<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
-----------------
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 Identification No.)
of incorporation or organization
One AMD Place
P. O. Box 3453
Sunnyvale, California 94088-3453
- --------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 732-2400
--------------
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
------- -------
The number of shares of $0.01 par value common stock outstanding as of May 2,
1997: 140,294,549.
<PAGE>
ADVANCED MICRO DEVICES, INC.
- ----------------------------
INDEX
- -----
Part I. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Condensed Consolidated Statements of Operations--
Quarters Ended March 30, 1997
and March 31, 1996 3
Condensed Consolidated Balance Sheets--
March 30, 1997 and December 29, 1996 4
Condensed Consolidated Statements of Cash Flows--
Quarters Ended March 30, 1997
and March 31, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Part II. Other Information
-----------------
Item 1. Legal Proceedings 24
Item 5. Other Information 25
Item 6. Exhibits and Reports on Form 8-K 26
Signature 28
---------
2
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I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
ADVANCED MICRO DEVICES, INC.
----------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Unaudited)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
-----------------------
March 30, March 31,
1997 1996
--------- --------
<S> <C> <C>
Net sales $551,999 $544,212
Expenses:
Cost of sales 349,076 368,735
Research and development 104,908 94,780
Marketing, general and administrative 94,519 103,011
------- -------
548,503 566,526
------- -------
Operating income (loss) 3,496 (22,314)
Interest income and other, net 13,322 28,059
Interest expense (9,410) (1,981)
------- -------
Income before income taxes and equity in joint venture 7,408 3,764
Provision for income taxes 2,148 -
------- -------
Income before equity in joint venture 5,260 3,764
Equity in net income of joint venture 7,691 21,563
------- -------
Net income $ 12,951 $ 25,327
======== ========
Net income per common share:
Primary $ .09 $ .18
======== ========
Fully diluted $ .09 $ .18
======== ========
Shares used in per share calculation:
Primary 146,751 138,399
======== ========
Fully diluted 147,322 138,399
======== ========
</TABLE>
See accompanying notes
- ----------------------
3
<PAGE>
ADVANCED MICRO DEVICES, INC.
----------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS*
--------------------------------------
(Thousands)
<TABLE>
<CAPTION>
March 30, December 29,
1997 1996
---------- ------------
Assets
- ------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 225,385 $ 166,194
Short-term investments 403,502 220,004
----------- -----------
Total cash, cash equivalents and
short-term investments 628,887 386,198
Accounts receivable, net 282,590 220,028
Inventories:
Raw materials 25,337 22,050
Work-in-process 86,486 83,853
Finished goods 37,395 48,107
----------- -----------
Total inventories 149,218 154,010
Deferred income taxes 140,085 140,850
Prepaid expenses and other current assets 51,976 127,991
----------- -----------
Total current assets 1,252,756 1,029,077
Property, plant and equipment, at cost 3,456,077 3,326,768
Accumulated depreciation and amortization (1,606,143) (1,539,366)
----------- -----------
Property, plant and equipment, net 1,849,934 1,787,402
Investment in joint venture 187,566 197,205
Other assets 135,870 131,599
----------- -----------
$ 3,426,126 $ 3,145,283
=========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Notes payable to banks $ 12,965 $ 14,692
Accounts payable 233,237 224,139
Accrued compensation and benefits 65,838 66,745
Accrued liabilities 106,796 103,436
Income tax payable 45,547 51,324
Deferred income on shipments to distributors 105,390 95,466
Current portion of long-term debt and capital
lease obligations 31,406 27,671
----------- -----------
Total current liabilities 601,179 583,473
Deferred income taxes 98,777 95,102
Long-term debt and capital lease obligations,
less current portion 682,413 444,830
Stockholders' equity:
Capital stock:
Common stock, par value 1,400 1,380
Capital in excess of par value 989,767 957,226
Retained earnings 1,052,590 1,063,272
----------- -----------
Total stockholders' equity 2,043,757 2,021,878
----------- -----------
$ 3,426,126 $ 3,145,283
=========== ===========
</TABLE>
* Amounts as of March 30, 1997 are unaudited. Amounts as of December 29, 1996
were derived from the December 29, 1996 audited financial statements.
See accompanying notes
----------------------
4
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ADVANCED MICRO DEVICES, INC.
----------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
(Thousands)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------
March 30, March 31,
1997 1996
Cash flows from operating activities: ---------- ---------
<S> <C> <C>
Net income $ 12,951 $ 25,327
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 88,821 79,623
Net loss on disposal of property, plant and equipment 3,110 416
Net gain realized on sale of available-for-sale securities (4,978) (24,743)
Compensation recognized under employee stock plans 7,733 687
Undistributed income of joint venture (7,691) (21,563)
Changes in operating assets and liabilities:
Net (increase) decrease in receivables, inventories,
prepaid expenses and other assets (5,286) 19,036
Net decrease in deferred income taxes 4,440 6,000
Decrease in income tax payable (5,777) (6,901)
Net increase (decrease) in payables and accrued liabilities 21,475 (102,423)
--------- ---------
Net cash provided by (used in) operating activities 114,798 (24,541)
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (150,594) (95,329)
Proceeds from sale of property, plant and equipment 130 802
Purchase of available-for-sale securities (308,326) (236,331)
Proceeds from sale of available-for-sale securities 138,892 322,128
Investment in joint venture (128) -
--------- ---------
Net cash used in investing activities (320,026) (8,730)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 261,584 15,125
Payments on debt and capital lease obligations (21,993) (39,812)
Proceeds from issuance of stock 24,828 17,024
--------- ---------
Net cash provided by (used in) financing activities 264,419 (7,663)
--------- ---------
Net increase (decrease) in cash and cash equivalents 59,191 (40,934)
Cash and cash equivalents at beginning of period 166,194 126,316
--------- ---------
Cash and cash equivalents at end of period $ 225,385 $ 85,382
========= ========
Supplemental disclosures of cash flow information:
Cash (refunded) paid during the first three months for:
Income taxes $(101,435) $ 464
========= ========
Non-cash financing activities:
Equipment capital leases $ - $ 342
========= ========
</TABLE>
See accompanying notes
- ----------------------
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. All such adjustments are of a
normal recurring nature.
The Company uses a 52- to 53-week fiscal year ending on the last Sunday in
December. The quarters ended March 30, 1997 and March 31, 1996 included 13
weeks.
Certain prior year amounts on the Condensed Consolidated Financial
Statements have been reclassified to conform to the 1997 presentation.
2. The following is a summary of available-for-sale securities included in
cash and cash equivalents and short-term investments as of March 30, 1997
(in thousands):
Cash equivalents
Treasury notes $ 2,017
Federal agency notes 32,777
Security repurchase agreements 125,300
Commercial paper 30,824
Other debt securities 869
--------
Total cash equivalents $191,787
========
Short-term investments
Certificates of deposit $155,619
Bank/Corporate notes 34,828
Treasury notes 81,614
Commercial paper 131,441
--------
Total short-term investments $403,502
========
As of March 30, 1997 the Company held $6 million of available-for-sale
equity securities with a fair value of $11 million which are included in
other assets. The total net unrealized gain on these equity securities, net
of tax, is included in retained earnings. During the first quarter of 1997,
the Company sold a portion of its available-for-sale equity securities and
realized a pre-tax gain of $5 million which is included in interest income
and other, net.
6
<PAGE>
3. The net income per common share computations are based on the weighted-
average number of common shares outstanding plus dilutive common share
equivalents. Shares used in the per share computations are as follows:
Quarter Ended
-------------------------
March 30, March 31,
1997 1996
--------- ---------
(Thousands)
Primary:
Common shares outstanding 138,616 133,229
Employee stock plans 7,873 4,374
Warrants 262 796
------- -------
146,751 138,399
======= =======
Fully diluted:
Common shares outstanding 138,616 133,229
Employee stock plans 8,437 4,374
Warrants 269 796
------- -------
147,322 138,399
======= =======
In February, 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share."
SFAS 128 supersedes Accounting Principles Board Opinion No. 15 (APB 15),
"Earnings per Share," and other related interpretations and is effective
for the periods ending after December 15, 1997. Upon adoption of SFAS 128,
all prior-period earnings per share amounts are required to be restated.
The Company's pro forma basic and diluted earnings per share as if SFAS 128
were effective for the periods presented, are $0.09 and $0.09 for the
quarter ended March 30, 1997, respectively, and $0.19 and $0.18 for the
quarter ended March 31, 1996, respectively.
4. On July 19, 1996 the Company entered into a syndicated bank loan agreement
(the Credit Agreement) which provided for a new $400 million term loan and
revolving credit facility. The Credit Agreement provided for a $150 million
three-year secured revolving line of credit (which can be extended for one
additional year, subject to approval of the lending banks) and a $250
million four-year secured term loan, the latter of which the Company
utilized fully in January, 1997.
7
<PAGE>
5. In 1993, AMD and Fujitsu Limited formed a joint venture, Fujitsu AMD
Semiconductor Limited (FASL), for the development and manufacture of non-
volatile memory devices. FASL operates an advanced integrated circuit
manufacturing facility in Aizu-Wakamatsu, Japan, to produce Flash memory
devices. The Company's share of FASL is 49.992 percent and the investment
is being accounted for under the equity method. At March 30, 1997, the
accumulated adjustment related to the translation of the FASL financial
statements into U.S. dollars resulted in a decrease of approximately $45
million to the investment in FASL. In the first quarter of 1997 and of
1996, the Company purchased $50 million and $69 million, respectively, of
Flash memory devices from FASL. At March 30, 1997 and March 31, 1996, the
Company had outstanding payables to FASL of $24 million and $55 million,
respectively, for Flash memory device purchases. In the first quarter of
1997 and of 1996, the Company earned royalty income of $4 million and $5
million, respectively, as a result of purchases from FASL.
The following is condensed unaudited financial data of FASL:
Quarter Ended
-------------------------
(Unaudited) March 30, March 31,
(Thousands) 1997 1996
--------- ---------
Net sales $103,711 $134,340
Gross profit 35,583 83,732
Operating income 25,205 66,630
Net income 27,314 54,457
The Company's share of the above FASL net income differs from the equity in
net income of joint venture reported on the condensed Consolidated
Statements of Operations due to differences in tax rates, as the above
table reflects the FASL tax expense (benefit) and the Statements of
Operations reflects the tax AMD would expect to pay if the Company's share
of FASL profits were remitted to AMD as a dividend.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
- ------- -----------------------------------------------------------------
FINANCIAL CONDITION
-------------------
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
- ---------------------------------------------------------
The statements in this Management's Discussion and Analysis of Results of
Operations and Financial Condition 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 operating results, cash flows, capital expenditures, tax rates and
adequacy of resources to fund operations and capital investments; future
business prospects for microprocessors, Flash memory device products and other
product lines; the effect of foreign exchange contracts and interest rate swaps;
the development, validation, certification, introduction, market acceptance and
pricing of the K86(TM) products; the Company's commitment to research and
development; the effective utilization of the Company's manufacturing
facilities; the proposed Dresden (as defined below) and FASL manufacturing
facilities; and the assembly and test facility being constructed in Suzhou,
China. See Financial Condition and Risk Factors below, as well as such other
risks and uncertainties as are detailed in the Company's Securities and Exchange
Commission reports and filings for a discussion of the factors that could cause
the actual results to differ materially from the forward-looking statements.
The following discussion should be read in conjunction with the attached
condensed Consolidated Financial Statements and Notes thereto, and with the
Company's Consolidated Financial Statements and Notes thereto at December 29,
1996 and December 31, 1995 and for each of the three years in the period ended
December 29, 1996.
AMD, the AMD logo, and combinations thereof, Advanced Micro Devices, Vantis and
NexGen, are either registered trademarks or trademarks of Advanced Micro
Devices, Inc. Other terms used to identify companies and products may be
trademarks of their respective owners. MACH, Am486, K86, K86 RISC SUPERSCALAR,
AMD-K5, AMD-K6, Nx586 and Nx686 are trademarks or registered trademarks of AMD.
Microsoft, MS-DOS, Windows and Windows NT are either registered trademarks or
trademarks of Microsoft Corporation. Pentium is a registered trademark
and MMX is a trademark of Intel Corporation.
9
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
AMD participates in the digital integrated circuit (IC) market - memory
circuits, microprocessors and logic circuits - through, collectively, its Memory
Group, its Communications Group, its Computation Products Group (CPG) and its
Programmable Logic Division (Vantis). Memory Group products include Flash memory
devices and Erasable Programmable Read-Only Memory (EPROM) devices.
Communications Group products include voice and data communications products,
embedded processors, input/output (I/O) devices, network products and bipolar
programmable logic devices, an older line of programmable logic devices that the
Company manufactures. CPG products include microprocessors and chip sets. Vantis
products are high-speed CMOS programmable logic devices.
The following is a summary of the net sales of the Memory Group, Communications
Group, CPG and Vantis for the first quarter of 1997 and of 1996, and the fourth
quarter of 1996:
Quarter Ended March 30, December 29, March 31,
1997 1996 1996
(Millions) --------- ------------ ---------
Memory Group $184 $162 $210
Communications Group 171 166 182
CPG 128 110 82
Vantis 69 59 70
---- ---- ----
Total $552 $497 $544
==== ==== ====
Revenue Comparison of Quarters Ended March 30, 1997 and March 31, 1996
- ----------------------------------------------------------------------
Net sales increased as a result of increases in AMD-K5(TM) microprocessor sales,
which more than offset declines in Am486(R) microprocessor and memory product
sales.
Memory Group net sales decreased due to a decline in both the average selling
price and unit shipments for EPROM products. Flash memory device sales were
slightly lower as substantial unit growth was offset by average selling price
declines.
Communications Group net sales decreased primarily due to a decline in the
average selling price for network products and secondarily due to a decline in
both unit shipments and average selling price of bipolar programmable logic
devices. These declines were partially offset by increased sales, due to unit
growth, of the Company's telecommunication products.
10
<PAGE>
CPG net sales increased due to sales of AMD-K5 microprocessors at higher average
selling prices than the Am486 microprocessor which represented most of the
Company's microprocessor sales in the first quarter of 1996. The Company expects
AMD-K5 microprocessor sales to substantially decrease as the Company ramps up
production of its sixth generation processor, the AMD-K6(TM) MMX(TM) Enhanced
processor. The Company began shipments of its AMD-K6 processor at the end of the
first quarter of 1997. AMD-K6 microprocessor sales did not materially impact the
first quarter results.
Vantis net sales remained relatively flat in the first quarter of 1997 as
compared to the same period in 1996. The Company is in the process of
transferring its programmable logic device operations to a wholly owned
subsidiary, Vantis Corporation. Vantis Corporation will continue to rely upon
the Company for manufacturing and administrative services.
Revenue Comparison of Quarters Ended March 30, 1997 and December 29, 1996
- -------------------------------------------------------------------------
Net sales increased as a result of strength in nearly all product lines, led by
sales growth in AMD-K5 microprocessors and Flash memory devices.
Memory Group net sales increased due to strong unit growth in Flash memory
device sales offset by slight average selling price declines.
Communications Group net sales increased primarily due to increased unit
shipments of network products.
CPG net sales increased due to sales of higher performance AMD-K5
microprocessors.
Vantis net sales increased as a result of unit growth in both MACH(R) and
simple programmable logic products.
Comparison of Expenses and Interest
- -----------------------------------
The following is a summary of expenses and interest income for the first quarter
of 1997 and of 1996, and the fourth quarter of 1996:
Quarter Ended March 30, December 29, March 31,
1997 1996 1996
--------- ------------ ---------
(Millions except for gross
margin percentages)
Cost of sales $349 $355 $369
Gross margin percentage 37% 29% 32%
Research and development $105 $107 $ 95
Marketing, general and
administrative 95 88 103
Interest income and other, net 13 4 28
Interest expense 9 8 2
11
<PAGE>
Gross margin percentage increased as compared to the first quarter of 1996 and
the fourth quarter of 1996 primarily due to better utilization of the Company's
Fab 25 wafer production facilities and the transition of a higher proportion of
Submicron Development Center (SDC) activities to research and development.
Research and development expenses increased as compared to the first quarter of
1996 due to the transition of a higher proportion of SDC activities to research
and development, partially offset by reduced research and development spending
related to the AMD-K5 processor.
Marketing, general and administrative expenses decreased as compared to the
first quarter of 1996 primarily due to (i) non-recurring costs associated with
the merger with NexGen, Inc. (NexGen) in the first quarter of 1996 and (ii)
effective cost containment efforts. During the first quarter of 1997 the Company
incurred higher advertising and marketing expenses primarily due to corporate
image and AMD-K6 microprocessor advertising.
Interest income and other, net decreased as compared to the first quarter of
1996 primarily due to a pre-tax gain of $25 million resulting from the sale of
equity securities in the first quarter of 1996, compared to a pre-tax gain of $5
million resulting from the sale of equity securities in the first quarter of
1997. The Company also fully utilized its $250 million four-year secured term
loan in the first quarter of 1997, increasing the average cash and cash
equivalents balance and the corresponding interest income. Interest income and
other, net increased as compared to the fourth quarter of 1996 primarily due to
the $5 million pre-tax gain and the utilization of the $250 million four-year
secured term loan as described above. Interest expense increased as compared to
the first quarter of 1996 primarily due to interest expense incurred on the
Company's $400 million Senior Secured Notes sold in August, 1996 and interest
expense on the $250 million four-year secured term loan. Interest expense
increased slightly as compared to the fourth quarter of 1996 due to the interest
expense on the $250 million four-year secured term loan.
Income Tax
- ----------
The Company's effective tax rate for the first quarter of 1997 was 29 percent.
No tax provision was recorded in the first quarter of 1996. Management currently
estimates that the 29 percent effective tax rate will continue throughout 1997.
Other Items
- -----------
International sales were 56 percent of total sales in the first quarter of 1997
as compared to 52 percent for the same period in 1996, and 55 percent for the
immediate prior quarter. In the first quarter of 1997, approximately 13 percent
of the Company's net sales were denominated in foreign currencies. The Company
does not have sales denominated in local currencies in those countries which
have highly
12
<PAGE>
inflationary economies. (A highly inflationary economy is defined in accordance
with the Statement of Financial Accounting Standards No. 52 as one in which the
cumulative inflation over a three-year consecutive period approximates 100
percent or more.) The impact on the Company's operating results from changes in
foreign currency rates individually and in the aggregate has not been material.
The Company enters into foreign exchange forward contracts to buy and sell
currencies as economic hedges of the Company's foreign net monetary asset
position including the Company's liabilities for products purchased from FASL.
In 1996 and 1997, these hedging transactions were denominated in lira, yen,
French franc, deutsche mark (DM) and pound sterling. The maturities of these
contracts are generally short-term in nature. The Company believes its foreign
exchange contracts do not subject the Company to material risk from exchange
rate movements because gains and losses on these contracts are designed to
offset losses and gains on the net monetary asset position being hedged. Net
foreign currency gains and losses have not been material. As of March 30, 1997,
the Company had approximately $34 million (notional amount) of foreign exchange
forward contracts.
The Company has engaged in interest rate swaps primarily to reduce its interest
rate exposure by changing a portion of the Company's interest rate obligation
from a floating rate to a fixed rate basis. At March 30, 1997, the net
outstanding notional amount of interest rate swaps was $40 million, which will
mature June 30, 1997. Gains and losses related to these interest rate swaps
have not been material. The Company anticipates that it will engage in future
swap arrangements after the outstanding amount has matured.
The Company participates as an end user in various derivative markets to manage
its exposure to interest and foreign currency exchange rate fluctuations. The
counterparties to the Company's foreign exchange forward contracts and interest
rate swaps consist of a number of major, high credit quality, international
financial institutions. The Company does not believe that there is significant
risk of nonperformance by these counterparties because the Company monitors
their credit ratings, and reduces the financial exposure by limiting the
notional amount of agreements entered into with any one financial institution.
FINANCIAL CONDITION
- -------------------
The Company's working capital balance increased to $652 million at March 30,
1997 from $446 million at December 29, 1996, primarily due to proceeds from a
$250 million four-year secured term loan and receipt of a tax refund, partially
offset by capital expenditures during the period. The Company's cash, cash
equivalents and short-term investments balance was approximately $629 million at
March 30, 1997 compared to $386 million at December 29, 1996.
13
<PAGE>
As a result of the Company's improved operating performance and a $101 million
tax refund received during the first quarter of 1997, the Company generated $115
million of cash flow from operating activities. The Company plans to continue to
make significant capital investments through 1997, including those relating to
the Dresden Facility (as defined below) and FASL. The Company's current capital
plan and requirements are based on the availability of financial resources and
various product-mix, selling-price, and unit-demand assumptions and are,
therefore, subject to revision.
AMD Saxony Manufacturing GmbH (AMD Saxony), a German subsidiary wholly owned by
the Company through a German holding company, is building a 900,000 square foot
submicron integrated circuit manufacturing and design facility in Dresden, in
the State of Saxony, Germany (the Dresden Facility) over the next five years at
a presently estimated cost of approximately $1.5 billion. The Dresden Facility
is being designed for the production of microprocessors and other advanced logic
products. The Federal Republic of Germany and the State of Saxony have agreed to
support the project in the form of (i) a guarantee of 65% of the bank debt to be
incurred by AMD Saxony up to a maximum of DM1.65 billion, (ii) investment grants
and subsidies totaling DM500.5 million, and (iii) interest subsidies from the
State of Saxony totaling DM300 million. In March, 1997 AMD Saxony entered into a
loan agreement with a consortium of banks led by Dresdner Bank AG under which
loan facilities totaling DM1.65 billion will be made available. In connection
with the financing, the Company has agreed to invest in AMD Saxony over the next
three years equity and subordinated loans in an amount totaling approximately
DM507.5 million. Until the Dresden Facility has been completed, AMD has also
agreed to guarantee AMD Saxony's obligations under the loan agreement up to a
maximum of DM217.5 million. After completion of the Dresden Facility, AMD has
agreed to make available to AMD Saxony up to DM145 million if the subsidiary
does not meet its fixed charge coverage ratio covenant. Finally, AMD has agreed
to undertake certain contingent obligations, including various obligations to
fund project cost overruns. The Company began site preparation of the Dresden
Facility in the fourth quarter of 1996, and has commenced construction in the
second quarter of 1997. The planned Dresden Facility costs are denominated in
deutsche marks and, therefore, are subject to change due to foreign exchange
rate fluctuations. The Company plans to hedge future foreign exchange
transaction exposure for the Dresden Facility.
The Company's total cash investment in FASL was $160 million at March 30, 1997
and at the end of 1996. In March of 1996, FASL began construction of a second
Flash memory device wafer fabrication facility (FASL II) at a site contiguous to
the existing FASL facility in Aizu-Wakamatsu, Japan. The facility is expected to
cost approximately $1.1 billion when fully equipped. Capital expenditures for
FASL II construction are expected to be funded by cash generated from FASL
operations and borrowings by FASL. To the extent that FASL is unable to secure
the necessary funds for FASL II, AMD may be required to contribute cash or
guarantee third-party loans in proportion to its percentage interest in FASL.
At March 30, 1997, AMD had loan guarantees of $26 million outstanding with
respect to such loans. The planned
14
<PAGE>
FASL II costs are denominated in yen and, therefore, are subject to change due
to foreign exchange rate fluctuations.
The Company has a syndicated bank loan agreement providing for a $150 million
three-year secured revolving line of credit (which can be extended for one
additional year, subject to approval of the lending banks) and a $250 million
four-year secured term loan, the latter of which the Company fully utilized in
January, 1997. Additionally, as of March 30, 1997, the Company has available
unsecured uncommitted bank lines of credit in the amount of $84 million, of
which $16 million was utilized.
The Company believes that current cash balances, together with cash flows, will
be sufficient to fund operations and capital investments currently planned
through 1997.
RISK FACTORS
- ------------
The Company's business, results of operations and financial condition are
subject to the following risk factors:
Microprocessor Products
Intel Dominance. Intel Corporation (Intel) has long held a dominant position in
- ---------------
the market for microprocessors used in personal computers (PCs). Intel
Corporation's dominant market position has to date allowed it to set and control
x86 microprocessor standards and thus dictate the type of product the market
requires of Intel Corporation's competitors. In addition, Intel Corporation's
financial strength has enabled it to reduce prices on its microprocessor
products within a short period of time following their introduction, which
reduces the margins and profitability of its competitors, to exert substantial
influence and control over PC manufacturers through the Intel Inside advertising
rebate program and to invest hundreds of millions of dollars in, and as a result
exert influence over, other technology companies. The Company expects Intel to
continue to invest heavily in research and development and new manufacturing
facilities, and to maintain its dominant position through the Intel Inside
program, through other contractual constraints on customers and other third
parties, and by controlling industry standards. As an extension of its dominant
microprocessor market share, Intel also increasingly dominates the PC platform.
The Company does not have the financial resources to compete with Intel on such
a large scale. As long as Intel remains in this dominant position, its product
introduction schedule, product pricing strategy, customer brand loyalty and
control over industry standards, PC manufacturers and other PC industry
participants may have a material adverse effect on the Company.
As Intel has expanded its dominance in designing and setting standards for PC
systems, many PC original equipment manufacturers (OEMs) have reduced their
system development expenditures and have begun to purchase microprocessors in
conjunction with chip sets or in assembled motherboards. In marketing its
microprocessors to these OEMs and dealers, AMD is dependent upon companies
15
<PAGE>
other than Intel for the design and manufacture of core-logic chip sets,
motherboards, basic input/output system (BIOS) software and other components. In
recent years, these third-party designers and manufacturers have lost
significant market share to Intel. In addition, these companies are able to
produce chip sets, motherboards, BIOS software and other components to support
each new generation of Intel Corporation's microprocessors only to the extent
that Intel makes its related proprietary technology available. Any delay in the
availability of such technologies would make it increasingly difficult for them
to retain or regain market share. To compete with Intel in this market in the
future, the Company intends to continue to form closer relationships with third-
party designers and manufacturers of core-logic chip sets, motherboards, BIOS
software and other components. The Company similarly intends to expand its chip
set and system design capabilities, and offer to OEMs a portion of the Company's
processors together with chip sets and licensed system designs incorporating the
Company's processors and companion products. There can be no assurance, however,
that such efforts by the Company will be successful. The Company expects that as
Intel introduces future generations of microprocessors, chip sets and
motherboards, the design of chip sets and higher level board products which
support Intel microprocessors will become increasingly dependent on the Intel
microprocessor design and may become incompatible with non-Intel processor-based
PC systems. Intel has announced that the Pentium II will be sold only in the
form of a daughtercard that is not compatible with "Socket 7" motherboards
currently used with Intel Pentium(R) processors. Thus, Intel will cease
supporting the Socket 7 infrastructure as it transitions away from its Pentium
processors. Because the AMD-K6 processor is designed to be Socket 7 compatible,
and will not work with motherboards designed for Pentium II processors, the
Company intends to work with third party designers and manufacturers of
motherboards, chip sets and other products to assure the continued availability
of Socket 7 infrastructure support for the AMD-K6 processor, including support
for enhancements and features the Company plans to add to the processor. The
Company's ability to compete with Intel in the market for seventh- and future
generation microprocessors will depend not only upon its success in designing
and developing the microprocessors themselves, but also in ensuring either that
they can be used in PC platforms designed to support future Intel
microprocessors or that alternative platforms are available which are
competitive with those used with Intel processors. A failure for any reason of
the designers and producers of motherboards, chip sets and other system
components to support the Company's x86 microprocessor offerings could have a
material adverse effect on the Company.
Dependence on New AMD Microprocessor Products. The Company's microprocessor
- ---------------------------------------------
products have traditionally made significant contributions to the Company's
revenues, profits and margins. The Company's AMD-K5 microprocessor, its fifth-
generation microprocessor and its first K86 RISC SUPERSCALAR(TM) microprocessor,
was introduced relatively late in the life cycle of fifth-generation products
and has not resulted in the levels of revenue that the Company realized from its
fourth-generation product. The Company expects AMD-K5 microprocessor sales
16
<PAGE>
to substantially decrease as the Company ramps up production for the AMD-K6
microprocessor. The Company's ability to expand its current levels of revenues
from microprocessor products and to benefit fully from the substantial financial
commitments it has made related to microprocessors will depend upon the success
of the AMD-K6 microprocessor and future generations of K86 microprocessors. The
Company's production and sales plans for its AMD-K6 microprocessors are subject
to numerous risks and uncertainties, including the pace at which the Company
will be able to ramp production in Fab 25, the effects of marketing and pricing
strategies adopted by Intel, the development of market acceptance for the
products particularly with leading PC OEMs, the possibility that products newly
introduced by the Company may be found to be defective, possible adverse
conditions in the personal computer market and unexpected interruptions in the
Company's manufacturing operations. A failure of the Company's AMD-K6 processors
to achieve market acceptance would have a material adverse effect on the
Company. AMD is also devoting substantial resources to the development of its
seventh-generation Microsoft(R) Windows(R) compatible microprocessor.
Compatibility Certifications. For its future generations of K86 microprocessors,
- ----------------------------
AMD intends to obtain Windows, Windows 95 and Windows NT(R) certifications from
Microsoft and other appropriate certifications from recognized testing
organizations. A failure to obtain certifications from Microsoft would prevent
the Company from describing and labeling its K86 microprocessors as Microsoft
Windows compatible. This could substantially impair the Company's ability to
market the products and could have a material adverse effect on the Company.
Fluctuation in PC Market. Since most of the Company's microprocessor products
- ------------------------
are used in personal computers and related peripherals, the Company's future
growth is closely tied to the performance of the PC industry. The Company could
be materially and adversely affected by industry-wide fluctuations in the PC
marketplace in the future.
Possible Rights of Others. Prior to its acquisition by AMD, NexGen granted
- -------------------------
limited manufacturing rights regarding certain of its current and future
microprocessors, including the Nx586 and Nx686(TM), to other companies. The
Company does not intend to produce any NexGen products. The Company believes
that its AMD-K6 processors are AMD products and not NexGen products. There can
be no assurance that another company will not seek to establish rights with
respect to the processors. If another company were deemed to have rights to
produce the Company's AMD-K6 processors for its own use or for sale to third
parties, such production could reduce the potential market for microprocessor
products produced by AMD, the profit margin achievable with respect to such
products, or both.
17
<PAGE>
Flash Memory Products
Importance of Flash Memory Device Business; Increasing Competition. In 1996, the
- ------------------------------------------------------------------
market for Flash memory devices experienced rapid growth and increased
competition as additional manufacturers introduced competitive products and
industry-wide production capacity increased. The Company expects that the
marketplace for Flash memory devices will continue to be increasingly
competitive. A substantial portion of the Company's revenues are derived from
sales of Flash memory devices, and the Company expects that this will continue
to be the case for the foreseeable future. During 1996 and the first quarter of
1997, the Company experienced declines in the selling prices of Flash memory
devices. There can be no assurance that the Company will be able to maintain its
market share in Flash memory devices or that price declines may not accelerate
as the market develops and as new competitors emerge. A decline in the Company's
Flash memory device business could have a material adverse effect on the
Company.
Manufacturing
Capacity. The Company's manufacturing facilities have been underutilized from
- --------
time to time as a result of reduced demand for certain of the Company's
products. The Company's operations related to microprocessors have been
particularly affected by this situation. Any future underutilization of the
Company's manufacturing facilities could have a material adverse effect on the
Company. The Company plans to increase its manufacturing capacity by making
significant capital investments in Fab 25 and in Fab 30 in Dresden, Germany. In
addition, FASL has begun construction of a second Flash memory device
manufacturing facility (FASL II). There can be no assurance that the industry
projections for future growth upon which the Company is basing its strategy of
increasing its manufacturing capacity will prove to be accurate. If demand for
the Company's products does not increase, underutilization of the Company's
manufacturing facilities will likely occur and have a material adverse effect on
the Company.
There have been situations in the past in which the Company's manufacturing
facilities were inadequate to enable the Company to meet demand for certain of
its products. In addition to having its own fabrication facilities, AMD has
foundry arrangements for the production of its products by third parties. Any
inability of AMD to generate sufficient manufacturing capabilities to meet
demand, either in its own facilities or through foundry or similar arrangements
with others, could have a material adverse effect on the Company.
Process Technology. Manufacturers of integrated circuits are constantly seeking
- ------------------
to improve the process technologies used to manufacture their products. In order
to remain competitive, the Company must make continuing substantial investments
in improving its process technologies. In particular, the Company has made and
continues to make significant research and development investments in the
18
<PAGE>
technologies and equipment used to fabricate its microprocessor products and its
Flash memory devices. Portions of these investments might not be recoverable if
the Company's microprocessors fail to gain market acceptance or if the market
for its Flash memory products should significantly deteriorate. This could have
a material adverse effect on the Company. In addition, any inability of the
Company to remain competitive with respect to process technology could have a
material adverse effect on the Company.
Manufacturing Interruptions. Any substantial interruption with respect to any of
- ---------------------------
the Company's manufacturing operations, either as a result of a labor dispute,
equipment failure or other cause, could have a material adverse effect on the
Company. The Company may also be materially adversely affected by fluctuations
in manufacturing yields.
Essential Manufacturing Materials. Certain raw materials used by the Company in
- ---------------------------------
the manufacture of its products are available from a limited number of
suppliers. For example, several types of the integrated circuit packages
purchased by AMD, as well as by the majority of other companies in the
semiconductor industry, are principally supplied by Japanese companies.
Shortages could occur in various essential materials due to interruption of
supply or increased demand in the industry. If AMD were unable to procure
certain of such materials, it would be required to reduce its manufacturing
operations which could have a material adverse effect on the Company. To date,
AMD has not experienced significant difficulty in obtaining necessary raw
materials.
International Manufacturing. Nearly all product assembly and final testing of
- ---------------------------
the Company's products are performed at the Company's manufacturing facilities
in Penang, Malaysia; Bangkok, Thailand; and Singapore; or by subcontractors in
Asia. AMD has a 50 year land lease in Suzhou, China, to be used for the
construction and operation of an additional assembly and test facility. Foreign
manufacturing and construction of foreign facilities entail 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 AMD were
unable to assemble and test its products abroad, or if air transportation
between the United States and the Company's overseas facilities were disrupted,
there could be a material adverse effect on the Company.
Other Risk Factors
Debt Restrictions. The Credit Agreement and the Indenture related to the
- -----------------
Senior Secured Notes contain significant covenants that limit the Company's and
its subsidiaries' ability to engage in various transactions and require
satisfaction of specified financial performance criteria. In addition, the
occurrence of certain events (including, without limitation, failure to comply
with the foregoing covenants, material inaccuracies of representations and
warranties, certain defaults under or acceleration of other indebtedness and
events of bankruptcy or insolvency) would, in
19
<PAGE>
certain cases after notice and grace periods, constitute events of default
permitting acceleration of indebtedness. The limitations imposed by the Credit
Agreement and the Indenture are substantial, and failure to comply with such
limitations could have a material adverse effect on the Company. In addition,
the agreements entered into by AMD Saxony in connection with the Dresden
Facility loan substantially prohibit the transfer of assets from AMD Saxony to
the Company, which will prevent the Company from utilizing current or future
assets of AMD Saxony other than to satisfy obligations of AMD Saxony.
Dependence on Third Parties for Programmable Logic Software. Customers utilizing
- -----------------------------------------------------------
programmable logic devices must use special software packages, generally
provided by the suppliers of the programmable logic devices, to program these
devices. AMD provides its programmable logic device customers with software
which it licenses from third parties and is dependent upon third parties for
the software and continuing improvements in the quality of the software. No
assurance can be made that the Company will be able to maintain its existing
relationships with these third parties. An inability of AMD to continue to
obtain appropriate software and improvements from third parties or to develop
its own software internally could materially adversely affect the Company's
Vantis business, including the timing of new or improved product introductions,
which could have a material adverse effect on the Company.
Technological Change and Industry Standards. The market for the Company's
- -------------------------------------------
products is generally characterized by rapid technological developments,
evolving industry standards, changes in customer requirements, frequent new
product introductions and enhancements, short product life cycles and severe
price competition. The establishment of industry standards is a function of
market acceptance. Currently accepted industry standards may change. The
Company's success depends substantially upon its ability, on a cost-effective
and timely basis, to continue to enhance its existing products and to develop
and introduce new products that take advantage of technological advances and
adhere to evolving industry standards. An unexpected change in one or more of
the technologies related to its products, in market demand for products based on
a particular technology or on accepted industry standards could have a material
adverse effect on the Company. There can be no assurance that AMD will be able
to develop new products in a timely and satisfactory manner to address new
industry standards and technological changes, or to respond to new product
announcements by others, or that any such new products will achieve market
acceptance.
Product Incompatibility. While AMD submits its products to rigorous internal and
- -----------------------
external testing, there can be no assurance that the Company's products will be
compatible with all industry-standard software and hardware. Any inability of
the Company's customers to achieve such compatibility or compatibility with
other software or hardware after the Company's products are shipped in volume
could have a material adverse effect on the Company. There can be no assurance
that AMD will be successful in correcting any such compatibility problems that
are discovered or
20
<PAGE>
that such corrections will be acceptable to customers or made in a timely
manner. In addition, the mere announcement of an incompatibility problem
relating to the Company's products could have a material adverse effect on the
Company.
Competition. The IC industry is intensely competitive and, historically, has
- -----------
experienced rapid technological advances in product and system technologies
together with substantial price reductions in maturing products. After a product
is introduced, prices normally decrease over time as production efficiency and
competition increase, and as a successive generation of products is 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 performance. Competition in the sale of ICs is
based on performance, product quality and reliability, price, compatibility with
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.
Fluctuations in Operating Results. The Company's operating results are subject
- ---------------------------------
to substantial quarterly and annual fluctuations due to a variety of factors,
including the effects of competition with Intel in the microprocessor industry,
competitive pricing pressures, anticipated decreases in unit average selling
prices of the Company's products, production capacity levels and fluctuations in
manufacturing yields, availability and cost of products from the Company's
suppliers, the gain or loss of significant customers, new product introductions
by AMD or its competitors, changes in the mix of products sold and in the mix of
sales by distribution channels, market acceptance of new or enhanced versions of
the Company's products, seasonal customer demand, the timing of significant
orders and the timing and extent of product development costs. In addition,
operating results could be adversely affected by general economic and other
conditions causing a downturn in the market for semiconductor devices, or
otherwise affecting the timing of customer orders or causing order cancellations
or rescheduling. The Company's customers may change delivery schedules or cancel
orders without significant penalty. Many of the factors listed above are
outside of the Company's control. These factors are difficult to forecast, and
these or other factors could materially adversely affect the Company's quarterly
or annual operating results.
Order Revision and Cancellation Policies. AMD manufactures and markets standard
- ----------------------------------------
lines of products. 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. As a
result, AMD must commit resources to the production of products without having
received advance purchase commitments from customers. Any inability to sell
products to which it had devoted significant resources could have a material
adverse effect on the Company. Distributors typically maintain an inventory of
the Company's products. Pursuant to the Company's agreements with distributors,
AMD protects its distributors' inventory of the Company's products against price
reductions as well as
21
<PAGE>
products that are slow moving or have been discontinued. These agreements, which
may be canceled by either party on a specified notice, generally contain a
provision for the return of the Company's products in the event the agreement
with the distributor is terminated. The price protection and return rights AMD
offers to its distributors may materially adversely affect the Company.
Key Personnel. The Company's future success depends upon the continued service
- -------------
of numerous key engineering, manufacturing, sales and executive personnel. There
can be no assurance that AMD will be able to continue to attract and retain
qualified personnel necessary for the development and manufacture of its
products. Loss of the service of, or failure to recruit, key engineering design
personnel could be significantly detrimental to the Company's product
development programs or otherwise have a material adverse effect on the Company.
Product Defects. One or more of the Company's products may possibly be found to
- ---------------
be defective after AMD has already shipped such products in volume, requiring a
product replacement, recall, or a software fix which would cure such defect but
impede performance. Product returns could impose substantial costs on AMD and
have a material adverse effect on the Company.
Intellectual Property Rights; Potential Litigation. Although the Company
- --------------------------------------------------
attempts to protect its intellectual property rights through patents,
copyrights, trade secrets, trademarks and other measures, there can be no
assurance that the Company will be able to protect its technology or other
intellectual property adequately or that competitors will not be able to develop
similar technology independently. There can be no assurance that any patent
applications that the Company may file will be issued or that foreign
intellectual property laws will protect the Company's intellectual property
rights. There can be no assurance that any patent licensed by or issued to the
Company will not be challenged, invalidated or circumvented or that the rights
granted thereunder will provide competitive advantages to the Company.
Furthermore, there can be no assurance that others will not independently
develop similar products, duplicate the Company's products or design around the
Company's patents and other rights.
From time to time, AMD has been notified that it may be infringing intellectual
property rights of others. If any such claims are asserted against the Company,
the Company may seek to obtain a license under the third party's intellectual
property rights. AMD could decide, in the alternative, to resort to litigation
to challenge such claims. Such challenges could be extremely expensive and time-
consuming and could materially adversely affect the Company. No assurance can be
given that all necessary licenses can be obtained on satisfactory terms, or that
litigation may always be avoided or successfully concluded.
Environmental Regulations. The failure to comply with present or future
- -------------------------
governmental regulations related to the use, storage, handling, discharge or
disposal
22
<PAGE>
of toxic, volatile or otherwise hazardous chemicals used in the manufacturing
process could result in fines being imposed on the Company, suspension of
production, alteration of the Company's manufacturing processes or cessation of
operations. Such regulations could require the Company to acquire expensive
remediation equipment or to incur other expenses to comply with environmental
regulations. Any failure by the Company to control the use, disposal or storage
of, or adequately restrict the discharge of, hazardous substances could subject
the Company to future liabilities and could have a material adverse effect on
the Company.
International Sales. AMD derives a substantial portion of its revenues from its
- -------------------
sales subsidiaries located in Europe and Asia Pacific. The Company's
international sales operations entail political and economic risks, including
expropriation, currency controls, exchange rate fluctuations, changes in freight
rates and changes in rates for taxes and tariffs.
Domestic and International Economic Conditions. The Company's business is
- ----------------------------------------------
subject to general economic conditions, both in the United States and abroad. A
significant decline in economic conditions in any significant geographic area
could have a material adverse effect on the Company.
Volatility of Stock Price; Ability to Access Capital. Based on the trading
- ----------------------------------------------------
history of its stock, AMD believes factors such as quarterly fluctuations in the
Company's financial results, announcements of new products by AMD or its
competitors and general conditions in the semiconductor industry have caused and
are likely to continue to cause the market price of AMD common stock to
fluctuate substantially. Technology company stocks in general have experienced
extreme price and volume fluctuations that often have been unrelated to the
operating performance of the companies. This market volatility may adversely
affect the market price of the Company's common stock and consequently limit the
Company's ability to raise capital. In addition, an actual or anticipated
shortfall in revenue, gross margins or earnings from securities analysts'
expectations could have an immediate effect on the trading price of AMD common
stock in any given period.
Earthquake Danger. The Company's corporate headquarters, a portion of its
- -----------------
manufacturing facilities, assembly and research and development activities and
certain other critical business operations are located near major earthquake
fault lines. The Company could be materially adversely affected in the event of
a major earthquake.
23
<PAGE>
II. Other Information
Item 1. Legal Proceedings
Advanced Micro Devices, Inc. v. Altera Corporation (Case No. C94-20567-RMW, U.S.
- --------------------------------------------------------------------------------
District Ct., San Jose, California). This litigation, which began in 1994,
- ------------------------------------
involves multiple claims and counterclaims for patent infringement relating to
the Company's and Altera Corporation's programmable logic devices. On June 27,
1996, the jury returned a verdict and found four of the eight patents-in-suit
were licensed to Altera. The parties have stipulated that the court, not a
jury, will decide which of the remaining AMD patents-in-suit fall within the
scope of the license that the jury found. The court has set August 7 and August
8, 1997 for the next phase regarding the remaining patents. Based upon
information presently known to management the Company does not believe that the
ultimate resolution of this lawsuit will have a material adverse effect on the
financial condition or results of operations of the Company.
Intel Corporation v. Advanced Micro Devices, Inc., et al. (Case No. 97-118, D.
- ------------------------------------------------------------------------------
Del.). On March 14, 1997, Intel Corporation (Intel) filed suit against the
- ------
Company and Cyrix Corporation in the United States District Court for the
District of Delaware alleging false designation of origin and false advertising,
trademark infringement and trademark dilution, and deceptive trade practices
arising out of alleged misuse by the Company of the term "MMX," which Intel
claims as a trademark. On April 2, 1997, Intel was denied a temporary
restraining order to prohibit the Company from using the term "MMX" until the
preliminary injunction hearing. In a related matter filed by Intel against the
Company on March 14, 1997, in the regional Court of Braunschweig, Germany (Case
Ref. No. 9 0 89/97), Intel was granted a temporary injunction prohibiting the
Company from using the term "MMX" to identify, advertise or market its
processors. These litigations have now been settled and dismissed. The
settlement gives AMD worldwide rights to use the term MMX in a variety of ways
in the marketing of AMD-K6 processors, and also provides analogous rights to AMD
customers in marketing AMD-K6 processor-based systems. In return, AMD agreed to
acknowledge MMX as an Intel trademark.
24
<PAGE>
Item 5. Other Information
On March 11, 1997, the Company, AMD Saxony and bank syndicate representatives
executed definitive agreements relating to the financing of the Dresden
Facility. In addition to the obligations discussed above in Management's
Discussion and Analysis of Results of Operations and Financial Condition, the
agreements require the Company (directly or indirectly) to (1) return all
federal and state government grants, allowances and interest subsidies, or
replace all such subsidies that are not made available, if the Company or AMD
Saxony fails to meet certain material obligations to the Federal Republic of
Germany or the State of Saxony; (2) purchase the output of the Dresden Facility
at transfer prices to be set pursuant to specific formulas, and which adjust
downwards when the Dresden Facility is operating at less than 75% capacity
because of a lack of market demand for the products being fabricated there (the
Company's product purchase obligation can be terminated once the syndicated loan
has been repaid or under circumstances relating to a change of control of AMD
Saxony or the destruction or abandonment of the Dresden Facility); (3) cause AMD
Saxony to undertake bona fide research and development activities at the design
center of the Dresden Facility; and (4) grant a non-exclusive license to AMD
Saxony to use, at the Dresden Facility and in products manufactured at the
Dresden Facility, intellectual property developed at the Dresden design center.
25
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits *10.48(a) Amendment No. 1 to the C-4 Technology Transfer
and Licensing Agreement, dated as of February
23, 1997, between the Company and International
Business Machine Corporation.
*10.50(a) 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.
*10.50(b) Determination Regarding the Request for a
Guarantee by AMD Saxony Manufacturing GmbH.
*10.50(c) AMD Subsidy Agreement, among AMD Saxony
Manufacturing GmbH and Dresdner Bank AG.
*10.50(d) Subsidy Agreement, dated February 12, 1997,
among Sachsische Aufbaubank and Dresdner Bank AG
with Appendix 1, 2a, 2b, 3 and 4.
10.50(e) AMD, Inc. Guaranty, dated as of March 11, 1997,
among the Company and Saxony Manufacturing GmbH
and Dresdner Bank AG.
10.50(f) Sponsors' Support Agreement, dated as of March
11, 1997, among the Company, AMD Saxony Holding
GmbH and Dresdner Bank AG.
10.50(g) Sponsors' Loan Agreement, dated as of March 11,
1997, among the Company, AMD Saxony Holding GmbH
and AMD Saxony Manufacturing GmbH.
10.50(h) Sponsors' Subordination Agreement, dated as of
March 11, 1997, among the Company, AMD Saxony
Holding GmbH, AMD Saxony Manufacturing GmbH and
Dresdner Bank AG.
10.50(i) Sponsors' Guaranty, dated as of March 11, 1997,
among the Company, AMD Saxony Holding GmbH and
Dresdner Bank AG.
26
<PAGE>
*10.50(j) AMD Holding Wafer Purchase Agreement, dated as
of March 11, 1997, among the Company and AMD
Saxony Holding GmbH.
*10.50(k) AMD Holding Research, Design and Development
Agreement, dated as of March 11, 1997, among
AMD Saxony Holding GmbH and the Company.
*10.50(l) AMD Saxonia Wafer Purchase Agreement, dated as
of March 11, 1997, among 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, among
AMD Saxony Manufacturing GmbH and AMD
Saxony Holding.
10.50(n) License Agreement, dated March 11, 1997, among
the Company, AMD Saxony Holding GmbH and
AMD Saxony Manufacturing GmbH.
10.50(o) AMD, Inc. Subordination Agreement, dated March
11, 1997, among the Company, AMD Saxony Holding
GmbH and Dresdner Bank AG.
*10.50(p) ISDA Agreement, dated March 11, 1997, among the
Company and AMD Saxony Manufacturing GmbH.
27.1 Financial Data Schedule
* Confidential treatment has been requested as to certain portions of
this Exhibit.
(b). Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter
for which this report is filed:
1. Current Report on Form 8-K dated January 13, 1997 reporting
under Item 5 - Other Events - fourth quarter earnings.
2. Current Report on Form 8-K dated March 13, 1997 reporting
under Item 5 - Other Events - announcement of the Dresden
loan agreement.
27
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly earned this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED MICRO DEVICES, INC.
Date: May 13, 1997 By: /s/ Geoffrey Ribar
------------------------------- ------------------
Geoffrey Ribar
Vice President and
Corporate Controller
Signing on behalf of the
registrant and as the principal
accounting officer
28
<PAGE>
EXHIBIT INDEX
-------------
Exhibits
- --------
*10.48(a) Amendment No. 1 to the C-4 Technology Transfer and
Licensing Agreement, dated as of February 23, 1997,
between the Company and International Business
Machine Corporation.
*10.50(a) 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 Luxemborg S.A.
*10.50(b) Determination Regarding the Request for a Guarantee
by AMD Saxony Manufacturing GmbH.
*10.50(c) AMD Subsidy Agreement, among AMD Saxony
Manufacturing GmbH and Dresdner Bank AG.
*10.50(d) Subsidy Agreement, dated February 12, 1997,
among Sachsische Aufbaubank and Dresdner Bank AG
with Apendix 1, 2a, 2b, 3 and 4.
10.50(e) AMD, Inc. Guaranty, dated as of March 11, 1997,
among the Company and Saxony Manufacturing GmbH and
Dresdner Bank AG.
10.50(f) Sponsors' Support Agreement, dated as of March 11,
1997, among the Company, AMD Saxony Holding GmbH
and Dresdner Bank AG.
10.50(g) Sponsors' Loan Agreement, dated as of March 11,
1997, among the Company, AMD Saxony Holding GmbH
and AMD Saxony Manufacturing GmbH.
10.50(h) Sponsors' Subordination Agreement, dated as of
March 11, 1997, among the Company, AMD Saxony
Holding GmbH, AMD Saxony Manufacturing GmbH and
Dresdner Bank AG.
10.50(i) Sponsors' Guaranty, dated as of March 11, 1997,
among the Company, AMD Saxony Holding GmbH and
Dresdner Bank AG.
*10.50(j) AMD Holding Wafer Purchase Agreement, dated as of
March 11, 1997, among the Company and AMD Saxony
Holding GmbH.
<PAGE>
*10.50(k) AMD Holding Research, Design and Development
Agreement, dated as of March 11, 1997, among AMD
Saxony Holding GmbH and the Company.
*10.50(l) AMD Saxonia Wafer Purchase Agreement, dated as of
March 11, 1997, among 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, among AMD
Saxony Manufacturing GmbH and AMD Saxony Holding.
10.50(n) License Agreement, dated March 11, 1997, among the
Company, AMD Saxony Holding GmbH and AMD Saxony
Manufacturing GmbH.
10.50(o) AMD, Inc. Subordination Agreement, dated March 11,
1997, among the Company, AMD Saxony Holding GmbH
and Dresdner Bank AG.
*10.50(p) ISDA Agreement, dated March 11, 1997, among the
Company and AMD Saxony Manufacturing GmbH.
27.1 Financial Data Schedule
* Confidential treatment has been requested as to certain portions of this
Exhibit.
<PAGE>
EXHIBIT 10.48(a)
AMENDMENT NO. 1 to the
C-4 TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
The C-4 TECHNOLOGY TRANSFER AND LICENSE AGREEMENT between Advanced
Micro Devices and International Business Machines Corporation, effective as of
June 17, 1996, is hereby amended as follows:
1. On page 1 of the Agreement, new WHEREAS clauses are added and the last
WHEREAS clause on page 1 is amended as follows:
Add the following new WHEREAS clauses after the third WHEREAS clause:
"WHEREAS, IBM has developed certain [*] and [*] processes known as [*]
processes, and these are the subject of proprietary rights of IBM in
the valuable technology related thereto;
WHEREAS, AMD desires to obtain licenses and other information and
rights from IBM in order to become a user of such [*] processes of
IBM, upon the terms and conditions provided herein;"
Amend the fourth line of the last WHEREAS clause by adding, after
"processes", "and [*] processes".
2. In Section 1 - Definitions, amend the definitions for LICENSED PRODUCTS and
-----------------------
LICENSED TECHNOLOGY and add new definitions for [*] ELEMENTS, [*] PRODUCT, [*]
and [*] TECHNOLOGY as follows:
In "LICENSED PRODUCTS", delete "and" in the fourth line, replace "." in
the fifth line with ", and", and add "v.) [*] PRODUCTS." in the sixth line.
AMD/IBM CONFIDENTIAL -1- February 20, 1997
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
<PAGE>
In "LICENSED TECHNOLOGY", in the third line, replace "C-4 TECHNOLOGY" with
"C-4 TECHNOLOGY and [*] TECHNOLOGY", and in the eighth and ninth lines, delete
"or to the forming of the pads and solder elements of a [*] for a [*]
substrate,".
Add new definitions for [*] ELEMENTS, [*] PRODUCT, [*] SUBSTRATE and [*]
TECHNOLOGY as follows:
"[*] shall mean [*].
'[*] ELEMENTS' shall mean an [*] used to join a [*] SUBSTRATE to the
next (higher) level of packaging.
'[*] PRODUCT' shall mean a [*] SUBSTRATE having at least one [*]
ELEMENT.
'[*] SUBSTRATE' shall mean a [*] article, having an [*], which is used
to join together and/or carry one or more electronic components and
which is prepared for use with the [*] TECHNOLOGY.
'[*] TECHNOLOGY' shall mean: (1) the [*] in an [*]; (2) the [*] of [*]
ELEMENTS to an [*] on a [*] SUBSTRATE; (3) the joining of the [*]
ELEMENTS to the [*] on the [*]; and (4) the [*] of the [*] SUBSTRATE
with the [*] ELEMENTS; and (5) the [*] of [*] ELEMENTS from the [*] of
a [*] SUBSTRATE and the [*] of the [*]."
3. In Section 2 - Licenses, amend Sections 2.1 and 2.3 as follows:
--------------------
In Section 2.1, fourth line, after "royalty-bearing" insert "(except for
LICENSED PRODUCTS which are made, used or sold using the [*] TECHNOLOGY
and require no other portion of the LICENSED TECHNOLOGY for their
manufacture, use or sale)", and add a new Section 2.1.7 as follows:
"2.1.7 after three (3) years from the EFFECTIVE DATE, to have another
manufacturer (but only one manufacturer at any one
AMD/IBM CONFIDENTIAL -2- February 20, 1997
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
<PAGE>
time) perform [*] TECHNOLOGY solely for LICENSED PRODUCTS, and solely for AMD
for resale under Section 2.1.4, provided that:
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2.1.7.1 such another manufactuer enters into an agreement with AMD with
terms and conditions acceptable to IBM regarding confidentiality, reverse
engineering of the MATERIALS per Section 3.3.2, such another
manufacturer's improvements to the LICENSED TECHNOLOGY, and the licensing
of such another manufacturer's improvements to the LICENSED TECHNOLOGY to
IBM at no cost to IBM, and
2.1.7.2 such another manufacturer is either:
2.1.7.2.1 geographically located in the United States, or
2.1.7.2.2 with IBM's prior written approval, geographically located
outside the United States. IBM reserves the right to grant written
approval so that both parties are assured that intellectual property
licensed in this Agreement will be accorded adequate protection or
enforcement in the geographic location of the proposed another
manufacturer or with respect to the potential partner(s), if any,
with AMD in the proposed another manufacturer. IBM will share with
AMD information that is considered to be objective, or information
available in the trade that IBM feels to be reliable, which
reasonably identifies legitimate concerns regarding the commercial
and/or intellectual property integrity and/or geographic location
and/or financial stability of the proposed another manufacturer;".
In Section 2.3.2, first line, replace "BA" with "BA and [*] TECHNOLOGY".
4. In Section 3 - Transfer of LICENSED TECHNOLOGY, amend Sections 3.1 and 3.2
-------------------------------------------
as follows:
Replace the first 19 lines of Section 3.1 with the following:
"3.1 IBM shall transfer to AMD, only at its wholly-owned Austin, Texas
or Santa Clara County, California facility, the LICENSED TECHNOLOGY as
practiced as of the EFFECTIVE DATE (except as of the effective date of
Amendment No. 1 to this Agreement for the [*] TECHNOLOGY) in IBM's
Burlington, Vermont and Bromont, Canada facilities (or IBM's East
Fishkill, New York facility for the [*]
AMD/IBM CONFIDENTIAL -3- February 20, 1997
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
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TECHNOLOGY). The parties understand and agree that the only processes
to be transferred and installed at AMD are the [*] (wherein [*] and
[*] are evaporated through a metal mask onto selected sites of an
integrated circuit, the integrated circuit with [*] and [*] is joined
to a CERAMIC CHIP CARRIER, and the joined integrated circuit and
CERAMIC CHIP CARRIER are [*] and the [*] TECHNOLOGY, both as more
particularly defined as the LICENSED TECHNOLOGY. Except as provided
herein, there is no obligation whatsoever to transfer any other know-
how or other information including know-how or information relating:
to MATERIALS, or the joining of an integrated circuit to an ORGANIC
CHIP CARRIER, or to the forming of the pads and solder elements of a
ball grid array for an organic ball grid array substrate;"
Amend Section 3.2, line 1, by adding "East Fishkill, New York," before
"Burlington", line 9, by adding, after "Agreement", "(except for
documentation items for the [*] TECHNOLOGY)", and line 11, by adding at
the end of the following:
"The transfer of documentation items related to the [*] TECHNOLOGY as
specified in Appendix A shall commence within thirty (30) days from
the effective date of Amendment No. 1 to this Agreement and be
completed within ninety (90) days thereafter."
5. In Section 5 - Technical Assistance, amend Sections 5.1.1, 5.3 and 5.4 as
--------------------------------
follows:
In Section 5.1.1, line 2 after "facilities" insert "(or IBM's East
Fishkill, New York facility for the [*] TECHNOLOGY)".
In Section 5.3, line 4, after "TECHNOLOGY" insert "(except for the [*]
TECHNOLOGY)", line 5, after "therewith," insert "and a maximum of 100
person-hours of assistance in the transfer of the [*] TECHNOLOGY to AMD
and technical assistance in connection therewith,", and line 8, after
"facilities" insert "(or IBM's East Fishkill, New York facility for the
[*] TECHNOLOGY)".
In Section 5.4, line 1, after "person-weeks" insert "and 100
person-hours", and line 11, after "facilities" insert "(or
AMD/IBM CONFIDENTIAL -4- February 20, 1997
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
<PAGE>
IBM's East Fishkill, New York facility for the [*] TECHNOLOGY)".
6. In Section 6 - Compensation, amend Sections 6.1, 6.11, 6.12, 6.13 and 6.14
---------------------------
and add a new Section 6.11 as follows:
In Section 6.1, first line, after "TECHNOLOGY" add "(except for the
[*] TECHNOLOGY)".
Renumber present Sections "6.11", "6.12", "6.13" and "6.14" to "6.12",
"6.13", "6.14" and "6.15".
Add a new Section 6.11 as follows:
"6.11 In consideration for the [*] TECHNOLOGY to be transferred,
and transfer thereof and technical assistance to be provided and
license granted therefor hereunder, AMD agrees to pay IBM upon the
execution of Amendment No. 1 to this Agreement a technology license
fee in the sum of [*], which sum shall be nonrefundable and
noncancelable, notwithstanding any termination or expiration of
this Agreement under any Section of this Agreement, provided,
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however, such nonrefundability and noncancelability will not
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preclude the award of damages by a court of competent
jurisdiction."
7. In APPENDIX A, amend Sections A5, A6, A7 and A8 and add new Sections A5 and
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A10 as follows:
Amend Section A5, third line, by replacing "A4" with "A5", and renumber
Sections "A5", "A6", "A7" and "A8" to "A6", "A7", "A8" and "A9".
Add new Sections A5 and A10 as follows:
"A5 Engineering, process, manufacturing and material
specifications, as applicable, for [*] TECHNOLOGY, as of the
effective date of Amendment No. 1 to this Agreement. The
process for [*] TECHNOLOGY to be transferred is made up of the
following process
AMD/IBM CONFIDENTIAL -5- February 20, 1997
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
<PAGE>
steps for which applicable documentation will be provided:
[*]
"A10 with respect to the [*] TECHNOLOGY, documentation as to test
vehicle design, [*] test vehicle and thermal parts; design
guidelines (i.e., chip size, C4 footprint, leads per substrate
(populated and depopulated) reliability data and models, failure
analysis methods and layer optimization); test and product sockets
(documentation limited to supplying vendors and test and damage
limits; no socket design information to be provided); testers and
test handling equipment; and second level assembly processes."
8. In APPENDIX B, amend Sections B2, B2.3 and B3.1 and add new Section B3.2 as
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follows:
Amend Sections B2, B2.3 and B3.1 as follows:
In Section B2, first paragraph, third line, after "effort" add (except
for technical assistance pertaining to the [*] TECHNOLOGY) and 100
person-hours for technical assistance pertaining to the [*] TECHNOLOGY."
In Section B2.3, third line, after "facilities" add "(or IBM's East
Fishkill, New York facility for the [*] TECHNOLOGY)", and fifth line,
after "Licensed Technology." add "Tours of IBM's test operations in
Burlington, Vermont associated with the [*] TECHNOLOGY are excluded from
this Section B2.3".
In Section B3.1, first line, after "assistance" add "pertaining to the
LICENSED TECHNOLOGY (not including the [*] TECHNOLOGY)" and change "and"
to "and/", and third line, replace "5.3" with "5.4".
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* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
Add new Section B3.2 as follows:
"B3.2 Additional technical assistance pertaining to the [*]
TECHNOLOGY beyond 100 person-hours and/or 24 months from the
EFFECTIVE DATE will be supplied by IBM at AMD's expense, as
specified in Section 5.4 of the Agreement."
Except as hereby amended, all other terms and conditions of the C-4 TECHNOLOGY
TRANSFER AND LICENSE AGREEMENT shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be executed
as of the date written below. This Amendment No. 1 shall be effective as of the
date of the last signature below.
INTERNATIONAL BUSINESS ADVANCED MICRO
MACHINES CORPORATION DEVICES
/s/ Mike Cadigan /s/ Don Brettner
By: __________________________ By: ___________________________
Mike Cadigan D. Brettner
2/21/97 2/20/97
Date: ________________________ Date: _________________________
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
-7-
<PAGE>
EXHIBIT 10.50(a)
ADVANCED MICRO DEVICES, INC.
SECRETARY'S CERTIFICATE
The undersigned, Thomas M. McCoy, certifies that he is the Secretary of
Advanced Micro Devices, Inc., a Delaware Corporation ("the Company"), and that,
as such, he is authorized to execute this Certificate on behalf of the Company,
and further certifies that the attached is a fair and accurate translation of
the Syndicated Loan Agreement dated March 11, 1997 among AMD Saxony
Manufacturing GmbH and Dresdner Bank AG and Dresdner Bank Luxembourg SA and
other financial institutions named therein as lenders.
WITNESS the signature of the undersigned this 13th day of May 1997.
/s/ Thomas M. McCoy
------------------------------------
Thomas M. McCoy
Secretary
[SEAL APPEARS HERE]
<PAGE>
ENGLISH TRANSLATION OF THE LEGALLY
BINDING GERMAN LOAN AGREEMENT.
TRANSLATION PREPARED FOR CONVENIENCE ONLY.
SYNDICATED LOAN AGREEMENT
11 MARCH 1997
BETWEEN
AMD SAXONY MANUFACTURING GMBH
-AS BORROWER-
AND
DRESDNER BANK AG
(AGENT AND SECURITY AGENT)
AND
THE OTHER BANKS AND FINANCIAL INSTITUTIONS
NAMED HEREIN
-AS LENDERS-
AND
DRESDNER BANK LUXEMBOURG S.A.
- AS PAYING AGENT -
DOSER AMERELLER NOACK/BAKER & MCKENZIE
FRANKFURT
<PAGE>
2
<TABLE>
<CAPTION>
INDEX
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Page
<C> <S> <C>
Preamble 5
(S)1 Definitions and Interpretation 6
(S)2 Facilities 12
(S)3 Purpose 12
(S)4 Utilisation of the Facilities 13
(S)5 Conditions to Drawing 15
(S)6 Interest, Commitment Fee, Payments 21
(S)7 Term and Repayment 24
(S)8 Security 25
(S)9 Illegality 28
(S)10 Market Disruption; Alternative Method of Calculation 28
(S)11 Increased Costs 29
(S)12 Indemnity 30
(S)13 No Deductions or Withholdings 31
(S)14 Continuity Clause 32
(S)15 Representations and Warranties 32
(S)16 Reporting and Information Requirements 35
(S)17 Covenants 37
(S)18 Project Budget; Project Schedule 42
(S)19 Project Accounts 43
(S)20 Consent of the Banks 44
(S)21 Termination of the Facilities by the Banks 44
(S)22 Agency Provisions 48
(S)23 Administration of Security 51
(S)24 Paying Agent 53
(S)25 Costs 54
(S)26 Assignment; Sub-participations 55
(S)27 Miscellaneous 55
(S)28 Governing Law 59
(S)29 Jurisdiction 59
</TABLE>
<PAGE>
3
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 Construction Status Report
Schedule 9 [Scheduled Project Phase] Technical Completion Certificate
(Obligors)
Schedule 10 [Scheduled Project Phase] Technical Completion Certificate
(Technical Advisor)
Schedule 11 Financial Completion Certificate (Obligors)
Schedule 12 Financial Completion Certificate (Banks' Auditor)
Schedule 13 Financial Completion Certificate (Technical Advisor)
Schedule 14 Management Plan
Schedule 15 Disclosure Schedule
Schedule 16 Statement of Use and Source of Funds
Schedule 17 Financial Covenants and Excess Cash
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 Confirmations of Project Manager/Banks'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
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
<PAGE>
4
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
<PAGE>
5
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
"Agent" and "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 "Paying Agent" -
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 projected total investment cost required for implementation of the
Project, estimated by AMD Saxonia, AMD Holding and AMD Inc. (together the
"AMD Companies") at DM 2,430,000,000, 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"). In addition, the Banks have
agreed to make available to AMD Saxonia a standby facility in an amount of
up to DM 150,000,000 on and subject to the terms and conditions of this
Agreement to partially finance potential cost overruns over the projected
Capital Expenditure.
<PAGE>
6
3. AMD Inc. will make available to AMD Saxonia, via AMD Holding, equity in the
form of ordinary share capital in an aggregate amount of DM 217,500,000 and
AMD Inc. and/or AMD Holding will make subordinated loans to or, in the case
of AMD Holding, additional equity contributions in cash to the reserves of
AMD Saxonia in an aggregate amount of DM 290,000,000. 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.
4. 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 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.
-----------
AUDITOR (WIRTSCHAFTSPRUFER):
Ernst & Young Wirtschaftsprhfungsgesellschaft 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 Wirtschaftsprhfungsgesellschaft 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.
<PAGE>
7
BANKING DAY (BANKARBEITSTAG):
any day on which banks are generally open for business in London,
Frankfurt am Main and Dresden and, to the extent that the same concerns
the duties of the Paying Agent under this Agreement, 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), the Technical
Completion Certificate (Technical Advisor), the Financial Completion
Certificate (Obligors), the Financial Completion Certificate (Banks'
Auditor) and the Financial Completion Certificate (Technical Advisor)
set out in Schedules 9, 10, 11, 12 and 13 is confirmed to the Agent by
------------------------------
the submission of properly executed originals of such Certificates.
COST OVERRUN (PLANKOSTENUBERSCHREITUNG):
at any time, the difference at such time between Capital Expenditure
estimated in the initial Project Budget pursuant to Schedule 6 and, if
----------
more, the actual Capital Expenditure incurred, in each case calculated
on a cumulative basis.
COSTS to Complete (FERTIGSTELLUNGSKOSTEN):
as defined in (S)21.2 (xxii).
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):
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.
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.
EXCESS CASH (UBERSCHUSSLIQUIDITAT):
as defined in (S)2 of Schedule 17.
-----------
FACILITIES (KREDITE):
as defined in (S)2.1.
<PAGE>
8
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 as referred to therein:
(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, together with
(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.
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 1,072,500,000), 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.
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) 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
<PAGE>
9
(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.
-----------
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.
-----------
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 and 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;
(iii) the Credit Agreement dated as of 19 July 1996 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 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), the Financial Completion Certificate (Obligors), the
Financial Completion Certificate (Banks' Auditor), and the
Financial Completion Certificate (Technical Advisor) in the form
set out in Schedules 9, 10, 11, 12 and 13, the Statement of the Use
------------------------------
and Source of Funds, in the form set out in the Schedule 16, the
agreements entered into with the Project Manager relating to its
appointment as Project Manager 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
<PAGE>
10
Agreement or the Sponsors' Support Agreement.
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 of the kind referred to in the
Project Budget which are incurred by AMD Saxonia in connection with the
Project up to Completion.
PROJECT MANAGER (PROJEKTMANAGER):
Hanscomb GmbH, or such other project manager as may be appointed by AMD
Saxonia on terms approved by the Agent, which approval shall not be
unreasonably withheld.
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.
<PAGE>
11
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.
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 fhr 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.
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 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.
<PAGE>
12
(S)2
FACILITIES
2.1 The Banks hereby agree to make available to AMD Saxonia the following
facilities:
2.1.1 FACILITY A
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). The loan will
be made available by each of the Banks in an amount corresponding to its
commitment as set out in Schedule 1.
----------
2.1.2 FACILITY B
A long term standby loan in an amount of up to DM 150,000,000 (in words:
one hundred and fifty million Deutsche Marks). The loan will be made
available by each of the Banks in an amount corresponding to its
commitment as set out in Schedule 1.
----------
Facility A and facility B are also referred to together as the
"Facilities".
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 in accordance with the Project Budget approved by
the Banks prior to execution of this Agreement and thereafter in
accordance with any revised Project Budget prepared in accordance with
(S)18. Utilisation of Facility A to finance Project Costs which are not
Capital Expenditure is permitted only up to a maximum amount of DM
100,000,000 and only in respect of costs incurred before 1 January 1999.
Subject to the conditions referred to in (S)4.1.3., Facility A may also
be utilised for the repayment of Facility B.
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
-----------
and the Project Manager, such statement to be delivered simultaneously
with the Scheduled Project Phase Technical Completion
<PAGE>
13
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.
3.3 Facility B shall be used on and subject to the terms set out in (S)4.1.2
only for the purpose of the partial financing of Cost Overruns which do
not exceed in aggregate an amount of DM 225,000,000. Cost Overruns up to
the aforesaid amount may be financed in an amount of up to two thirds
thereof from drawings under Facility B on the terms and conditions
referred to below.
(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
----------
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. 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 available for the relevant Project Phase. No more
than one advance may be made in any calendar month,
Drawdowns are permitted only in the amount of Project Costs which have
been incurred during a Project Phase, as the same are documented by
invoices and other supporting evidence to be furnished together with the
Drawdown Notice, as required below.
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:
(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)5.2.2 to 5.2.4 with
respect to it have been satisfied at the time of the Drawdown
Notice;
(ii) 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) written confirmation of (a) the Project Manager that the deliveries
and services referred to in the evidence furnished pursuant to (ii)
are in accordance with the Project Budget, have been performed in
all material respects in accordance with the contractual
obligations to which they relate and (b) written
<PAGE>
14
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.
-----------
Amounts drawn and subsequently repaid may not be reborrowed.
4.1.2 FACILITY B
----------
Utilisations of Facility B are permitted only to the extent that
Facility A has been fully drawn for the relevant Project Phase in
accordance with (S)4.1.1 and the Sponsors have complied in full with
their then obligations with respect to such Cost Overruns in accordance
with Section 4.1 of the Sponsors' Support Agreement. Advances may be
made up to the relevant cumulative maximum amount for the relevant
Project Phase in accordance with the Drawdown Schedule. Advances shall
be in minimum amounts of DM 2,500,000 and in integral multiples of DM
500,000 or in an amount equal to the undrawn portion of the amount of
Facility B available for the relevant Project Phase.
Drawdowns are permitted only in the amount of Capital Expenditure which
has been incurred during a Project Phase, as the same is documented by
invoices and the other supporting evidence set out below to be furnished
together with the Drawdown Notice.
Drawdown Notices and the confirmation contained therein from AMD Saxonia
in the form set out in Schedule 3 shall be furnished to the Paying Agent
----------
and the Agent at the same time. The following documents shall be
furnished to the Agent together with the relevant Drawdown Notice:
(i) written confirmation of the Managing Directors (Geschaftsfhhrung)
of AMD Saxonia and an authorised representative of AMD Inc. that
the conditions precedent referred to in (S)5.2.2 to 5.2.4 with
respect to it and the first paragraph of this (S) 4.1.2 have been
satisfied at the time of the Drawdown Notice;
(ii) 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;
(iii) written confirmation of (a) the Project Manager that the deliveries
and services referred to in the evidence furnished pursuant to (ii)
have been performed in all material respects in accordance with the
contractual obligations to which they relate and (b) 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 and that all amounts relate
to Cost Overruns for the amount in question, in each case, in the
form set out in Schedule 21;
-----------
Amounts drawn may be reborrowed only to the extent that such amounts
have been repaid in accordance with (S)4.1.3.
4.1.3 To the extent that at the end of any Project Phase the maximum amount
available under Facility A for such Project Phase has not been fully
drawn, AMD Saxonia shall be obliged to utilise the entire amount of the
difference for repayment of Facility B. In such case, AMD Saxonia shall
deliver to the Paying Agent, with a copy to the Agent, at the
<PAGE>
15
latest on the tenth Banking Day after the end of the relevant Project
Phase, a Drawdown Notice for the relevant amount of Facility A pursuant
to (S)4.1.1, and in conjunction with (S)6.2 (but without the documents
referred to in (S)4.1.1 (i) to (iii)).
A drawing under Facility A and a repayment of Facility B shall be
effected by netting with value at the latest on the fifth Banking Day
after receipt of the Drawdown Notice by the Paying Agent and the Agent.
Amounts so repaid may be reborrowed under Facility B. If a written
Drawdown Notice is not received by the Paying Agent before the tenth
Banking Day referred to above, the Agent shall be authorised to effect
such repayment on the conditions applicable to the advance under
Facility A last drawn.
4.2 Drawings of the Facilities are not permitted after whichever is the
earlier of Completion and 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 and/or cash contributions made to the
reserves and not repaid in accordance with Section 4.4 or 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.
(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. that
[*].
5.1.2 Written confirmation from AMD Saxonia and AMD Inc. that as at the date
of the initial Drawdown Notice all 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
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
16
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 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 764 parcels nos. 121/2, 154/2, 122, 123, 124, 126, 125/2,
127, 128/2, 129, 129/1, 129/2, 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, 522/1, 547, 558/2, 558/3, 639, 694, 694/1, 695/2 und Folio 851
parcels no. 150/2 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.
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.
-----------
<PAGE>
17
(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) 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, Annex 3 of Schedule 49 or in such other form to
----------- -----------
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) Letter from the European Commission confirming 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,
<PAGE>
18
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 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 (Geschaftsfhhrung) 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 (Geschaftsfhhrung)
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.
<PAGE>
19
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.
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
<PAGE>
20
AMD Saxonia in the form set out in Schedule 19;
-----------
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 Agent has received the Plans and Specifications in substance
satisfactory to the Technical Advisor.
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 certified copy 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
Schedule 49 and 55 which have not already been obtained;
----------- --
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
<PAGE>
21
& 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. Subject to the provisions of (S)10.1, Facility B may only be
drawn on the basis of a variable rate.
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.
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.
<PAGE>
22
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 and Facility B prior to Completion
shall be one percent (1.00%) per annum. After Completion, 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)" 70% or more 0.75% per annum;
or better
"investment grade (Baa3)" at least 50% but less than 70% 0.70% per annum; and
or better
"investment grade (Baa3)" less than 50% 0.55% per annum.
or better
</TABLE>
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 not exceed 5 and shall not be less
than 2 years and must always be in integral multiples of one year.
<PAGE>
23
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
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 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
<PAGE>
24
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 by AMD Saxonia pursuant to this Agreement shall be made to
the Paying Agent's Account No. 0809580200 with the Agent or such other
account as the Paying Agent shall designate. 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 2006.
7.2 The Facilities shall be amortized, commencing on whichever date is the
earlier of:
(i) the last Banking Day of the sixth full calendar month after
Completion; and
(ii) 30 June 2001,
in semi-annual repayments in the percentages set out below on the last
Banking Day of the relevant six month period:
PERCENTAGE OF THE AGGREGATE PRINCIPAL
AMOUNT OF THE FACILITIES OUTSTANDING AT
THE END OF THE AVAILABILITY PERIOD
INSTALLMENTS PURSUANT TO (S)4.2
- -------------------------------------------------------------------------------
first and second installment 6.50% each
third and fourth installment 12.25% each
fifth and sixth installment 13.25% each
seventh and eighth installment 9.75% each
ninth and tenth installment 4.75% each
eleventh and twelfth installment 3.50% each
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 and
shall be made (prior to any
<PAGE>
25
consolidation pursuant to (S)6.3) pro rata as between Facility A and
Facility B and as between advances drawn.
7.4 AMD Saxonia shall, commencing in the financial year ending in 2001 or,
if earlier, the financial year in which Completion occurs, in each case
within thirty days after finalisation of the report and accounts and, at
the latest, by 31 March (or, if not a Banking Day, by the immediately
succeeding Banking Day) of each year, make a mandatory prepayment of the
outstanding amount of the Facilities up to an amount of DM 50,000,000
for each financial year from the aggregate Excess Cash in respect of
such financial year. To the extent that, in respect of a LIBOR-Rate
advance, an Interest Period does not expire on 31 March, the amounts in
question will be credited to an account pursuant to (S)19 and will be
used to repay the relevant advance at the end of the shortest existing
Interest Period or at the next interest payment date. Until repayment
amounts so standing to the credit of the Project Accounts shall bear
interest at such rate of interest as is available, as determined by AMD
Saxonia, or be invested pursuant to (S)19.3.
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 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
<PAGE>
26
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 (until Completion) in an
amount of up to DM 217.500.000, in the form set out in Schedule 32;
-----------
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.
-----------
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 764 parcels nos. 121/2, 154/2, 122, 123, 124, 126, 125/2,
127, 128/2, 129, 129/1, 129/2, 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, 522/1, 547, 558/2, 558/3, 639, 694, 694/1, 695/2 und Folio 851
parcel no. 150/2 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 acknowledgment 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 form 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
-----------
<PAGE>
27
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;
-----------
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, including to the extent required by this
-----------
Agreement Consents and Agreements in the form set out in Schedule 40 or
-----------
in such other form as the Agent has consented to.
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
<PAGE>
28
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 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
<PAGE>
29
adequately reflect the cost to such Banks of making or maintaining
their respective participations in the relevant advance for such
interest period.
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
(iii) the affected Bank being subject to additional costs which arise
from its commitment under the Facility,
<PAGE>
30
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).
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
<PAGE>
31
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.
(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.
<PAGE>
32
(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;
(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,
<PAGE>
33
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 dictated by German
law or the law of the United States of America or one of its states and
used as qualifications in legal opinions delivered to and accepted by
the Agent pursuant to (S)5.1.11. 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.
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.
<PAGE>
34
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
between AMD Inc. and the United States Trust Company of New York or the
Credit Agreement of 9 July 1996 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 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.
<PAGE>
35
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 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
<PAGE>
36
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 AMD Saxonia will furnish to the Agent promptly after receipt the
Requirement Forecasts, Annual Pricing Compliance Certificates, the
Quarterly Pricing Compliance Certificates and the Pari Passu Compliance
Certificate, each as referred to in the AMD Saxonia Wafer Purchase
Agreement as well as, at the request of the Agent, all other reports,
statements, notifications and documents produced in accordance with the
AMD Saxonia Wafer Purchase Agreement.
16.2.6 AMD Saxonia will furnish to the Agent within ten (10) Banking Days after
the end of each calendar month a status report relating to the progress
of construction in the form set out in Schedule 8 as well as a Statement
----------
as to the Use and Source of Funds in accordance with Schedule 16 within
-----------
ten (10) Banking Days after the end of each quarter and within ten (10)
Banking Days after the end of each Project Phase.
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 pursuant to clause 3.09 of 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.
<PAGE>
37
(S)17
COVENANTS
17.1 If at any time the Agent determines that the Actual Selling Price Per
Wafer (as defined in the AMD Saxonia Wafer Purchase Agreement) has for
any period of three consecutive calendar quarters, been substantially
lower than the Adjusted Selling Price Per Wafer (as defined in the AMD
Saxonia Wafer Purchase Agreement), the Agent may request the Banks'
Auditor to review the Actual Selling Price Per Wafer (as so defined) for
the period in question. If following such review, the Banks' Auditor
determines that an adjustment to the Actual Selling Price Per Wafer (as
so defined) is necessary according to the AMD Saxonia Wafer Purchase
Agreement, the Agent shall notify AMD Saxonia, in writing of such
adjustment (giving reasonable details of the calculation) and of the
Actual Selling Price Per Wafer (as so defined) to be utilised for the
purposes of Section 3.02 (f) of the AMD Saxonia Wafer Purchase
----------------
Agreement. AMD Saxonia undertakes, immediately following receipt of any
such notification to notify AMD Holding and AMD Inc. thereof pursuant to
Section 3.02 (f) of the AMD Saxonia Wafer Purchase Agreement and to
----------------
insist upon such adjustment.
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.
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 30
December 2001; 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
<PAGE>
38
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. 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, Dhsseldorf,
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
<PAGE>
39
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:
- 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 Account 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 fulfill 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 furthermore 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. 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.
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:
<PAGE>
40
(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 short term agreements entered into in the ordinary
course business in connection with the operation of the Fabrication
Facility and of the Design Center and do not exceed in aggregate
more than DM 10,000,000;
(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
Documents (b) the disposal is of assets promptly replaced by assets
of at least equivalent value in the ordinary course of business or
(c) the aggregate value of which does not exceed DM 3,000,000 in
any calendar year;
(vi) make any loans to or deposit funds with any third party, purchase
or acquire securities or other financial instruments, save to the
extent the same:
(a) are assets held in the bank accounts charged pursuant to (S)8 or
such other accounts opened with the consent of the Agent, which are
charged to the Banks,
(b) constitute trade credit,
(c) constitute the payment of amounts due under the AMD Saxonia Wafer
Purchase Agreement in respect of deliveries thereunder, or
(d) are bona fide employee loans which are in aggregate not in excess
of DM 5,000,000, or
(e) relate to the payment of amounts in respect of AMD Saxonia's stated
capital which shall be transferred promptly to a Project Account
pursuant to (S)19.4,
(vii) make any payments of dividends or other repayment of capital to AMD
Holding or to make any other payment AMD Inc. or to any affiliate
of AMD Inc., save to the extent such payments are permitted
pursuant to Section 3 of
<PAGE>
41
the Sponsors' Subordination Agreement, in the form set out in
Schedule 30 or Sections 4.4 or 6.3 of the Sponsors' Support
-----------
Agreement;
(viii) make payments pursuant to the Operative Documents (and, in
particular, not to make any repayment of interest or principal on
the Sponsors' Loan) save in accordance with the terms of such
Operative Documents;
(ix) undertake only business compatible with the purpose set out in the
first paragraph of the preamble to this Agreement;
(x) incur any expenditure (including Capital Expenditure) which is not
of the type contemplated in the Operative Documents and which is
not incurred in the ordinary course of business;
(xi) terminate or amend any of the Operative Documents, save for
(a) Equipment Supply Contracts which are not Material Equipment
Supply Contracts;
(b) Service Contracts which are not Material Service Contracts;
(c) amendments to the agreement set out in Schedule 39
-----------
(Design/Build Agreement), the Material Equipment Supply
Contracts, the Material Service Contracts and the Plans and
Specifications which adversely affect the value of the
Project, the Fabrication Plant and the Design Center or their
purpose, or the production capacity or other characteristics
required or agreed in the AMD Saxonia Wafer Purchase Agreement
in a manner which is immaterial only and which are in
accordance with the Project Budget and the Project Schedule
are however permitted without the consent of the Banks.;
(d) the Project Budget and the Project Schedule which may be
amended in accordance with the provisions of (S)18.
(xii) agree to any changes to the articles of incorporation of AMD
Saxonia, in particular changes of its fiscal year, or grant any
general powers of attorney with respect to the business of AMD
Saxonia except as otherwise permitted in the Operative Documents;
(xiii) enter into any agreement compliance with which would be contrary to
any of the obligations of AMD Saxonia pursuant to the Operative
Documents;
(xiv) amend the contracts with the Project Manager which have been
furnished to the Agent or enter into other contracts with the
Project Manager;
(xv) at any time during the currency of this Agreement manufacture in
any quarter microchip silicon wafers containing microprocessors
other than general purpose microprocessors and related products in
such number as would, prior to Completion, be in excess of 25% or
after Completion, be in excess of 35 % of all wafers produced by
AMD Saxonia during the relevant quarter.
17.16 AMD Saxonia undertakes until the satisfaction in full of all claims of
the Banks under this Agreement to ensure that the financial covenants
set out in Schedule 17 are complied
-----------
<PAGE>
42
with at all times and/or to the extent AMD Saxonia has no direct
influence on compliance with such financial covenants, to use its best
endeavours to ensure that they are so complied with.
17.17 AMD Saxonia undertakes to keep and maintain its fixed and current assets
exclusively within the area of the Plant and Design Center shown in
Schedules 44 and 45.
------------ --
17.18 AMD Saxonia undertakes to prepare on a best efforts basis the estimates
to be prepared in accordance with Section 3.02 of the AMD Saxonia Wafer
Purchase Agreement by reference to the information from all available
sources.
17.19 AMD Saxonia undertakes, as a genuine contract for the direct benefit of
third parties, to permit an examination at any time by the Guarantor or
an authorised representative of the Guarantor as to whether there is any
possibility of a claim being made pursuant to the 65/35 Guaranty or as
to whether circumstances exist or have existed which would make such a
claim possible. AMD Saxonia furthermore undertakes (as a genuine
contract for the direct benefit of third parties) to provide to the
Guarantors all information requested by them in connection with the
65/35 Guaranty. AMD Saxonia is aware that the examination and
information rights referred to above exist also in favour of the Banks,
however, only to the extent such documentation relates to the guaranteed
Facilities. AMD Saxonia hereby relieves and discharges the Banks from
their duty of confidentiality as against the Guarantors and their
authorised representatives, to the extent that the aforesaid rights in
favour of the Banks are exercised. AMD Saxonia undertakes, as a genuine
contract for the direct benefit of third parties, to bear the costs of
all examinations by the Guarantors referred to above.
17.20 AMD Saxonia will procure that at all times until Completion, a Project
Manager will be appointed who has the necessary qualifications in
respect of the duties of the Project Manager referred to in the
Operative Documents.
17.21 AMD Saxonia undertakes not to enter into any confidentiality and non-
competition undertakings with its employees, officers or contracting
parties other than in the form agreed with the Agent prior to entering
into this Agreement or save as may be otherwise agreed with the Agent.
17.22 AMD Saxonia will at the request of the Agent use its best endeavours to
obtain from any contracting parties a Consent and Agreement, to the
extent that such Consent and Agreement is not required to have been
already obtained, in accordance with this Agreement or the Security
Documents, in the form set out in Part II of Schedule 40 or such other
-----------
form as shall have been consented to by the Agent, if the Agent deems
the same to be necessary to ensure the unrestricted continuation of the
Project in the event of enforcement of its security and AMD Saxonia does
not demonstrate the contrary and will make an offer to the Agent
enabling it to assume the contract in accordance with the provisions of
(S)3 of the Security Document referred to in Schedule 49.
-----------
(S)18
PROJECT BUDGET; PROJECT SCHEDULE
18.1 The Project will be implemented pursuant to the Project Budget and the
Project Schedule.
<PAGE>
43
18.2 Within fourteen (14) days after the end of each Project Phase described
in the Project Schedule, AMD Saxonia will furnish to the Agent the
Scheduled Project Phase Technical Completion Certificates signed by the
AMD Companies and the Technical Advisor in accordance with Schedules 9
-----------
and 10 together with a confirmation pursuant to (S)15.2. At the same
--
time, AMD Saxonia will furnish a Project Budget together with an updated
Management Plan approved by the Sponsors setting out all projected
future Capital Expenditure until Completion broken down in respect of
each relevant Project Phase together with the then anticipated Capital
Expenditure to Completion. AMD Saxonia will consult and agree with the
Agent on a timely basis any amendments or variations to the Project
Budget or the Project Schedule which it regards as necessary. Project
Budgets and Project Schedules amended with the consent of the Agent, who
may consult with the Technical Advisor, the Auditor and the Banks'
Auditors with regard thereto, shall be regarded as Project Budgets and
Project Schedules within the meaning of this Agreement.
(S)19
PROJECT ACCOUNTS
19.1 AMD Saxonia undertakes to ensure that - without prejudice to (S)17.15
(vi) (e) - all payments under the Operative Documents or otherwise in
connection with the Project which are made to it or to be paid by it are
effected only through one or more of the accounts maintained with the
Security Agent (such accounts together with the reserve account referred
to in (S)19.4 herein referred to as "Project Accounts").
19.2 Amounts standing to the credit of the Project Accounts other than the
Minimum Reserve Account in accordance with (S)19.4 may be used only in
the ordinary course of business, for the settlement of financing costs
and for the repayment of the Facilities and for the transfer of any
amount to the reserve account referred to in (S)19.4 and prior to
Completion only for the purpose of payment of Project Costs (including
Cost Overruns).
19.3 Cash standing to the credit of the Project Accounts may be invested in
the securities set out in Schedule 23 which shall be maintained in a
-----------
custody account maintained solely with the Security Agent forming part
of a Project Account or in other custody accounts opened with the
consent of the Agent and charged to the Banks.
19.4 If the credit standing to the account of the Project Accounts after 1
January, 1999 and before Completion, exceeds in the aggregate an amount
of DM 20,000,000, AMD Saxonia shall transfer all amounts in excess
thereof to a reserve account to be maintained with the Security Agent
until the amount standing to the credit of the reserve account reaches
an amount of DM 72,500,000 (Minimum Reserve Amount). After Completion,
AMD Saxonia shall be entitled to draw on the funds standing to the
credit of the aforesaid reserve account in accordance with the
provisions of the Operative Documents provided that the amount remaining
to the credit of the reserve account shall not be less than the amount
which is equal to the Minimum Reserve Amount multiplied by the
proportion which the outstanding amount of the Facilities bears to the
total amount drawn under the Facilities.
19.5 The Banks shall be entitled to set off any claims due against AMD
Saxonia against the amount standing to the credit of any of the Project
Accounts; it shall be sufficient for this purpose for the Agent to issue
a declaration of set off.
<PAGE>
44
19.6 All credits and securities standing to the credit of the Project
Accounts shall be charged in favour of the Banks as security for their
claims under this Agreement pursuant to (S)8.
(S)20
CONSENT OF THE BANKS
20.1 In all cases in which AMD Saxonia requires the consent of the Agent, the
Security Agent or the Banks pursuant to the provisions of this
Agreement, the Agent, the Security Agent and/or the Banks shall be
entitled to withhold their consent only if the legal or risk exposure of
the Banks would otherwise be affected in a manner which is material. In
this regard circumstances shall be regarded as material which relate, in
particular, to:
(i) the interests of the Banks in receiving payments under this
Agreement and the other Operative Documents in a timely and
complete manner or which would affect their ability to realise
sufficient proceeds from the realisation of security;
(ii) the shareholding structure of AMD Inc. AMD Holding and AMD Saxonia;
(iii) the obligations of the Sponsors pursuant to the Sponsors' Support
Agreement;
(iv) the viability of the Project by reference, in particular, to the
obligations of AMD Inc. under the AMD Holding Wafer Purchase
Agreement and the AMD Holding Research, Design and Development
Agreement in the form set out in Schedule 34 or AMD Holding under
-----------
the AMD Saxonia Wafer Purchase Agreement and the AMD Saxonia
Research, Design and Development Agreement in the form set out in
Schedule 36; and
-----------
(v) the compliance in full or the ability to comply with the conditions
of the Guaranty Decision, the 65/35 Guaranty and the AMD/Dresdner
Subsidy Agreement.
20.2 Each consent of the Banks shall be in writing. The parties agree that
the consent of the Banks shall not be deemed to have been given unless
expressly given in writing and that consents should be given on a timely
basis taking into account the interests of AMD Saxonia and the other
Banks. The Agent shall be authorised to give such consent unless such
consent relates to the duties of the Paying Agent. In such case, the
Paying Agent may give such consent.
(S)21
TERMINATION OF THE FACILITIES BY THE BANKS
21.1 The Banks shall be entitled to terminate the Facilities for good cause,
in whole or in part, and without notice or subject to such notice as
they may determine and,
(i) to refuse to make available to AMD Saxonia advances under the
Facilities and/or
(ii) to require the immediate repayment of all outstanding advances
together with accrued interest and other fees and amounts payable
by AMD Saxonia pursuant to this Agreement and/or
<PAGE>
45
(iii) to require the payment of damages including any loss of profit
pursuant to (S)12 which the Banks may suffer following termination
between the time of termination and the expiry of the relevant
Interest Period and/or
(iv) to realise the security granted by AMD Saxonia,
21.2 There shall be good cause for termination within the meaning of the
aforesaid (S)21.1 and of (S)19 of the General Terms and Conditions of
the Agent, in particular, if any of the following events has occurred
and is continuing and if in the opinion of the Banks, exercising the
standard of care customary in commercial relations, the legal or risk
position of the Banks is materially adversely affected thereby:
(i) AMD Saxonia shall be in default in any payment of interest or
principal under this Agreement for more than three months;
(ii) the information provided by AMD Saxonia in respect of its financial
position is incorrect or incomplete in any material respect;
(iii) AMD Saxonia, AMD Inc. or AMD Holding ceases payment of its
creditors or composition, insolvency or similar proceedings are
applied for in respect of all of the assets of AMD Saxonia, AMD
Inc. or AMD Holding or a material part of the assets of AMD
Saxonia, AMD Inc. or AMD Holding are subject to mandatory
attachment - and which in the case of involuntary proceedings or
attachment against AMD Inc. have not been fully discharged within
60 days - or AMD Saxonia, AMD Inc. or AMD Holding enters into
negotiations with respect to any extra-judicial composition
proceedings;
(iv) AMD Saxonia, AMD Holding or AMD Inc. are in default of any payment
due to the Banks pursuant to the Sponsor's Support Agreement or any
other Operative Document for more than five (5) Banking Days
following receipt of written notice of default;
(v) the Facilities are not used for the purposes set out in (S)3;
(vi) any representation and warranty pursuant to (S)15 including any
deemed repetition thereof, was incorrect in any material respect at
the time it was given;
(vii) any condition precedent for utilisation of the Facilities pursuant
to (S)5 subsequently ceases to be complied with without the
previous consent of the Banks;
(viii) any of the obligations or covenants pursuant to (S)17 or 18 are
breached, whether or not as a result of action by AMD Saxonia, and
cannot be complied with or remedied or, to the extent the breach is
capable of remedy, the breach is not remedied within seven (7)
Banking Days after the Agent has given AMD Saxonia written notice
thereof; the Event of Default referred to in (xxv) shall remain
unaffected;
(ix) AMD Holding or AMD Inc. does not comply with any material provision
of the Sponsors' Support Agreement or of the other Operative
Documents to which it is a party and, to the extent, the breach is
capable of remedy, and, is not remedied within seven (7) Banking
Days after the Agent has given
<PAGE>
46
written notice thereof; Articles I, III and VII and Sections 4.1,
6.2, 13.1 (a) to (f) and (e), 13.2., 13.3., 13.4 (a) to (h) and
13.5 of the Sponsors' Support Agreement shall without prejudice to
the generality of the foregoing be regarded as material;
(x) AMD Saxonia is in breach of any material provision of this
Agreement, the Security Documents, the AMD Saxonia Research, Design
and Development Agreement in the form set out in Schedule 36 or the
-----------
AMD Saxonia Wafer Purchase Agreement;
(xi) any of the Operative Documents is or becomes invalid or
unenforceable or its validity or enforceability is challenged by
AMD Saxonia or any of the Sponsors;
(xii) receivership, composition or insolvency proceedings against the
assets of the contractor for the Fabrication Facility and the
Design Center or against a supplier are commenced or there is a
material adverse change in the financial position of such general
contractor or such supplier and any such event could reasonably be
expected to have a material adverse effect on the Project, unless
AMD Saxonia has cured the relevant event by entering into adequate
substitute arrangements satisfactory to the Agent within 45 days;
(xiii) a material adverse change in the financial condition of AMD
Saxonia, AMD Holding or AMD Inc., or AMD Inc. on a consolidated
basis, and as result there is likely to be a material adverse
effect on the Project;
(xiv) AMD Saxonia, AMD Holding or AMD Inc. are in default with any
payment obligation in favour of a third party in an aggregate
amount of more than DM 15,000,000;
(xv) the occurrence of an "Event of Default" within the meaning of the
Credit Agreement of 19 July 1996 between, inter alia, AMD Inc. and
Bank of America National Trust & Savings Association as
"Administrative Agent" or there is an "Event of Default" within the
meaning of the Indenture of 1 August 1996 between AMD Inc. and
United States Trust Company of New York as "trustee";
(xvi) any action under this Agreement requiring consent is undertaken
without the necessary consent unless the refusal to grant consent
is unlawful or in contravention of the terms of this Agreement;
(xvii) the insurances to be maintained pursuant to (S)17.8 are not
maintained in full force and effect;
(xviii) any material governmental approvals, consents or permits are not
granted, are revoked or are made subject to conditions or if any
governmental regulations or decrees are passed relating to the
Project which will prejudice the viability of the Project and which
are not either set aside by adequate action of AMD Saxonia to
discharge the effects of such regulations or decrees or if AMD
Saxonia has not suggested a course of action reasonably
satisfactory to the Agent within 30 days thereof;
<PAGE>
47
(xix) any statement made to the Banks by AMD Saxonia, AMD Holding or AMD
Inc. in connection with the Project is inaccurate or incomplete in
any material respect to the extent that such statement is of
material significance for the viability of the Project or for the
compliance by AMD Saxonia, AMD Holding or AMD Inc. with its
obligations under the Operative Documents;
(xx) AMD Saxonia ceases to be a wholly owned subsidiary of AMD Holding
or AMD Holding ceases to be a wholly owned subsidiary of AMD Inc.
(xxi) AMD Saxonia's ordinary share capital is not fully paid in by 31
December 1997 in an amount of at least DM 217,500,000.-- or
subordinated shareholder loans or equity are or is, as the case may
be, not made available in accordance with the Sponsors' Support
Agreement.
(xxii) at any time, the sum of (a) the Capital Expenditure incurred by AMD
Saxonia at such time and (b) the amount, determined by the
Technical Advisor, from the relevant date of additional Capital
Expenditure necessary to achieve Completion ("Costs to Complete"),
exceeds an amount of DM 2.430.000.000,-- by more than 30% unless
AMD Inc. does not within 10 Banking Days after receipt of a
statement from the Technical Advisor relating thereto furnish
evidence in a form satisfactory to the Banks that AMD Saxonia has
or will have sufficient funds to finance Completion;
(xxiii) the terms or conditions of the 65/35 Guaranty or of the Guaranty
Decision or the Subsidy Agreement are not complied with or breached
or the 65/35 Guaranty is no longer available in full, or
investment or interest grants or investments subsidies or other
material state assistance is not available in the amount promised
and AMD Inc. does not make available compensation pursuant to the
Operative Documents,
AMD Saxonia, AMD Holding or AMD Inc. breaches the terms and
conditions of other state assistance material to the Project and as
a result thereof it is likely that the same will not be available
in their full amount or are revoked or cancelled;
(xxiv) payments are not made to the reserve account in accordance with
(S)19.4;
(xxv) the financial covenants set out in Schedule 17 (S)2 are not
-----------
complied with;
(xxvi) the Agent becomes aware that AMD Saxonia has breached any other
material contractual obligations;
(xxvii) other circumstances occur or become known which may prejudice the
ability of AMD Saxonia to repay the Facility;
(xxviii) the Agent has not received by 31 March 2000 written confirmation
from the Technical Advisor to the effect that the conditions
required for completion in the Technical Completion Certificate
(Technical Advisor) as set out in Schedule 10 can be satisfied
-----------
prior to 31 December 2000.
<PAGE>
48
The Banks shall not be entitled to rely upon any of the aforesaid events if the
circumstances giving rise thereto have been remedied within ten (10) Banking
Days following receipt of written notice from the Agent. This shall not apply to
the events referred to in (i), (ii), (iii), (viii) (ix), (xii), (xiii), (xvi),
(xvii), (xix), (xx), (xxi), (xxiv), (xxv) above. The Agent will consult with the
Guarantors before terminating on the grounds of the Events of Default referred
to in (viii), (xiv), (xv) and (xxii). Termination on the grounds of the Event of
Default referred to in (xxv) is permitted only in agreement with the Guarantors.
(S)22
AGENCY PROVISIONS
22.1 The Banks have agreed to participate in the profits and risks of the
Facilities in the form of a disclosed consortium. Any joint and several
liability, the Banks is excluded; each Bank is liable only for the
relevant commitment undertaken by it pursuant to (S)2 and Schedule 1.
----------
Each Bank shall immediately inform the Agent in respect of any breach of
the Operative Documents of which it becomes aware. A corresponding
obligation shall apply to the Agent in the performance of its duties
pursuant to (S)22.3.
22.2 The Agent is acting on behalf of the Banks under this Agreement. The
Banks hereby appoint the Agent to act on their behalf as Agent in
relation to the rights and obligations of the Banks under this
Agreement, with exception of rights and obligations pursuant to (S)24,
and the other Operative Documents pursuant to the terms thereof under
the following terms and conditions. Each of the Banks hereby irrevocably
authorizes the Agent to give on their behalf all contractually binding
declarations in connection with the implementation in this Agreement and
the other Operative Documents and to pursue their rights and obligations
in accordance therewith. The Agent shall be exempted from the
restrictions of (S)181 BGB. The Agent shall be authorised to delegate
authority to entities within its group or to persons subject to a
professional duty of confidence and revoke the same free from any
restrictions pursuant to (S)181 BGB. Dresdner Bank AG shall in its
capacity as house bank pursuant to the Subsidy Agreements, exercise its
rights thereunder exclusively in accordance with the terms of such
agreements.
22.3 In addition, the Agent shall have the following duties:
22.3.1 verification of satisfaction of the conditions precedent pursuant to
(S)5.
22.3.2 negotiations with AMD Saxonia and the Sponsors as well as changes and
additions to this Agreement and the other Operative Documents including
any changes to the method of payment;
22.3.3 prompt circulation to the Banks of Drawdown Notices submitted by AMD
Saxonia to the Agent (together with confirmation from the Agent that it
has received the documents to be furnished pursuant to (S)4.1.1 (i) -
(iii) and (S)4.1.2 (i) - (iii), as the case may be), as well as
circulation to each of the Banks of the documents to be furnished by AMD
Saxonia or in individual cases, required by the Banks or any of them
pursuant to (S)16 and other information which is required to be
circulated to all the Banks in accordance with the terms of this
Agreement or the Operative Documents;
22.3.4 prompt notification of the Banks of all material circumstances coming to
the attention of the Agent in connection with the implementation of this
Agreement which affect the enforcement of the rights of all or any of
the Banks such as in particular the occurrence of an event pursuant to
(S)21;
<PAGE>
49
22.3.5 distribution of all requisite information in connection with the 65/35
Guaranty to the Guarantors and consultation with them;
22.3.6 the convening and conduct of meetings of the Banks;
22.3.7 implementation of resolutions of the Banks;
22.3.8 monitoring of compliance with the provisions of this Agreement and the
other Operative Documents without prejudice to the obligations of the
Banks pursuant to (S)22.1, sentence 3;
22.3.9 instruction of, and consultation with, the Technical Advisor, the
Insurance Advisor the Banks' Auditor and other advisors, for example
lawyers.
22.4 If the Agent issues a material instruction within the meaning of
(S)22.3.4 each Bank, including the Agent, shall be entitled to require
the convening of a meeting of the consortium. In addition, a meeting of
the consortium can be required at any time by 25% of the votes of the
Banks. Convening of the meeting shall be made in writing, by telex or by
fax, setting out the agenda and subject to five (5) Banking Days notice
or in urgent cases with such notice as is appropriate to the urgency of
the matter. Meetings shall take place in Frankfurt am Main or such other
location as is mutually agreed. Resolutions may be passed by way of
written resolution if in the Agent's opinion, given the nature of the
matter to be determined, a written resolution is appropriate and the
Banks do not decline a written resolution procedure pursuant to the
majority of Banks (in accordance with (S)22.6).
22.5 Each Bank shall have voting rights corresponding to the amounts drawn
under the commitments made available by it, or if the Facilities have
not been drawn, corresponding to its respective commitment pursuant to
(S)2.1 and Schedule 1. Only those Banks represented in meetings -
including Banks authorised by written proxy on behalf of other Banks -
shall be entitled to vote. In respect of written resolutions, account
shall be taken only of those votes of the Banks whose written response
to the matter to be voted on has been received before the expiry five
(5) Banking Days after dispatch of the resolutions by the Agent and
whether received as an original or by telex or telefax. Abstentions will
not be counted. Resolutions shall be binding on the Agent as between the
members of the consortium inter se.
22.6 Resolutions of the Banks relating to amendments to the provisions of
this (S)22, changes of the amounts due to the Banks pursuant to the
provisions of this Agreement or any other Operative Agreement, or any
amendment to the due date relating to payment obligations of AMD
Saxonia, the release of the land charge referred to in (S)8.1.6 or the
waiver - in whole or in part - of rights under the 65/35 Guaranty
require the consent of all the Banks. Resolutions relating to the
termination, in whole or in part of this Agreement or the commencement
of legal proceedings or administration, composition or insolvency
proceedings against AMD Saxonia, AMD Holding or AMD Inc. or to changes
to the Security Documents or the payment obligations of the Sponsors
pursuant to the terms of the Sponsors' Support Agreement or the release
and realisation of securities (other than referred to in the first
sentence of this clause) require a majority of 75 % of the votes of the
Banks. In addition a majority of 75 % of votes of the Banks is required
for resolutions which concern:
(i) a decision of the Banks pursuant to (S)21;
<PAGE>
50
(ii) the consent of the Banks to any change of the AMD Saxonia Wafer
Purchase Agreement, the AMD Holding Wafer Purchase Agreement, the
AMD Saxonia Research, Design and Development Agreement (Schedule
36), the AMD Holding Research, Design and Development Agreement
(Schedule 34), the Management Service Agreement (Schedule 37) and
the License Agreement (Schedule 38);
(iii) the consent of the Banks to any change of the Project Budget or the
Project Schedule or the Drawdown Schedule;
(iv) a change in the Technical Advisor, the Insurance Advisor, the
Project Manager, the Auditor, the Banks' Auditor or any other
advisor of the Banks, and
(v) a waiver of any of the conditions to drawing.
Otherwise, resolutions shall be passed with a majority of the votes of
the Banks; this applies in particular to resolutions which concern the
consent of the Banks pursuant to (S)20 or the approval of the Plans and
Specifications or any changes thereto.
22.7 The Agent undertakes to consult with the other Banks prior to taking any
material decisions or steps pursuant to the terms of this Agreement. At
the request of the Banks, the Agent undertakes to furnish further
information in respect of particular issues and to obtain such
information from the AMD Companies pursuant to (S)16.4 of this Agreement
or the provisions of the Operative Documents. In urgent cases, the Agent
may make determinations within the proper exercise of its discretion
without obtaining a resolution of the Banks. In such case, the Agent
will immediately inform the other Banks of the measures taken by it. To
the extent that the relevant measures can be revoked and the Banks pass
a resolution for such revocation, the Agent shall undertake all steps to
revoke the measures taken by it.
22.8 Each of the Banks (including the Agent) shall comply with its
obligations under this Agreement and under the other Operative Documents
with the customary care and attention pursuant to (S)347 HGB. The Agent
shall not assume any additional liability in particular with reference
to the legality, enforceability or value of the claims of the Banks and
all the security. Without prejudice to its other obligations pursuant to
this Agreement, the Agent is not obliged on its own volition to
undertake inquiries or investigations with respect to breaches of this
Agreement or as to the existence of any grounds for termination.
22.9 Each of the other Banks agrees to hold harmless and indemnify the Agent
in respect of all claims or obligations which arise or are asserted
against the Agent in the implementation of this Agreement save to the
extent the same arise from the Agent's gross negligence or willful
default and to compensate it for expenses incurred and not otherwise
reimbursed. The amount of the indemnity and/or the obligation to
compensate costs shall correspond to the commitments of each of the
Banks in respect of the Facilities. Costs will be paid to the Agent on
first demand in proportion of the commitments of the other Banks.
22.10 Each Bank confirms that it has independently verified the
creditworthiness of AMD Saxonia and the Sponsors and all Operative
Documents and all other documents relating thereto in all respects and
independently. If any Bank is of the opinion that the documents made
available to it in connection with the Operative Documents do not comply
with the
<PAGE>
51
contractual requirements such Bank shall be obliged to inform the Agent
immediately thereof.
22.11 The Agent is entitled, on giving 60 days' notice, to transfer its rights
and obligations as Agent to the Paying Agent. Resignation by the Agent
from its role as Agent is possible only subject to 60 days' notice. If
the Banks have not passed a resolution with the required majority
(according to (S)22.6) by the seventh Banking Day before the end of this
period, the Agent shall appoint as its successor a Bank resident in
Germany. The Agent may be dismissed with a majority of at least 75 % of
the votes of all the Banks. It shall be a condition of the Agent's
dismissal that the function of the house bank within the meaning of the
Subsidy Agreement and the function of the Paying Agent is assumed by
another bank or financial institution. The Banks will consult with AMD
Saxonia in advance in respect of any change in the Agent.
(S)23
ADMINISTRATION OF SECURITY
23.1 The Agent (in this capacity also referred to as the "Security Agent")
shall be responsible for administration of the security granted in
favour of the Banks. The Banks hereby irrevocably authorise the Security
Agent, free from the restrictions pursuant to (S)181 BGB, to enter into
all agreements necessary for the granting of the accessory security.
Without prejudice to the restrictions governing the relationship of the
members of the Bank consortium inter se the Security Agent is further
authorised to enter into all necessary agreements for the granting of
security pursuant to (S)8 in their name, to amend and to supplement the
same and to exercise all rights of control, administration and
disposition arising under the Security Documents also in relation to the
accessory security in its own name and free from the restrictions set
out in (S)181 BGB. As between the Banks (internally), a resolution
passed with a majority of 75 % of the votes of the Banks shall be
required in respect of the release of any security, whether in whole or
in part save to the extent unanimity is required pursuant to (S)22.6.
The Security Agent shall be released from all restrictions pursuant to
(S)181 BGB in connection with all action taken in respect of the
security.
23.2 The Security Agent shall be authorised to delegate administration of the
security to another financial institution and to undertake all steps in
relation thereto in the name of the other Banks. The provisions of this
(S)23 shall apply in their entirety to any successor of the Security
Agent. The Security Agent shall be liable to the other Banks only for
the exercise of due care and attention in the selection of a successor.
The Security Agent will inform AMD Saxonia and the Banks in writing
prior to any transfer of its administrative duties and consult with AMD
Saxonia and the Banks concerning the transfer of such duties. The
Security Agent can be dismissed by way of resolution passed with a
majority of 75 % of the votes of the Banks provided that steps are taken
to ensure that the administration of the security is assumed by another
bank or financial institution.
23.3 Each Bank shall be entitled at any time to require information from the
Security Agent relating to the administration of the security. Without
prejudice thereto, the Security Agent shall in any event keep the other
Banks informed thereof in accordance with the proper exercise of its
discretion. In addition, the provisions of the German Civil Code
relating to the relationship of agents ((S)662 et seq. BGB) shall apply
to the relationship between the Security Agent and the other Banks.
<PAGE>
52
23.4 The Security Agent shall not be liable or responsible for the validity
and enforceability of the Security Documents nor shall the Security
Agent assume any liability as to whether the relevant status of the
security is sufficient to secure the claims of the Banks under this
Agreement. In this context, each Bank shall be responsible for examining
the documentation delivered to it and shall inform the Security Agent of
any concerns it may have so that any such concerns may be taken account
of by a mutually acceptable arrangement.
23.5 The Security Agent will perform its obligations in relation to the
administration of the security with the customary standard of care in
accordance with (S)347 HGB. The Security Agent shall not bear any
liability in respect of possible shortfalls which may arise as a result
of a breach of their obligations by any of the obligors under the
Security Documents. Each Bank hereby agrees to indemnify and keep
harmless the Security Agent with respect to all claims which may arise
or be made against the Security Agent arising from the proper acceptance
and administration of the security, save to the extent the same arise
from the Security Agent's gross negligence or willful default and to
indemnify the Security Agent in respect of any costs incurred by it and
not otherwise reimbursed, in each case in proportion in which the
individual commitments of the relevant Banks bear to the Facilities. The
Security Agent shall be reimbursed for all costs on first demand in
accordance with the commitments of the Banks.
23.6 Realisation of the security granted pursuant to the Operative Documents
shall be effected to the extent such security is non-accessory security
by the Security Agent in its own name but for the account of the Banks.
The Security Agent is hereby authorised to realise the accessory
security in its own name and in the name and on behalf of the other
Banks.
23.7 The Banks shall agree by way of resolution passed with a majority of
75% of their votes on measures to implement any realisation of the
security. However, in urgent cases the Security Agent may make such
decisions unilaterally in accordance with the proper exercise of its
discretion; in such event, the Security Agent will immediately inform
the other Banks of the steps taken. In the event that unanimity is not
be achieved, the Banks will determine the relevant steps to be taken for
realisation by way of majority decision (in accordance with (S)22.6). In
all other respects, the conditions for or procedure of realisation of
security shall be as set out in the individual Security Documents.
23.8 Proceeds from the realisation of security shall be distributed in the
following order of priority:
(i) in satisfaction of the costs and other expenses of the Agent,
including any taxes incurred by the Agent in the administration and
realisation of the security pursuant to its obligations hereunder;
(ii) in payment of accrued interest; and
(iii) in payment of the claims of the Banks under the Facilities in
accordance with this Agreement, and in satisfaction of any other
claims of the Banks under or in connection with the Operative
Documents pro rata in accordance with the outstanding advances of
the Banks.
The Guarantors shall, without prejudice to the first right of
satisfaction in favour of the Banks as security for their shortfall
risk, be subrogated by operation of law to the relevant portion of the
guaranteed claims which is secured pro rata by the security granted in
respect thereof. To the extent the security does not pass to the
Guarantors by
<PAGE>
53
operation of law, the same shall be transferred pro rata to the
Guarantors following payment by them.
Any remaining amount not otherwise required out of the proceeds of
realisation of the security shall be paid to AMD Saxonia.
Subject to the consent of the Guarantors, the Banks shall be entitled to
amend the above order of distribution at any time.
23.9 AMD Saxonia has agreed to pay to the Security Agent a fee in respect of
the administration of the security by it in an amount and on terms as to
payment set out in a letter of even date between AMD Saxonia and the
Security Agent.
(S)24
PAYING AGENT
24.1 The Paying Agent is hereby appointed with the duties of the Paying Agent
in respect of all rights and obligations of the Banks under this
Agreement and the other Operative Documents subject to the following
terms and conditions. The Banks hereby irrevocably appoint the Paying
Agent to do all acts and things in connection with the making of
payments under this Agreement and the other Operative Documents and to
give all necessary statements and declarations in their name and to
enforce and undertake all things on their behalf to the extent the same
have not been delegated to the Agent. The Paying Agent is exempted from
the restrictions of (S)181 BGB. The Paying Agent is authorised to
delegate authority and to revoke the same free from the restrictions of
(S)181 BGB.
24.2 The Paying Agent will exercise the standard of care customary in
commercial relations in accordance with (S)347 HGB in the performance of
its obligations under this Agreement and the other Operative Documents.
24.3 The Banks hereby undertake to make available the relevant amounts of
advances to be made available by them as requested by the Paying Agent
in accordance with (S)4 by 11.00 a.m. (London time) at the latest on the
drawdown date and make the same available to the account notified to
them by the Paying Agent. The Paying Agent will make available to AMD
Saxonia the amounts so provided with value for the same day.
24.4 The Paying Agent will pay to the Banks all interest, payments of
principal and other payments due to the Banks pursuant to this Agreement
on the relevant due date and to the accounts notified to the Paying
Agent by individual Banks. To the extent that amounts are paid to the
Banks without the Paying Agent having received a corresponding payment
in full from AMD Saxonia on the same day, the Paying Agent may debit the
relevant Bank accordingly.
24.5 AMD Saxonia shall pay to the Paying Agent in respect of the performance
of its duties under this Agreement a fee, the amount and the terms as to
payment of which are set out in a letter of even date from the Paying
Agent to AMD Saxonia.
24.6 The Banks hereby undertake to hold harmless and to indemnify the Paying
Agent against all claims which may arise or be made against the Paying
Agent in connection with the performance of its duties under this
Agreement, save to the extent the same
<PAGE>
54
arise from the Paying Agent's gross negligence or willful default and to
reimburse all expenses borne by the Paying Agent and not otherwise
reimbursed. Each Bank shall indemnify the Paying Agent and reimburse
costs in an amount equal to the commitment of the relevant Bank under
the Facilities. All costs shall be payable to the Paying Agent on first
demand and in accordance with the commitments of the Banks.
24.7 The Paying Agent may resign on 60 days' notice. If no resolution of the
Banks has been passed by the seventh Banking Day before the expiry of
such notice period in respect of a successor to the Paying Agent with
the required majority (in accordance with (S)22.6) the Paying Agent
shall be entitled to appoint as its successor a credit institute
domiciled in Germany or Luxembourg. The Paying Agent can be dismissed by
way of resolution passed with a majority of 75 % of the votes of the
Banks provided that steps are taken to ensure that the administration of
the security is assumed by another bank or financial institution.
24.8 The department of the Paying Agent shall, with regard to the assumption
of the paying agent's duties for the Banks, be regarded as a entity
separate from the Paying Agent's other departments.
(S)25
COSTS
25.1 AMD Saxonia shall bear all expenses, fees and other external costs
incurred by the Agent, the Paying Agent and the Security Agent in
connection with the preparation, amendment and implementation of the
Operative Documents and the granting of the security and/or perfection
including in particular the reasonable costs of the Technical Advisor,
the Insurance Advisor and the Banks' Auditor and the reasonable fees,
costs and expenses of auditors and lawyers instructed by the Agent in
connection with the verification, valuation, administration and
realisation of the security or otherwise in connection with the
Operative Documents. AMD Saxonia's obligations to reimburse costs shall
also remain unaffected in those cases in which the Banks have paid the
costs of the parties referred to above pursuant to such Banks'
obligations to indemnify or otherwise reimburse such costs.
25.2 In the event of any payment received by a Bank either as a result of set
off by such Bank or by AMD Saxonia or as a result of any other
performance by AMD Saxonia as a result of which such Bank's claims are
paid in excess of the proportion due to it in respect of its commitments
in (S)2 and Schedule 1, such Bank shall be obliged to make a payment to
----------
the Paying Agent for the account of the other Banks such as to place
such other Banks in the position they would have been in had they
received payment in proportion to their Commitments pursuant to (S)2 and
Schedule 1. To the extent any Bank pays such excess amount to the other
----------
Banks, such Bank shall have a claim against AMD Saxonia in an amount
equal to the excess. This provision shall apply to any payment received
from or on account of AMD Saxonia. This provision does not, however,
apply in favour of a Bank which declined to participate in proceedings
initiated by the other Banks which have led to successful claims being
made under the Operative Documents. If any Bank is obliged to repay to
AMD Saxonia any amount received from any of the other Banks, the other
Banks shall be obliged to repay the amounts received by them to the Bank
obliged to repay.
<PAGE>
55
(S)26
ASSIGNMENT; SUB-PARTICIPATIONS
26.1 The Banks are not entitled prior to Completion to assign, whether in
whole or in part, their rights under this Agreement. Assignments and
sub-participations to affiliated companies within the meaning of (S)15
of the Stock Corporation Act are permitted at any time as well as
assignments to third parties following termination of this Agreement.
After Completion, the Banks are entitled to assign their rights and
claims under this Agreement with the consent of AMD Saxonia and the
Agent, which consent may be withheld only for good cause. Each Bank is
entitled moreover at any time to grant sub-participations to other banks
or credit institutions in an amount up to 50 % of its respective
commitment on and subject to the following terms and conditions:
(i) sub-participations require the consent of AMD Saxonia and the Agent.
Consent may be withheld only for good cause;
(ii) the sub-participant shall not be granted rights as against AMD Saxonia
or as against the other Banks and no contractual relationship between
the sub-participant, AMD Saxonia or the other Banks shall be permitted
to exist;
(iii) implementation of this Agreement shall be effected exclusively as
between AMD Saxonia, the Agent and the Paying Agent and/or the relevant
Bank.
(S)27
MISCELLANEOUS
27.1 The failure by any of the Banks to exercise any of their rights
hereunder, (whether in whole or in part), in particular any failure to
exercise their right to terminate this Agreement, shall not constitute a
waiver by the Banks of such right nor shall they be estopped from doing
so. All rights pursuant to this Agreement shall have effect individually
and without prejudice to any other rights at law or under contract in
favour the Banks.
27.2 All amendments and supplements to this Agreement and the other Operative
Documents must be in writing unless they are required by law to be
notarially certified. This requirement shall apply also to any
amendments, release or waiver of the requirement for such written form
as well as all consents of the Banks contemplated under this Agreement.
27.3 The provisions of (S)22 to 24 and all rights and duties relating thereto
may be amended without the consent of AMD Saxonia this shall not apply
to the provisions set out in the last sentence of each of (S)22.11 and
(S)23.2.
27.4 The invalidity or unenforceability of one or more provisions of this
Agreement shall not affect the remaining provisions of this Agreement.
The invalid or unenforceable provision shall be substituted by a
provision which approximates most closely to the economic purpose of the
void or unenforceable provision.
27.5 AMD Saxonia shall not be entitled to assign its rights under this
Agreement to any third party or to dispose of such rights in any other
way without the prior written consent of the Banks.
<PAGE>
56
27.6 Each of the Banks shall inform the Agent with a copy to the Paying Agent
at least five (5) Banking Days prior to any change in its Lending
Office.
27.7 All correspondence or notifications under in connection with this
Agreement shall be served personally at the following addresses (or such
other address notified in writing by the recipient to the other party)
or by registered letter, courier or fax:
to the Agent:
Dresdner Bank AG
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489 1350
to the Banks:
Dresdner Bank AG
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489 1350
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5 - 9
60325 Frankfurt am Main
Attention: Frau Birgit Otte
Facsimile No.: (49) 69 74 31 2944
DG Bank Deutsche Genossenschaftsbank
Am Platz der Republik
60325 Frankfurt am Main
Attention: Herrn Lothar Ferber-Hammeke/Frau Ute Suffrian
Facsimile No.: (49) 69 7447 6098
L-Bank, Landeskreditbank Baden-Whrttemberg
Schlossplatz 10/12
76113 Karlsruhe
Attention: Frau Bettina Kilp
Facsimile No.: (49) 721 150 1033
Sachsen LB Landesbank Sachsen
Girozentrale
Humboldtstr. 25
04105 Leipzig
Attention: Herrn Dr. Carlhans Uhle
Facsimile No.: (49) 341 97 93 139
Bayerische Landesbank
Girozentrale
Briennerstrasse 20
80333 Munchen
Attention: Herrn Matthias Rohnfelder
Facsimile No.: (49) 89 2171 2549
<PAGE>
57
Hypobank International S.A.
4, rue Alphonse Weicker
L-2099 Luxembourg
Attention: Herrn Erwin Moos
Facsimile No.: (352) 4272 4510
BHF-Bank Aktiengesellschaft
Niederlassung Leipzig
Kathe-Kollwitz-Str. 52
04109 Leipzig
Attention: Herrn Klaus Berthold/Frau Peggy Kuhnast
Facsimile No.: (49) 341 4654 150
Commerzbank AG
Filiale Dresden
Schumannstr. 21
01307 Dresden
Attention: Herrn Christoph Hense
Facsimile No.: (49) 351 4451 264
DSL Bank Deutsche Siedlungs- und Landesrentenbank
Gartnerweg 3
60322 Frankfurt
Attention: Herrn Rainer Franke
Facsimile No.: (49) 69 15421 122
Hamburgische Landesbank
Girozentrale
Gerhard-Hauptmann-Platz 50
20095 Hamburg
Attention: Herrn Gasser/Herrn Rebber
Facsimile No.: (49) 40 3333 3037
IKB Deutsche Industriebank AG
Karl-Theodor-Str. 6
40213 Dusseldorf
Attention: Frau Birgit Matzerath/ Herr Wolfram Kreisel
Facsimile No.: (49) 211 8221 697
Landesbank Rheinland-Pfalz
Girozentrale
Grosse Bleiche 54 - 56
55098 Mainz
Attention: Herrn Ulrich Voepel/Herrn Lothar Ayasse
Facsimile No.: (49) 6131 13 2599
Landesgirokasse Offentliche Bank und Landessparkasse
Corporate Finance (GB 57)
70144 Stuttgart
Attention: Abtlg. 5701
Facsimile No.: (49) 711 124 1239
<PAGE>
58
ABN AMRO Bank (Deutschland) AG
Niederlassung Berlin
Unter den Linden 42
10105 Berlin
Attention: Herr Axel Huck
Facsimile No.: (49) 30 20 24 92 95
Creditanstalt-Bankverein
Wasagasse 2
A-1090 Wien
Attention: Herrn Dr. Martin Frank
Facsimile No.: (43) 1 310 05 54
The Sumitomo Bank, Limited, Dhsseldorf Branch
Immermannstrasse 14 - 16
40210 Dusseldorf
Attention: Herrn Wienke
Facsimile No.: (49) 211 3619 277
to AMD Saxonia:
AMD Saxony Manufacturing GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No: (49) 351 8412 150
to the Paying Agent
DRESDNER BANK LUXEMBOURG S.A.
26 Rue due Marche-aux Herbes
L-2097 Luxembourg
Attention: Projekt-Spezialfinanzierung
Facsimile No.: (352) 4760 297
27.8 The German language counterpart of this Agreement is binding.
27.9 To the extent this Agreement does not provide to the contrary this
Agreement shall be governed by the General Terms and Conditions of the
Agent set out in Schedule 62, save that all references to a "Bank" shall
-----------
be deemed to be references to the "Banks" within the meaning of this
Agreement and all references to a "customer" shall be deemed to be
references to AMD Saxonia.
27.10 All press statements or other announcements relating to this Agreement
shall require the prior written consent of the Agent which consent shall
not be unreasonably withheld. The withholding of consent by the Agent
shall be deemed to be unreasonable to the extent that the disclosure of
information relating to this Agreement is required by any law,
regulation or official requirement or as required by any recognised
securities supervisory authority or securities exchange.
<PAGE>
59
(S)28
GOVERNING LAW
This Agreement shall be governed by the law of the Federal Republic of Germany.
(S)29
JURISDICTION
The courts of Frankfurt am Main shall have exclusive jurisdiction in respect of
the resolution of all disputes under or in connection with this Agreement.
Frankfurt am Main 11 March 1997
AMD SAXONY MANUFACTURING GMBH
/s/ Jack L. Saltich
- ---------------------------------------------
Managing Directors (Geschaftsfuhrer)
DRESDNER BANK AG
(as Agent, Security Agent and Bank)
/s/ Dr. Hans-Jurgen Menzel /s/ Horst Oechsler
- ---------------------------------------------
Other Banks:
KREDITANSTALT FUR WIEDERAUFBAU
/s/ Klaus Rosenfeld
- ---------------------------------------------
- ---------------------------------------------
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
/s/ Klaus Rosenfeld
- ---------------------------------------------
- ---------------------------------------------
L-BANK, LANDESKREDITBANK BADEN-WgRTTEMBERG
/s/ Klaus Rosenfeld
- ---------------------------------------------
<PAGE>
60
SACHSEN LB LANDESBANK SACHSEN GIROZENTRALE
/s/ Klaus Rosenfeld
- --------------------------------------
/s/ Klaus Rosenfeld
- --------------------------------------
BAYERISCHE LANDESBANK GIROZENTRALE
/s/ Klaus Rosenfeld
- --------------------------------------
HYPOBANK INTERNATIONAL S.A.
/s/ Klaus Rosenfeld
- --------------------------------------
- --------------------------------------
BHF-BANK AKTIENGESELLSCHAFT
/s/ Klaus Rosenfeld
- --------------------------------------
COMMERZBANK AG, Dresden Branch
/s/ Dr. Friedrich Droste
- --------------------------------------
- --------------------------------------
DSL BANK DEUTSCHE SIEDLUNGS- UND LANDESRENTENBANK
/s/ Klaus Rosenfeld
- -------------------------------------
- -------------------------------------
HAMBURGISCHE LANDESBANK - GIROZENTRALE -
/s/ Klaus Rosenfeld
- --------------------------------------
- --------------------------------------
IKB DEUTSCHE INDUSTRIEBANK AG
/s/ Klaus Rosenfeld
- --------------------------------------
- --------------------------------------
<PAGE>
61
LANDESBANK RHEINLAND-PFALZ - GIROZENTRALE -
/s/ Lothar Ayasse
- --------------------------------------
/s/ Ulrich Voelpel
- --------------------------------------
LANDESGIROKASSE OFFENTLICHE BANK UND LANDESSPARKASSE
/s/ Klaus Rosenfeld
- --------------------------------------
ABN AMRO BANK (DEUTSCHLAND) AG, Frankfurt
/s/ Klaus Rosenfeld
- --------------------------------------
CREDITANSTALT-BANKVEREIN
/s/ Klaus Rosenfeld
- --------------------------------------
- --------------------------------------
THE SUMITOMO BANK, LIMITED, Dusseldorf Branch
/s/ Klaus Rosenfeld
- --------------------------------------
- --------------------------------------
DRESDNER BANK LUXEMBOURG S.A.
(as Paying Agent)
/s/ Wolfgang Schneider
- --------------------------------------
<PAGE>
SCHEDULE 1
(COMMITMENTS OF THE BANKS)
BANKS AND THEIR LENDING OFFICES COMMITMENTS
DM Million
DRESDNER BANK AG, 210
Frankfurt am Main
KREDITANSTALT FUR WIEDERAUFBAU, 205
Frankfurt am Main
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK, 125
Frankfurt am Main
L-BANK, LANDESKREDITBANK BADEN-WURTTEMBERG, 125
Karlsruhe
SACHSEN LB LANDESBANK SACHSEN GIROZENTRALE, 110
Leipzig
BAYERISCHE LANDESBANK GIROZENTRALE, 100
Munich
HYPOBANK INTERNATIONAL S.A., 100
Luxembourg
BHF-BANK AKTIENGESELLSCHAFT, 75
Leipzig
HAMBURGISCHE LANDESBANK - GIROZENTRALE - 75
Hamburg
COMMERZBANK AG, 75
Dresden Branch
DSL BANK DEUTSCHE SIEDLUNGS- UND LANDESRENTENBANK, 75
Bonn
<PAGE>
IKB DEUTSCHE INDUSTRIEBANK AG, 75
Dhsseldorf
LANDESBANK RHEINLAND-PFALZ - GIROZENTRALE -, 75
Mainz
LANDESGIROKASSE OFFENTLICHE BANK UND LANDESSPARKASSE 75
Stuttgart
ABN AMRO BANK (DEUTSCHLAND) AG, 50
Berlin
CREDITANSTALT-BANKVEREIN, 50
Vienna
THE SUMITOMO BANK, LIMITED, 50
Dusseldorf
1.650,0
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
- ----------------------------------------------------------------------------------------------------------------
| DRAWDOWN SCHEDULE |
- ----------------------------------------------------------------------------------------------------------------
PHASE
- ----------------------------------------------------------------------------------------------------------------
FACILITY A CUMULATIVE FACILITY B CUMULATIVE
PROJECT PHASE PERIOD PER PROJECT PHASE* FACILITY A* PER PROJECT PHASE* FACILITY B*
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Planning/Design [
Shell
Clean Room
First Equipment
Qualification/ *
First Silicon
Technical Completion
Financial
Completion*** ]
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* DM Millions
*** Q2/01 denotes the end of the availability period on 29 June 2001
[*] CONFIDENTIAL INFORMATION OMITTED AND FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
SCHEDULE 17
FINANCIAL COVENANTS AND EXCESS CASH
The financial covenants for AMD Saxony Manufacturing GmbH ("AMD
Saxonia") will be determined on the basis of the quarterly financial
statements of AMD Saxonia and other information provided by the
management pursuant to (S)16.2.1 and the audited annual financial
statements of AMD Saxonia and the Auditor's confirmation pursuant to
(S)16.2.2 of this Agreement.
Excess cash will be determined on the basis of the audited annual
financial statements to be provided pursuant to (S)16.2.2 of this
Agreement.
1. DEFINITIONS
OPENING CASH BALANCE:
cash at the beginning of a fiscal year or at the beginning of
the relevant period under consideration, as the case may be
ROLLING QUARTER BASIS:
refers to the calculation of a ratio or of an amount at the end
of a Fiscal Quarter in each case covering the Fiscal Quarter in
question and the three preceding Fiscal Quarters
CASH:
other marketable securities included in current assets ((S)266,
2B III No. 3 Commercial Code) including cash equivalent
investments as described in Schedule 23 to this Agreement
together with cheques, balances at the Bundesbank and the Post
Office and cash at bank ((S)266, 2B IV Commercial Code)
TANGIBLE NET WORTH:
Equity
plus 45% of special items with equity portion ((S)273, in
conjunction with (S)247, 3 Commercial Code)
<PAGE>
2
plus Subordinated Shareholder Loans (less capitalised
interest)
less capitalised start-up and business expansion expenses
((S)269 Commercial Code)
less payments on account for fixed and Current Assets ((S)266
2A II No. 3, 266 2 B I No.4 Commercial Code)
less accruals for deferred tax released from reserves ((S)274
2 S 1 Commercial Code)
less intangible assets ((S)266 2 A I Commercial Code)
= TANGIBLE NET WORTH
CASH FLOW FROM OPERATIONS AND INVESTING:
net income for the year ((S)275, 2, No. 20 Commercial Code) or
net income during the relevant period under consideration, as
the case may be
less Interest Subsidies
plus depreciation ((S)275, 2, No. 7 Commercial Code)
less other operating income ((S)275, 2, No. 4 Commercial
Code), to the extent arising from the release of
provisions ((S)266, 3B Commercial Code) or from special
items with equity portion ((S)273 i.c. with (S) 247, 3
Commercial Code)
plus other operating expenses ((S)275, 2, No. 8 Commercial
Code), to the extent arising from accruals to the
reserves ((S)266, 3B Commercial Code), or from accruals
to special items with equity portion which do not result
from or are in connection with the payment of subsidies
or allowances ((S)273 in conjunction with 247, 3
Commercial Code)
plus/less decrease/increase of Net Working Capital
plus capitalised interest on Subordinated Shareholder Loans
less Capital Expenditure
= CASH FLOW FROM OPERATIONS AND INVESTING
EQUITY:
subscribed share capital ((S)266, 3A I Commercial Code) less
amounts not paid-up ((S)272, 1S 3 Commercial Code)
plus additional capital reserves ((S)266, 3A II Commercial
Code)
plus revenue reserves ((S)266, 3A, III Commercial Code)
plus/less retained profit/accumulated losses ((S)266, 3A, IV
Commercial Code)
plus/less net income/net loss for the year ((S)266, 3A, V
Commercial Code)
= EQUITY
<PAGE>
3
CAPITAL EXPENDITURE:
as defined in (S)1 of this Agreement
CURRENT LIABILITIES:
all liabilities falling due within 12 months
MODIFIED EBIT:
net income for the year ((S)275, 2, No. 20 Commercial Code) or
net income during the period under consideration, as the case
may be
plus taxes on income ((S)275, 2, No. 18 Commercial Code)
plus other taxes ((S)275, 2, No. 19 Commercial Code)
plus Interest Expense on Bank Debt
plus interest and other expenses ((S)275, 2, No. 13
Commercial Code) including capitalised interest to the
extent capitalised on Subordinated Shareholder Loans
= MODIFIED EBIT
SUBORDINATED SHAREHOLDER LOANS:
all shareholder loans made to AMD Saxonia by AMD Holding and AMD
Inc. pursuant to the Sponsors' Support Agreement and the
Sponsors' Loan Agreement.
NET WORKING CAPITAL:
the difference between:
Current Assets
less Cash
and
Current Liabilities
less bank liabilities falling due within one year
<PAGE>
4
= NET WORKING CAPITAL
SCHEDULED REPAYMENT OF BANK DEBT:
the amount of scheduled repayments to be made in accordance with
(S)7.2 of this Agreement in any particular period (excluding
prepayments)
FISCAL QUARTER:
each quarterly fiscal accounting period of AMD Saxonia ending on
or about the last day of March, June, September or the last
Sunday in December.
FIXED CHARGE COVER RATIO:
Cash Flow from Operations and Investing
plus Interest Subsidies
plus Interest Expense on Bank Debt
plus Opening Cash Balance
plus Mandatory prepayments pursuant to Section 7.4 of this
Agreement made before the relevant period under
consideration
plus Increases in subscribed share capital and capital
reserves within the period under consideration
plus Subordinated Shareholder Loans paid to AMD Saxonia in
the period under consideration
divided
by Scheduled Repayment of Bank Debt plus Interest Expense on
Bank Debt
= FIXED CHARGE COVER RATIO
CURRENT ASSETS:
Inventory ((S)266, 2 B I Commercial Code), accounts receivable
and other assets ((S)266, 2 B II Commercial Code), other
marketable securities included in the current assets ((S)266, 2
B III No. 3 Commercial Code), cheques, balances at the
Bundesbank and Post Office, and cash at bank ((S)266 2 B IV
Commercial Code)
<PAGE>
5
TURNOVER OF INVENTORY:
on a Rolling Quarter Basis, the ratio of:
average of Inventory over the past four Fiscal Quarters
to
sales ((S)275 2 No. 1 Commercial Code) within such four Fiscal
Quarters
multiplied by
365
= TURNOVER OF INVENTORY
INVENTORY:
raw materials and supplies, work in progress, finished services,
finished goods and merchandise, payments on account (net of any
provisions for obsolete or slow moving stock) ((S)266 2B I
Commercial Code)
INTEREST EXPENSE ON BANK DEBT:
all interest payments (cash or capitalised), commisions, fees,
discounts and other financial charges incurred in respect of
indebtedness for borrowings from banks.
INTEREST COVER RATIO:
the ratio of Modified EBIT to Interest Expense on Bank Debt
INTEREST SUBSIDIES:
the annual amount of subsidies received or receivable by AMD
Saxonia pursuant to the SAB/Dresdner; Dresdner/AMD Subsidy
Agreement for the reimbursement of Interest Expense on Bank
Debt.
<PAGE>
6
2. FINANCIAL COVENANTS
2.1 MINIMUM TANGIBLE NET WORTH
The Tangible Net Worth shall not at the end of any fiscal year be less
than the amounts set out below:
<TABLE>
<CAPTION>
END OF A FISCAL YEAR AMOUNT IN DM MILLIONS
<S> <C>
28 December 1997 [*]
27 December 1998 [*]
26 December 1999 [*]
31 December 2000 [*]
30 December 2001 [*]
29 December 2002 [*]
28 December 2003 [*]
26 December 2004 [*]
25 December 2005 [*]
31 December 2006 [*]
</TABLE>
2.2 MAXIMUM CAPITAL EXPENDITURE
AMD Saxonia shall not undertake Capital Expenditure in excess of 125 %
of the amounts referred to for the relevant years as set out below:
<TABLE>
<CAPTION>
END OF A FISCAL YEAR AMOUNT IN DM MILLIONS
<S> <C>
29 December 2002 [*]
28 December 2003 [*]
26 December 2004 [*]
25 December 2005 [*]
31 December 2006 [*]
</TABLE>
2.3 MINIMUM INTEREST COVER RATIO
The Interest Cover Ratio calculated on a Rolling Quarter Basis shall not
at the end of any Fiscal Quarter be less than the amount set out below:
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
7
<TABLE>
<CAPTION>
END OF THE FISCAL QUARTER INTEREST COVER RATIO
<S> <C>
30 December 2001 1,70
31 March 2002 1,70
30 June 2002 1,90
29 September 2002 2,00
29 December 2002 2,20
30 March 2003 2,40
29 June 2003 2,60
28 September 2003 2,80
28 December 2003 3,00
28 March 2004 3,00
27 June 2004 3,00
26 September 2004 3,00
26 December 2004 3,00
27 March 2005 3,00
26 June 2005 3,00
25 September 2005 3,00
25 December 2005 3,00
26 March 2006 3,00
25 June 2006 3,00
24 September 2006 3,00
31 December 2006 3,00
</TABLE>
2.4 FIXED CHARGE COVER RATIO
The Fixed Charge Cover Ratio calculated on a Rolling Quarter Basis shall
not at the end of any Fiscal Quarter be less than the ratio set out
below:
<TABLE>
<CAPTION>
END OF THE FISCAL QUARTER FIXED CHARGE COVER RATIO
<S> <C>
30 December 2001 1,25
31 March 2002 1,25
30 June 2002 1,25
29 September 2002 1,25
29 December 2002 1,30
30 March 2003 1,30
29 June 2003 1,30
28 September 2003 1,30
28 December 2003 1,40
28 March 2004 1,40
27 June 2004 1,40
26 September 2004 1,60
26 December 2004 1,60
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
<S> <C>
27 March 2005 1,80
26 June 2005 2,00
25 September 2005 2,25
25 December 2005 2,50
26 March 2006 2,75
25 June 2006 3,00
24 September 2006 3,00
31 December 2006 3,00
</TABLE>
2.5 MAXIMUM INVENTORY TURNOVER
The Inventory Turnover of AMD Saxonia, calculated on a Rolling Quarter
Basis, shall not at the end of any Fiscal Quarter be more than the
amount set out below
<TABLE>
<CAPTION>
END OF THE FISCAL QUARTER INVENTORY TURNOVER
<S> <C>
31 December 2000 57
1 April 2001 57
1 July 2001 57
30 September 2001 57
30 December 2001 57
31 March 2002 57
30 June 2002 57
29 September 2002 57
29 December 2002 57
30 March 2003 57
29 June 2003 57
28 September 2003 57
28 December 2003 57
28 March 2004 57
27 June 2004 57
26 September 2004 57
26 December 2004 57
27 March 2005 57
26 June 2005 57
25 September 2005 57
25 December 2005 57
26 March 2006 57
25 June 2006 57
24 September 2006 57
31 December 2006 57
</TABLE>
<PAGE>
9
3. EXCESS CASH:
Cash Flow from Operations and Investing
less Scheduled Repayment of Bank Debt
plus Opening Cash Balance
less DM 150,000,000
= EXCESS CASH*
* not included in the calculation of Excess Cash are insurance proceeds
which are, or are to be, applied directly for reinstatement or
replacement in accordance with Schedule 22
-----------
<PAGE>
EXHIBIT 10.50(b)
ADVANCED MICRO DEVICES, INC.
SECRETARY'S CERTIFICATE
The undersigned, Thomas M. McCoy, certifies that he is the Secretary of
Advanced Micro Devices, Inc., a Delaware Corporation ("the Company"), and that,
as such, he is authorized to execute this Certificate on behalf of the Company,
and further certifies that the attached is a fair and accurate translation of
the Determination Regarding the Request for a Guarantee by AMD Saxony
Manufacturing GmbH.
WITNESS the signature of the undersigned this 13th day of May, 1997.
/s/ Thomas M. McCoy
--------------------------------
Thomas M. McCoy
Secretary
[SEAL APPEARS HERE]
<PAGE>
D e t e r m i n a t i o n
Regarding the Request for a Guarantee by the
AMD Saxony Manufacturing GmbH, Dresden
1. Borrower
AMD Saxony Manufacturing GmbH [Gesellschaft mit beschrankter Haftung; private
limited liability company], Dresden
2. Extent of Credit
Investment credit up to a total of 1,650 Million German marks (DM) (including
any additional investment credits of up to DM 150 Million in accordance with
Sub-Clause 9 b), third line)
Based on model credit agreement F. 13 September 1990 (1993 version), the credits
must be notarized in accordance with the "Notices" (1993 version) well known to
the borrower and to the creditor.
3. Creditor
Bank consortium under the direction of the Dresdner Bank AG [Aktiengesellschaft;
stock corporation] Frankfurt am Main [Frankfurt on the Main River]
1
<PAGE>
4. Conditions
<TABLE>
<S> <C>
Pay-out/Interest Rate: In accordance with prevailing market conditions at time of notarization
Term: until 31 December 2006
Repayment: In twelve six-month installments in 2001 until 2006, starting
on 30 June 2001.
</TABLE>
5. Scheduled Notarization and Value Dates
<TABLE>
<CAPTION>
DM Millions
<S> <C>
up to 31 December 1997 [*]
up to 31 December 1998 [*]
up to 31 December 1999 [*]
up to 31 December 2000 [*]
---
[*]/*/
</TABLE>
/*/ without any additional investment credits of up to DM 150 Million in
accordance with Sub-Clause 9 b), third line
6. Guarantees of the Federal Government and the Free State of Saxony
All told, 65 % of the possible shortfall with proportionate parallel guarantees
of 39 % from the federal government and 26 % from the Free State of Saxony.
Model document F. 04 January 1993/03 August 1994 federal government/
states (with an advanced right to payment) in accordance with "Notices" F. 12
October 1990 (1993 Version) is applicable for the guarantees.
2
*CONFIDENTIAL INFORMATION OMITTED &
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
<PAGE>
7. Credit Usage
Partial financing of the following borrower's investment program:
a) Approximately DM 2,207 Million for building a microchip factory,
b) Approximately DM 25 Million for building a development center, and
c) Approximately 14 Million for real estate to be acquired within the City of
Dresden. The above is in accordance with the following investment planning/1/
for 1996 - 2000, plus other (follow-on) investments starting in 2001 to the
extent of approximately DM 697 Million:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1998 1999 2000 Total
- -----------------------------------------------------------------------------------------------
$ $ $ $ $ $
Million Million Million Million Million Million
- -----------------------------------------------------------------------------------------------
Wafer Factory
Building and Infrastructure
Facilities and Equipment [*] [*] [*] [*] [*] [*]
Development Center [*] [*] [*] [*] [*] [*]
Building and Infrastructure
Facilities and Equipment
Real Estate [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
- -----------------------------------------------------------------------------------------------
[*] [*] [*] [*] [*] [*]
- -----------------------------------------------------------------------------------------------
</TABLE>
The results and financial planning of the borrowing corporation for 1996 to
2006/2/, including the scheduled initial losses (enclosed as an attachment), are
applicable for the total financing.
- -----------------------
/1/ US dollar investment planning converted at a US dollar exchange rate of
approximately DM 1.45
/2/ US dollar investment planning converted at a US dollar exchange rate of
approximately DM 1.45
3
------------------------------------
*CONFIDENTIAL INFORMATION OMITTED &
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
<PAGE>
8. Security of the Loan
a) Registration of first ranking mortgages in a total credit amount on the
borrower's entire real estate holdings.
b) Transfer of ownership of the machines and mechanical systems procured/to be
procured within the scope of this project and unencumbered by a third
party.
c) In line with customary banking practices, transfer of ownership of the
inventories and assignments of claims (without any previous or equal
allowances for other credits), as well as transferring the rights and
claims from the agreement to be concluded with AMD Inc. regarding non-
exclusive licenses for commercial copyrights, which, if applicable, are
generated within the development center in Dresden.
Signing of a collateral security pool agreement is recommended.
9. Other Stipulations
a) The following must be proven to the creditors before the guarantee becomes
effective:
- That the borrower's registered capital to be obligated with DM 217.5
Million from AMD Inc. (equity holders of the borrower) is entered in
the commercial register and that, as a minimum, one-half is deposited,
- That all important authorizations and similar documents required for
implementing the project are available, and
- That binding commitments of the investment and interest subsidies
applied for from the Free State of Saxony are available in the sum of
approximately
4
<PAGE>
725 Million. The guarantors assume that committed investment
subsidies, as required, are financed on an interim basis by the bank
consortium.
b) AMD Inc. is obligated to the following before the guarantee becomes
effective:
- To provide the remaining payments on the borrower's registered capital
in 1997 at the latest,
- To guarantee subordinate internal corporation loans of a total of DM
[*] to the borrower. These loans must be paid in 1998 and 1999 at the
rate of DM [*] per year. Interest and repayments on internal
corporation loans require the previous consent of the creditors and
guarantors during the term of the guarantee credit,
- To finance any total investment costs expected for building the
factory in Dresden (including a development center) exceeding DM 2,246
Million up to an excess amount of a total of DM 225 Million with
additional equity resources and bank credits (with 65 % participation
by the guarantors) in the ratio of 1:2 and to finance any other
investment costs over and above the preceding excesses to the full
amount with additional equity resources.
- To sign a "take off" agreement for complete acceptance of the
production of the factory in Dresden based on a 100 % reimbursement of
costs expressed in German marks corresponding to German cost
accounting principles and including the development center, plus a
profit margin of 10 % at completion (expected at the latest in 2001,
according to plan), and subject to the following provisions:
-- Cost reimbursement clauses for unexpected initial losses in 1996
through 1998, plus an adjustment for 1999 and 2000 with
5
------------------------------------
*CONFIDENTIAL INFORMATION OMITTED &
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
<PAGE>
employment-independent complete cost reimbursements by AMD Inc.
to the extent of 75 % and 105 %;
-- Take over by AMD Inc. of the market risks for capacity
utilization ranging from 75 % to 100 % of the planned/normal
utilization with a guarantee of "a stable cash flow" within this
utilization range.
Complying with the above adjustments must be verified in each case by
the auditor within the scope of the borrower's annual audit.
- Within the scope of a separate agreement of the AMD Saxony
Manufacturing GmbH at completion, to guarantee the allocation of
additional equity capital or additional subordinate internal
corporation loans up to a total amount of DM 145 Million, when and to
what extent a "debt servicing coverage" of one year to be defined by
mutual consent with the creditors drops below the factor of 1.25.
- In accordance with the principle of equal treatment, to distribute
proportionally any market-related adaptations of the production to all
factories of the AMD group manufacturing products comparable to the
borrower's products, provided the actual capacity utilization of the
AMD Saxony Manufacturing GmbH does not fall below 75 % of the
planned/normal utilization. Differing distributions are only
permitted when AMD Inc. compensates for the resulting deterioration of
the AMD Saxony Manufacturing GmbH cash flow by additional equity
resources or by additional subordinate internal corporation loans.
Designating other affected AMD factories and monitoring compliance
with the principle of equal treatment are performed in an appropriate
manner by consulting a neutral third party.
6
<PAGE>
- To ensure that the borrower's sustained cash flow excesses are used
within the scope of a separate adjustment to be agreed upon between
the borrower and creditors for the early repayment of the guarantee
credits.
- To conduct bona fide research in the Dresden factory in addition to
production and to design and develop state of the art products in the
development center. The following written statement released on 18
January 1996 by AMD Inc. applies in this context:
"In this regard, the Design Center will be an authentic research and
development center. Two hundred highly qualified personnel will
research and develop new products. A large part of the activity
will extend into independent research of modern technology, with the
main focus being the development and design of new products. These
products will be produced not only in Dresden but worldwide in AMD
factories. The product palette is expected to include a wide
spectrum of modern digital components, such as microprocessors and
circuits for the telecommunication and multimedia-media fields.
Analogous to the Design Center at our locations in the United
States, personnel will also redesign and develop variations of
existing products."
c) The following written statement released on 18 January 1996 by AMD Inc.
applies:
"We agree that a qualified buyer of the business should be capable of
manufacturing his own products in the factory using existing equipment
and facilities should AMD become in default and the banks take over
the factory. We believe that the factory and the existing equipment
are sufficient for operations. A qualified buyer would, therefore,
not be hindered from manufacturing his own products in the factory."
d) Extending outside of the "take off" agreement, any exchange of delivery and
performance obligations between the borrower and AMD Inc. and companies
under the influence of AMD Inc. must be completed based on customary market
conditions. In this regard, the auditor's opinion must be considered
within the scope of the borrower's annual audits.
7
<PAGE>
e) The acceptance of this determination of guarantee also encompasses the
acknowledgment that AMD Inc. has taken note of the written notice reported
on 4 October 1995 by the C&L Deutsche Revision regarding subsidy-relevant
facts. This also applies to the credit borrowing corporation AMD Saxony
Manufacturing GmbH.
<TABLE>
<S> <C> <C>
Bonn, 2 July 1996 Dr. Hirsch signing for the Dr. Wenzel signing for the
Federal Ministry of Commerce Federal Ministry of Finance
Dresden, 2 July 1996 Schlicht signing for the Saxony Hille signing for the Saxony
State Ministry for Commerce State Ministry of Finance
and Labor
Dusseldorf, 2 July 1996 Sinne and Biener signing for the
C&L Deutsche Revision AG
Auditing Company
</TABLE>
8
<PAGE>
Gesch.-Z: 872 277 Villemombler Street 76,
53123 Bonn
(Please Specify when Replying)
Telephone: (02 28) 615
or 615 - 0 (Operator)
Fax: (02 28) 615 - 44 36
Teletext: 228340- BMWi
Telex: 8 86 747
Federal Ministry of Commerce - 53107 Bonn
- -----------------------------------------
Dresdner Bank AG
Business and International Branch
- - Special Financing -
Attention: Dr. Fahrholz/Dr. Leimbach
Weser Street 43
60301 Frankfurt am Main
Regarding: Federal/State Guarantees;
- ----------
In this Case: AMD Saxony Manufacturing GmbH, Dresden
-------------
Reference: Your Request dated 2 October 1995
- ----------
File Designation of the C&L DEUTSCHE REVISION AG,
Dusseldorf: BB 278 (B)
In the inter-ministerial committee with consent of the Federal Ministry of
Finance and representatives of the responsible state, I have reached the
determination delineated in the
12
<PAGE>
enclosed correspondence from the C&L DEUTSCHE REVISION AG, Dusseldorf, dated 2
July 1996.
Please conduct all further correspondence in this matter directly with the C&L
DEUTSCHE REVISION AG, Dusseldorf, as the mandatary entrusted by the federal and
state governments with the management. Please specify the file designation of
the C&L DEUTSCHE REVISION AG stated in the above Reference.
Sincerely,
per direction
/s/ Dr. Hirsch
Dr. Hirsch
13
<PAGE>
Attachment III
--------------
F. 13 September 1990 (1993 Version)
Federal/States and/or THA [Treuhandanstalt; Trustee Administration]
M o d e l
C R E D I T A G R E E M E N T
The following credit agreement is herewith entered into
between the
(Creditor)
and the
(Borrower)
(S) 1
Extension of Credit
--------------------
The creditor grants the borrower credit in an amount of up to
DM
(in words: German marks)
(S) 2
Credit Usage
------------
In accordance with the summarized demands and financial planning presented in
Attachment I, the credit must be used for financing the borrower's business.
14
<PAGE>
From the credit in the amount of DM , a partial amount
of DM is provided for financing operating funds. In the amount of this
partial amount, the credit can be used on a revolving basis within the scope of
the credit term provisions in accordance with (S) 4/4/.
(S) 3
Payment of Interest
-------------------
The credit must be paid as follows starting from the date of disbursement:
a) Partial Amount of DM (Investment Financing)
b) Partial Amount of DM (Operating Funds Financing)
(S) 4
Credit Term
-----------
The credit has the following term:
a) Partial Amount of DM (Investment Financing):
Up to with (six months) yearly repayment installments of
DM each; first installment due on ; last installment due
on .
b) Partial Amount of DM (Operating Funds Financing):
Up to with complete repayment on this date at the latest.
- ----------------------
/4/ This paragraph and the variations in credit and collateral envisioned
hereinafter are not applicable provided no financing of operating funds is
taking place/is guaranteed.
15
<PAGE>
(S) 5
Collateral
----------
1. The credit is secured by a percentage of a deficiency guarantee from
the Trusteeship Administration and/or by a percentage of deficiency
guarantees of the Federal Republic of Germany and the State of
.................. in the form known to the creditor and to the borrower.
The determination of guarantee is enclosed as Attachment II and is a
critical component of this credit agreement. All provisions/obligations to
be incorporated into the credit agreement in accordance with the
determination of guarantee are agreed hereto, even though they are not
separately delineated in this credit agreement.
The guarantor(s) is/are entitled to employ a representative in
administrating the guarantee.
2. Moreover, the credit and any possible rights of recourse of the
guarantor(s) are secured as follows/5/:
a) Partial Amount of DM (Investment Financing):
Mortgages in the amount of the credit on the borrower's entire
(commercial) real estate holdings/6/, ranked according to mortgages of
DM for securing unauthenticated credits.
- -------------------------
/5/ Employing a collateral trustee is recommended.
/6/ If necessary, to be appropriated by means of descriptions in the real estate
register. In the case of indeterminate real estate relationships, to
be possibly relativized by obligation for the first possible mortgage
designation.
16
<PAGE>
b) Partial Amount of DM (Operating Funds Financing):
Moveable collateral on the borrower's working capital (with equivalent
appropriation and, as necessary, delineation of priorities).
The mutual, directly subordinate joint liability of the respective
collateral is agreed herewith.
Regarding mortgages: In the case of registrations having higher priority,
requires the agreement of customary ordered collateral measures.
3. If necessary, further or other provisions for providing collateral in
accordance with the determination of guarantee.
4. The borrower is obligated to pledge currently non-encumbered and/or future
acquired real estate holdings which are used or intended to be used for
commercial purposes.
5. In the case of deterioration of the collateral, in particular by a decline
in value and/or losses, the borrower must designate additional collateral
in accordance with the demands of the creditor or must correspondingly pay
back the credit.
17
<PAGE>
(S) 6
Consent Requirements for Critical Measures
------------------------------------------
Provided a direct or indirect majority participation of the Trustee
Administration no longer exists on the part of the creditor, then the
following applies/7/:
1. The borrower is obligated to obtain the prior consent of the
guarantor(s) for critical new capital and financing investments, for
assuming critical new obligations, and for disposing of critical
operational entities and holdings.
2. Possible further consent reservations in accordance with a
determination of guarantee.
(S) 7
Termination
-----------
The creditor has the right to terminate the credit at any time demanding
immediate repayment in total or in part based on critical reasons. In
particular, a critical reason exists when
1. The borrower is in default for longer than 3 months with the payment of
interest and repayment agreements,
2. The creditor determines that other critical contractual obligations have
been violated by the borrower,
- --------------------------
/7/ The preamble becomes void in the case of an exclusive federal
guarantee/state guarantee and when no direct or indirect majority
participation of the Trustee Administration exists from the beginning.
18
<PAGE>
3. The borrower's statements regarding his capital and income relationships
are subsequently proven as incorrect or incomplete in critical aspects,
4. The borrower suspends his payments; the start of enforcement, settlement or
bankruptcy proceedings regarding the borrower's capital is requested; or
enforcement takes place in critical parts of the borrower's capital.
5. Other circumstances occur or become known which jeopardize credit
repayment.
(S) 8
Insurance Obligations
---------------------
During the term of the credit, the borrower must adequately insure all of his
buildings, machines, other facilities, inventories and similar items against the
customary risks.
(S) 9
Reporting
---------
The borrower is obligated
1. To prepare his annual financial statements in accordance with commercial
principles for large capital corporations and to present to the creditor
and to the guarantor(s) on a regular basis his annual financial statements,
including a situation report and supplement, immediately after filing and
approval. Moreover, the auditor's report must be submitted to the
guarantor(s).
2. To report semiannually to the creditor on the usage and handling of the
credit.
19
<PAGE>
3. To report to the creditor on critical business processes and, on demand,
its overall economic condition.
(S) 10
Rights of Audit
---------------
1. The guarantor(s) is/are entitled to perform at any time an audit of the
borrower or to have it performed by a representative, regardless whether a
recourse can be considered from the guarantee or whether prerequisites
exist or have existed for an audit of this nature.
2. The creditor is entitled to deliver to the guarantor(s) all documentation
which affects the credit and collateral, and to provide all information
demanded by this/these guarantor(s).
3. The borrower pays the costs of all audits and expert opinions specified as
required by the guarantor(s) for the assumption of and in relation to the
guarantee.
(S) 11
Guarantee Compensations
-----------------------
(Version for the THA/8/)
During the term of the credit, the borrower must submit to the guarantor(s) the
following guarantee compensations:
- ----------------------------
/*/ For federal/state guaranteed credits, the adjustment in accordance with
Section B of the "Notices" in the 1992 version applies in this case and must be
agreed to in this form in the credit agreement.
20
<PAGE>
1. 0.25 % of the maximum liability amount to the creditor for the principle
claim specified in the instrument of guarantee, when delivering the
instrument of guarantee;
2. 0.25 % of the guarantee sum in effect on the following first of April and
first of October of each year for each six month period starting at these
dates. (The guarantee sum is specified in the instrument of guarantee as
the maximum liability amount for the principle claim less any repayments.
Interim credit repayments are not considered repayments when using
revolving guarantees/partial amounts of the guarantee.)
Compensations must be transferred to THA-specified accounts by indicating the
guarantee number(s) delineated by the creditor.
(S) 12
Concluding Provisions
---------------------
1. Any modifications to this agreement must be in writing.
2. All taxes, fees and other costs resulting from this agreement and its
implementation are the responsibility of the borrower.
3. Provided a provision of this agreement should become null and void,
contestable, or not legally valid based on other reasons, the applicability
of the remaining provisions is not affected herewith. The partners to the
agreement are obligated, moreover, to replace the invalid provision with a
provision equal in its result, if possible.
21
<PAGE>
4. Place of performance and place of jurisdiction is
......................., [date] ........................[date]
The creditor: The borrower:
22
<PAGE>
Attachment IX
F. 04 January 1993
------------------
FEDERAL/STATES
General conditions for guarantee assumptions by the Federal Republic of Germany
and the states of the accessing region.
I. Requirements and Conditions
--------------------------------
1. Conditions and requirements specified in writing by the federal/state
governments are an integral component of the statement of guarantee. As
far as the credit relation is concerned, they must be incorporated into the
credit agreement.
II. Credit Agreement
---------------------
2. Modifications to the credit agreement approved by the federal/state
governments based on the respective valid model of a credit agreement and
forming the basis of the guarantee require the previous consent of the
federal/state governments.
3. Based on the factual situation, the creditor is entitled to grant a
proposed delay of interest and repayments up to a maximum six month period
and up to the maximum amount of owed interest and repayment installments.
23
<PAGE>
III. Transfer
--------------
4. The guaranteed claim can not be transferred or pledged without the previous
consent of the federal/state governments. In this regard, transfers are
excepted to banking institutions or other institutional investors having
their principle place of business within the territory of the European
Common Market, provided the creditor continues to observe the fiduciary
administration of the rights and obligations from credits/guarantees.
IV. Obligations of the Creditor
-------------------------------
5. The creditor must exercise the prudence of an ordinary businessman when
granting and handling the credit. The fact of a federal/state guarantee
must not reduce this prudence.
6. The federal/state governments are released from the guarantee vis-a-vis the
creditor, when the creditor violates an obligation incumbent upon him in
accordance with this guarantee. This does not apply in the case of
negligent violations, provided the deficiency has not been caused by the
violation.
The federal/state governments can terminate the guarantee vis-a-vis the
creditor to take effect immediately, when the creditor violates an
obligation incumbent upon him in accordance with this guarantee and,
despite requests, the obligation has not been discharged within a
reasonable, fixed time period.
7. The creditor must immediately inform the federal/state governments when
a) The borrower is in default of the agreed to interest and repayment
installments on the guaranteed credit for longer than three months;
24
<PAGE>
b) The creditor determines that other critical credit conditions have been
violated by the borrower;
c) The creditor determines that the borrower's statements on capital
relations have been subsequently proven as incorrect or incomplete;
d) The creditor discovers that proceedings on the enforcement, settlement
or bankruptcy regarding the borrower's capital have been initiated;
e) The creditor becomes aware of other circumstances jeopardizing, in his
opinion, the repayment of the guaranteed credit.
8. The creditor is obligated to exercise his contractual right of termination
when requested to do so by the federal/state governments. Herewith, the
creditor's justified concerns must be taken into consideration.
9. The credit must be secured in accordance with the provisions of the credit
agreement. The collateral to be designated secures the entire credit.
Designating special collateral for the creditor's risk percentage is not
acceptable without the consent of the guarantor. The creditor reserves the
right to demand from the borrower the designation of additional collateral
or an equivalent repayment of the credit in case the collateral
deteriorates, in particular resulting from a decline in value and/or
losses.
10. As soon as and provided the collateral designated for the credit and/or
other available collateral correspond to the investment principle generally
followed by the creditor, the creditor must inform the federal/state
governments on this point. The creditor as well as the federal/state
governments will then agree to what
25
<PAGE>
extent, corresponding to the intrinsic value of this collateral, the
federal/state governments can be released from their guarantees.
11. Provided the rights from the collateral designated for the credit do not
pass over from their guarantees through operations of the law to the
governments in accordance with the performance obligations of the
federal/state governments, the creditor is obligated to transfer these
rights (proportionally) to the federal/state governments.
If the creditor is satisfied from these guarantees as a result of recourse
by the federal/state governments, then the creditor must administer and
utilized the rights passing over to the federal/ state governments through
operations of the law or through transfer with the prudence of an ordinary
businessman in a fiduciary manner without special compensation (expenses
will be reimbursed).
V. Default
-----------
12. In the case of default on the part of the borrower with owed performance
obligations, the interest rate must be withdrawn starting with the
occurrence of the default. This interest rate can be asserted as a claim
for damages against the borrower. The amount of the claim for damages is
limited to the discount rate plus 3 percent per year, unless a higher
substitute claim is proven in this case. However, the contractually agreed
upon standard interest rate approved by the federal/state governments can
not be exceeded in any case.
Other damages due to the default, compound interests, interests charged
during an agreed to delay, compensation interests, prosecution interests,
overdraw interests, processing fees and auditing costs are not covered by
the guarantee and can also not be directly incorporated into the deficiency
accounting vis-a-vis the federal/state governments.
26
<PAGE>
VI. Deficiency
---------------
13. Deficiency is applicable for the guaranteed credit when and provided the
inability to pay on the part of the borrower is shown by suspension of
payments, initiation of proceedings on enforcement, bankruptcy or
settlement; as a result of releasing insurance in lieu of an oath in
accordance with (S) 870 ZPO [Zivilprozebbordung; code of civil procedure];
or in any other manner. Nominal receipts from the utilization of credit-
designated collateral or from the utilization of the borrower's other
capital are not or no longer expected.
14. Even when the prerequisites of No. 13 are non-existent, the deficiency is
applicable in the amount of the entire credit claim not yet paid or
recovered, including interests and any costs, when an owed capital or
interest amount has not been paid within twelve months in accordance with
written payment demands issued after the maturity. The claim for the
remaining credit must, however, be overdue for at least six months. After
the maturity of the guaranteed principle and incidental claims, the
creditor remains obligated to try with the prudence of an ordinary
businessman to collect or to recover the claims and, if necessary, to
utilize the collateral, and to report on the situation to the federal/state
governments. This obligation is suspended as long as the federal/state
governments have not granted a directive which is reasonable according to
the circumstances and which has been demanded by the creditor. Employing
forceful measures with the borrower requires, moreover, the previous
consent of the federal/state governments.
15. On request from the federal/state governments, the creditor must formulate
a draft accounting of the deficiency.
27
<PAGE>
16. Federal/state governments are entitled
a) To pay progress payments on the expected guarantee indebtedness to be
obligated,
b) To discharge their guarantee obligation instead of in a total amount
according to the maturity date for interest and repayment performance
obligations established per the credit agreement for the case of proper
servicing, but pursuant to the fact that the first payment from the
federal/state governments must take place in accordance with Nos. 13
and 14 once the deficiency has been determined.
VII. Audit Rights
------------------
17. The creditor must obligate the borrower to permit at any time an audit by
the federal/state governments or by their representative, regardless
whether a recourse is possible from the guarantee or whether prerequisites
exist or have existed for such an audit. The creditor must further
obligate the borrower to provide the federal/state governments information
requested by them in relation to the guarantee.
18. The preceding audit rights and rights to information also exist on the part
of the creditor, but only regarding that documentation affecting the
guaranteed credit. The creditor must obligate the borrower to release him
from any vow of silence vis-a-vis the previously specified items.
28
<PAGE>
VIII. Audit Costs and Guarantee Compensations
----------------------------------------------
19. The creditor must obligate the borrower in the credit agreement to pay
guarantee compensations to the federal/state governments in accordance with
Section B. 1. of the "Notices" (1993 version) and, furthermore, to bear the
costs of an audit in accordance with Nos. 17 and 18.
IX. Representative of the Federal/State Governments
---------------------------------------------------
20. The C&L TREUARBEIT Deutsche Revision AG, Auditing Company, Tax Consulting
Company, Dusseldorf, is under contract to the federal government and the
states to administer the guarantees of the federal/state governments and is
authorized to release and to accept all related clarifications for the
federal government and the states, provided they are not reserved for
federal/state government debt management.
X. Place of Performance and Place of Jurisdiction
--------------------------------------------------
21. Bonn is the place of performance and place of jurisdiction.
29
<PAGE>
F. 12 October 1990
------------------
(1993 Version)
N O T I C E S
for the Request of Guarantees and Credits
of the Trustee Administration in Berlin and/or Parallel Federal and State
Guarantees
for Projects on the Territory of
Brandenburg, Mecklenburg-Vorpommern, Saxony, Saxony-Anhalt,
Thuringia and East Berlin
(specified as an accessing region hereinafter)
A. Application Documentation
I. Creditor Information
---------------------
a) For a Newly Established Project Company:
Partnership agreement/articles of incorporation (drafts, if
necessary) with concise information on equity holders and the
management.
b) For Established Companies, in addition to a):
1. Operational relations, in particular information on the
production program, location conditions, capacities, staff,
market and competition conditions.
30
<PAGE>
2. Last annual financial statement in form attested to by an
expert page. Also, situation report/business report and
audit report, as well as opening DM balance for existing
companies in the accessing region, if possible with
incorporation/audit/situation reports.
3. Concise report on the economic development in the operating
business year.
4. For existing companies in the accessing region:
Restructuring concept: if possible, an expert opinion
rendered by an external specialist.
II. Project Information
-------------------
If not already provided in a to-be-submitted restructuring concept:
a) A detailed description of the project, including critical
agreements.
b) Business accounting with explanations.
c) Financial requirements and financing with individual breakdowns.
III. Business Planning Information
-----------------------------
In accordance with the model enclosed as Attachment I with
explanations.
31
<PAGE>
IV. Security
--------
Primarily mortgage-related collateral with size and value
specifications; Presentation of collateral lending options in line
with customary banking practices; Justified representation of assets
not to be encumbered/can be encumbered.
V. Other
-----
a) Statement as to whether and to what extent other public assistance
is/will be requested for or in relation to the project by the
borrower and/or by his equity holders.
b) Enclosing a feasibility study conducted by an external specialist
is recommended for the project companies.
c) The right to demand enhanced documentation and information is
reserved.
Applications must be submitted to the Trustee Administration, Berlin,
Leipziger Street 5 - 7, when applying for guarantees and credits from the
Trustee Administration.
Applications must be submitted to the C & L Treuarbeit Deutsche Revision
AG, Dusseldorf, Auf'm Hennekamp 47, when applying for federal/state
government guarantees.
32
<PAGE>
B. Costs of Guarantee Assumptions/Credit Guarantees
I. Federal/State Government Guarantees
-----------------------------------
For the assumption of a guarantee, one-time and on-going compensations
as well as set-up and processing fees are imposed on the
applicant/borrower in accordance with the following provisions:
a) Application Fee
---------------
At the time of the application, a one-time application fee is due
consisting of 0.5 percent of the requested guarantee, but, at
most, DM 25,000.00. In case of withdrawal or rejection of the
guarantee application, 50 % of the fee is reimbursed. In the
case of a positive determination of the guarantee, the
application fee is credited against the first of the on-going
compensations.
b) On-Going Compensations
----------------------
The borrower must pay the following guarantee compensations,
starting with approval of and continuing for the term of the
guarantee:
- 0.25 % of the highest amount of the guarantee regarding the
principle claim when the determination of guarantee is
delivered.
- 0.25 % of the guarantee sum after delivery of the
statement of guarantee on the following first of April and
first of October of each year for each six month period
starting at
33
<PAGE>
these dates. (The guarantee sum is specified in
the statement of guarantee as the maximum liability amount
for the principle claim, less any repayments. Interim credit
repayments are not considered repayments when using
revolving guarantees/partial amounts of the guarantee.)
If, according to the determination, the guaranteed credit is
split up into many tranches affecting different six month periods
and notarized, then the previous compensation adjustment applies
tranche-related with the understanding that the compensation due
when the determination of guarantee is delivered relates only to
the first tranche and that the first compensations for subsequent
tranches become due with their incorporation into the statement
of guarantee or for a separate guarantee notarization when the
statement of guarantee is delivered.
c) Set-Up and Processing Fees
--------------------------
The federal government and the respective state reserve the right
to impose the following:
- A set-up fee up to 0.25 percent of the extended guarantee
commitment payable to the federal and state governments when
extending the guarantee commitment.
- A processing fee equivalent to the application compensation
adjustment for significant modifications to a previously
granted but not yet notarized guarantee.
34
<PAGE>
The application compensation and the processing fee for
significant modifications of a previously granted but not yet
notarized guarantee must be transferred to the C&L Treuarbeit
Deutsche Revision AG, Dusseldorf, account No. 31 308 12 at the
Westdeutschen Landesbank, Girozentrale [clearinghouse],
Dusseldorf.
On-going compensations and set-up fees must be transferred to the
C&L Treuarbeit Deutsche Revision AG, Dusseldorf, "Federal
Ministry of Finance" trust account No. 30 151 12 at the
Westdeutschen Landesbank, Girozentrale, Dusseldorf. Please
specify the guarantee number.
II. THA Guarantees
--------------
The adjustments delineated in the enclosed model agreement apply in
this case.
C. Liability Principles
The liability principles of the federal and state governments are enclosed
as Attachment II. These principles also apply for the Trustee
Administration.
D. Agreement Model
The model enclosed as Attachments III through IX must be used for guarantee
assumptions/credit guarantees.
35
<PAGE>
Outline
of financial requirements of the Company
and scheduled financing sources
FINANCING REQUIREMENT
Investments
- -----------
Investments within the project
Replacement investments
Other investments
Financing requirement of participating companies
- ------------------------------------------------
Redemptions
- -----------
Credits secured by mortgages
Other long term and short term credits
Negative results according to separate planning
- -----------------------------------------------
Other financial requirement (increase/reduction in short-term property/liability
- --------------------------------------------------------------------------------
domain)/*/
- ----------
Total
- -----
FINANCING SOURCES
First rank credits
- ------------------
.................} Liquidation possibilities should be described in a
.................} suitable manner (commitment, collateral possibilities, etc.)
Other long-term credits
- -----------------------
with guarantee
other
36
<PAGE>
Equity capital additions of shareholders and/or partners
- --------------------------------------------------------
(mandatory bonds)
Depreciations/**/
- -----------------
[ill.] depreciations
Other depreciations
Net addition to long term reserves (for example, pension and severance schemes)
- -------------------------------------------------------------------------------
Asset [ill.] (book values)
- --------------------------
Positive results according to separate planning (minus planned profit averages)
- -------------------------------------------------------------------------------
Public subsidies (investment tax incentives etc.)
- -------------------------------------------------
Other financing sources (decrease/increase in short-term property/liability
- ---------------------------------------------------------------------------
domain)/*/
- ----------
Total
- -----
Credit [ill.]
- -------------
Long-term area (foreign exchange)
Long term area
a) foreign exchange
b) lines
/*/Larger items should be explained specially
/**/Optionally provided value adjustments on capital assets should be considered
separate correction items
37
<PAGE>
F. 12 October 1990
------------------
(1993 Version)
L I A B I L I T Y P R I C I P L E S
of the Federal and State Governments for the Requests of Guarantees for
Financing Projects in the Accessing Region
1. As an investment incentive, the federal and state governments have created
the possibility of engaging project companies as borrowers of federal/state
government guaranteed credits for building, financing and operating
projects in the accessing region.
2. The liability of the equity holders can be limited to a reasonable equity
capital deposit. Besides partnership agreement-related adjustments and
cost- and market-compliance delivery and acceptance agreements to be
completed, if necessary, with the borrower, no further business agreements
of these types are permitted whatsoever.
3. When financing projects in the accessing region, it is currently not
foreseeable in a reliable manner whether or to what extent existing
unauthenticated credit acceptances are possible against first-ranking
mortgage-related collateral. Provided this is not (yet) the case, it can,
as a result, be taken into account within the scope of a positive
determination of guarantee that the creditors are obligated for the
availability of collateral in line with customary banking practices and
corresponding to their investment principles. This applies provided they
forego at a subsequent time portions of the guarantee coverage, assuming
agreement with the guarantors and after reaching an understanding about the
intrinsic value of the collateral. In order to alleviate this reassigning
of collateral, the administration of
38
<PAGE>
the real collateral to be supplemented, if necessary, by agreement
transfers (delivery and acceptance agreements) must be strived for by a
collateral trustee.
4. Provided businesses from the jurisdiction of the Trustee Administration,
Berlin, are also involved with the borrower, the federal government has
noted that a proportionate parallel guarantee of the Trustee Administration
must be considered in accordance with its direct or indirect participating
holdings in order to alleviate federal/state government guarantee
obligations. Even in this case, the main responsibility for the
determination and administration of the guarantee lies with the federal
government.
5. Regarding the project-related application of the above mentioned
principles: The individual audit adjudicates in accordance with the
submission of real guarantee applications. The individual audit takes both
the point of view of the economical eligibility for promotion and customary
financial reliability criteria into consideration.
6. Dependent on the granting or abeyance of a federal/state government
guarantee, facts are subsidy-relevant in the sense of (S) 264 of the
criminal code. The economic, operating and legal relationships of the
applicant are an integral part of this point, as is the planned credit
usage (Clauses I. - V. under Section A of the "Notices for the Request of
Guarantees and Credits from the Trustee Administration, Berlin, and/or
parallel Federal and State Government Guarantees for Projects on the
Territory of Brandenburg, Mecklenburg-Vorpommern, Saxony, Saxony-Anhalt,
Thuringia and East Berlin"). Willful or extremely careless incorrect
information about these facts as well as the omission of information
contradicting the granting or abeyance of the guarantee can be criminally
pursued in accordance with (S) 264 of the criminal code.
39
<PAGE>
The applicant must clearly acknowledge this subsidy instruction when
submitting a request for a guarantee.
40
<PAGE>
F. 04 January 1993/03 August 1994
---------------------------------
FEDERAL/STATES
Deficiency Guarantee
(with advanced payment right)
M o d e l
---------
S t a t e m e n t of G u a r a n t e e
----------------------------------------
A credit in the amount of
DM__________________
(in words: German marks)
has been granted to the (Borrower)
by the (Creditor)
in accordance with a credit agreement dated .
Based on (S) No. of the federal budget act for the budget year (Budget Act
) dated (BGBl; [Bundesgesetzblatt; Federal Law Gazette])/9/, the Federal
Republic of German assumes herewith for the purpose of securing this credit a
deficiency guarantee vis-a-vis the creditor up to an amount of DM
(in words German marks), which is %
(in words: percentage) of the original credit sum, plus % of the interest
shortfall in the amount approved by the federal/state governments, as well as %
of the cost shortfall associated with termination and judicial proceedings.
However, the federal government is responsible for these costs only up to 2 % of
the highest amount of the guarantee for the principle claim and on the
understanding that the State of ....... assumes a similar guarantee up to
the amount of DM , plus % of the above specified incidental claims.
- ---------------------------------
/9/ An analogous adjustment applies in this case for state government
guarantees.
41
<PAGE>
Credit and guarantee can be utilized with DM
or on a revolving basis with DM /10/.
The obligation of the federal/state governments from the guarantee assumption is
reduced in each case by % of the amounts which are paid for the sustained
repayment of the guaranteed total credit.
The creditor is entitled to use profits realized from utilizing credit-
designated collateral primarily for covering his own percentage of liability on
the principle claims, on standard interests, and on costs associated with
termination and judicial proceedings.
The guarantee is assumed until return of this statement of guarantee, but at the
latest to /11/. Up to this point, the creditor must report his justified
claims to the federal/state governments.
The "General Conditions for Guarantee Assumptions by the Federal Republic of
Germany and the States of the Accessing Region" ( F. 04 January 1993) are a
critical component of this statement of guarantee.
- --------------------------
/10/ This applies only within the scope of operating funds and guarantee credit.
/11/ Twelve months after a scheduled credit maturity.
42
<PAGE>
EXHIBIT 10.50(C)
ADVANCED MICRO DEVICES, INC.
SECRETARY'S CERTIFICATE
The undersigned, Thomas M. McCoy, certifies that he is the Secretary of
Advanced Micro Devices, Inc., a Delaware Corporation ("the Company"), and that,
as such, he is authorized to execute this Certificate on behalf of the Company,
and further certifies that the attached is a fair and accurate translation of
the AMD Subsidy Agreement between AMD Saxony Manufacturing GmbH and Dresdner
Bank AG in Dresden, Germany.
WITNESS the signature of the undersigned this 13th day of May, 1997.
/s/ Thomas M. McCoy
------------------------------------
Thomas M. McCoy
Secretary
[SEAL APPEARS HERE]
<PAGE>
A M D S u b s i d y A g r e e m e n t
between
AMD Saxony Manufacturing GmbH
Washingtonstrasse 16 A, 01139 Dresden
(hereinafter "Grant Recipient")
and
Dresdner Bank AG In Dresden
Dr. Kulz - Ring 10.01607 Dresden
(hereinafter "Principal Bank")
Preamble
The Grant Recipient intends to construct in Dresden a manufacturing facility for
the production of microelectronics products (hereinafter the "Project"). On
October 2, 1995 the Grant Recipient applied to the Sachsische Aufbaubank
(hereinafter "SAB") for public funding within the framework of the Regional
Economic Development Programme of the Free State of Saxony. The application was
for investment and interest grants. Based on this application as well as the
authorisation of the State Ministry of Saxony for Economic and Labour Affairs
the SAB authorised the following grants (hereinafter collectively referred to as
the "Grants"):
<PAGE>
-2-
- an investment grant of DM 476,687,000. - (hereinafter the "Investment
Grant");
- an interest grant of DM 300,000,000. - (hereinafter the "Interest
Grant")
In respect of the Grants the SAB on the (date of the last draft) entered
into a subsidy agreement attached hereto as Appendix 1, (hereinafter the
"SAB Subsidy Agreement") with the Principal Bank. According to the
provisions of the SAB Subsidy Agreement the Principal Bank is obligated to
enter into a subsidy agreement with the Grant Recipient.
The following provisions of this agreement apply to the Interest Grants as
well as to the Investment Grants unless something else is explicitly stated
or required by the context.
1. Investment Grant
1.1 The SAB has granted to the Principal Bank an appropriated Investment Grant
of:
DM 476,687,000.-
in words:
DM four hundred seventy six million six hundred eighty seven thousand
from funds of the Common Action "Regional Economic Structural Improvements"
(CA funds) for onward transmission to the Grant Recipient.
1.2 The Investment Grant will be made available in instalments to the Grant
Recipient in the name of the Principal Bank and for the account of SAB as
follows:
<PAGE>
-3-
<TABLE>
<CAPTION>
EFRD-funds
CA funds EC/Federal Government/
Federal State Federal State
<S> <C> <C>
Account-No. 972.003990.2
1997 a payment of up to DM 138,000,000.-
Account-No. 972.003968.9
1998 a payment of up to DM 163,500,000.-
Account-No. 972.004257.3
1999 a payment of up to DM 175,687,000.-
</TABLE>
A precondition for the transmission of Investment Grant payments to the
Grant Recipient is the prior receipt by the Principal Bank of the
necessary funds from the SAB. (ref. 7.12)
1.3 In calculating the amount of the Investment Grant a total grant-in-aid of
DM 500,500,000.- has been assumed, consisting of an Investment allowance
of DM 23,813,000.- and an Investment Grant of DM 476,687,000.-. If the
investment allowance is increased or reduced, the amount of the
Investment Grant will be adjusted accordingly as provided for in the SAB
Subsidiary Agreement.
2. Interest Grant from the Budget of the Free State of Saxony
In addition the Principal Bank was promised from SAB, based on the
authorisation of the State Ministry of Saxony for Economic and Labour
Affairs, for onward transmission to the Grant Recipient and Interest
Grant of:
DM 300,000,000.-
In words:
DM three hundred million
<PAGE>
-4-
It is assumed that the Interest Grants will become due as follows:
1997: 8,800,000.00 DM
1998: 31,000,000.00 DM
1999: 59,300,000.00 DM
2000: 84,300,000.00 DM
2001: 96,800,000.00 DM
2002: 19,800,000.00 DM
The Interest Grant is to be used solely for the guaranteed loan in the
amount of up to DM 1,650,000,000. - to be extended by the Principal
Bank/banks for the financing of the Project. The Interest Grant will be
made available in instalments by the SAB upon presentation of interest
calculations by the Principal Bank/banks. A precondition for the
transmission of Interest Grant payments to the Grant Recipient is the
prior receipt by the Principal Bank of the necessary funds from the SAB.
(ref. 7.12)
3. Purpose of the Grants
The Grants have been appropriated for a specific purpose and must be used
for cofinancing the costs of the project
"Construction of a manufacturing facility for the production of
microelectronic products at the investment site 01067 Dresden".
4. Investment Period
4.1 The Project shall be carried out between March 31, 1996 and December 31,
2006.
<PAGE>
-5-
4.2 The Project consists of two phases:
Phase 1: March 31, 1996 to December 31, 2001
and
Phase 2: January 1, 2002 to December 31, 2006
4.3 The Investment Grant is granted on the basis of the following investment
and financial plan.
<TABLE>
<CAPTION>
in accordance according to
with commitment AMD planning as
Investment plan letter dated Dec. of Sept. 1996
--------------- 18, 1995
-old- -new-
DM DM
<S> <C> <C>
Purchase of Real Estate [
Waferplant
----------
- Buildings and infrastructure
- Plant and equipment
Development centre *
------------------
- Buildings and infrastructure
- plant and equipment
Start-up expenditure ]
--------------------
</TABLE>
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
-6-
FINANCIAL PLAN DM DM
- --------------
Contribution of equity funds by AMD Inc./
USA (share capital/shareholder loans)
Contribution of funds sourced from the
cash flow of the Grant Recipient from 2001
*
onwards
Investment allowance
Investment Grant from CA funds
Loan provided by the Principal Bank
5. Notes on the calculation of the public financing assistance
5.1 The calculation of the CA Grant is based on maximum costs eligible for
assistance in the amount of DM 1,430,000,000.-. This amount corresponds to
maximum total investment eligible for assistance of DM 1,000,000.- per
permanent job created.
It has to be noted, that the cost eligible for assistance actually incurred
may be subsidised by Grants and other public financial aid up to a maximum
rate of 35%.
5.2 The Interest Grant has been calculated on the basis of a loan requirement
from the Principal Bank in the amount of up to DM 1,650,000,000.-. This
additional grant is designed to off-set the interest expenses of the Grant
Recipient during the investment phase up to the year 2002 and thereafter,
if the Interest Grant has not been fully used.
* CONFINDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSSION.
<PAGE>
-7-
6. Jobs
6.1 The calculation of the public financial assistance is based on the
assumption that through the investment at least 1,430 permanent jobs will
be created, which will be filled in full by the end of the year 2001. The
Grant Recipient is not obliged to create special jobs for women.
6.2 With regard to the reporting requirements concerning the creation and
filling of the permanent jobs we, in addition, refer to clause 6 of the
General Conditions for Grants from the Regional Economic Development
Programme of the Free State of Saxony - Version for the Grant Recipient -
in the version 31515 dated 08 of 1995 attached hereto as Appendix 2
(hereinafter the "General Conditions for the Grant Recipient") as well as
to the repayment provisions according to clause 7 of the General
Conditions for the Grant Recipient. In addition reference is made to
clause 6 and 7 of the General Conditions for Grants from the Regional
Economic Development Programme of the Free State of Saxony - Version for
the Principal Bank - in the version 31514 dated 08 of 1995 (hereinafter
the "General Conditions for the Principal Bank") attached hereto as
Appendix 3.
7. Disbursement conditions
7.1 The current certified annual financial statements and an economic
analysis of the operating figures for the month preceding the
disbursement must be sent via the Principal Bank to SAB with each Notice
of Drawdown provided that the actual certified annual statement has not
been presented at a previous drawdown. The results must justify the
disbursement of public financial aid. This is the case, if - based on the
above mentioned information - there is no imminent threat to the
continued existence of the entity/enterprise.
<PAGE>
-8-
7.2 The real estate purchase contract must be sent via the Principal Bank to
SAB prior to the first disbursement.
7.3 The Articles of Incorporation as well as the bylaws of the Grant Recipient
must be submitted via the Principal Bank to SAB prior to the first
disbursement. Any change of the legal situation has immediately to be
announced to SAB via the Principal Bank.
7.4 Cost eligible for assistance include the cost for the purchase or the cost
of manufacturing for tangible fixed assets (Sachanlagevermogen) according
to German GAAP with regard to the investment project. Excluded from
assistance are capital expenditure for the procurement of replacement
assets, vehicles, minor-value assets, real estate and capitalised real
estate expenses.
The Grant Recipient will be obliged to capitalise the capital expenditure
as stated in the investment plan approved in conjunction with the loan
commitment as additions to the company's fixed assets.
Prior to the first disbursement SAB must receive confirmation from the
auditors and from the Grant Recipient that they have taken note of the
above mentioned conditions. The confirmations have to be sent via the
Principal Bank to SAB.
7.5 Prior to the first disbursement Advanced Micro Devices, Inc. (hereinafter
"AMD Inc.") and the Grant Recipient shall confirm to SAB that the
Investment project supported by the CA grant has not been, and will not be,
the object of previous or future applications for public funds. Likewise
confirmation must be rendered that SAB has been notified of all the Grants
employed or applied for in connection with the subsidised Investment
project for which assistance is being provided herewith. The confirmations
have to be send via the Principal Bank to SAB.
<PAGE>
-9-
7.6 Prior to the first disbursement of funds confirmation by the Principal Bank
must be submitted that financing of the Project is secured in accordance
with the financial plan described in the grant offer provided that the
Grant Recipient shall communicate and comment any deviations from the
actual financial plan. In the event that the additional financial
assistance is provided, causing the maximum permissible amount of subsidies
to be exceeded, SAB has reserved the right vis-a-vis the Grant Recipient to
reduce the Grants proportionately. Such a reduction would be passed on by
the Principal Bank to the Grant Recipient.
7.7 Prior to the first disbursement of funds the formal declaration by the
Principal Bank and the loan agreements must be presented to SAB.
Furthermore, an updated financial plan of the Grant Recipient has to be
submitted to SAB. The aforementioned documents have to be submitted via the
Principal Bank to SAB even if they have to be provided by the Grant
Recipient or any third parties.
7.8 In promising the Grants and for the amount of subsidies on which they are
based the SAB and the Principal Bank have assumed that no special
depreciation will be claimed for the economic assets for which assistance
is granted. This must be confirmed to SAB in writing by the auditors of the
Grant Recipient prior to the first disbursement of funds. Furthermore such
confirmation has to be rendered within each financial statement of the
Grant Recipient.
7.9 SAB and the Principal Bank further assume that the Grant Recipient has
fulfilled its tax commitments. A certificate of non-objection from the tax
authorities providing information on tax-related circumstances of the
company and its shareholders must be sent via the Principal Bank to SAB
prior to the first disbursement of funds.
<PAGE>
-10-
7.10 Before the first disbursements of funds related to capital expenditure on
construction evidence must be submitted via the Principal Bank to SAB that
an incontestable building permit has been issued therefor.
7.11 In the event that the equity (nominated capital and shareholder loans) as
set out in clauses 10.4 and 10.5 below in a total amount of DM 507,500,000
is not, as provided therein, employed in full, AMD Inc. and AMD Saxony
Holding GmbH shall assume joint and several liability together with the
Grant Recipient for the cases set forth in clauses 7 and 8 of the General
Conditions for the Grant Recipient. The original of the declaration
attached as Appendix 4 (hereinafter the "Declaration of Liability"), duly
signed and sealed with the company stamp, must be presented via the
Principal Bank to SAB not later than at the time of first drawdown of the
Grants.
7.12 Each subsidy payment from the Principal Bank to the Grant Recipient is
dependent on the Principal Bank having previously received the
corresponding contribution from the SAB to be forwarded to the Grant
Recipient. The Principal Bank can refuse to transmit the provided
contribution if a corresponding instruction of the SAB or if
circumstances are such that in the opinion of the Principal Bank a
reduction or demand for repayment of the Grants by SAB threatens and
if SAB following a written demand of the Principal Bank for consent to
the transmission of cash funds to the Grant Recipient within a certain
time-limit has not declared such a consent.
7.13 Prior to the first disbursement commercial register excerpts of the
Grant Recipient and of AMD Saxony Holding GmbH have to be provided to
SAB via the Principal Bank.
7.14 The Principal Bank has no liability whatsoever for the failure of
either the SAB or the Free State of Saxony to provide for funds.
<PAGE>
-11-
7.15 For all the documents that according to these provisions the Grant
Recipient is to provide to the SAB via the Principal Bank the Grant
Recipient must provide two copies to the Principal Bank. The Principal Bank
has a reasonable amount of time to forward the required documents to the
SAB. A reasonable time shall be deemed to mean at least five banking days
exclusive of the days the documents are received or forwarded by the
Principal Bank. The Principal Bank has the right but not the obligation to
review the documents before their transmission to the SAB.
7.16 The Principal Bank will transmit all Grant payments received by SAB for
the Grant Recipient to the Grant Recipient without delay.
8. Drawdowns on the Funds from the Common Action "Regional Economic Structural
Improvement."
8.1 The Grant may be drawn from SAB via the Principal Bank until January 30,
April 30, July 30 and October 30 of each year upon fulfillment of
conditions pursuant to clause 7 and the following drawndown requirements.
In consultation with the SAB an additional drawdown up to December 15 of
each year is possible.
a) The overall financing of the Project has been secured.
b) Before the first drawdown the Grant Recipient has received equity and
shareholder loans amounting to DM 143,000,000.- and costs eligible for
assistance in the amount of DM 143,000,000.- have been incurred.
Grants may be drawn down before presentation of invoices for costs eligible
for assistance before presentation of invoices if such costs are expected
to be incurred in the subsequent two months after disbursement.
<PAGE>
-12-
Otherwise the drawdown requirements mentioned in clause 2 of the General
Conditions - Version for the Principal Bank - and - Version for the Grant
Recipient - shall apply, insofar as nothing else has been agreed in this
AMD Subsidy Agreement (including all appendices).
8.2 For the purpose of drawdown the Grant Recipient will provide in a timely
fashion an original of the attached "Declaration of the Grant Recipient"
(hereinafter "Notice of Drawdown") attached hereto as Appendix 5 as well as
the confirmation of an auditor attached hereto as Appendix 6 to the
Principal Bank for further transmission to the SAB. The draw of the Grants
from SAB occurs through the Principal Bank by submission to the SAB of the
"Request for Draw of Grant Funds from the Regional Economic Structural
Improvement Programme of the Free State of Saxony" (hereinafter the
"Request for Funds") attached hereto as Appendix 7. The Grant Recipient is
aware of the fact that the disbursement of individual Grant payments and
the transmission of these funds to the Principal Bank by the SAB for
transmission to the Grant Recipient is subject to the provision of cash
funds by the Free State of Saxony.
8.3 The Principal Bank has the right but not the obligation vis-a-vis the Grant
Recipient to verify the accuracy of the documents and statements provided
by the Grant Recipient in connection with a draw of the Grants. The
Grant Recipient undertakes on demand of the Principal Bank to provide all
information and documents which the Principal Bank deems necessary for spot
checks. Neither the circumstances nor the consequences of the SAB
objecting to or deeming insufficient, either for form or content, in whole
or in part, the documents or information necessary to confirm compliance
with the disbursement conditions, will grant the Grant Recipient any rights
vis-a-vis the Principal Bank.
<PAGE>
-13-
9. INTEREST GRANT DRAWS
9.1 The Interest Grant will be disbursed upon evidence that interest payments
under the Principal Bank loans referred to in clause 5.2 are due. In the
event of a draw on the Interest Grant the due date of the interest payments
within the framework of the financing of the Project is to be proven
through the presentation of the jointly determined relevant interest
accounts. With every Notice of Drawdown relating to Interest Grants the
Grant Recipient must provide the Principal Bank with the interest account
for which equalisation the Grant Recipient will use the Interest Grant.
9.2 If the interest accounts, which are intended to be offset by the Interest
Grant, have not yet been paid by the Grant Recipient to the respective
interest creditors then the Grant Recipient hereby irrevocably authorises
the Principal Bank to pay the funds received from the SAB for the purpose
of repaying the outstanding interest owed directly to the respective
interest creditor according to the rendered account.
10. GENERAL COVENANTS
10.1 Financial assistance is provided on the basis of the General Conditions
for Grants under the Regional Economic Development Programme of the Free
State of Saxony, Versions 31514 dated August 1995 and 31515 dated August
1995.
10.2 In granting this assistance SAB and the Principal Bank assume that the
intangible assets being subsidised have not been acquired/will not be
acquired from affiliated companies or companies with other business, legal
or personnel linkages.
<PAGE>
-14-
10.3 Assistance is granted provided that the Grants will be claimed back (pro
rata, as the case may be) in the event that the subsidised economic
assets leave the Grant Recipient's possession during the commitment
period or are no longer used in the Grant Recipient's facility with the
exception of expenditure on replacements of at least the same value in
the ordinary course of business. Other usage (e.g. renting/leasing) or a
disposal of assets shall be excluded. Renting and leasing in the course
of a demerger, pooling of interests or partnership shall be subject to
approval by SAB.
10.4 Assistance is granted provided that the Grant Recipient is endowed with a
nominal share capital in an amount of DM 217,500,000.- and entered in the
Register of Companies. The total amount must be paid up by no later than
end 1997.
10.5 Assistance is granted subject to the granting shareholder loans by AMD
Inc. totaling DM 290,000,000.- in favour of the Grant Recipient, to be
paid in two instalments of DM 145,000,000.- each in 1998 and 1999. During
the term of the guaranteed loans interest and redemption payments on the
shareholder loans will require the prior approval of SAB.
10.6 Assistance is granted provided that any overruns of the anticipated total
investment costs for the construction of the production facility in
Dresden (including the development centre) above and beyond DM
2,430,000,000.-(excluding additional investment cost for ongoing capital
expenditure in the amount of DM 551,000,000.-) up to a further amount of
altogether DM 225,000,000.- is financed by additional equity by AMD Inc.
and bank loans (with 65% guarantee backing) in the ration 1:2 and that
any investment cost overruns in excess thereof is financed in full by
additional equity (nominal capital/shareholder loans).
10.7 Assistance is granted provided that AMD Inc. and the Grant Recipient
conclude a cost reimbursement agreement as well as a "Wafer Purchase
Agree-
<PAGE>
-15-
ment" to take off - from the time of completion (which is scheduled to take
place by 2001 at the least) onwards - all the output from the Dresden plant
on the basis of full cost reimbursement in DM prices a 10%-profit-margin
complying with German cost accounting principle and including the
development centre, according to the following provisions:
- reimbursement of start-up losses for the years 1996 to 1998 exceeding
the budgeted amounts as well as a provision for the years 1999 and
2000 concerning cost reimbursement by AMD Inc. in the amount of 75%
and 105% irrespective of the actual capacity utilization:
- AMD Inc. covers the market risk within a capacity utilization range
from 100% to 75% p.a. of the planned/standard capacity utilization by
securing a "stable cash-flow" within this capacity utilization range.
Compliance with the above mentioned provisions shall be confirmed each year
by the auditor in the course of the annual audits of the Grant Recipient.
10.8 Assistance is granted provided that any market-induced adjustments in
production will be shared proportionally amongst all the production
facilities belonging to the AMD group manufacturing products comparable to
those of the Grant Recipient, according to the principle of equal
treatment, if the actual capacity utilization of AMD Saxony Manufacturing
GmbH falls below 75% of the planned/standard capacity utilization. Other
allocations are only permissible. If AMD Inc. covers the cash flow
shortfall of AMD Saxony Manufacturing GmbH caused by such allocations:
determination of such other AMD production facilities as well as the
monitoring of adherence to the equal treatment principle monitored will be
carried out in suitable manner with aid of neutral third parties.
10.9 Assistance is granted provided that any permanent cash flow surpluses of
the Grant Recipient will be used for premature repayment of the guaranteed
loans to be agreed upon between the Grant Recipient and the lenders in a
separate arrangement.
<PAGE>
-16-
10.10 Assistance is granted provided that in addition to production bona fide
research will be carried out at the Dresden plant and the development
centre will be occupied with the design and development of modern
products: for this the following declaration issued by AMD Inc. in a
letter dated January 18, 1996 shall apply:
"In this respect the design centre will be a genuine research and
development facility. 200 high qualified staff there will devote
themselves to the research and development of modern products.
Much of their activity will consist of independent research into
state-of-the-art technology, emphasis being placed on the
development and design of new products for the manufacture not
only in Dresden but in AMD's facilities world-wide. The range of
products will probably comprise a broad spectrum of state-of-the-
art digital components such as microprocessors and circuits for
telecommunications and multimedia sector. In line with the design
centres at our locations in the United States, the Dresden
facility will also address the redesign and development of
variations on existing products."
The declaration issued by AMD Inc. in a letter dated January 18th, 1996
shall apply:
"We accept that in the event AMD should default on the loan and
that the banks then take over the facility, a qualified buyer of
the facility should be able to produce his own products there
using the equipment and tools set in place...
We believe that the facility and the equipment set in the place
will be sufficient to allow operation of the production facility.
Thus a qualified buyer would not be encumbered from
manufacturing his own products in the facility.
10.11 Assistance is granted provided that any exchange of goods and services
between the Grant Recipient and AMD Inc. as well as companies within the
<PAGE>
reach of influence of AMD Inc. going beyond the Wafer Purchase Agreement
will be settled on the basis of customary market terms; the auditor will
comment on this in the course of their annual audits of the Grant
Recipient.
11. Processing Fee
For the processing of the application for the granting of the Investment
and Interest Grant the Principal Bank receives a single fee consisting of
[*] of the Investment Grant. The fee of DM [*] is due when the first
Grant payment is made and is to be paid into Account No. [*] at the
Dresdner Bank AG in Dresden (BLZ - Bank Destination Code).
12. General Provisions, Grant Agreement, Schedule of Conditions.
12.1 All provisions which are contained in the General Conditions for the Grant
Recipient, the General Conditions for the Principal Bank, the SAB Subsidy
Agreement and/or the list of obligatory conditions attached to the SAB
Subsidy Agreement (hereinafter the "Schedule of Conditions"; attached
hereto as Appendix 8) are binding parts of this agreement. The Grant
Recipient explicitly undertakes to abide by the conditions contained
therein and to make all declarations, and do all things which are required
of it pursuant to these obligations. Should there be contradictions between
provisions of this agreement and provisions contained in the appendixes to
this agreement, the provisions contained in the appendixes to this
agreement shall prevail.
12.2 Specific reference to particular provisions of the General Conditions for
the Grant Recipient, the General Conditions for the Principal Bank, the SAB
Subsidy Agreement and the Schedule of Conditions leaves the application of
other provisions of the General Conditions for the Grant Recipient, the
General Conditions for the Principal Bank, the SAB Subsidy Agreement and
the Schedule of Conditions unaltered.
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
-18-
12.3 The appendices referred to in this agreement form part of this agreement.
12.4 The rights and obligations in this agreement exist independently of all
other rights and obligations of the parties to this agreement that may be
contained in any other agreements relating to the financing of the Project.
12.5 In the commitment letter, which is the basis for the SAB Subsidy Agreement,
the SAB has reserved the right to adjust the commitment letter, if in the
context of the final handling of the guaranty application amendments or
supplements of its conditions arise. It is agreed between the parties to
this agreement that, if the SAB Subsidy Agreement will be modified due to
a modification of the commitment letter, this agreement shall be modified
accordingly. The Principal Bank will give the Grant Recipient the
opportunity to comment on forthcoming modifications of the SAB Subsidy
Agreement.
13. Assignment
13.1 The assignment of rights arising under this agreement is only permitted
with the written consent of the Principal Bank and the SAB. The Principal
Bank has the right to assign or transfer to the SAB all claims pursuant to
this agreement as against the Grant Recipient including all ancillary
claims or present or future securities.
13.2 According to the conditions of the SAB Subsidy Agreement with which the
Principal Bank has declared it is in agreement, the Principal Bank has
assigned all claims arising out of this agreement to the SAB. The Grant
Recipient acknowledges that it has knowledge thereof and explicitly agrees
thereto.
<PAGE>
-19-
14. DISCLOSURE REQUIREMENTS AND CERTIFICATES OF USE
14.1 The Grant Recipient shall submit Certificates of use to SAB via the
Principal Bank. The final Certificate of use shall be presented no later
than six months after termination of the investment project, by June 30,
2007, to SAB. Six months after termination of the first stage of the
investment - June 30, 2002 - an initial Certificate of intermediate use
shall be submitted without further reminder. The aforementioned
Certificates of use are to be produced by using (i) the form attached
hereto as Appendix 9 in case of the final Certificate of use, and (ii) the
form attached hereto as Appendix 10 in case of Certificate of intermediate
use.
14.2 SAB and the Principal Bank reserves the right to call for further
Certificates of intermediate use. In addition, on February 1 of each year a
report on the progress of the project shall be submitted by the Grant
Recipient to SAB via the Principal Bank, starting, however, with August 1,
1997. Separate reports shall also be submitted to the European Commission
if so required.
14.3 The correctness of the statements in the Certificates of use and their
compliance with the books and records has to be confirmed by an auditor.
14.4 At the end of each year the Principal Bank shall submit a Certificate of
intermediate use with regard to the Interest Grants furnished [Appendix I].
This Certificate of intermediate use must contain confirmation of the
amount of interest expenses paid on the loan provided by the Principal
Bank/banks in connection with the use of the guaranteed loan provided by
the Principal Bank/banks for the investment project in Dresden. Further
Certificates of use shall be submitted by the Grant Recipient and the
Principal Bank upon request of the SAB or its agents.
<PAGE>
-20-
14.5 Two copies of all Certificates of use with complete documentation and
information are to be provided to the Principal Bank without delay for
transmission to the SAB. Neither the circumstances nor the consequences of
the SAB objecting to or deeming insufficient, either for form or content,
in whole or in part, the Certificates of use, will give the Grant Recipient
any rights vis-a-vis the Principal Bank.
14.6 All expenses associated with the drawing up on the aforementioned
Certificates of use and their possible review by the Principal Bank are to
be borne by the Grant Recipient and such associated costs as incurred by
the Principal Bank are to be immediately reimbursed by the Grant Recipient.
15. RIGHT OF EXAMINATION
15.1 The SAB, the Free State of Saxony, represented through their respective
departments or an entity authorised by these, and the Audit
Office/Accounting Office of the Free State of Saxony as well as the
Principal Bank have the right to verify that the administration and the use
of the Grants by the Grant Recipient conforms with their designation. In as
much as EU funds are used the above also applies to the respective
departments of the EU. The Principal Bank has the right to burden the Grant
Recipient with its costs of the verification. The Grant Recipient is
obliged to inform the above noted departments about the Project and to
provide access to the corporate records.
15.2 The Grant Recipient is aware that the SAB, the Free State of Saxony, the
Audit Office/Accounting Office of the Free State of Saxony and the EU have
the right at any time to conduct investigations at the Principal Bank to
the extent the matters investigated are connected with the Grants and
further they have the right to examine all documents related to the Grants.
In case
<PAGE>
-21-
of doubt the necessity of such an investigation is deemed to exist in the
relationship between the Principal Bank and Grant Recipient. The Grant
Recipient hereby explicitly releases the Principal Bank from every and any
duty of confidentiality with respect to the investigating departments and
their personnel in connection with all information and documents
concerning the Grants. The costs of such investigations upon presentation
of an account will be immediately paid by the Grant Recipient to the
Principal Bank.
16. OBLIGATIONS TO NOTIFY
16.1 If pursuant to the provisions of this agreement the General Conditions for
the Grant Recipient, the SAB Subsidy Agreement, or the Schedule of
Conditions the Grant Recipient has an obligation to inform, the Grant
Recipient must do so immediately and in writing to the Principal Bank for
transmission to the SAB. The notification must specifically refer to the
provision which requires the notification.
16.2 The Grant Recipient will simultaneously provide the Principal Bank with
copies of all information and notifications which the Grant Recipient in
connection with the Subsidies provides directly to the SAB. The obligation
of the Grant Recipient to provide such information and notification to the
Principal Bank first remains undisturbed.
16.3 The Grant Recipient shall immediately notify the SAB via the Principal
Bank, if the total investment cost are reduced or the financing is changed
by more than DM 10,000,000.-. Otherwise clause 6 of the General
Conditions - Version of the Grant Recipient - and - Version of the
Principal Bank - shall apply.
16.4 The Grant Recipient will provide the following reports to the Principal
Bank for further transmission to the SAB:
<PAGE>
-22-
- yearly on the 1st of February, commencing, however, on August 1, 1997:
report to the SAB detailing the progress of the Project;
- on request of the European Commission; report to the European
Commission.
17. Waste Management and soil protection
The Grant Recipient herewith confirms that he will comply with the
objective of waste management and soil protection (clause 1 and clause 7
EGAB/First Law on Waste Management and Soil Protection in the Free State of
Saxony) in an exemplary manner.
18. Rescission and Repayment of Grants
18.1 The Principal Bank pursuant to the provisions of this agreement and the
General Conditions for the Grant Recipient has the right to resile from
this agreement and to demand immediate repayment of the Grants.
18.2 A rescission of Grants in case the number of permanent jobs the financial
assistance is based on are not filled or are not filled in full is only
possible until June 30, 2007.
18.3 In the event Grants are claimed back due to a partial non-compliance with
the conditions [stated in the Schedule of Conditions] and/or other
conditions for the provisions of financial assistance, the rescission of
the Grant is limited to a corresponding Grant amount.
18.4 Grants can completely or partially be claimed back even if the reason for
rescission has been set by AMD Saxony Holding GmbH.
<PAGE>
-23-
18.5 The Principal Bank will, upon request of the SAB, rescind this subsidy
agreement for good reason, and require immediate repayment of the grant, in
particular if:
a) the Grant Recipient has obtained the grant wrongfully;
b) the Grant Recipient does not implement the project for which financial
assistance is provided, or deviates from the capital expenditures
and/or non-investment measures upon which this commitment is based;
c) the Grant Recipient does not employ the Grants immediately in
accordance with the purpose stipulated in the commitment letter;
d) the Grant Recipient does not comply with the conditions, provisions and
other obligations resulting from this subsidy agreement;
e) the Grant Recipient does not maintain in a proper fashion the
certificates of use in the form attached to the commitment letter or
the records stipulated for maintenance of such evidence of use, or does
not submit these immediately on completion of the Project;
f) the number of permanent jobs and traineeships required to be created or
guaranteed to qualify for financial assistance are not filled, or are
not filled in full;
g) other conditions for the provision of financial assistance are not
satisfied;
h) the conditions for the provision of financial assistance subsequently
no longer apply;
i) before expiry of the funds commitment period (five years after
completion of the project): (i) the manufacturing facility for which
financial assistance is provided is closed, disposed of or rented or
leased partially or in full, (ii) assets for which financial assistance
is provided are
<PAGE>
-24-
retired from the subsidised manufacturing facility, and (iii) the
Grant Recipient applies for full enforcement proceedings or for
comparable insolvency proceedings, against the assets of the Grant
Recipient.
19. REPAYMENT OF GRANTS
19.1 The Grant Recipient will repay to the account of the Principal Bank as
specified in the repayment demand all improperly claimed, reduced or
repayable subsidies. On explicit request of the SAB the Grant Recipient
will pay the Grants to be repaid directly into a bank account specified by
the SAB. In this case the Grant Recipient will simultaneously inform the
Principal Bank in writing of the payment to the SAB and shall upon request
of the Principal Bank provide evidence that such a payment has been
effected.
19.2 The Grant Recipient cannot free himself from the obligation to repay the
Grant irrespective of the basis for the obligation by presenting an
alleged or actual setoff or counterclaim or right of retention against the
Principal Bank or the SAB.
20. LIABILITY OF THE PRINCIPAL BANK
In relation to the performance of this Subsidy Agreement as well as the
payment of Grants the Principal Bank is only required to comply with the
standard of care in line with banking praxis.
The Grant Recipient is aware that the Principal Bank can and will only
fulfil its obligations pursuant to the SAB Subsidy Agreement insofar as the
Grant Recipient enables the Principal Bank to do so. The Grant Recipient,
based on any rights, irrespective for what reason, exercised by the SAB
arising out of the SAB Subsidy Agreement gains no rights whatsoever. In
particular the Principal Bank has no obligation to investigate the accuracy
or veracity of any information or documents provided by the Grant Recipient
for transmis-
<PAGE>
-25-
sion to the SAB. Likewise the Principal Bank has no legal obligation to
investigate if the Grant Recipient is complying with the conditions upon
which the Grants were granted or any other agreements. Furthermore the
Principal Bank is not obligated to inform the Grant Recipient of any
possible omissions by the Grant Recipient in the performance of this
agreement and/or to explain possible consequences thereof.
21. Waiver and Forfeiture
The full or partial failure to exercise or the delayed exercise of a right
granted to the Principal Bank under this agreement shall not be deemed to
be a waiver or forfeiture of the particular right.
22. Choice of Law, Jurisdiction, and Place of Performance
22.1 This agreement and all rights and obligations thereunder are governed and
to be interpreted according to the law of the Federal Republic of Germany.
22.2 The parties hereby agree that the courts in Dresden are to have
jurisdiction over all disputes that arise in connection with this
agreement.
22.3 The place of performance for all obligations under this agreement is
Dresden.
23. Notice
Notices or other correspondence in connection with this agreement must be
in writing and forwarded by mail or fax to one of the following addresses
except if the receiver has not previously in writing personally provided
another address.
<PAGE>
-26-
Grant Recipient:
AMD Saxony Manufacturing GmbH
- ------------------------------
Washington Strasse 16 A/B
- ------------------------------
01139 Dresden
- ------------------------------
z.Hd. Geschaftsfuhrung
- ------------------------------
Tel: 49 351 84120
- ------------------------------
Fax: 49 351 8412150
- ------------------------------
Principal Bank:
Dr. Kulz-Ring 10
- ------------------------------
01067 Dresden
- ------------------------------
z.Hd. Direktion
- ------------------------------
Tel: 49 351 489-1213
- ------------------------------
Fax: 49 351 489-1350
- ------------------------------
24. GENERAL PROVISIONS
24.1 Should the Principal Bank for the purposes of the agreement, generally or
in a singular case, be authorised by the Grant Recipient to act on its
behalf, the Principal Bank, unless expressly agreed otherwise, is in single
instances deemed to be released from the limitations of (S) 181 the of
German Civil Code.
24.2 If particular terms of this agreement are or become ineffective in whole or
in part the effectiveness of the remaining terms is unaffected thereby.
The inoperative terms are to be replaced by a provision which in legally
permissible form comes closest to fulfilling the will of the parties as
expressed in this agreement. The above provision shall apply accordingly to
fill any lacunae in this agreement.
24.3 Any and all additions or amendments to this agreement must be in writing in
order to be valid except where a law mandates another form. All oral
supplemental agreement, additions or amendments to this agreement are
hereby explicitly contracted out of. This does also apply to the repeal
of the writing rule.
<PAGE>
-27-
Dresden, March 11, 1997
AMD Saxony Manufacturing GmbH as the Grant Recipient by:
/s/Jack L. Saltich
- -------------------------
Dresdner Bank AG in Dresden as Principal Bank by:
/s/Dr. Hans-Jurgen Menzel /s/Horst Oechsler
- --------------------------------------------
<TABLE>
<CAPTION>
Appendices:
- -----------
<S> <C>
1. SAB Subsidy Agreement
2. General Conditions for the Grant Recipient (Appendix 2 b to the SAB Subsidy Agreement)
3. General Conditions for the Principal Bank (Appendix 2 a to the SAB Subsidy Agreement)
4. Declaration of Liability (Appendix 4 to the SAB Subsidy Agreement)
5. Notice of Drawdown (Appendix 5 a to the SAB Subsidy Agreement)
6. Auditor's confirmation (Appendix 5 b to the SAB Subsidy Agreement)
7. Request for Funds (Appendix 5 c to the SAB Subsidy Agreement)
8. Schedule of Conditions (Appendix 1 to the SAB Subsidy Agreement)
9. Certificate of use (Appendix 6 a to the SAB Subsidy Agreement)
10.Certificate of Intermediate use (Appendix 6 b to the SAB Subsidy Agreement)
</TABLE>
<PAGE>
EXHIBIT - 10.50(d)
ADVANCED MICRO DEVICES, INC.
SECRETARY'S CERTIFICATE
The undersigned, Thomas M. McCoy, certifies that he is the Secretary of
Advanced Micro Devices, Inc., a Delaware Corporation ("the Company"), and that,
as such, he is authorized to execute this Certificate on behalf of the Company,
and further certifies that the attached is a fair and accurate translation of
the Subsidy Agreement between AMD Saxony Manufacturing GmbH and Sachsische
Aufbaubank.
WITNESS the signature of the undersigned this 13th day of May, 1997.
/s/ Thomas M. McCoy
-------------------------------
Thomas M. McCoy
Secretary
[SEAL APPEARS HERE]
<PAGE>
--The german version will be binding--
Sachsische Aufbaubank
COMMITMENT LETTER
Dresdner Bank AG Dresden, February 12, 1997
in Dresden M 1/Herr Zweckl-ro
Postfach 12 07 17 Tel.: (0351) 49 10 - 47 00
01008 Dresden
Customer no.: 262-206553
Project no.: 2514-7943
REGIONAL ECONOMIC DEVELOPMENT PROGRAMME OF THE FREE STATE OF SAXONY
Re: Application dated October 2, 1995 and Subsidy agreement dated
December 18, 1995 in the form of July 24, 1996
Grant recipient: AMD Saxony Manufacturing GmbH, 01067 Dresden
Ladies and Gentlemen,
based on the approval by the State Ministry of Saxony for Economic and Labour
Affairs of the above application, the Sachsische Aufbaubank is committing by way
of amending the Subsidy agreement dated December 18, 1995 in the form of July
24, 1996 an appropriated investment grant to you in the amount of
DM 476,687,000.00
in words:
DM four hundred seventy six million six hundred eighty-seven thousand
from funds of the Common Action (CA) "Regional Economic Structural Improvement"
(CA funds) for onward transmission to the above mentioned grant recipient.
The grant will be made available in instalments as follows:
EFRD funds
CA Funds EC/Federal Government/
Federal State Federal State
- --------------------------------------------------------------------------------
Account no. 972.003990.2
1997 an amount of up to DM 138,000,000.00
Account no. 972.003968.9
1998 an amount of up to DM 163,000,000.00
Account no. 972.004257.3
1999 an amount of up to DM 175,687,000.00
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In calculating the amount of the investment grant a total grant-in-aid of DM
500,500,000.00 has been assumed, consisting of an investment allowance of DM
23,813,000.00 and an investment grant of DM 476,687,000.00 million. If the
investment allowance is increased or reduced, the amount of the investment grant
will be adjusted accordingly.
GRANTING OF AN INTEREST GRANT FROM BUDGET FUNDS OF THE FREE STATE OF SAXONY
Based on the approval by the State Ministry for Economics and Labour Affairs,
the Sachsische Aufbaubank is committing in particularization of the Subsidy
agreement dated July 24, 1996 an interest grant in the amount of
DM 300,000,000.00
in words:
DM three hundred million
for onward transmission to the grant recipient mentioned above.
It is assumed that the interest grant will become due as follows:
1997 8,800,000.00 DM
1998 31,000,000.00 DM
1999 59,300,000.00 DM
2000 84,300,000.00 DM
2001 96,800,000.00 DM
2002 19,800,000.00 DM
The interest grant is to be used solely for the guaranteed loan in the amount of
up to DM 1,650,000,000.00 to be extended for the financing of the project. The
interest grant will be made available in instalments by the Sachsische
Aufbaubank upon presentation of interest calculations by the principal bank.
For both grants the following conditions shall apply:
PURPOSE OF THE GRANTS
The grants have been appropriated for a specific purpose and must be used for
cofinancing the costs of the project
"Construction of a manufacturing facility for the production of
microelectronics products at the investment site 01067 Dresden".
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--The german version will be binding--
INVESTMENT PERIOD
The project shall be carried out BETWEEN MARCH 31, 1996 AND DECEMBER 31, 2006.
The project consists of two phases:
Phase 1: March 31, 1996 to December 31, 2001
and
Phase 2: January 1, 2002 to December 31, 2006.
INVESTMENT AND FINANCIAL PLAN
The basis for the provision of the grants is the following investment and
financial plan.
in accordance with
commitment letter
dated Dec. 18,
1995
INVESTMENT PLAN -old- -new-
DM DM**
- ----------------------------------------------------------------------------
Purchase of real estate [
Wafer plant
- - Buildings and infrastructure**
- - Plant and equipment
Development centre *
- - Buildings and infrastructure
- - Plant and equipment
Start-up expenditure
]
**According to the AMD Plan dated Sept. 1996
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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-old- -new-
FINANCIAL PLAN DM DM
- -------------------------------------------------------------------------------
Contribution of equity funds by [
AMD/USA (share capital/shareholder
loans
Contribution of funds sourced from
the cash flow of the grant recipient
from 2001 onwards *
Investment allowance
Investment grant from CA funds
Loan provided by the principal bank
]
NOTES ON THE CALCULATION OF THE PUBLIC FINANCIAL ASSISTANCE:
The calculation of the CA grant is based on maximum costs eligible for
assistance in the amount of DM 1,430,000,000.00. This amounts corresponds to
maximum total investment eligible for assistance of DM 1,000,000.00 per
permanent job created.
It has to be noted, that the cost eligible for assistance actually incurred may
be subsidized by grants and other public financial aid up to a maximum rate of
35%.
The interest grant has been calculated on the basis of a loan requirement from
the principal bank in the amount of up to DM 1,650,000,000.00. This additional
grant is designed to off-set the interest expenses of the grant recipient during
the investment phase up to the year 2002 and thereafter, if the interest grant
has not been fully used.
JOBS
The calculation of the public financial assistance is based on the assumption
that through the investment at least 1,430 permanent jobs will be created, which
will be filled in full by the end of the year 2001. The grant recipient is not
obliged to create special jobs for women.
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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--The german version will be binding--
With regard to the reporting requirements concerning the creation and filing of
the permanent jobs we, in addition, refer to Clause 6 of the General Conditions
as well as to the repayment provisions according to Clause 7 of the General
Conditions.
DRAWDOWN OF FUNDS FROM THE COMMON ACTION "REGIONAL ECONOMIC STRUCTURAL
IMPROVEMENT"
The grant may be drawn down on January 30, April 30, July 30 and October 30 of
each year upon fulfillment of the following drawdown requirements by making use
of the attached notice of drawdown forms (Appendix 5):
- - The overall financing of the project has been secured.
- - Before the first drawdown the grant recipient has received equity and
shareholder loans amounting to DM 143,000,000.00 and cost eligible for
assistance in the amount of DM 143,000,000.00 have been incurred.
Grants may be drawn down for costs eligible for assistance before presentation
of invoices if such costs are expected be incurred in the subsequent 2 months
after disbursement.
To each Notice of Drawdown a confirmation of an auditor according to Appendix 5b
has to be attached.
Otherwise the drawdown requirements mentioned in Section 2 of the General
Conditions - Version for the Principal Bank - and - Version for the Grant
Recipient - shall apply, insofar as nothing else has been agreed in this subsidy
agreement (including the Schedule of Conditions).
PROCESSING FEE
We shall charge no fee for the processing of the grant application.
We cover your own processing charges you may arrange with the grant recipient
for a flat fee up to [*] of the committed investment and interest grant.
DRAWDOWN OF THE INTEREST GRANT FUNDS
The interest grant will also be disbursed through us upon evidence that interest
payments are due on the above mentioned load provided by the principal bank.
GENERAL CONDITIONS
The attached General Conditions for Grants from the Regional Economic Structural
Development Programme of the Free State of Saxony - Version for the Principal
Bank, including the Additional Agreements concluded with the Letter of Consent
between Dresdner Bank AG in Dresden and the Sachsische Aufbaubank dated January
31, 1997 and Version for the Grant Recipient - and the Schedule of Conditions
are an integral part of this commitment letter.
* CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
<PAGE>
You undertake to conclude a corresponding subsidy agreement with the grant
recipient on the basis of this commitment letter and to incorporate the above
mentioned General Conditions - Version for the Grant Recipient - as an integral
part of your subsidy agreement with the grant recipient.
The principal bank assigns with immediate effect all claims arising from this
agreement to the Sachsische Aufbaubank. The Sachsische Aufbaubank accepts this
assignment.
Yours faithfully,
Appendices:
- ----------
1. Schedule of Conditions
2. General Conditions for the Principal Bank and the Grant Recipient, August
1995
3. Letter of Consent including the Additional Agreements dated January 31, 1997
4. Declaration of Liability
5. Drawdown documents a) + b) + c)
6. Certificate of intermediate-use and Certificate of use a) + b)
<PAGE>
Appendix 1
- ----------
SCHEDULE OF CONDITIONS
to the letter
dated February 12, 1997
AMD SAXONY MANUFACTURING GmbH
Customer no. 262-206553
GENERAL COVENANTS:
1. Financial assistance is provided on the basis of the General Conditions for
Grants under the Regional Economic Development Programme of the Free State
of Saxony, Version 31514 dated August 1995 and 31515 dated August 1995.
2. In granting this assistance we assume that the intangible assets being
subsidised have not been acquired/will not be acquired from affiliated
companies or companies with other business, legal or personnel linkages.
3. Assistance is granted provided that the grants will be claimed back (pro
rata, as the case may be) in the event that the subsidised economic assets
leave the Grant recipient's possession during the commitment period or are
no longer used in the Grant recipient's facility with the exception of
expenditure on replacements of at least the same value in the ordinary
course of business. Other usage of project (e.g. renting/leasing) or a
disposal of assets shall be excluded. Renting and leasing in the course of a
demerger, pooling of interests or partnership shall be subject to approval
by the Sachsische Aufbaubank ("SAB").
4. Assistance is granted provided that the Grant recipient is endowed with a
nominal share capital in an amount of DM 217.5 million and entered in the
Register of Companies. The total amount must be paid up by no later than end
1997.
5. Assistance is provided subject to the granting of shareholder loans by
Advanced Micro Devices, Inc., Sunnyvale California/U.S.A. ("AMD Inc.")
totalling DM 290 million in favour of the Grant recipient to be paid in two
--------------
instalments of DM 145 million each in 1998 and 1999. During the term of the
--------------
guaranteed loans interest and redemption payments on the shareholder loans
will require the prior approval of SAB.
6. Assistance is granted provided that any overruns of the anticipated total
investment costs for the construction of the production facility in Dresden
(including the development centre) above and beyond DM 2,430,000,000.00
million (excluding additional investment coast for ongoing capital
expenditure in the amount of DM 551,000,000.00) up to a further amount of
altogether DM 225,000,000.00 million by additional equity and bank loans
(with 65% guarantee backing) in the ratio 1:2
<PAGE>
and to finance in full any investment cost overruns in excess thereof by
additional equity (nominal capital/shareholder loans).
7. Assistance is granted provided that AMD Inc. and the Grant Recipient
conclude a "Wafer Purchase Agreement" with the Borrower to take - from the
time of completion (which is scheduled to take place by 2001 at the least)
onwards -all the output from the Dresden plant on the basis of full cost
reimbursement in DM prices plus a 10%-profit-margin complying with German
cost accounting principles and including the development centre, according
to the following provisions:
- reimbursement of start-up losses for the years 1996 to 1998 exceeding the
budgeted amounts as well as a provision for the years 1999 and 2000
concerning cost reimbursement by AMD Inc. in the amount of 75% and 105%
irrespective of the actual capacity utilization;
- AMD Inc. covers the market risk within a capacity utilization range from
100% to 75% p.a. of the planned/standard capacity utilization by securing
a "stable cash-flow" within this capacity utilization range.
Compliance with the above mentioned provisions shall be confirmed each year
by the auditor in the course of the annual audit of the Grant recipient.
8. Assistance is granted provided that any market-induced adjustments in
production will be shared proportionally amongst all the production
facilities belonging to the AMD group manufacturing products comparable to
those of the Grant recipient, according to the principle of equal
treatment, if the actual capacity utilization of AMD Manufacturing GmbH
falls below 75% of the planned/standard capacity utilization. Other
allocations are only permissable, if AMD Inc. covers the cashflow shortfall
of AMD Saxony Manufacturing GmbH caused by such allocations; determination
of such other AMD production facilities as well as the monitoring of
adherence to the equal treatment principle monitored will be carried out in
suitable manner with aid of neutral third parties.
9. Assistance is granted provided that any permanent cash flow surpluses of
the Grant recipient's will be used for premature repayment of the
guaranteed loans to be agreed upon between the Grant Recipient and lenders
in a separate arrangement.
10. Assistance is granted provided that in addition to production bona fide
research will be carried out at the Dresden plant and the development
centre will be occupied with the design and development of modern products;
for this the following declaration issued by AMD Inc. in a letter dated
January 18th, 1996 shall apply:
"In this respect the design centre will be a genuine research and
development facility. 200 high qualified staff there will devote themselves
to the research and development of modern products. Much of their activity
will consist of independent research into state-of-the-art technology,
emphasis being placed on the development and design of new products for
manufacture not only in Dresden but in AMD's facilities worldwide. The
range of products will probably comprise a broad spectrum of state-of-the-
art digital components such as microprocessors and circuits for
telecommunications and the multimedia sector. In
<PAGE>
--The german version will be binding--
line with the design centres at our locations in the United States, the
Dresden facility will also address the redesign and development of
variations on existing products."
The declaration issued by AMD Inc. in a letter dated January 18th, 1996
shall apply:
"We accept that in the event AMD should default on the loan and that the
banks then take over the facility, a qualified buyer of the facility should
be able to produce his own products there using the equipment and tools set
in place.... We believe that the facility and the equipment set in place
will be sufficient to allow operation of the production facility. Thus a
qualified buyer would not be encumbered from manufacturing his own products
in the facility."
11. Assistance is granted provided that any exchange of goods and services
between the Grant recipient and AMD Inc. as well as companies within the
reach of influence of AMD Inc. going beyond the "Wafer Purchase Agreement"
will be settled on the basis of customary market terms; the auditor will
comment on this in the course of their annual audits of the Grant
recipient.
DISBURSEMENT CONDITIONS:
1. The current certified annual financial statements and an analysis of the
operating figures for the month preceeding the disbursement must be sent to
SAB with each Notice of Drawdown provided that the actual certified annual
statement has not been presented at a previous drawdown. The results must
justify the disbursement of public financial aid. A disbursement is not
justified, if based on the above mentioned information there is an imminent
threat to the continued existence of the Grant Recipient.
2. The real estate purchase contract must be sent to us prior to the first
disbursement.
3. The Articles of Incorporation as well as the bylaws of the Grant recipient
must be submitted to us prior to the first disbursement. Any change of the
legal situation has to be immediately announced to the SAB.
4. Cost eligible for assistance include the cost of purchase or the cost of
manufacturing for tangible fixed assets (Sachanlagevermogen) according to
German GAAP with regard to the investment project. Excluded from assistance
are capital expenditure for the procurement of replacement assets,
vehicles, minor-value assets, real estate and capitalised real estate
expenses.
The Grant recipient will be obliged to capitalise the capital expenditures
as stated in the investment plan approved in conjunction with the loan
commitment as additions to the company's fixed assets.
Prior to the first disbursement we must receive confirmation from the tax
adviser/auditors and from the Grant recipient that they have taken note of
the above mentioned conditions.
<PAGE>
5. Prior to the first disbursement AMD Inc. and the Grant recipient shall
confirm to us that the investment project supported by the CA grant has not
been, and will not be, the object of previous or future applications for
public aid funds. Likewise confirmation must be rendered that the
Sachsische Aufbaubank has been notified of all the grants employed or
applied for in connection with the subsidised investment project for which
assistance is being provided herewith.
6. Prior to the first disbursement of funds confirmation by the principal bank
must be submitted that financing of the project is secured in accordance
with the financial plan described in the grant offer provided that the
Grant recipient shall communicate and comment any deviations from the
financial plan. In the event that additional financial assistance is
provided, causing the maximum permissible amount of subsidies to be
exceeded, we reserve the right vis-a-vis the Grant Recipient to reduce the
grant proportionately.
7. Prior to the first disbursement of funds the formal declaration by the
principal bank and the loan agreements must be presented to us.
Furthermore, an updated financial plan of the Grant Recipient's has to be
submitted to us.
8. For the present grant offer and the amount of subsidies on which it is
based we have assumed that no special depreciation will be claimed for the
-----------------------
economic assets for which assistance is granted. This must be confirmed to
us in writing by the tax adviser/auditors prior to the first disbursement
of funds. Furthermore such confirmation has to be rendered within each
annual financial statement of the Grant recipient.
9. We further assume that the Grant recipient has fulfilled its tax
commitments. A certificate of non-objection from the tax authorities
providing information on the tax-related circumstances of the company and
its shareholders must be sent to us prior to the first disbursement of
funds.
10. Before the first disbursements of funds related to capital expenditure on
construction evidence must be submitted to SAB that an incontestable
building permit has been issued therefor.
11. In the event that the equity (nominal capital and shareholder loans)
scheduled in the above financial plan is not employed in full, AMD Inc. and
AMD Saxony Holding GmbH shall assume joint and several liability together
with the Grant Recipient for the cases set forth in Sections 7 and 8 of the
General Conditions for the Grant Recipient in version 31515 dated August
1995. The original of the attached declaration, duly signed and sealed with
the company stamp - must be presented to SAB no later than at the time of
first drawdown of the grants.
12. Prior to the first disbursement commercial register excerpts of the Grant
Recipient and of AMD Saxony Manufacturing GmbH have to be provided to SAB
via the principal bank.
DISCLOSURE REQUIREMENT AND CERTIFICATES OF USE
1. The Grant recipient shall immediately notify the SAB, if the total
investment cost are reduced or the financing is changed by more than DM
10,000,000.00 --. Other-
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--The german version will be binding--
wise Section 6 of the General Conditions - Version for the Grant recipient
- and - Version for the principal bank - shall apply.
2. The Grant recipient shall submit Certificates of use to us via the
principal bank. The final Certificate of use (Appendix 6a) shall be
presented no later than six months after termination of the investment
project, by June 30, 2007, to the Sachsische Aufbaubank (SAB). Six months
after termination of the first stage of the investment - June 30, 2002 - an
initial Certificate of intermediate use (Appendix 6b) shall be submitted
without further reminder. SAB reserves the right to call for further
Certificates of intermediate use. In addition, on February 1 of each year a
report on the progress of the project shall be submitted to SAB, starting
with August 1, 1997. Separate reports shall also be submitted to the
European Commission if so required.
The correctness of the statements in the certificates of use and their
compliance with the books and records has to be confirmed by an auditor.
3. At the end of each year the principal bank shall submit a Certificate of
intermediate use with regard to the interest grants furnished. This
Certificate of intermediate use (Appendix 6b) must contain confirmation of
the amount of interest expenses paid on the loan provided by the principal
bank in connection with use of the loan for the investment project in
Dresden. Further Certificates of use shall be submitted by the Grant
Recipient and the principal bank upon request of the SAB or its agents.
RECISSION OF GRANTS
A recission of grants in case the number of permanent jobs the financial
assistance is based on are not filled or are not filled in full is only possible
until June 30, 2007.
In the event grants are claimed back due to a partial non-compliance with the
conditions and/or other conditions for the provision of financial assistance the
recission of the grant is limited to a corresponding grant amount. Grants can
completely or partially be claimed backed even if the reason for recission has
been set by AMD Saxony Holding GmbH.
WASTE MANAGEMENT AND SOIL PROTECTION
The Grant recipient has to confirm within the subsidy contract that he will
comply with the objectives of waste management and soil protection (Section 1
and Section 7 EGAB / First Law on Waste Management and Soil Protection in the
Free State of Saxony) in an exemplary manner.
MISCELLANEOUS
As far as, in the course of the final revision of the guarantee application, any
changes of or additions to the covenants become necessary, the adjustment of the
covenants of the commitment letter is reserved.
<PAGE>
Appendix 2a
General Provisions
for Subsidies
from the Regional Economic Development Program
of the Free State of Saxony
- Version for the Subsidy Recipient
1. Use of the Subsidy
1.1 The subsidy funds may only be used for the project named in the
acceptance for proportional coverage of the sponsored costs estimated
according to the application within the framework of the financing
plan.
1.2 The subsidy recipient must demonstrate the use of the subsidy
according to the attached forms or according to the documents provided
for verification of the source and disposition statement via the
company's bank to the Saxon Development Bank [SAB] on his own accord
on the occasion of each disbursement and after completion of the
project.
The subsidy recipient must retain the records and all documents
otherwise associated with assistance for at least 5 years, starting
from the end of the project (funds commitment term), if a longer
retention period is not defined according to provisions of tax law or
other regulations.
1.3 The project shall begin as soon as possible.
2. Request/Disbursement of the Subsidy
2.1 The subsidy recipient may only request the subsidy funds using the
attached request forms, when complete project financing is guaranteed.
The subsidy funds many only be called proportionally for already
incurred sponsored costs.
Within the framework of proportional financing the subsidy funds
should be used in proportion with the stipulated subsidy recipient's
own and other funds. The first call can be made when 10% of the
sponsored project costs have been incurred.
2
<PAGE>
Using the attached form an interim source and disposition statement
should be kept for investment measures and the call statement should
be attached. For non-investment measures the corresponding invoice
copies should be attached.
2.2 If it is subsequently ascertained that the subsidy has been claimed in
whole or in part although the prerequisites for it were absent, the
amounts drawn contrary to the provisions must be immediately repaid
via the company's bank to the SAB. They can only be called again when
the prerequisites for the request have been satisfied.
3. Transfer
Transfer of claims from the subsidy agreement shall only be possible
with the consent of the company's bank and the Saxon Development Bank.
The company's bank shall be entitled to transfer or assign all claims
against the subsidy recipient besides ancillary rights or possibly
surrendered securities resulting from the subsidy agreement to the
Saxon Development Bank.
4. Reduction Proviso
The company's bank reserves the right to reduce the amount of the
subsidy in proportion on behalf of the Saxon Development Bank if the
sponsored costs of the project are lowered, other assistance funds are
increased, or other assistance funds are granted. Already disbursed
amounts must be immediately repaid to the Saxon Development Bank to
the extent they exceed the reduced subsidy amount.
5. Audit Rights
The Saxon Development Bank, the Free State of Saxony, represented by
its responsible agencies or an agency commissioned by them, and the
General Accounting Office of the Free State of Saxony and the
company's bank shall be entitled to review economical administration
and use of the dedicated subsidy by the subsidy recipient according to
the terms. To the extent EU funds are used, the equivalent shall
apply to the responsible EU agencies. The company's bank shall be
entitled to charge the costs which may result from the audit to the
subsidy recipient.
It shall be incumbent on the subsidy recipient to provide information
about the sponsored project to these agencies and to allow inspection
of company documents.
6. Information Obligations/Funds Commitment Term
It shall be incumbent on the subsidy recipient to immediately indicate
to the company's bank when changes arise relative to the information
in the application and all other
3
<PAGE>
submitted documents which are all relevant to the subsidy. This
disclosure obligation shall begin with the acceptance date and end 5
years after completion of the project (funds commitment term).
In particular this disclosure obligation shall be immediate for the
subsidy recipient when
6.1 after submitting the financing plans he requests or receives further
allocations for the same purpose from other public agencies or when
the total expenditures are reduced or financing is changed by more
than 1000.- DM.
6.2 the number of permanent/training and women's jobs to be created or
guaranteed decreases,
6.3 the circumstances specified under item 7 prevail,
6.4 shutdown, sale, lease or rental of the sponsored plant in whole or in
part is impending or institution of a general attachment execution
according to the General Attachment Act or comparable insolvency
proceedings is requested for the property of the subsidy recipient.
6.5 corporate legal relationships change.
7. Cancellation of the Agreement and Recovery of the Subsidy
7.1 The company's bank shall be entitled to withdraw from this subsidy
agreement for good cause and to recover the subsidy for immediate
repayment, especially when
7.1.1 the subsidy recipient has improperly acquired the subsidy,
7.1.2 he is not executing the sponsored project or deviates from the
investments/non-investment measures underlying this acceptance.
7.1.3 he does not immediately use the subsidy in accord with the purpose
specified in this acceptance,
7.1.4 he does not satisfy the conditions, directions and other obligations
associated with the subsidy agreement,
7.1.5 he does not properly keep the source and disposition statement
according to the source and disposition statement form attached to the
acceptance or the documents provided for keeping the source and
disposition statement or does not submit them immediately after
completion of the project,
4
<PAGE>
7.1.6 the number of permanent/training and women's jobs to be created or
guaranteed which are necessary for the assistance are not filled or
not reached.
7.1.7 other requirements for assistance are not met,
7.1.8 assistance requirements subsequently cease to exit,
7.1.9 before expiration of the funds commitment term (see item 6)
- the sponsored plant is shut down, sold, leased or rented in its
entirety or in part,
- sponsored capital goods separate from the sponsored plant,
- institution of a general attachment execution or comparable
insolvency proceedings is requested for the property of the
subsidy recipient.
7.1.10 The Saxon Development Bank has not approved a change of corporate legal
relationships.
7.2 Jobs must be in fact held or at least continually offered on the labor
market for a supervisory period of at least 5 years after the end of
the project (funds commitment term, item 6).
If the number of employees after completion of the project does not
correspond to the required number of permanent/training and women's
jobs, because the permanent/training and women's jobs have not been
created, the company's bank shall recover the subsidy in its entirety
or in proportion. The company's bank will also recover the subsidy if
permanent jobs have not been made available without interruption to
the labor market during the funds commitment term (see item 6). This
can be assumed if the number of actual employees during this five year
period was less for a longer time interval than the required number of
permanent/training and women's jobs.
7.3 Women's jobs should be held for a period of at least 5 years after
completion of the project.
The Saxon Development Bank will proportionally recover via the
company's bank the subsidy accepted to create women's jobs for the
times during which the total number of women's jobs cannot be proven.
8. Interest surcharge
5
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8.1 The subsidy recipient must refund the subsidy at the request of the
company's bank when there are grounds for reduction as per item 4 or
there are grounds for cancellation as per items 7.1 - 7.3 and must pay
interest from the time of disbursement on at the given lombard lending
rate.
8.2 It shall moreover be incumbent on the subsidy recipient at the request
of the company's bank to refund the subsidy or partial amounts thereof
and to pay interest in the amount specified in item 8.1 from the date
of disbursement on, if
a) the subsidy recipient has not used the subsidy made available to
him for payments rendered,
b) the subsidy was not immediately returned to the Saxon Development
Bank for lack of field of application,
c) due reduction of the subsidy for lack of notice by the subsidy
recipient did not take place
9. Amendments and Additions to the Agreement
Amendments and additions to the subsidy agreement must be in writing.
10. Legal invalidity of individual provisions
If individual provisions of this agreement should be or become
invalid, the other agreement provisions shall remain unaffected
thereby. It shall be incumbent on the parties to the agreement to
replace invalid provisions by equivalent provisions.
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<PAGE>
Appendix 2b
General Provisions
for Subsidies
from the Regional Economic Development Program
of the Free State of Saxony
- Version for the Company's Bank
1. Use of the Subsidy
1.1 The subsidy funds may only be used for the project named in the
acceptance for proportional coverage of the sponsored costs estimated
according to the application within the framework of the financing
plan.
1.2 The company's bank shall supervise the use of the subsidy funds, have
their use according to the terms demonstrated, and on its own accord
shall confirm to the Saxon Development Bank the correctness of the
source and disposition statement after completion of the project on
its forms or on the documents provided for this purpose.
The retention period for records and all documents otherwise
associated with assistance is at least 5 years, starting from the end
of the project (funds commitment term), if a longer retention period
is not defined according to provisions of tax law or other
regulations.
2. Request/Disbursement of the Subsidy
2.1 The company's bank may only request the subsidy funds using the
attached request forms, when complete project financing is guaranteed.
The subsidy funds many only be called proportionally for already
incurred sponsored costs.
Within the framework of proportional financing the subsidy funds
should be used in proportion with the stipulated subsidy recipient's
own and other funds. The first call can be made when 10% of the
sponsored project costs have been incurred.
Using the attached form an interim source and disposition statement
should be kept by the subsidy recipient and the call statement should
be attached. For non-investment measures the corresponding invoice
copies should be attached.
7
<PAGE>
2.2 If it is subsequently ascertained that the subsidy has been claimed in
whole or in part although the prerequisites for it were absent, the
amounts drawn contrary to the provisions must be immediately repaid to
the Saxon Development Bank. They can only be called again when the
prerequisites for the claim have been satisfied.
3. Transfer
Transfer of claims from the subsidy agreement shall only be possible
with the consent of the company's bank and the Saxon Development Bank.
4. Reduction Proviso
The Saxon Development Bank reserves the right to reduce the amount of
the subsidy in proportion if the sponsored costs of the sponsored
project are lowered, other assistance funds are increased, or other
assistance funds are granted. Already disbursed amounts must be
immediately repaid to the Saxon Development Bank to the extent they
exceed the reduced subsidy amount.
5. Audit Rights
The Saxon Development Bank, the Free State of Saxony, represented by
its responsible agencies or an agency commissioned by them, and the
General Accounting Office of the Free State of Saxony shall be
entitled to undertake an audit at any time at the company's bank if
necessary in conjunction with granting of the subsidy and in doing so
to inspect all documents relating to the subsidy. To the extent EU
funds are used, the equivalent shall apply relative to the responsible
EU agencies. The company's bank shall compensate the costs which may
result from the audit. They can be charged to the subsidy recipient.
The company's bank must furnish any desired information to these
agencies.
6. Information Obligations/Funds Commitment Term
It shall be incumbent on the company's bank to immediately indicate to
the Saxon Development Bank when changes arise relative to the
information in the application and all other submitted documents which
are all relevant to the subsidy. This disclosure obligation shall
begin with the acceptance date and end 5 years after completion of the
project (funds commitment term).
In particular this disclosure obligation shall be immediate for the
company's bank when
8
<PAGE>
6.1 after submitting the financing plans the subsidy recipient requests or
receives further allocations for the same purpose from other public
agencies or when the total expenditures are reduced or financing is
changed by more than 1000.- DM.
6.2 the number of permanent/training and women's jobs to be created or
guaranteed decreases,
6.3 the circumstances specified under item 7 prevail,
6.4 shutdown, sale, lease or rental of the sponsored plant in whole or in
part is impending or institution of a general attachment execution
according to the General Attachment Act or comparable insolvency
proceedings is requested for the property of the subsidy recipient.
6.5 the company's bank is to be changed. The Saxon Development Bank must
approve the change of the company's bank.
7. Cancellation of the Agreement and Recovery of the Subsidy
7.1 The company's bank will withdraw from the subsidy agreement concluded
with the subsidy recipient for good cause at the request of the Saxon
Development Bank and recover the subsidy for immediate repayment,
especially when
7.11 the subsidy recipient has improperly acquired the subsidy,
7.12 he is not executing the sponsored project or deviates from the
investments/non-investment measures underlying this acceptance,
7.13 he does not immediately use the subsidy in accord with the purpose
specified in this acceptance,
7.14 he does not satisfy the conditions, directions and other obligations
associated with the subsidy agreement,
7.15 he does not properly keep the source and disposition statement
according to the source and disposition statement form attached to the
acceptance or the documents provided for keeping the source and
disposition statement or does not submit them immediately after
completion of the project,
7.16 the number of permanent/training and women's jobs to be created or
guaranteed which are necessary for the assistance are not filled or
not reached.
9
<PAGE>
7.17 other requirements for assistance are not met,
7.18 assistance requirements subsequently cease to exit,
7.19 before expiration of the funds commitment term (see item 6)
- the sponsored plant is shut down, sold, leased or rented in its
entirety or in part,
- sponsored capital goods separate from the sponsored plant,
- institution of a general attachment execution or comparable
insolvency proceedings is requested for the property of the
subsidy recipient.
7.2 Jobs must be in fact held or at least continually offered on the labor
market for a supervisory period of at least 5 years after the end of
the project (funds commitment term, item 6).
If the number of employees after completion of the project does not
correspond to the required number of permanent/training and women's
jobs, because the permanent/training and women's jobs have not been
created, the Saxon Development Bank shall recover the subsidy in its
entirety or in proportion via the company's bank. The Saxon
Development Bank will also recover the subsidy if permanent/training
and women's jobs have not been made available without interruption to
the labor market during the funds commitment term (see item 6). This
can be assumed if the number of actual employees during this five year
period was less for a longer time interval than the required number of
permanent/training and women's jobs.
7.3 Women's jobs should be held for a period of at least 5 years after
completion of the project.
The Saxon Development Bank will proportionally recover via the
company's bank the subsidy accepted to create women's jobs for the
times during which the total number of women's jobs cannot be proven.
7.4 When there are grounds for reduction as per item 4 or there are
grounds for cancellation as per items 7.1 - 7.3 the company's bank
will immediately remit the repaid subsidy to the Saxon Development
Bank.
7.5 The Saxon Development Bank shall be entitled to withdraw from this
subsidy agreement for good cause and demand immediate repayment of the
subsidy, especially when
10
<PAGE>
a) the company's bank has acquired the subsidy improperly or
contrary to the provisions of the subsidy agreement,
b) the company's bank violates some other obligation assumed with
the subsidy agreement.
8. Interest surcharge relative to the subsidy recipient
8.1 The subsidy recipient must refund the subsidy at the request of the
Saxon Development Bank when there are grounds for reduction as per
item 4 or there are grounds for cancellation as per items 7.1 - 7.3
and must pay interest from the time of disbursement on at the given
lombard lending rate.
It shall be incumbent on the company's bank to lodge the reimbursement
claim besides any interest at the request of the Saxon Development
Bank against the subsidy recipient and to remit it immediately to the
Saxon Development Bank.
8.2 It shall moreover be incumbent on the subsidy recipient at the request
of the Saxon Development Bank to refund the subsidy or partial amounts
thereof and to pay interest in the amount specified in item 8.1 from
the date of disbursement on, if
a) the subsidy recipient has not immediately used the subsidy made
available to him for payments rendered,
b) the subsidy was not immediately returned to the Saxon Development
Bank for lack of field of application,
c) due reduction of the subsidy for lack of notice by the subsidy
recipient did not take place.
It shall be incumbent on the company's bank to lodge the reimbursement
claim besides any interest at the request of the Saxon Development
Bank against the subsidy recipient and to remit it immediately to the
Saxon Development Bank.
9 Interest surcharge relative to the company's bank
9.1 The company's bank must refund the subsidy at the request of the Saxon
Development Bank when there are grounds for withdrawal as per item 7.5
and must pay interest from the time of disbursement on at the given
lombard lending rate.
11
<PAGE>
9.2 It shall moreover be incumbent on the company's bank at the request of
the Saxon Development Bank to refund the subsidy or partial amounts
thereof and to pay interest in the amount specified in item 9.1 from
the date of disbursement on, if
a) it does not transmit the subsidy immediately to the subsidy
recipient,
b) the subsidy has not been returned immediately to the Saxon
Development Bank for lack of field of application,
c) it does not remit amounts which it is obligated to remit to the
Saxon Development Bank according to the agreement.
10. Mode of Payment
All payments to the Saxon Development Bank shall be made at the risk
and costs of the company's bank.
11. Amendments and Additions to the Agreement
Amendments and additions to the subsidy agreement must be in writing.
12. Legal invalidity of individual provisions
If individual provisions of this agreement should be or become
invalid, the other agreement provisions shall remain unaffected
thereby. It shall be incumbent on the parties to the agreement to
replace invalid provisions by equivalent provisions.
12
<PAGE>
Appendix 3
Declaration of Agreement
Saxon Development Bank
Pirnaische Strasse 9
01069 Dresden
Customer No.: 262-206553
Project No.: 2514-7943
Regional Economic Development Program of the Free State of Saxony
Company: AMD Saxony Manufacturing GmbH
Dear Sirs:
We hereby declare ourselves in agreement with the contents of your
amended acceptance (including all appendices) dated February 12, 1997 with
recognition of the General Provisions for Subsidies from the Regional Economic
Development Program of the Free State of Saxony which were sent to us, including
the Supplementary Agreement dated February 12, 1997 which has been countersigned
by us and which is attached to this Declaration of Agreement.
It shall be incumbent on us to conclude the subsidy agreement with the
subsidy recipient on the basis of this acceptance and to make the direction
sheet and the General Provisions - Version for the Subsidy Recipient - (as
modified by the Allocation Instruction and the instruction sheet) part of our
subsidy agreement with the subsidy recipient.
- ------------------------- -------------------------------------------
(Date and Place) (Stamp and signature of the Company's Bank)
13
<PAGE>
Supplementary Agreements
The Saxon Development Bank (hereinafter called the "SAB") has submitted to
Advanced Micro Devices Saxony Manufacturing GmbH Dresden (hereinafter
called "AMD Saxonia or "subsidy recipient") as the subsidy recipient via
the company's bank an amended proposal dated February 12, 1997 for
construction of a plant for manufacture of microelectronic products in
Dresden for extending investment subsidies in the amount of 476,687,000.00
DM and interest subsidies in the amount of 300,000,000.00 DM (jointly also
the "subsidies").
Within the framework of the company's bank process conventional in the Free
State of Saxony the subsidies shall be extended via the Dresdner Bank AG in
Dresden ("Dresdner Bank") as the banker to the subsidy recipient.
To specify and delineate the obligations to be assumed by the company's
bank and the possible liabilities associated therewith for them, the
following shall hereby be agreed upon by way of clarification and in
addition to the allocation instruction and the General Provisions for
Subsidies from the Regional Economic Development Program of the Free State
of Saxony - version for the Company's Bank - status 08/95 ("General
Provisions" or "AGB") between the SAB and Dresdner Bank as the prerequisite
for assuming the function of the company's bank:
1. The SAB shall make available to the Dresdner Bank investment subsidies in
the amount of 476,687,000 DM and interest subsidies in the amount of 300
million DM for transfer to the subsidy recipient. With signing of the
declaration of agreement by the Dresdner Bank an agency agreement between
SAB and Dresdner Bank shall exist.
2. Thus it shall be incumbent on the Dresdner Bank to transfer the subsidy to
AMD Saxonia and to make the AGB (Version for the Subsidy Recipient) and the
conditions and disbursement prerequisites part of its subsidy agreement
with AMD Saxonia.
3. Dresdner Bank shall not be liable to the SAB for repayment of the
subsidies, but only for careful fulfillment of its obligations to SAB
accepted expressly in this agreement, as the banker of the subsidy
recipient. Item 7.5 (a) of the AGB (Version for the Company's Bank) shall
constitute one exception thereto.
These obligations must be satisfied with the diligence which Dresdner Bank
is accustomed to exercising in its own affairs as well.
4. Within the framework of supervision of the funds call and monitoring the
use of the funds, the Dresdner Bank shall fulfill its obligations to the
SAB by monitoring the use of the subsidies by causing to be demonstrated
the use of the subsidies according to the terms with the employment of an
auditor of the subsidy recipient agreeable to the company's bank. Dresdner
14
<PAGE>
Bank will have the correctness of the source and disposition statement
confirmed once again by the auditor after completion of the project and
will forward this confirmation to the SAB.
The Dresdner Bank shall coordinate the manner of confirmation with the SAB.
In addition, the Dresdner Bank shall verify the correctness of the
confirmation by random sampling. With regard to the interest subsidies
proof shall be furnished by submitting the corresponding bank confirmations
regarding interest accrued.
5. The subsidies shall be claimed via the company's bank by call declaration
of the subsidy recipient. The subsidy recipient will attached one source
and disposition statement at a time to the call declaration. All source
and disposition statements must be kept by the subsidy recipient. The
Dresdner Bank shall not be liable either for the timely submittal or for
late filing of the source and disposition statements.
6. The retention obligation for records and all documents otherwise associated
with assistance according to item 1.2 of the General Provisions and the
disclosure obligation according to item 6 of the General Provisions shall
end 5 years after completion of the project.
7. Complete financing of the project shall be considered guaranteed with
delivery of the company's bank declaration desired by the SAB in
conjunction with the granting of the subsidies.
8. Amounts drawn contrary to the provisions according to item 2.2 of the
General Provisions must be repaid by the subsidy recipient via the Dresdner
Bank or at the request of the SAB by him directly to the SAB. The
equivalent shall apply to repayment of reduced subsidy amounts (item 4 of
the AGB) and to recovery of subsidy amounts (item 7.2 of the AGB). Item
7.4 of the AGB shall apply.
9. The Dresdner Bank as the banker of the subsidy recipient shall furnish to
the SAB, the Free State of Saxony and the responsible EU agencies on
request all information necessary in conjunction with the granting of the
subsidy.
10. Within the framework of this agreement, immediately shall be construed to
mean after allowance of an appropriate period of 30 bank working days.
11. The disclosure obligation according to item 6.1 of the General Provisions
shall exist only when the subsidy recipient has made application for
further allocations for the same purpose from other public agencies via the
Dresdner Bank as the company's bank. Otherwise a disclosure obligation of
the Dresdner Bank according to item 6 shall exist only if the office of the
Dresdner Bank responsible for handling the transfer of subsidies has
learned of measures
15
<PAGE>
subject to the disclosure requirement especially according to items 6.1 -
6.5 of the General Provisions while exercising the diligence which it
ordinarily applies in bank transactions.
12. Transfer of recovered subsidies according to item 7.4 of the General
Provisions by the Dresdner Bank to the SAB shall presuppose that the
Dresdner Bank has received them beforehand. Recovery of subsides according
to item 7.5 (a) of the General Provisions shall presuppose violation of
obligations to the SAB by the Dresdner Bank. An independent recovery claim
against the Dresdner Bank may only be lodged as a compensation claim.
In this case the Dresdner Bank shall have the right to assert - in case of
damages this must be proven by the Dresdner bank - that the claimed damages
would have arisen in their entirely or in part even without its fault.
13. Amendments to this agreement must be in writing to be valid. This shall
also apply to amendments of this written form clause.
14. If one of the agreements should be invalid or impracticable in whole or in
part, the preceding agreement shall remain otherwise unaffected thereby.
The parties shall replace an agreement which is wholly or partially invalid
or impracticable by an agreement which commercially best corresponds to the
impracticable or invalid provision in its result. This shall apply
accordingly to the case in which deficiencies in the provisions should be
subsequently ascertained.
Dresden, Feb. 12, 1997 Dresden, 1997
/signature/
Signatures illegible
- --------------------------- -------------------------------
Saxon Development Bank Dresdner Bank AG in Dresden
16
<PAGE>
Appendix 4
- ----------
DECLARATION OF LIABILITY
Sachsische Aufbaubank
Pirnaische Strasse 9
06109 Dresden
Customer no. 262-206553
Project no. 2514-7943
REGIONAL ECONOMIC DEVELOPMENT PROGRAMME OF THE FREE STATE OF SAXONY
Company: AMD Saxony Manufacturing GmbH
Together with the applicant, AMD Saxony Manufacturing GmbH, Advanced Micro
Devices, Inc. and AMD Saxony Holding GmbH will assume joint and several
liability for the grants amounting to DM 476,687,000.00 in the cases set forth
in Sections 7 and 8 of the General Conditions for Grants under the Regional
Economic Development Programme of the Free State of Saxony - Version for the
Grant Recipient - version 31515 dated August 1995 and the Schedule of Conditions
in the event that the equity scheduled in the financial plan (nominal capital
and shareholder loans equalling altogether DM 507,500,000.00) cannot be employed
in full by the applicant.
- ------------------------------
(Place and date)
- ------------------------------ ------------------------------
AMD Saxony Manufacturing GmbH AMD Saxony Holding GmbH
(Signature and company stamp) (Signature and company stamp)
- ------------------------------
Advanced Micro Devices, Inc.
(Signature and company stamp)
<PAGE>
EXHIBIT 10.50(e)
================================================================================
AMD INC. GUARANTY
(GARANTIEVERTRAG)
DATED 11 MARCH 1997
BETWEEN
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY MANUFACTURING GMBH,
AND
DRESDNER BANK AG
AS AGENT AND SECURITY AGENT
================================================================================
<PAGE>
AMD INC. GUARANTY (GARANTIEVERTRAG)
THIS AMD INC. GUARANTY, dated 11 March 1997, is made by ADVANCED MICRO DEVICES,
INC., a corporation organised and existing under the laws of the State of
Delaware, United States of America, with its chief executive office and
principal place of business at One AMD Place, Sunnyvale, California 94088,
United States of America ("AMD Inc."), in favour of AMD SAXONY MANUFACTURING
-------
GMBH, Dresden, registered in the Commercial Register of the Dresden County Court
HRB 13186 ("AMD Saxonia"), and DRESDNER BANK AG ("Dresdner"), as Agent (in such
----------- --------
capacity, the "Agent") for the Banks under the Loan Agreement and as Security
-----
Agent (in such capacity, the "Security Agent") for the Secured Parties under
--------------
such Loan Agreement.
WHEREAS, AMD Saxonia, a wholly-owned Subsidiary (such and other capitalised
terms being used herein with the meanings provided in Section 1.1) of AMD Saxony
-----------
Holding GmbH, domiciled in Dresden, registered in the Commercial Register of the
Dresden County Court HRB 13931 ("AMD Holding"; and, together with AMD Inc.,
-----------
collectively, the "Sponsors"), which is, in turn, a wholly-owned Subsidiary of
--------
AMD Inc., has been formed for the purpose of constructing, owning, and operating
(i) the Plant and (ii) the integrated Design Center (the construction,
ownership, and operation of the Plant and the Design Center being hereinafter
called the "Project");
-------
WHEREAS, in order to finance the construction of the Plant and the Design
Center, and start-up costs of the operation of the Plant, (i) the Sponsors
expect to make substantial subordinated loans to, and AMD Holding expects to
make substantial equity investments in, AMD Saxonia, and (ii) AMD Saxonia has
entered into a Syndicated Loan Agreement, dated 11 March 1997 (the "Loan
----
Agreement"), with the banks from time to time party thereto (hereinafter
- ---------
collectively called the "Banks" and individually called a "Bank"), Dresdner, as
----- ----
Agent and Security Agent, and Dresdner Bank Luxembourg S.A., as Paying Agent (in
such capacity, the "Paying Agent"), providing, inter alia, for two separate
------------ ----- ----
senior secured term and standby facilities aggregating up to DM1,650,000,000
(one billion six hundred fifty million Deutsche Marks);
WHEREAS, AMD Inc. desires that the Project be constructed and completed and is
executing and delivering this Guaranty in favour of AMD Saxonia, the Agent and
the Security Agent for the benefit of the Banks and the Paying Agent (the Agent,
the Security Agent, the Banks and the Paying Agent hereinafter collectively
called the "Secured Parties" and individually called a "Secured Party"), for the
--------------- -------------
purpose, among other things, of providing (i) certain assurances with respect to
the completion of the Project, and (ii) certain undertakings to and for the
benefit of AMD Saxonia and the Secured Parties;
WHEREAS, a condition precedent to the initial Advance is, inter alia, the
----- ----
execution by AMD Inc. of this Guaranty, and, in extending credit to AMD Saxonia
under the Loan Agreement, the Banks are relying on the undertakings of AMD Inc.
contained herein;
WHEREAS, AMD Inc. has duly authorized the execution, delivery, and performance
of this Guaranty; and
<PAGE>
2
WHEREAS, it is in the best interests of AMD Inc. to execute this Guaranty
inasmuch as AMD Inc. will derive substantial benefits from the loans and other
financial accommodations made from time to time to AMD Saxonia by the Banks
pursuant to the Loan Agreement;
NOW, THEREFORE, in order to induce the Banks to make the loans and other
financial accommodations to AMD Saxonia pursuant to the Loan Agreement, AMD Inc.
hereby agrees, for the benefit of AMD Saxonia and the Secured Parties, as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Definitions. Unless otherwise defined herein, terms used herein
have the meanings assigned to such terms in the Sponsors' Support Agreement. In
addition, the following terms (whether or not underlined) when used in this
Guaranty, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Agent" has the meaning assigned to such term in the introduction to this
----- ------------
Guaranty.
"AMD Holding" has the meaning assigned to such term in the first recital of
----------- -------------
this Guaranty.
"AMD Inc." has the meaning assigned to such term in the introduction to
------- ------------
this Guaranty.
"AMD Saxonia" has the meaning assigned to such term in the introduction to
----------- ------------
this Guaranty.
"Bank" and "Banks" have the respective meanings assigned to such terms in
---- -----
the second recital of this Guaranty.
--------------
"Dresdner" has the meaning assigned to such term in the introduction to
-------- ------------
this Guaranty.
"Guaranty" means this AMD Inc. Guaranty, as the same may at any time be
--------
amended or modified in accordance with the terms hereof and in effect.
"Loan Agreement" has the meaning assigned to such term in the second
-------------- ------
recital of this Guaranty.
- -------
"Obligations" means all obligations of AMD Holding to AMD Saxonia or any
-----------
Secured Party under or arising out of (i) the AMD Saxonia Wafer Purchase
Agreement, (ii) the AMD Saxonia Research Agreement, (iii) the Management Service
Agreement, (iv) the License Agreement, and (v) each other Operative Document to
which AMD Holding is or is to be a party other than (v) the Sponsors' Support
Agreement, (w) the Sponsors' Guaranty, (x) the AMD Holding Wafer Purchase
Agreement, (y) the AMD Holding Research Agreement, and (z) the AMD Holding
Security Documents.
<PAGE>
3
"Paying Agent" has the meaning assigned to such term in the second recital
------------ --------------
of this Guaranty.
"Project" has the meaning assigned to such term in the first recital of
------- -------------
this Guaranty.
"Security Agent" has the meaning assigned to such term in the introduction
-------------- ------------
to this Guaranty.
"Secured Parties" and "Secured Party" have the respective meanings assigned
--------------- -------------
to such terms in the third recital of this Guaranty.
-------------
"Sponsors" has the meaning assigned to such term in the first recital of
-------- -------------
this Guaranty.
"Sponsors' Support Agreement" means the Sponsors' Support Agreement, of
---------------------------
even date herewith, between the Sponsors, the Agent, and the Security Agent, as
the same may at any time be amended or modified in accordance with the terms
thereof and in effect.
SECTION 1.2 Miscellaneous. In this Guaranty, unless the context requires
otherwise, (i) any reference to an Operative Document shall be to such Operative
Document as the same may have been or from time to time may be amended, varied,
re-issued, replaced, novated, or supplemented, in each case, in accordance with
the terms thereof and hereof, and in effect; (ii) any statutory provisions shall
be construed as references to those provisions as amended, modified, re-enacted,
or replaced from time to time; (iii) words importing a gender include every
gender; and (iv) references to Sections are to Sections of this Guaranty.
Section headings are inserted for reference only and shall be ignored in
construing this Guaranty.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1 Guaranty. AMD Inc. hereby absolutely, unconditionally, and
irrevocably (all of the following guaranteed and indemnified obligations being
collectively called the "Guaranteed Obligations")
----------------------
(a) guarantees the full and punctual payment and performance when due,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand, or otherwise, of all Obligations of AMD Holding
now or hereafter existing, whether for principal, interest, fees,
expenses, or otherwise, howsoever created, arising, or evidenced,
whether direct or indirect, absolute or contingent or now or hereafter
existing or due or to become due (including in all cases all such
amounts which would become due but for the operation of the automatic
stay under Section 362(a) of the United States Bankruptcy Code, 11
U.S.C. '362(a), and the operation of Sections 502(b) and 506(b) of the
United States Bankruptcy Code, 11 U.S.C. (S)502(b) and (S)506(b)), and
(b) indemnifies and holds harmless AMD Saxonia and each Secured Party for
any and all costs and expenses (including reasonable attorney's fees
and expenses) incurred by AMD Saxonia, or such Secured Party, as the
case may be, in enforcing any rights under this Guaranty.
<PAGE>
4
This Guaranty constitutes a guaranty of payment and performance when due and not
of collection, and AMD Inc. specifically agrees that it shall not be necessary
or required that AMD Saxonia, the Security Agent, the Agent, the Paying Agent,
or any Bank exercise any right, assert any claim, or demand or enforce any
remedy whatsoever against AMD Holding (or any other Person) before or as a
condition to the obligations of AMD Inc. hereunder. For the avoidance of doubt,
the obligations of AMD Inc. under this Guaranty constitute a primary guaranty
obligation (Garantievertrag) and not a surety guaranty obligation (Burgschaft).
Notwithstanding any term or provision of this Guaranty to the contrary, (i) the
provisions of Section 13.6 of the Sponsors' Support Agreement shall be
------------
applicable to this Guaranty mutatis mutandis, and (ii) AMD Inc. shall not be
----------------
exposed to double exposure under this Guaranty, on the one hand, and the AMD
Holding Wafer Purchase Agreement or the AMD Holding Research Agreement, as the
case may be, on the other hand, with respect to any Guaranteed Obligations
arising under the AMD Saxonia Wafer Purchase Agreement or the AMD Saxonia
Research Agreement, as the case may be, to the extent, but only to the extent,
that such Guaranteed Obligations correspond to obligations of AMD Inc. to AMD
Holding under the AMD Holding Wafer Purchase Agreement or the AMD Holding
Research Agreement, as the case may be, which have been or concurrently are
being performed in accordance with the terms thereof; it being understood and
agreed that only one recovery shall be allowed by the Secured Parties in respect
of the foregoing, and (iii) AMD Inc. shall have no liability hereunder for any
failure of AMD Holding to comply with its obligations under the Sponsors'
Subordination Agreement or the License Agreement to the extent, but only to the
extent, that such failure occurs after the Agent or the Security Agent has
enforced its rights under the Security Documents. Subject to the foregoing, AMD
Inc. shall pay the Guaranteed Obligations upon a demand in writing from the
Agent or AMD Saxonia following a default by AMD Holding in the performance of
any Guaranteed Obligation (taking into account any applicable grace period).
SECTION 2.2 EMU. European Economic and Monetary Union anticipate the
introduction of a single currency and the substitution of the national
currencies of Member States participating in Monetary Union. On the date on
which the Deutsche Mark is replaced by the single currency, conversion into such
currency shall take effect. The denomination of the original currency shall be
retained for so long as this is legally permissible. Conversions shall be based
on the officially fixed rate of conversion. Neither the introduction of the
single currency nor the substitution of the national currencies of the Member
States participating in European Monetary Union nor the fixing of the official
rate of conversion nor any economic consequences that arise from any of the
aforementioned events or in connection with European Monetary Union shall give
rise to any right to terminate prematurely, contest, cancel, rescind, modify, or
renegotiate this Guaranty or any of its provisions or to raise any other
objections and/or exceptions or to assert any claims for compensation. This
Guaranty shall continue in full force and effect in accordance with its terms.
SECTION 2.3 Guaranty Absolute. This Guaranty shall in all respects be a
continuing, absolute, unconditional, and irrevocable guaranty of payment, and
shall remain in full force and effect until all Advances under the Loan
Agreement have been repaid in full, and the commitments of the Banks under and
in connection with the Operative Documents shall have terminated. AMD Inc.
guarantees that, subject to Section 2.1, the Guaranteed Obligations will be paid
-----------
and performed strictly in accordance with the terms of the Operative Document
under which they arise, regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of AMD Saxonia, the Security Agent, the Agent, or any Bank
<PAGE>
5
with respect thereto. The liability of AMD Inc. under this Guaranty shall be
continuing, absolute, unconditional, and irrevocable irrespective of:
(a) any lack of validity, legality, or enforceability of any Operative
Document;
(b) the failure of AMD Saxonia, the Security Agent, the Agent, the Paying
Agent, or any Bank
(i) to assert any claim or demand or to enforce any right or remedy
against AMD Holding or any other Person (including any other
guarantor) under or in connection with the provisions of any
Operative Document, or otherwise, or
(ii) to exercise any right or remedy against any other guarantor of,
or collateral securing, any Guaranteed Obligations;
(c) any change in the time, manner, or place of payment or performance of,
or in any other term of, all or any of the Guaranteed Obligations, or
any other extension, compromise, or renewal of any Guaranteed
Obligation;
(d) any reduction, limitation, impairment, or termination of any Guaranteed
Obligations for any reason, including any claim of waiver, release,
surrender, alteration, right of retention or compromise, and shall not
be subject to (and AMD Inc. hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment, or termination whatsoever
by reason of the invalidity, illegality, non-genuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Guaranteed Obligations;
(e) any amendment to, rescission, waiver, or other modification of, or any
consent to departure from, any of the terms of any Operative Document;
(f) any addition, exchange, release, surrender, or non-perfection of any
collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by AMD Saxonia, the
Security Agent, the Agent, the Paying Agent, or any Bank securing any
of the Guaranteed Obligations; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, AMD Holding, any surety (Bhrge), or
any guarantor.
<PAGE>
6
SECTION 2.4 Reinstatement, etc. AMD Inc. agrees this Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
(in whole or in part) of any of the Guaranteed Obligations is rescinded or must
otherwise be restored by AMD Saxonia or any Secured Party, upon the insolvency,
bankruptcy, or reorganization of AMD Holding, or otherwise, as though such
payment had not been made.
SECTION 2.5 Waiver, etc. AMD Inc. hereby waives promptness, diligence, notice
of acceptance, and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that AMD Saxonia, the Security
Agent, the Agent, or any Bank protect, secure, perfect, or insure any security
interest or lien, or any property subject thereto, or exhaust any right or take
any action against AMD Holding or any other Person (including any other
guarantor) or any collateral securing any Guaranteed Obligations. AMD Inc.
hereby further waives its right to deposit (Hinterlegung) under (S)372 of the
German Civil Code.
SECTION 2.6 Subrogation, etc. AMD Inc. will not exercise any rights which it
may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement, or otherwise, until all Advances under the Loan
Agreement have been repaid in full, and the commitments of the Banks under or
arising out of the Operative Documents shall have terminated. Any amount paid to
AMD Inc. on account of any payment made hereunder prior to such time shall not
be commingled with assets of AMD Inc. and shall immediately be paid to the
Security Agent and credited and applied against the Guaranteed Obligations in
accordance with the terms of the applicable Operative Document pursuant to which
such Guaranteed Obligations are outstanding; provided, however, that if
-------- -------
(a) AMD Inc. has made payment to the Security Agent of all or any part of
the Guaranteed Obligations, and
(b) all Advances under the Loan Agreement have been repaid in full and the
commitments of the Banks under or arising out of the Operative
Documents shall have terminated,
AMD Saxonia, the Security Agent, the Agent, the Paying Agent, and each Bank
agree that, at AMD Inc.'s request and expense, AMD Saxonia, the Security Agent,
the Agent, the Paying Agent, or such Bank (as the case may be) will execute and
deliver to AMD Inc. appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
AMD Inc. of an interest in the Guaranteed Obligations resulting from such
payment by AMD Inc. In furtherance of the foregoing, for so long as any
Advances under the Loan Agreement remain unpaid or the Banks have any
commitments under any of the Operative Documents, AMD Inc. shall refrain from
taking any action or commencing any proceeding against AMD Holding (or its
successors or assigns, whether in connection with a bankruptcy proceeding, or
otherwise) to recover any amounts in respect of payments made under this
Guaranty to AMD Saxonia, the Security Agent, the Paying Agent, the Agent, or any
Bank.
SECTION 2.7 Successors, Transferees, and Assigns. This Guaranty shall:
(a) be binding upon AMD Inc., and its successors, transferees, and assigns;
and
(b) inure to the benefit of and be enforceable by AMD Saxonia and each
Secured Party, and each of their respective successors, transferees,
and assigns.
Without limiting the generality of the foregoing clause (b), (i) AMD Saxonia may
----------
assign or otherwise transfer (in whole or in part) its rights against AMD
Holding under and in connection with the Operative Documents to the Security
Agent, and (ii) each Bank may assign or otherwise transfer (in whole or in part)
the loans and financial accommodations made by it to AMD Saxonia under the Loan
Agreement to any other Person, and such other Person, for purposes of this
<PAGE>
7
Guaranty, shall thereupon become vested with all rights and benefits in respect
thereof granted to the transferring Bank under any Operative Document (including
this Guaranty) or otherwise, subject, however, to any contrary provisions in
such assignment or transfer, and to the provisions of Section 26 of the Loan
----------
Agreement.
SECTION 2.8 Payments Free and Clear of Taxes, etc. AMD Inc. hereby agrees
that:
(a) All payments by AMD Inc. hereunder shall be made to AMD Saxonia as
provided in the Loan Agreement or to the Security Agent at its
principal office in Frankfurt am Main in Same Day Funds, free and clear
of and without deduction for any present or future income, excise
stamp, or franchise taxes and other taxes, fees, duties, withholdings,
or other charges of any nature whatsoever imposed by any taxing
authority on such payments, but excluding taxes imposed on or measured
by AMD Saxonia's, the Security Agent's, the Agent's, the Paying
Agent's, or any Bank's net income or receipts or the net income or
receipts of any branch thereof (such non-excluded items being called
"Taxes"). In the event that any withholding or deduction from any
-----
payment to be made by AMD Inc. hereunder is required in respect of any
Taxes pursuant to any applicable law, rule, or regulation, then AMD
Inc. will, subject to Section 2.8(d),
--------------
(i) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(ii) promptly forward to AMD Saxonia or the Security Agent, as
applicable, an official receipt or other documentation
satisfactory to AMD Saxonia and the Security Agent evidencing
such payment to such authority; and
(iii) pay to AMD Saxonia and the Security Agent such additional
amount or amounts as is necessary to ensure that the net amount
actually received hereunder by AMD Saxonia, the Security Agent,
the Agent, the Paying Agent, or such Bank, as the case may be,
will equal the full amount AMD Saxonia, the Security Agent, the
Agent, the Paying Agent, or such Bank, as the case may be,
would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against AMD Saxonia, the
Security Agent, the Agent, the Paying Agent, or any Bank with respect
to any payment received by AMD Saxonia or the Security Agent hereunder
(as the case may be), AMD Saxonia, the Security Agent, the Agent, the
Paying Agent, or such Bank may pay such Taxes and AMD Inc. will
promptly pay such additional amounts (including any penalties,
interest, or expenses, but only (in the case of penalties or interest)
to the extent not resulting from a negligent or wilful failure to pay
any or all of such Taxes by AMD Saxonia, the Security Agent, the
Agent, or such Bank, as the case may be) as is necessary in order that
the net amount received by AMD Saxonia, the Security Agent, the Agent,
or such Bank after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount AMD Saxonia, the
Security Agent, the Agent, the Paying Agent, or such Bank would have
received had no such Taxes been asserted.
<PAGE>
8
(b) The additional amount or amounts that AMD Inc. shall be required to pay
pursuant to clause (iii) of Section 2.8(a) shall be reduced, to the
------------ --------------
extent permitted by applicable law, by the amount of the offsetting tax
benefits, if any, as determined by the relevant recipient of such
payment in the exercise of its sole discretion, which such recipient
actually receives and utilises as a result of AMD Inc.'s payment under
clause (i) of Section 2.8(a) to the relevant authority (it being
---------- --------------
expressly understood and agreed that such recipient shall be required
to use commercially reasonable efforts to claim or utilise any such
benefit which may be available to it unless it believes in good faith
that to do so would be inconsistent with its internal tax and other
policies or if, in its good faith judgment, it would be disadvantaged
in any respect with respect to its tax position or planning).
(c) Subject to the relevant recipient complying with Section 2.8(d) below,
--------------
if AMD Inc. fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to AMD Saxonia or the Security Agent the
required receipts or other required documentary evidence, AMD Inc.
shall indemnify AMD Saxonia, the Security Agent, the Agent, the Paying
Agent, and each Bank for any incremental Taxes, interest, or penalties
that may become payable by AMD Saxonia, the Security Agent, the Agent,
the Paying Agent, or any Bank as a result of any such failure.
(d) Each recipient of a payment that is entitled to claim an exemption
(either on its own account or for the account of AMD Inc.) in respect
of all or a portion of any Taxes which are otherwise required to be
paid or deducted or withheld pursuant to this Section 2.8 in respect of
-----------
any payments made by AMD Inc. hereunder shall, within a reasonable time
after receiving a written request from AMD Inc., provide AMD Inc. with
such certificates as may be appropriate in order to obtain the benefits
of such exemption.
(e) Without prejudice to the survival of any other agreement of AMD Inc.
hereunder, the agreements and obligations of AMD Inc. contained in this
Section 2.8 shall survive the payment and performance in full of all
-----------
Guaranteed Obligations.
SECTION 2.9 Judgment. AMD Inc. hereby agrees that:
(a) If, for the purposes of obtaining a judgment in any court, it is
necessary to convert a sum due hereunder in Deutsche Marks into another
currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the Security Agent could
purchase Deutsche Marks with such other currency on the Business Day
preceding that on which final judgment is given.
(b) The obligation of AMD Inc. in respect of any sum due from it to AMD
Saxonia, the Security Agent, the Agent, the Paying Agent, or any Bank
hereunder shall, notwithstanding any judgment in a currency other than
Deutsche Marks, be discharged only to the extent that on the Business
Day following receipt by AMD Saxonia, the Security Agent, the Agent,
the Paying Agent, or such Bank, as the case may be, of any sum adjudged
to be so due in such other currency,
<PAGE>
9
AMD Saxonia, the Security Agent, the Agent, the Paying Agent, or such
Bank, as the case may be, may, in accordance with normal banking
procedures, purchase Deutsche Marks with such other currency; in the
event that the Deutsche Marks so purchased are less than the sum
originally due to AMD Saxonia, the Security Agent, the Agent, the
Paying Agent, or any Bank, in Deutsche Marks, AMD Inc., as a separate
obligation and notwithstanding any such judgment, hereby indemnifies
and holds harmless AMD Saxonia, the Security Agent, the Agent, the
Paying Agent, and each Bank against such loss,and if the Deutsche
Marks so purchased exceed the sum originally due to AMD Saxonia, the
Security Agent, the Agent, the Paying Agent, or such Bank in Deutsche
Marks, AMD Saxonia, the Security Agent, the Agent, the Paying Agent,
or such Bank, as the case may be, shall remit to AMD Inc. such excess.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.1 No Waiver; Modifications in Writing. In addition to, and
not in limitation of, Sections 2.3 and 2.5 hereof, no failure or delay on the
-------- --- ---
part of AMD Saxonia or the Agent or the Security Agent in exercising any right,
power, or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power, or remedy preclude any
other or further exercise thereof or the exercise of any other rights, power, or
remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to AMD Saxonia or the Agent or the
Security Agent at law, in equity, or otherwise. No amendment, modification,
supplement, termination, or waiver of or to any provision of this Guaranty, or
consent to any departure by AMD Inc. therefrom, shall be effective unless the
same shall be in writing and signed by or on behalf of AMD Saxonia, the Agent,
and the Security Agent. Any waiver of any provision of this Guaranty, and any
consent to any departure by AMD Inc. from the terms of any provision of this
Guaranty, shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on AMD Inc. in any case shall
entitle AMD Inc. to any other or further notice or demand in similar or other
circumstances.
SECTION 3.2 Severability of Provisions. Any provision of this
Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. AMD Inc. shall have an obligation to replace any invalid
provision by a valid provision which approximates best the economic purpose of
the invalid provision.
SECTION 3.3 Termination. The obligations of AMD Inc. hereunder shall
terminate on the day that all Advances under the Loan Agreement have been repaid
in full and the commitments of the Banks under or arising out of the Operative
Documents shall have terminated; provided that such obligations shall
--------
automatically revive and be reinstated if and to the extent that AMD Saxonia
shall subsequently have obligations under or arising out of any of the Financing
Documents.
SECTION 3.4 Binding on Successors, Transferees, and Assigns;
Assignment of Guaranty. In addition to, and not in limitation of, Section 2.7,
-----------
this Guaranty shall be binding upon AMD Inc. and its successors, transferees,
and assigns, shall inure to the benefit of AMD Saxonia, the
<PAGE>
10
Security Agent, the Agent, the Paying Agent, and each Bank, and their respective
successors, transferees, and assigns, and shall be enforceable by AMD Saxonia
and by the Security Agent, for the benefit of itself, the Agent, and each Bank
and their respective successors, transferees, and assigns (to the full extent
provided pursuant to Section 2.7), in each case subject to Section 26 of the
----------- ----------
Loan Agreement; provided, however, that AMD Inc. may not assign any of
-------- -------
its obligations hereunder without the prior written consent of the Security
Agent. The rights of the Secured Parties hereunder shall be exercisable solely
by the Security Agent on behalf of the Secured Parties unless either the
------
Security Agent is not able pursuant to applicable law to realise the practical
benefits of such rights on behalf of the Secured Parties or the limitation set
--
forth in this sentence would otherwise materially adversely affect the rights of
the Secured Parties hereunder.
SECTION 3.5 Notice. All notices, demands, instructions, and other
communications required or permitted to be given to or made upon any of the
Persons listed below shall be in writing and shall be personally delivered or
sent by registered or certified mail, postage pre-paid, return receipt
requested, or by pre-paid telex, TWX, or telegram, or by pre-paid courier
service, or by telecopier, and shall be deemed to be given for purposes of this
Guaranty on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 3.5. Unless
------------
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 3.5, notices, demands, instructions, and
-----------
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telex, TWX
or telecopier numbers) indicated below.
To the Security Agent:
Dresdner Bank AG, as Security Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To the Agent:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile No.: (1) (408) 774-7399
<PAGE>
11
To AMD Saxonia:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No.: (49) 351 8412 150
SECTION 3.6 Relationship to Other Agreements. The rights of AMD Saxonia, the
Agent, and the Security Agent pursuant to this Guaranty are in addition to any
other rights or remedies which AMD Saxonia, the Agent, and the Security Agent
may have under statutory law or other agreements between one or more of AMD
Saxonia, the Agent, the Security Agent, the Paying Agent, the Banks, and AMD
Inc. Where such rights and remedies are in conflict with the provisions of this
Guaranty, the provisions of this Guaranty shall prevail.
SECTION 3.7 Setoff. In addition to, and not in limitation of, any rights of
AMD Saxonia, the Security Agent, the Agent, or any Bank under applicable law,
AMD Saxonia, the Security Agent, the Paying Agent, the Agent, and each Bank
shall, upon the acceleration of the Advances under the Loan Agreement following
the occurrence of any Event of Default, or upon the occurrence and during the
continuance of any event with respect to AMD Inc. of the type described in
Section 8.01(f) or (g) of the AMD Inc. 1996 Bank Credit Agreement, have the
- --------------- ---
right to appropriate and apply to the payment of the obligations of AMD Inc.
owing to it hereunder, any and all balances, credits, deposits, accounts, or
moneys of AMD Inc. then or thereafter maintained with AMD Saxonia, the Security
Agent, the Paying Agent, the Agent, or such Bank and any and all property of
every kind or description of or in the name of AMD Inc. now or hereafter, for
any reason or purpose whatsoever, in the possession or control of AMD Saxonia,
the Security Agent, the Paying Agent, the Agent, or such Bank, or any agent or
bailee for AMD Saxonia, the Security Agent, the Paying Agent, the Agent, or such
Bank.
SECTION 3.8 Governing Law; etc. This Guaranty and all rights and obligations
of the parties arising under or in connection herewith shall be governed by the
Laws of the Federal Republic of Germany.
SECTION 3.9 Jurisdiction. AMD Inc. hereby submits to the exclusive
jurisdiction of the courts in Frankfurt am Main for any dispute arising out of
or in connection with this Guaranty. AMD Inc. states that Advanced Micro Devices
GmbH whose address is Rosenheimerstra8e 143b, 81671 Munich, Germany, Tel.: +49
89 450 530, Fax: +49 89 906 490, is its accredited agent for service of process
and hereby undertakes to maintain an agent for service in Germany. The foregoing
submission to jurisdiction shall not (and shall not be construed so as to) limit
the rights of the Agent, the Security Agent or AMD Saxonia to take suits,
actions, or proceedings against AMD Inc. to enforce any judgment rendered by the
courts in Frankfurt am Main in any other court or entity of competent
jurisdiction where AMD Inc. has assets, nor shall the taking of suits, actions,
or proceedings to enforce any such judgment in one or more jurisdictions
preclude the taking of enforcement proceedings in any other jurisdiction,
whether concurrently or not.
SECTION 3.10 Operative Document. This Guaranty is an Operative Document
executed pursuant to the Loan Agreement.
SECTION 3.11 Place of Performance and Payment. The place of performance and
payment (Zahlungs-und Erfhllungsort) under this Guaranty shall be Frankfurt am
Main.
SECTION 3.12 Use of English Language. This Guaranty has been executed in the
English language. All certificates, reports, notices, and other documents and
communications given or delivered pursuant to this Guaranty shall be in the
English language and a certified German translation thereof shall be delivered
promptly thereafter if reasonably requested by the Agent. In the event of any
inconsistency, the English language version of any such document shall control.
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
---------------------------------------------
Its
--------------------------------------------
<PAGE>
12
AMD SAXONY MANUFACTURING GMBH
/s/ Jack L. Saltich
------------------------------------------------
DRESDNER BANK AG,
as Agent and Security Agent
/s/ Dr. Hans-Jurgen Menzel /s/ Horst-Oechsler
------------------------------------------------
<PAGE>
EXHIBIT 10.50(f)
- --------------------------------------------------------------------------------
SPONSORS' SUPPORT AGREEMENT
Dated 11 March 1997
between
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY HOLDING GMBH,
and
DRESDNER BANK AG,
as Agent and Security Agent
- --------------------------------------------------------------------------------
<PAGE>
INDEX
ARTICLE I Definitions and Accounting Terms 2
ARTICLE II Contribution of Equity Capital 26
ARTICLE III Sponsors' Loans 29
ARTICLE IV Cost Overruns Prior to Completion 32
ARTICLE V Completion Guaranty 35
ARTICLE VI Subsidies Undertaking 36
ARTICLE VII Pari Passu Undertaking 38
ARTICLE VIII AMD Inc. Share Pledge Agreement;
AMD Holding Security Documents 38
ARTICLE IX Sponsors' Guaranty 39
ARTICLE X Sponsors' Subordination Agreement;
AMD Inc. Subordination Agreement 39
ARTICLE XI Obligations Unconditional 40
ARTICLE XII Representations and Warranties 40
ARTICLE XIII Covenants 58
ARTICLE XIV Costs and Expenses; Indemnities; Taxes; Etc. 71
ARTICLE XV Miscellaneous 76
ARTICLE XVI Governing Law, Jurisdiction, and Language 79
SCHEDULE I - Existing Wafer Fabrication Plants
SCHEDULE II - Sponsors' Disclosure Schedule
<PAGE>
SPONSORS' SUPPORT AGREEMENT
THIS SPONSORS' SUPPORT AGREEMENT, dated 11 March 1997, is made between ADVANCED
MICRO DEVICES, INC., a corporation organised and existing under the laws of the
State of Delaware, United States of America, with its chief executive office and
principal place of business at One AMD Place, Sunnyvale, California 94088,
United States of America ("AMD Inc."), AMD SAXONY HOLDING GMBH, Dresden,
--------
registered in the Commercial Register of the Dresden County Court, HRB 13931
("AMD Holding"; and, together with AMD Inc., collectively, the "Sponsors"), and
----------- --------
DRESDNER BANK AG ("Dresdner"), as Agent under the Loan Agreement referred to
--------
below (in such capacity, the "Agent") for the Banks referred to below, and as
-----
Security Agent under such Loan Agreement (in such capacity, the "Security
--------
Agent") for the Secured Parties referred to below.
- -----
W I T N E S S E T H :
WHEREAS, AMD Saxony Manufacturing GmbH, Dresden, registered in the Commercial
Register of the Dresden County Court HRB 13186 ("AMD Saxonia"), a wholly-owned
-----------
Subsidiary (such and other capitalised terms being used herein with the meanings
provided in Section 1.1) of AMD Holding, which is, in turn, a wholly-owned
-----------
Subsidiary of AMD Inc., has been formed for the purpose of constructing, owning,
and operating (i) the Plant and (ii) the integrated Design Center (the
construction, ownership, and operation of the Plant and the Design Center being
hereinafter called the "Project");
-------
WHEREAS, in order to finance the construction of the Plant and the Design
Center, and start-up costs of the operation of the Plant, (i) the Sponsors
expect to make substantial subordinated loans to, and AMD Holding expects to
make substantial equity investments in, AMD Saxonia, and (ii) AMD Saxonia has
entered into a Syndicated Loan Agreement, dated 11 March 1997 (the "Loan
----
Agreement"), with the banks from time to time party thereto (hereinafter
- ---------
collectively called the "Banks" and individually called a "Bank"), Dresdner, as
Agent and Security Agent, and Dresdner Bank Luxembourg S.A., as Paying Agent (in
such capacity, the "Paying Agent"), providing, inter alia, for two separate
------------ ----------
senior secured term and standby facilities aggregating up to DM1,650,000,000
(one billion six hundred fifty million Deutsche Marks);
WHEREAS, the Sponsors desire that the Project be constructed and completed and
are entering into this Agreement with the Agent (for the benefit of itself and
the Banks) and the Security Agent (for the benefit of the Secured Parties), for
the purpose, among other things, of providing (i) certain assurances with
respect to the completion of the Project, and (ii) certain undertakings to and
for the benefit of the Secured Parties; and
WHEREAS, a condition precedent to the initial Advance is, inter alia, the
execution by the Sponsors of this Agreement and, in extending credit to AMD
Saxonia under the Loan Agreement, the Banks are relying on the undertakings of
the Sponsors contained herein;
NOW, THEREFORE, the Sponsors, the Agent (for itself and on behalf of the Banks),
and the Security Agent (on behalf of the Secured Parties), agree as follows:
<PAGE>
ARTICLE I
Definitions and Accounting Terms
SECTION 1.1 Definitions. Unless otherwise defined herein, the following terms
(whether or not underlined) when used in this Agreement, including its preamble
and recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):
"Advances" means all advances that the Banks make to AMD Saxonia pursuant
--------
to the Loan Agreement.
"Affiliate" means, with respect to any Person, a Person which, directly or
---------
indirectly, controls, is controlled by, or is under common control with, such
other Person; and, for purposes of this definition, the concept of "control",
-------
with respect to any Person, signifies the possession of the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, the possession of voting rights, by
contract, or otherwise; provided, that none of the Agent, the Security Agent,
--------
the Paying Agent, any of the Banks, nor any of their respective Affiliates,
shall be deemed to be Affiliates of (x) any AMD Company or (y) any other
Subsidiary of AMD Inc.
"Agent" has the meaning assigned to that term in the introduction to this
-----
Agreement.
"Agreement" means this Sponsors' Support Agreement, as the same may be
---------
amended or modified in accordance with the terms hereof and in effect.
"AMD Companies" means AMD Saxonia, AMD Holding, and AMD Inc., collectively.
-------------
"AMD Holding" has the meaning assigned to that term in the introduction to
-----------
this Agreement.
"AMD Holding Assignment (U.S.A.)" means the AMD Holding Assignment of,
-------------------------------
inter alia, rights under the Wafer Purchase Agreements, in the form set out in
Schedule 56 to the Loan Agreement, between AMD Holding and the Security Agent.
"AMD Holding Assignment of Contractual Rights" means the AMD Holding
--------------------------------------------
Assignment of Contractual Rights, in the form set out in Schedule 55 to the Loan
-----------
Agreement, between AMD Holding and the Security Agent.
"AMD Holding Assignment of Current Assets" means the AMD Holding Security
----------------------------------------
Assignment of Current Assets, in the form set out in Schedule 52 to the Loan
-----------
Agreement, between AMD Holding and the Security Agent.
2
<PAGE>
"AMD Holding Charge of Bank Accounts" means the AMD Holding Charge of Bank
-----------------------------------
Accounts, in the form set out in Schedule 54 to the Loan Agreement, between AMD
-----------
Holding and the Security Agent.
"AMD Holding Global Assignment" means the AMD Holding Global Assignment, in
-----------------------------
the form set out in Schedule 53 to the Loan Agreement, between AMD Holding and
-----------
the Security Agent.
"AMD Holding Research Agreement" means the AMD Holding Research, Design and
------------------------------
Development Agreement, in the form set out in Schedule 34 to the Loan Agreement,
-----------
between AMD Inc. and AMD Holding.
"AMD Holding Security" means all collateral security created pursuant to
--------------------
the AMD Holding Security Documents.
"AMD Holding Security Documents" means, collectively, the AMD Holding
------------------------------
Assignment (U.S.A), the AMD Holding Assignment of Contractual Rights, the AMD
Holding Assignment of Current Assets, the AMD Holding Charge of Bank Accounts,
the AMD Holding Global Assignment, the AMD Holding Share Pledge Agreement, and
each other instrument or document designated by the Agent (with the consent of
each AMD Company) as an AMD Holding Security Document under and for purposes of
this Agreement.
"AMD Holding Share Pledge Agreement" means the AMD Holding Share Pledge
----------------------------------
Agreement, in the form set out in Schedule 51 to the Loan Agreement, between AMD
-----------
Holding and the Security Agent.
"AMD Holding Wafer Purchase Agreement" means the AMD Holding Wafer Purchase
------------------------------------
Agreement, in the form of Schedule 33 to the Loan Agreement, between AMD Inc.
-----------
and AMD Holding.
"AMD Inc." has the meaning assigned to that term in the introduction to
-------- ------------
this Agreement.
"AMD Inc. Guaranty" means the AMD Inc. Guaranty in the form set out in
-----------------
Schedule 27 to the Loan Agreement, executed by AMD Inc. in favour of AMD
- -----------
Saxonia, the Agent, and the Security Agent for the benefit of the Secured
Parties.
"AMD Inc. 1996 Bank Credit Agreement" means the Credit Agreement, dated as
-----------------------------------
of July 19, 1996, between, inter alia, AMD Inc., the lenders party thereto, and
----------
Bank of America National Trust & Savings Association, as administrative agent.
"AMD Inc. Primary Bank Credit Agreement" means, from time to time:
--------------------------------------
(i) the AMD Inc. 1996 Bank Credit Agreement; or
3
<PAGE>
(ii) if the agreement referred to in paragraph (i) above is terminated or
cancelled, then any secured or unsecured revolving credit or term loan
agreement between or among AMD Inc., as borrower, and any bank or
banks, as lender(s), for borrowed monies to be used for general
corporate purposes of AMD Inc., with an original term of not less than
4 years and an original aggregate loan commitment of at least
$100,000,000 (one hundred million Dollars) or the equivalent thereof
in any other currency, and, if there is more than one such revolving
credit or term loan agreement, then such agreement which involves the
greatest original aggregate loan commitment(s) and, as between
agreements having the same aggregate original loan commitment(s), then
the one which has the most recent date; or
(iii) if the agreement referred to in paragraph (i) above and all of the
agreements, if any, which could apply under paragraph (ii) above have
been terminated or cancelled, then so long as paragraph (ii) does not
apply as the result of one or more new agreements being entered into,
the agreement which is the last such agreement under paragraph (i) or
(ii) to be so terminated or cancelled as in effect immediately prior
to such termination or cancellation.
"AMD Inc. Security" means all collateral security furnished pursuant to the
-----------------
AMD Inc. Share Pledge Agreement.
"AMD Inc. Senior Secured Note Indenture" means that certain Indenture,
--------------------------------------
dated as of August 1, 1996, between AMD Inc. and United States Trust Company of
New York, as trustee, relating to the issuance by AMD Inc. of $400,000,000 (four
hundred million Dollars) of its 11% Senior Secured Notes due 2003.
"AMD Inc. Share Pledge Agreement" means the AMD Inc. Share Pledge
-------------------------------
Agreement, in the form set out in Schedule 41 to the Loan Agreement, between AMD
-----------
Inc. and the Security Agent.
"AMD Inc. Subordination Agreement" means the AMD Inc. Subordination
--------------------------------
Agreement, in the form set out in Schedule 42 to the Loan Agreement, between AMD
-----------
Inc., AMD Holding, and the Security Agent.
"AMD Saxonia" has the meaning assigned to that term in the first recital of
----------- -------------
this Agreement.
"AMD Saxonia Assignment (U.S.A)" means the AMD Saxonia Assignment of, inter
------------------------------
alia, rights under the AMD Saxonia Wafer Purchase Agreement, in the form set out
in Schedule 50 to the Loan Agreement, between AMD Saxonia and the Security
-----------
Agent.
4
<PAGE>
"AMD Saxonia Assignment of Contractual Rights" means the AMD Saxonia
--------------------------------------------
Assignment of Contractual Rights, in the form set out in Schedule 49 to the Loan
-----------
Agreement, between AMD Saxonia and the Security Agent.
"AMD Saxonia Assignment of Current Assets" means the AMD Saxonia Security
----------------------------------------
Assignment of Current Assets, in the form set out in Schedule 44 to the Loan
-----------
Agreement, between AMD Saxonia and the Security Agent.
"AMD Saxonia Assignment of Fixed Assets" means the AMD Saxonia Security
--------------------------------------
Assignment of Fixed Assets, in the form set out in Schedule 45 to the Loan
-----------
Agreement, between AMD Saxonia and the Security Agent.
"AMD Saxonia Assignment of Insurances" means the AMD Saxonia Assignment of
------------------------------------
Insurances, in the form set out in Schedule 46 to the Loan Agreement, between
-----------
AMD Saxonia and the Security Agent.
"AMD Saxonia Charge of Project Accounts" means the AMD Saxonia Charge of
--------------------------------------
Project Accounts, in the form set out in Schedule 48 to the Loan Agreement,
-----------
between AMD Saxonia and the Security Agent.
"AMD Saxonia/Dresdner Subsidy Agreement" means the AMD/Dresdner Subsidy
--------------------------------------
Agreement, in the form set out in Schedule 25 to the Loan Agreement, between AMD
-----------
Saxonia and Dresdner.
"AMD Saxonia Disclosure Schedule" means the Disclosure Schedule attached to
-------------------------------
the Loan Agreement as Schedule 15, as it may be amended, supplemented, or
-----------
otherwise modified from time to time by AMD Saxonia with the written consent of
the Agent.
"AMD Saxonia Global Assignment" means the AMD Saxonia Global Assignment, in
-----------------------------
the form set out in Schedule 47 to the Loan Agreement, between AMD Saxonia and
-----------
the Security Agent.
"AMD Saxonia Hedging Contract" means the Agreement, in the form set out in
----------------------------
Schedule 50a to the Loan Agreement, between AMD Saxonia and AMD Inc.
- ------------
"AMD Saxonia Land Charge" means the Grundschuld, in the form set out in
-----------------------
Schedule 43 to the Loan Agreement, between AMD Saxonia and the Security Agent.
- -----------
"AMD Saxonia Research Agreement" means the AMD Saxonia Research, Design and
------------------------------
Development Agreement, in the form set out in Schedule 36 to the Loan Agreement,
-----------
between AMD Holding and AMD Saxonia.
"AMD Saxonia Security" means all collateral security created pursuant to
--------------------
the AMD Saxonia Security Documents.
5
<PAGE>
"AMD Saxonia Security Documents" means, collectively, the AMD Saxonia
------------------------------
Assignment (U.S.A), the AMD Saxonia Assignment of Contractual Rights, the AMD
Saxonia Assignment of Current Assets, the AMD Saxonia Assignment of Fixed
Assets, the AMD Saxonia Assignment of Insurances, the AMD Saxonia Charge of
Project Accounts, the AMD Saxonia Land Charge, the AMD Saxonia Global
Assignment, and each other instrument or document designated by the Agent (with
the consent of each AMD Company) as an AMD Saxonia Security Document under and
for purposes of this Agreement.
"AMD Saxonia Wafer Purchase Agreement" means the AMD Saxonia Wafer Purchase
------------------------------------
Agreement, in the form set out in Schedule 35 to the Loan Agreement, between AMD
-----------
Holding and AMD Saxonia.
"Approved Project Budget" means:
-----------------------
(i) initially, that certain Project Budget, in the form set out in
Schedule 6 to the Loan Agreement, which has been prepared by AMD
----------
Saxonia and approved by each Sponsor; and
(ii) at any time after such Project Budget has been updated, amended,
supplemented, or otherwise modified, and prior to Completion, any such
updated, amended, supplemented, or modified Project Budget having been
approved by each AMD Company (such approval of each Sponsor not to be
unreasonably withheld or delayed) and the Agent (which may, in its
sole discretion, consult with the Technical Advisor and the Banks'
Auditor) in accordance with ss.18.2 of the Loan Agreement.
The initial Approved Project Budget and (subject to the requirements of ss.
---
13.1(i)(d)(y)(1)) each subsequent Approved Project Budget from time to time in
- ----------------
effect shall itemise, separately from the other information set forth therein,
and on a Project Phase by Project Phase basis, the aggregate Capital Expenditure
then required to be made by AMD Saxonia in order to complete each then
uncompleted Project Phase of the Project and to achieve Completion. All
references herein to the Approved Project Budget shall, at any time, refer to
the Approved Project Budget as then in effect.
"Approved Project Schedule" means:
-------------------------
(i) initially, that certain Project Schedule, in the form set out in
Schedule 7 to the Loan Agreement, which has been prepared by AMD
----------
Saxonia and approved by each Sponsor with respect to the schedule for
completing each Project Phase and for achieving Completion; and
(ii) at any time after such Project Schedule has been updated, amended,
supplemented, or otherwise modified, and prior to Completion, any such
updated, amended, supplemented, or modified Project Schedule having
been ap-
6
<PAGE>
proved by each AMD Company (such approval of each Sponsor not to be
unreasonably withheld or delayed) and the Agent (which may, in its
sole discretion, consult with the Technical Advisor and the Banks'
Auditor) in accordance with ss.18.2 of the Loan Agreement.
-------
The initial Approved Project Schedule and (subject to the requirements of ss.
--
13.1(i)(d)(y)(2)) each subsequent Approved Project Schedule from time to time in
- ----------------
effect shall itemise, separately from the other information set forth therein,
and on a Project Phase by Project Phase basis, the then anticipated date for
completing each then uncompleted Project Phase and for achieving Completion. All
references herein to the Approved Project Schedule shall, at any time, refer to
the Approved Project Schedule as then in effect.
"Auditor" means 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 delayed or withheld.
"Available Tranche A Amount" means, on any date, the excess, if any, of:
--------------------------
(i) the Total Tranche A Commitment Amount on such date;
over
(ii) the aggregate unpaid principal amount of all Tranche A Advances
outstanding on such date.
"Available Tranche B Amount" means, on any date, the excess, if any, of:
--------------------------
(i) the Total Tranche B Commitment Amount on such date;
over
(ii) the aggregate unpaid principal amount of all Tranche B Advances
outstanding on such date.
"Average Production Cost Per Wafer" means, with respect to any Fiscal
---------------------------------
Quarter, the amount determined by dividing (x) the aggregate cost, determined in
accordance with GAAP, incurred by AMD Saxonia for the production of all Wafers
"Shipped" (as defined in the AMD Saxonia Wafer Purchase Agreement) during such
Fiscal Quarter (including all materials, labor, and other out-of pocket costs
and expenses, but excluding depreciation and interest expense), by (y) the
number of Wafers "Shipped" (as so defined) during such Fiscal Quarter.
"Banks' Auditor" means BDO Deutsche Warentreuhand AG
--------------
Wirtschafts-prufungsgesellschaft 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 delayed or withheld.
7
<PAGE>
"Bank" and "Banks" have the respective meanings assigned to those terms in
---- -----
the second recital of this Agreement.
------ -------
"Business Day" means any day of the year on which banks are generally open
------------
for business in London, Frankfurt am Main, Dresden and, to the extent the same
relates to any obligation to be performed by AMD Inc., San Francisco.
"Capital Expenditure" means all acquisition or manufacturing costs in
-------------------
respect of fixed and movable assets in accordance with ss. 266 2 A II of the
Commercial Code and all acquisition costs for intangible assets in accordance
with ss. 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).
"Capitalised Lease Liabilities" means, with respect to any Person, all
-----------------------------
monetary obligations of such Person under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as fixed or capitalised
leases or finance leases, and, for purposes of this Agreement, the amount of
such obligations shall be the capitalised amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Cash Equivalent Investment" means any security or other instrument set out
--------------------------
in Schedule 23 to the Loan Agreement.
"Class A Sponsors' Loans" has the meaning assigned to that term in Section
-----------------------
3.1.
"Class B Sponsors' Loans" has the meaning assigned to that term in Section
-----------------------
3.1.
"Completion" means the date on which the initial satisfaction of all
----------
conditions set forth in the Technical Completion Certificate (Obligors), the
Technical Completion Certificate (Technical Advisor), the Financial Completion
Certificate (Obligors), the Financial Completion Certificate (Banks' Auditor)
and the Financial Completion Certificate (Technical Advisor) set out in
Schedules 9, 10, 11, 12 and 13 to the Loan Agreement is confirmed to the Agent
- ------------------------------
by the submission of properly executed originals of such Certificates.
"Completion Certificates" means the Scheduled Project Phase Completion
-----------------------
Certificates, the Technical Completion Certificates, and the Financial
Completion Certificates.
"Completion Date" means the date specified by the Agent in a notice to be
---------------
given to each AMD Company and each Bank as the first date on or as of which
Completion shall have occurred.
8
<PAGE>
"Compliance Certificate" means an Annual Pricing Compliance Certificate, a
----------------------
Quarterly Pricing Compliance Certificate, or a Pari Passu Compliance
Certificate, as the case may be.
"Consent and Agreement" means:
---------------------
(i) in the case of the Sponsors, the Sponsors' Consent and Agreement;
(ii) in the case of the Contractor, the Contractor's Consent and
Agreement;
(iii) in the case of an Equipment Supplier, each Equipment Supplier's
Consent and Agreement; and
(iv) in the case of a Service Supplier, each Service Supplier's Consent
and Agreement.
"Contingent Liabilities" means, with respect to any Person, any agreement,
----------------------
undertaking, or arrangement by which such Person guarantees, endorses, or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment to, supply
funds to, or otherwise invest in, a debtor, or otherwise to assure a creditor
against loss) the indebtedness, obligation, or other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of the
indebtedness, obligation, or other liability guaranteed thereby.
"Contractor" means Meissner & Wurst GmbH & Co., Ro(beta)bachstra(beta)e 38,
----------
70499 Stuttgart, registered in the Commercial Register of the Stuttgart County
Court HRA 1208.
"Contractor's Consent and Agreement" means the Contractor's Consent and
----------------------------------
Agreement, in the form set out in Schedule 39 to the Loan Agreement, or in such
-----------
other form as is consented to by the Security Agent from the Contractor in
favour of the Security Agent.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust, or other instrument, document, or agreement
to which such Person is a party or by which it or any of its property is bound.
"Cost Overruns" means, at any time, the difference at such time between
-------------
Capital Expenditure estimated in the initial Approved Project Budget and, if
more, the actual Capital Expenditure incurred, in each case calculated on a
cumulative basis.
9
<PAGE>
"Cost to Complete" means, at the time any determination thereof is to be
----------------
made, the amount then most recently determined by the AMD Companies and
certified to the Agent (or, in the event the Agent so requests, the amount then
most recently determined reasonably and in good faith by the Technical Advisor
and certified to the Agent upon its request (after consultation with the AMD
Companies), as the then aggregate amount of additional Capital Expenditure
required to be made to achieve Completion.
"Debt Service Reserve Account" means the reserve account referred to and
----------------------------
opened pursuant in ss. 19.4 of the Loan Agreement (including any sub-accounts
--------
into which such account may be divided), as such account may be renewed,
redesignated, or renumbered from time to time.
"Design/Build Agreement" means the Design/Build Agreement for the
----------------------
construction of the Plant and the Design Center, in the form set out in Schedule
--------
39 to the Loan Agreement, between the Contractor and AMD Saxonia.
- --
"Design Center" means the research, design, and development facilities
-------------
constructed or to be constructed by AMD Saxonia and integrated with the Plant
for the purpose of designing and developing a broad spectrum of state-of-the-art
and other digital components such as micro-processors and circuits for the
telecommunications and multi-media sectors, and improvements thereof.
"Deutsche Mark Equivalent" means, with respect to any Class A Sponsors'
------------------------
Loan, the amount, expressed in Deutsche Marks, which results from the conversion
of Dollars to Deutsche Marks at a spot rate of exchange equal to the greater of
(i) DM 1.45 for $1.00 and (ii) the Agent's spot rate of exchange, expressed in
Deutsche Marks, for the sale of Dollars for Deutsche Marks prevailing on the
date two (2) Business Days prior to the date such Class A Sponsors' Loan is or
was due to be made.
"Deutsche Marks" and the sign "DM" mean lawful money of the Federal
-------------- --
Republic of Germany from time to time.
"Disclosure Schedules" means the AMD Saxonia Disclosure Schedule and the
--------------------
Sponsors' Disclosure Schedule, collectively.
"Dollars" and the sign "$" mean the lawful money of the United States of
------- -
America from time to time.
"Dresdner" has the meaning assigned to that term in the introduction to
-------- ------------
this Agreement.
"Encumbrance" means, (i) when used with reference to any Person organized
-----------
and existing under the laws of the Federal Republic of Germany, any security
interest in property or in rights to secure payment of a debt or performance of
an obligation, including, but not
10
<PAGE>
limited to, mortgages (Hypotheken), land charges (Grundschulden), annuity
charges (Rentenschulden), contractual and legal pledges (vertragliche und
gesetzliche Pfandrechte) including pledges or mortgages in favour of execution
creditors (Pfandungspfandrechte und Zwangshypotheken), transfers of title by way
of security (Sicherungsubereignungen), assignments of claims or other property
or rights by way of security (Sicherungsabtretungen und sonstige Ubertragungen
von Sachen oder Rechten zur Sicherung), retention of title arrangements
(Eigentumsvorbehalt) including extended retentions of title (erweiterter und
verlangerter Eigentumsvorbehalt), and any other priority or preferential
arrangement of any kind or nature whatsoever, and (ii) when used with reference
to any other Person, any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge (including floating and fixed charges) against or interest in property to
secure payment of a debt or performance of an obligation, or other preferential
arrangement of any kind or nature whatsoever in respect of any property, but not
including the interest of a lessor under a lease which, in accordance with GAAP,
would be classified as an operating lease.
"Equipment Suppliers" means, collectively, each Person party to a contract
-------------------
or other agreement with AMD Saxonia in the capacity of a supplier of fixed or
tangible current assets for the Project; it being understood and agreed that AMD
Inc. or an Affiliate thereof (other than AMD Saxonia) may be an Equipment
Supplier.
"Equipment Supplier's Consent and Agreement" means, with respect to an
------------------------------------------
Equipment Supplier, such Equipment Supplier's Consent and Agreement, in the form
set out in Schedule 40 to the Loan Agreement or Annex 3 to Schedule 49 or Annex
----------- -----------
3 to Schedule 55 of the Loan Agreement, as the case may be, or in such other
-----------
form as is consented to by the Security Agent, which pertains to a Material
Equipment Supply Contract or which is otherwise required pursuant to the terms
of the Loan Agreement or the Security Documents.
"Equipment Supply Contract" means 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.
"Equity Capital" means registered stated capital (Stammkapital).
--------------
"Event of Default" means an event which would entitle the Banks to
----------------
terminate their commitments and the loan facilities pursuant to ss. 21 of the
------
Loan Agreement.
"Event of Termination" means any event which would entitle a party to an
--------------------
Operative Document to terminate such Operative Document in accordance with the
terms thereof; provided, however, that such event could reasonably be expected
-----------------
to have a material adverse consequence to the entirety of the transactions
contemplated by the Operative Documents.
11
<PAGE>
"Financial Completion" is deemed to have occurred when:
--------------------
(i) all of the conditions set forth in the form of Financial Completion
Certificate (Obligors) have been satisfied in all material respects,
all of the statements of the AMD Companies appearing in said form of
Certificate are true and correct in all material respects, and the
Agent shall have received a fully executed counterpart of such
Certificate; and
(ii) the Agent shall have received a fully executed counterpart of the
Financial Completion Certificate (Banks' Auditor) and the Financial
Completion Certificate (Technical Advisor).
"Financial Completion Certificate (Banks' Auditor)" means a certificate, in
-------------------------------------------------
the form set out in Schedule 12 to the Loan Agreement (appropriately completed),
-----------
executed by the Banks' Auditor and delivered to the Agent.
"Financial Completion Certificate (Technical Advisor)" means a certificate,
----------------------------------------------------
in the form set out in Schedule 13 to the Loan Agreement (appropriately
-----------
completed), executed by the Technical Advisor, and delivered to the Agent.
"Financial Completion Certificate (Obligors)" means a certificate, in the
-------------------------------------------
form set out in Schedule 11 to the Loan Agreement (appropriately completed),
-----------
executed by the AMD Companies, and delivered to the Agent.
"Financial Completion Certificates" means the Financial Completion
---------------------------------
Certificate (Obligors), the Financial Completion Certificate (Banks' Auditor)
and the Financial Completion Certificate (Technical Advisor).
"Financial Ratio Calculation Date" means
--------------------------------
(i) the Completion Date; and
(ii) the date as of which the Fixed Charge Cover Ratio is, or is required
to be, calculated in any certificate of compliance furnished by AMD
Saxonia pursuant to ss. 16.2.1 of the Loan Agreement or the date so
----------
referred to in a confirmation relating to the financial covenants
given by the Auditor pursuant to ss. 16.2.2 of the Loan Agreement, in
----------
each case after the Completion Date.
"Financing Documents" means, collectively, the Loan Agreement, this
-------------------
Agreement, the Sponsors' Guaranty, the Sponsors' Subordination Agreement, the
AMD Inc. Subordination Agreement, the Sponsors' Loan Agreement, the AMD
Saxonia/Dresdner Subsidy Agreement, the SAB/Dresdner Subsidy Agreement, the
65/35 Burgschaft, the AMD Saxonia Hedging Contract, the Security Documents, each
Consent and Agreement, and each other
12
<PAGE>
instrument or document designated by the Agent (with the consent of each AMD
Company) as a Financing Document under and for purposes of this Agreement.
"Fiscal Month" means any fiscal month of a Fiscal Year.
------------
"Fiscal Quarter" means any fiscal quarter of a Fiscal Year.
--------------
"Fiscal Year" means any period of approximately 12 consecutive calendar
-----------
months ending on the last Sunday in December; references to a Fiscal Year with a
number corresponding to any calendar year (e.g., the "1997 Fiscal Year") refer
to the Fiscal Year ending on the last Sunday in December occurring during such
calendar year.
"Fixed Charge Coverage Ratio" has the meaning assigned to that term in
---------------------------
ss.1 of Schedule 17 to the Loan Agreement.
- ---- -----------
"GAAP" means, (x) in the case of AMD Saxonia or AMD Holding or its
----
respective financial statements, those generally accepted accounting principles
in general use by the accounting profession (Grundsatze ordnungsgemasser
Buchfuhrung und Bilanzierung) and in effect on the Loan Agreement Effective Date
in Germany (it being expressly understood and agreed that AMD Saxonia's and AMD
Holding's monthly and quarterly financial statements shall be prepared on the
basis of a Fiscal Month or a Fiscal Quarter (rather than on the basis of a
calendar month or a calendar quarter, as the case may be), but shall be
reconciled on an annual basis), and (y) in the case of AMD Inc. or its financial
statements, generally accepted accounting principles set forth from time to time
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the 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.
"Governmental Approvals" means each and every authorization, consent,
----------------------
approval, licence, permit, franchise, certificate, exemption or order of or
filing or registration with, any Governmental Authority or legal or regulatory
body, federal, state, local or foreign except for (i) routine or periodic
information reports which, if not filed, would not in any case or in the
aggregate, adversely affect the due authorization, execution, delivery,
validity, legality, or enforceability of any of the Operative Documents, (ii)
filings of certificates or articles of incorporation, registrations or
qualifications of a foreign corporation or similar corporate filings, and (iii)
returns and filings with respect to taxes.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
13
<PAGE>
"Guarantors" means the Federal Republic of Germany and the Free State of
----------
Saxony in their respective capacities as guarantors pursuant to the 65/35
Burgschaft.
"Guaranty Decision" means the decision dated 2 July 1996 set out in
-----------------
Schedule 24 to the Loan Agreement concerning the guaranty application made by
- -----------
AMD Saxonia, including the following documents as referred to therein:
(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, together with
(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.
"Indebtedness" of any Person, means, without duplication:
------------
(i) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, or similar
instruments;
(ii) all obligations, contingent or otherwise, relative to the face amount
of all letters of credit, guarantees, and bankers' acceptances issued
for the account of such Person, whether or not drawn or paid;
(iii) all obligations of such Person as lessee under leases which have been
or should be, in accordance with GAAP, recorded as Capitalised Lease
Liabilities;
(iv) all net liabilities of such Person under or in connection with any
interest rate, currency, commodity, or other hedging contracts to
which such Person is a party;
(v) all other items which, in accordance with GAAP, would be included as
liabilities on the liability side of the balance sheet of such Person
as of the date at which Indebtedness is to be determined;
(vi) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (including pre-paid interest
thereon) secured by an Encumbrance on property owned or being
purchased by such Person
14
<PAGE>
(including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse; and
(vii) all Contingent Liabilities of such Person in respect of any of the
foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer, respectively.
"Information Memorandum" means the Information Memorandum, dated September
----------------------
1996, entitled "AMD Saxony Manufacturing GmbH, Dresden: DM1,650,000,000
Information Memorandum Limited Recourse Financing", prepared and furnished by
the AMD Companies to the Agent, for distribution to prospective lenders under
the Loan Agreement, as such Information Memorandum may at any time be amended or
modified with the consent of each AMD Company and in effect.
"Initial Cash Balance" means, as at the Completion Date, the cash balance
--------------------
in the Project Accounts together with the then aggregate value of all Cash
Equivalent Investments.
"Instructing Group" means in respect of any matter, the Banks whose votes
-----------------
are required to pass a resolution on such matter as determined in accordance
with ss.ss. 22.5 and 22.6 of the Loan Agreement.
"License Agreement" means the License Agreement, in the form set out in
-----------------
Schedule 38 to the Loan Agreement, between AMD Inc., AMD Holding, and AMD
- -----------
Saxonia.
"Loan Agreement" has the meaning assigned to that term in the second
-------------- ------
recital of this Agreement.
- -------
"Loan Agreement Effective Date" means the date specified by the Agent in a
-----------------------------
notice given to the parties hereto as being the first date on or as of which (i)
the Loan Agreement has been executed and delivered by each of the respective
parties thereto, and (ii) the Agent has received each of the documents referred
to in ss.ss. 5.1.1 to 5.1.16 of the Loan Agreement, in each case in the form,
------------ ------
and with the substance, specified therein.
"Loan Agreement Termination Date" has the meaning assigned to that term in
-------------------------------
Section 15.7.
- ------------
"Management Plan" means the project concept dated February 1997, and
---------------
attached as Schedule 14 to the Loan Agreement, as the same may from time to time
-----------
be further amended or modified by AMD Saxonia (with the consent of each Sponsor,
whose consent will not be unreasonably delayed or withheld) in accordance with
the terms of this Agreement and the Loan Agreement and in effect.
15
<PAGE>
"Management Service Agreement" means the Amended and Restated Management
----------------------------
Service Agreement, in the form set out in Schedule 37 to the Loan Agreement,
-----------
between AMD Inc., AMD Holding, and AMD Saxonia.
"Material Adverse Effect" means
-----------------------
(i) a material adverse change in, or a material adverse effect upon, the
operations, business, properties, condition (financial or otherwise),
or prospects of any AMD Company, or of AMD Inc. and its Subsidiaries,
taken as a whole;
(ii) with respect to the Contractor, a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise), or prospects of the Contractor
and its Subsidiaries, taken as a whole;
(iii) with respect to an Equipment Supplier, a material adverse change in,
or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise), or prospects of such
Equipment Supplier and its Subsidiaries, taken as a whole;
(iv) with respect to a Service Supplier, a material adverse change in, or
a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise), or prospects of such Service
Supplier and its Subsidiaries, taken as a whole;
(v) a material impairment of the ability of any AMD Company, the
Contractor, any Equipment Supplier, or any Service Supplier to
perform its obligations under any Operative Document to which it is
or is to be a party; or
(vi) a material adverse effect upon (i) the legality, validity, binding
effect, or enforceability against any AMD Company, the Contractor,
any Equipment Supplier, or any Service Supplier of any Operative
Document, or (ii) the perfection or priority of any Security granted
under any of the Security Documents;
provided, however, that with respect to an event described in clause (ii),
- ----------------- -----------
(iii), (iv), or, with respect to the Contractor, an Equipment Supplier, or a
- -----------
Service Supplier, clause (v) or (vi) above, such event could reasonably be
------------------
expected to have a material adverse consequence to the entirety of the
transactions contemplated by the Operative Documents.
"Material AMD Inc. Subsidiary" means, at any time, any Subsidiary of AMD
----------------------------
Inc. having at such time (either on an individual basis or on a consolidated
basis for such Subsidiary and its Subsidiaries) either:
16
<PAGE>
(i) total (gross) revenues for the preceding four Fiscal Quarter period in
excess of 5% of gross revenues for AMD Inc. and its Subsidiaries on a
consolidated basis for such period, or
(ii) total assets, as of the last day of the preceding Fiscal Quarter,
having a net book value in excess of 5% of total assets for AMD Inc.
and its Subsidiaries on a consolidated basis as of such date,
in each case, based on the then most recent annual or quarterly financial
statements delivered to the Agent hereunder; provided, however, that AMD Saxonia
-------- -------
and AMD Holding shall, for purposes of this Agreement, each be deemed to be a
Material AMD Inc. Subsidiary.
"Material Equipment Supply Contract" means 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 to the Loan Agreement.
"Material Service Contract" means each Service Contract (with the exception
-------------------------
of the AMD Saxonia Wafer Purchase Agreement, the Management Service Agreement
and employment contracts):
(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 to the Loan Agreement.
"Operating Account" means the account or accounts referred to and opened
-----------------
pursuant in ss. 19.1 of the Loan Agreement (including any sub-accounts into
--------
which any such account may be divided), as such account may be renewed,
redesignated, or renumbered from time to time.
"Operative Documents" means, collectively, the Project Agreements, the
-------------------
Financing Documents, the AMD Inc. Primary Bank Credit Agreement, the AMD Inc.
Senior Secured Note Indenture, the Management Plan, each Project Budget, each
Project Schedule, each
17
<PAGE>
Approved Project Budget, each Approved Project Schedule, the Information
Memorandum, the Completion Certificates, the Compliance Certificates, and each
other instrument or document designated by the Agent (with the consent of each
AMD Company) as an Operative Document under and for purposes of this Agreement.
"Opinion Reservations" means limitations on the enforceability of legal
--------------------
documents as a matter of German law or the law of the United States of America
or one of its states and as incorporated as qualifications to an enforceability
opinion in the legal opinions delivered to and accepted by the Agent under and
pursuant to ss. 5.1.11 of the Loan Agreement.
----------
"Organizational Documents" means, with respect to any AMD Company, its
------------------------
certificate of incorporation, Memorandum and Articles of Association, charter,
by-laws, and (except with respect to AMD Inc.) all shareholder agreements,
voting trusts, and similar arrangements applicable to any of its authorised
shares of capital stock.
"Paying Agent" has the meaning assigned to that term in the second recital
------------ --------------
of this Agreement.
"Perform in Accordance with the Plans and Specifications" means, for
-------------------------------------------------------
purposes of the Technical Completion tests, and when used for the period from
and after Technical Completion, the performance by the Plant, on a substantially
continuous basis substantially as intended under normal operating conditions, of
the functions for which it was designed in accordance with the Plans and
Specifications. In order to certify that the Plant is capable of performing
substantially as intended under normal operating conditions, the Technical
Advisor will during normal operations of the Plant (and without, to the extent
practicable, disrupting production at the Plant), observe the operation of the
Plant and its component parts to determine if the Plant and its component parts
(except for uninstalled spares):
(x) are in operation and performing normally; and
(y) demonstrate as a whole the operation of the principal component parts
of the Plant at production rates consistent with the design capacity
of the Plant (as observed by the Technical Advisor from the operating
log sheets and such other data as may be reasonably available and is
demonstrated from AMD Saxonia's operating reports, copies of which
will be obtained by the Technical Advisor).
The Technical Advisor will not be required to conduct specific tests on
individual pieces of the Plant or its component parts in making this
determination. In order to certify that the Plant has met the tests, or has
demonstrated performance equivalent to the tests, set forth in the definition
"Perform in Accordance with the Plans and Specifications", the Technical Advisor
will:
18
<PAGE>
(i) in the case of demonstrated performance equivalent to the tests of the
Plant (or portion thereof), obtain and rely on copies of, review, and
analyze, AMD Saxonia's operating data comprising, but not limited to,
daily log sheets, yield test results, and product shipments and, based
upon the foregoing, will determine if the Plant (or such portion) has
demonstrated its required performance; and
(ii) in the case of a formal test run, observe the operations during normal
business hours to verify the operating rates and time of operation and
obtain and rely on copies of and review and analyse AMD Saxonia's
operating data (as specified in clause (i) above) to independently
determine if the Plant (or portion thereof) has demonstrated its
required performance.
"Permitted Encumbrances" means, (i) in the case of AMD Saxonia or AMD
----------------------
Holding, any Encumbrance arising by operation of law in the ordinary course of
business, Encumbrances arising in the ordinary course of business as a result of
a supplier retaining title to goods supplied pending payment for such goods, and
Encumbrances on the Security pursuant to the Security Documents, and (ii) in the
case of AMD Inc. or any Subsidiary of AMD Inc. (other than AMD Saxonia or AMD
Holding), a "Permitted Lien" under, and as defined in, the AMD Inc. Primary Bank
Credit Agreement.
"Person" means an individual or a corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof), or other juridical
entity of any kind.
"Plans and Specifications" means the plans and specifications to be
------------------------
prepared by AMD Saxonia and approved by each of the Sponsors (which approval
shall not be unreasonably delayed or withheld), the Technical Advisor, and the
Agent for the fitting out of the Plant and the Design Center, as the same may be
amended by AMD Saxonia from time to time with the consent of each Sponsor and
the Agent (which consent, in the case of each Sponsor, shall not be unreasonably
delayed or withheld); provided, that amendments to the plans and specifications
which do not, individually or in the aggregate, reduce or adversely affect the
value of the Plant and the Design Center in any material respect or the capacity
and purpose of the Plant as set out in the plans and specifications as
originally approved by the Technical Advisor and the Agent for purposes of the
Operative Documents shall not require the consent of the Agent.
"Plant" means the advanced silicon wafer production facility constructed or
-----
to be constructed by AMD Saxonia in or near Dresden, Germany to manufacture
integrated circuits in wafer form using high-volume semi-conductor wafer
fabrication processes.
19
<PAGE>
"Primary Secured Obligations" means, at the time any determination thereof
---------------------------
is to be made, all Secured Obligations then owing and, whether or not then
owing, all Secured Obligations in respect of the principal of and interest on
the Advances.
"Project" has the meaning assigned to that term in the first recital of
------- -------------
this Agreement.
"Project Accounts" means the Debt Service Reserve Account and the Operating
----------------
Account.
"Project Agreements" means, collectively, the Wafer Purchase Agreements,
------------------
the Research Agreements, the Management Service Agreement, the License
Agreement, the Design/Build Agreement, the Equipment Supply Contracts, the
Service Contracts, the AMD Inc. Guaranty, and each other instrument or document
designated by the Agent (with the consent of each AMD Company) as a Project
Agreement under and for purposes of this Agreement.
"Project Budget" means the budget, in the form set out in Schedule 6 to the
-------------- ----------
Loan Agreement, with such changes (if any) to its form as the Agent may from
time to time reasonably require, of projected Capital Expenditure for the
implementation of the Project and the Project Phases in the implementation of
the Project, including a detailed projected sources and uses of funds statement,
broken down for each Project Phase on a Fiscal Quarter by Fiscal Quarter basis,
as prepared by AMD Saxonia and approved by each Sponsor in accordance with the
Management Plan and the Project Schedule, such approval not to be unreasonably
withheld or delayed.
"Project Costs" means all Capital Expenditure and other costs of the kind
-------------
referred to in the Approved Project Budget which are incurred by AMD Saxonia in
connection with the Project up to Completion.
"Project Phase" means each project phase set out in the Approved Project
-------------
Schedule contemplated for the implementation of the Project.
"Project Schedule" means the schedule, in the form set out in Schedule 7 to
---------------- ----------
the Loan Agreement, with such changes (if any) to its form as the Agent may from
time to time reasonably require, of Project Phases to be achieved during the
construction of the Project prior to Completion, as prepared by AMD Saxonia and
approved by each Sponsor, such approval not to be unreasonably withheld or
delayed.
"Projected Total Cost" means, at the time any determination thereof is to
--------------------
be made, the sum (without duplication) of
(i) the Capital Expenditure then or theretofore made or accrued,
plus
----
20
<PAGE>
(ii) the Cost to Complete at such time.
"Relevant AMD Inc. Individual" means any Vice President or more senior
----------------------------
officer of AMD Inc., some or all of whose responsibilities include the Project.
"Requirements of Law" means, with respect to any Person, any law (statutory
-------------------
or common), treaty, rule, or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Research Agreements" means, collectively, the AMD Saxonia Research
-------------------
Agreement and the AMD Holding Research Agreement.
"SAB" means Sachsische Aufbaubank GmbH, a Gesellschaft mit beschrankter
---
Haftung organised and existing under the laws of Germany and registered in
Dresden, Germany, acting on behalf of the Free State of Saxony.
"SAB Related Agreements" means the AMD Saxonia/Dresdner Subsidy Agreement
----------------------
and the SAB/Dresdner Subsidy Agreement, collectively.
"SAB/Dresdner Subsidy Agreement" means the Agreement, in the form set out
------------------------------
in Schedule 26 to the Loan Agreement, between SAB and Dresdner.
-----------
"Same Day Funds" means, at the time of any determination, funds which are
--------------
immediately available to AMD Saxonia.
"Scheduled Project Phase Completion Certificates" means the Scheduled
-----------------------------------------------
Project Phase Technical Completion Certificate (Obligors) and the Scheduled
Project Phase Technical Completion Certificate (Technical Advisor).
"Scheduled Project Phase Technical Completion" when used with reference to
--------------------------------------------
a Project Phase, shall be deemed to have occurred when:
(i) all of the conditions set forth in the form of Scheduled Project Phase
Technical Completion Certificate (Obligors) attached to the Loan
Agreement as Schedule 9 thereto have been satisfied in all material
----------
respects, all of the statements appearing in said form of Certificate
are true and correct in all material respects, in each case with
respect to such Project Phase, and the Agent shall have received a
fully executed counterpart of such Certificate; and
(ii) the Agent shall have received a fully executed counterpart of the
Scheduled Project Phase Technical Completion Certificate (Technical
Advisor).
21
<PAGE>
"Scheduled Project Phase Technical Completion Certificate (Obligors)" means
-------------------------------------------------------------------
a Certificate, in the form set out in Schedule 9 to the Loan Agreement
----------
(appropriately completed), executed by the AMD Companies, and delivered to the
Agent.
"Scheduled Project Phase Technical Completion Certificate (Technical
-------------------------------------------------------------------
Advisor)" means a Certificate, in the form set out in Schedule 10 to the Loan
- -------- -----------
Agreement (appropriately completed), executed by the Technical Advisor, and
delivered to the Agent.
"Secured Obligations" means all actual and contingent obligations of AMD
-------------------
Saxonia to the Secured Parties under or arising out of the Financing Documents
and the Security Documents.
"Secured Parties" means the Agent, the Paying Agent, the Security Agent,
---------------
and the Banks, collectively.
"Security" means, collectively, the AMD Inc. Security, the AMD Holding
--------
Security, and the AMD Saxonia Security.
"Security Agent" has the meaning assigned to that term in the introduction
--------------
to this Agreement.
"Security Documents" means, collectively, the AMD Saxonia Security
------------------
Documents, the AMD Holding Security Documents, the AMD Inc. Share Pledge
Agreement, and each other instrument or document designated by the Agent (with
the consent of each AMD Company) as a Security Document under and for purposes
of this Agreement.
"Service Suppliers" means, collectively, each Person party to a contract or
-----------------
other agreement with AMD Saxonia in the capacity of a supplier of services for
the Plant or the Design Center.
"Service Supplier's Consent and Agreement" means, with respect to a Service
----------------------------------------
Supplier, such Service Supplier's Consent and Agreement, in the form set out in
Schedule 40 to the Loan Agreement or Annex 3 to Schedule 49 of the Loan
- ----------- -----------
Agreement, as the case may be, or such other form as is consented to by the
Security Agent, which pertains to a Material Service Contract or which is
otherwise required pursuant to the terms of the Loan Agreement or the Security
Documents.
"Service Contract" means each agreement (which may be in the form of an
----------------
accepted order) between AMD Saxonia and a Service Supplier relating to the
acquisition by, and delivery to, AMD Saxonia of services for the Project.
"65/35 Burgschaft" means 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 DM
22
<PAGE>
1,072,500,000 (one billion seventy-two million five hundred thousand Deutsche
Marks), together with 65% of the shortfall of interest and costs, vested with a
first right of satisfaction in favour of the Banks over all security granted by
each AMD Company as security for the Banks' risk of recovery.
"Sponsors" has the meaning assigned to that term in the introduction to
-------- ------------
this Agreement.
"Sponsors' Applicable Share" means the applicable share of a Cost Overrun
--------------------------
determined in accordance with Section 4.2.
-----------
"Sponsors' Consent and Agreement" means the Sponsors' Consent and
-------------------------------
Agreement, in the form set out in Schedule 31 to the Loan Agreement, between the
-----------
Sponsors, the Agent, and the Security Agent.
"Sponsors' Disclosure Schedule" means the Disclosure Schedule attached as
-----------------------------
Schedule II, as it may be amended, supplemented, or otherwise modified from time
- -----------
to time by the Sponsors with the written consent of the Agent.
"Sponsors' Guaranty" means the Sponsors' Guaranty, in the form set out in
------------------
Schedule 32 to the Loan Agreement, executed by the Sponsors in favour of the
- -----------
Agent and the Security Agent for the benefit of the Secured Parties.
"Sponsors' Loan Agreement" means the Sponsors' Loan Agreement, in the form
------------------------
set out in Schedule 29 to the Loan Agreement, between the Sponsors, as lenders,
-----------
and AMD Saxonia, as borrower.
"Sponsors' Loans" means all loans made or to be made by AMD Inc. or AMD
---------------
Holding to AMD Saxonia in accordance with the terms of the Sponsors' Loan
Agreement, which loans are subordinated in accordance with the Sponsors'
Subordination Agreement.
"Sponsors' Subordination Agreement" means the Sponsors' Subordination
---------------------------------
Agreement, in the form set out in Schedule 30 to the Loan Agreement, executed by
-----------
the Sponsors, AMD Saxonia, and the Security Agent.
"Sponsors' Warranty Date" means each of the following dates which occurs
-----------------------
prior to the exercise of rights by the Security Agent under any of the Security
Documents: (i) the Loan Agreement Effective Date, (ii) each date AMD Saxonia
delivers a notice of drawing for an Advance under the Loan Agreement, (iii) each
date the AMD Companies deliver each Scheduled Project Phase Technical Completion
Certificate (Obligors), (iv) the date of Technical Completion, (v) the date of
Financial Completion, and (vi) each date the Sponsors deliver the certificate
referred to in Section 13.1(i)(c).
------------------
23
<PAGE>
"Subsidiary" means with respect to (i) any Person organised and existing
----------
under the laws of the Federal Republic of Germany, a subsidiary within the
meaning of the term "abhangiges Unternehmen" in ss. 17 of the German Stock
Corporation Act (Aktiengesetz); and (ii) any other Person, a corporation or
other entity of which such Person or such Person and/or such Person's other
Subsidiaries own, directly or indirectly, more than 50% of the ordinary voting
power for the election of directors or others performing similar functions.
"Subsidies" has the meaning assigned to that term in Section 6.1.
--------- -----------
"Taxes" has the meaning assigned to that term in Section 14.5(a).
----- ---------------
"Technical Advisor" means Fraunhofer Institut fur Siliziumtechnologie,
-----------------
Itzehoe, or such other technical advisor as may be appointed by the Security
Agent with the consent of each AMD Company, which consent shall not be
unreasonably delayed or withheld.
"Technical Advisor's Report" means that certain report dated October 16,
--------------------------
1996 from the Technical Advisor to the Agent prepared for purposes of this
Agreement and the other Operative Documents and the transactions contemplated
hereby and thereby.
"Technical Completion" shall be deemed to have occurred when:
--------------------
(i) all of the conditions set forth in the form of Technical Completion
Certificate (Obligors) attached to the Loan Agreement as Schedule 9
----------
thereto have been satisfied in all material respects, all of the
statements appearing in said form of Certificate are true and correct
in all material respects, and the Agent shall have received a fully
executed counterpart of such Certificate; and
(ii) the Agent shall have received a fully executed counterpart of the
Technical Completion Certificate (Technical Advisor).
"Technical Completion Certificates" means the Technical Completion
---------------------------------
Certificate (Obligors) and the Technical Completion Certificate (Technical
Advisor).
"Technical Completion Certificate (Obligors)" means a certificate, in the
-------------------------------------------
form set out in Schedule 9 to the Loan Agreement (appropriately completed and
----------
with the legal opinion therein referred to attached), executed by the AMD
Companies, and delivered to the Agent.
"Technical Completion Certificate (Technical Advisor)" means a certificate,
----------------------------------------------------
in the form set out in Schedule 10 to the Loan Agreement (appropriately
-----------
completed), executed by the Technical Advisor, and delivered to the Agent.
24
<PAGE>
"Total Tranche A Commitment Amount" means DM 1,500,000,000 (one billion
---------------------------------
five hundred million Deutsche Marks), as such amount shall be reduced by any
reductions to (but not utilizations of) the commitments of the Banks under
"Facility A" under the Loan Agreement.
"Total Tranche B Commitment Amount" means DM 150,000,000 (one hundred fifty
---------------------------------
million Deutsche Marks), as such amount shall be reduced by any reductions to
(but not utilizations of) the commitments of the Banks under "Facility B" under
the Loan Agreement.
"Tranche A Advances" means Advances made by the Banks or any Bank pursuant
------------------
to "Facility A" under the Loan Agreement.
"Tranche B Advances" means Advances made by the Banks or any Bank pursuant
------------------
to "Facility B" under the Loan Agreement.
"Uneven Capacity Allocation" has the meaning assigned to that term in the
--------------------------
AMD Saxonia Wafer Purchase Agreement.
"Unmatured Event of Default" means an event or circumstance which, with the
--------------------------
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Wafer" has the meaning assigned to that term in the AMD Saxonia Wafer
-----
Purchase Agreement.
"Wafer Fabrication Plant" has the meaning assigned to that term in the AMD
-----------------------
Saxonia Wafer Purchase Agreement.
"Wafer Purchase Agreements" means, collectively, the AMD Saxonia Wafer
-------------------------
Purchase Agreement and the AMD Holding Wafer Purchase Agreement.
SECTION 1.2 Accounting and Financial Determinations. Unless otherwise specified,
all accounting terms used herein shall be interpreted, all accounting
determinations and computations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with, GAAP. When used herein, the term "financial statements" shall include the
notes and schedules thereto, but need not include such notes or schedules when
used with reference to such statements of any Person as of any date other than
the end of a Fiscal Year of such Person. In the determination of any periods
pursuant to any provision hereof, unless otherwise specified, the term "from"
means "from (and including)", the term "to" means "to (and excluding)", and the
term "until" means "until (and excluding)".
25
<PAGE>
SECTION 1.3 Construction. In this Agreement, unless the context requires
otherwise, any reference to:
"assets" includes any asset, property, or right and includes uncalled
------
capital;
"including" or "includes" means including or includes without limitation;
--------- --------
"law" and/or "regulation" includes any constitutional provision, treaty,
--- ----------
convention, statute, act, law, decree, ordinance, subsidiary or subordinate
legislation, order, rule, or regulation having the force of law, and any rule of
civil or common law or equity;
"order" includes any judgment, injunction, decree, determination, or award
-----
of any court, arbitration, or administrative tribunal;
"tax" includes any tax, levy, duty, charge, impost, fee, deduction, or
---
withholding of any nature now or hereafter imposed, levied, collected, withheld,
or assessed by any taxing or other authority and includes any interest, penalty,
or other charge payable or claimed in respect thereof, and "taxation" shall be
--------
construed accordingly; and
"winding-up" includes any winding-up, liquidation, dissolution, or
----------
comparable process in any jurisdiction.
SECTION 1.4 Miscellaneous. In this Agreement, unless the context requires
otherwise, (i) any reference to an Operative Document shall be to such Operative
Document as the same may have been or from time to time may be amended, varied,
re-issued, replaced, novated or supplemented, in each case in accordance with
the terms thereof and hereof, and in effect; (ii) any statutory provisions shall
be construed as references to those provisions as amended, modified, re-enacted,
or replaced from time to time; (iii) words importing a gender include every
gender; (iv) references to Sections and Schedules are to Sections of and
Schedules to this Agreement; and (v) references to this Agreement include its
Schedules. Section headings are inserted for reference only and shall be ignored
in construing this Agreement. A time of day, unless otherwise specified, shall
be construed as a reference to Frankfurt am Main time.
ARTICLE II
Contribution of Equity Capital
SECTION 2.1 Undertaking to Contribute. AMD Holding hereby undertakes to
contribute to AMD Saxonia, and AMD Inc. hereby undertakes to cause AMD Holding
to so contribute to AMD Saxonia (and AMD Inc. shall, to the extent necessary,
contribute sufficient funds, or otherwise cause sufficient funds to be made
available, to AMD Holding as shall be necessary to enable AMD Holding to so
contribute to AMD Saxonia), Equity Capital at the times and in the amounts set
forth in Section 2.2. For the avoidance of doubt:
-----------
26
<PAGE>
(i) to the extent, but only to the extent, reflected in AMD Saxonia's
financial statements referred to in ss. 15.1.6 of the Loan Agreement
----------
(or, if not so reflected, as certified by AMD Inc. to the Agent and
the Security Agent as of the Loan Agreement Effective Date), amounts
contributed by the Sponsors to AMD Saxonia prior to the Loan
Agreement Effective Date shall be taken into account in determining
whether the Sponsors shall have complied with their obligations under
this Article II;
----------
(ii) the obligations of the Sponsors contained in this Article II are in
----------
addition to, and not in limitation of, their respective obligations
contained elsewhere in this Agreement and in the other Operative
Documents;
(iii) the Sponsors shall not be relieved of the foregoing obligations by
virtue of:
(a) any Sponsors' Loan made by either Sponsor pursuant to this
Agreement or the Sponsors' Loan Agreement; or
(b) any payment made by either Sponsor under the Sponsors' Guaranty;
and
(iv) the amounts set forth in Section 2.2 below are minimum aggregate
-----------
amounts of Equity Capital to be received by AMD Saxonia; nothing
contained herein shall be deemed to preclude AMD Holding from making
additional contributions to AMD Saxonia's stated capital or capital
reserves in order to fulfil the obligations of the Sponsors contained
in Article IV, V, VI, or VII, or for any other reason.
-------------------------
SECTION 2.2 Time of Contribution. The Equity Capital to be contributed to AMD
Saxonia under this Article II is due and payable to AMD Saxonia as follows:
(i) one or more instalments aggregating DM 108,750,000 (one hundred eight
million seven hundred fifty thousand Deutsche Marks) on or before the
date of the initial Advance under the Loan Agreement; it being
understood and agreed that, to the extent, but only to the extent,
reflected in AMD Saxonia's financial statements referred to
in ss.15.1.6 of the Loan Agreement (or, if not so reflected, as
---------
certified by AMD Inc. to the Agent and the Security Agent as of the
Loan Agreement Effective Date), all contributions to the Equity
Capital of AMD Saxonia prior to Loan Agreement Effective Date shall be
considered contributions to its Equity Capital for purposes of this
Section 2.2(i); and
--------------
(ii) in addition to the Equity Capital contributed or to be contributed
pursuant to Section 2.2(i) hereof, one or more additional instalments
--------------
aggregating
27
<PAGE>
DM 108,750,000 (one hundred eight million seven hundred fifty thousand
Deutsche Marks) by the earlier to occur of:
(a) the acceleration of the Advances under the Loan Agreement
following the occurrence of an Event of Default (it being
understood and agreed that if, at the time of any such
acceleration, the Primary Secured Obligations are less than the
amount otherwise required to be contributed to AMD Saxonia under
this Section 2.2(ii), such contribution shall be made in an
---------------
amount which, when added to the aggregate amount of all Sponsors'
Loans and/or other contributions to AMD Saxonia's Equity Capital
or capital reserves then concurrently made, is equal to the
Primary Secured Obligations at such time); and
(b) December 31 1997;
provided, however, that such Equity Capital shall be required to be
-----------------
contributed in whole or in part at any time prior to such dates if,
but only to the extent that, the ratio of:
(x) the sum of
(1) the then aggregate outstanding principal amount of Sponsors'
Loans,
plus
----
(2) the then aggregate amount of AMD Saxonia's Equity Capital
and capital reserves,
to
(y) the then aggregate outstanding principal amount of the Advances,
is less than 25:75.
SECTION 2.3 Form of Contribution. The Equity Capital under this Article II shall
----------
be contributed in cash and in Same Day Funds to AMD Saxonia.
28
<PAGE>
ARTICLE III
Sponsors' Loans
SECTION 3.1 Undertaking to Make Class A and Class B Sponsors' Loans. The
Sponsors, jointly and severally, hereby undertake that either Sponsor or both of
the Sponsors will make Sponsors' Loans to AMD Saxonia:
(i) in an aggregate principal amount of at least DM 290,000,000 (two
hundred ninety million Deutsche Marks) for all such Sponsors' Loans,
the exact amount thereof being equal to the Deutsche Mark Equivalent
of $200,000,000 (two hundred million Dollars) for all such Sponsors'
Loans, as contemplated by Section 3.2 (the "Class A Sponsors' Loans");
----------- -----------------------
and
(ii) in an aggregate principal amount of up to an additional DM 145,000,000
(one hundred forty five million Deutsche Marks) as contemplated by
Section 3.3 (the "Class B Sponsors' Loans").
----------- -----------------------
For the avoidance of doubt:
(i) the obligations of the Sponsors under the Sponsors' Loan Agreement
are intended to reflect, rather than to be in addition to, the
obligations of the Sponsors pursuant hereto;
(ii) to the extent, but only to the extent, reflected in AMD Saxonia's
financial statements referred to in ss.15.1.6 of the Loan Agreement
---------
(or, if not so reflected, as certified by AMD Inc. to the Agent and
the Security Agent as of the Loan Agreement Effective Date),
Sponsors' Loans and/or contributions (to the extent, but only to the
extent, not otherwise taken into account in determining whether AMD
Holding has complied with its obligations under Article II) by AMD
Holding to AMD Saxonia's capital reserves made to AMD Saxonia prior
to the Loan Agreement Effective Date shall be taken into account as
Class A Sponsors' Loans in determining whether the Sponsors shall
have complied with their obligations under this Article III;
-----------
(iii) although the obligations of the Sponsors contained in this Article
-------
III are in addition to, and not in limitation of, their respective
---
obligations contained elsewhere in this Agreement and in the other
Operative Documents, if the Agent shall have otherwise expressly
consented thereto in writing (which consent will not be unreasonably
withheld or delayed), the Sponsors shall be deemed to have complied
with their obligations to make Class A Sponsors' Loans and/or Class B
Sponsors' Loans to the extent, but only to the extent, that AMD
Holding shall have made additional contributions to AMD Saxonia's
Equity Capital (or other contribution to AMD Saxonia's
29
<PAGE>
capital reserves) which contributions are not otherwise required to
be made pursuant hereto or to any other Operative Document;
(iv) the Sponsors shall not be relieved:
(a) of the foregoing obligation by virtue of any Equity Capital (or
other contribution to AMD Saxonia's capital reserves) contributed
or required to be contributed to AMD Saxonia pursuant to Section
-------
2.1 or (except as, and to the extent, provided in clause (iii)
--- ------------
above) otherwise;
(b) of any obligation to make Class A Sponsors' Loans (or to
contribute additional Equity Capital or other contributions to
AMD Saxonia's capital reserves in lieu thereof) by virtue of any
payment made by either Sponsor under the Sponsors' Guaranty; or
(c) of any obligation following Completion to make Class B Sponsors'
Loans until and unless the Sponsors shall have paid all amounts
payable under the Sponsors' Guaranty following a demand for
payment made by the Agent thereunder (it being understood and
agreed that the obligation of the Sponsors to make Class B
Sponsors' Loans shall be subject to the occurrence of
Completion);
(v) each Class A Sponsors' Loan shall be denominated in Deutsche Marks and
the Deutsche Mark Equivalent thereof shall be calculated for the
purpose of determining whether the Sponsors have complied with their
obligations under Section 3.2; provided, however, that any Class A
----------- -------- -------
Sponsors' Loan may, with the consent of the Agent (such consent not to
be unreasonably delayed or withheld), be funded in Dollars but for all
purposes of this Agreement and the Sponsors' Loan Agreement shall be
deemed to have been funded in Deutsche Marks in an amount which is
equal to the Deutsche Mark Equivalent thereof; and
(vi) the amounts set forth in this Section 3.1 are cumulative minimum
-----------
aggregate amounts for both Sponsors, collectively; nothing contained
herein shall be deemed to preclude the Sponsors (or either of them)
from making additional Sponsors' Loans in order to fulfil their
respective obligations contained in Article IV, V, VI, or VII, or for
-------------------------
any other reason.
SECTION 3.2 Time of Class A Sponsors' Loans. The Class A Sponsors' Loans will be
made in cash and in Same Day Funds and will be made as follows:
(i) at least DM 145,000,000 (one hundred forty five million Deutsche
Marks) for all such Class A Sponsors' Loans, the exact amount thereof
being equal
30
<PAGE>
to the Deutsche Mark Equivalent of $100,000,000 (one hundred million
Dollars) for all such Class A Sponsors' Loans, by the earlier to occur
of:
(a) the acceleration of the Advances under the Loan Agreement
following the occurrence of an Event of Default (it being
understood and agreed that if, at the time of any such
acceleration, the Primary Secured Obligations are less than the
amount otherwise required to be lent to AMD Saxonia under this
Section 3.2(i), the amount of such Class A Sponsors' Loans shall
--------------
be an amount which, when added to the aggregate amount of all
Sponsors' Loans and/or other contributions to AMD Saxonia's
Equity Capital or capital reserves then concurrently made, is
equal to the Primary Secured Obligations at such time); and
(b) December 31, 1998; and
(ii) at least a further DM 145,000,000 (one hundred forty five million
Deutsche Marks) for all such Class A Sponsors' Loans, the exact amount
thereof being equal to the Deutsche Mark Equivalent of $100,000,000
(one hundred million Dollars) for all such Class A Sponsors' Loans, by
the earlier to occur of:
(a) the acceleration of the Advances under the Loan Agreement
following the occurrence of an Event of Default (it being
understood and agreed that if, at the time of any such
acceleration, the Primary Secured Obligations are less than the
amount otherwise required to be lent to AMD Saxonia under this
Section 3.2(ii), the amount of such Class A Sponsors' Loans shall
be an amount which, when added to the aggregate amount of all
Sponsors' Loans and/or other contributions to AMD Saxonia's
Equity Capital or capital reserves then concurrently made, is
equal to the Primary Secured Obligations at such time); and
(b) December 31, 1999;
provided, however, that such Class A Sponsors' Loans shall be required to be
- -----------------
made in whole or in part at any time prior to the aforesaid dates if, but only
to the extent that, the ratio of:
(x) the sum of
(1) the then aggregate outstanding principal amount of Sponsors'
Loans,
plus
----
31
<PAGE>
(2) the then aggregate amount of AMD Saxonia's Equity Capital
and capital reserves,
to
--
(y) the then aggregate outstanding principal amount of the Advances
under the Loan Agreement,
is less than 25:75.
SECTION 3.3 Time of Class B Sponsors' Loans. The Class B Sponsors' Loans will be
made in cash and in Same Day Funds and will be made upon first written demand by
the Security Agent to the extent necessary to remedy any shortfall in the Fixed
Charge Coverage Ratio as required by the Security Agent at any time and from
time to time following Completion if, on or as of a Financial Ratio Calculation
Date, AMD Saxonia's Fixed Charge Coverage Ratio is less than 125%.
SECTION 3.4 Additional Sponsors' Loans. In addition to the Class A Sponsors'
Loans and the Class B Sponsors' Loans, the Sponsors (or either of them) may,
from time to time, at their option make additional Sponsors' Loans in order to
fulfil their respective obligations contained herein or otherwise to provide
additional funds to AMD Saxonia.
SECTION 3.5 Terms of Sponsors' Loans. The making of Sponsors' Loans will be made
on the terms, and shall be subject to the conditions, contained in the Sponsors'
Loan Agreement which, as provided in Section 3.1, is intended to reflect, rather
-----------
than to be in addition to, the obligations of the Sponsors contained in this
Article III.
- -----------
SECTION 3.6 Subordination of Sponsors' Loans. The Sponsors' Loans will be
subordinated on the terms and conditions contained in the Sponsors'
Subordination Agreement.
ARTICLE IV
Cost Overruns Prior to Completion
SECTION 4.1 Cost Overruns. In addition to, and not in limitation of, their other
obligations contained in this Agreement and the other Operative Documents, the
Sponsors, jointly and severally, hereby undertake to provide AMD Saxonia with
Same Day Funds (whether, in the case of AMD Holding, by contribution to AMD
Saxonia's Equity Capital (or other contributions to AMD Saxonia's capital
reserves), or, in the case of either Sponsor, through Sponsors' Loans)
sufficient to cover the Sponsors' Applicable Share of any Cost Overrun. The
Sponsors shall be relieved of any further obligations under this Article IV if,
but only if:
(i) the Sponsors shall have complied with each of their respective
obligations under Article II and, insofar as such obligations relate
----------
to Class A Sponsors'
32
<PAGE>
Loans (or additional contributions to Equity Capital or AMD Saxonia's
capital reserves in lieu thereof), Article III; and
-----------
(ii) following a demand by the Agent for payment under the Sponsors'
Guaranty, the Sponsors shall have paid all amounts payable under the
Sponsors' Guaranty.
The Sponsors shall be required to provide AMD Saxonia with Same Day Funds in the
amount of the Sponsors' Applicable Share of any Cost Overrun:
(i) on or prior to the occasion of each drawdown of a Tranche B Advance,
and as a condition to the making thereof; and
(ii) promptly following any notice from the Agent or the Technical Advisor
to AMD Inc. to the effect that the Cost to Complete exceeds the funds
otherwise available to AMD Saxonia for such purpose (including,
without limitation, the Available Tranche A Amount, the Available
Tranche B Amount, and the balance, if any, of collected funds then on
deposit in the Operating Account, together with the then value of the
Cash Equivalent Investments acquired with the proceeds of the
Operating Account).
SECTION 4.2 Determination of Sponsors' Applicable Share.
(i) If and to the extent that Cost Overruns do not exceed DM 225,000,000
(two hundred twenty five million Deutsche Marks), the Sponsors'
Applicable Share thereof shall be 33-1/3% (ie, up to DM 75,000,000
(seventy five million Deutsche Marks)); and
(ii) If and to the extent that Cost Overruns exceed DM 225,000,000 (two
hundred twenty five million Deutsche Marks), the Sponsors' Applicable
Share thereof shall be 100%.
SECTION 4.3 Time of Payment. As and when required by Section 4.1, the Sponsors
-----------
will provide AMD Saxonia with cash in Same Day Funds to cover the Sponsors'
Applicable Share of any Cost Overrun.
SECTION 4.4 Post Completion Adjustment. Following Completion, if:
(i) AMD Holding has made contributions to AMD Saxonia's Equity Capital (or
other contributions to AMD Saxonia's capital reserves), other than
contributions of the minimum Equity Capital referred to in Article II;
----------
or
(ii) a Sponsor has made Sponsors' Loans to AMD Saxonia (other than Class A
Sponsors' Loans or Class B Sponsors' Loans),
33
<PAGE>
in either case to enable AMD Saxonia to have sufficient funds to pay Cost
Overruns (the aggregate amount so contributed or lent to AMD Saxonia being
hereinafter called the "Sponsors' Cost Overrun Contribution"), then, provided
-----------------------------------
that no Event of Default, Unmatured Event of Default or Event of Termination has
occurred and is continuing, AMD Saxonia shall, at the request of a Sponsor, and
with the consent of the Agent, repay to such Sponsor Sponsors' Loans in an
amount which is equal to the excess, if any, of:
(i) the Sponsors' Cost Overrun Contribution
over
- ----
(ii) the Sponsors' Applicable Share of the Cost Overruns prior to
Completion.
The Agent shall be required to grant such consent unless it has actual knowledge
that an Event of Default, Unmatured Event of Default or Event of Termination
shall have occurred and be continuing.
SECTION 4.5 Determination of Cost Overruns. As soon as reasonably practicable
after a Cost Overrun has been identified by a Relevant AMD Inc. Individual or by
the Technical Advisor, the AMD Companies shall calculate the amount of any Cost
Overrun and furnish such calculation to the Agent (together with such additional
information as the Agent may reasonably request); provided, however, that if the
-----------------
Technical Advisor, acting reasonably and in good faith at the request of the
Agent, identifies and calculates a Cost Overrun or disagrees with the AMD
Companies' identification or calculation thereof, the Technical Advisor's
calculation shall, for purposes of this Agreement, be conclusive and binding.
The Agent will promptly advise the AMD Companies and the Banks of any
determination by the Technical Advisor pursuant to the proviso to the preceding
-------
sentence.
SECTION 4.6 Projected Total Cost. If, at any time, the Projected Total Cost
exceeds DM 3,159,000,000 (three billion one hundred fifty nine million Deutsche
Marks), then, as soon as reasonably practicable (and, in any case, within 10
Business Days) following receipt of a demand by the Agent pursuant to ss.
---
21.2(xxiii) of the Loan Agreement, an Event of Default shall be deemed to have
- -----------
occurred unless AMD Inc. provides the Agent with such evidence as shall be
reasonably satisfactory to the Agent with respect to the ability of AMD Inc. and
AMD Saxonia to fund the entire remaining Cost to Complete, after giving effect
to the sum of (i) the Available Tranche A Amount, plus (ii) the Available
Tranche B Amount.
SECTION 4.7 Form of Contribution. The Sponsors may comply with their respective
obligations under this Article IV by making, either:
----------
(i) in the case of AMD Holding, a cash increase in the Equity Capital (or
other contributions to AMD Saxonia's capital reserves) of AMD Saxonia;
and/or
(ii) in the case of either Sponsor, further Sponsors' Loans to AMD Saxonia.
34
<PAGE>
ARTICLE V
Completion Guaranty
SECTION 5.1 Completion Guaranty. The Sponsors (jointly and severally), hereby
agree to cause AMD Saxonia:
(i) to complete each Project Phase as soon as contemplated by the
Approved Project Schedule (it being understood and agreed that the
completion date for one or more Project Phases (other than the final
Project Phase) may be deferred for up to six (6) months in the
aggregate for all such deferrals on a cumulative basis provided that
no such deferral may affect the final deadline for Completion);
(ii) to achieve Completion as soon as contemplated by the Approved Project
Schedule and, in any event, on or before 30 December 2001; and
(iii) to take all such action, including, without limitation, all actions
before Governmental Authorities, as shall be necessary or appropriate
to enable AMD Saxonia to complete each Project Phase and to achieve
Completion as aforesaid.
For the avoidance of doubt, the obligations of the Sponsors contained in this
Article V are in addition to, and not in limitation of, their respective
- ---------
obligations contained elsewhere in this Agreement and in the other Operative
Documents; provided, however, that the Sponsors shall be relieved of their
-----------------
respective obligations under this Article V if, but only if:
---------
(i) the Sponsors shall have complied with each of their respective
obligations under Article II and, insofar as such obligations relate
----------
to Class A Sponsors' Loans (or additional contributions to Equity
Capital or AMD Saxonia's capital reserves in lieu thereof), Article
-------
III; and
---
(ii) following a demand for payment by the Agent under the Sponsors'
Guaranty, the Sponsors shall have paid all amounts payable under the
Sponsors' Guaranty.
SECTION 5.2 Notice of Scheduled Project Phase, Technical, and Financial
Completion. Upon the occurrence of each of the following, the Agent shall
promptly advise the Sponsors, AMD Saxonia, and the Banks thereof:
(i) Scheduled Project Phase Technical Completion for each Project Phase,
(ii) Technical Completion;
35
<PAGE>
(iii) Financial Completion, and
(iv) Completion.
SECTION 5.3 No Double Recovery Under Article V and Sponsors' Guaranty. In the
event that the Sponsors default in the payment and performance of their
obligations under this Article V and, following any such default, the Agent
---------
institutes litigation or other adversary proceedings designed to compel the
Sponsors to perform such obligations or to pay damages for such failure, the
right of recovery against the Sponsors under this Article V is limited mutatis
--------- -------
mutandis to the amount set forth in Section 2.1 of the Sponsors' Guaranty and
-----------
any recovery by the Agent from the Sponsors hereunder shall, pro tanto, reduce
---------
the amount available to be recovered from the Sponsors under the Sponsors'
Guaranty.
For the avoidance of doubt, the obligations of the Sponsors under this Section
5.1 constitute a primary guarantee obligation (Garantievertrag) and not a surety
guarantee (Burgschaft).
ARTICLE VI
Subsidies Undertaking
SECTION 6.1 Subsidies. The Project will be supported by the following subsidies
and grants from the Free State of Saxony (hereinafter, the "Subsidies"):
---------
(i) a dedicated purpose investment grant in an aggregate amount of DM
476,687,000 (four hundred seventy six million six hundred eighty seven
thousand Deutsche Marks) which, together with the investment subsidies
in an aggregate amount of DM 23,813,000 (twenty three million eight
hundred thirteen thousand Deutsche Marks), totals an aggregate amount
of DM 500,500,000 (five hundred million five hundred thousand Deutsche
Marks); and
(ii) a dedicated purpose interest subsidy in an amount of DM 300,000,000
(three hundred million Deutsche Marks)
which, in each case, will be paid to AMD Saxonia by Dresdner Bank AG in Dresden,
in its capacity as house bank.
SECTION 6.2 Payment of Shortfall. The granting of the Subsidies is contingent on
the adherence by the Sponsors and AMD Saxonia to particular conditions,
requirements, and covenants. If, for any reason whatsoever, any AMD Company or
any Affiliate of any AMD Company breaches any such conditions, requirements, or
covenants, and, accordingly, causes the Subsidies not to be paid or, as a result
of any such breach, the Subsidies are required to be repaid (in either such case
the amount thereof being hereinafter called a "Shortfall"), then, without delay
---------
following its or their receipt of a demand therefor by the Agent, either:
36
<PAGE>
(i) AMD Holding shall contribute Equity Capital (or other contributions to
AMD Saxonia's capital reserves) to AMD Saxonia, and AMD Inc. shall
cause AMD Holding to so contribute to AMD Saxonia (and AMD Inc. shall,
to the extent necessary, contribute sufficient funds, or otherwise
cause sufficient funds to be made available, to AMD Holding as shall
be necessary to enable AMD Holding to so contribute to AMD Saxonia);
and/or
(ii) one or both Sponsors shall make Sponsors' Loans to AMD Saxonia,
in either case in an aggregate amount (and, if the Subsidies have not yet been
provided, as and when the Subsidies, but for such breach, would have otherwise
been provided) equal to the Shortfall.
For the avoidance of doubt:
(i) the obligations of the Sponsors contained in this Article VI are in
----------
addition to, and not in limitation of, their obligations contained
elsewhere in this Agreement and in the other Operative Documents, and
shall survive Completion; and
(ii) the Sponsors shall not be relieved of the foregoing obligations by
virtue of:
(a) any prior Sponsors' Loans made by the Sponsors (or either of
them);
(b) any prior contributions of Equity Capital (or other contributions
to AMD Saxonia's capital reserves) by AMD Holding; or
(c) any payment made by either Sponsor under the Sponsors' Guaranty;
provided, however, that the Sponsors shall have no liability as aforesaid in
- -----------------
respect of any Subsidies which fail to be provided at any time after the
foreclosure by the Security Agent upon any security provided by the Security
Documents, unless such failure is attributable to any such breach by AMD Inc. or
any of its Affiliates (other than AMD Saxonia or AMD Holding, if then Affiliates
of AMD Inc.) occurring after such foreclosure.
SECTION 6.3 Bridging of AMD Saxonia's Receipt of the Subsidies.
(a) It is understood and agreed that the Sponsors (jointly and severally)
will, in the case of AMD Holding, contribute Equity Capital (or other
contributions to AMD Saxonia's capital reserves), or, in the case of
either Sponsor, make Sponsors' Loans, to AMD Saxonia, in either case
as and to the extent that
37
<PAGE>
AMD Saxonia requires such funds prior to and in anticipation of its
receipt of the Subsidies. If any such contribution or Sponsors' Loan
is made for such purpose prior to AMD Saxonia's receipt of the
Subsidies (or any portion thereof) then, to the extent that AMD
Saxonia subsequently receives the proceeds of such Subsidies, and
provided that no Event of Default, Unmatured Event of Default or Event
of Termination shall have occurred and be continuing, AMD Saxonia
shall, to the extent permitted by applicable law, repay Sponsors'
Loans to the extent of the aggregate amount of the proceeds of the
Subsidy so received, but without interest.
(b) The Sponsors' obligations to make contributions or loans under Section
-------
6.3 (a) shall terminate from the date of any foreclosure over the
-------
shares of AMD Holding or AMD Saxonia under the Security Documents.
ARTICLE VII
Pari Passu Undertaking
SECTION 7.1 Pari Passu Undertaking. AMD Holding has certain payment obligations
under, and as set forth in, the AMD Saxonia Wafer Purchase Agreement, including
an obligation under Section 3.12 thereof (which obligates AMD Holding to
------------
compensate AMD Saxonia for certain Uneven Capacity Allocations). AMD Inc.,
pursuant to the AMD Inc. Guaranty, has unconditionally guaranteed, inter alia,
----------
the obligations of AMD Holding under and in connection with the AMD Saxonia
Wafer Purchase Agreement. AMD Holding and AMD Inc. hereby jointly and severally
acknowledge and agree that the Secured Parties have an interest in the proper
performance by AMD Holding and AMD Inc. of their respective obligations under
the AMD Saxonia Wafer Purchase Agreement and the AMD Inc. Guaranty,
respectively, and, therefore, the parties hereto hereby agree that the Security
Agent may compel AMD Holding's and/or AMD Inc.'s performance of its or their
respective obligations thereunder.
ARTICLE VIII
AMD Inc. Share Pledge Agreement; AMD Holding Security Documents
SECTION 8.1 AMD Inc. Share Pledge Agreement. AMD Inc. has granted a first
priority security interest in the AMD Inc. Collateral pursuant to and on the
terms and conditions set forth in the AMD Inc. Share Pledge Agreement.
SECTION 8.2 AMD Holding Security Documents. AMD Holding has granted a first
priority security interest in the AMD Holding Security pursuant to and on the
terms and conditions set forth in the AMD Holding Security Documents.
38
<PAGE>
ARTICLE IX
Sponsors' Guaranty
SECTION 9.1 Sponsors' Guaranty. Without intending to derogate from the
provisions of the Sponsors' Guaranty (and, in the event of any inconsistency
with this Section 9.1, the Sponsors' Guaranty shall prevail), the Sponsors
-----------
(jointly and severally), have agreed to guarantee, on the terms and subject to
the conditions of the Sponsors' Guaranty, the full and prompt payment when due,
whether by acceleration or otherwise, of all Secured Obligations of AMD Saxonia
to the Secured Parties under or in connection with the Financing Documents and
the Security Documents; provided, however, that as provided in the Sponsors'
-----------------
Guaranty, the cumulative right of recovery against the Sponsors with respect to
the Sponsors' Guaranty is limited to DM 217,500,000 (two hundred seventeen
million five hundred thousand Deutsche Marks), plus (as and to the extent
provided in the Sponsors' Guaranty) interest on such amount, if not paid when
due, and plus costs and expenses of enforcement. In furtherance of the
foregoing, the Sponsors have undertaken, pursuant to the terms of the Sponsors'
Guaranty, to pay to the Agent, upon first written demand following the
occurrence of an Event of Default and acceleration of the Advances a sum equal
to the lesser of:
(i) the aggregate amount of all Secured Obligations; and
(ii) DM 217,500,000 (two hundred seventeen million five hundred thousand
Deutsche Marks).
For the avoidance of doubt, the obligations of the Sponsors under the Sponsors'
Guaranty constitute a primary guarantee obligation (Garantievertrag) and not a
surety guarantee (Burgschaft), and are in addition to, and not in limitation of,
the other obligations of the Sponsors hereunder and under the other Operative
Documents.
ARTICLE X
Sponsors' Subordination Agreement; AMD Inc. Subordination Agreement
SECTION 10.1 Sponsors' Subordination Agreement. The Sponsors hereby agree to
subordinate the payment of the Junior Liabilities (under, and as defined in, the
Sponsors' Subordination Agreement) to the payment in full of all Senior
Liabilities (under, and as defined in, the Sponsors' Subordination Agreement),
on the terms and subject to the conditions of the Sponsors' Subordination
Agreement.
SECTION 10.2 AMD Inc. Subordination Agreement. AMD Inc. hereby agrees to
subordinate the payment of the Junior Liabilities (under, and as defined in, the
AMD Inc. Subordination Agreement) to the payment in full of all Senior
Liabilities (under, and as defined in, the AMD Inc. Subordination Agreement), on
the terms and subject to the conditions of the AMD Inc. Subordination Agreement.
39
<PAGE>
ARTICLE XI
Obligations Unconditional
SECTION 11.1 Absolute and Unconditional Nature of the Sponsors' Obligations. The
obligation of the Sponsors to perform their respective obligations under this
Agreement, and the right of AMD Saxonia or the Agent or the Security Agent, as
applicable, to receive the proceeds of each payment to be made to or for the
account of AMD Saxonia as provided herein and in each of the other Operative
Documents, shall be absolute, irrevocable, and unconditional, it being the
intention of the parties hereto that all obligations of the Sponsors under or in
connection with this Agreement shall be paid and performed in all events in the
manner and at the times herein provided, irrespective of and without prejudice
to, in particular, any rights or remedies that are available to the other
parties hereto and thereto under any agreements or any applicable laws. The
Sponsors shall be entitled to setoff, and to raise rights of retention, in
respect of their respective payment claims hereunder and under the other
Operative Documents only to the extent their respective counterclaims are
undisputed or have been the subject of a final binding arbitral or court
decision.
ARTICLE XII
Representations and Warranties
SECTION 12.1 Representations and Warranties of AMD Inc. AMD Inc. hereby
represents and warrants to the Agent and the Security Agent as follows:
(i) Organization; Corporate Power.
AMD Inc. and each Material AMD Inc. Subsidiary:
(a) is a corporation duly incorporated, validly existing, and (where
the concept has a technical meaning) in good standing under the
laws of the jurisdiction of its incorporation;
(b) is duly qualified or licensed and (where the concept has a
technical meaning) in good standing as a foreign corporation
authorized to do business in each other jurisdiction where,
because of the nature of its activities or properties in such
jurisdiction, such qualification or licensing is required,
(c) has all requisite corporate power and authority to own, operate,
and lease its assets and properties and to carry on the business
in which it is engaged and in which it proposes to engage;
(d) that is an AMD Company, has all requisite corporate power and
authority:
40
<PAGE>
(x) to execute, deliver, and perform its obligations under each
of the Operative Documents to which it is a party; and
(y) to assign, and grant a security interest in, the Security in
the manner and for the purpose contemplated by the Security
Documents to which it is a party; and
(e) is in compliance with all Requirements of Law
except, in each case referred to in clause (b), (c), or (e), to the
-----------------------
extent that the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
(ii) Corporate Authority; No Conflict.
The execution, delivery, and performance by each AMD Company of each
Operative Document to which any such AMD Company is a party, and the
grant by such AMD Company of a security interest in the Security in
the manner and for the purpose contemplated by the Security Documents
to which such AMD Company is a party, have been duly authorised by all
necessary corporate action (including any necessary shareholder
action) on the part of such AMD Company, and do not:
(a) violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award presently
in effect binding on such AMD Company, or of the Organizational
Documents of such AMD Company;
(b) result in a breach of, result in a mandatory prepayment or
acceleration of indebtedness evidenced or secured by, or
constitute a default under, any indenture or loan or credit
agreement, or any other agreement or instrument, to which such
AMD Company is a party or by which such AMD Company or its
properties are bound; or
(c) result in, or require (in either case except as contemplated by
the Operative Documents), the creation or imposition of any
Encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by any of the AMD
Companies (other than any right of set-off or banker's lien or
attachment that the Agent, the Security Agent, or any Bank may
have under the Operative Documents or applicable law), and none
of the AMD Companies is in default under or in violation of its
Organizational Documents, any of the Operative Documents to which
it is a party,
41
<PAGE>
or any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination, award, indenture, agreement,
or instrument, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
(iii) Valid and Binding Obligations.
Each Operative Document which has been executed and delivered by an
AMD Company constitutes the legal, valid, and binding obligation of
such AMD Company, enforceable against such AMD Company in accordance
with its respective terms, subject, however, to the Opinion
Reservations.
(iv) Sponsor Security Documents.
(a) The provisions of each of the Security Documents which has been
executed and delivered by a Sponsor are effective to create in
favor of the Security Agent for the benefit of the Secured
Parties, a legal, valid, and enforceable first priority
Encumbrance on all rights, title, and interest of such Sponsor in
the Security described therein, subject only to Permitted
Encumbrances; and all necessary filings and recordings have been
made in the requisite offices in all of the jurisdictions
necessary or appropriate to perfect or continue perfected with
such priority such Encumbrance on such Security.
(b) Each Security Document which has been executed and delivered by a
Sponsor is effective to grant to the Security Agent a legal,
valid, and enforceable security interest on all rights, title,
and interest of the relevant Sponsor in the Security described
therein. When each such Security Document is duly recorded or
filed in the applicable recording or filing office(s), if any,
and the recording or filing fees and taxes, if any, in respect
thereof are paid and compliance is otherwise had with the formal
requirements of applicable law applicable to the recording and
filing of security documentation generally, such Security is
subject to a legal, valid, enforceable, and perfected first
priority Encumbrance.
(v) Financial Information; No Material Adverse Change.
(a) The audited consolidated balance sheet of AMD Inc. and its
Subsidiaries dated December 31, 1995, the unaudited consolidated
balance sheet of AMD Inc. and its Subsidiaries for the Fiscal
Quarter ending on or about December 30, 1996, and in each case
the related consolidated statements of income or operations,
share-
42
<PAGE>
holders' equity and cash flows for the fiscal period ended on
such dates:
(x) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise
expressly noted therein, subject to ordinary, good faith
year-end audit adjustments, in the case of quarterly
financial statements;
(y) are complete and accurate in all material respects and
fairly present the consolidated financial condition of AMD
Inc. and its Subsidiaries as of the dates thereof and
results of operations and cash flows for the periods covered
thereby; and
(z) except as specifically disclosed in the Disclosure
Schedules, show all material indebtedness and other
liabilities, direct or contingent, of AMD Inc. and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments, and Contingent
Obligations.
(b) Since December 31, 1995, there has been no Material Adverse
Effect, except as may be specifically disclosed in the Disclosure
Schedules.
(vi) Litigation.
Except as specifically disclosed in the Disclosure Schedules, there
are no actions, suits, proceedings, claims, or disputes pending, or to
the best knowledge of AMD Inc., threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against
any AMD Company or any other Subsidiary of AMD Inc. or any of their
respective properties which:
(a) purport to affect or pertain to this Agreement or any other
Operative Document, or the entirety of the transactions
contemplated hereby or thereby; or
(b) if determined adversely to such AMD Company or such other
Subsidiary, would reasonably be expected to have a Material
Adverse Effect.
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No injunction, writ, temporary restraining order, or any order of
any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery, or
performance of this Agreement or any other Operative Document, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
(vii) No Default or Termination.
No Event of Default or Unmatured Event of Default, and, to the best of
AMD Inc.'s knowledge, no Event of Termination, exists. None of the AMD
Companies nor any other Subsidiary of AMD Inc. is in default under or
with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect.
(viii) No Burdensome Restrictions.
None of the AMD Companies nor any other Subsidiary of AMD Inc. is a
party to or bound by any Contractual Obligation other than the
Operative Documents, or subject to any restriction in any
Organizational Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
(ix) Title to Properties; Encumbrances.
Each AMD Company and each other Material AMD Inc. Subsidiary has good
record and marketable title in fee simple to, or valid leasehold
interests in (or the equivalent for the relevant jurisdiction), all
real property necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The property of each AMD Company and each
other Material AMD Inc. Subsidiary is subject to no Encumbrances,
other than Permitted Encumbrances.
(x) Subsidiaries; Material AMD Inc. Subsidiaries.
(a) As of the Loan Agreement Effective Date, AMD Inc. has no
Subsidiaries other than those specifically disclosed in the
Disclosure Schedules and has no equity investments in any other
Person other than those specifically disclosed in the Disclosure
Schedules;
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(b) As of the Loan Agreement Effective Date, there are no Material
AMD Inc. Subsidiaries other than those specifically disclosed in
the Disclosure Schedules;
(c) AMD Inc. is the direct legal and beneficial owner of 100% of the
issued and outstanding shares of capital stock of AMD Holding,
all of which shares have been validly issued;
(d) AMD Holding is the direct legal and beneficial owner of 100% of
the issued and outstanding shares of capital stock of AMD
Saxonia, all of which shares have been validly issued;
(e) AMD Holding has no Subsidiaries other than AMD Saxonia, and has
no equity investments in any other Person; and
(f) AMD Saxonia has no Subsidiaries and has no equity investments in
any other Person.
(xi) Insurance.
Except as specifically disclosed in the Disclosure Schedules,
properties of each Sponsor and each "Restricted Subsidiary" (under,
and as defined in the AMD Inc. 1996 Bank Credit Agreement) are insured
with financially sound and reputable insurance companies not
Affiliates of AMD Inc., in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where
such Sponsor or such "Restricted Subsidiary" (as so defined) operates.
(xii) Copyrights, Patents, Trademarks and Licenses, Etc.
Each AMD Company and each other Material AMD Inc. Subsidiary owns or
is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations, and other rights that are reasonably
necessary for the operation of its respective businesses, without
conflict with the rights of any other Person, except for such
conflicts which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as
specifically disclosed in the Disclosure Schedules, to the best
knowledge of AMD Inc.:
(a) no slogan or other advertising device, product, process, method,
substance, part, or other material now employed, or now
contemplated to be employed, by any AMD Company or any other
Subsi-
45
<PAGE>
diary of AMD Inc. infringes upon any rights held by any other
Person;
(b) no claim or litigation regarding any of the foregoing is pending
or, to the best knowledge of AMD Inc., threatened; and
(c) no patent, invention, device, application, principle, or any
statute, law, rule, regulation, standard, or code is pending or,
to the best knowledge of AMD Inc., proposed,
which, in any case described in (a), (b), or (c) above, could
reasonably be expected to have a Material Adverse Effect.
(xiii) Taxes.
Each Sponsor and each "Restricted Subsidiary" (under, and as defined
in, the AMD Inc. 1996 Bank Credit Agreement) have filed all material
US Federal, German, and other tax returns and reports required to be
filed, and have paid all material US Federal, German, and other taxes,
assessments, fees, and other governmental charges levied or imposed
upon them or their properties, income, or assets otherwise due and
payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment
against either Sponsor or any "Restricted Subsidiary" (as so defined)
that would, if made, have a Material Adverse Effect.
(xiv) Governmental Approvals with Respect to the Operative Documents.
As of the date this representation and warranty is made or reaffirmed,
as the case may be, all Governmental Approvals (including, without
limitation, from the European Union, the Federal Republic of Germany,
and the Free State of Saxony) necessary for the due authorization,
execution, delivery, and performance by each of the AMD Companies of,
the legality or validity of the obligations of each of the AMD
Companies under, or the enforceability against each of the AMD
Companies of, each of the Operative Documents to which it is a party
and the due and timely payment by each of the AMD Companies of amounts
owing under each of the Operative Documents have been listed on
Schedule 20 to the Loan Agreement and, except as otherwise noted
-----------
therein, all of such Governmental Approvals have been duly obtained or
effected, and are in full force and effect, on the Loan Agreement
Effective Date.
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(xv) Governmental Approvals with Respect to the Plant and the Design
Center.
As at the date this representation and warranty is made or reaffirmed,
as the case may be, all Governmental Approvals necessary for the
construction, ownership, use, and operation by AMD Saxonia of the
Plant and the Design Center or which are required in order that the
Plant and the Design Center may be operated for their intended
purposes and Perform in Accordance with the Plans and Specifications,
have been listed on Schedule 20 to the Loan Agreement, and all of such
-----------
Governmental Approvals (except those listed in Part B of Schedule 20
------ -----------
to the Loan Agreement) have been duly obtained or effected, are
sufficient for all purposes thereof, and are in full force and effect
on such date (and, in the case of Government Approvals that have
expired, each AMD Company has timely applied for renewal thereof and
such Governmental Approvals have been administratively extended under
applicable law); and AMD Inc. reasonably believes, after due inquiry,
that the Governmental Approvals set forth in Schedule 20 to the Loan
-----------
Agreement, together with all Governmental Approvals, if any, that may
be required in connection with the transactions contemplated by the
Operative Documents subsequent to the date on which this
representation and warranty is made or reaffirmed, as the case may be,
will be obtained at such time or times as may be necessary to avoid
material delay in, or material restrictions on the use or operation
of, the Plant and Design Center.
(xvi) Interruption of Business.
Neither the business nor the properties of an AMD Company are
presently affected by any fire, explosion, accident, strike, lockout,
or other dispute, drought, storm, hail, earthquake, embargo, Act of
God, or of the public enemy, or other casualty (whether or not covered
by insurance) which impairs, or, if such event or condition were to
continue for more than thirty (30) additional days would be likely to
impair, such AMD Company's ability to perform its obligations under
the Operative Documents.
(xvii) Prior Activities, etc.
Prior to the Loan Agreement Effective Date, neither AMD Holding nor
AMD Saxonia has engaged in any business, conducted any operations or
activities, nor incurred any obligations or liabilities (contingent or
otherwise), other than (a) as described in the Disclosure Schedules,
and (b) its obligations, if any, under the Operative Documents, and
activities reasonably incidental thereto.
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<PAGE>
(xviii) Status of AMD Holding and AMD Saxonia, etc.
(a) AMD Holding is an "Unrestricted Subsidiary" under, and for
purposes of, the AMD Inc. Senior Secured Note Indenture and is
not a "Restricted Subsidiary" under, and for the purposes of, the
AMD Inc. 1996 Bank Credit Agreement;
(b) AMD Saxonia is an "Unrestricted Subsidiary" under, and for
purposes of, the AMD Inc. Senior Secured Note Indenture and is
not a "Restricted Subsidiary" under, and for the purposes of, the
AMD Inc. 1996 Bank Credit Agreement; and
(c) the Indebtedness of AMD Saxonia under and in connection with the
Loan Agreement constitutes "Non-Recourse Debt" under, and for
purposes of, the AMD Inc. Senior Secured Note Indenture.
(xix) Accuracy of Information.
As of the date this representation and warranty is made or reaffirmed,
as the case may be, all factual information then or theretofore
furnished by or on behalf of any AMD Company to the Agent or any Bank
or the Technical Advisor for purposes of or in connection with any
Operative Document or any transaction contemplated thereby (including
the Information Memorandum, true and complete copies of which were
furnished to the Agent in connection with the execution and delivery
of this Agreement) is true and accurate (taken as a whole) in all
material respects on the date as of which such information is dated or
certified, and on such date such information (taken as a whole) was
not incomplete by omitting to state any material fact necessary to
make such information not misleading. Insofar as any such information
includes assumptions, estimates, or projections, such assumptions,
estimates, or projections have been made in good faith, with due care,
and with a diligent application of engineering, construction, and
accounting expertise reasonably available within AMD Inc. and its
Subsidiaries (it being understood that although any projections and
forecasts furnished by an AMD Company represent such AMD Company's
best estimates and assumptions as to future performance, which such
AMD Company believes to be fair and reasonable as of the time made in
the light of current and reasonably foreseeable business conditions,
such projections and forecasts as to future events are not to be
viewed as facts and that actual results during the period or periods
covered thereby may differ from the projected or forecasted results).
Without limiting the generality of the foregoing, as of the Loan
Agreement Effective Date, no new information has become available
which was not provided to the Technical Advisor prior to the Loan
Agreement Effective Date and which, had it been so
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<PAGE>
provided, could reasonably be expected to have caused the Technical
Advisor to express an unfavourable opinion with respect to the Project
in the Technical Advisor's Report.
(xx) Warranties of AMD Saxonia and AMD Holding.
Each of the representations and warranties made by AMD Saxonia or AMD
Holding in any Operative Document to which it is a party (other than
the representation and warranty of AMD Holding contained in Section
-------
12.2(ix) and the representation and warranty of AMD Saxonia contained
--------
in ss. 15.1.10 of the Loan Agreement) is true and accurate in all
-----------
material respects on each Sponsors' Warranty Date, except to the
extent that any such representation or warranty expressly relates
solely to an earlier date, and except, in the case of any
representation or warranty made on a Sponsors' Warranty Date described
in clause (vi) of the definition thereof, as otherwise provided in the
-----------
certificate referred to therein.
SECTION 12.2 Representations and Warranties of the Sponsors. The Sponsors,
jointly and severally, hereby represent and warrant to the Agent and the
Security Agent as follows (save in respect of Section 12.2 (ix) which is
-----------------
warranted by AMD Holding only):
(i) Organization; Corporate Power.
Each of AMD Holding and AMD Saxonia:
(a) is a Gesellschaft mit beschrankter Haftung duly organised and
existing under the laws of the Federal Republic of Germany and
registered in Dresden, Germany;
(b) is duly qualified or licensed as a foreign corporation authorized
to do business in each other jurisdiction where, because of the
nature of its activities or properties in such jurisdiction, such
qualification or licensing is required,
(c) has all requisite corporate power and authority to own, operate,
and lease its assets and properties and to carry on the business
in which it is engaged and in which it proposes to engage;
(d) has all requisite corporate power and authority
(x) to execute, deliver, and perform its obligations under each
of the Operative Documents to which it is a party; and
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(y) to assign, and grant a security interest in, the Security in
the manner and for the purpose contemplated by the Security
Documents to which it is or is to be a party; and
(e) is in compliance with all Requirements of Law,
except, in each case referred to in clause (b), (c), or (e), to the
-----------------------
extent that the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
(ii) Corporate Authority; No Conflict.
The execution, delivery, and performance by each of AMD Holding and
AMD Saxonia of each Operative Document to which either such AMD
Company is a party, and the grant by each such AMD Company of a
security interest in the Security in the manner and for the purpose
contemplated by the Security Documents to which such AMD Company is a
party, have been duly authorised by all necessary corporate action
(including any necessary shareholder action) on the part of such AMD
Company, and do not:
(a) violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award presently
in effect binding on such AMD Company, or of the Organizational
Documents of such AMD Company;
(b) result in a breach of, result in a mandatory prepayment or
acceleration of indebtedness evidenced or secured by, or
constitute a default under, any indenture or loan or credit
agreement, or any other agreement or instrument, to which such
AMD Company is a party or by which such AMD Company or its
properties are bound; or
(c) result in, or require (in each case except as contemplated by the
Operative Documents), the creation or imposition of any
Encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by either of such AMD
Companies (other than any right of set-off or banker's lien or
attachment that the Agent, the Security Agent, or any Bank may
have under the Operative Documents or applicable law), and
neither of such AMD Companies is in default under or in violation
of its Organizational Documents, any of the Operative Documents
to which it is a party, or any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination, award,
indenture,
50
<PAGE>
agreement, or instrument, which default or violation,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(iii) Valid and Binding Obligations.
Each Operative Document (which has been executed and delivered by
either AMD Holding or AMD Saxonia) constitutes the legal, valid, and
binding obligation of such AMD Company, enforceable against such AMD
Company in accordance with its respective terms, subject, however, to
the Opinion Reservations.
(iv) AMD Holding Security Documents.
(a) The provisions of each of the AMD Holding Security Documents
which has been executed and delivered by AMD Holding are
effective to create in favor of the Security Agent for the
benefit of the Secured Parties, a legal, valid, and enforceable
first priority Encumbrance in all rights, title, and interest of
AMD Holding in the AMD Holding Security described therein,
subject only to Permitted Encumbrances; and all necessary filings
and recordings have been made in the requisite offices in all
jurisdictions necessary or appropriate to perfect or continue
perfected with such priority such Encumbrance on such Security.
(b) Each AMD Holding Security Document which has been executed and
delivered by AMD Holding is effective to grant to the Security
Agent a legal, valid, and enforceable security interest in all
rights, title, and interest of AMD Holding in the AMD Holding
Security described therein. When each such Security Document is
duly recorded or filed in the applicable recording or filing
office(s), if any, and the recording or filing fees and taxes, if
any, in respect thereof are paid and compliance is otherwise had
with the formal requirements of applicable law applicable to the
recording and filing of security documentation generally, such
AMD Holding Security is subject to a legal, valid, enforceable,
and perfected first priority Encumbrance.
(v) Financial Information; No Material Adverse Change.
(a) The audited consolidated balance sheet of AMD Holding and its
Subsidiaries as at 31 December 1996, and the audited balance
sheet of AMD Saxonia as at 31 December 1996, and in each case the
related consolidated statements of income or operations,
sharehol-
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ders' equity and cash flows for the period from incorporation
to such date:
(x) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise
expressly noted therein, subject to ordinary, good faith
year-end audit adjustments;
(y) are complete and accurate in all material respects and
fairly present the consolidated financial condition of AMD
Holding and AMD Saxonia, or the financial condition of AMD
Saxonia, as the case may be, as of the date thereof and
their results of operations and cash flows for the period
covered thereby; and
(z) except as specifically disclosed in the Disclosure
Schedules, show all material indebtedness and other
liabilities, direct or contingent, of AMD Holding and AMD
Saxonia as of the date thereof, including liabilities for
taxes, material commitments, and Contingent Obligations.
(b) Since the respective dates of incorporation of AMD Holding and
AMD Saxonia, there has been no Material Adverse Effect with
respect to AMD Holding or AMD Saxonia, except as may be
specifically disclosed in the Disclosure Schedules.
(vi) Litigation.
Except as specifically disclosed in the Disclosure Schedules, there
are no actions, suits, proceedings, claims, or disputes pending, or to
the best knowledge of the Sponsors, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority,
against AMD Holding or AMD Saxonia or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other
Operative Document, or the entirety of the transactions
contemplated hereby or thereby; or
(b) if determined adversely to such AMD Company would reasonably be
expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order, or any order of any
nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery, or
performance of this Agree-
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<PAGE>
ment or any other Operative Document, or directing that the
transactions provided for herein or therein not be consummated as
herein or therein provided.
(vii) No Default or Termination.
No Event of Default or Unmatured Event of Default, and, to the best of
the Sponsors' knowledge, no Event of Termination, exists. Neither AMD
Holding nor AMD Saxonia is in default under or with respect to any
Contractual Obligation in any respect which, individually or together
with all such defaults, could reasonably be expected to have a
Material Adverse Effect.
(viii) No Burdensome Restrictions.
Neither AMD Holding nor AMD Saxonia is a party to or bound by any
Contractual Obligation (other than the Operative Documents), or
subject to any restriction in any Organizational Document, or any
Requirement of Law, which could reasonably be expected to have a
Material Adverse Effect.
(ix) Solvency.
AMD Holding is not insolvent as a matter of German law.
(x) Title to Properties; Encumbrances.
AMD Saxonia has good record and marketable title in fee simple to, or
valid leasehold interests in (or the equivalent for the relevant
jurisdiction), all real property necessary or used in the ordinary
conduct of its business, except for such defects in title as could
not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. AMD Holding has no real property or
leasehold interests. The property of each of AMD Holding and AMD
Saxonia is subject to no Encumbrances, other than Permitted
Encumbrances.
(xi) Subsidiaries; Material AMD Inc. Subsidiaries.
(a) AMD Holding is the direct legal and beneficial owner of 100% of
the issued and outstanding shares of capital stock of AMD
Saxonia, all of which shares have been validly issued;
(b) AMD Holding has no Subsidiaries other than AMD Saxonia, and has
no equity investments in any other Person; and
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(c) AMD Saxonia has no Subsidiaries and has no equity investments in
any other Person.
(xii) Insurance.
Except as specifically disclosed in the Disclosure Schedules,
properties of AMD Holding are insured with financially sound and
reputable insurance companies not Affiliates of AMD Inc., in such
amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and
owning similar properties in localities where AMD Holding operates.
(xiii) Copyrights, Patents, Trademarks and Licenses, Etc.
Each of AMD Holding and AMD Saxonia owns or is licensed or otherwise
has the right to use all of the patents, trademarks, service marks,
trade names, copyrights, contractual franchises, authorizations, and
other rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other
Person, except for such conflicts, if any, which would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as specifically disclosed in the
Disclosure Schedules, to the best knowledge of the Sponsors:
(a) no slogan or other advertising device, product, process, method,
substance, part, or other material now employed, or now
contemplated to be employed, by AMD Holding or AMD Saxonia
infringes upon any rights held by any other Person;
(b) no claim or litigation regarding any of the foregoing is pending
or, to the best knowledge of the Sponsors, threatened; and
(c) no patent, invention, device, application, principle, or any
statute, law, rule, regulation, standard, or code is pending or,
to the best knowledge of the Sponsors, proposed
which, in any case described in (a), (b), or (c) above, could
reasonably be expected to have a Material Adverse Effect.
(xiv) Taxes.
AMD Holding has filed all material German and other tax returns and
reports required to be filed, and has paid all material German and
other taxes, assessments, fees, and other governmental charges levied
or imposed
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<PAGE>
upon it or its properties, income, or assets otherwise due and
payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment
against AMD Holding that would, if made, have a Material Adverse
Effect.
(xv) Governmental Approvals with Respect to the Operative Documents.
As of the date on which this representation and warranty is made or
reaffirmed, as the case may be, all Governmental Approvals (including,
without limitation, from the European Union, the Federal Republic of
Germany, and the Free State of Saxony) necessary for the due
authorization, execution, delivery, and performance by each of AMD
Holding and AMD Saxonia of, the legality or validity of the
obligations of each of such AMD Companies under, or the enforceability
against each of such AMD Companies of, each of the Operative Documents
to which it is a party and the due and timely payment by each of such
AMD Companies of amounts owing under each of the Operative Documents
have been listed on Schedule 20 to the Loan Agreement and, except as
-----------
otherwise noted therein, all of such Governmental Approvals have been
duly obtained or effected, and are in full force and effect, on the
Loan Agreement Effective Date.
(xvi) Governmental Approvals with Respect to the Plant and the Design
Center.
As of the date on which this representation and warranty is made or
reaffirmed, as the case may be, all Governmental Approvals necessary
for the construction, ownership, use, and operation by AMD Saxonia of
the Plant and the Design Center or which are required in order that
the Plant and the Design Center may be operated for their intended
purposes and Perform in Accordance with the Plans and Specifications,
have been listed on Schedule 20 to the Loan Agreement, and all of such
-----------
Governmental Approvals (except those listed in Part B of Schedule 20
------ -----------
to the Loan Agreement) have been duly obtained or effected, are
sufficient for all purposes thereof, and are in full force and effect
on such date (and, in the case of Government Approvals that have
expired, each of AMD Holding and AMD Saxonia has timely applied for
renewal thereof and such Governmental Approvals have been
administratively extended under applicable law); and the Sponsors
reasonably believe, after due inquiry, that the Governmental Approvals
set forth in Schedule 20 to the Loan Agreement, together with all
-----------
Governmental Approvals, if any, that may be required in connection
with the transactions contemplated by the Operative Documents
subsequent to the date on which this representation and warranty is
made or reaffirmed, as the case may be, will be obtained at such time
or times as may be necessary to avoid
55
<PAGE>
material delay in, or material restrictions on the use or operation
of, the Plant and Design Center.
(xvii) Interruption of Business.
Neither the business nor the properties of AMD Holding or AMD Saxonia
are presently affected by any fire, explosion, accident, strike,
lockout, or other dispute, drought, storm, hail, earthquake, embargo,
Act of God, or of the public enemy, or other casualty (whether or not
covered by insurance) which impairs, or, if such event or condition
were to continue for more than thirty (30) additional days would be
likely to impair, such AMD Company's ability to perform its
obligations under the Operative Documents.
(xviii) Prior Activities, etc.
Prior to the Loan Agreement Effective Date, neither AMD Holding nor
AMD Saxonia has engaged in any business, conducted any operations or
activities, nor incurred any obligations or liabilities (contingent or
otherwise), other than (i) as described in the Disclosure Schedules,
and (ii) its obligations, if any, under the Operative Documents, and
activities reasonably incidental thereto.
(xix) Status of AMD Holding and AMD Saxonia, etc.
(a) AMD Holding is an "Unrestricted Subsidiary" under, and for
purposes of, the AMD Inc. Senior Secured Note Indenture and is
not a "Restricted Subsidiary" under, and for purposes of, the AMD
Inc. 1996 Bank Credit Agreement;
(b) AMD Saxonia is an "Unrestricted Subsidiary" under, and for
purposes of, the AMD Inc. Senior Secured Note Indenture and is
not a "Restricted Subsidiary" under, and for purposes of, the AMD
Inc. 1996 Bank Credit Agreement; and
(c) the Indebtedness of AMD Saxonia under and in connection with the
Loan Agreement constitutes "Non-Recourse Debt" under, and for
purposes of, the AMD Inc. Senior Secured Note Indenture.
(xx) Accuracy of Information.
As of the date this representation and warranty is made or reaffirmed,
as the case may be, all factual information then or theretofore
furnished by or on behalf of AMD Holding or AMD Saxonia to the Agent
or any Bank or the
56
<PAGE>
Technical Advisor for purposes of or in connection with any Operative
Document or any transaction contemplated thereby (including the
Information Memorandum, true and complete copies of which were
furnished to the Agent in connection with the execution and delivery
of this Agreement) is true and accurate (taken as a whole) in all
material respects on the date as of which such information is dated or
certified, and on such date such information (taken as a whole) was
not incomplete by omitting to state any material fact necessary to
make such information not misleading. Insofar as any such information
includes assumptions, estimates, or projections, such assumptions,
estimates, or projections have been or will be made in good faith,
with due care, and with a diligent application of engineering,
construction, and accounting expertise reasonably available within AMD
Inc. and its Subsidiaries (it being understood that although any
projections and forecasts furnished by an AMD Company represent such
AMD Company's best estimates and assumptions as to future performance,
which such AMD Company believes to be fair and reasonable as of the
time made in the light of current and reasonably foreseeable business
conditions, such projections and forecasts as to future events are not
to be viewed as facts and that actual results during the period or
periods covered thereby may differ from the projected or forecasted
results). Without limiting the generality of the foregoing, as of the
Loan Agreement Effective Date, no new information has become available
which was not provided to the Technical Advisor prior to the Loan
Agreement Effective Date and which, had it been so provided, could
reasonably be expected to have caused the Technical Advisor to express
an unfavourable opinion with respect to the Project in the Technical
Advisor's Report.
(xxi) Warranties made by AMD Saxonia.
Each of the representations and warranties made by AMD Saxonia in any
Operative Document to which it is a party (other than the
representation and warranty contained in ss. 15.1.10 of the Loan
-----------
Agreement) is true and accurate in all material respects on each
Sponsors' Warranty Date, except to the extent that any such
representation or warranty expressly relates solely to an earlier
date, and except, in the case of any representation or warranty made
on a Sponsors' Warranty Date described in clause (vi) of the
-----------
definition thereof, as otherwise provided in the certificate referred
to therein.
SECTION 12.3 Repetition of Representations and Warranties. The representations
and warranties contained in Sections 12.1 and 12.2 shall be repeated on each
------------- ----
Sponsors' Warranty Date, except to the extent that any such representation and
warranty expressly relates solely to an earlier date, and except, in the case of
the Sponsors' Warranty Date described in clause (vi) of the definition thereof,
-----------
as otherwise set forth in the certificate referred to therein.
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ARTICLE XIII
Covenants
SECTION 13.1 Affirmative Covenants of AMD, Inc. AMD Inc. agrees, so long as any
Primary Secured Obligations shall remain outstanding or any Bank shall have any
commitment under or arising out of the Loan Agreement, that it will, and will
cause each other AMD Company to, unless in either case the Security Agent shall
have enforced any of the Security or the Agent (acting on the instructions of an
Instructing Group) shall have otherwise consented in writing:
(i) furnish to the Agent (with copies for each of the Banks):
(a) as soon as possible and in any event within ten (10) Business
Days after a Relevant AMD Inc. Individual shall have obtained
actual knowledge of the occurrence of a Cost Overrun, an Event of
Default, an Unmatured Event of Default or an Event of
Termination, or a change in the Projected Total Cost, the
statement of an authorised officer of AMD Inc. setting forth the
details thereof which has occurred and the action (if any) which
AMD Inc. or any other AMD Company proposes to take with respect
thereto;
(b) as soon as available, and in any event within forty-five (45)
days after the end of each of the first three Fiscal Quarters of
each Fiscal Year of AMD Inc., (x) consolidated financial
statements consisting of a consolidated balance sheet of AMD Inc.
as at the end of such Fiscal Quarter and a consolidated statement
of income and statement of shareholders' equity and cashflows
(including source and application of funds) of AMD Inc. for such
Fiscal Quarter and for the Fiscal Year through such Fiscal
Quarter, setting forth in comparative form the corresponding
figures for the corresponding periods of the preceding Fiscal
Year, all in reasonable detail and certified (subject to ordinary
good faith year end audit adjustments) by an authorised financial
officer of AMD Inc. as being complete and accurate in all
material respects, and as fairly presenting in accordance with
GAAP, consistently applied, the financial position and results of
operations of AMD Inc. and its Subsidiaries, and (y)
consolidating financial statements consisting of a consolidating
balance sheet of AMD Inc. as at the end of such Fiscal Quarter
and a consolidating statement of income and statement of
shareholders' equity and cashflows (including source and
application of funds) of AMD Inc. for such Fiscal Quarter and for
the Fiscal Year through such Fiscal Quarter, setting forth in
comparative form the corresponding figures for the corresponding
periods of the preceding Fiscal Year, all in reasonable detail
and
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certified (subject to ordinary good faith year end audit
adjustments) by an authorised financial officer of AMD Inc. as
being complete and accurate in all material respects, and as
having been developed and used in connection with the financial
statements referred to in clause (x) above;
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(c) as soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year of AMD Inc., (x) financial
statements consisting of a consolidated balance sheet of AMD Inc.
as at the end of such Fiscal Year and a consolidated statement of
income and statement of shareholders' equity and cashflows
(including source and application of funds) of AMD Inc. for such
Fiscal Year, setting forth in comparative form the corresponding
figures for the preceding Fiscal Year, all in reasonable detail
and certified by independent certified public accountants of
recognised national standing as fairly presenting in accordance
with GAAP, consistently applied, the financial position and
results of operations of AMD Inc. and its Subsidiaries, and (y) a
certificate from each Sponsor confirming, as of the date of such
certificate, that, except as otherwise therein set forth, each of
the representations and warranties made by each AMD Company in
any Operative Document to which it is a party is true and
accurate in all material respects on the date of such
certificate, except to the extent that any such representation or
warranty expressly relates solely to an earlier date;
(d) (x) in connection with the completion of any Scheduled Project
Phase, (1) a Scheduled Project Phase Technical Completion
Certificate (AMD Companies), and (2) a Scheduled Project Phase
Technical Completion Certificate (Technical Advisor), and (y) as
soon as available, and in any event within ten (10) days after
the completion of any Scheduled Project Phase, (1) a Project
Budget and (2) a Project Schedule relating to the Project,
setting forth in reasonable detail a description of all of the
Capital Expenditures which have been made during each Scheduled
Project Phase with respect to the Project to the date thereof and
those which are anticipated to be made during each Project Phase
prior to Completion; provided, however, that if, at any time, any
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AMD Company or the Agent (acting on the instructions of an
Instructing Group), determines that it is appropriate to amend,
supplement, or otherwise modify the Approved Project Budget, or
the Approved Project Schedule, the parties hereto hereby agree to
discuss in good faith any such proposed amendment, supplement, or
modification; provided, further, that (a) neither the Agent nor
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the Banks shall be
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obligated in any matter, as a result of any such discussions or
otherwise, to agree to any amendments, supplements, or other
modifications to the Approved Project Budget or Approved Project
Schedule which would reduce or relax the then required financial
performance of AMD Saxonia with respect to the Project, and (b)
each of the Agent and the Banks reserve(s) all rights hereunder
in the event that such discussions fail to produce an amendment
or other supplement to, or modification of, the Approved Project
Budget or the Approved Project Schedule. In the event (but only
in such event) that AMD Saxonia (with the consent of each
Sponsor) and the Agent agree to amend, supplement, or otherwise
modify any Approved Project Budget or any Approved Project
Schedule, as the case may be, then such amended, supplemented, or
otherwise modified Approved Project Budget or Approved Project
Schedule, as the case may be, shall thereafter be the "Approved
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Project Budget" or the "Approved Project Schedule" for all
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purposes hereof until further changed, if at all, pursuant to
this Section 13.1(i)(d);
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(e) promptly following AMD Inc.'s or such other AMD Company's receipt
or transmission thereof pursuant to the terms of the AMD Holding
Wafer Purchase Agreement, and unless otherwise concurrently
delivered by another AMD Company pursuant thereto, a copy of each
Compliance Certificate to be delivered pursuant thereto;
(f) promptly following AMD Inc.'s or such other AMD Company's receipt
or transmission thereof, and unless otherwise concurrently
delivered by another AMD Company to the Agent under an Operative
Document, a copy of each notice, report, schedule, certificate,
financial statement, or other document furnished pursuant to any
of the Operative Documents if such notice, report, schedule,
certificate, financial statement, or other document could
reasonably be considered material to the Agent or any Bank in
connection with the Operative Documents and the entirety of the
transactions contemplated thereby;
(g) promptly following the occurrence of (x) any change in the
identification of the applicable AMD Inc. Primary Bank Credit
Agreement pursuant to the definition thereof contained in Section
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1.1, or (y) any consent or waiver or amendment or modification
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with respect to the incorporated covenants, related definitions,
or ancillary provisions of the AMD Inc. Primary Bank Credit
Agreement or of the AMD Inc. Senior Secured Note Indenture,
notice of such
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change and the basis therefor or of such consent or waiver or
amendment or modification and the basis therefor; and
(h) such other information with respect to the business affairs,
financial condition, and/or operations of AMD Inc. and its
Subsidiaries (including AMD Saxonia) and Affiliates as the Agent
or any Bank (acting through the Agent) may from time to time
reasonably request for purposes of the transactions contemplated
by the Operative Documents.
(ii) pay and perform all of its obligations under each of the Operative
Documents to which it is a party in the manner and at the time
contemplated therein.
(iii) cause AMD Holding at all times to be a wholly owned Subsidiary of AMD
Inc. and cause AMD Saxonia at all times to be a wholly owned
Subsidiary of AMD Holding.
(iv) promptly following a request by the Agent or any Bank (acting through
the Agent) to do so, permit the Agent, the Technical Advisor, the
Auditor, or any of their respective representatives to have reasonable
access during normal business hours to any of the Wafer Fabrication
Plants owned or controlled by AMD Inc. or any of its Subsidiaries or
Affiliates and to such books and records of AMD Inc. and its
Subsidiaries or Affiliates as may be necessary or reasonably desirable
(in the good faith discretion of the Agent or any Bank) to verify
compliance by each AMD Company with its obligations under the
Operative Documents to which it is a party; provided, that such access
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shall be exercised in a manner which does not disrupt the operations
of the Plant, the Design Center, or the relevant Wafer Fabrication
Plant in any material respect.
(v) prior to Completion, cause AMD Saxonia to use Sponsor Loans, Equity
Contributions, and Advances solely to pay Project Costs and, if
applicable, Cost Overruns incurred to complete the Project in
accordance with the Plans and Specifications.
SECTION 13.2 Negative Covenants of AMD Inc. AMD Inc. agrees, so long as any
Primary Secured Obligation shall remain outstanding or any Bank shall have any
commitment under or arising out of the Loan Agreement, that it will not, and not
permit any other AMD Company to, unless in either case the Security Agent shall
have enforced any of the Security or the Agent (acting on the instructions of an
Instructing Group) shall have otherwise consented in writing:
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(i) terminate, amend or modify, or agree to the termination, amendment or
modification, of any Operative Document, other than (w) the AMD Inc.
Primary Bank Credit Agreement or the AMD Inc. Senior Secured Note
Indenture (each of which may be amended, modified, or terminated in
accordance with Section 13.3), (x) the Equipment Supply Contracts that
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are not Material Equipment Supply Contracts, (y) the Service Contracts
that are not Material Service Contracts, or (z) in the case of the
Project Budget, the Approved Project Budget, the Project Schedule, the
Approved Project Schedule, and the Management Plan, as expressly
provided hereunder; provided, that AMD Inc. may terminate the AMD
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Holding Wafer Purchase Agreement or the AMD Holding Research Agreement
only in accordance with the express termination provisions thereof;
provided, further, that AMD Holding may terminate the AMD Saxonia
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Wafer Purchase Agreement or the AMD Saxonia Research Agreement only in
accordance with the express termination provisions thereof; and
provided, further, that the AMD Saxonia Hedging Contract may be
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terminated only in accordance with the express termination provisions
thereof. The foregoing notwithstanding, AMD Saxonia may amend or
modify, or agree to the amendment or modification of, the Design/Build
Agreement, any Material Equipment Supply Contract, any Material
Service Contract, or the Plans and Specifications to the extent such
amendment or modification does not, individually or in the aggregate,
decrease or adversely affect (x) the value or use of the Plant and the
Design Center (or of the rights of the Banks with respect thereto) in
any material respect, (y) the Anticipated Capacity of the Plant
(under, and as defined in, the AMD Saxonia Wafer Purchase Agreement),
or (z) the capacity of the Plant to perform, on a substantially
continuous basis, the functions for which it was specifically designed
in accordance with the plans and specifications as originally approved
by the Technical Advisor and the Agent for purposes of the Operative
Documents; provided, that no such amendment or modification will,
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individually or in the aggregate, be inconsistent with the Approved
Project Budget or the Approved Project Schedule or materially increase
the Cost to Complete.
(ii) create, incur, or suffer to exist any Encumbrance with respect to its
rights under or in respect of the Sponsors' Loan Agreement.
(iii) permit AMD Holding or AMD Saxonia to amend their respective
Organizational Documents.
SECTION 13.3 Incorporated Covenants of AMD, Inc. AMD Inc. agrees, so long as any
Primary Secured Obligation shall remain outstanding or any Bank shall have any
commitment under or arising out of the Loan Agreement, that it will, unless the
Security Agent shall have enforced any of the Security or the Agent (acting on
the instructions of an Instructing Group) shall have otherwise consented in
writing, duly keep, perform, and observe, for the benefit of
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the Agent, the Security Agent, and the Secured Parties, each and every
affirmative, negative, and informational covenant contained in each of (x) the
AMD Inc. Senior Secured Note Indenture, and (y) the AMD Inc. Primary Bank Credit
Agreement (to the extent that such covenants are applicable to AMD Inc.
thereunder), all of which covenants, together with related definitions and
ancillary provisions, are hereby incorporated herein by reference as if such
terms were set forth herein in full; provided, however, that:
(i) with respect to the AMD Inc. Primary Bank Credit Agreement referred to
in clause (i) of the definition thereof:
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(a) any references to the "Agent" shall be deemed to be references to
the Agent (except where such term is used in Sections 6.06, 6.14,
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and 7.01 thereof);
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(b) any references to the "Banks" shall be deemed to be references to
the Banks (except where such term is used in Section 6.06 or 7.01
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thereof);
(c) any references to the "Majority Banks" shall be deemed to be
references to an Instructing Group (except where such term is
used in Section 6.14 thereof);
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(d) any references to the "Agreement" shall be deemed to be
references to this Agreement (except where such term is used in
Section 7.05(a) thereof);
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(e) any references to the "Loan Documents" shall be deemed to be
references to the Operative Documents (except where such term is
used in Section 6.12 or 7.01(b) thereof);
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(f) any references to the "Collateral Documents" shall be deemed to
be references to any Security Documents to which AMD Inc. is a
party (except where such term is used in Sections 6.06 and 7.02
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thereof);
(g) any references to an "Event of Default" shall be deemed to be
references to an Event of Default (or, in the case of Section
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7.02(d) thereof, but subject, in any case, to Section 13.3(iv),
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an Unmatured Event of Default which is described in ss. 21.2(i)
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of the Loan Agreement);
(h) any references to a "Default" shall be deemed to be references to
an Unmatured Event of Default;
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(i) any references to a "Material Adverse Effect" shall be deemed to
be references to a Material Adverse Effect;
(j) any references to "So long as any Bank shall have any Commitment
hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied" shall be deemed to be references to "So long as any
Bank shall have any commitment to make Advances under the Loan
Agreement or any of the Primary Secured Obligations shall remain
unpaid or unsatisfied"; and
(k) for purposes of each "Compliance Certificate" to be delivered
pursuant to Section 6.02(a) thereof, the following additional
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paragraph shall be deemed to be included after the initial
paragraph thereof:
"Reference is also made to that certain Sponsors' Support
Agreement, dated 11 March 1997 (as extended, renewed,
amended or restated from time to time, the "Sponsors'
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Support Agreement"), between the Company, AMD Saxony Holding
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GmbH and Dresdner Bank AG, as Agent and Security Agent.
Except where such terms are used in the first sentence of
the immediately preceding paragraph, the terms "Banks" and
"Agent" shall, for purposes hereof, have the respective
meanings assigned thereto in the Sponsors' Support
Agreement.";
(ii) with respect to the AMD Inc. Senior Secured Note Indenture:
(a) the reference to "so long as any Notes are outstanding" contained
in Section 4.03 thereof shall be deemed to be a reference to "so
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long as any Bank shall have any commitment to make Advances under
the Loan Agreement or any of the Primary Secured Obligations
shall remain unpaid or unsatisfied", and the reference to "the
Holders of the Notes" contained in Section 4.03 thereof shall be
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deemed to be a reference to "the Agent and the Banks";
(b) the references to "this Indenture" and "the Trustee" contained in
Section 4.06 thereof shall be deemed to be references to "this
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Agreement" and "the Security Agent and the Agent", respectively;
(c) subject to Section 13.3(iv), the reference to "no Default or
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Event of Default" contained in clause (a) of Section 4.07 thereof
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(which follows clause (v)) shall be deemed to be a reference to
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"no Event of Default or Unmatured Event of Default"; the
reference to
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"Event of Default" in the proviso which follows clause (c) of
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Section 4.07 thereof shall be deemed to be a reference to "Event
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of Default"; and the reference to "a Default" in the penultimate
paragraph of Section 4.07 thereof shall be deemed to be a
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reference to "an Event of Default or an Unmatured Event of
Default";
(d) the reference to "the Holders of the Notes" contained in Section
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4.15 thereof shall be deemed to be a reference to "the Agent and
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the Banks";
(e) the reference to "the Notes, this Indenture and the Collateral
Documents pursuant to a supplemental indenture or other documents
or instruments in form reasonably satisfactory to the Trustee"
contained in clause (ii) of Section 5.01 thereof shall be deemed
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to be a reference to "each of the Operative Documents to which
AMD Inc. is a party pursuant to one or more documents or
instruments in form reasonably satisfactory to the Agent"; and
(f) the references to "this Indenture" contained in Section 5.02
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thereof shall be deemed to be references to "this Agreement"; and
the reference to "the obligation to pay the principal of,
premium, if any, and interest, if any, on the Notes" contained in
Section 5.02 thereof shall be deemed to be a reference to "its
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obligations under each of the Operative Documents to which it is
a party";
(iii) with respect to the AMD Inc. Primary Bank Credit Agreement referred
to in clause (ii) of the definition thereof, such modifications to the
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provisions incorporated in this Agreement as shall be appropriate to
make them applicable to this Agreement and consistent with the Project
shall be deemed to be made; and
(iv) if (x) AMD Inc., during the pendency of an Event of Default, or an
Unmatured Event of Default described in ss.21.2(i) of the Loan
Agreement, at its sole option, desires to be released from the effects
of Section 13.3(i)(g), as it relates to Section 7.02(d) of the AMD
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Inc. Primary Bank Credit Agreement described in clause (i) of the
definition thereof, or (y) AMD Inc., during the pendency of an Event
of Default or an Unmatured Event of Default, at its sole option,
desires to be released from the effects of Section 13.3 (ii)(c), as it
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relates to Section 4.07 of the AMD Inc. Senior Secured Note Indenture,
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AMD Inc. may (but shall not be required to) deliver written notice to
the Agent (with a copy to the Paying Agent) referring to this Section
13.3 (iv) and demanding that the Banks (I) accelerate the Loan
Agreement and (II) make a demand for payment in full under the
Sponsors' Guaranty on, or as soon as practicable after, the first date
that the Banks are
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entitled to do so. In the event that the Banks do not so accelerate
the Loan Agreement and make such demand under the Sponsors' Guaranty,
or, as the case may be, give notice (the "Sponsors' Guaranty Notice")
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to AMD Inc. that they intend to do so on, or as soon as practicable
after, the first date that the Banks are entitled to do so, in each
case within 90 days of the date the Sponsors' Guaranty Notice is
delivered to the Agent, then with effect from such 90th day (or, if
after having given the Sponsors' Guaranty Notice, the Banks do not so
accelerate the Loan Agreement and make demand under the Sponsors'
Guaranty on, or as soon as practical after, the first date they are
entitled to do so):
(a) in the case of clause (x) above, the parenthetical expression
contained in Section 13.3(i)(g) shall be deemed to read as
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follows: "(except when such term is used in Section 7.02(d)
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thereof)"; and
(b) in the case of clause (y) above, Section 13.3(ii)(c) shall be of
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no further effect.
The provisions and definitions of the applicable AMD Inc. Primary Bank Credit
Agreement, and the AMD Inc. Senior Secured Note Indenture, as incorporated by
reference in this Agreement, shall continue to be binding on AMD Inc. after
giving effect to any consent or waiver with respect to such provisions or to any
amendment or modification or (in the case of the AMD Inc. Senior Secured Note
Indenture only) termination thereof, in each case given or made in accordance
with the terms of and by the parties to the applicable AMD Inc. Primary Bank
Credit Agreement or the AMD Inc. Senior Secured Note Indenture.
SECTION 13.4 Affirmative Covenants of the Sponsors. The Sponsors, jointly and
severally, agree, so long as any Primary Secured Obligations shall remain
outstanding or any Bank shall have any commitment under or arising out of the
Loan Agreement, that AMD Holding will (and, at all times prior to the exercise
of rights by the Security Agent under any of the Security Documents, AMD Inc.
will cause AMD Holding to), unless the Agent (acting on the instructions of an
Instructing Group) shall have otherwise consented in writing:
(i) duly and punctually pay and perform all of its obligations under each
of the Operative Documents to which it is a party in the manner and at
the time contemplated therein.
(ii) pay or discharge (a) all taxes, assessments, and governmental charges
or levies imposed upon it or upon its income or profits or any
property belonging to it prior to the date on which penalties attach
thereto, and (b) all lawful claims prior to the time they become an
Encumbrance upon any property of AMD Holding, and other than taxes,
assessments, charges, levies, or claims included in clauses (a) and
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(b) above which are not, individually or collectively, substantial in
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aggregate amount; provided, that
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(after providing notice thereof to the Agent) AMD Holding shall not be
required to pay or discharge any such tax, assessment, charge, levy,
or claim while the same is being contested by it in good faith and by
appropriate proceedings and adequate book reserves have been
established with respect thereto, and so long as the lien or charge
resulting from the nonpayment or non-discharge of such tax,
assessment, charge, levy, or claim shall not, individually or in the
aggregate, have a Material Adverse Effect.
(iii) cause AMD Saxonia to preserve and maintain its corporate existence,
rights, privileges, and franchises in the jurisdiction of its
incorporation, and cause AMD Saxonia to not have operations in any
other jurisdiction.
(iv) comply in all material respects with all laws, rules, regulations, and
governmental orders (Federal, state, local, and foreign) having
applicability to it or to the business or businesses at any time
conducted by AMD Holding except to the extent that any such
noncompliance, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(v) promptly following AMD Holding's receipt or transmission thereof,
unless otherwise concurrently delivered by another AMD Company to the
Agent under an Operative Document, furnish to the Agent a copy of each
notice, report, schedule, certificate, financial statement, or other
document furnished pursuant to any of the Operative Documents if such
notice, report, schedule, certificate, financial statement, or other
document could reasonably be considered material to the Agent or any
Bank in connection with the Operative Documents or the entirety of the
transactions contemplated thereby.
(vi) promptly following a request from the Security Agent to do so and at
AMD Holding's own expense, take all such lawful action as the Security
Agent may reasonably request to enforce or secure the performance by
each other AMD Company under any Operative Document to which AMD
Holding is a party of such AMD Company's respective obligations under
and in connection with the applicable Operative Document in accordance
with the respective terms thereof, and exercise any right of
termination or remedy available to AMD Holding thereunder or in
connection therewith to the extent and in the manner reasonably
directed by the Security Agent, including, without limitation, the
institution of legal or administrative actions or proceedings to
compel or enforce performance by each other AMD Company of its
respective obligations thereunder, or to recover any payment due AMD
Holding thereunder.
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(vii) keep, or cause to be kept, adequate records and books of account, in
which complete entries are to be made reflecting its business and
financial transactions, such entries to be made in accordance with
GAAP consistently applied in the case of financial transactions or as
otherwise required by applicable rules and regulations of any
governmental agency or regulatory authority (federal, state, local or
foreign) having jurisdiction over AMD Holding, or the transactions
contemplated by this Agreement or the other Operative Documents to
which it is or will be a party.
(viii) maintain, obtain or effect all Governmental Approvals which may at
any time or from time to time be necessary for the due authorization,
execution, delivery, performance, legality, validity, or
enforceability of each of the Operative Documents to which it is or
will be a party.
(ix) prior to Completion, cause AMD Saxonia to use Sponsor Loans, Equity
Contributions and Advances solely to pay Project Costs and, if
applicable, Cost Overruns incurred to complete the Project in
accordance with the Plans and Specifications.
SECTION 13.5 Negative Covenants of the Sponsors. The Sponsors, jointly and
severally, agree, so long as any Primary Secured Obligation shall remain
outstanding or any Bank shall have any commitment under or arising out of the
Loan Agreement, that AMD Holding will not (and AMD Inc. will not, at any time
prior to the exercise of rights by the Security Agent under any of the Security
Documents, permit AMD Holding to), unless the Agent (acting on the instructions
of an Instructing Group) shall have otherwise consented in writing:
(i) terminate, amend or modify, or agree to the termination, amendment or
modification, of any Operative Document, other than (w) the AMD Inc.
Primary Bank Credit Agreement or the AMD Inc. Senior Secured Note
Indenture (each of which may be amended, modified or terminated in
accordance with Section 13.3), (x) the Equipment Supply Contracts that
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are not Material Equipment Supply Contracts, (y) the Service Contracts
that are not Material Service Contracts, or (z) in the case of the
Project Budget, the Approved Project Budget, the Project Schedule, the
Approved Project Schedule, and the Management Plan, as expressly
provided hereunder; provided, that AMD Inc. may terminate the AMD
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Holding Wafer Purchase Agreement or the AMD Holding Research Agreement
only in accordance with the express termination provisions thereof;
provided, further, that AMD Holding may terminate the AMD Saxonia
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Wafer Purchase Agreement or the AMD Saxonia Research Agreement only in
accordance with the express termination provisions thereof; and
provided, further, that the AMD Saxonia Hedging Contract may be
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terminated only in accordance with the express termination provisions
thereof. The foregoing notwithstanding, AMD Saxonia may amend or
modify, or agree to the amendment
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or modification of, the Design/Build Agreement, any Material Equipment
Supply Contract, any Material Service Contract, or the Plans and
Specifications to the extent such amendment or modification does not,
individually or in the aggregate, decrease or adversely affect (x) the
value or use of the Plant and the Design Center (or of the rights of
the Banks with respect thereto) in any material respect, (y) the
Anticipated Capacity of the Plant (under, and as defined in, the AMD
Saxonia Wafer Purchase Agreement), or (z) the capacity of the Plant to
perform, on a substantially continuous basis, the functions for which
it was specifically designed in accordance with the plans and
specifications as originally approved by the Technical Advisor and the
Agent for purposes of the Operative Documents; provided, that no such
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amendment or modification will, individually or in the aggregate, be
inconsistent with the Approved Project Budget or the Approved Project
Schedule or materially increase the Cost to Complete.
(ii) engage in any activities other than those contemplated by the
Operative Documents to which it is a party or the transactions
contemplated thereby and activities reasonably incidental thereto.
(iii) create, incur, assume, or suffer to exist any Encumbrance in, upon,
or with respect to any of its properties or assets, whether now owned
or hereafter acquired, or assign or otherwise convey any right to
receive income to secure any obligation, except (1) as contemplated by
the AMD Holding Security Documents, and (2) for Permitted
Encumbrances.
(iv) create, incur, assume, or suffer to exist any Indebtedness, whether
current or funded, except current accounts and other amounts payable
in the ordinary course of business, and except to the extent
contemplated by the Operative Documents.
(v) create, incur, assume, or suffer to exist any obligations as lessee
for the rental or hire of real or personal property of any kind
whatsoever.
(vi) assume, guarantee, or endorse, or otherwise become directly or
contingently liable in respect of, any obligation of any Person,
except pursuant to the Operative Documents to which it is a party.
(vii) merge with or into or consolidate with any Person, or, acquire,
lease, or purchase, all or substantially all of the assets or stock of
any class of, or any partnership or joint venture interest in, any
Person, or create or acquire any Subsidiary, except for the
acquisition of AMD Saxonia.
(viii) sell, lease, assign, transfer, or otherwise dispose of any of its
assets, including its accounts receivable, except as contemplated by
the Operative
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Documents; or issue or sell any shares of any class of its capital
stock to any Person except to AMD Inc.
(ix) make any loan or advance or extend any credit to any Person other than
AMD Saxonia or as contemplated by the AMD Holding Wafer Purchase
Agreement, or purchase or otherwise acquire the capital stock or
obligation of, or any investment in, any Person other than AMD
Saxonia, in each case other than Cash Equivalent Investments which
have been pledged to the Security Agent pursuant to the AMD Holding
Security Documents.
(x) apply for or become liable with respect to any letter of credit or
acceptance financing; or enter into or become liable with respect to
any interest or currency swap, hedge, exchange, or other similar
obligation.
(xi) purchase any shares of any Person, other than AMD Saxonia, or redeem
any of its shares, declare or pay any dividend thereon or make any
distribution to its shareholders, except for any such redemption or
distribution made as a result of the transactions contemplated by
Section 4.4 or 6.3.
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(xii) except as provided in the Management Service Agreement, pay any
salary, compensation, or bonus of any character to any officer,
director, or employee of AMD Holding or any Affiliate thereof or
provide any such Person with any medical, surgical, dental, hospital,
disability, unemployment, retirement, pension, vacation, or insurance
benefit of any kind or adopt, establish, or maintain any plan, fund,
or program to provide any such benefit.
(xiii) enter into any transaction with AMD Inc. or an Affiliate thereof
(other than AMD Saxonia) on a basis materially less favourable to AMD
Holding than would be the case if such transaction had been effected
with a Person other than AMD Inc. or an Affiliate thereof.
(xiv) open or maintain a bank account with any Person, except for demand or
other deposit accounts at the Agent and at Security Agent.
(xv) amend or modify the Organizational Documents of AMD Saxonia.
(xvi) issue any power of attorney or other contract or agreement giving any
Person power or control over the day-to-day operations of AMD
Holding's business, except as contemplated by the Operative Documents.
(xvii) commence, or join with any other creditor in commencing, any
bankruptcy, reorganization, or insolvency proceeding with respect to
AMD Saxonia or AMD Inc.
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(xviii) enter into any agreement other than as contemplated by the
Operative Documents to which it is or will be a party or under any
instrument or document delivered or to be delivered by it hereunder or
thereunder, or in connection herewith or therewith.
(xix) make any significant change in accounting treatment or reporting
practices, except as required by GAAP, or change its Fiscal Year.
(xx) create, incur, assume, or suffer to exist any Encumbrance with respect
to its rights under or in respect of the Sponsors' Loan Agreement,
except as set forth in the Security Documents.
SECTION 13.6 Recourse to AMD Inc. for Breach of Covenant. It is expressly
understood and agreed by the parties hereto that the obligations of AMD Saxonia
under the Loan Agreement are intended to be limited recourse obligations from
the perspective of AMD Inc. and that the covenants of the Sponsors contained in
this Article XIII are not intended to represent a guaranty of AMD Saxonia's
------------
obligations under the Loan Agreement. Accordingly, (i) neither AMD Inc. nor its
assets (other than its interests in AMD Holding) shall be exposed to liability
(whether in damages or otherwise) for breach of any covenant contained in this
Article XIII to the extent that such damages would otherwise result in AMD Inc.
- ------------
incurring greater financial exposure than the aggregate amount otherwise agreed
to be payable by AMD Inc. pursuant to this Agreement and the other Operative
Documents, and (ii) AMD Holding shall have no right of contribution against AMD
Inc. arising from any payment made by AMD Holding under this Agreement or the
Sponsors' Guaranty to the extent that AMD Inc. provides funds for the purpose of
such payment by contributions to AMD Holding's stated capital or capital
reserves and/or by loans to AMD Holding; provided, however, that the provisions
-----------------
of this Section 13.6 shall not be construed to absolve AMD Inc. for its
------------
liability, whether in damages or otherwise, for actions or omissions
constituting fraud or misrepresentation or breach of warranty; and provided,
---------
further that the provisions of this Section 13.6 shall not preclude the Security
- ------- ------------
Agent from seeking temporary relief (if otherwise available) for any prospective
breach by AMD Inc. of its covenants contained in this Article XIII.
ARTICLE XIV
Costs and Expenses; Indemnities; Taxes; Etc.
SECTION 14.1 Costs and Expenses. The Sponsors, jointly and severally, agree to
pay (to the extent not previously paid by AMD Saxonia promptly following a
demand by the Agent therefor, it being understood and agreed that the Agent will
demand such payment for the costs and expenses of the preparation of this
Agreement) all costs and expenses (including reasonable legal fees and expenses)
of the Agent, the Security Agent, and the Paying Agent in connection with the
negotiation, preparation, execution, and delivery of this Agreement, any
amendments or modifications of (or supplements to) this Agreement, and any and
all other documents furnished pursuant hereto or in connection herewith, as well
as all costs and
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expenses (including, without limitation, reasonable attorneys' fees and
expenses) if any, in connection with the enforcement of this Agreement or any
other agreement furnished by them prior to the enforcement by the Security Agent
of any of the Security pursuant hereto or in connection herewith.
SECTION 14.2 General Indemnity. The Sponsors, jointly and severally, hereby
agree to indemnify, exonerate, and hold the Agent, the Security Agent, and the
Paying Agent, and each of the officers, directors, employees of the Agent, the
Security Agent, and the Paying Agent (herein collectively called the
"Indemnitees") free and harmless from and against any and all actions, claims,
-----------
losses, liabilities, damages, and expenses, including, without limitation,
reasonable legal fees and expenses (herein collectively called the "Indemnified
-----------
Liabilities"), which may be incurred by or asserted against the Indemnitees or
- -----------
any Indemnitee as a result of, or arising out of, or relating to, or in
connection with:
(i) the failure by either Sponsor to comply with its respective
obligations under this Agreement, the Sponsors' Guaranty, and the
Sponsors' Loan Agreement (subject, in the case of Indemnified
Liabilities arising from Article XIII, to the provisions of Section
------------ -------
13.6);
----
(ii) the inaccuracy by either Sponsor of any of its representations and
warranties contained in any of the Operative Documents to which it is
a party as and when made or reaffirmed as the case may be (provided
that AMD Inc. shall have no liability under this Section 14.2 in
------------
respect of any inaccuracy by AMD Holding of the representation and
warranty contained in Section 12.2 (viii)); and
-------------------
(iii) any investigation, litigation, or proceeding related to this
Agreement or the consummation of the transactions contemplated hereby,
whether or not any such Indemnitee is a party thereto, and, to the
extent that the foregoing undertaking may be unenforceable for any
reason, the Sponsors, jointly and severally, hereby agree to make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 14.3 Undertaking to Contribute. AMD Inc. hereby undertakes that in the
event:
(i) a liability is imposed on AMD Saxonia and/or AMD Holding as a result
of the German tax authorities recharacterising interest on the
Sponsors' Loans as dividends; or
(ii) a liability is imposed on AMD Saxonia and/or AMD Holding as a result
of the German tax authorities ruling that AMD Saxonia and/or AMD
Holding is not sufficiently profitable (the "Liabilities"),
-----------
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and in either case (x) provided all remedies and/or appeals under the provisions
of the German and U.S.A. (Income and Capital) Tax Treaty, to the extent
applicable, have been exhausted and (y) only to the extent that AMD Saxonia is
not able to repay the Advances in the amounts and at the times scheduled, that
it will contribute Equity Capital (or other contributions to AMD Saxonia's
capital reserves) to AMD Holding (and AMD Inc. shall to the extent necessary and
depending on where the Liability arises, contribute sufficient funds or
otherwise cause sufficient funds to be made available, to AMD Holding as shall
be necessary to enable AMD Holding to so contribute to AMD Saxonia and AMD Inc.
shall cause AMD Holding to do the same) in an amount not exceeding the
Liabilities that, when added to amounts then available to AMD Saxonia, is
sufficient to pay the Primary Secured Obligations.
SECTION 14.4 SAB Related Agreements Indemnity. The Sponsors, jointly and
severally, hereby agree to indemnify, exonerate, and hold the Agent, and each of
the officers, directors, employees of the Agent (herein collectively called the
"SAB Indemnitees") free and harmless from and against any and all actions,
---------------
claims, losses, liabilities, damages, and expenses, including, without
limitation, reasonable legal fees and expenses (herein collectively called the
"Indemnified SAB Liabilities"), which may be incurred by or asserted against the
---------------------------
SAB Indemnitees or any SAB Indemnitee as a result of, or arising out of, or
relating to, or in connection with, the SAB Related Agreements (other than any
such Indemnified SAB Liabilities finally determined by a court of competent
jurisdiction to have resulted from the gross negligence or wilful misconduct of
an SAB Indemnitee), and, to the extent that the foregoing undertaking may be
unenforceable for any reason, the Sponsors, jointly and severally, hereby agree
to make the maximum contribution to the payment and satisfaction of each of the
Indemnified SAB Liabilities which is permissible under applicable law.
SECTION 14.5 Payments Free and Clear of Taxes, etc. Each of the Sponsors hereby
agrees that:
(a) All payments by such Sponsor hereunder shall be made to the Person
entitled thereto in Same Day Funds, free and clear of and without
deduction for any present or future income, excise, stamp, or
franchise taxes and other taxes, fees, duties, withholdings, or other
charges of any nature whatsoever imposed by any taxing authority on
such payments, but excluding taxes imposed on or measured by such
Person's net income or receipts or the net income or receipts of any
branch thereof (such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to be made by
either of the Sponsors hereunder is required in respect of any Taxes
pursuant to any applicable law, rule, or regulation, then such Sponsor
will, subject to Section 14.5(d),
---------------
(i) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
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(ii) promptly forward to such Person (with a copy to the Security
Agent) an official receipt or other documentation satisfactory to
the Security Agent evidencing such payment to such authority; and
(iii) pay to such Person such additional amount or amounts as is
necessary to ensure that the net amount actually received by such
Person will equal the full amount such Person would have received
had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Person
entitled to receive a payment under this Agreement with respect to any
payment received by such Person hereunder, such Person may pay such
Taxes and the Sponsors will promptly pay such additional amounts
(including any penalties, interest, or expenses, but only (in the case
of penalties or interest) to the extent not resulting from a negligent
or wilful failure to pay any or all of such Taxes by such Person, as
the case may be) as is necessary in order that the net amount received
by such Person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such Person would have
received had no such Taxes been asserted.
(b) The additional amount or amounts that either Sponsor shall be required
to pay pursuant to clause (iii) of Section 14.5(a) shall be reduced,
------------ ---------------
to the extent permitted by applicable law, by the amount of the
offsetting tax benefits, if any, as determined by the relevant Person
in the exercise of its sole discretion, which such Person actually
receives and utilises as a result of such Sponsor's payment under
clause (i) of Section 14.5(a) to the relevant authority (it being
-----------------------------
expressly understood and agreed that such Person shall be required to
use commercially reasonable efforts to claim or utilise any such
benefit which may be available to it unless it believes in good faith
that to do so would be inconsistent with its internal tax and other
policies or if, in its good faith judgment, it would be disadvantaged
in any respect with respect to its tax position or planning).
(c) Subject to the relevant Person complying with Section 14.5(d) below,
---------------
if either of the Sponsors fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the applicable
recipient hereunder the required receipts or other required
documentary evidence, such Sponsor shall indemnify such Person for any
incremental Taxes, interest, or penalties that may become payable by
such Person as a result of any such failure.
(d) Each Person entitled to receive a payment hereunder that is entitled
to claim an exemption (either on its own account or for the account of
the relevant Sponsor) in respect of all or a portion of any Taxes
which are otherwise required to be paid or deducted or withheld
pursuant to this Section 14.5 in respect of any payments made by a
------------
Sponsor hereunder shall, within a reasonable time after receiving a
written request from such Sponsor, provide such
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<PAGE>
Sponsor with such certificates as may be appropriate in order to
obtain the benefits of such exemption.
(e) Without prejudice to the survival of any other agreement of the
Sponsors hereunder, the agreements and obligations of the Sponsors
contained in this Section 14.5 shall survive the payment in full of
------------
the principal of and interest on the loans and other financial
accommodations made to AMD Saxonia under the Loan Agreement.
SECTION 14.6 Judgment. The Sponsors hereby agree that:
(a) If, for the purposes of obtaining a judgment in any court, it is
necessary to convert a sum due hereunder in Deutsche Marks into
another currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the Security Agent could
purchase Deutsche Marks with such other currency on the Business Day
preceding that on which final judgment is given.
(b) The obligation of each of the Sponsors in respect of any sum due from
it to the Security Agent, the Agent, the Paying Agent, or any Bank
hereunder shall, notwithstanding any judgment in a currency other than
Deutsche Marks be discharged only to the extent that on the Business
Day following receipt by the Security Agent, the Agent, the Paying
Agent, or such Bank, as the case may be, of any sum adjudged to be so
due in such other currency, the Security Agent, the Agent, the Paying
Agent, or such Bank, as the case may be, may, in accordance with
normal banking procedures, purchase Deutsche Marks with such other
currency; in the event that the Deutsche Marks so purchased are less
than the sum originally due to the Security Agent, the Agent, the
Paying Agent, or any Bank, in Deutsche Marks, such Sponsor, as a
separate obligation and notwithstanding any such judgment, hereby
indemnifies and holds harmless the Security Agent, the Agent, the
Paying Agent, and each Bank against such loss, and if the Deutsche
Marks so purchased exceed the sum originally due to the Security
Agent, the Agent, or such Bank in Deutsche Marks, the Security Agent,
the Agent, the Paying Agent, or such Bank, as the case may be, shall
remit to the relevant Sponsor such excess.
SECTION 14.7 License Agreement. With respect to the License Agreement,
(a) AMD Inc. hereby waives, and agrees to cause each of its Subsidiaries
other than AMD Saxonia to waive, any and all rights, claims and/or
causes of action such Person now has or in the future may have against
AMD Saxonia, its successors and assigns, the Agent, the Security
Agent, the Paying Agent, any Bank, any receiver appointed to operate
the Plant, or a third party purchaser of the capital stock, or of all
or substantially all of the assets, of AMD Saxonia (herein
collectively referred to as the "Beneficiaries" and individually as a
-------------
"Beneficiary"), based on: (i) its use, in any manner whatsoever, of
-----------
any Non-Proprietory Know-how or of Information Residuals (as such
terms are defined
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<PAGE>
in the License Agreement); (ii) its use, within the scope of the
license granted in Section 3(a) of the License Agreement, of the
------------
Developed Intellectual Property (as defined in the License Agreement),
or (iii) its use, in any manner whatsoever, of Post Research Agreement
AMD Saxonia Developed Improvements or Post Research Agreement AMD
Saxonia Developed Intellectual Property (as such terms are defined in
the License Agreement). The preceding sentence notwithstanding, AMD
Inc. does not waive any rights, claims or causes of action based on
the infringement and/or misappropriation of any patents, copyrights,
mask works, trademarks and trade secrets, whether registered or not,
which are owned by AMD Inc. or by an Affiliate of AMD Inc. other than
AMD Saxonia and not licensed to AMD Saxonia under the License
Agreement; provided, however, that the use of Information Residuals
shall not be deemed to constitute an infringement and/or
misappropriation of any intellectual property rights of AMD Inc. or
any of its Subsidiaries (other than AMD Saxonia).
(b) each Sponsor hereby acknowledges and agrees that, following the
termination of the AMD Saxonia Wafer Purchase Agreement, the operation
of the Plant by AMD Saxonia, its successors and assigns, or by a
Beneficiary shall not, absent a separate infringement or other
unlawful violation, under the License Agreement or otherwise, of a
proprietary, substantial, and identifiable right of AMD Inc., or any
of its Subsidiaries other than AMD Saxonia, constitute: (i) a breach
of the terms of the License Agreement or of any of the Service
Agreements (as defined in the License Agreement), or (ii) an
infringement upon any intellectual property right of AMD Inc. or its
Subsidiaries other than AMD Saxonia; and
(c) except where such failure was due to a breach by AMD Saxonia of its
covenants to cooperate with AMD Inc., if AMD Inc. fails to complete
the document removal process set forth in Section 9 of the License
Agreement within the period required therein following the termination
of the AMD Saxonia Research Agreement, AMD Inc. and its Subsidiaries
other than AMD Saxonia shall be deemed to have waived any and all
rights, claims and/or causes of action they have or in the future may
have against AMD Saxonia, its successors and assigns, or against a
Beneficiary based on the disclosure or use, for any purpose, by such
Person of any documentation left in the Plant on the grounds that such
documentation or the information contained therein is proprietary to
AMD Inc. or its Affiliates or Subsidiaries other than (in either case)
AMD Saxonia.
ARTICLE XV
Miscellaneous
SECTION 15.1 No Waiver; Modifications in Writing. No failure or delay on the
part of the Agent or the Security Agent in exercising any right, power, or
remedy hereunder shall operate
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as a waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any other right, power, or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Agent or the Security Agent at law or otherwise. No amendment, modification,
supplement, termination, or waiver of or to any provision of this Agreement, or
consent to any departure by either Sponsor therefrom, shall be effective unless
the same shall be in writing and signed by or on behalf of the Agent and the
Security Agent. Any waiver of any provision of this Agreement, and any consent
to any departure by either Sponsor from the terms of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on either Sponsor in any case
shall entitle such Sponsor to any other or further notice or demand in similar
or other circumstances.
SECTION 15.2 Severability of Provisions. In case any provision of this Agreement
is invalid or unenforceable, the validity or enforceability of the remaining
provisions hereof shall remain unaffected. The parties hereto shall have an
obligation to replace any invalid or unenforceable provision by a valid and
enforceable provision which approximates best the economic purpose of the
invalid provision.
SECTION 15.3 Termination. This Agreement and the obligations of the parties
hereunder shall terminate on the day that AMD Saxonia has paid in full all of
the Primary Secured Obligations, and the Banks shall have no other or further
commitments under the Loan Agreement; provided, that such obligations shall
---------
automatically revive and be reinstated if and to the extent that AMD Saxonia
shall subsequently have obligations to any Secured Party under or in connection
with any of the Operative Documents.
SECTION 15.4 Assignment. This Agreement shall be binding upon and shall inure to
the benefit of each party hereto and their respective successors and assigns;
provided that neither AMD Inc. nor AMD Holding shall have the right to transfer
- --------
or assign its rights under this Agreement without the prior written consent of
the Agent and the Security Agent.
SECTION 15.5 Notice. All notices, demands, instructions, and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage pre-paid, return receipt requested, or by
pre-paid telex, TWX, or telegram, or by pre-paid courier service, or by
telecopier, and shall be deemed to be given for purposes of this Agreement on
the day that such writing is delivered or sent to the intended recipient thereof
in accordance with the provisions of this Section 15.5. Unless otherwise
------------
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 15.5, notices, demands, instructions, and other
------------
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective telex, TWX or
telecopier numbers) indicated below.
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To the Security Agent:
Dresdner Bank AG, as Security Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To the Agent:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile No.: (1) (408) 749-3945
To AMD Holding:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No.: 49 351 8412 150
SECTION 15.6 Relationship to Other Agreements. The rights of the Agent and the
Security Agent pursuant to this Agreement are in addition to any other rights or
remedies which the Agent and the Security Agent may have under statutory law or
other agreements between one or more of the Agent, the Security Agent, the
Banks, and AMD Inc. or AMD Holding.
SECTION 15.7 Effectiveness of Agreement; Survival; Expiry of Obligation. This
Agreement shall not be effective for any purpose whatsoever prior to the
execution and delivery of the Loan Agreement by each of AMD Saxonia and the
Agent. Subject to Section 15.3 hereof, the obligations of the Sponsors under
------------
this Agreement shall terminate, except as otherwise
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provided herein, upon the payment in full of all of the Primary Secured
Obligations to the Secured Parties under or in connection with the Financing
Documents and the Security Documents, and the expiration or termination of all
of their respective commitments thereunder (the "Loan Agreement Termination
--------------------------
Date"); provided, however, that the obligations of the Sponsors contained in
- ---- -----------------
Article XIV hereof shall survive any termination of this Agreement. Except as
- -----------
provided in Section 2.4 of the Sponsors' Guaranty, the obligations of the
-----------
Sponsors under the Sponsors' Guaranty shall expire once the Agent advises the
Sponsors that Completion has occurred.
SECTION 15.8 EMU. European Economic and Monetary Union anticipate the
introduction of a single currency and the substitution of the national
currencies of Member States participating in Monetary Union. On the date on
which the Deutsche Mark is replaced by the single currency, conversion into such
currency shall take effect. The denomination of the original currency shall be
retained for so long as this is legally permissible. Conversions shall be based
on the officially fixed rate of conversion. Neither the introduction of the
single currency nor the substitution of the national currencies of the Member
States participating in European Monetary Union nor the fixing of the official
rate of conversion nor any economic consequences that arise from any of the
aforementioned events or in connection with European Monetary Union shall give
rise to any right to terminate prematurely, contest, cancel, rescind, modify, or
renegotiate this Agreement or any of its provisions or to raise any other
objections and/or exceptions or to assert any claims for compensation. This
Agreement shall continue in full force and effect in accordance with its terms.
ARTICLE XVI
Governing Law, Jurisdiction, and Language
SECTION 16.1 Governing Law. The form and execution of this Agreement and all
rights and obligations of the parties arising hereunder shall be governed by the
Laws of the Federal Republic of Germany.
SECTION 16.2 Jurisdiction. Each of AMD Inc. and AMD Holding hereby submits to
the exclusive jurisdiction of the courts in Frankfurt am Main for any dispute
arising out of or in connection with this Agreement. AMD Inc. states that
Advanced Micro Devices GmbH, whose address is Rosenheimerstrasse 143b, 81671
Munich, Germany, Attention: Legal Department, Tel: +49 89 450 530, Fax: +49 89
406 490, Telex: 841523883, is its accredited agent for service of process and
hereby undertakes to maintain an agent for service in Germany. The foregoing
submission to jurisdiction shall not (and shall not be construed so as to) limit
the rights of the Agent or the Security Agent to take suits, actions, or
proceedings against a Sponsor to enforce any judgment rendered by the courts in
Frankfurt am Main in any other court or entity of competent jurisdiction where
such Sponsor has assets, nor shall the taking of suits, actions, or proceedings
to enforce any such judgment in one or more jurisdictions preclude the taking of
enforcement proceedings in any other jurisdiction, whether concurrently or not.
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SECTION 16.3 Use of English Language. This Agreement has been executed in the
English language. All certificates, reports, notices, and other documents and
communications given or delivered pursuant to this Agreement shall be in the
English language and, if reasonably requested by the Agent, shall be accompanied
by a certified German translation thereof. In the event of any inconsistency,
the English language version of any such document shall control.
IN WITNESS WHEREOF, each of the parties set out below has caused this Agreement
to be duly executed and delivered by its respective officer or agent thereunto
duly authorized as of the date first above written.
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
---------------------------
Its
----------------------------------------
AMD SAXONY HOLDING GMBH
/s/ Marvin D. Burkett
---------------------------
DRESDNER BANK AG, as Agent and Security Agent
/s/ Dr. Hans-Jurgen Menzel /s/ Horst Oechsler
-----------------------------------------------
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EXHIBIT 10.50(g)
- --------------------------------------------------------------------------------
SPONSORS' LOAN AGREEMENT
Dated 11 March 1997
between
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY HOLDING GMBH,
and
AMD SAXONY MANUFACTURING GMBH
- --------------------------------------------------------------------------------
<PAGE>
SPONSORS' LOAN AGREEMENT
THIS SPONSORS' LOAN AGREEMENT, dated 11 March 1997, is made between
ADVANCED MICRO DEVICES, INC., a corporation organised and existing under the
laws of the State of Delaware, United States of America, with its chief
executive office and principal place of business at One AMD Place, Sunnyvale,
California 94088, United States of America ("AMD Inc."), AMD SAXONY HOLDING
-------
GMBH, Dresden, registered in the Commercial Register of the Dresden County Court
HRB 13931 ("AMD Holding"; and, together with AMD Inc., collectively, the
-----------
"Sponsors"), and AMD SAXONY MANUFACTURING GMBH, Dresden, registered in the
--------
Commercial Register of the Dresden County Court HRB 13186 ("AMD Saxonia").
-----------
W I T N E S S E T H :
WHEREAS, AMD Saxonia, a wholly-owned Subsidiary (such and other capitalised
terms being used herein with the meanings provided in Section 1.1) of AMD
-----------
Holding, which is, in turn, a wholly owned Subsidiary of AMD Inc., has been
formed for the purpose of constructing, owning, and operating (i) the Plant and
(ii) the integrated Design Center (the construction, ownership, and operation of
the Plant and the Design Center being hereinafter called the "Project");
-------
WHEREAS, in order to finance the construction of the Plant and the Design
Center, and start up costs of the operation of the Plant, (i) the Sponsors will
make substantial subordinated loans to, and AMD Holding will make substantial
equity investments in, AMD Saxonia, and (ii) AMD Saxonia has entered into a
Syndicated Loan Agreement, dated 11 March 1997 (the "Loan Agreement"), with the
--------------
banks from time to time party thereto (hereinafter collectively called the
"Banks" and individually called a "Bank"), Dresdner Bank AG ("Dresdner"), as
----- ---- --------
Agent (in such capacity, the "Agent") for the Banks, and as Security Agent (in
-----
such capacity, the "Security Agent") for the Secured Parties referred to below,
--------------
and Dresdner Bank Luxembourg S.A., as Paying Agent (in such capacity, the
"Paying Agent"), providing, inter alia, for two separate senior secured term and
------------ ----------
standby facilities aggregating up to DM1,650,000,000 (one billion six hundred
fifty million Deutsche Marks);
WHEREAS, the Sponsors desire that the Project be constructed and completed
and are entering into this Agreement with AMD Saxonia for the purpose, among
other things, of providing certain undertakings to and for the benefit of AMD
Saxonia, the Agent, the Banks, the Security Agent, and the Secured Parties;
WHEREAS, as contemplated by the Sponsors' Support Agreement and the Loan
Agreement, AMD Saxonia, each Bank, the Agent, and the Security Agent each
desires to obtain a commitment from the Sponsors to make certain unsecured
subordinated loans to AMD Saxonia to enable AMD Saxonia to fulfill certain of
its obligations under the Loan Agreement;
WHEREAS, the Sponsors are willing to extend such commitment on the terms
and subject to the conditions hereinafter set forth; and
2
<PAGE>
WHEREAS, a condition precedent to the initial Advance is, inter alia, the
----------
execution and delivery by the Sponsors of this Agreement and, in extending
credit to AMD Saxonia under the Loan Agreement, the Banks are relying on the
undertakings of the Sponsors contained herein;
NOW, THEREFORE, the Sponsors and AMD Saxonia, agree as follows:
ARTICLE I
Definitions and Accounting Terms
SECTION 1.1 Definitions. Unless otherwise defined herein, terms used herein have
the meanings assigned to such terms in the Sponsors' Support Agreement. In
addition, the following terms (whether or not underlined) when used in this
Agreement, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Agent" has the meaning assigned to that term in the second recital of this
----- --------------
Agreement.
"Agreement" means this Sponsors' Loan Agreement, as the same may at any
---------
time be amended or modified in accordance with the terms hereof and in effect.
"AMD Holding" has the meaning assigned to that term in the introduction to
----------- ------------
this Agreement.
"AMD Inc." has the meaning assigned to that term in the introduction to
------- ------------
this Agreement.
"AMD Saxonia" has the meaning assigned to that term in the introduction to
----------- ------------
this Agreement.
"Bank" and "Banks" have the respective meanings assigned to those terms in
---- -----
the second recital of this Agreement.
--------------
"Class A Sponsors' Loans" has the meaning assigned to that term in Section
----------------------- -------
2.1.
- ---
"Class B Sponsors' Loans" has the meaning assigned to that term in Section
----------------------- -------
2.1.
- ---
"Deutsche Mark Equivalent" means, with respect to any Class A Sponsors'
------------------------
Loan, the amount, expressed in Deutsche Marks, which results from the conversion
of Dollars to Deutsche Marks at a spot rate of exchange equal to the greater of
(i) DM 1.45 for $ 1.00 and (ii) the Agent's spot rate of exchange, expressed in
Deutsche Marks, for the sale of Dollars
3
<PAGE>
for Deutsche Marks prevailing on the date two (2) Business Days prior to the
date such Class A Sponsors' Loan is or was due to be made.
"Dresdner" has the meaning assigned to that term in the second recital of
-------- --------------
this Agreement.
"Loan Agreement" has the meaning assigned to that term in the second
-------------- ------
recital of this Agreement.
- -------
"Paying Agent" has the meaning assigned to that term in the second recital
------------ --------------
of this Agreement.
"Project" has the meaning assigned to that term in the first recital of
------- -------------
this Agreement.
"Required Sponsors' Loans" has the meaning assigned to that term in Section
------------------------ -------
2.1.
- ---
"Security Agent" has the meaning assigned to that term in the second
-------------- ------
recital of this Agreement.
- -------
"Sponsors" has the meaning assigned to that term in the introduction to
-------- ------------
this Agreement.
"Sponsors' Loan" means an unsecured, subordinated loan that is or is
--------------
required to be made by a Sponsor to AMD Saxonia pursuant hereto, which loans are
subordinated pursuant to the Sponsors' Subordination Agreement (including any
such loan made prior to the Loan Agreement Effective Date as contemplated by
Section 2.1).
- -----------
"Sponsors' Support Agreement" means the Sponsors' Support Agreement, of
---------------------------
even date herewith, between the Sponsors, the Agent, and the Security Agent.
"Voluntary Sponsors' Loans" has the meaning assigned to that term in
-------------------------
Section 2.4.
- -----------
SECTION 1.2 Miscellaneous. In this Agreement, unless the context requires
otherwise, (i) any reference to an Operative Document shall be to such Operative
Document as the same may have been or from time to time may be amended, varied,
re-issued, replaced, novated, or supplemented, in each case, in accordance with
the terms thereof and hereof, and in effect; (ii) any statutory provisions shall
be construed as references to those provisions as amended, modified, re-enacted,
or replaced from time to time; (iii) words importing a gender include every
gender; and (iv) references to Sections are to Sections of this Agreement.
Section headings are inserted for reference only and shall be ignored in
construing this Agreement. A time of day, unless otherwise specified, shall be
construed as a reference to Frankfurt am Main time.
4
<PAGE>
ARTICLE II
Subordinated Loan Provisions
SECTION 2.1 Required Sponsors' Loans. On the terms and subject to the conditions
of this Agreement, the Sponsors, jointly and severally, hereby undertake that
either Sponsor or both of the Sponsors will make Sponsors' Loans to AMD Saxonia:
(i) in an aggregate principal amount of at least DM 290,000,000 (two
hundred ninety million Deutsche Marks) for all such Sponsors' Loans,
the exact amount thereof being equal to the Deutsche Mark Equivalent
of $200,000,000 (two hundred million Dollars) for all such Sponsors'
Loans, as contemplated by Section 2.2 (the "Class A Sponsors' Loans");
----------- -----------------------
and
(ii) in an aggregate principal amount of up to an additional DM 145,000,000
(one hundred forty five million Deutsche Marks) as contemplated by
Section 2.3 (the "Class B Sponsors' Loans"; and, together with the
----------- -----------------------
Class A Sponsors' Loans, collectively, the "Required Sponsors'
------------------
Loans").
-----
For the avoidance of doubt:
(i) the obligations of the Sponsors under this Agreement are intended to
reflect, rather than to be in addition to, the obligations of the
Sponsors pursuant to the Sponsors' Support Agreement;
(ii) to the extent, but only to the extent, reflected in AMD Saxonia's
financial statements referred to in ss.15.1.6 of the Loan Agreement
------
(or, if not so reflected, as certified by AMD Inc. to the Agent and
the Security Agent as of the Loan Agreement Effective Date),
Sponsors' Loans made to AMD Saxonia prior to the Loan Agreement
Effective Date, and/or contributions by AMD Holding to AMD Saxonia's
capital reserves prior to the Loan Agreement Effective Date (to the
extent, but only to the extent, not otherwise taken into account in
determining whether AMD Holding has complied with its obligations
under Article II of the Sponsors' Support Agreement), shall
----------
be taken into account as Class A Sponsors' Loans in determining
whether the Sponsors shall have complied with their obligations under
this Article II;
----------
(iii) although the obligations of the Sponsors contained in this Article II
----------
are in addition to, and not in limitation of, their respective
obligations contained elsewhere in this Agreement and in the other
Operative Documents, if the Agent shall have otherwise expressly
consented thereto in writing (which consent will not unreasonably be
delayed or withheld), the Sponsors shall be deemed to have complied
with their obligations to make Class A Spon
5
<PAGE>
sors' Loans and/or Class B Sponsors' Loans to the extent, but only to
the extent, that AMD Holding shall have made additional contributions
to AMD Saxonia's Equity Capital (or other contribution to AMD
Saxonia's capital reserves) which contributions are not otherwise
required to be made pursuant hereto or to any other Operative
Document;
(iv) the Sponsors shall not be relieved:
(a) of the foregoing obligation by virtue of any Equity Capital (or
other contribution to AMD Saxonia's capital reserves) contributed
or required to be contributed to AMD Saxonia pursuant to Section
-------
2.1 of the Sponsors' Support Agreement or (except as, and to the
---
extent, provided in clause (iii) above) otherwise;
------------
(b) of any obligation to make Class A Sponsors' Loans (or to
contribute additional Equity Capital or other contributions to
AMD Saxonia's capital reserves in lieu thereof) by virtue of any
payment made by either Sponsor under the Sponsors' Guaranty; or
(c) of any obligation following Completion to make Class B Sponsors'
Loans until and unless the Sponsors shall have paid all amounts
payable under the Sponsors' Guaranty following a demand for
payment made by the Agent thereunder (it being understood and
agreed that the obligation of the Sponsors to make Class B
Sponsors' Loans shall be subject to the occurrence of
Completion);
(v) each Class A Sponsors' Loan shall be denominated in Deutsche Marks and
the Deutsche Mark Equivalent thereof shall be calculated for the
purpose of determining whether the Sponsors have complied with their
obligations under Section 2.2; provided, however, that any Class A
----------- -------- -------
Sponsors' Loan may, with the consent of the Agent (such consent not to
be unreasonably delayed or withheld), be funded in Dollars, but for
all purposes of this Agreement and the Sponsors' Support Agreement
shall be deemed to have been funded in Deutsche Marks in an amount
which is equal to the Deutsche Mark Equivalent thereof; and
(vi) the amounts set forth in this Section 2.1 are cumulative minimum
-----------
aggregate amounts for both Sponsors, collectively; nothing contained
herein shall be deemed to preclude the Sponsors (or either of them)
from making additional Sponsors' Loans in order to fulfil their
respective obligations contained in Article IV, V, VI, or VII of the
---------- - -- ---
Sponsors' Support Agreement, or for any other reason.
6
<PAGE>
SECTION 2.2 Time of Class A Sponsors' Loans. The Class A Sponsors' Loans will be
made in cash and in Same Day Funds and will be made as follows:
(i) at least DM 145,000,000 (one hundred forty five million Deutsche
Marks) for all such Class A Sponsors' Loans, the exact amount thereof
being equal to the Deutsche Mark Equivalent of $100,000,000 (one
hundred million Dollars) for all such Class A Sponsors' Loans, by the
earlier to occur of:
(a) the acceleration of the Advances under the Loan Agreement
following the occurrence of an Event of Default (it being
understood and agreed that if, at the time of any such
acceleration, the Primary Secured Obligations are less than the
amount otherwise required to be lent to AMD Saxonia under this
Section 2.2(i), the amount of such Class A Sponsors' Loans shall
--------------
be an amount which, when added to the aggregate amount of all
Sponsors' Loans and/or other contributions to AMD Saxonia's
Equity Capital or capital reserves then concurrently being made,
is equal to the Primary Secured Obligations at such time); and
(b) December 31, 1998; and
(ii) at least a further DM 145,000,000 (one hundred forty five million
Deutsche Marks) for all such Class A Sponsors' Loans, the exact amount
thereof being equal to the Deutsche Mark Equivalent of $100,000,000
(one hundred million Dollars) for all such Class A Sponsors' Loans, by
the earlier to occur of:
(a) the acceleration of the Advances under the Loan Agreement
following the occurrence of an Event of Default (it being
understood and agreed that if, at the time of any such
acceleration, the Primary Secured Obligations are less than the
amount otherwise required to be lent to AMD Saxonia under this
Section 2.2(ii), the amount of such Class A Sponsors' Loans shall
---------------
be an amount which, when added to the aggregate amount of all
Sponsors' Loans and/or other contributions to AMD Saxonia's
Equity Capital or capital reserves then concurrently being made,
is equal to the Primary Secured Obligations at such time); and
(b) December 31, 1999;
provided, however, that such Class A Sponsors' Loans shall be required
-----------------
to be made in whole or in part prior to the aforesaid dates if, but
only to the extent that, the ratio of:
7
<PAGE>
(x) the sum of
(1) the then aggregate outstanding principal amount of the
Sponsors' Loans,
plus
----
(2) the then aggregate amount of AMD Saxonia's Equity
Capital and capital reserves
to
--
(y) the then aggregate outstanding principal amount of the
Advances, under the Loan Agreement,
is less than 25:75.
SECTION 2.3 Time of Class B Sponsors' Loans. The Class B Sponsors' Loans will be
made in cash and in Same Day Funds and will be made upon first written demand by
the Security Agent to the extent necessary to remedy any shortfall in the Fixed
Charge Coverage Ratio as required by the Security Agent at any time and from
time to time following Completion if, on or as of a Financial Ratio Calculation
Date, AMD Saxonia's Fixed Charge Coverage Ratio is less than 125%.
SECTION 2.4 Voluntary Sponsors' Loans.
(i) Making of Voluntary Sponsors' Loans. On the terms and subject to the
conditions of this Agreement, the Sponsors (or either of them) may, in
order to comply with their obligations under the Sponsors' Support
Agreement or for any other reason, from time to time at their option (but
shall not be required to), on any Business Day, make additional Sponsors'
Loans to AMD Saxonia (herein collectively called the "Voluntary Sponsors'
-------------------
Loans").
-----
(ii) Timing of Voluntary Sponsors' Loans. Voluntary Sponsors' Loans may be
made by a Sponsor from time to time on at least two (2) Business Days'
prior notice to AMD Saxonia and the Agent.
SECTION 2.5 Subordination of Sponsors' Loans; Acknowledgment of Subordination.
The Sponsors and AMD Saxonia acknowledge and agree that the obligation of AMD
Saxonia to repay the principal of and interest on the Sponsors' Loans shall be
subordinated to all obligations of AMD Saxonia to the Banks, the Agent, and the
Security Agent under or arising out of the Loan Agreement and any other
Operative Document, all as, and to the extent, provided in the Sponsors'
Subordination Agreement.
8
<PAGE>
ARTICLE III
Interest Provisions
SECTION 3.1 Interest Rate. The unpaid principal amount from time to time
outstanding of each Sponsors' Loan shall bear interest at a rate per annum equal
to 7%, compounded monthly. As provided in the Sponsors' Subordination Agreement,
payment of interest on the Sponsors' Loans has been subordinated to the Senior
Liabilities (as therein defined) and, once permitted to be paid by AMD Saxonia
pursuant to the Sponsors' Subordination Agreement, shall be paid quarterly in
arrears.
SECTION 3.2 Computation of Interest. Interest shall be computed on the basis of
the actual number of days elapsed and a 360-day year.
ARTICLE IV
Disbursements and Prepayments
SECTION 4.1 Disbursements and Repayments. The proceeds of each Sponsors' Loan
shall be deposited to the Operating Account. Subject to the Sponsors'
Subordination Agreement, all payments to be made by AMD Saxonia in respect of
the Sponsors' Loans shall be made to the applicable Sponsor(s) that made such
Sponsors' Loans at its address as set forth in Section 6.5 (or to such other
-----------
address or account as such Sponsor may specify by written notice to AMD Saxonia
and the Agent), not later than noon, Frankfurt time, on the date due (after
giving effect to any extension of any such due date contemplated hereby); and
funds received after that hour shall be deemed to have been received on the next
succeeding Business Day.
ARTICLE V
Obligations Unconditional
SECTION 5.1 Absolute and Unconditional Nature of the Sponsors' Obligations. The
obligation of the Sponsors to perform their respective obligations under this
Agreement, and the right of AMD Saxonia to receive the proceeds of each
Sponsors' Loan to be made by or on behalf of either of the Sponsors as provided
herein, shall be absolute and unconditional, it being the intention of the
parties hereto that all obligations of the Sponsors under or in connection with
this Agreement shall be paid and performed in all events in the manner and at
the times herein provided, irrespective of and without prejudice to, in
particular, any rights or remedies that are available to the other parties
hereto under any agreements or any applicable laws. The Sponsors shall be
entitled to set off, and to raise rights of retention, in respect of their
respective payment claims hereunder and under the other Operative Documents only
to the extent their respective counterclaims are undisputed or have been the
subject of a final judgment.
9
<PAGE>
ARTICLE VI
Miscellaneous
SECTION 6.1 No Waiver; Modifications in Writing. No failure or delay on the part
of AMD Saxonia in exercising any right, power, or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any other right, power, or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to AMD
Saxonia at law or otherwise. No amendment, modification, supplement,
termination, or waiver of or to any provision of this Agreement, or consent to
any departure by either of the Sponsors, or AMD Saxonia, therefrom, shall be
effective unless the same shall be in writing and signed by or on behalf of AMD
Saxonia and, if prior to the Loan Agreement Termination Date, the Agent and the
Security Agent.
Any waiver of any provision of this Agreement, and any consent to any departure
by either Sponsor from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on either Sponsor in any case shall entitle such
Sponsor to any other or further notice or demand in similar or other
circumstances.
SECTION 6.2 Severability of Provisions. In case any provision of this Agreement
is invalid or unenforceable, the validity or enforceability of the remaining
provisions hereof shall remain unaffected. The parties hereto shall have an
obligation to replace any invalid or unenforceable provision by a valid and
enforceable provision which approximates best the economic purpose of the
invalid provision.
SECTION 6.3 Termination. This Agreement and the obligations of the Sponsors to
make Sponsors' Loans shall terminate on the day that AMD Saxonia has paid in
full all of the Primary Secured Obligations, and the Banks shall have no other
or further commitments under or arising out of the Loan Agreement; provided,
--------
that such obligations shall automatically revive and be reinstated (with effect
from the date of such reinstatement) if and to the extent that AMD Saxonia shall
subsequently have obligations under or arising out of the Loan Agreement.
SECTION 6.4 Assignment. This Agreement shall be binding upon and shall inure to
the benefit of each party hereto and their respective successors and assigns;
provided, however, that neither of the Sponsors nor AMD Saxonia shall have the
- -------- -------
right to transfer or assign its rights under this Agreement prior to the Loan
Agreement Termination Date, without the prior written consent of the Agent and
the Security Agent.
10
<PAGE>
SECTION 6.5 Notice. All notices, demands, instructions, and other communications
required or permitted to be given to or made upon any party hereto or any other
Person shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage pre-paid, return receipt requested, or by
pre-paid telex, TWX, or telegram, or by pre-paid courier service, or by
telecopier, and shall be deemed to be given for purposes of this Agreement on
the day that such writing is delivered or sent to the intended recipient thereof
in accordance with the provisions of this Section 6.5. Unless otherwise
-----------
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 6.5, notices, demands, instructions, and other
-----------
communications in writing shall be given to or made upon the respective parties
hereto and other Persons at their respective addresses (or to their respective
telex, TWX or telecopier numbers) indicated below.
To AMD Inc.: Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile No.: (1) (408) 749-3945
To AMD Holding: AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No: (49) 351 8412 150
To AMD Saxonia: AMD Saxony Manufacturing GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No: (49) 351 8412 150
with, in each case prior to the Loan Agreement Termination Date, a copy
concurrently delivered:
To the Security Agent: Dresdner Bank AG, as Security Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489 1350
To the Agent: Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489 1350
11
<PAGE>
SECTION 6.6 Relationship to Other Agreements. The rights of AMD Saxonia,
pursuant to this Agreement are in addition to any other rights or remedies which
AMD Saxonia may have under statutory law or other agreements between one or more
of AMD Saxonia, the Agent, the Security Agent, the Banks, and the Sponsors.
SECTION 6.7 EMU. European Economic and Monetary Union anticipate the
introduction of a single currency and the substitution of the national
currencies of Member States participating in Monetary Union. On the date on
which the Deutsche Mark is replaced by the single currency, conversion into such
currency shall take effect. The denomination of the original currency shall be
retained for so long as this is legally permissible. Conversions shall be based
on the officially fixed rate of conversion. Neither the introduction of the
single currency nor the substitution of the national currencies of the Member
States participating in European Monetary Union nor the fixing of the official
rate of conversion nor any economic consequences that arise from any of the
aforementioned events or in connection with European Monetary Union shall give
rise to any right to terminate prematurely, contest, cancel, rescind, modify, or
renegotiate this Agreement or any of its provisions or to raise any other
objections and/or exceptions or to assert any claims for compensation. This
Agreement shall continue in full force and effect in accordance with its terms.
ARTICLE VII
Governing Law, Jurisdiction, and Language
SECTION 7.1 Governing Law; etc. NOTWITHSTANDING THAT THE SPONSORS' SUPPORT
AGREEMENT IS GOVERNED BY THE LAWS OF GERMANY, THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS TO WHICH ANY OF THE AMD
COMPANIES IS A PARTY CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.2 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, OR UNDER, THIS AGREEMENT SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE
BOROUGH OF MANHATTAN OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK. EACH AMD COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE
BOROUGH OF MANHATTAN OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
EACH AMD COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PRO
12
<PAGE>
CESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. EACH AMD COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY AMD COMPANY HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, SUCH AMD COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.3 Waiver of Jury Trial. EACH AMD COMPANY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY AMD COMPANY. EACH AMD COMPANY ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS
ENTERING INTO THE LOAN AGREEMENT AND EACH SUCH OTHER OPERATIVE DOCUMENT TO WHICH
THEY ARE A PARTY.
SECTION 7.4 Use of English Language. This Agreement has been executed in the
English language. All certificates, reports, notices, and other documents and
communications given or delivered pursuant to this Agreement shall be in the
English language and, if reasonably requested by the Agent, a certified German
translation thereof shall be furnished by the relevant party promptly following
such request. In the event of any inconsistency, the English language version of
any such document shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized, as of
the date first above written.
13
<PAGE>
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
----------------------------------
Its
----------------------------------
AMD SAXONY HOLDING GMBH
By /s/ Marvin D. Burkett
----------------------------------
AMD SAXONY MANUFACTURING GMBH
By /s/ Jack L. Saltich
----------------------------------
14
<PAGE>
EXHIBIT 10.50(h)
SPONSORS' SUBORDINATION AGREEMENT
Dated 11 March 1997
between
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY HOLDING GMBH,
AMD SAXONY MANUFACTURING GMBH
and
DRESDNER BANK AG
as Agent and Security Agent
<PAGE>
SPONSORS' SUBORDINATION AGREEMENT
THIS SPONSORS' SUBORDINATION AGREEMENT, dated 11 March 1997, is made between
ADVANCED MICRO DEVICES, INC., a corporation organised and existing under the
laws of the State of Delaware, United States of America, with its chief
executive office and principal place of business at One AMD Place, Sunnyvale,
California 94088, United States of America ("AMD Inc."), AMD SAXONY HOLDING
--------
GMBH, Dresden, registered in the Commercial Register of the Dresden County Court
HRB 13931 ("AMD Holding"; and, together with AMD Inc., collectively, the
-----------
"Sponsors"), AMD SAXONY MANUFACTURING GMBH, Dresden, registered in the
--------
Commercial Register of the Dresden County Court HRB 13186 ("AMD Saxonia"), and
-----------
DRESDNER BANK AG ("Dresdner"), as Agent (in such capacity, the "Agent") for the
-------- -----
Banks under the Loan Agreement referred to below and as Security Agent (in such
capacity, the "Security Agent") for the Secured Parties under such Loan
--------------
Agreement.
W I T N E S S E T H :
WHEREAS, AMD Saxony Manufacturing GmbH, Dresden, registered in the Commercial
Register of the Dresden County Court HRB 13186 ("AMD Saxonia"), a wholly-owned
-----------
Subsidiary (such and other capitalised terms being used herein with the meanings
provided in Section 1.1), of AMD Holding, which is, in turn, a wholly-owned
-----------
Subsidiary of AMD Inc., has been formed for the purpose of constructing, owning,
and operating (i) the Plant and (ii) the integrated Design Center (the
construction, ownership, and operation of the Plant and the Design Center being
hereinafter called the "Project");
-------
WHEREAS, in order to finance the construction of the Plant and the Design
Center, and start-up costs of the operation of the Plant, (i) the Sponsors
expect to make substantial subordinated loans to, and AMD Holding expects to
make substantial equity investments in, AMD Saxonia, and (ii) AMD Saxonia has
entered into a Syndicated Loan Agreement, dated 11 March 1997 (the "Loan
----
Agreement"), with the banks from time to time party thereto (hereinafter
- ---------
collectively called the "Banks" and individually called a "Bank"), Dresdner, as
----- ----
Agent and Security Agent, and Dresdner Bank Luxembourg S.A., as Paying Agent (in
such capacity, the "Paying Agent"), providing, inter alia, for two separate
------------ ----------
senior secured term and standby facilities aggregating up to DM1,650,000,000
(one billion six hundred fifty million Deutsche Marks);
WHEREAS, the Sponsors desire that the Project be constructed and completed and
are entering into this Agreement with AMD Saxonia, the Agent, the Security Agent
for the benefit of the Banks and the Paying Agent (the Agent, the Security
Agent, the Banks and the Paying Agent being hereinafter collectively called the
"Secured Parties" and individually called a "Secured Party"), for the purpose,
--------------- -------------
among other things, of providing (i) certain assurances with respect to the
completion of the Project, and (ii) certain undertakings to and for the benefit
of the Secured Parties; and
WHEREAS, a condition precedent to the initial Advance is, inter alia, the
----------
execution by the Sponsors of this Agreement, and, in extending credit to AMD
Saxonia under the Loan
2
<PAGE>
Agreement, the Banks are relying on the undertakings of the Sponsors contained
herein;
NOW, THEREFORE, the Sponsors, AMD Saxonia, the Agent (for itself and on
behalf of and the Banks), and the Security Agent (on behalf of the Secured
Parties), agree as follows:
SECTION 1. Definitions. Unless otherwise defined herein, terms used herein have
the meanings assigned to such terms in the Sponsors' Support Agreement. In
addition, the following terms (whether or not underlined) when used in this
Agreement, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Agent" has the meaning assigned to such term in the introduction to this
----- ------------
Agreement.
"Agreement" means this Sponsors' Subordination Agreement, as the same may
---------
at any time be amended or modified in accordance with the terms hereof and in
effect.
"AMD Holding" has the meaning assigned to such term in the introduction to
----------- ------------
this Agreement.
"AMD Holding Junior Liabilities" means all Junior Liabilities owing to AMD
------------------------------
Holding.
"AMD Inc." has the meaning assigned to such term in the introduction to
------- ------------
this Agreement.
"AMD Saxonia" has the meaning assigned to such term in the first recital of
----------- -------------
this Agreement.
"Bank" and "Banks" have the respective meanings assigned to such terms in
---- -----
the second recital of this Agreement.
--------------
"Dresdner" has the meaning assigned to such term in the introduction to
-------- ------------
this Agreement.
"Junior Liabilities" means all obligations and liabilities of AMD Saxonia
------------------
to either of the Sponsors (including, in the case of AMD Holding, any AMD
Holding Junior Liabilities), howsoever created, arising, or evidenced, whether
direct or indirect, absolute or contingent, or now or hereafter existing, or due
or to become due.
"Loan Agreement" has the meaning assigned to such term in the second
-------------- ------
recital of this Agreement.
- -------
3
<PAGE>
"Loan Agreement Termination Date" means the first date on or as of which
-------------------------------
(i) all Primary Secured Obligations have been paid in full, and (ii) the Banks
have no commitments under or in connection with the Loan Agreement.
"Paying Agent" has the meaning assigned to such term in the second recital
------------ --------------
of this Agreement.
"Project" has the meaning assigned to such term in the first recital of
------- -------------
this Agreement.
"Secured Parties" and "Secured Party" have the respective meanings assigned
--------------- -------------
to such terms in the third recital of this Agreement.
-------------
"Security Agent" has the meaning assigned to such term in the introduction
-------------- ------------
to this Agreement.
"Senior Liabilities" means all obligations and liabilities of AMD Saxonia
------------------
to the Agent, the Security Agent, any Bank, the Paying Agent, or either
Guarantor (other than any arising solely by reason of any pledge or assignment
of any AMD Holding Junior Liabilities made to the Security Agent pursuant to
Section 2(b) hereof) under or arising out of any Financing Document, howsoever
- ------------
created, arising, or evidenced, whether direct or indirect, absolute or
contingent, or now or hereafter existing, or due or to become due, it being
expressly understood and agreed that the term "Senior Liabilities" shall
------------------
include, without limitation, any and all interest accruing on any of the Senior
Liabilities after the commencement of any proceedings referred to in Section 4,
---------
notwithstanding any provision or rule of law which might restrict the rights of
the Security Agent, as against AMD Saxonia or any other Person, to collect such
interest.
"Sponsors" has the meaning assigned to such term in the introduction to
-------- ------------
this Agreement.
"Sponsors' Support Agreement" means the Sponsors' Support Agreement, of
---------------------------
even date herewith, between the Sponsors, the Agent, and the Security Agent, as
the same may at any time be amended or modified in accordance with the terms
thereof and in effect.
In this Agreement, unless the context requires otherwise, (i) any reference
to an Operative Document shall be to such Operative Document as the same may
have been or from time to time may be amended, varied, re-issued, replaced,
novated or supplemented, in each case in accordance with the terms thereof and
hereof, and in effect; (ii) any statutory provisions shall be construed as
references to those provisions as amended, modified, re-enacted, or replaced
from time to time; (iii) words importing a gender include every gender; and (iv)
references to Sections are to Sections of this Agreement. Section headings are
inserted for reference only and shall be ignored in construing this Agreement. A
time of day, unless otherwise specified, shall be construed as a reference to
Frankfurt am Main time.
4
<PAGE>
SECTION 2. Obligations of Sponsors. The Sponsors will, from time to time, (a)
promptly notify the Security Agent of the creation of any Junior Liabilities
pursuant to the Sponsors' Loan Agreement, and (b) in the case of AMD Holding,
and as collateral security for all Senior Liabilities, indorse without recourse,
deliver, and pledge to the Security Agent any and all promissory notes or other
instruments evidencing any of the AMD Holding Junior Liabilities, in a manner
satisfactory to the Security Agent.
SECTION 3. Subordination. Except as expressly provided in this Agreement, or as
the Agent (acting on the instructions of an Instructing Group) may hereafter
otherwise expressly consent in writing, the payment of all Junior Liabilities
shall be postponed and subordinated to the payment in full of all Senior
Liabilities, and no payments or other distributions whatsoever in respect of any
Junior Liabilities shall be made, nor shall any property or assets of AMD
Saxonia be applied to the purchase or other acquisition or retirement of any
Junior Liabilities; provided, however, that as long as no Event of Default, or
-----------------
Unmatured Event of Default with respect to either Sponsor which is of the type
described in Section 8.01(f) or (g) of the AMD Inc. 1996 Bank Credit Agreement
--------------- ---
has occurred and is continuing, there are excepted from the foregoing provisions
of this Section 3 (without duplication): (i) those payments to either of the
---------
Sponsors made by AMD Saxonia pursuant to Article II of the Management Service
----------
Agreement, (ii) those payments to AMD Holding made by AMD Saxonia pursuant to
Article IV of the AMD Saxonia Wafer Purchase Agreement, (iii) those payments to
- ----------
AMD Inc. made by AMD Saxonia in respect of purchases of equipment in the
ordinary course of business and on an arm's length basis and not exceeding
DM50,000,000 (fifty million Deutsche Marks) in aggregate, (iv) those payments to
the Sponsors made by AMD Saxonia in accordance with Section 4.4 of the Sponsors'
-----------
Support Agreement, and (v) those payments to the Sponsors made by AMD Saxonia in
accordance with Section 6.3 of the Sponsors' Support Agreement; and provided,
----------- --------
further, that there are excepted from the provisions of this Section 3: (i)
- ------- ---------
distributions in respect of the Junior Liabilities to the extent such
distributions constitute non cash credits expressly permitted to be made under
the Management Service Agreement or the AMD Saxonia Wafer Purchase Agreement,
(ii) those payments to AMD Inc. made by AMD Saxonia pursuant to the AMD Saxonia
Hedging Agreement other than payments of premium and other than payments in
respect of the early termination thereof and (iii) performance by AMD Saxonia of
its obligations (other than payment obligations, if any) under the AMD Saxonia
Wafer Purchase Agreement, the AMD Saxonia Research Agreement or the License
Agreement. Moreover, if the AMD Saxonia Wafer Purchase Agreement or the
Management Service Agreement terminates for any reason whatsoever, AMD Saxonia
shall be permitted to credit the amounts payable thereunder against the amounts
receivable by it thereunder strictly in accordance with the terms and provisions
of each such Operative Document.
In addition to, and without intending to derogate from, the foregoing provisions
of this Section 3, each of the Sponsors hereby subordinates its claims arising
under or in connection with the Sponsors' Loan Agreement to all other present
and future creditors of AMD Saxonia, but the subordination under this sentence
shall not apply to any such claims as long as and to the extent that omitting
such claims from the subordination under this sentence will not result
5
<PAGE>
in or lead to an increase of an overindebtedness of AMD Saxonia within the
meaning of Sec. 63 Act on Limited Liability Companies (GmbHG), to be determined
on the basis of AMD Saxonia's statement of affairs (Vermogensstatus) as per any
relevant point in time or, if applicable, in an opening or closing liquidation
balance sheet (Liquidationseroffnungs-, schlussbilanz). For the purposes of
determining whether a repayment of principal or the payment of interest by AMD
Saxonia is permitted under this paragraph the value of the assets and
liabilities of AMD Saxonia to be included in the relevant statement of affairs
shall always be determined by the managing directors and confirmed by the
Auditor in accordance with the applicable rules. The Sponsors shall not be
entitled to make payment claims under the Sponsors' Loan Agreement as long as
there is an overindebtedness of AMD Saxonia within the above meaning, or as long
as there is not a liquidation surplus, or in a bankruptcy proceeding over the
assets of AMD Saxonia, it being understood that the Sponsors' claims shall rank
behind all other creditors in case of any insolvency proceeding which is
governed by the provisions of the Insolvency Act (Insolvenzordnung).
SECTION 4. Bankruptcy, Insolvency, etc. In the event of any dissolution, winding
up, liquidation, reorganization, or other similar proceedings relating to AMD
Saxonia or to its creditors, as such, or to its property (whether voluntary or
involuntary, partial or complete, and whether in bankruptcy, insolvency,
compromise proceedings (Vergleichsverfahren) or any other marshalling of the
assets and liabilities of AMD Saxonia, or any sale of all or substantially all
of the assets of AMD Saxonia, or otherwise), the Senior Liabilities shall first
be paid in full before either of the Sponsors shall be entitled to receive and
to retain any payment or distribution in respect of the Junior Liabilities, and
in order to implement the foregoing, (a) each of the Sponsors hereby irrevocably
agrees that in such event all payments and distributions of any kind or
character in respect of the Junior Liabilities to which such Sponsor would be
entitled if the Junior Liabilities were not subordinated, or, in the case of the
AMD Holding Junior Liabilities, subordinated and pledged or assigned, pursuant
to this Agreement, shall be made directly to the Security Agent; (b) upon the
commencement and during the continuance of any proceedings referred to in this
Section 4, the Security Agent shall have the right to require either or both of
- ---------
the Sponsors to claim, enforce, prove, or vote in respect of the Junior
Liabilities in such manner as is directed by the Security Agent and as is
permitted by applicable law, including, without limitation, to direct that all
payments and distributions of any kind or character in respect of the Junior
Liabilities to which such Sponsor would be entitled if the Junior Liabilities
were not subordinated (or, in the case of the AMD Holding Junior Liabilities,
subordinated and (if applicable) pledged) pursuant to this Agreement, shall be
made directly to the Security Agent; provided, that if the Security Agent shall
--------
not have required a Sponsor to claim, enforce, prove, or vote in respect of any
of the Junior Liabilities on or before the day which is 10 Business Days before
a date on which the failure to so claim, enforce, prove, or vote would
invalidate or otherwise materially adversely affect the rights of such Sponsor,
such Sponsor shall have the right to claim, enforce, prove, or vote in respect
of such Junior Liabilities in such Sponsor's sole discretion; and (c) each
Sponsor hereby irrevocably agrees that the Security Agent may, at its sole
discretion for purposes hereof, in the name of such Sponsor or otherwise,
demand, sue for, collect, receive, and receipt for any and all such payments or
distributions, and file, prove, and vote, or consent in any such
6
<PAGE>
proceedings with respect to, any and all claims of such Sponsor relating to the
Junior Liabilities.
SECTION 5. Payments Held in Trust. In the event that either of the Sponsors
receives any payment or other distribution of any kind or character from AMD
Saxonia or from any other source whatsoever in respect of any of the Junior
Liabilities, other than as expressly permitted by the terms of this Agreement,
such payment or other distribution shall be received in trust for the Security
Agent, and promptly turned over by such Sponsor to the Security Agent. Each of
the Sponsors will mark its books and records, and cause AMD Saxonia to mark its
books and records, as to clearly indicate that the Junior Liabilities are
subordinated in accordance with the terms of this Agreement, and will cause to
be clearly inserted in any instrument which at any time evidences any of the
Junior Liabilities a statement to the effect that the payment thereof is
subordinated in accordance with the terms of this Agreement. Each of the
Sponsors will execute such further documents or instruments and take such
further action as the Security Agent may reasonably request from time to time to
carry out the intent of this Agreement.
SECTION 6. Application of Payments; No Subrogation. All payments and
distributions received by the Security Agent in respect of the Junior
Liabilities in accordance with the terms hereof, to the extent received in or
converted into cash, may be applied by the Security Agent first to the payment
of any and all expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Security Agent in enforcing this Agreement or
in endeavouring to collect or realize upon any of the Junior Liabilities or any
security therefor in accordance with the terms hereof, and any balance thereof
shall, solely as between the Sponsors and the Security Agent, be applied by the
Security Agent, in the manner provided by the Loan Agreement, toward the payment
of the Senior Liabilities remaining unpaid; but, as between AMD Saxonia and its
creditors, no such payments or distributions of any kind or character shall be
deemed to be payments or distributions in respect of the Senior Liabilities;
and, notwithstanding any such payments or distributions received by the Security
Agent in respect of the Junior Liabilities and so applied by the Security Agent
toward the payment of the Senior Liabilities, each of the Sponsors shall be
subrogated to the then-existing rights of the Agent, the Security Agent, and the
Banks, if any, in respect of the Senior Liabilities only at such time as (i) the
Agent, the Security Agent, and the Banks shall have received payment of the full
amount of the Senior Liabilities, as provided for in Section 9, or (ii) this
---------
Agreement shall terminate pursuant to Section 15. Each Secured Party shall, at
----------
the relevant Sponsor's request and expense made after such time, execute and
deliver to such Sponsor appropriate documents (without recourse or warranty
whatsoever) to evidence the transfer by subrogation to such Sponsor of an
interest in the Senior Liabilities resulting from the application of payments in
the manner contemplated by this Section 6. The obligations of the Secured
---------
Parties under the preceding sentence shall survive any termination of this
Agreement.
SECTION 7. Waivers by the Sponsors. Each of the Sponsors hereby waives: (a)
notice of acceptance by the Agent, the Security Agent, or any Bank of this
Agreement; (b) notice of the existence or creation or non-payment of all or any
of the Senior Liabilities; and (c) all
7
<PAGE>
diligence in collection or protection of or realization upon the Senior
Liabilities or any thereof or any security therefor.
SECTION 8. Obligations of the Sponsors. Neither of the Sponsors will, without
the prior written consent of the Security Agent: (a) transfer or assign, or
attempt to enforce or collect, any Junior Liabilities or any rights in respect
thereof, except (i) that AMD Inc. may assign any Senior Liability to AMD
Holding, and (ii) that AMD Inc. may enforce or collect any Junior Liabilities
that are expressly permitted to be paid pursuant to Section 3; provided, that
--------- --------
nothing in this Agreement shall be deemed to prevent AMD Inc. from seeking
damages, equitable relief or otherwise enforcing any rights it may have against
AMD Saxonia arising out of (x) any tort or infringement of AMD Inc. tangible or
intangible property rights (including without limitation rights under applicable
patent, copyright and trade secret laws and similar principles) to the extent
such tort or infringement arises after the date of termination of the AMD
Holding Wafer Purchase Agreement or (y) a breach by AMD Saxonia of its
obligations under the License Agreement to the extent, but only to the extent,
such tort or infringement arises after the date of termination of the AMD
Holding Wafer Purchase Agreement; (b) take any collateral security for any
Junior Liabilities; (c) convert any Junior Liabilities into equity capital of
AMD Saxonia (it being understood and agreed that the Sponsors' Loans made by AMD
Holding (but not AMD Inc.) may be converted into equity of AMD Saxonia); or (d)
commence, or join with any other creditor commencing, any bankruptcy,
reorganisation, or insolvency proceedings with respect to AMD Saxonia.
SECTION 9. Continuing Subordination. This Agreement shall in all respects be a
continuing agreement and shall remain in full force and effect (notwithstanding,
without limitation, the dissolution of either of the Sponsors or that at any
time or from time to time all Senior Liabilities may have been paid in full),
but shall automatically terminate on the Loan Agreement Termination Date.
SECTION 10. Rights of the Agent, the Security Agent, and the Banks. The Agent,
the Security Agent, and each Bank may, from time to time, at its sole discretion
and without notice to either of the Sponsors, take any or all of the following
actions without affecting its or their rights under this Agreement: (a) retain
or obtain a security interest in any property of any Person to secure any of the
Senior Liabilities; (b) retain or obtain the primary or secondary obligations of
any other obligor or obligors with respect to any of the Senior Liabilities; (c)
extend or renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Liabilities, or release or
compromise any obligation of any nature of any obligor with respect to any of
the Senior Liabilities; (d) compromise, settle, release, renew, extend, indulge,
amend, change, waive, modify, or supplement in any respect any of the terms or
conditions of any of the Operative Documents; and (e) release its lien on or
security interest in, or surrender, release, or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter, or exchange any
obligations of any nature of any obligor with respect to any such property.
8
<PAGE>
SECTION 11. Transfer of Obligations; Enforcement. The Security Agent, the Agent,
or any Bank may, from time to time, without notice to either of the Sponsors,
but subject, however, to the provisions of Section 26 of the Loan Agreement,
----------
assign or transfer any or all of the Senior Liabilities or any interest therein;
and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Senior Liabilities shall be and remain
Senior Liabilities for purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Senior Liabilities or of any
interest therein, shall, to the extent of the interest of any such assignee or
transferee in the Senior Liabilities, be entitled to the benefits of this
Agreement to the same extent as if such assignee or transferee were the
transferor. The rights of the Secured Parties hereunder shall be exercisable
solely by the Security Agent on behalf of the Secured Parties, unless either the
------
Security Agent is not able pursuant to applicable law to realize the practical
benefits of such rights on behalf of the Secured Parties or the limitations set
--
forth in this sentence would otherwise materially adversely affect the rights of
the Secured Parties hereunder.
SECTION 12. Additional Provisions. None of the Agent, the Security Agent, or the
Banks shall be prejudiced in its rights under this Agreement by any act or
failure to act of any of AMD Saxonia or either of the Sponsors, or any
noncompliance of AMD Saxonia or either of the Sponsors with any agreement or
obligation, regardless of any knowledge thereof which the Agent, the Security
Agent, or such Bank may have or with which the Agent, the Security Agent, or
such Bank may be charged; and no action of the Agent, the Security Agent, or any
Bank permitted hereunder shall in any way affect or impair the rights of the
Agent, the Security Agent, or any Bank, and the obligations of each of the
Sponsors, under this Agreement. For the purposes of this subordination, Senior
Liabilities shall include all obligations of AMD Saxonia under or in connection
with any of the Operative Documents to the Agent, the Security Agent, the Paying
Agent and each Bank, notwithstanding any right or power of any AMD Saxonia or
anyone else to assert any claim or defence as to the invalidity or
unenforceability of any such obligation, and no such claim or defence shall
affect or impair the agreements and obligations of the Sponsors hereunder;
provided, however, that Senior Liabilities shall not include any obligations or
- -------- -------
liabilities of AMD Saxonia which a court of competent jurisdiction shall have
determined (which determination shall be final and unappealable) are invalid or
unenforceable.
SECTION 13. Cumulative Remedies; Modifications in Writing. The remedies provided
for herein are cumulative and are not exclusive of any remedies that may be
available to the Agent or the Security Agent at law, in equity, or otherwise. No
amendment, modification, supplement, termination, or waiver of or to any
provision of this Agreement, or consent to any departure by either of the
Sponsors or AMD Saxonia therefrom, shall be effective unless the same shall be
in writing and signed by or on behalf of the Agent and the Security Agent.
SECTION 14. Severability of Provisions. In case any provision of this Agreement
is invalid or unenforceable, the validity or enforceability of the remaining
provisions hereof shall remain unaffected. The parties hereto shall have an
obligation to replace any invalid provision by a valid provision which
approximates best the economic purpose of the invalid provision.
9
<PAGE>
SECTION 15. Termination. This Agreement and the obligations of the parties
hereunder shall terminate on the Loan Agreement Termination Date; provided, that
--------
such obligations shall automatically revive and be reinstated if and to the
extent that AMD Saxonia shall subsequently have obligations to any of the
Secured Parties under or arising out of any of the Financing Documents.
SECTION 16. Assignment. This Agreement shall be binding upon and shall inure to
the benefit of each party hereto and their respective successors and assigns;
provided, however, that the Security Agent, the Agent, and the Banks may
- -----------------
transfer their rights under this Agreement, subject, however, to the provisions
of Section 26 of the Loan Agreement; provided, further, that neither of the
---------- -------- -------
Sponsors nor AMD Saxonia shall have the right to transfer or assign its rights
under this Agreement without the prior written consent of the Agent and the
Security Agent; and provided, further, that AMD Saxonia may assign this
-------- -------
Agreement to the Security Agent as security for the obligations of AMD Saxonia
under the Loan Agreement and the other Operative Documents. Notwithstanding any
such assignment or transfer or any subsequent assignment or transfer thereof,
Senior Liabilities shall be and remain Senior Liabilities for the purposes of
this Agreement, and every immediate and successive assignee or transferee of any
of the Senior Liabilities or of any interest therein shall, to the extent of the
interest of such assignee or transferee in the Senior Liabilities, be entitled
to the benefits of this Agreement to the same extent as if such assignee or
transferee were the transferor, subject, however, to the provisions of Section
-------
11; provided, however, that, in addition to its rights under Section 11, unless
- -- ----------
the Security Agent (acting on the instructions of an Instructing Group) shall
otherwise consent in writing, the Security Agent shall have an unimpaired right,
prior and superior to that of any such assignee or transferee, to enforce this
Agreement for the benefit of the Secured Parties as to those of the Senior
Liabilities which have not been so assigned or transferred.
SECTION 17. Notice. All notices, demands, instructions, and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing and shall be personally delivered or sent by registered or certified
mail, postage pre-paid, return receipt requested, or by pre-paid telex, TWX, or
telegram, or by pre-paid courier service, or by telecopier, and shall be deemed
to be given for purposes of this Agreement on the day that such writing is
delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 17. Unless otherwise specified in a notice sent or
----------
delivered in accordance with the foregoing provisions of this Section 17,
----------
notices, demands, instructions, and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telex, TWX or telecopier numbers) indicated
below.
To the Security Agent:
Dresdner Bank AG, as Security Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
10
<PAGE>
To the Agent:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile No.: (1) (408)774 7399
To AMD Holding:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No.: (49) 351 8412 150
To AMD Saxonia:
AMD Saxony Manufacturing GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No.: (49) 351 8412 150
SECTION 18. Relationship to Other Agreements. The rights of the Agent and the
Security Agent pursuant to this Agreement are in addition to any other rights or
remedies which the Agent and the Security Agent may have under statutory law or
other agreements between one or more of the Agent, the Security Agent, the
Banks, the Sponsors, and AMD Saxonia. Where such rights and remedies are in
conflict with the provision of this Agreement, the provision of this Agreement
shall prevail.
11
<PAGE>
SECTION 19. Governing Law. This Agreement and all rights and obligations of the
parties arising hereunder or in connection herewith shall be governed by the
Laws of the Federal Republic of Germany.
SECTION 20. Jurisdiction. Each of the Sponsors and AMD Saxonia hereby submits to
the exclusive jurisdiction of the courts in Frankfurt am Main for any dispute
arising out of or in connection with this Agreement. AMD Inc. states that
Advanced Micro Devices GmbH, whose address is Rosenheimerstrasse 143b, 81671
Munich, Germany, Attention: Legal Department, Tel: +49 89 450 530, Fax: +49 89
406 490, Telex: 841523883, is its accredited agent for service of process and
hereby undertakes to maintain an agent for service in Germany. The foregoing
submission to jurisdiction shall not (and shall not be construed so as to) limit
the rights of the Agent or the Security Agent to take suits, actions, or
proceedings against a Sponsor to enforce any judgment rendered by the courts in
Frankfurt am Main in any other court or entity of competent jurisdiction where
such Sponsor has assets, nor shall the taking of suits, actions, or proceedings
to enforce any such judgment in one or more jurisdictions preclude the taking of
enforcement proceedings in any other jurisdiction, whether concurrently or not.
SECTION 21. Use of English Language. This Agreement has been executed in the
English language. All certificates, reports, notices, and other documents and
communications given or delivered pursuant to this Agreement shall be in the
English language and, if reasonably requested by the Agent, shall be accompanied
by a certified German translation promptly thereafter. In the event of any
inconsistency, the English language version of any such document shall control.
SECTION 22. Operative Document. This Agreement is an Operative Document executed
pursuant to the Loan Agreement.
IN WITNESS WHEREOF, each of the parties set out below has caused this Agreement
to be duly executed and delivered by its respective officer or agent thereunto
duly authorised as of the date first above written.
ADVANCED MICRO DEVICES, INC.
/s/ Marvin D. Burkett
By__________________________________________
Its_________________________________________
12
<PAGE>
AMD SAXONY HOLDING GMBH
/s/ Marvin D. Burkett
---------------------------------------------
AMD SAXONY MANUFACTURING GMBH
/s/ Jack L. Saltich
---------------------------------------------
DRESDNER BANK AG, as Agent and Security Agent
/s/ Dr. Hans-Jurgen Menzel /s/ Horst Oechsler
----------------------------------------------
13
<PAGE>
EXHIBIT 10.50(i)
==============================================================================
SPONSORS' GUARANTY
(GARANTIEVERTRAG)
DATED 11 MARCH 1997
BETWEEN
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY HOLDING GMBH,
AND
DRESDNER BANK AG
AS AGENT AND SECURITY AGENT
===============================================================================
<PAGE>
SPONSORS' GUARANTY (GARANTIEVERTRAG)
THIS SPONSORS' GUARANTY, dated 11 March 1997, is made by ADVANCED MICRO DEVICES,
INC., a corporation organised and existing under the laws of the State of
Delaware, United States of America, with its chief executive office and
principal place of business at One AMD Place, Sunnyvale, California 94088,
United States of America ("AMD Inc."), and AMD SAXONY HOLDING GMBH, Dresden,
-------
registered in the Commercial Register of the Dresden County Court HRB 13931
("AMD Holding"; and, together with AMD Inc., collectively, the "Sponsors"), in
- ------------- --------
favour of DRESDNER BANK AG ("Dresdner"), as Agent (in such capacity, the
--------
"Agent") for the Banks under the Loan Agreement referred to below and as
-----
Security Agent (in such capacity, the "Security Agent") for the Secured Parties
--------------
under such Loan Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, AMD Saxony Manufacturing GmbH, Dresden, registered in the Commercial
Register of the Dresden County Court HRB 13186 ("AMD Saxonia"), a wholly-owned
-----------
Subsidiary (such and other capitalised terms being used herein with the meanings
provided in Section 1.1) of AMD Holding, which is, in turn, a wholly-owned
-----------
Subsidiary of AMD Inc., has been formed for the purpose of constructing, owning,
and operating (i) the Plant and (ii) the integrated Design Center (the
construction, ownership, and operation of the Plant and the Design Center being
hereinafter called the "Project");
-------
WHEREAS, in order to finance the construction of the Plant and the Design
Center, and start-up costs of the operation of the Plant, (i) the Sponsors
expect to make substantial subordinated loans to, and AMD Holding expects to
make substantial equity investments in, AMD Saxonia, and (ii) AMD Saxonia has
entered into a Syndicated Loan Agreement, dated 11 March 1997 (the "Loan
----
Agreement"), with the banks from time to time party thereto (hereinafter
- ---------
collectively called the "Banks" and individually called a "Bank"), Dresdner, as
----- ----
Agent and Security Agent, and Dresdner Bank Luxembourg S.A., as Paying Agent (in
such capacity, the "Paying Agent"), providing, inter alia, for two separate
------------ ----------
senior secured term and standby facilities aggregating up to DM1,650,000,000
(one billion six hundred fifty million Deutsche Marks);
WHEREAS, the Sponsors desire that the Project be constructed and completed and
are executing and delivering this Guaranty in favour of the Agent and the
Security Agent for the benefit of the Banks and the Paying Agent (the Agent, the
Security Agent, the Banks and the Paying Agent hereinafter collectively called
the "Secured Parties" and individually called a "Secured Party"), for the
--------------- -------------
purpose, among other things, of providing (i) certain assurances with respect to
the completion of the Project, and (ii) certain undertakings to and for the
benefit of the Secured Parties;
WHEREAS, a condition precedent to the initial Advance is, inter alia, the
----------
execution by the Sponsors of this Guaranty, and, in extending credit to AMD
Saxonia under the Loan Agreement, the Banks are relying on the undertakings of
the Sponsors contained herein;
WHEREAS, the Sponsors have duly authorized the execution, delivery, and
performance of this Guaranty; and
1
<PAGE>
WHEREAS, it is in the best interests of the Sponsors to execute this Guaranty
inasmuch as the Sponsors will derive substantial benefits from the loans and
other financial accommodations made from time to time to AMD Saxonia by the
Banks pursuant to the Loan Agreement;
NOW, THEREFORE, in order to induce the Banks to make the loans and other
financial accommodations to AMD Saxonia pursuant to the Loan Agreement, the
Sponsors hereby agree, for the benefit of the Secured Parties, as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Definitions. Unless otherwise defined herein, terms used herein
-----------
have the meanings assigned to such terms in the Sponsors' Support Agreement. In
addition, the following terms (whether or not underlined) when used in this
Guaranty, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Agent" has the meaning assigned to such term in the introduction to this
----- ------------
Guaranty.
"AMD Holding" has the meaning assigned to such term in the introduction
----------- ------------
to this Guaranty.
"AMD Inc." has the meaning assigned to such term in the introduction to
------- ------------
this Guaranty.
"AMD Saxonia" has the meaning assigned to such term in the first recital
----------- -------------
of this Guaranty.
"Bank" and "Banks" have the respective meanings assigned to such term in
---- -----
the second recital of this Guaranty.
--------------
"Dresdner" has the meaning assigned to such term in the introduction to
-------- ------------
this Guaranty.
"Guaranty" means this Sponsors' Guaranty, as the same may at any time be
--------
amended or modified in accordance with the terms hereof and in effect. "Loan
Agreement" has the meaning assigned to such term in the second recital of this
Guaranty.
"Paying Agent" has the meaning assigned to that term in the second
------------ ------
recital of this Guaranty.
- -------
"Project" has the meaning assigned to such term in the first recital of
------- -------------
this Guaranty.
"Security Agent" has the meaning assigned to such term in the
--------------
introduction to this Guaranty.
- ------------
2
<PAGE>
"Secured Parties" and "Secured Party" have the respective meanings
--------------- -------------
assigned to such terms in the third recital of this Guaranty.
-------------
"Sponsors" has the meaning assigned to such term in the introduction to
-------- ------------
this Guaranty.
"Sponsors' Support Agreement" means the Sponsors' Support Agreement, of
---------------------------
even date herewith, between the Sponsors, the Agent, and the Security Agent, as
the same may at any time be amended or modified in accordance with the terms
thereof and in effect.
SECTION 1.2 Miscellaneous. In this Guaranty, unless the context requires
-------------
otherwise, (i) any reference to an Operative Document shall be to such Operative
Document as the same may have been or from time to time may be amended, varied,
re-issued, replaced, novated or supplemented, in each case, in accordance with
the terms thereof and hereof, and in effect; (ii) any statutory provision shall
be construed as references to those provision as amended, modified, re-enacted,
or replaced from time to time; (iii) words importing a gender include every
gender and; (iv) references to Sections are to Sections of this Guaranty.
Section headings are inserted for reference only and shall be ignored in
construing this Guaranty.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1 Guaranty. The Sponsors, jointly and severally, hereby absolutely,
--------
unconditionally, and irrevocably (all of the following guaranteed and
indemnified obligations referred in sub-clauses (a) and (b) below being
--- ---
collectively called the "Guaranteed Obligations")
----------------------
(a) guarantee the full and punctual payment when due, whether at stated
maturity, by required prepayment, declaration, acceleration,
demand, or otherwise, of all obligations of AMD Saxonia now or
hereafter existing under or arising out of the Loan Agreement,
whether for principal, interest, fees, expenses, or otherwise,
howsoever created, arising, or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing or
due or to become due (including in all cases all such amounts which
would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
(S)362(a), and the operation of Sections 502(b) and 506(b) of the
United States Bankruptcy Code, 11 U.S.C. (S)502(b) and (S)506(b)),
and
(b) indemnify and hold harmless each Secured Party for any and all
costs and expenses (including reasonable attorney's fees and
expenses) incurred by such Secured Party in enforcing any rights
under this Guaranty in accordance with the terms hereof;
3
<PAGE>
provided, however, that (i) the right of recovery against the Sponsors under
- -------- -------
this Guaranty is, however, limited to the amount of DM 217,500,000 (two hundred
seventeen million five hundred thousand Deutsche Marks), plus, to the extent
----
that any amount payable hereunder is not paid when due, interest on such amount
from the date due until paid, calculated at the same per annum rate of interest
as is from time to time applicable to the obligations guaranteed hereby, and
plus all costs and expenses referred to in sub-clause (b) of this Section 2.1,
- ---- ------------- -----------
and (ii) the Sponsors shall be released from liability under this Guaranty from
and upon their receipt of written notice from the Agent to the effect that
Completion has occurred. This Guaranty constitutes a guaranty of payment when
due and not of collection, and the Sponsors specifically agree that it shall not
be necessary or required that the Security Agent, the Agent, the Paying Agent,
or any Bank exercise any right, assert any claim, or demand or enforce any
remedy whatsoever against AMD Saxonia (or any other Person) before or as a
condition to the obligations of the Sponsors hereunder. For the avoidance of
doubt, the obligations of the Sponsors under this Guaranty constitute a primary
guaranty obligation (Garantievertrag) and not a surety guaranty obligation
(Burgschaft). The Sponsors shall pay the Guaranteed Obligations only upon first
written demand from the Agent following the occurrence of an Event of Default
and acceleration of the Advances under the Loan Agreement.
SECTION 2.2 EMU. European Economic and Monetary Union anticipate the
---
introduction of a single currency and the substitution of the national
currencies of Member States participating in Monetary Union. On the date on
which the Deutsche Mark is replaced by the single currency, conversion into such
currency shall take effect. The denomination of the original currency shall be
retained for so long as this is legally permissible. Conversions shall be based
on the officially fixed rate of conversion. Neither the introduction of the
single currency nor the substitution of the national currencies of the Member
States participating in European Monetary Union nor the fixing of the official
rate of conversion nor any economic consequences that arise from any of the
aforementioned events or in connection with European Monetary Union shall give
rise to any right to terminate prematurely, contest, cancel, rescind, modify,
or renegotiate this Guaranty or any of its provisions or to raise any other
objections and/or exceptions or to assert any claims for compensation. This
Guaranty shall continue in full force and effect in accordance with its terms.
SECTION 2.3 Guaranty Absolute. This Guaranty shall in all respects be a
-----------------
continuing, absolute, unconditional, and irrevocable guaranty of payment, and,
subject to the provisions of the proviso to Section 2.1 hereof, shall remain in
------- -----------
full force and effect until all Guaranteed Obligations have been paid in full,
all obligations of the Sponsors hereunder shall have been paid in full, and the
commitments of the Banks under and in connection with the Loan Agreement shall
have terminated. Subject to Section 2.1 above, the Sponsors jointly and
-----------
severally guarantee that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Loan Agreement under which they arise,
regardless of any law, regulation, or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Security Agent,
the Agent, or any Bank with respect thereto. The liability of the Sponsors
under this Guaranty shall be joint and several and shall be continuing,
absolute, unconditional, and irrevocable irrespective of:
(a) any lack of validity, legality, or enforceability of the Loan
Agreement or any other Operative Document;
4
<PAGE>
(b) the failure of the Security Agent, the Agent, the Paying Agent, or
any Bank
(i) to assert any claim or demand or to enforce any right or
remedy against AMD Saxonia or any other Person (including any
other guarantor) under or in connection with the provisions of
the Loan Agreement, any other Operative Document, or
otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Guaranteed Obligations;
(c) any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any
other extension, compromise, or renewal of any Guaranteed
Obligation;
(d) any reduction, limitation, impairment, or termination of any
Guaranteed Obligations for any reason, including any claim of
waiver, release, surrender, alteration, right of retention or
compromise, and shall not be subject to (and the Sponsors hereby
waive any right to or claim of) any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of
the invalidity, illegality, non-genuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Guaranteed Obligations;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Loan
Agreement or any other Operative Document;
(f) any addition, exchange, release, surrender, or non-perfection of
any collateral, or any amendment to or waiver or release or
addition of, or consent to departure from, any other guaranty, held
by the Security Agent, the Agent, the Paying Agent, or any Bank
securing any of the Guaranteed Obligations; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, AMD Saxonia, any surety (Burge),
or any guarantor.
SECTION 2.4 Reinstatement, etc. Each of the Sponsors agrees that, subject to
------------------
the provisions of the proviso to Section 2.1 hereof, this Guaranty shall
------- -----------
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Guaranteed Obligations is
rescinded or must otherwise be restored by any Secured Party, upon the
insolvency, bankruptcy, or reorganization of AMD Saxonia, or otherwise, as
though such payment had not been made.
SECTION 2.5 Waiver, etc. Each of the Sponsors hereby waives promptness,
-----------
diligence, notice of acceptance, and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Security
Agent, the Agent, the Paying Agent, or any Bank protect, secure, perfect, or
insure any security interest or lien, or any property subject thereto, or
exhaust any right or take any action against AMD Saxonia or any other Person
(including any other guarantor) or any collateral securing any Guaranteed
Obligations.
5
<PAGE>
Each of the Sponsors hereby further waives its right to deposit (Hinterlegung)
under (S) 372 of the German Civil Code.
SECTION 2.6 Subrogation, etc. Neither of the Sponsors will exercise any rights
----------------
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement, or otherwise, until the prior payment, in full and
in cash, of all Guaranteed Obligations. Any amount paid to either of the
Sponsors on account of any payment made hereunder prior to the payment in full
of all Guaranteed Obligations shall not be commingled with assets of the
relevant Sponsor and shall immediately be paid to the Security Agent and
credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Agreement; provided,
--------
however, that if
- -------
(a) either of the Sponsors has made payment to the Security Agent of
all or any part of the Guaranteed Obligations, and
(b) all Guaranteed Obligations have been paid in full and the
commitments of the Banks under or in connection with the Loan
Agreement to AMD Saxonia have been permanently terminated,
the Security Agent, the Agent, the Paying Agent, and each Bank agree that, at
the relevant Sponsor's request and expense, the Security Agent, the Paying
Agent, the Agent, or such Bank will execute and deliver to such Sponsor
appropriate documents (without recourse and without representation or warranty)
necessary to evidence the transfer by subrogation to such Sponsor of an interest
in the Guaranteed Obligations resulting from such payment by such Sponsor. In
furtherance of the foregoing, for so long as any Guaranteed Obligations or
commitments by the Banks under or in connection with the Loan Agreement to AMD
Saxonia remain outstanding, each of the Sponsors shall refrain from taking any
action or commencing any proceeding against AMD Saxonia (or its successors or
assigns, whether in connection with a bankruptcy proceeding, or otherwise) to
recover any amounts in respect of payments made under this Guaranty to the
Security Agent, the Agent, the Paying Agent, or any Bank.
SECTION 2.7 Successors, Transferees, and Assigns. This Guaranty shall:
------------------------------------
(a) be binding upon each of the Sponsors, and their respective
successors, transferees, and assigns; and
(b) inure to the benefit of and be enforceable by each Secured Party,
and each of their respective successors, transferees, and assigns.
Without limiting the generality of the foregoing clause (b), each Bank may
----------
assign or otherwise transfer (in whole or in part) the loans and financial
accommodations made by it to AMD Saxonia under the Loan Agreement to any other
Person, and such other Person, for purposes of this Guaranty, shall thereupon
become vested with all rights and benefits in respect thereof granted to the
transferring Bank under any Operative Document (including this Guaranty) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 26 of the Loan Agreement.
----------
6
<PAGE>
SECTION 2.8 Payments Free and Clear of Taxes, etc. Each of the Sponsors hereby
-------------------------------------
agrees that:
(a) All payments by such Sponsor hereunder shall be made to the
Security Agent at its principal office in Frankfurt am Main in Same
Day Funds, free and clear of and without deduction for any present
or future income, excise, stamp, or franchise taxes and other
taxes, fees, duties, withholdings, or other charges of any nature
whatsoever imposed by any taxing authority on such payments, but
excluding taxes imposed on or measured by any Secured Party's net
income or receipts or the net income or receipts of any branch
thereof (such non-excluded items being called "Taxes"). In the
-----
event that any withholding or deduction from any payment to be made
by either of the Sponsors hereunder is required in respect of any
Taxes pursuant to any applicable law, rule, or regulation, then
such Sponsor will, subject to Section 2.8(d),
--------------
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Security Agent an official receipt or
other documentation satisfactory to the Security Agent
evidencing such payment to such authority; and
(iii) pay to the Security Agent such additional amount or amounts
as is necessary to ensure that the net amount actually
received by the relevant Secured Party will equal the full
amount such Secured Party would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Security
Agent, the Agent, or any Bank with respect to any payment received
by the Security Agent hereunder, the Security Agent, the Agent, the
Paying Agent, or such Bank may pay such Taxes and the Sponsors will
promptly pay such additional amounts (including any penalties,
interest, or expense , but only (in the case of penalties or
interest) to the extent not resulting from a negligent or wilful
failure to pay any or all of such Taxes by the Security Agent, the
Agent, the Paying Agent or such Bank, as the case may be) as is
necessary in order that the net amount received by the Security
Agent, the Agent, the Paying Agent, or such Bank after the payment
of such Taxes (including any Taxes on such additional amount) shall
equal the amount the Security Agent, the Agent, the Paying Agent,
or such Bank would have received had no such Taxes been asserted.
(b) The additional amount or amounts that either Sponsor shall be
required to pay pursuant to clause (iii) of Section 2.8(a) shall be
------------ --------------
reduced, to the extent permitted by applicable law, by the amount
of the offsetting tax benefits, if any, as determined by the
relevant Secured Party in the exercise of its sole discretion,
which such Secured Party actually receives and utilises as a result
of such Sponsor's payment under clause (i) of Section 2.8(a) to the
---------- --------------
relevant authority (it being expressly understood and agreed that
such Secured Party shall be required to use commercially reasonable
efforts to claim or utilise any
7
<PAGE>
such benefit which may be available to it unless it believes in
good faith that to do so would be inconsistent with its internal
tax and other policies or if, in its good faith judgment, it would
be disadvantaged in any respect with respect to its tax position or
planning).
(c) Subject to the relevant Secured Party complying with Section 2.8(d)
--------------
below, if either of the Sponsors fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to the Security
Agent the required receipts or other required documentary evidence,
such Sponsor shall indemnify the Security Agent, the Agent, the
Paying Agent, and each Bank for any incremental Taxes, interest, or
penalties that may become payable by the Security Agent, the Agent,
the Paying Agent, or any Bank as a result of any such failure.
(d) Each Secured Party that is entitled to claim an exemption (either
on its own account or for the account of the relevant Sponsor) in
respect of all or a portion of any Taxes which are otherwise
required to be paid or deducted or withheld pursuant to this
Section 2.8 in respect of any payments made by a Sponsor hereunder
-----------
shall, within a reasonable time after receiving a written request
from such Sponsor, provide such Sponsor with such certificates as
may be appropriate in order to obtain the benefits of such
exemption.
(e) Without prejudice to the survival of any other agreement of the
Sponsors hereunder, the agreements and obligations of the Sponsors
contained in this Section 2.8 shall survive the payment in full of
-----------
the principal of and interest on the loans and other financial
accommodations made to AMD Saxonia under the Loan Agreement.
SECTION 2.9 Judgment. The Sponsors hereby agree that:
--------
(a) If, for the purposes of obtaining a judgment in any court, it is
necessary to convert a sum due hereunder in Deutsche Marks into
another currency, the rate of exchange used shall be that at which
in accordance with normal banking procedures the Security Agent
could purchase Deutsche Marks with such other currency on the
Business Day preceding that on which final judgment is given.
(b) The obligation of each of the Sponsors in respect of any sum due
from it to the Security Agent, the Agent, the Paying Agent, or any
Bank hereunder shall, notwithstanding any judgment in a currency
other than Deutsche Marks, be discharged only to the extent that on
the Business Day following receipt by the Security Agent, the
Agent, the Paying Agent, or such Bank, as the case may be, of any
sum adjudged to be so due in such other currency, the Security
Agent, the Agent, the Paying Agent, or such Bank, as the case may
be, may, in accordance with normal banking procedures, purchase
Deutsche Marks with such other currency; in the event that the
Deutsche Marks so purchased are less than the sum originally due to
the Security Agent, the Agent, the Paying Agent, or any Bank, in
Deutsche Marks, such Sponsor, as a separate obligation and
notwithstanding any such judgment, hereby indemnifies and holds
harmless the Security Agent, the Agent, the Paying Agent, and each
Bank
9
<PAGE>
against such loss, and if the Deutsche Marks so purchased exceed
the sum originally due to the Security Agent, the Agent, the Paying
Agent, or such Bank in Deutsche Marks, the Security Agent, the
Agent, the Paying Agent, or such Bank, as the case may be, shall
remit to the relevant Sponsor such excess.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.1 No Waiver; Modifications in Writing. In addition to, and not in
-----------------------------------
limitation of, Sections 2.3 and 2.5, no failure or delay on the part of the
------------ ---
Agent or the Security Agent in exercising any right, power, or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power, or remedy preclude any other or further exercise thereof
or the exercise of any other rights, power, or remedy. The remedies provided
for herein are cumulative and are not exclusive of any remedies that may be
available to the Agent or the Security Agent at law, in equity, or otherwise.
No amendment, modification, supplement, termination, or waiver of or to any
provision of this Guaranty, or consent to any departure by either Sponsor
therefrom, shall be effective unless the same shall be in writing and signed by
or on behalf of the Agent and the Security Agent. Any waiver of any provision
of this Guaranty, and any consent to any departure by either Sponsor from the
terms of any provision of this Guaranty, shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand
on either Sponsor in any case shall entitle such Sponsor to any other or further
notice or demand in similar or other circumstances.
SECTION 3.2 Severability of Provisions. Any provision of this Guaranty which
--------------------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. Each Sponsor shall have an obligation to replace any invalid
provision by a valid provision which approximates best the economic purpose of
the invalid provision.
SECTION 3.3 Termination. The obligations of the Sponsors hereunder shall
-----------
terminate on the earlier to occur of (i) the receipt by the Sponsors of written
notice from the Agent to the effect that Completion has occurred and (ii) the
day that AMD Saxonia has paid in full all obligations then owing, and all
obligations in respect of principal and interest, whether or not then owing,
under or arising out of the Loan Agreement and the Banks have no other or
further commitments under or arising out of the Loan Agreement.
SECTION 3.4 Binding on Successors, Transferees, and Assigns; Assignment of
-----------------------------------------------
Guaranty. In addition to, and not in limitation of, Section 2.7, this Guaranty
-----------
shall be binding upon the Sponsors and their respective successors, transferees,
and assigns, and shall inure to the benefit of the Security Agent, the Agent,
the Paying Agent, and each Bank, and their respective successors, transferees,
and assigns, and shall be enforceable by the Security Agent, for the benefit of
itself, the Agent, the Paying Agent, and each Bank and their respective
successors, transferees, and assigns (to the full extent provided pursuant to
Section 2.7), in each case subject to Section 26 of the Loan Agreement;
- ----------- ----------
provided, however, that neither Sponsor may assign any of its obligations
- -------- -------
hereunder without the prior written consent
9
<PAGE>
of the Security Agent. The rights of the Secured Parties hereunder shall be
exercisable solely by the Security Agent on behalf of the Secured Parties unless
either the Security Agent is not able pursuant to applicable law to realise the
practical benefits of such rights on behalf of the Secured Parties or the
limitation set forth in this sentence would otherwise materially adversely
affect the rights of the Secured Parties hereunder.
SECTION 3.5 Notice. All notices, demands, instructions, and other
------
communications required or permitted to be given to or made upon any of the
Persons listed below shall be in writing and shall be personally delivered or
sent by registered or certified mail, postage pre-paid, return receipt
requested, or by pre-paid telex, TWX, or telegram, or by pre-paid courier
service, or by telecopier, and shall be deemed to be given for purposes of this
Guaranty on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 3.5. Unless
-----------
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 3.5, notices, demands, instructions, and
-----------
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telex, TWX
or telecopier numbers) indicated below.
To the Security Agent:
Dresdner Bank AG, as Security Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351/489-1350
To the Agent:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351/489-1350
To AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile No.: (1) (408) 774 7399
10
<PAGE>
To AMD Holding:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No.: (49) 351 8412 150
SECTION 3.6 Relationship to Other Agreements. The rights of the Agent and the
--------------------------------
Security Agent pursuant to this Guaranty are in addition to any other rights or
remedies which the Agent and the Security Agent may have under statutory law or
other agreements between one or more of the Agent, the Security Agent,, the
Paying Agent the Banks, and the Sponsors. Where such rights and remedies are in
conflict with the provisions of this Guaranty, the provisions of this Guaranty
shall prevail.
SECTION 3.7 Setoff. In addition to, and not in limitation of, any rights of
------
the Security Agent, the Agent, or any Bank under applicable law, the Security
Agent, the Agent, the Paying Agent, and each Bank shall, upon the acceleration
of the Advances under the Loan Agreement following the occurrence any Event of
Default or upon the occurrence and during the continuance of any event with
respect to either Sponsor of the type described in Section 8.01(f) or (g) of the
--------------- ---
AMD Inc. 1996 Bank Credit Agreement, have the right to appropriate and apply to
the payment of the obligations of each of the Sponsors owing to it hereunder,
whether or not then due, and AMD Holding (but not AMD Inc.) hereby grants to the
Security Agent, the Agent, the Paying Agent, and each Bank a continuing security
interest (securing its obligations under this Guaranty) in, any and all of its
balances, credits, deposits, accounts, or moneys then or thereafter maintained
with the Security Agent, the Agent, the Paying Agent, or such Bank and any and
all property of every kind or description of or in the name of AMD Holding now
or hereafter, for any reason or purpose whatsoever, in the possession or control
of the Security Agent, the Agent, the Paying Agent, or such Bank, or any agent
or bailee for the Security Agent, the Agent, the Paying Agent, or such Bank.
SECTION 3.8 Governing Law; etc. This Guaranty and all rights and obligations
------------------
of the parties arising under or in connection herewith shall be governed by the
Laws of the Federal Republic of Germany.
SECTION 3.9 Jurisdiction. Each of the Sponsors hereby submits to the exclusive
------------
jurisdiction of the courts in Frankfurt am Main for any dispute arising out of
or in connection with this Guaranty. AMD Inc. states that Advanced Micro
Devices GmbH whose address is Rosenheimerstrasse 143b, 81671 Munich, Germany,
Attention: Legal Department, Tel.: +49 89 450 530, Fax: +49 89 406 490, Telex:
841523883, is its accredited agent for service of process and hereby undertakes
to maintain an agent for service in Germany. The foregoing submission to
jurisdiction shall not (and shall not be construed so as to) limit the rights of
the Agent or the Security Agent to take suits, actions, or proceedings against a
Sponsor to enforce any judgment rendered by the courts in Frankfurt am Main in
any other court or entity of
11
<PAGE>
competent jurisdiction where such Sponsor has assets, nor shall the taking of
suits, actions, or proceedings to enforce any such judgment in one or more
jurisdictions preclude the taking of enforcement proceedings in any other
jurisdiction, whether concurrently or not.
SECTION 3.10 Operative Document. This Guaranty is an Operative Document
------------------
executed pursuant to the Loan Agreement.
SECTION 3.11 Place of Performance and Payment. The place of performance and
--------------------------------
payment (Zahlungs-und Erfullungsort) under this Guaranty shall be Frankfurt am
Main.
SECTION 3.12 Use of English Language. This Guaranty has been executed in the
-----------------------
English language. All certificates, reports, notices, and other documents and
communications given or delivered pursuant to this Guaranty shall be in the
English language and, if reasonably requested by the Agent, a certified German
translation thereof shall be furnished promptly thereafter. In the event of any
inconsistency, the English language version of any such document shall control.
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
----------------------------------------
Its
---------------------------------------
AMD SAXONY HOLDING GMBH
/s/ Marvin D. Burkett
-------------------------------------------
DRESDNER BANK AG,
as Agent and Security Agent
/s/ Dr. Hans-Jurgen Menzel /s/ Horst Oechsler
----------------------------------------------
<PAGE>
EXHIBIT 10.50(j)
AMD HOLDING WAFER
PURCHASE AGREEMENT
between
ADVANCED MICRO DEVICES,
INC.
and
AMD SAXONY HOLDING GMBH
<PAGE>
TABLE OF CONTENTS
<TABLE>
ARTICLE I
<S> <C>
Interpretation
Section 1.01. Definitions
Section 1.02. Construction of Certain Terms.
ARTICLE II Supply of Products
Section 2.01. Sale of Products by AMD Holding to AMD Inc.
Section 2.02. Importation of Products
Section 2.03. Quality of the Products; Inspection and Rejection; Replacement
Product
ARTICLE III Payments and Delivery of Products
Section 3.01. Purchase Price of Products
Section 3.02. Certain Forecasts and Notices Relating to Quarterly Pricing;
Capacity
Section 3.03. Ordering Procedure
Section 3.04. Shipping Terms
Section 3.05. Payments; Set Off
Section 3.06. Method of Payment
Section 3.07. Product Warranty.
Section 3.08. Disclaimer.
Section 3.09. Limitation of Liability
Section 3.10. Annual Fee; Reimbursement of Certain Administrative
Costs of AMD Holding
ARTICLE IV Technical Assistance
Section 4.01. Provision to AMD Saxonia of Know-how, Advice, Technical Assistance, Expert
Support and Training and Access to Comparable Plants
Section 4.02. Charge for Technical Assistance
ARTICLE V Accounting Reports; Other Reports; Right of Inspection by or on Behalf of AMD Holding
Section 5.01. Annual Accounting Reports
Section 5.02. Periodic Written Report regarding AMD Inc.
Section 5.03. Accountants' Certification; Officer's Certificate
Section 5.04. Access to AMD Inc. Facilities
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI Effectiveness; Termination
Section 6.01. Effectiveness; Termination
Section 6.02. Rights Upon Termination
Section 6.03. Survival
ARTICLE VII Miscellaneous
Section 7.01. Representations and Warranties Generally
Section 7.02. Force Majeure
Section 7.03. Relationship of Parties
Section 7.04. Assignment
Section 7.05. Waivers
Section 7.06. Rights Cumulative
Section 7.07. Notices
Section 7.08. No Effect on Other Agreements
Section 7.09. Governing Law
Section 7.10. Dispute Resolution
Section 7.11. Consent to Jurisdiction and Forum; AMD Holding Appointment
of Agent for Service of Process
Section 7.12. Judgment Currency
Section 7.13. Language
Section 7.14. Entire Agreement
Section 7.15. Counterparts
Section 7.16. Amendments
Section 7.17. EMU
</TABLE>
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AMD HOLDING WAFER PURCHASE AGREEMENT
This AMD Holding Wafer Purchase Agreement (this "Agreement") dated as of 11
March, 1997 is between:
(1) Advanced Micro Devices, Inc., a corporation organized and existing under
the laws of the State of Delaware, United States of America, with its
principal place of business at One AMD Place, Sunnyvale, California 94088,
United States of America ("AMD Inc."); and
(2) AMD Saxony Holding GmbH, a Gesellschaft mit beschrankter Haftung organized
and existing under the laws of Germany and registered in Dresden, Germany
("AMD Holding").
RECITALS
WHEREAS, AMD Saxony Manufacturing GmbH, a Gesellschaft mit beschrankter
Haftung organized and existing under the laws of Germany and registered in
Dresden, Germany ("AMD Saxonia"), is a wholly-owned Subsidiary (such and other
capitalized terms not otherwise defined herein having the meaning assigned
thereto in Section 1.01) of AMD Holding, which in turn is a wholly-owned
Subsidiary of AMD Inc.;
WHEREAS, AMD Inc., AMD Holding and AMD Saxonia are currently involved in
the initial planning stages of a project pursuant to which AMD Saxonia will
construct, own and operate inter alia the Plant to be located in or near
Dresden, Germany to manufacture Wafers using high-volume semiconductor wafer
fabrication processes;
WHEREAS, concurrently herewith, AMD Holding and AMD Saxonia are entering
into the AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the "AMD Saxonia Wafer Purchase
Agreement") pursuant to which AMD Holding is obtaining the exclusive right to
purchase Wafers from AMD Saxonia, and AMD Saxonia is agreeing, on such exclusive
basis, to manufacture and sell Wafers to AMD Holding, in each case on the terms
and conditions of the AMD Saxonia Wafer Purchase Agreement;
WHEREAS, on the terms and conditions of this Agreement, including the
payment terms of Article III, AMD Inc. wishes the exclusive right to purchase
such Wafers from AMD Holding as are purchased by AMD Holding from AMD Saxonia
pursuant to the AMD Saxonia Wafer Purchase Agreement, and AMD Holding is
willing, on such exclusive basis, to sell such Wafers to AMD Inc.;
WHEREAS, concurrently herewith (i) AMD Inc. and AMD Holding are entering
into the AMD Holding Research Agreement, (ii) AMD Inc., AMD Holding and AMD
Saxonia are entering into the License Agreement and the amendment and
restatement
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of the Management Service Agreement and (iii) AMD Holding and AMD Saxonia are
entering into the AMD Saxonia Research Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Interpretation
Section 1.01. Definitions. Capitalized terms used and not otherwise defined
herein shall have the respective meanings assigned to them in the AMD Saxonia
Wafer Purchase Agreement.
Section 1.02 Construction of Certain Terms.
(a) Unless otherwise specifically provided, (i) references to the singular
shall include the plural and vice versa, and references by way of masculine
pronoun or adjective shall include references by way of the feminine; (ii)
references to Articles, Sections and Subsections shall be to Articles, Sections
and Subsections of this Agreement; (iii) accounting terms are to be construed in
accordance with German GAAP; (iv) all references to money, costs and payments in
this Agreement are to money, costs and payments in DM; and (v) references to
days in this Agreement shall be to calendar days.
(b) The index to and headings in this Agreement are inserted for
convenience only and are to be ignored in construing this Agreement.
ARTICLE II
Supply of Products
Section 2.01. Sale of Products by AMD Holding to AMD Inc.
(a) AMD Holding hereby agrees to sell to AMD Inc., and AMD Inc. hereby
agrees to purchase from AMD Holding, in accordance with the terms of this
Agreement, 100% of such Products as are manufactured by AMD Saxonia and sold to
AMD Holding in accordance with the AMD Saxonia Wafer Purchase Agreement. AMD
Holding further agrees that, during the term of this Agreement, unless AMD Inc.
and, prior to the Loan Agreement Termination Date, the Agent, otherwise consent
thereto,
(i) it shall not under any circumstances, directly or indirectly, (i)
market, distribute or sell any Products or any other goods or services to
any Person other than AMD Inc. or one or more of AMD Inc.'s Subsidiaries
and Affiliates, (ii) order
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Products from AMD Saxonia under the AMD Saxonia Wafer Purchase Agreement
unless ordered by AMD Inc. hereunder, (iii) amend, supplement or otherwise
modify the AMD Saxonia Wafer Purchase Agreement, or (iv) engage in any
activities other than (v) the investment in equity of AMD Saxonia, (w) the
making of loans and provision of other financial support to AMD Saxonia,
(x) the purchase and sale of Products as contemplated hereby, (y) the
provision of research, design and development services as contemplated by
the AMD Holding Research Agreement and (z) activities reasonably incidental
to any of the foregoing; and
(ii) it shall cause AMD Saxonia to comply with AMD Saxonia's
obligations under the AMD Saxonia Wafer Purchase Agreement except to the
extent inconsistent with the terms of the Sponsors' Subordination Agreement
(as defined in the Loan Agreement).
(b) On the terms and subject to the conditions of this Agreement, AMD Inc.
hereby agrees to purchase from AMD Holding and pay for the Products Onshipped
(as defined below) to it pursuant to the terms of this Agreement. For purposes
of this Agreement, "Onshipped" means Products delivered by or on behalf of AMD
Holding F.O.B. Dresden, Germany pursuant to Section 3.04 pursuant to one or more
purchase orders placed by AMD Inc. and accepted by AMD Holding in accordance
with this Agreement. For purposes of this definition, all Products Shipped by
AMD Saxonia to AMD Holding under the AMD Saxonia Wafer Purchase Agreement shall
be deemed to be delivered by AMD Holding under this Agreement.
(c) AMD Inc. hereby agrees to provide, on behalf of AMD Holding, such
technical assistance and to make such disclosures to AMD Saxonia at such times
and to the extent required to be provided or made by AMD Holding, or required to
be arranged by AMD Holding to be provided or made, pursuant to Section 2.01(c)
of the AMD Saxonia Wafer Purchase Agreement.
(d) Section 2.01(d) of the AMD Saxonia Wafer Purchase Agreement
contemplates delivery to AMD Holding of pre-production samples of Products under
the circumstances contemplated thereby. AMD Holding shall submit such samples to
AMD Inc. for approval under this Agreement within one Business Day of its
receipt of such samples from AMD Saxonia pursuant to such Section 2.01(d). AMD
Inc. shall communicate its approval or disapproval of any such samples no later
than 10 days after such samples are submitted to AMD Holding by AMD Saxonia for
such approval (and shall be deemed to have approved such samples under this
Section 2.01(d) if it has not communicated any such disapproval within such 10
day period). Approval shall not be unreasonably withheld by AMD Inc. and, once
given, shall constitute irrevocable confirmation that the Products manufactured
in conformity with the samples (or differing only within normal silicon computer
chip industry limits) will comply with the Specifications and will meet the
requirements of quality specified in Section 2.03, except in respect of defects
in such samples or future production which are not capable of being revealed on
reasonable inspection by AMD Inc.
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(e) AMD Holding with AMD Inc.'s approval shall nominate one or more senior
managers of AMD Inc. to act as its representative for liaising with AMD Saxonia,
pursuant to Section 2.01(e) of the AMD Saxonia Wafer Purchase Agreement, in
connection with the manufacture and development of Products by AMD Saxonia.
Section 2.02. Importation of Products. AMD Inc. shall be responsible, at
its own cost and expense, for obtaining any and all consents, authorizations,
permits or approvals in connection with the import of Products hereunder into
any territory outside Germany.
Section 2.03. Quality of the Products; Inspection and Rejection;
Replacement Product. Without prejudice to AMD Inc.'s obligation to make payment
for Products Onshipped pursuant to Section 3.05:
(a) AMD Holding shall use, and shall cause AMD Saxonia to use, all
reasonable efforts to ensure that each Product Onshipped meets the
Specifications for that Product. In order to assist AMD Holding in such efforts
and for the purpose of assuring to AMD Inc. the quality of the Products required
under this Agreement, AMD Holding shall permit the duly authorized
representatives of AMD Inc., at any time during normal working hours and on
reasonable notice, to inspect any premises of AMD Holding, and shall use all
reasonable efforts to permit such representatives, at such time and on such
notice, to inspect any premises of any third party where any of the Products, or
any labeling or packaging for them, are stored by or for AMD Holding. In
addition, AMD Holding shall cause AMD Saxonia to permit the duly authorized
representatives of AMD Inc., at any time during normal working hours and on
reasonable notice, to inspect any premises of AMD Saxonia, and shall cause AMD
Saxonia to use all reasonable efforts to permit such representatives, at such
time and on such notice, to inspect any premises of any third party where any of
the Products, or any labeling or packaging for them, are manufactured or stored
by or for AMD Saxonia.
(b) AMD Inc. shall promptly notify AMD Holding and AMD Saxonia in writing
should the quality of the Products Onshipped vary materially from the typical
quality of the four previous shipments or, in the case of the first four
shipments, from the quality of the previous shipments. In such event, AMD
Holding shall use, and shall cause AMD Saxonia to use, its reasonable commercial
efforts to restore the quality of the Products delivered hereunder to again meet
such typical quality as soon as possible.
ARTICLE III
Payments and Delivery of Products
Section 3.01 Purchase Price of Products.
(a) AMD Inc. shall pay to AMD Holding the relevant Actual Selling Price Per
Wafer for each Product Onshipped by AMD Holding and, to the extent paid by AMD
Saxonia and/or AMD Holding, the costs and expenses for freight and insurances
(including such costs and expenses in respect of delivery from AMD Saxonia to
AMD Holding). In
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addition, and without duplication, AMD Inc. agrees to make payments from time to
time to AMD Holding in amounts equal to (and on the same basis as) all other
amounts (but without duplication of amounts compensated to AMD Holding under
Section 6.02 or any other provision hereof) due from AMD Holding to AMD Saxonia
under the AMD Saxonia Wafer Purchase Agreement, including without limitation the
following:
(i) payment of the Price Adjustment Amount when and to the extent
required to be paid by AMD Holding under Section 3.03 of the AMD Saxonia
Wafer Purchase Agreement;
(ii) payment of Excess Start-Up Costs when and to the extent required
to be paid by AMD Holding under Section 3.04 of the AMD Saxonia Wafer
Purchase Agreement;
(iii) payment of the Advance Payment Adjustment Amount when and to the
extent required to be paid by AMD Holding under Section 3.05 of the AMD
Saxonia Wafer Purchase Agreement;
(iv) payment of the Fixed Cost Compensation Amount when and to the
extent required to be paid by AMD Holding under Section 3.06 of the AMD
Saxonia Wafer Purchase Agreement; and
(v) payment of the Pari Passu Compensation Amount when and to the
extent required to be paid by AMD Holding under Section 3.12 of the AMD
Saxonia Wafer Purchase Agreement.
(b) AMD Inc. may offset against amounts it owes or will owe to AMD Holding
under this Agreement the same amount as is required to be credited from time to
time by AMD Saxonia to AMD Holding under the AMD Saxonia Wafer Purchase
Agreement.
(c) Without limiting Sections 2.01(a) and (b), AMD Holding agrees that it
will neither Onship any Product to AMD Inc. for an amount in excess of the
purchase price paid by AMD Holding to AMD Saxonia (or credited to AMD Holding by
AMD Saxonia) for such Product, nor bill AMD Inc. for research and development
services in an amount in excess of the amount paid by AMD Holding to AMD Saxonia
(or credited to AMD Holding by AMD Saxonia) for such research and development
services.
Section 3.02. Certain Forecasts and Notices Relating to Quarterly Pricing;
Capacity.
(a) AMD Holding shall deliver to AMD Inc. copies of each estimate and
forecast required to be delivered to AMD Holding by AMD Saxonia pursuant to
Section 3.02 of the AMD Saxonia Wafer Purchase Agreement as soon as practicable
after AMD Holding receives the relevant estimate or forecast. To the extent any
such estimate or forecast must be reasonably acceptable to AMD Holding, AMD
Holding agrees to consult with AMD Inc., and
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<PAGE>
shall consider AMD Inc.'s views in determining whether such estimate or forecast
is reasonably acceptable to AMD Holding.
(b) Not later than ten (10) days before the commencement of each Period,
AMD Inc. shall prepare and deliver to AMD Holding (with a copy to AMD Saxonia
and, if prior to the Loan Agreement Termination Date, the Agent) a written
forecast, showing in reasonable detail AMD Inc.'s good faith and reasonable
estimate of the volume of each Product that AMD Inc. anticipates ordering from
AMD Holding in accordance with the terms of this Agreement for delivery during
the course of the Period, provided that such estimate shall be not less than 1
for any Period commencing on or after the Completion Date. AMD Holding shall
adopt such estimate in the Requirements Forecast required to be delivered by it
pursuant to Section 3.02(a)(ii) of the AMD Saxonia Wafer Purchase Agreement.
(c) Whenever AMD Holding is required under the terms of the AMD Saxonia
Wafer Purchase Agreement to make a determination of the Capacity of a Wafer
Fabrication Plant, AMD Holding shall request that AMD Inc. determine such
Capacity, and AMD Inc. promptly shall determine such Capacity in good faith and
inform AMD Holding thereof. AMD Holding shall adopt such determination for
purposes of the AMD Saxonia Wafer Purchase Agreement unless it cannot reasonably
do so. In the event Section 7.10(k) of the AMD Saxonia Wafer Purchase Agreement
applies to a dispute over the determination of Capacity under the AMD Saxonia
Wafer Purchase Agreement, AMD Holding shall consult with AMD Inc. and use all
reasonable efforts to cause a technical consultant acceptable to AMD Inc. to be
appointed pursuant to such Section.
Section 3.03. Ordering Procedure.
(a) AMD Inc. shall place with AMD Holding written orders (with copies to
AMD Saxonia) for Products, to be Onshipped during a Fiscal Quarter, at least 7
days prior to the beginning of such Fiscal Quarter and shall specify the volume
of Products ordered, the Actual Selling Price Per Wafer, the desired
destination, a reasonable shipment date and any other relevant shipping terms
for the Products covered by each such order. AMD Holding shall use its best
efforts to advise AMD Inc. in advance of any inability to make full and timely
delivery of any Products ordered by AMD Inc. AMD Inc. shall take delivery of,
and be solely responsible for the disposition of, any Product with respect to
any order which it has placed with AMD Holding.
(b) AMD Inc. may change the destination of any order prior to the Product
shipment date. AMD Holding shall use its best efforts to Onship each order of
Products on the shipment date requested and to the destination specified by AMD
Inc., unless AMD Inc. gives notice to AMD Holding of a different destination for
such order in accordance with this Section 3.03, in which event AMD Holding
shall use its best efforts to Onship such order of Products to the revised
destination, if any.
Section 3.04. Shipping Terms. AMD Holding shall deliver the Products
purchased hereunder F.O.B. Dresden, Germany. AMD Inc. will arrange and be
responsible for and pay all freight, trucking, insurance and other charges
incurred in connection with the shipment of the Products from Dresden, Germany,
to such place or places of delivery as specified by AMD Inc. pursuant to Section
3.03.
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Section 3.05. Payments; Set Off.
(a) AMD Inc. shall pay to AMD Holding the relevant Actual Selling Price Per
Wafer for each Product Onshipped by AMD Holding and, to the extent paid by AMD
Holding and/or AMD Saxonia, the costs and expenses for freight and insurances,
unconditionally before the date on which AMD Holding is required to pay to AMD
Saxonia the corresponding Actual Selling Price Per Wafer for the relevant
Product Shipped by AMD Saxonia pursuant to Section 3.10 of the AMD Saxonia Wafer
Purchase Agreement (provided AMD Holding or AMD Saxonia gives AMD Inc.
reasonable advance notice of such date) but in no event later than 30 days after
receipt of invoices denominated in DM from AMD Holding in accordance with this
Section 3.05. AMD Holding shall be entitled to issue invoices to AMD Inc. as
soon as the relevant Products are Onshipped as provided in Section 3.04 above.
(b) Payment for all other amounts due hereunder from either party
(including any adjustment amount as set forth in Section 3.01 hereof) shall be
unconditionally due on or before the date specified in the AMD Saxonia Wafer
Purchase Agreement for the corresponding such amount. AMD Holding agrees that it
shall, as soon as practicable and in any event prior to the relevant due date
for any such payment, deliver to AMD Inc. any certification, invoice or notice
from AMD Saxonia to AMD Holding which, pursuant to the terms of the AMD Saxonia
Wafer Purchase Agreement, is to be delivered by AMD Saxonia to AMD Holding prior
to the relevant due date for payment of any amount under the AMD Saxonia Wafer
Purchase Agreement.
(c) All amounts under this Agreement not paid when due from AMD Inc. shall
bear interest at the rate of 7.0% per annum from the date due until paid,
calculated on the basis of actual days and months elapsed. Such interest shall
be due and payable at the end of each calendar month. In no event shall the
interest charged exceed the maximum amount permitted under law.
(d) The obligations of AMD Inc. under this Agreement are intended by the
parties to be absolute and unconditional under any and all circumstances except
to the extent expressly stated in this Agreement, and are intended to be
independent of the rights and obligations of AMD Holding and AMD Inc. or any of
their Affiliates or of any third party under this Agreement or any other
agreement or arrangement in each case except as expressly stated in this
Agreement.
(e) The parties hereto hereby expressly acknowledge, agree, and understand
that the payment by AMD Inc. of all amounts payable by it hereunder as required
by this Agreement shall in no way be prevented, delayed, or otherwise affected
as a result of any dispute between the parties (or between any of the parties
and their Affiliates) or by any breach of this Agreement or any other agreement
entered into in connection herewith and/or any adverse change in the financial
or economic condition of AMD Holding or any Affiliate thereof, including without
limitation AMD Holding's or any such Affiliate's liquidation or bankruptcy, or
any kind of insolvency proceeding in respect thereof.
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(f) Except as otherwise expressly provided herein and in that certain
Management Service Agreement entered into concurrently herewith (a copy of which
is attached as Exhibit VII to the AMD Saxonia Wafer Purchase Agreement), no
obligations of AMD Inc. under this Agreement shall be subject to any
counterclaim, set-off, deduction, withholding, or defense based upon (and
without prejudice to) any claim that AMD Inc. may have against AMD Holding, any
of its Affiliates, or any other Person, or released, discharged, or in any way
affected for any reason or through any circumstances whatsoever (other than as
required by any mandatory non-waivable requirements of law) including, without
limitation, (i) any breach of any representation or warranty on the part of AMD
Holding under or in connection with this Agreement or any other agreement
entered into in connection herewith or any failure of AMD Holding to perform any
of its agreements, covenants, or other obligations hereunder or thereunder, or
(ii) any other circumstance which might constitute a legal or equitable
discharge or defense of AMD Inc.; provided that, as between AMD Inc. and AMD
Holding (and (x) notwithstanding any other provision hereof, and (y) without
prejudice to any rights of subrogation that may arise), payment or performance
by AMD Inc. or any other Person of any obligation of AMD Holding under the AMD
Saxonia Wafer Purchase Agreement (including without limitation pursuant to the
AMD Inc. Guaranty (as defined in the Sponsors' Support Agreement)) shall
constitute payment or performance (as applicable) of the corresponding such
obligation of AMD Inc. hereunder.
(g) Any amounts that are due from AMD Holding to AMD Inc. hereunder shall
be payable only in the form of credit against amounts owed or to be owed by AMD
Inc. to AMD Holding under this Agreement, except to the extent expressly
provided in Section 4.02. Any amount that is due from AMD Inc. to AMD Holding
hereunder may be set-off against any payment then due (whether as a credit or
otherwise) hereunder or under the Management Service Agreement from AMD Holding
to AMD Inc.
Section 3.06. Method of Payment. Payments under this Agreement from AMD
Inc. to AMD Holding, if made other than by set-off permitted by Section 3.05,
shall be made by wire transfer deposited into account no. [*] or such other
account specified by AMD Holding with the prior written consent of the Agent (a
copy of which consent shall be delivered by AMD Holding to AMD Inc.) with not
less than 15 days written notice to AMD Inc., and all such payments shall be
made in DM.
Section 3.07. Product Warranty. Subject to Section 3.08, AMD Holding
represents and warrants that all Products sold to AMD Inc. pursuant to this
Agreement shall conform in all material respects to the Specifications for such
Products and, if expressly agreed by AMD Holding in writing in advance, to any
specific changes thereto contained in a specific purchase order.
Section 3.08. Disclaimer. THE WARRANTY CONTAINED IN SECTION 3.07 IS THE
SOLE AND EXCLUSIVE WARRANTY AS TO THE PRODUCTS AND IS EXPRESSLY IN LIEU OF ANY
EXPRESS OR IMPLIED WARRANTIES, IN FACT OR IN LAW, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY SIMILAR
WARRANTIES IMPLIED BY APPLICABLE LAW. REPAIR OR
11
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
REPLACEMENT OF DEFECTIVE PRODUCTS SHALL BE AMD INC.'S EXCLUSIVE REMEDY WITH
RESPECT TO DEFECTIVE PRODUCTS. AMD HOLDING ASSUMES NO LIABILITY IN TORT OR
STRICT LIABILITY, NOR SHALL AMD HOLDING BE LIABLE TO AMD INC. OR ANY SUBSIDIARY
OR AFFILIATE THEREOF FOR LOSS OF USE OF PRODUCTS OR ANY OTHER INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED BY AMD INC. OR ANY SUBSIDIARY OR
AFFILIATE THEREOF. IN NO EVENT SHALL THE LIABILITY OF AMD HOLDING ARISING IN
CONNECTION WITH ANY PRODUCTS SOLD HEREUNDER EXCEED THE ACTUAL AMOUNT PAID BY AMD
INC. TO AMD HOLDING FOR PRODUCTS INVOLVED IN SUCH CLAIM.
Section 3.09. Limitation of Liability. In furtherance of the parties'
selection of California law to govern this Agreement, the parties hereby
expressly exclude rescission (Wandlung) and price reduction (Minderung) as
remedies for defective Products and agree that in no event shall German Civil
Code Paragraph 462 be applicable. To the extent permissible under applicable
law, AMD Holding assumes no liability in tort or strict liability, nor shall AMD
Holding be liable to AMD Inc. or any AMD Inc. Affiliate for loss of use of
Products or any other incidental, special, indirect or consequential damages or
lost profits incurred by AMD Inc. or an AMD Inc. Affiliate. Without prejudice to
Section 3.08, in no event shall the liability of AMD Holding arising in
connection with any Products sold hereunder exceed the actual amount paid by AMD
Inc. to AMD Holding for Products involved in such claim.
Section 3.10. Annual Fee; Reimbursement of Certain Administrative Costs of
AMD Holding.
(a) AMD Inc. agrees to pay AMD Holding an annual fee, no later than 30 days
after the end of the relevant Fiscal Year, of (i) DM 250,000 for the Fiscal Year
ending December 1997, and (ii) DM 500,000 for each Fiscal Year thereafter during
the term of this Agreement (which fee shall be pro-rated for any part of a
Fiscal Year other than the Fiscal Year ending December 1997), as compensation to
AMD Holding for undertaking any obligations under the Operative Documents (as
defined in the Sponsors' Support Agreement) that benefit AMD Inc.
(b) AMD Inc. agrees to compensate AMD Holding for any administrative costs,
including without limitation bookkeeping, legal and accounting costs and amounts
payable by AMD Holding to AMD Saxonia pursuant to Section 3.07 of the AMD
Saxonia Wafer Purchase Agreement, incurred by AMD Holding in connection with
this Agreement, the AMD Saxonia Wafer Purchase Agreement and the Research
Agreements, plus a surcharge on such costs of 7.5%. All amounts payable by AMD
Inc. under this Section 3.10(b) shall be payable in arrears no later than 30
days after the end of each Fiscal Year.
ARTICLE IV
Technical Assistance
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Section 4.01. Provision to AMD Saxonia of Know-how, Advice, Technical
Assistance, Expert Support and Training and Access to Comparable Plants. AMD
Inc. hereby agrees to (i) provide, on behalf of AMD Holding, AMD Saxonia with
such technical assistance, advice, expert support, Intellectual Property,
Technical Documentation, copies, technical discussions, lectures, guidance and
technical and other training, (ii) make such disclosures and notifications to
AMD Saxonia, (iii) permit AMD Saxonia to make such copies and (iv) permit AMD
Saxonia to send employees of AMD Saxonia to visit AMD Inc.'s Wafer Fabrication
Plants, in each case to the extent and in the manner required to be provided,
made or permitted, or required to be arranged to be provided, made or permitted,
by AMD Holding and/or AMD Inc. under Article IV of the AMD Saxonia Wafer
Purchase Agreement. To the extent any such requirement is contingent on AMD
Saxonia making a request to AMD Holding, AMD Holding shall inform AMD Inc. of
each such request (including all relevant details) as soon as practicable after
such request is made by AMD Saxonia to AMD Holding.
Section 4.02. Charge for Technical Assistance.
(a) As compensation in full for the performance of the services
contemplated under this Article IV, AMD Holding shall reimburse AMD Inc. for (i)
all reasonable out-of-pocket expenses incurred by AMD Inc. in connection with
providing such services, plus (ii) the reasonable salaries and other
remuneration of the relevant personnel involved, in each case to the extent not
reimbursed by AMD Saxonia directly to AMD Inc. In this regard, AMD Inc. shall
issue quarterly invoices to AMD Holding itemizing in detail the basis for each
invoiced amount. Prior to the Effective Date, all such invoiced amounts shall,
notwithstanding Section 3.05, be paid by AMD Holding within thirty-five (35)
days of its receipt of the respective invoice. Payments shall be made in DM by
wire transfer. From and after the Effective Date, payments shall be made only in
the form of credits against amounts owed or to be owed by AMD Inc. to AMD
Holding under this Agreement.
(b) The parties agree that any invoiced amounts to be paid or credited by
AMD Holding under this Section 4.02 shall not duplicate amounts charged for
services provided by AMD Inc. to AMD Saxonia pursuant to the Management Service
Agreement.
(c) The foregoing notwithstanding, (i) in no event shall the aggregate
amounts to be paid to AMD Inc. under this Section 4.02 and under the Management
Service Agreement prior to the Effective Date exceed DM 135,000,000 (One Hundred
Thirty-Five Million Deutsche Marks), and (ii) the parties agree that any
Intellectual Property provided in any form to AMD Saxonia or to AMD Holding for
the benefit of AMD Saxonia for its use hereunder is provided at no charge.
ARTICLE V
Accounting Reports; Other Reports;
Right of Inspection by or on Behalf of AMD Holding
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Section 5.01. Annual Accounting Reports.
(a) AMD Inc. and its duly authorized representatives and, if the Loan
Agreement Termination Date has not yet taken place, the Agent shall at all
reasonable times have access to the books and accounts kept by AMD Holding and
annually upon the closing of the Fiscal Year all such books and accounts shall
be audited by Ernst & Young GmbH or such other firm of independent and
internationally known public accountants as may be selected by AMD Holding with
the approval of AMD Inc. and, if the Loan Agreement Termination Date has not yet
taken place, the Agent (the consent of the Agent not to be unreasonably
withheld). A copy of each such report of audit, together with a reconciliation
of AMD Holding's fiscal year figures to the statutory financial statements of
AMD Holding, shall be sent promptly to AMD Inc. and, prior to the Loan Agreement
Termination Date, the Agent. AMD Inc. and its duly authorized representatives
shall also have the right to examine and inspect at any reasonable time all
properties and operations of AMD Holding to which this Agreement relates.
(b) AMD Holding shall (i) cause AMD Saxonia to give AMD Inc. at all
reasonable times access to the books and accounts kept by AMD Saxonia and (ii)
cause all such books and accounts to be audited annually upon the closing of the
Fiscal Year by Ernst & Young GmbH or such other firm of independent and
internationally known public accountants as may be selected by AMD Saxonia with
the approval of AMD Inc. and, if the Loan Agreement Termination Date has not yet
taken place, the Agent (the consent of the Agent not to be unreasonably
withheld). A copy of each such report of audit, together with a reconciliation
of AMD Saxonia's fiscal year figures to the statutory financial statements of
AMD Saxonia, shall be sent promptly to AMD Inc. and, prior to the Loan Agreement
Termination Date, the Agent by or on behalf of AMD Holding. AMD Holding shall
cause AMD Saxonia to permit AMD Inc. and its duly authorized representatives to
examine and inspect at any reasonable time all properties and operations of AMD
Saxonia to which the AMD Saxonia Wafer Purchase Agreement relates.
Section 5.02. Periodic Written Report regarding AMD Inc. AMD Inc. shall
prepare and deliver to AMD Holding and AMD Saxonia and, if the Loan Agreement
Termination Date has not yet taken place, the Agent not later than 30 days after
the end of each Period commencing on or after the Effective Date a written
report in form and substance reasonably satisfactory to the Agent and AMD
Saxonia discussing in reasonable detail AMD Inc.'s production volumes of all
Comparable Products and AMD Inc.'s purchase volumes of Comparable Products
produced by third parties and the Capacity as well as Capacity Utilization
levels of other AMD Inc. Wafer Fabrication Plants producing Comparable Products
and, to the extent relevant to this Agreement, other information that AMD
Saxonia and/or, if the Loan Agreement Termination Date has not yet taken place,
the Agent may reasonably request in connection with this Agreement.
Section 5.03. Accountants' Certification; Officer's Certificate. AMD
Holding shall, as soon as practicable after its receipt of the same, deliver to
AMD Inc. a copy of each certificate delivered by or on behalf of AMD Saxonia to
AMD Holding pursuant to Section 5.03 of the AMD Saxonia Wafer Purchase
Agreement.
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Section 5.04. Access to AMD Inc. Facilities. If the Loan Agreement
Termination Date has not yet taken place, AMD Inc. shall give reasonable access
upon reasonable notice, to any Person duly designated by the Agent, to any of
AMD Inc.'s Wafer Fabrication Plants and other AMD Inc. manufacturing or research
facilities and all books, records, facilities and information the Agent may
reasonably require for purposes of this Agreement.
ARTICLE VI
Effectiveness; Termination
Section 6.01. Effectiveness; Termination.
(a) This Agreement shall become effective on the date hereof and (unless
otherwise extended as hereinafter provided) shall terminate on the date (the
"Initial Termination Date") which is the earlier of (i) the Loan Agreement
Termination Date and (ii) the Termination Date (as defined below). At the option
of AMD Holding, exercised by giving notice to AMD Inc. at least six months prior
to the Loan Agreement Termination Date, and provided that no Termination Event
has occurred and is continuing and the AMD Saxonia Wafer Purchase Agreement is
extended for the same period, this Agreement may be extended for one additional
three year term. At the option of AMD Inc., exercised by giving notice to AMD
Holding, at least six months prior to the Loan Agreement Termination Date, and
provided that no Termination Event has occurred and is continuing and the AMD
Saxonia Wafer Purchase Agreement is extended for the same period (and AMD
Holding shall use its best efforts to effect such extension under the terms of
the AMD Saxonia Wafer Purchase Agreement following its receipt of such notice),
the initial term of this Agreement may be extended for one additional three year
term (to the extent not previously extended by AMD Holding pursuant to the
preceding sentence).
(b) Each of the events described in this Section 6.01(b), whether or not
such events directly or indirectly affect AMD Inc. or AMD Holding, shall
constitute a Termination Event. If such a Termination Event has occurred and is
continuing, AMD Holding (or, if prior to the Loan Agreement Termination Date,
the Security Agent on behalf of AMD Holding pursuant to and in accordance with
the Security Documents (as defined in the Sponsors' Support Agreement)) may, by
notice to AMD Inc. and, if prior to the Loan Agreement Termination Date, the
Agent, terminate this Agreement in case of any of the Termination Events
described in clauses (viii) through (xii) below. In addition, this Agreement
shall automatically terminate (without any requirement for any action by any
party hereto) immediately upon the occurrence of the Termination Event described
in clauses (i) through (vii) below. Any such automatic termination shall be
effective on the date of the relevant Termination Event, and any termination
upon the giving of notice pursuant to this Section 6.02 shall be effective on
the date any such notice is given (the date of any such automatic or other
termination being the "Termination Date"). The Termination Events are as
follows:
15
<PAGE>
(i) the expropriation or condemnation of the Plant or any substantial
part of the assets or business of AMD Saxonia or AMD Holding by any
Governmental Authority, or the involuntary suspension, or curtailment below
seventy-five percent of capacity, by AMD Saxonia of the operation of the
Plant for six months or more as a result of any change in or introduction
of any Law, or any change in the interpretation or application thereof, in
each case occurring after the date hereof;
(ii) AMD Inc. or AMD Holding being required by any Governmental
Authority to divest itself of all or a substantial portion of its direct or
indirect interest in AMD Saxonia, or AMD Saxonia being required by any
Governmental Authority to divest itself or all or a substantial portion of
the Plant;
(iii) the destruction of the Plant or a substantial portion thereof
and a decision by AMD Saxonia not to rebuild the same after having received
insurance proceeds in respect of such destruction in an amount at least
equal to the depreciated book value of such Plant or substantial portion
thereof;
(iv) obligations of AMD Saxonia being accelerated following lapse of
any applicable grace periods as a result of the occurrence of an event
described in Section 21 of the Loan Agreement that would permit the Banks
to terminate the Facilities under, and as defined in, such agreement,
and/or the Agent, the Security Agent or any of the Banks exercising
remedies pursuant to any of the Security Documents (as defined in the Loan
Agreement);
(v) the involuntary (including without limitation as a result of
enforcement of any rights of security granted in shares of AMD Holding
and/or AMD Saxonia or performance of any undertakings to transfer such
shares made to secure obligations of AMD Holding and/or AMD Saxonia)
transfer of a controlling interest in AMD Holding and/or AMD Saxonia from
AMD Inc. and its Subsidiaries to one or more third parties;
(vi) the involuntary dissolution or winding up of the business of AMD
Holding and/or AMD Saxonia;
(vii) the AMD Saxonia Wafer Purchase Agreement terminating in
accordance with its terms;
(viii) failure by AMD Inc. to make any payment required from it
hereunder or under the AMD Holding Research Agreement or Sponsors' Support
Agreement within 45 days of the date due therefor, or default by AMD Inc.
in the performance of or compliance with any other term contained in this
Agreement or any such other agreement and such default shall not have been
remedied or waived within 30 days after receipt of notice from AMD Holding
or, if the Loan Agreement Termination Date has not yet taken place, the
Agent of such default;
(ix) any of AMD Inc.'s representations or warranties made in this
Agreement or the AMD Holding Research Agreement or in any statement or
16
<PAGE>
certificate at any time given by AMD Inc. in writing pursuant to any
thereof being false in any material respect on the date as of which made;
(x) a court having jurisdiction in the premises entering a decree or order
for relief in respect of AMD Inc. in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief
being granted under any applicable federal or state law;
(xi) a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over AMD Inc. or over all
or a substantial part of its property, having been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of AMD Inc. for all or a substantial part of its property; or the issuance
of a warrant of attachment, execution or similar process against any
substantial part of the property of AMD Inc.; and the continuance of any
such events in this clause (xi) for 90 days unless stayed, dismissed,
bonded or discharged; or
(xii) AMD Inc. having an order for relief entered with respect to it
or commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consenting to the entry of
an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or consenting to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by AMD
Inc. of any assignment for the benefit of creditors; or the inability or
failure by AMD Inc. or the admission by AMD Inc. in writing of its
inability to pay its debts as such debts become due; or the Board of
Directors of AMD Inc. (or any committee thereof) adopting any resolution or
otherwise authorizing action to approve any of the foregoing.
Section 6.02. Rights Upon Termination.
(a) Promptly, but in no event later than 20 days following the
Termination Date,
(i) the Adjusted Selling Price Per Wafer for the Period ending on the
Termination Date shall be calculated in accordance with Section 3.03 of the
AMD Saxonia Wafer Purchase Agreement;
(ii) in the event that the Termination Date occurs before all of the
Excess Start-up Costs or the Start-up Cost Savings, whichever the case may
be, has been paid in accordance with Section 3.04 of the AMD Saxonia Wafer
Purchase Agreement, the amount of any unpaid Excess Start-up Costs or
Start-up Costs Savings shall be calculated in accordance with Section 3.04
of that Agreement;
(iii) if no Products were Shipped in the Period ending on the
Termination Date, the final Advance Payment Adjustment Amount for that
Period shall be
17
<PAGE>
calculated in accordance with Section 3.05 of the AMD Saxonia Wafer
Purchase Agreement;
(iv) the Fixed Cost Compensation Amount for the Period ending on the
Termination Date shall be calculated in accordance with Section 3.06 of the
AMD Saxonia Wafer Purchase Agreement;
(v) the Pari Passu Compensation Amount shall be calculated in
accordance with Section 3.12 of the AMD Saxonia Wafer Purchase Agreement;
(vi) amounts payable by AMD Holding under Section 3.07 of the AMD
Saxonia Wafer Purchase Agreement shall be calculated in accordance with the
terms thereof; and the amounts payable by AMD Inc. under Section 3.10 shall
be calculated in accordance with the terms thereof;
and, for purposes of each such calculation under the AMD Saxonia Wafer Purchase
Agreement and of clause (b) of this Section 6.02 only, the Termination Date
under the AMD Saxonia Wafer Purchase Agreement shall be deemed to be the
Termination Date hereunder.
(b) AMD Inc. shall purchase from AMD Holding all inventory and
work-in-process of AMD Saxonia as of the Termination Date that AMD Holding is
required to purchase from AMD Saxonia pursuant to Section 6.02(b) of the AMD
Saxonia Wafer Purchase Agreement. The terms and conditions of such sale shall be
as set forth in Section 6.02(b) of the AMD Saxonia Wafer Purchase Agreement. The
purchase price to be paid by AMD Inc. therefore shall be equal to the purchase
price paid or to be paid by AMD Holding therefor under such Section 6.02(b) and
shall be paid before the date on which AMD Holding is required to pay for such
inventory and work-in-process under the AMD Saxonia Wafer Purchase Agreement.
(c) Upon termination of this Agreement for any reason, any amounts due from
AMD Inc. to AMD Holding hereunder (including for this purpose the amounts
calculated under 6.02(a) and/or 6.02(b)) shall be aggregated, and any amounts
due (whether in the form of an obligation to pay or credit) from AMD Holding to
AMD Inc. hereunder (including for this purpose the amounts calculated under
6.02(a) and/or 6.02(b)) and under the Management Service Agreement shall be
aggregated. If the aggregate amount payable by AMD Inc. exceeds the aggregate
amount payable and/or to be credited by AMD Holding, then each party's
obligation to make payment of any such amount will be automatically satisfied
and discharged and replaced by an obligation upon AMD Inc. to pay to AMD Holding
the excess of the larger aggregate amount over the smaller aggregate amount. If
the aggregate amount payable by AMD Holding exceeds the aggregate amount payable
by AMD Inc., then each party's obligation to make payment of any such amount
will be automatically discharged and the amount of such excess shall be
additional compensation to be retained by AMD Holding for the early termination
of this Agreement, and AMD Holding shall have no obligation to pay such amount
to AMD Inc.
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Section 6.03. Survival. The provisions of Sections 3.07, 3.08, 3.09, 6.02,
7.09, 7.10, 7.11 and 7.13 shall survive any termination of this Agreement.
ARTICLE VII
Miscellaneous
Section 7.01. Representations and Warranties Generally. Each of AMD Inc.
and AMD Holding hereby represents and warrants to the other as follows:
(a) Organization; Corporate Power. It is duly incorporated and validly
existing under the laws of the jurisdiction of its organization, and has all
necessary power and authority to (i) own its assets and to carry on the business
in which it is engaged; and (ii) execute, deliver and perform its obligations
under this Agreement;
(b) Corporate Authority; No Conflict. The execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
corporate action (including any necessary shareholder action) on its part, and
do not and will not (i) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to it, or of its charter or by-laws or (ii) result
in a breach of, result in a mandatory prepayment or acceleration of indebtedness
evidenced by or secured by, or constitute a default under, any indenture or loan
or credit agreement, or any other agreement or instrument to which it is a party
or by which it or its properties may be bound, or require the creation or
imposition of any encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by it, and it is not in default under
or in violation of its charter or by-laws or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination, award, indenture or
instrument, which default or violation, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on its financial
condition, business, operations, or prospects;
(c) Valid and Binding Obligations. This Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms subject, however, to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and, as to
enforceability, by general equitable principles; and
(d) No Litigation. No litigation, arbitration proceedings or governmental
proceedings are pending or to its knowledge, threatened, which pertain to this
Agreement or any of the transactions contemplated thereby.
AMD Inc. acknowledges that it has no right to terminate this Agreement or offset
payments hereunder because of any breach by AMD Holding of the representations
and warranties contained herein.
Section 7.02. Force Majeure.
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(a) A party to this Agreement shall not be liable for the consequences of
any failure to perform, or default in performing, any of its obligations, other
than its payment obligations, under this Agreement if that party can show that
such failure is caused by Force Majeure.
(b) Where there has been any such failure, the said failure shall not be
considered non-compliance with any term or condition of this Agreement, and all
the obligations (other than payment obligations) and times which because of such
failure could not be fulfilled shall be deemed to have been suspended while the
failure continues. In addition, the party for whom such obligations and/or times
have been suspended shall be entitled to take reasonable steps during the
pendency of the relevant Force Majeure to limit its losses resulting from such
Force Majeure, and following the termination of such Force Majeure such
obligations and/or times shall continue to be suspended for such further
reasonable period as is necessary for such party to restore its capacity to
perform such obligations and/or meet such times.
Section 7.03. Relationship of Parties. AMD Holding and AMD Inc. shall at
all times be independent contractors with respect to each other. Nothing in this
Agreement shall constitute either party hereto as the partner, joint venturer,
employee or agent of the other such party or of AMD Saxonia, and neither AMD
Holding nor AMD Inc. shall act or omit to act in such a way as to suggest the
contrary to any Person.
Section 7.04. Assignment. This Agreement shall be binding upon and enure to
the benefit of each party hereto and their respective successors and assigns;
provided, however, that neither party hereto shall have the right to transfer or
assign its interest in this Agreement without the prior written consent of the
other party hereto, and, if prior to the Loan Agreement Termination Date, of the
Agent; provided further that AMD Holding may assign this Agreement to the Agent
as security for obligations of AMD Saxonia under the Loan Agreement and the
Agent may assign this Agreement to any direct transferee of the Plant in the
proper exercise of the Agent's enforcement rights in respect of such security.
Section 7.05. Waivers. No delay or omission in exercise of any right or
remedy of either party or any default by the other, and no custom or practice of
the parties at variance with the terms of this Agreement, shall impair any right
or remedy otherwise available nor shall it be construed as a waiver of any right
or remedy. Any waiver by either party of any default must be in writing and
shall not be a waiver of any other default concerning the same or any other
provision. AMD Holding shall have no right to waive any of its rights or
remedies under this Agreement prior to the Loan Agreement Termination Date
without the prior written consent of the Agent.
Section 7.06. Rights Cumulative. The rights, remedies and powers of each of
the parties contained in this Agreement are cumulative and not exclusive of any
rights, remedies or powers provided to the parties by Law. No single or partial
exercise by any of the parties hereto of any right, remedy or power under this
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.
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<PAGE>
Section 7.07. Notices. All notices and other communications required or
permitted to be given to or made upon either party hereto shall be in writing
and shall be personally delivered or sent by registered or certified mail,
postage pre-paid, return receipt requested, or by pre-paid telex, TWX or
telegram, or by pre-paid courier service, or by telecopier, to the respective
parties hereto at their respective addresses (or to their respective telex, TWX
or telecopier numbers) indicated below, or such other addresses or numbers
specified in a notice sent or delivered in accordance with the provisions of
this Section 7.07. Any such notice or communication shall be deemed to be given
for purposes of this Agreement on the day that such writing or communication is
delivered or, in the case only of a telex, TWX or telegram, sent to the intended
recipient thereof, or in the case only of telecopier, sent to the intended
recipient thereof with confirmation of receipt, all in accordance with the
provision of this Section 7.07.
If to AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
P.O. Box 3453
Sunnyvale, California 94088
Attention: General Counsel
Facsimile: +1 408 774 7399
If to AMD Holding:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Gesch@ftsfuhrer
Facsimile: +49 351 8412 150
with a copy to:
Dresdner Bank AG
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: +49 351 489 1350
Section 7.08. No Effect on Other Agreements. No provision of this Agreement
shall be construed so as to negate, modify or affect in any way the provisions
of any other agreement between AMD Inc. and AMD Holding except as specifically
provided in any such other agreement.
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Section 7.09. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES. THE PARTIES EXPRESSLY
EXCLUDE APPLICATION OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE SALE
OF GOODS OF APRIL 11, 1980.
Section 7.10. Dispute Resolution. Subject to Section 7.10(j) below,
arbitration under this Section 7.10 shall be the exclusive means for a party to
seek resolution of any dispute arising out of, relating to or connected with
this Agreement, except that either party may bring an action before a competent
court for the issuance of provisional or protective measures.
(a) The parties hereto agree to submit any dispute, controversy or claim
("Dispute") arising out of, relating to or in any way connected with this
Agreement to final and binding arbitration in Santa Clara County, California,
under the Commercial Arbitration Rules and Supplementary Procedures for
International Commercial Arbitration of the American Arbitration Association
("AAA") then in force except as modified in accordance with the provisions of
this Section 7.10.
(b) The arbitral tribunal shall be composed of three arbitrators, one
appointed by each party, and the two arbitrators so appointed shall, within 15
days appoint a third arbitrator who shall be chosen from a country other than
those of which the parties are nationals, who shall be fluent in English, and
who shall act as Chairman of the tribunal.
(c) In arriving at decisions, the arbitrators shall apply the terms and
conditions of this Agreement in accordance with the laws of California.
(d) The award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New
York Convention"). The English language shall be used in the arbitral
proceedings and all exhibits and other evidence in a language other then English
shall be accompanied by English translations when submitted into evidence before
the arbitral tribunal.
(e) The arbitrators are empowered to render the following awards in
accordance with any provision of this Agreement or any related agreement: (i)
enjoining a party from performing any act prohibited, or compelling a party to
perform any act required, by the terms of this Agreement or any related
agreement and any order entered pursuant to this Agreement and (ii) ordering
such other legal or equitable relief, including any provisional legal or
equitable relief, or specifying such procedures as the arbitrator deems
appropriate, to resolve any Dispute submitted for arbitration. The parties shall
be entitled to discover all documents and other information reasonably necessary
for a full understanding of any legitimate issue raised in the arbitration. They
may use all methods of discovery customary under U.S. federal law, including but
not limited to depositions, requests for admission, and requests for production
of documents. The time periods for compliance shall be set by the arbitrators,
who may also set limits on the scope of such discovery. The arbitrators shall
not be empowered to award consequential or punitive damages.
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(f) Either party may file an application in any proper court described in
Section 7.11 for a provisional remedy in connection with an arbitrable
controversy hereunder, but only upon the ground that the award to which the
applicant may be entitled may be rendered ineffectual without provisional
relief.
(g) The arbitrators shall issue to both parties a written explanation in
English of the reasons for the award and a full statement of the facts as found
and the rules of law applied in reaching the decision.
(h) Any monetary award shall be made and shall be payable in DM free of any
tax or any deduction.
(i) The award of the arbitral tribunal will be the sole and exclusive
remedy between the parties regarding any and all claims and counterclaims with
respect to the subject matter of the arbitrated dispute. An award rendered in
connection with an arbitration pursuant to this Section 7.10 shall be final and
binding upon the parties, and any judgment upon which an award may be entered
and enforced in any court of competent jurisdiction.
(j) Notwithstanding the foregoing, the parties agree that any disputes
hereunder relating solely to accounting matters shall be resolved by an auditor,
appointed as provided below, acting as an expert (and not as an arbitrator), and
that the resolution by such independent auditor of any such matter shall be
conclusive between the parties absent manifest error. Such auditor shall be
appointed by mutual agreement of the parties' respective auditors, and, if prior
to the Loan Agreement Termination Date, of the Agent and shall be an independent
and internationally known certified public accounting firm with no affiliation
with either the parties, the Agent or any of their respective auditors.
Section 7.11. Consent to Jurisdiction and Forum; AMD Holding Appointment of
Agent for Service of Process.
(a) Subject to Section 7.10, all judicial proceedings brought against
either party hereto with respect to this Agreement may be brought in Santa Clara
County, California, and by execution and delivery of this Agreement, each such
party accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of such courts. In addition, each
such party hereby irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such proceedings, and hereby further irrevocably and
unconditionally waives and agrees to the fullest extent permitted by law not to
plead or claim that any such proceeding brought in any such court has been
brought in an inconvenient forum.
(b) AMD Holding hereby irrevocably appoints CT Corporation Services as its
agent to receive on behalf of AMD Holding and its property service of copies of
the summons and complaint and any other process which may be served in any
proceeding in any state or federal court of competent jurisdiction in the State
of California.
Section 7.12. Judgment Currency. The parties hereto agree that, without
prejudice to Sections 7.10 and 7.11 above:
23
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(a) if, for purposes of obtaining hereunder an arbitral award or judgment
of any court, it is necessary to convert a sum due hereunder in DM into another
currency, the rate of exchange used shall be that at which in accordance with
normal banking procedures the prevailing party could purchase DM with such other
currency on the Business Day preceding that on which the final award or judgment
(as applicable) is given; and
(b) the obligation of each of the parties hereto in respect of any sum due
hereunder from it (the "Payor") to the other party (the "Recipient") shall,
notwithstanding any judgment in a currency other than DM, be discharged only to
the extent that on the Business Day following receipt by the Recipient of any
sum adjudged to be so due in such other currency, the Recipient may, in
accordance with normal banking procedures, purchase DM with such other currency;
in the event that the DM so purchased is less than the sum originally due to the
Recipient, the Payor, as a separate obligation and notwithstanding any such
judgment or award, hereby agrees to indemnify and hold harmless the Recipient
against such loss, and if the DM so purchased exceeds the sum originally due to
the Recipient, the Recipient shall remit to the Payor the excess.
Section 7.13. Language. This Agreement is in the English language, which
language shall be controlling in all respects.
Section 7.14. Entire Agreement. This Agreement, the AMD Saxonia Wafer
Purchase Agreement, the AMD Holding Research Agreement, the AMD Saxonia Research
Agreement, the Management Service Agreement and the License Agreement embody the
entire agreement and understanding between the parties with respect to the
subject matter hereof. Neither party has relied upon any representation or
warranty of the other party in entering into this Agreement except as expressly
set forth herein. AMD Inc. further acknowledges and agrees that its obligations
hereunder shall remain in full force and effect notwithstanding the breach by
AMD Holding of any representation or warranty contained herein.
Section 7.15. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple counterparts and attached to a
single counterpart so that all signature pages are physically attached to the
same document.
Section 7.16. Amendments. No modifications or amendments to this Agreement
shall be binding unless in writing and executed by each of the parties hereto.
In addition, no modification or amendment to this Agreement may be made without
the prior written consent of, if prior to the Loan Agreement Termination Date,
the Agent.
Section 7.17. EMU. The European Economic and Monetary Union anticipates the
introduction of a single currency and the substitution of the national
currencies of Member States participating in the Monetary Union. On the date on
which the DM is replaced by the single currency, conversion into such currency
shall take effect. The denomination of the original currency shall be retained
for so long as this is legally
24
<PAGE>
permissible. Conversions shall be based on the officially fixed rate of
conversion. Neither the introduction of the single currency nor the substitution
of the national currencies of the Member States participating in European
Monetary Union nor the fixing of the official rate of conversion nor any
economic consequences that arise from any of the aforementioned events or in
connection with European Monetary Union shall give rise to any right to
terminate prematurely, contest, cancel, rescind, modify, or renegotiate this
Agreement or any of its provisions or to raise any other objections and/or
exceptions or to assert any claims for compensation. This Agreement shall
continue in full force and effect in accordance with its terms.
[Remainder of page intentionally left blank]
25
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IN WITNESS OF THE FOREGOING, AMD Inc. and AMD Holding have caused this
Agreement to be executed by their authorized representatives as of the date
first written above.
ADVANCED MICRO DEVICES, INC.
By: /s/ Marvin D. Burkett
-------------------------------
Its:
-------------------------------
AMD SAXONY HOLDING GMBH
By: /s/ Marvin D. Burkett
-------------------------------
Its: Managing Director
-------------------------------
26
<PAGE>
EXHIBIT 10.50(k)
- --------------------------------------------------------------------------------
AMD HOLDING
RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT
Dated 11 March 1997
between
AMD SAXONY HOLDING GMBH,
and
ADVANCED MICRO DEVICES, INC.
- --------------------------------------------------------------------------------
<PAGE>
AMD HOLDING
RESEARCH, DESIGN AND
DEVELOPMENT AGREEMENT
THIS AMD HOLDING RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT (this "Agreement")
dated as of 11 March, 1997 is entered into between AMD SAXONY HOLDING GmbH, a
limited liability company organized and existing under the laws of Germany and
registered in the Commercial Register of the Dresden County Court, HRB 13931
("AMD Holding"), and ADVANCED MICRO DEVICES, INC., a corporation organized and
-----------
existing under the laws of the State of Delaware, U.S.A. ("AMD Inc.").
--------
WHEREAS, AMD Saxony Manufacturing GmbH ("AMD Saxonia") is a wholly-owned
-----------
Subsidiary of AMD Holding, which in turn is a wholly-owned Subsidiary of AMD
Inc., and
WHEREAS, AMD Saxonia, AMD Holding and AMD Inc. (together, the "AMD Companies")
-------------
are currently involved in the initial planning stages of a project pursuant to
which AMD Saxonia will construct, own and operate inter alia a Plant to
manufacture Wafers using high-volume semiconductor Wafer fabrication processes
along with an adjoining Design Center, each of which is to be located in
Dresden, Germany, and
WHEREAS, it is expected that the Design Center will employ qualified
individuals, mostly hired from local colleges, universities and technical
institutes and having advanced educational degrees, to conduct bona fide
research on advanced semiconductor products and on the redesign and development
of variants of existing semiconductor products, and
WHEREAS, this research is expected to focus on system architecture of
microprocessors, circuit designs and improvements of computation and compression
algorithms, and the products involved are expected to cover a range of advanced
logic devices such as microprocessors and circuits for telecommunications and
multimedia applications, and
WHEREAS, AMD Inc. is engaged in research, development, design, manufacturing and
marketing of semiconductor products, and
WHEREAS, concurrently herewith AMD Holding and AMD Saxonia are entering into an
AMD Saxonia Research, Design and Development Agreement (as amended, supplemented
or otherwise modified from time to time, the "AMD Saxonia Research Agreement"),
------------------------------
pursuant to which AMD Holding will obtain, and AMD Saxonia will provide,
assistance in the area of research, design and development of semiconductor
products, and
WHEREAS, AMD Inc. wishes to obtain assistance in the area of research, design
and development of semiconductor products from AMD Holding, and AMD Holding is
willing to provide such assistance, in each case on the terms and subject to the
conditions of this Agreement, and
WHEREAS, concurrently herewith (i) AMD Holding and AMD Saxonia are entering into
that certain AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the "AMD Saxonia Wafer Purchase
--------------------------
Agreement"), and (ii) AMD
- ---------
<PAGE>
Saxonia, AMD Holding and AMD Inc. are entering into that certain License
Agreement (as amended, supplemented or otherwise modified from time to time, the
"License Agreement"), and
-----------------
WHEREAS, capitalized terms not defined herein shall have the meaning assigned to
them in the AMD Saxonia Research Agreement.
NOW, THEREFORE, in consideration of the mutual covenants expressed herein, the
parties hereby agree as follows:
ARTICLE I
Statement of Work
(a) On the terms and subject to the conditions provided herein, (i) AMD
Inc. hereby retains AMD Holding to provide, or to arrange for AMD Saxonia
to provide, research, design and development services ("Services") related
--------
to semiconductor products to or for the benefit of AMD Inc. or, at its
request, to or for the benefit of Fujitsu AMD Semiconductor Limited
("FASL") or Subsidiaries of AMD Inc. other than AMD Holding and AMD
----
Saxonia, and (ii) AMD Holding hereby agrees to use its reasonable
commercial efforts to provide, or to arrange for AMD Saxonia to provide,
the Services. In furtherance of the foregoing, AMD Holding shall furnish,
or shall cause AMD Saxonia to furnish, all personnel, facilities, labor,
materials, tools, equipment and supervision as may be necessary and
commercially reasonable to provide, or to arrange for AMD Saxonia to
provide, the Services, including without limitation to research, design and
develop custom circuits, schematics and layouts, and to perform such other
activities, as AMD Inc. shall from time to time reasonably request (the
"Design Activity"); it being understood and agreed that, for all purposes
---------------
of this Agreement, the Services and the Design Activity shall be in all
respects comparable and consistent with the "Services' and the "Design
Activity" under, and as defined in, the AMD Saxonia Research Agreement.
(b) AMD Inc. acknowledges that AMD Holding's obligation is to use its
reasonable commercial efforts to provide, or to arrange for AMD Saxonia to
provide, the Services and Design Activities, and that AMD Holding therefore
does not undertake and cannot guarantee that the results of the Services
and Design Activities will achieve the goals set therefor or that such
results will have any commercial value. AMD Inc. further acknowledges and
agrees that AMD Holding shall not be required at any time to take any steps
hereunder to provide the Services and/or Design Activities to the extent
such steps at such time could reasonably be expected to delay the
"Completion Date" under, and as defined in, the AMD Saxonia Wafer Purchase
---------------
Agreement.
(c) AMD Holding further agrees, during the term of this Agreement, (i) only
to perform Services and engage, or to arrange for AMD Saxonia to perform
and engage, in Design Activities specifically requested by AMD Inc. which
request may be made by AMD Inc., FASL or one of AMD Inc.'s Subsidiaries
acting pursuant to authorization from AMD Inc. hereunder and (ii) not to
provide research, design and development services for persons or entities
other than AMD Inc., its Subsidiaries or FASL, without the prior consent of
AMD Inc.
2
<PAGE>
(d) AMD Holding and AMD Inc. agree that this Agreement is limited to
research, design and development of semiconductor products. AMD Holding
further agrees that during the term of this Agreement it shall cause AMD
Saxonia to comply with AMD Saxonia's obligations under the AMD Saxonia
Research Agreement.
ARTICLE II
Payments
(a) AMD Inc. agrees to pay AMD Holding for the Services and Design
Activities performed under this Agreement an amount equal to the amount
charged to AMD Holding under the AMD Saxonia Research Agreement, plus Value
Added Tax, if applicable.
(b) AMD Inc. will authorize the commencement of Services at such time as
AMD Holding is able to cause AMD Saxonia to perform the Services
contemplated under the AMD Saxonia Research Agreement, but in any event no
later than when the Design Center is completed to AMD Holding's reasonable
satisfaction. The parties may agree that the Services and Design Activity
may be phased in over a period of time prior to the completion of the
Design Center.
(c) AMD Holding shall within 30 days after the end of each of its fiscal
months, provide AMD Inc. with an installment invoice in respect of such
fiscal month detailing the Services rendered and the Design Activity
undertaken and specifying costs with respect to such Services and Design
Activity, and the amount payable by AMD Inc. under this Article II with
----------
respect thereto. Some of these costs may be estimated, budgeted or accrued
costs, but shall be subject to a quarterly adjustment to reflect actual
costs when finally determined.
(d) Under this Agreement, invoices shall be rendered and payments shall be
made in the lawful currency of the Federal Republic of Germany ("DM").
--
Invoices shall be paid in full within thirty (30) days of the receipt of
such invoice. Payments under this Agreement from AMD Inc. to AMD Holding
shall be made by wire transfer deposited into [*], or such other account of
AMD Holding specified by AMD Holding with the prior written consent of the
Agent (a copy of which consent shall be delivered by AMD Holding to AMD
Inc.) with not less than 15 days written notice to AMD Inc. All amounts
under this Agreement not paid when due from AMD Inc. shall bear interest at
the rate of 7.0% per annum from the date due until paid, calculated on the
basis of actual days and months elapsed. Accrued interest hereunder shall
be due and payable at the end of each calendar month.
(e) The obligations of AMD Inc. hereunder, including, without limitation,
the obligation to pay for any Services or Design Activity performed by or
on behalf of AMD Holding, are intended to be absolute and unconditional.
The parties hereto hereby expressly acknowledge, agree, and understand that
the payment by AMD Inc. of all amounts payable by it hereunder shall in no
way be prevented, delayed, or otherwise affected as a result of any dispute
between the parties (or between any of their Affiliates) nor by any breach
of this Agreement or any other agreement entered into in connection
herewith and/or any
3
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
adverse change in the financial or economic condition of AMD Holding, AMD
Saxonia or any Affiliate thereof, including situations or conditions which
would render any or all of AMD Holding, AMD Saxonia or any Affiliate
thereof in liquidation, bankruptcy, or any kind of insolvency. All
obligations of AMD Inc. under or in connection with this Agreement shall be
paid and performed in all events in the manner and at the times herein
provided, irrespective of and without prejudice to, any rights or remedies
that are available to AMD Inc. under any other agreements or any applicable
laws. The foregoing notwithstanding, AMD Inc. shall be entitled to setoff,
and to raise rights of retention, in respect of payment claims due from it
hereunder only to the extent its counterclaim is undisputed by AMD Holding
or has been the subject of a final, binding arbitral or court decision.
(f) AMD Holding shall keep and maintain, in accordance with German
generally accepted accounting principles, books of account and other
records with respect to the costs and other amounts charged by AMD Holding
to AMD Inc. under this Agreement.
(g) AMD Inc. shall, upon reasonable written notice to AMD Holding, have a
right to perform special audits of AMD Holding by either outside auditors
or one or more of the internal auditors of the AMD Companies, at AMD Inc.'s
own cost. In addition, AMD Holding shall cause AMD Saxonia to permit AMD
Inc. to perform special audits of AMD Saxonia by either outside auditors or
one or more of the internal auditors of the AMD Companies, at AMD Inc.'s
own cost. The scope of the foregoing audits shall not be limited in any
manner.
(h) AMD Holding and AMD Inc. agree that the purpose of this Agreement and
the related Services and Design Activity is the creation of intellectual
property. However, from time to time, such intellectual property may be
transferred in the form of tangible personal property. The transfer of any
tangible personal property is solely for the purpose of conveying or
exchanging intellectual property or "Ideas". Examples of such tangible
-----
personal property may include, but are not limited to, magnetic tapes,
pattern generation tapes, test tapes, schematic diagrams, prototypes and
prototype tooling. Both parties agree that, in the aggregate, the fair
market value of such tangible property transferred to AMD Inc. shall not
exceed U.S. $5,000 dollars per year. The provisions of this paragraph are
intended solely for valuation purposes under the various state sales and
use tax rules in the U.S.A. and do not in any way alter the compensation
provisions of this Article II, which is the sole and controlling provision
----------
for the compensation to AMD Holding for the Services and Design Activities
under this Agreement.
ARTICLE III
Work Performed Outside Germany
(a) The parties recognize that to implement the intent and purpose of this
Agreement, and to bring the research, design and development efforts of AMD
Holding to the stage at which production of semiconductor products is
possible, essential work related to the Design Activity which AMD Holding
is unable to perform may have to be performed directly by AMD Inc. at AMD
Inc. facilities outside Germany.
4
<PAGE>
(b) It is expressly agreed that all cost for work performed by or on behalf
of AMD Inc., at any facility other than the Design Center, will be absorbed
by AMD Inc. and will not be charged back to AMD Holding.
ARTICLE IV
Changes in Specifications
(a) AMD Inc. may from time to time request changes in the specifications of
semiconductor products undergoing research, design and development during
the course of the Design Activity, which request may be made by AMD Inc.,
FASL or one of AMD Inc.'s Subsidiaries acting pursuant to authorization
from AMD Inc. AMD Inc. acknowledges that such changes may result in
additional delays as well as alteration of designs, drawings, materials,
and other items used in the development process and consequently may result
in changed costs or delay, that such changed costs may be included in the
amounts payable to AMD Saxonia by AMD Holding and, consequently, payable to
AMD Holding by AMD Inc. pursuant to Section (a) of Article II hereof and
----------
that AMD Holding shall have no liability or obligation as a result of any
such delays.
(b) AMD Holding will use its reasonable commercial efforts to inform AMD
Inc. of the changes in cost in sufficient time to authorize or approve such
changed costs before they are incurred provided that the failure by AMD
--------
Holding to do so will not excuse AMD Inc. of the obligation to compensate
AMD Holding in respect of any such changes in cost.
ARTICLE V
Effective Date: Term and Termination
(a) This Agreement shall become effective on the date hereof and shall
terminate on the earliest of (i) the Loan Agreement Termination Date and
(ii) any date upon which the AMD Holding Wafer Purchase Agreement
terminates in accordance with its terms.
(b) The provisions of Articles V(c), XV, XVII, XVIII, XIX, and XX of this
------------------------------ --- --
Agreement shall survive any termination of this Agreement.
(c) Within 30 days after termination of this Agreement, AMD Holding shall
send a final invoice to AMD Inc. for any uninvoiced Services or Design
Activity. Such invoice shall be paid in accordance with the payment
provisions set forth in Section (d) of Article II hereof.
----------
5
<PAGE>
ARTICLE VI
Representations and Warranties
AMD Inc. represents and warrants to AMD Holding as follows:
(a) Organization; Corporate Power. AMD Inc. is a corporation duly
-----------------------------
incorporated, validly existing, and in good standing under the laws of the
State of Delaware; AMD Inc. is duly qualified or licensed and (where the
term has a technical meaning) is in good standing as a foreign corporation
authorized to do business in each jurisdiction where, because of the nature
of its activities or properties, such qualification or licensing is
required, except for such jurisdictions where the failure to be so
qualified or licensed will not materially adversely affect its financial
condition, business, operations, or prospects; and AMD Inc. has all
requisite corporate power and authority (i) to own, operate, and lease its
assets and properties and to carry on the business in which it is engaged
and in which it currently proposes to engage; and (ii) to execute, deliver,
and perform its obligations under this Agreement.
(b) Corporate Authority; No Conflict. The execution, delivery, and
--------------------------------
performance by AMD Inc. of this Agreement have been duly authorized by all
necessary corporate action (including any necessary shareholder action) on
the part of AMD Inc., and do not and will not (i) violate any provision of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award presently in effect binding on AMD Inc. (which
violation, in the case of performance only, individually or in the
aggregate could reasonably be expected to have a material adverse effect on
the financial condition, business, operations or prospects of AMD Inc.) or
violate the charter of AMD Inc., or (ii) result in a breach of, result in a
mandatory prepayment or acceleration of indebtedness evidenced or secured
by, or constitute a default under, any indenture or loan or credit
agreement, or any other agreement or instrument, to which AMD Inc. is a
party or by which AMD Inc. or its properties are bound or affected, or
(iii) result in or require (in either case except as contemplated by the
Operative Documents), the creation or imposition of any encumbrance of any
nature upon or with respect to any of the properties now owned or hereafter
acquired by AMD Inc., and AMD Inc. is not in default under or in violation
of its charter, or any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination, award, indenture, agreement, or
instrument, which default or violation, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the
financial condition, business, operations, or prospects of AMD Inc.
(c) Valid and Binding Obligations. This Agreement constitutes the legal,
-----------------------------
valid, and binding obligation of AMD Inc., enforceable against AMD Inc. in
accordance with its respective terms, subject, however, to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors' rights generally and except as the enforceability
thereof may be limited by general principles of equity (regardless of
whether considered in a proceeding in equity or law).
6
<PAGE>
ARTICLE VII
Warranty Disclaimer
(a) AMD Holding covenants and warrants (i) that it will perform
substantially, or cause AMD Saxonia to perform substantially, all Services
and Design Activity under this Agreement in accordance with the standards
and practices of care, skill and diligence customarily observed by similar
firms under similar circumstances at the time they are rendered, and (ii)
that all Services and Design Activities shall be free of material defects
in workmanship.
(b) THE WARRANTY CONTAINED IN THIS ARTICLE VII IS THE SOLE AND EXCLUSIVE
WARRANTY AS TO THE SERVICES AND DESIGN ACTIVITIES RENDERED AND PROVIDED
HEREUNDER, AND IS EXPRESSLY IN LIEU OF ANY EXPRESS OR IMPLIED WARRANTIES,
IN FACT OR IN LAW, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. AMD HOLDING ASSUMES NO
LIABILITY IN TORT OR STRICT LIABILITY, NOR SHALL AMD HOLDING BE LIABLE TO
AMD INC. OR ANY SUBSIDIARY OR AFFILIATE THEREOF FOR LOSS OF USE OF SERVICES
OR DESIGN ACTIVITY OR ANY OTHER INCIDENTAL, SPECIAL, OR CONSEQUENTIAL
DAMAGES INCURRED BY AMD INC. OR ANY SUBSIDIARY OR AFFILIATE THEREOF. IN NO
EVENT SHALL THE LIABILITY OF AMD HOLDING ARISING IN CONNECTION WITH ANY
SERVICES OR DESIGN ACTIVITY PROVIDED HEREUNDER EXCEED THE ACTUAL AMOUNT
PAID BY AMD INC. TO AMD HOLDING FOR SERVICES OR DESIGN ACTIVITY INVOLVED IN
SUCH CLAIM.
ARTICLE VIII
Severability
If any term or provision of this Agreement or the application of this Agreement
to any person, entity or circumstance is found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remainder of this Agreement shall not be affected, but shall be valid and
enforceable as if the invalid term, condition or provision were not a part of
this Agreement.
ARTICLE IX
Headings
The headings contained in this Agreement are for convenience of reference only
and shall not be deemed to be a part of this Agreement or to affect the meaning
or interpretation of this Agreement.
7
<PAGE>
ARTICLE X
Force Majeure
(a) A party to this Agreement shall not be liable for the consequences of
any failure to perform, or default in performing, any of its obligations,
other than its payment obligations, under this Agreement, if that party can
show that such failure is caused by Force Majeure (as defined below).
(b) Where there has been any such failure, the said failure shall not be
considered non-compliance with any term or condition of this Agreement, and
all the obligations and times which because of such failure could not be
fulfilled shall be deemed to have been suspended while the failure
continues. In addition, the party for whom such obligations and/or times
have been suspended shall be entitled to take reasonable steps during the
pendency of the relevant Force Majeure to limit its losses resulting from
such Force Majeure, and following the termination of such Force Majeure
such obligations and/or times shall continue to be suspended for such
further reasonable period as is necessary for such party to restore its
capacity to perform such obligations and/or meet such times.
(c) For purposes of this Article X, "Force Majeure" means an event which is
--------- -------------
not within the reasonable control of the party seeking to rely on the
existence of Force Majeure, where the adverse effect of such event on such
party's compliance with its obligations under this Agreement is not
preventable by such party using all reasonable care and diligence. Such
events may include, without limitation, the following: acts of war (whether
declared or undeclared), invasion, armed conflict, acts of one or more
enemy of the United States of America, Germany or any other country or
jurisdiction; blockade or embargo, revolution, riot, bombs, insurrection,
or other civil disturbance, sabotage, terrorism, or the threat of any of
the foregoing, nuclear explosion, radioactive or chemical contamination or
ionizing radiation, strikes, lockouts, industrial action or labour
disputes, any effect of the natural elements including, without limitation,
lightning, fire, earthquake, flood, strike and other unusual or extreme
adverse weather, or environmental conditions or actions of the elements,
epidemic or plague, loss of or damage to the Design Center and/or
machinery, equipment or materials at, for or in transit to the Design
Center, acts of God and any events or circumstances analogous to any of the
above.
ARTICLE XI
Relationship of Parties
AMD Inc. and AMD Holding shall at all times be independent contractors with
respect to each other. Nothing in this Agreement shall constitute either party
hereto as the partner, joint venturer, employee or agent of the other such party
and neither AMD Inc. nor AMD Holding shall act or omit to act in such a way as
to suggest the contrary to any third party.
8
<PAGE>
ARTICLE XII
Assignment
This Agreement shall be binding upon and inure to the benefit of each party
hereto and their respective successors and assigns; provided, however, that this
--------
Agreement contemplates personal services of AMD Holding and accordingly neither
party hereto shall have the right to transfer or assign its interest in this
Agreement or, in the case of AMD Holding, delegate any obligation hereunder,
without the prior written consent of both the other party hereto and, prior to
the Loan Agreement Termination Date, of the Agent, and provided further that AMD
----- ----------------
Holding may assign this Agreement to the Agent as security for obligations of
-----
AMD Saxonia under the Loan Agreement and the Agent may further assign this
-----
Agreement to the extent permitted in the proper exercise of the Agent's
-------
enforcement rights in respect of such security.
ARTICLE XIII
Waivers
No delay or omission in exercise of any right or remedy of either party or any
default by the other, and no custom or practice of the parties at variance with
the terms of this Agreement, shall impair any right or remedy otherwise
available nor shall it be construed as a waiver of any right or remedy. Any
waiver by either party of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision. AMD
Holding shall have no right to waive any of its rights or remedies under this
Agreement without the prior written consent of the Agent.
-----
ARTICLE XIV
Rights Cumulative
The rights, remedies and powers of each of the parties contained in this
Agreement are cumulative and not exclusive of any rights, remedies or powers
provided to the parties by applicable law. No single or partial exercise by
either of the parties hereto of any right, remedy or power under this Agreement
shall preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
ARTICLE XV
Notices
All notices and other communications required or permitted to be given to or
made upon either party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage pre-paid, return
receipt requested, or by pre-paid telex, TWX or telegram, or by pre-paid courier
service, or by telecopier, to the respective parties hereto at their respective
addresses (or to their respective telex, TWX or telecopier numbers) indicated
below, or such other addresses or numbers specified in a notice sent or
delivered in accordance with the provisions of this Article XV. Any such notice
----------
or communication shall be deemed to be given for purposes of this Agreement on
the day that such writing or communication is delivered or, in the
9
<PAGE>
case only of a telex, telecopier, TWX or telegram, sent to the intended
recipient thereof, with confirmation of receipt, in accordance with the
provision of this Article XV, or
----------
If to AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile: (408) 749-3945
If to AMD Holding:
AMD Saxony Holding GmbH
Washingtonstr. 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: (49) 351-8412-150
with a copy to:
AMD Saxony Manufacturing GmbH
Washingtonstr. 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: (49) 351-8412-150
and a copy to:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: (49) 351-4851350
ARTICLE XVI
No Effect on Other Agreements
No provision of this Agreement shall be construed so as to negate, modify or
affect in any way the provisions of any other agreement between AMD Inc. and AMD
Holding except as specifically provided in any such other agreement.
10
<PAGE>
ARTICLE XVII
Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.
ARTICLE XVIII
Arbitration of Disputes
Arbitration under this Article XVIII shall be the exclusive means for a party to
-------------
seek resolution of any dispute arising out of, relating to or connected with
this Agreement, except that either party may bring an action before a competent
court for the issuance of provisional or protective measures.
(a) The parties hereto agree to submit any dispute, controversy or claim
("Dispute") arising out of, relating to or in any way connected with this
-------
Agreement to final and binding arbitration in the County of Santa Clara,
California, under the Commercial Arbitration Rules and Supplementary
Procedures for International Commercial Arbitration of the American
Arbitration Association ("AAA") then in force except as modified in
---
accordance with the provisions of this Article XVIII.
-----
(b) The arbitral tribunal shall be composed of three arbitrators, one
appointed by each party, and the two arbitrators so appointed shall, within
15 days appoint a third arbitrator who shall be chosen from a country other
than those of which the parties are nationals, who shall be fluent in
English, and who shall act as Chairman of the tribunal.
(c) In arriving at decisions, the arbitrators shall apply the terms and
conditions of this Agreement in accordance with the laws of the State of
California.
(d) The award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the
"New York Convention"). The English language shall be used in the arbitral
-------------------
proceedings and all exhibits and other evidence in a language other than
English shall be accompanied by English translations when submitted into
evidence before the arbitral tribunal.
(e) The arbitrators are empowered to render the following awards in
accordance with any provision of this Agreement or any related agreement:
(i) enjoining a party from performing any act prohibited, or compelling a
party to perform any act required, by the terms of this Agreement or any
related agreement and any order entered into pursuant to this Agreement and
(ii) ordering such other legal or equitable relief, including any
provisional legal or equitable relief, or specifying such procedures as the
arbitrator deems appropriate, to resolve any Dispute submitted for
arbitration. The parties shall be entitled to discover all documents and
other information reasonably necessary for a full understanding of any
legitimate issue raised in the arbitration. They may use all methods of
discovery customary under U.S. federal law, including but not limited to
11
<PAGE>
depositions, requests for admission, and requests for production of
documents. The time periods for compliance shall be set by the arbitrators,
who may also set limits on the scope of such discovery. The arbitrators
shall not be empowered to award consequential or punitive damages.
(f) Either party may file an application in any proper court described in
Article XIX hereof for a provisional remedy in connection with an
-----------
arbitrable controversy hereunder, but only upon the ground that the award
to which the applicant may be entitled may be rendered ineffectual without
provisional relief.
(g) The arbitrators shall issue to both parties a written explanation in
English of the reasons for the award and a full statement of the facts as
found and the rules of law applied in reaching the decision.
(h) Any monetary award shall be made and shall be payable in DM free of any
tax or any deduction.
(i) The award of the arbitral tribunal will be the sole and exclusive
remedy between the parties regarding any and all claims and counterclaims
with respect to the subject matter of the arbitrated dispute. An award
rendered in connection with an arbitration pursuant to this Article XVIII
-------------
shall be final and binding upon the parties, and any judgment upon which an
award may be entered and enforced in any court of competent jurisdiction.
ARTICLE XIX
Consent to Jurisdiction and Forum:
AMD Holding Appointment of
Agent for Service of Process
(a) Subject to Article XVIII, all judicial proceedings brought against
-------------
either party hereto with respect to this Agreement may be brought in the
United States District Court for the Northern District of California or in
any branch of the Superior Court of the State of California sitting in the
City of San Francisco, and by execution and delivery of this Agreement,
each such party accepts for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of such
courts. In addition, each such party hereby irrevocably and unconditionally
waives, to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any such proceedings, and
hereby further irrevocably and unconditionally waives and agrees to the
fullest extent permitted by law not to plead or claim that any such
proceeding brought in any such court has been brought in an inconvenient
forum.
(b) AMD Holding hereby irrevocably appoints CT Corporation Services as its
agent to receive on behalf of AMD Holding and its property service of
copies of the summons and complaint and any other process which may be
served in any proceeding in any state or federal court of competent
jurisdiction in the State of California.
12
<PAGE>
ARTICLE XX
Judgment Currency
The parties hereto agree that, without prejudice to Articles XVII, XVIII and XIX
-------------------- ---
above:
(a) if, for purposes of obtaining hereunder an arbitral award or judgment
of any court, it is necessary to convert a sum due hereunder in DM into
another currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the prevailing party could
purchase DM with such other currency on the Business Day preceding that on
which the final award or judgment (as applicable) is given; and
(b) the obligation of each of the parties hereto in respect of any sum due
hereunder from it (the "Payor") to the other party (the "Recipient") shall,
----- ---------
notwithstanding any judgment in a currency other than DM, be discharged
only to the extent that on the Business Day following receipt by the
Recipient of any sum adjudged to be so due in such other currency, the
Recipient may, in accordance with normal banking procedures purchase DM
with such other currency; in the event that the DM so purchased is less
than the sum originally due to the Recipient, the Payor, as a separate
obligation and notwithstanding any such judgment or award hereby agrees to
indemnify and hold harmless the Recipient against such loss, and if the DM
so purchased exceeds the sum originally due to the Recipient, the Recipient
shall remit to the Payor the excess.
ARTICLE XX1
Language
This Agreement is in the English language, which language shall be controlling
in all respects.
ARTICLE XXII
Entire Agreement
This Agreement, the AMD Saxonia Research Agreement, the AMD Holding Wafer
Purchase Agreement, the Confidentiality and Intellectual Property Agreement, the
License Agreement and that certain Amended and Restated Management Services
Agreement, dated as of even date hereof, embody the entire agreement and
understanding between the parties with respect to the subject matter hereto. AMD
Inc. acknowledges and agrees that it has not relied upon any representation or
warranty of the AMD Holding or AMD Saxonia in entering into this Agreement and
that this Agreement shall remain in force notwithstanding the breach by AMD
Holding of any such representation or warranty.
ARTICLE XXIII
Counterparts
This Agreement may be executed in one or more counterparts and by different
parties hereto in
13
<PAGE>
separate counterparts, each of which when so executed and delivered shall be
deemed an original but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
ARTICLE XXIV
Amendments
No modifications or amendments to this Agreement shall be binding unless in
writing and executed by each of the parties hereto and AMD Inc. and, prior to
the Loan Agreement Termination Date, without the prior written consent of the
Agent.
- -----
ARTICLE XXV
European Monetary Union
The European Economic and Monetary Union anticipates the introduction of a
single currency and the substitution of the national currencies of Member States
participating in the Monetary Union. On the date on which the DM is replaced by
the single currency, conversion into such currency shall take effect. The
denomination of the original currency shall be retained for so long as this is
legally permissible. Conversions shall be based on the officially fixed rate of
conversion. Neither the introduction of the single currency nor the substitution
of the national currencies of the Member States participating in European
Monetary Union nor the fixing of the official rate of conversion nor any
economic consequences that arise from any of the aforementioned events or in
connection with European Monetary Union shall give rise to any right to
terminate prematurely, contest, cancel, rescind, modify, or renegotiate this
Agreement or any of its provisions or to raise any other objections and/or
exceptions or to assert any claims for compensation. This Agreement shall
continue in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals as of the date first written above by causing their duly authorized
representatives to sign below.
AMD SAXONY HOLDING GMBH ADVANCED MICRO DEVICES, INC.
By: /s/Marvin D. Burkett By: /s/Marvin D. Burkett
------------------------------ ------------------------------
Its: _____________________________ Its: ______________________________
14
<PAGE>
EXHIBIT 10.50(l)
AMD SAXONIA WAFER PURCHASE AGREEMENT
BETWEEN
AMD SAXONY HOLDING GMBH
AND
AMD SAXONY MANUFACTURING GMBH
<PAGE>
AMD SAXONIA WAFER PURCHASE AGREEMENT
This AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, this "AGREEMENT") dated as of 11 March,
1997 is between:
(1) AMD Saxony Holding GmbH, a Gesellschaft mit beschrankter Haftung organized
-------------------------------------
and existing under the laws of Germany and registered in Dresden, Germany
("AMD HOLDING"); and
(2) AMD Saxony Manufacturing GmbH, a Gesellschaft mit beschrankter Haftung
-------------------------------------
organized and existing under the laws of Germany and registered in Dresden,
Germany ("AMD SAXONIA").
RECITALS
WHEREAS, AMD Saxonia is a wholly-owned Subsidiary (such and other
capitalized terms having the meaning assigned thereto in Section 1.01) of AMD
Holding, which in turn is a wholly-owned Subsidiary of Advanced Micro Devices,
Inc., a corporation organized and existing under the laws of the State of
Delaware, United States of America ("AMD INC.");
WHEREAS, AMD Inc., AMD Holding and AMD Saxonia are currently involved in
the initial planning stages of a project pursuant to which AMD Saxonia will
construct, own and operate inter alia the Plant to be located in or near
----------
Dresden, Germany, to manufacture Wafers using high-volume semiconductor wafer
fabrication processes;
WHEREAS, concurrently herewith, AMD Inc. and AMD Holding are entering
into the AMD Holding Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the "AMD HOLDING WAFER PURCHASE
AGREEMENT"), pursuant to which, among other things, AMD Inc. will agree to
purchase from AMD Holding, and AMD Holding will agree to supply on an exclusive
basis to AMD Inc., all Wafers as are ordered from time to time by AMD Inc. from
AMD Holding, in each case on the terms and conditions of the AMD Holding Wafer
Purchase Agreement;
WHEREAS, on the terms and conditions of this Agreement, including the
payment terms of Article III, AMD Holding wishes the exclusive right to purchase
Wafers from AMD Saxonia in order to enable AMD Holding to fulfill its
obligations under the AMD Holding Wafer Purchase Agreement, and AMD Saxonia is
willing, on such exclusive basis, to manufacture and sell Wafers to AMD Holding,
all on the terms and conditions of this Agreement; and
1
<PAGE>
WHEREAS, concurrently herewith, (i) AMD Inc. and AMD Holding are
entering into the AMD Holding Research Agreement, (ii) AMD Inc., AMD Holding and
AMD Saxonia are entering into the License Agreement and the amendment and
restatement of the Management Service Agreement referred to in the definition
thereof, and (iii) AMD Holding and AMD Saxonia are entering into the AMD Saxonia
Research Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
INTERPRETATION
--------------
SECTION 1.01. DEFINITIONS. The following terms shall, unless the context
-----------
requires otherwise, have the respective meanings assigned to them as follows:
(1) "AAA" has the meaning assigned to it in Section 7.10;
(2) "ACTUAL SELLING PRICE PER WAFER" has the meaning assigned to it in
Section 3.02;
(3) "ACTUAL VOLUME" means, with respect to any Period or 4 Quarter Period,
as the case may be, the actual number of Wafers Shipped by AMD Saxonia
to AMD Holding during that Period or 4 Quarter Period;
(4) "ADJ.4QFC" has the meaning assigned to it in Section 3.06;
(5) "ADJUSTED ACTUAL VOLUME" has the meaning assigned to it in Section 3.12;
(6) "ADJUSTED SELLING PRICE PER WAFER" has the meaning assigned to it in
Section 3.03(b);
(7) "ADVANCE PAYMENT ADJUSTMENT AMOUNT" has the meaning assigned to it in
Section 3.05;
(8) "AFFILIATE" means, with respect to any Person, a Person which, directly
or indirectly, controls, is controlled by, or is under common control
with, such other Person; and, for purposes of this definition, the
concept of "control," with respect to any Person, signifies the
possession of the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, the possession of voting rights, by contract, or otherwise;
provided that FASL shall be deemed to be an Affiliate of AMD Inc. for
--------
purposes of this Agreement;
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<PAGE>
(9) "AGENT" means Dresdner Bank AG, as Agent under the Loan Agreement,
including any successor to Dresdner Bank AG in that capacity;
(10) "AGREEMENT" has the meaning assigned to it in the introduction to this
Agreement;
(11) "AMD HOLDING" has the meaning assigned to it in the introduction to this
Agreement;
(12) "AMD HOLDING RESEARCH AGREEMENT" means that certain AMD Holding
Research, Design and Development Agreement entered into concurrently
herewith between AMD Inc. and AMD Holding, as such agreement may be
amended, supplemented or otherwise modified from time to time;
(13) "AMD HOLDING WAFER PURCHASE AGREEMENT" has the meaning assigned to it in
the Recitals to this Agreement;
(14) "AMD INC." has the meaning assigned to it in the Recitals to this
Agreement;
(15) "AMD INC.'S AVERAGE CAPACITY UTILIZATION" has the meaning assigned to it
in Section 3.12;
(16) "AMD SAXONIA" has the meaning assigned to it in the introduction to this
Agreement;
(17) "AMD SAXONIA RESEARCH AGREEMENT" means that certain AMD Saxonia
Research, Design and Development Agreement entered into concurrently
herewith between AMD Holding and AMD Saxonia, as such agreement may be
amended, supplemented or otherwise modified from time to time;
(18) "AMD SAXONIA'S CAPACITY UTILIZATION" has the meaning assigned to it in
Section 3.12;
(19) "ANNUAL PRICING COMPLIANCE CERTIFICATE" means a certificate
substantially in the form of Exhibit I to this Agreement;
(20) "ANTICIPATED CAPACITY" means,
(i) with respect to the Fiscal Year 2000, a capacity level of 177,000
Wafers per annum; and
(ii) with respect to the Fiscal Year 2001, a capacity level of 244,000
Wafers per annum;
(iii) with respect to any Fiscal Year thereafter, a capacity level of
300,000 Wafers, which is the capacity level specified in the
Management Plan;
3
<PAGE>
provided that in the event the Completion Date takes place other than on
--------
the first day of a Fiscal Year, the respective amount shall be reduced
proportionately according to the actual number of days during such 4
Quarter Period.
In the event that the capacity level at the Plant is changed in
accordance with the Approved Project Budget as defined in the Sponsors'
Support Agreement, the parties hereto shall meet and in good faith
adjust the Anticipated Capacity, if necessary to reflect such change,
which shall have effect from the date such change is made under the
Sponsors' Support Agreement.
(21) "APPLICABLE PERCENTAGE" has the meaning assigned to it in Section
3.03(b);
(22) "BANKS" means the banks from time to time party to the Loan Agreement;
(23) "BANKS' AUDITOR" shall have the meaning assigned to it in the Loan
Agreement;
(24) "BUDGETED START-UP COSTS" means DM [*], which is the amount of
aggregate Start-up Costs as determined in the Management Plan;
(25) "BUSINESS DAY" means any day of the year on which banks are open for the
purpose of conducting a commercial banking business in each of
Frankfurt, Dresden, San Francisco, and London, and when used with
reference to payment in any currency, on which dealings are carried out
in the London Interbank Market with respect to such currency;
(26) "CAPACITY" means, with respect to a Wafer Fabrication Plant and any 4
Quarter Period, and as determined in accordance with Section 1.02(c),
the maximum number of Wafers of satisfactory commercial quality that can
be manufactured at such Wafer Fabrication Plant during such 4 Quarter
Period operating at its then maximum capacity in the ordinary course of
business using installed machinery and equipment designated for the
manufacture of such Wafers and normal work schedules, allowing for the
normally experienced reliability of machinery, equipment, personnel and
manufacturing processes at such plant;
(27) "COMPARABLE PRODUCTS" means all Wafers manufactured at a Wafer
Fabrication Plant, except for any such Wafers where the individual
integrated circuits etched or otherwise imprinted thereon are
demonstrated to the reasonable satisfaction of the Technical Advisor not
to be Microsoft-compatible general purpose microprocessors; and all
Wafers purchased by AMD Inc. or one of its Subsidiaries from third-party
suppliers where such Wafers contain Microsoft-compatible general purpose
microprocessors;
4
*CONFIDENTIAL INFORMATION OMITTED &
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
<PAGE>
(28) "COMPLETION DATE" means the date on which Completion (as defined in the
Sponsors' Support Agreement) takes place;
(29) "DESIGN CENTER" means the research, design and development facility,
owned and operated by AMD Saxonia and associated with the Plant, to be
used for the purpose of designing and developing a broad spectrum of
state-of-the-art and other digital components such as micro-processors
and circuits for the telecommunications and multi-media sectors, and
improvements thereof;
(30) "DISPUTE" has the meaning assigned to it in Section 7.10;
(31) "DM" means the lawful currency from time to time of Germany;
(32) "ECV" has the meaning assigned to it in Section 3.12;
(33) "EFFECTIVE DATE" means the earlier of (i) December 28, 1998, which day
is the first day of AMD Saxonia's first Fiscal Quarter of its Fiscal
Year 1999, or (ii) the first day of AMD Saxonia's Fiscal Quarter which
commences immediately following the first commercial shipment of
Products;
(34) "EVEN CAPACITY VOLUME" has the meaning assigned to it in Section 3.12;
(35) "EXCESS START-UP COSTS" means the excess, if any, of Start-up Costs over
Budgeted Start-up Costs;
(36) "FASL" means Fujitsu AMD Semiconductor Limited, a joint venture
organized under the laws of Japan between AMD Inc. and Fujitsu Limited;
(37) "FISCAL QUARTER" means each quarterly fiscal accounting period of AMD
Saxonia, ending on or about the last day of March, June, September or
the last Sunday in December and corresponding with the fiscal accounting
period of AMD Inc.;
(38) "FISCAL YEAR" means each annual fiscal period of AMD Saxonia, ending on
the last Sunday in December;
(39) "FIXED COST COMPENSATION AMOUNT" has the meaning assigned to it in
Section 3.06;
(40) "FIXED COSTS" for any period means Total Costs less Variable Costs for
that period;
(41) "FORCE MAJEURE" means with respect to AMD Saxonia or AMD Holding, as the
case may be, an event which is not within the reasonable control of the
Person seeking to rely on the existence of Force Majeure, where the
adverse effect of such event on such Person's compliance with its
obligations under
5
<PAGE>
this Agreement is not preventable by such Person using all reasonable
care and diligence. Such events may include, without limitation, the
following: acts of war (whether declared or undeclared), invasion, armed
conflict, acts of one or more enemy of the United States of America,
Germany or any other country or jurisdiction; blockade or embargo,
revolution, riot, bombs, insurrection or other civil disturbance,
sabotage, terrorism or the threat of any of the foregoing, nuclear
explosion, radioactive or chemical contamination or ionizing radiation,
strikes, lockouts, industrial action or labor disputes, any effect of
the natural elements including without limitation lightning, fire,
earthquake, flood, strike and other unusual or extreme adverse weather
or environmental conditions or actions of the elements, epidemic or
plague, loss of or damage to the Plant and/or machinery, equipment or
materials at, for or in transit to the Plant, acts of God and any events
or circumstances analogous to any of the above;
(42) "4Q ANTICIPATED CAPACITY" has the meaning assigned to it in Section
3.06;
(43) "4Q ANTICIPATED CAPACITY LIMIT" has the meaning assigned to it in
Section 3.06;
(44) "4QAV" has the meaning assigned to it in Section 3.06;
(45) "4 QUARTER PERIOD" means (i) each Fiscal Year commencing after the
Completion Date and (ii) in the event the Completion Date takes place on
a day other than the last day of a Fiscal Year, the period from (and
excluding) the Completion Date through (and including) the end of the
Fiscal Year in which the Completion Date takes place; provided further
----------------
that no 4 Quarter Period shall extend beyond, and the final 4 Quarter
Period shall end on, the Termination Date;
(46) "GERMAN GAAP" means accounting principles and practices generally
accepted in Germany, consistently applied throughout the periods
involved;
(47) "GERMANY" means the Federal Republic of Germany;
(48) "GOVERNMENTAL AUTHORITY" means any German domestic or foreign
government, court or governmental body, department, agency, commission,
authority or instrumentality;
(49) "IMPROVEMENTS" means any development, enhancement, improvements,
upgrades, modifications and updates (including error corrections),
translations and derivative works;
(50) "INITIAL TERMINATION DATE" has the meaning assigned to it in Section
6.01(a);
(51) "INTELLECTUAL PROPERTY" has the meaning assigned to it in Section 4.01;
6
<PAGE>
(52) "KNOW-HOW" means know-how, show-how, methods, techniques, procedures,
formulations, formulae, assembly, installation, operating and quality
control procedures and manuals, quality control standards, technical
information, technical and product specifications, equipment
requirements, writings, plans, drawings, designs, layouts, data,
equipment descriptions, masks, mask works, systems, toolings, software,
data, copyrightable material, trade secrets, inventions (whether
patentable or not), improvements, developments, discoveries and any
other information or intellectual property rights which may not lie
within, may only partially lie within or may lie completely within the
domain of public knowledge;
(53) "LAW" means all present and future laws, regulations, ordinances,
permits or other requirements having legal effect;
(54) "LICENSE AGREEMENT" means the License Agreement among AMD Inc., AMD
Holding and AMD Saxonia entered into concurrently herewith, as such
License Agreement may be amended, supplemented or otherwise modified
from time to time;
(55) "LOAN AGREEMENT" means the Loan Agreement, dated 11 March, 1997 among
AMD Saxonia, the Banks, the Agent, the Security Agent and the Paying
Agent, as such Loan Agreement may be amended, supplemented or otherwise
modified from time to time;
(56) "LOAN AGREEMENT TERMINATION DATE" means the first day on which (i) all
Obligations (under, and as defined in, the Loan Agreement) have been
paid in full, and (ii) the Banks have no Commitments (under, and as
defined in, the Loan Agreement);
(57) "MANAGEMENT PLAN" means that certain Management Plan of AMD Saxonia
dated February 1997;
(58) "MANAGEMENT SERVICE AGREEMENT" means, together, that certain Management
Service Agreement dated as of January 1, 1996 and that certain letter
agreement dated April 9, 1996 between AMD Inc. and AMD Saxonia, as
amended and restated among AMD Inc., AMD Holding and AMD Saxonia as of
the date hereof (a copy of which amendment and restatement is attached
hereto as Exhibit VII), and as such amended and restated agreement may
be further amended, supplemented or otherwise modified from time to
time;
(59) "NEW YORK CONVENTION" has the meaning assigned to it in Section 7.10;
(60) "PARI PASSU COMPENSATION AMOUNT" has the meaning assigned to it in
Section 3.12;
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<PAGE>
(61) "PARI PASSU COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit II to this Agreement;
(62) "PAYING AGENT" means Dresdner Bank Luxembourg S.A., as paying agent
under the Loan Agreement, including any successor to Dresdner Bank
Luxembourg in that capacity;
(63) "PERIOD" means any Fiscal Quarter of AMD Saxonia commencing on or after
the Effective Date, including without limitation any Post Completion
Period; provided that the Period in which the Completion Date takes
place shall end on the Completion Date, and the next Period shall
commence on the day after the Completion Date and end on the last day of
the Fiscal Quarter in which the Completion Date takes place; provided
further that no Period shall extend beyond, and the final Period shall
end on, the Termination Date;
(64) "PERSON" means an individual, partnership, joint venture, trustee,
trust, corporation, unincorporated association or other entity, or a
government, state or agency or political subdivision thereof;
(65) "PLANT" means the advanced production facility to be constructed, owned
and operated by AMD Saxonia in or near Dresden, Germany to manufacture
Wafers using high-volume semiconductor wafer fabrication processes;
(66) "POST COMPLETION PERIOD" means each successive Period commencing after
the Completion Date, and the first Post Completion Period shall
accordingly begin the day following the Completion Date;
(67) "PRICE ADJUSTMENT AMOUNT" has the meaning assigned to it in Section
3.03(a);
(68) "PRODUCT" means a Wafer containing identical individual integrated
circuits meeting Specifications which have been supplied by or on behalf
of AMD Holding to AMD Saxonia in accordance with Sections 2.01 and
4.01(a);
(69) "PRODUCTION PROBLEMS" means any circumstances other than those resulting
from Force Majeure pertaining to AMD Saxonia which prevent or delay the
manufacture or shipment of a Product by AMD Saxonia, including any
temporary or permanent inability to apply or continue to apply
Intellectual Property in the manufacture of such Product;
(70) "QUALIFIED PERSONNEL" has the meaning assigned to it in Section 4.02;
(71) "QUARTERLY PRICING COMPLIANCE CERTIFICATE" means a certificate
substantially in the form of Exhibit III to this Agreement;
(72) "REQUIREMENTS FORECAST" has the meaning assigned to it in Section
3.02(a);
(73) "SECURITY AGENT" means Dresdner Bank AG, as security agent under the
Loan Agreement, including any successor to Dresdner Bank AG in such
capacity;
8
<PAGE>
(74) "SHIPPED" means, with respect to any Products and any Period or 4
Quarter Period (as the case may be), Products delivered by AMD Saxonia
F.O.B. Dresden, Germany pursuant to Section 3.09 during that Period or 4
Quarter Period in each case pursuant to one or more purchase orders
placed by AMD Holding and accepted by AMD Saxonia in accordance with
this Agreement;
(75) "SPECIFICATIONS" means, with respect to a Product, the tooling, masks,
mask-works, specifications, blueprints, drawings, assembly instructions
and other instructions required for the manufacture of that Product;
(76) "SPONSORS' SUPPORT AGREEMENT" means the Sponsors' Support Agreement
entered into concurrently herewith among AMD Inc., AMD Holding, the
Agent, and the Security Agent, as such agreement may be amended,
supplemented or otherwise modified from time to time;
(77) "START-UP COST ADJUSTMENT CERTIFICATION" means certification in the form
of a certificate substantially in the form of Exhibit IV to this
Agreement;
(78) "START-UP COSTS" means the aggregate amount of Total Costs incurred by
AMD Saxonia prior to the Effective Date;
(79) "START-UP COST SAVINGS" means the excess, if any, of Budgeted Start-up
Costs over Start-up Costs;
(80) "SUBORDINATED SHAREHOLDER LOAN" means a loan made pursuant to and in
accordance with the terms of the Sponsors' Loan Agreement (as defined in
the Sponsors' Support Agreement);
(81) "SUBSIDIARY" means, with respect to any Person, any other Person of
which more than 50% of the total voting power of shares of stock or
other ownership interest entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof;
(82) "SURCHARGE" has the meaning assigned to it in Section 3.07;
(83) "TECHNICAL ADVISOR" has the meaning assigned to it in the Sponsors'
Support Agreement;
(84) "TECHNICAL DOCUMENTATION" for any Know-how means manuals and other
documentation in which such Know-how is recorded and all specifications,
programs, software, formulae, drawings, sketches, plans, blueprints,
design materials, manuals and other technical or organizational
documentation for such Know-how;
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(85) "TERMINATION DATE" has the meaning assigned to it in Section 6.01;
(86) "TOTAL COSTS" means, for any period, all costs incurred, paid or accrued
by AMD Saxonia and included for that period in the "Results from
ordinary activities" (Ergebnis der gewohnlichen Geschaftstatigkeit) in
--------------------------------------------
accordance with German GAAP (i.e., (S) 275 of the German Commercial Code
(Handelsgesetzbuch), an English translation of which is attached as
-----------------
Exhibit V to this Agreement) plus extraordinary expenses plus all taxes
other than corporation tax (Korperschaftsteuer), solidarity levy
------------------
(Solidaritatszuschlag) and value added tax (Umsatzsteuer), all as shown
-------------------- ------------
in the statutory income statement of AMD Saxonia; provided that
--------
(a) German GAAP, solely for purposes of this definition, shall be
applied according to the accounting options specified under items
(i) through (x) of this definition below regardless of whether
German GAAP is so applied in the statutory income statement of AMD
Saxonia;
(b) Total Costs shall be reduced by any revenue or income (other than
revenue under this Agreement and the AMD Saxonia Research
Agreement) accrued or received by AMD Saxonia, which revenue or
income shall include any interest accrued or received by AMD
Saxonia including income earned on deposits and investments, as
well as net payments received in respect of hedging transactions;
(c) Total Costs shall not include any AMD Saxonia costs reimbursed by
AMD Inc. pursuant to Article II of the AMD Saxonia Research
Agreement;
(d) Total Costs shall include all interest expense paid or accrued by
AMD Saxonia, including without limitation all interest expense
relating to loans to AMD Saxonia from third parties and from
Affiliates of AMD Saxonia.
(e) Without limiting the generality of clause (d) of this definition,
interest expenses shall include interest at the rate of 7% per
annum (calculated on the basis of actual days and months and
compounded monthly) on each Class A Sponsors' Loan (as defined in
the Sponsors' Support Agreement) from the date made, irrespective
of whether such Class A Sponsors' Loan is made as a loan or as an
equity contribution, whether such Class A Sponsors' Loan bears
interest at such rate, whether such interest has been paid, waived
or capitalized or whether the obligation to pay such interest has
been deferred;
(f) Total Costs shall be reduced by the amount of any grants,
allowances, interest subsidies, and expense reimbursements received
by AMD Saxonia from the Republic of Germany, the Sachsiche
Aufbaubank,
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the Free State of Saxony, the City of Dresden, or from
any other Governmental Authority, and such reduction shall be made
in the manner specified in (iv) or (v) below (as applicable);
(g) Total Costs in a Period in which amounts are paid by AMD Holding
to AMD Saxonia pursuant to Section 3.07 below shall be reduced by
such amount; provided that such Total Costs shall not be reduced
--------
by the amount of the Surcharge;
(h) Total Costs for any Period after the Effective Date shall be
increased by the amount of the Total Costs in the immediately
preceding Period (if any) if no Products were shipped during such
preceding Period (and the parties hereto acknowledge that the
amount by which the Total Costs shall be increased pursuant to
this clause (h) therefore corresponds to the aggregate Total Costs
for all immediately preceding consecutive Periods in which no
Products were Shipped, in each case without giving effect to this
clause (h));
(i) For the avoidance of doubt, Total Costs for each Period shall
neither be (a) decreased for that Period by the amount by which
the inventory at the end of that Period exceeds the amount of the
inventory at the end of the immediately preceding Period, nor (b)
increased for that Period by the amount by which the inventory at
the end of that Period is less than the amount of the inventory at
the end of the immediately preceding Period.
With reference to clause (a) of this definition above,
(i) Start-up Costs will not be capitalized;
(ii) depreciation of fixed assets will be applied on a straight-line
basis on the assumption of useful lives of 25 years for buildings
(shell), ten years for other non-movables (i.e., installations
---
(Betriebsvorrichtungen) including, without limitation, the "clean
---------------------
room") and five years for movables (machinery, tools and other
equipment);
(iii) exceptional depreciation in order to state fixed assets at a lower
value, and reversals of such depreciation in the case that the
reasons for an exceptional depreciation no longer exist, will be
included;
(iv) revenues from investment grants (Investitionszuschusse) and
---------------------
allowances (Investitionszulagen) will be allocated chronologically
-------------------
to the investments in buildings, machinery, tools and other
equipment to which they relate for the AMD Saxonia fiscal years
1996 to 2000. They will be amortized parallel to the depreciation
of the
11
<PAGE>
corresponding fixed assets and so will reduce these depreciation
costs. Without limiting the generality of clause (a) of this
definition, such amortization shall occur regardless of whether
AMD Saxonia elects to treat some or all of such grants and
allowances as income in the year received for purposes of AMD
Saxonia's statutory financial statements;
(v) all grants, allowances, interest subsidies, or expense
reimbursements described in clause (f) of this definition but
which are not investment grants (Investitionszuschusse) or
---------------------
allowances (Investitionszulagen) will reduce Total Costs in the
-------------------
Period received by the full amount received in that Period;
(vi) write-downs on current assets due to obsoleteness or solvency
reasons will be included;
(vii) inventory will be valued at the lower valuation limit according
to German Income Tax Regulation (R 33 Einkommensteuerrichtlinien)
--------------------------
in effect on the date of this Agreement;
(viii) if there is a fiscal unit (Organschaft) implemented for trade tax
-----------
purposes, the portion of trade taxes (Gewerbeertragsteuer) paid
-------------------
by AMD Holding and attributable to the trading profit and capital
of AMD Saxonia will be included;
(ix) deferred taxes (latente Steuern specified in (S) 274 of the
---------------
German Commercial Code (Handelsgesetzbuch)) will not be included;
-----------------
and
(x) accruals for repairs and maintenance expenses, necessary
demolition and/or dismantlement, environmental obligations and
other future expenses (so-called Aufwandsruckstellungen, (S) 249
----------------------
Section 2 of the German Commercial Code (Handelsgesetzbuch)) will
-----------------
be included to the extent they are made in the statutory
financial statements of AMD Saxonia;
(87) "UNEVEN CAPACITY ALLOCATION" has the meaning assigned to it in Section
3.12;
(88) "VARIABLE COSTS" for any period means the cost of raw materials,
consumables and supplies used for or in connection with the manufacture
of Products during that period;
(89) "WAFER" means a silicon wafer onto which many identical individual
integrated circuits have been etched or otherwise imprinted; and
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(90) "WAFER FABRICATION PLANT" means (a) the Plant, (b) for so long as such
plant is owned or controlled (including under lease) by AMD Inc. or one
or more of its Subsidiaries, AMD Inc.'s plant located in Austin, Texas
and known as "Fab 25", and (c) any other high volume semiconductor wafer
fabrication plant constructed or otherwise acquired by AMD Inc. and/or
one or more of its Subsidiaries after the date hereof which produces
Wafers containing Microsoft-compatible general purpose microprocessors.
SECTION 1.02. CONSTRUCTION OF CERTAIN TERMS.
-----------------------------
(a) Unless otherwise specifically provided, (i) references to the
singular shall include the plural and vice versa, and references by way of
----------
masculine pronoun or adjective shall include references by way of the feminine;
(ii) references to Articles, Sections and Subsections shall be to Articles,
Sections and Subsections of this Agreement; (iii) accounting terms are to be
construed in accordance with German GAAP; (iv) all references to money, costs
and payments in this Agreement are to money, costs and payments in DM; and (v)
references to days in this Agreement shall be to calendar days.
(b) The index to and headings in this Agreement are inserted for
convenience only and are to be ignored in construing this Agreement.
(c) For purposes of this Agreement, "Capacity" shall be determined in
good faith by AMD Saxonia (in the case of the Plant) or AMD Holding (in the case
of each other Wafer Fabrication Plant); provided that the Agent, through its
--------
Technical Advisor, may, at any time prior to the Loan Agreement Termination
Date, review any such determination, and in the event the Agent and AMD Holding
or AMD Saxonia (as the case may be) do not agree as to such Capacity, Section
7.10 (k) shall apply.
ARTICLE II
MANUFACTURE OF PRODUCTS
-----------------------
SECTION 2.01. MANUFACTURE BY AMD SAXONIA OF PRODUCTS FOR SALE TO AMD
------------------------------------------------------
HOLDING.
- -------
(a) On the terms and subject to the conditions of this Agreement, AMD
Saxonia hereby agrees to manufacture and sell Products to AMD Holding; provided
that prior to the Completion Date AMD Saxonia (i) shall be required only to use
its reasonable efforts to manufacture and sell such Products in accordance with
the requirements of this sentence, and (ii) shall not be required to take any
steps hereunder to manufacture and sell such Products to the extent such steps
at such time could reasonably be expected to delay Completion (as defined in the
Loan Agreement) of the Plant. AMD Saxonia further agrees that, during the term
of this Agreement, unless AMD Inc., AMD Holding and, prior to the Loan Agreement
Termination Date, the Agent, otherwise consent thereto, it shall not, directly
or indirectly, (i) market, distribute or sell any Products or any other goods or
services to any
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<PAGE>
Person other than AMD Holding, AMD Inc. or one or more of AMD Inc.'s other
Subsidiaries under any circumstances, or (ii) engage in any activities other
than (v) construction of the Plant and the Design Center, (w) provision of the
services contemplated by the AMD Saxonia Research Agreement, (x) manufacture and
sale of Products to be Shipped pursuant to this Agreement and (y) activities
reasonably incidental to any of the foregoing.
(b) On the terms and subject to the conditions of this Agreement, AMD
Holding hereby agrees to purchase from AMD Saxonia and pay for the Products
Shipped to it pursuant to the terms of this Agreement.
(c) AMD Holding shall from time to time provide, or shall arrange for
AMD Inc. to provide, to AMD Saxonia technical assistance as required in Article
IV, including disclosure to AMD Saxonia of such of the Know-how and
Specifications of AMD Inc. and its Subsidiaries, or which AMD Inc. or its
Subsidiaries have the right to use, as is necessary or, in the reasonable
opinion of AMD Saxonia, desirable, to enable AMD Saxonia to manufacture Products
on a timely basis, in accordance with the Specifications for the relevant
Product, as required by AMD Inc. under the AMD Holding Wafer Purchase Agreement.
Any disclosure of Know-how and Specifications (including without limitation by
way of technical assistance pursuant to Article IV) to AMD Saxonia by or on
behalf of AMD Holding (including without limitation any such disclosure arranged
by AMD Holding as contemplated hereby) shall be subject to the License
Agreement.
(d) AMD Saxonia shall, as soon as is reasonably practicable (i) after
the disclosure to it of the Know-how and Specifications for a Product as
contemplated in Subsection 2.01(c) and Article IV, and (ii) without at any time
prior to the Completion Date being required to take any steps hereunder to
manufacture and sell such Products to the extent such steps at such time could
reasonably be expected to delay Completion (as defined in the Loan Agreement) of
the Plant, submit to AMD Holding (or as directed by AMD Holding) for approval
pre-production samples of the Product. AMD Holding shall communicate its
approval or disapproval of any such samples no later than two weeks after such
samples are submitted to AMD Holding for such approval (and shall be deemed to
have approved such samples under this Section 2.01(d) for all purposes of this
Agreement if it has not communicated any such disapproval within such two week
period). AMD Saxonia shall not commence manufacture of such Product until AMD
Holding has approved or is deemed to have approved the samples. Approval shall
not be unreasonably withheld or delayed by AMD Holding (each of the parties
hereto agrees that, for this purpose, disapproval by AMD Holding because of any
reasonable disapproval by AMD Inc. of such samples pursuant to the AMD Holding
Wafer Purchase Agreement, shall not be deemed unreasonable) and, once given,
shall constitute irrevocable confirmation that the Products manufactured in
conformity with the samples (or differing only within normal silicon computer
chip industry limits) will comply with the Specifications and will meet the
requirements of quality specified in Section 2.03, except in respect of defects
in such samples or future production which are not capable of being revealed on
reasonable inspection by AMD Holding.
(e) Each of AMD Holding and AMD Saxonia shall nominate one or more
senior managers or representatives (which representatives, in the case of AMD
Holding, may
14
<PAGE>
include or be senior managers of AMD Inc.) who shall be responsible for liaising
in connection with the manufacture and development of the Products.
SECTION 2.02. COMPLIANCE WITH LAWS AND REQUIRED PERMITS. AMD Saxonia
-----------------------------------------
shall, at its cost and expense, use commercially reasonable efforts to (i)
comply with all applicable Laws relating to the manufacture and sale of the
Products, and (ii) obtain all requisite consents, authorizations, permits and
approvals for the manufacturing and sale to AMD Holding and the sale by AMD
Holding to AMD Inc. of the Products from each Governmental Authority having
jurisdiction over the manufacture and sale of the Products by AMD Saxonia and
AMD Holding; provided, however, that AMD Saxonia shall not be responsible for
obtaining any consents, authorizations, permits or approvals in connection with
the import of Products into any territory outside Germany.
SECTION 2.03. QUALITY OF PRODUCTS; INSPECTION AND REJECTION;
----------------------------------------------
REPLACEMENT PRODUCTS. Without prejudice to AMD Holding's obligation to make
- --------------------
payment for Products Shipped pursuant to Section 3.10:
(a) AMD Saxonia shall use all reasonable efforts to ensure that each
Product Shipped meets the Specifications for that Product. In order to assist
AMD Saxonia in such efforts and for the purpose of assuring to AMD Holding the
quality of the Products required under this Agreement, AMD Saxonia shall permit
the duly authorized representatives of AMD Holding and/or AMD Inc., at any time
during normal working hours and on reasonable notice, to inspect any premises of
AMD Saxonia, and shall use all reasonable efforts to permit such
representatives, at such time and on such notice, to inspect any premises of any
third party where any of the Products, or any labeling or packaging for them,
are manufactured or stored by or for AMD Saxonia.
(b) AMD Holding shall promptly notify AMD Saxonia in writing should the
quality of the Products Shipped vary materially from the typical quality of the
four previous shipments or, in the case of the first four shipments, from the
quality of the previous shipments. In such event, AMD Saxonia shall use its
reasonable commercial efforts to restore the quality of the Products delivered
hereunder to again meet such typical quality as soon as reasonably possible.
ARTICLE III
PURCHASE PRICE AND DELIVERY OF PRODUCTS
---------------------------------------
SECTION 3.01. DESCRIPTIVE OVERVIEW OF PRODUCT PRICING. Without
---------------------------------------
derogating from Sections 3.02 through 3.12 hereunder:
It is the intention of the parties hereto that from and after the
Effective Date AMD Holding shall purchase Products which it orders from AMD
Saxonia and are Shipped by AMD Saxonia in accordance with the requirements of
this Agreement. The purchase price for the Products will be set at a price per
Wafer equal to the Adjusted Selling Price Per Wafer,
15
<PAGE>
which will be determined on a "cost-plus" basis for any Period. Before the
beginning of each Period, AMD Saxonia will prepare a budget for that Period
pursuant to Section 3.02 setting out all relevant estimated costs for that
Period, and shall determine the Actual Selling Price Per Wafer based on such
budgets and on the quarterly Requirements Forecast to be provided by AMD
Holding.
For all Products Shipped during any Period, AMD Holding shall make
payments to AMD Saxonia based on the Actual Selling Price Per Wafer. In the
event no shipments of Products are made during any Period following the
Effective Date (regardless of whether before or after the Completion Date),
other than where no shipments are made as a result of Force Majeure in any Post
Completion Period, AMD Holding shall at the end of such Period make advance
payments to AMD Saxonia, against Products to be Shipped during the following
Period, in an amount corresponding to the Applicable Percentage (as defined in
Section 3.03(b)) of AMD Saxonia's Total Costs incurred in that Period. Such
advance payments shall be included as Total Costs in the next Period in which
Products are shipped.
Within 25 days after the end of each Period (other than one in which no
Products are Shipped), AMD Saxonia shall determine the Adjusted Selling Price
Per Wafer for such Period on the basis of its Total Costs actually incurred
during that Period and the Applicable Percentage in accordance with Section
3.03. In the event the Actual Selling Price Per Wafer and the Adjusted Selling
Price Per Wafer differ for such Period, the aggregate price difference shall be
paid within 30 days after the end of such Period by AMD Saxonia to AMD Holding,
or by AMD Holding to AMD Saxonia, as the case may be, pursuant to Section
3.03(a). The parties acknowledge that this pricing mechanism may have the result
of dictating a high price per Wafer for any Period in which only relatively few
Wafers are Shipped and that after the Effective Date it will result in a full
cost reimbursement during each year (except for the first four Periods after the
Effective Date during which the Applicable Percentage is 75%). Furthermore, the
amount of Fixed Costs compensated will be adjusted retroactively pursuant to
Section 3.06, where the Actual Volumes over any 4 Quarter Period after
Completion are lower than 75% or exceed 100% of Anticipated Capacity for that
year, to reduce or increase such reimbursement, respectively.
In the event Start-up Cost Savings are realized or Excess Start-up Costs
are incurred prior to the Effective Date, these will be compensated in eight
equal quarterly payments after the Effective Date pursuant to Section 3.04.
SECTION 3.02. DETERMINATION OF THE ACTUAL SELLING PRICE PER WAFER
---------------------------------------------------
PRIOR TO BEGINNING OF EACH PERIOD BASED ON FORECASTS.
- ----------------------------------------------------
(a) Not later than ten (10) days before the commencement of each
Period:
(i) AMD Saxonia shall prepare and deliver to AMD Holding (with a
copy to the Agent) a written estimate reasonably acceptable to AMD
Holding showing in reasonable detail AMD Saxonia's good faith and
reasonable estimate of the Products and Capacity of the Plant for each
such Product for the succeeding Period; and
16
<PAGE>
(ii) AMD Holding shall prepare and deliver to AMD Saxonia (with a
copy to the Agent) a written forecast, showing in reasonable detail AMD
Holding's good faith and reasonable estimate of the volume (the
"REQUIREMENTS FORECAST") of each Product that AMD Holding anticipates
ordering from AMD Saxonia in accordance with the terms of this
Agreement for delivery during the course of the Period, provided that
--------
the Requirements Forecast shall be not less than 1 for any Period
commencing on or after the Completion Date.
(b) Not later than seven (7) days before the commencement of each
Period, AMD Saxonia shall prepare and deliver to AMD Holding (with a copy to the
Agent) a written forecast reasonably acceptable to AMD Holding, showing AMD
Saxonia's good faith and reasonable estimate of the Adjusted Selling Price Per
Wafer for the Period (such estimate being the "ACTUAL SELLING PRICE PER WAFER").
Such estimate shall include a detailed itemization of the costs and volumes
making up such Actual Selling Price Per Wafer. The Actual Selling Price Per
Wafer shall be calculated based on the Requirements Forecast and the estimated
Total Cost for such Period using the formula set out in the definition of
"Adjusted Selling Price Per Wafer" in Section 3.03(b).
(c) Each of AMD Holding and AMD Saxonia agrees to consult with each
other in the preparation of such forecasts and estimates, and to cooperate with
one another in complying with their respective obligations under Sections
3.02(a) and (b) on a timely basis.
(d) The Actual Selling Price Per Wafer, as determined for any Period
pursuant to this Section 3.02, shall apply to all Products Shipped by AMD
Saxonia during the Period.
(e) Each forecast and estimate referred to in Section 3.02(a) and (b)
shall be in the applicable form attached as Exhibit VI hereto.
(f) In the event the Bank's Auditor ("Wirtschaftsprufer der Banken") as
defined in the Loan Agreement determines a different Actual Selling Price Per
Wafer for any Period in accordance with Section 17.1 of the Loan Agreement, the
parties agree that such price as determined by the Bank's Auditor shall be
deemed to be the Actual Selling Price Per Wafer for that Period from and after
the date three Business Days after the Bank's Auditor notifies them of such
determination, notwithstanding the initial determination thereof by AMD Saxonia
under Section 3.02(b) and regardless of whether invoices containing the original
Actual Selling Price Per Wafer may have already been issued for Products Shipped
during such Period. Provided that all payments required under this Section
3.02(f) have been made in full, the Adjusted Selling Price Per Wafer and Price
Adjustment Amount for that Period shall be calculated using the Actual Selling
Price Per Wafer as so determined by the Bank's Auditor. In the event that during
such Period any Products have already been Shipped and AMD Holding has already
paid the Actual Selling Price Per Wafer for such Products (as calculated by AMD
Saxonia), AMD Holding shall promptly (but in no event later than 10 Business
Days) pay to AMD Saxonia in cash the difference in the aggregate purchase price
for such Products resulting from the change in the Actual Selling Price Per
Wafer.
17
<PAGE>
SECTION 3.03. PAYMENT TO REFLECT CERTAIN VARIATIONS BETWEEN ESTIMATED
-------------------------------------------------------
AND ACTUAL FIGURES IN THE PRIOR PERIOD; DEFINITION OF ADJUSTED SELLING PRICE PER
- --------------------------------------------------------------------------------
WAFER.
- -----
(a) Promptly, but in any event not later than 25 days after the end of
each Period, the Adjusted Selling Price Per Wafer for that Period shall be
calculated in accordance with the formula contained in Section 3.03(b) by AMD
Saxonia and certified by AMD Saxonia to AMD Holding (with a copy to the Agent).
Such calculation shall be based on the Total Costs actually incurred during such
Period and the Actual Volume for such Period and shall be accompanied by a
detailed itemization of the Total Costs and Actual Volume reflected therein. In
the event the Adjusted Selling Price Per Wafer for that Period is not equal to
the Actual Selling Price Per Wafer for that Period, then the "PRICE ADJUSTMENT
AMOUNT" shall be calculated for that Period in accordance with the following
formula:
Price
Adjustment
Amount = (AdjustedSPPW x AV) - (ActualSPPW x AV)
where:
"ACTUALSPPW" means the Actual Selling Price Per Wafer for that
Period;
"AV" means the Actual Volume for that Period; and
"ADJUSTEDSPPW" means the Adjusted Selling Price Per Wafer for that
Period.
(i) to the extent the Price Adjustment Amount for that Period is a
positive number, the Price Adjustment Amount shall be paid by AMD
Holding to AMD Saxonia within 30 days after the end of that Period; and
(ii) to the extent the Price Adjustment Amount for that Period is a
negative number, the Price Adjustment Amount shall be credited by AMD
Saxonia against amounts owed or to be owed by AMD Holding under this
Agreement.
(b) For any Period the "ADJUSTED SELLING PRICE PER WAFER" shall be
calculated in accordance with the following formula:
Adjusted
Selling Price Applicable
Per Wafer = TC x Percentage
_________________
AV
where (whether for the purpose of calculating the Adjusted Selling Price Per
Wafer or estimating the Adjusted Selling Price Per Wafer pursuant to Section
3.02(b):
18
<PAGE>
"APPLICABLE
PERCENTAGE" shall be (i) 75% in the case of the first four Periods,
(ii) 105% in the case of the next four Periods and (iii)
110% in the case of each subsequent Period;
"AV" means the Actual Volume for that Period;
"TC" is AMD Saxonia's Total Costs for or in respect of that
Period.
SECTION 3.04. PAYMENT IN FIRST EIGHT PERIODS TO REFLECT CERTAIN EXCESS
--------------------------------------------------------
COSTS OR COSTS SAVINGS.
- ----------------------
(a) In the first eight Periods only, one-eighth the amount of any (i)
Excess Start-up Costs shall be paid by AMD Holding to AMD Saxonia no later than
30 days after the end of each such Period, and (ii) Start-up Cost Savings shall
be credited by AMD Saxonia against amounts owed or to be owed by AMD Holding
under this Agreement.
(b) The amount of Excess Start-up Costs and Start-up Cost Savings shall
be determined in any event not later than 60 days after the Effective Date. In
the event Start-up Costs have not been conclusively determined prior to the date
30 days after the end of the first Period, such Start-up Costs shall be
estimated for purposes of the payment contemplated for that first Period under
Section 3.04(a), and the payment required under Section 3.04(a) for the next
Period shall be increased or decreased by the shortfall or excess, respectively,
in the amount of the payment for that first Period from the amount it would have
been if it had been made based on actual instead of estimated Start-up Costs.
SECTION 3.05. ADVANCE PAYMENT ADJUSTMENT TO REIMBURSE TOTAL COSTS IN
------------------------------------------------------
CERTAIN PERIODS DURING WHICH NO WAFERS ARE SHIPPED. For any Period after the
- --------------------------------------------------
Effective Date during which no Products are Shipped, promptly after the end but
in any event not later than 30 days after such Period, AMD Holding shall make an
advance payment in the amount of AMD Saxonia's Total Costs (without giving
effect to clause (h) of the definition thereof) during that Period multiplied by
the Applicable Percentage for that Period (the "ADVANCE PAYMENT ADJUSTMENT
AMOUNT") against the first Wafers Shipped in the succeeding Period in which
Wafers are Shipped; provided that (without prejudice to the inclusion of the
--------
relevant costs in the Total Costs for a subsequent Post Completion Period) no
such Advance Payment Adjustment Amount shall be paid with respect to a Post
Completion Period in which no Wafers are Shipped as a result of Force Majeure.
SECTION 3.06. FIXED COST COMPENSATION ADJUSTMENT TO ACHIEVE PARTIAL
-----------------------------------------------------
FIXED COST COMPENSATION IN POST COMPLETION PERIODS. AMD Holding and AMD Saxonia
- --------------------------------------------------
agree that, to the extent the Actual Volume for any 4 Quarter Period is less
than 75% or greater than 100% of the Anticipated Capacity for such 4 Quarter
Period, and (i) the Fixed Cost Compensation Amount (as defined below) for such 4
Quarter Period is a positive number, then AMD Saxonia shall credit AMD Holding
for such amount (against amounts owed or to be owed by AMD Holding under this
Agreement), and (ii) such Fixed Cost Compensation Amount is a negative number,
AMD Holding shall pay to AMD Saxonia such
19
<PAGE>
amount, in either case within 60 days after the end of such 4 Quarter Period.
For this purpose, the Fixed Cost Compensation Amount shall be calculated in
accordance with the following formula:
Fixed Cost
Compensation = Adj.4QFC - Adj.4QFC x 4QAV
Amount ___________________
4Q Anticipated Capacity Limit
where:
"ADJ.4QFC" means the sum of the amount, calculated for each Period or
part thereof comprising such 4 Quarter Period, represented
by the Fixed Costs for such Period or part thereof, as
applicable, multiplied by the Applicable Percentage under
Section 3.03(b) for such Period or part thereof.
"4QAV" means the aggregate amount of Actual Volume during such 4
Quarter Period.
"4Q ANTIC-
IPATED
CAPACITY
LIMIT" means (i) 75% of 4Q Anticipated Capacity in all cases where
the 4QAV is less than 75% of 4Q Anticipated Capacity and
(ii) 100% of 4Q Anticipated Capacity in all cases where the
4QAV exceeds 100% of 4Q Anticipated Capacity.
"4Q ANTIC-
IPATED
CAPACITY" means the aggregate amount of Anticipated Capacity during
such 4 Quarter Period.
SECTION 3.07. ANNUAL COMPENSATION FOR CERTAIN ADMINISTRATIVE COSTS.
----------------------------------------------------
AMD Holding shall compensate AMD Saxonia for any administrative costs, including
without limitation bookkeeping, legal and accounting costs, incurred by AMD
Saxonia from time to time for the direct benefit of AMD Holding, as follows.
The parties agree that the amount payable by AMD Holding to AMD Saxonia under
this Section 3.07 shall be DM 50,000 per annum for each Fiscal Year (and pro-
rated for any portion of a Fiscal Year) from the date hereof until the Effective
Date, payable no later than 30 days after the end of each Fiscal Year. In
addition, AMD Holding shall compensate AMD Saxonia for any such costs,
determined in accordance with German GAAP, incurred by AMD Saxonia on or after
the Effective Date, plus a surcharge thereon of 7.5% (the "SURCHARGE"), no later
than 30 days after the end of each Fiscal Year.
SECTION 3.08. ORDERING PROCEDURE.
------------------
20
<PAGE>
(a) AMD Holding shall place written orders for Products from AMD
Saxonia, to be Shipped during a Fiscal Quarter, at least 7 days prior to the
beginning of such Fiscal Quarter and shall specify the volume of Products
ordered, the Actual Selling Price Per Wafer, the desired destination, a
reasonable requested shipment date and any other relevant shipping terms for the
Products covered by each such order. All orders shall be subject to acceptance
by AMD Saxonia. AMD Saxonia shall use its best efforts to advise AMD Holding in
advance of any inability to make full and timely delivery of any Products
ordered by AMD Holding. AMD Holding shall take delivery of, and be solely
responsible for the disposition of, any Product with respect to any order which
it has placed with AMD Saxonia.
(b) AMD Holding may change the destination of any order prior to the
Product shipment date. AMD Saxonia shall use its best efforts to ship each order
of Products on the shipment date requested and to the destination specified by
AMD Holding, unless AMD Holding gives notice to AMD Saxonia of a different
destination for such order in accordance with this Section 3.08, in which event
AMD Saxonia shall use its best efforts to ship such order of Products to the
revised destination, if any.
SECTION 3.09. SHIPPING TERMS. AMD Saxonia shall deliver the Products
--------------
purchased hereunder F.O.B. Dresden, Germany. AMD Holding will arrange and be
responsible for and pay all freight, trucking, insurance and other charges
incurred in connection with the shipment of the Products from Dresden, Germany,
to such place or places of delivery as specified by AMD Holding pursuant to
Section 3.08.
SECTION 3.10. PAYMENTS; SET OFF.
-----------------
(a) AMD Holding shall pay to AMD Saxonia the Actual Selling Price Per
Wafer for all Products Shipped by AMD Saxonia and, to the extent paid by AMD
Saxonia, the costs and expenses for freight and insurances, unconditionally
within 30 days after receipt of invoices denominated in DM from AMD Saxonia in
accordance with this Section 3.10. AMD Saxonia shall be entitled to issue
invoices to AMD Holding as soon as the relevant Products are Shipped. Payment
for all other amounts due hereunder from either party (including any adjustment
amount) shall be unconditionally due on or before the date specified in this
Agreement for such amount.
(b) All amounts under this Agreement not paid when due from AMD Holding
shall bear interest at the rate of 7.0% per annum from the date due until paid,
calculated on the basis of actual days and months elapsed. Such interest shall
be due and payable at the end of each calendar month. In no event shall the
interest charged exceed the maximum amount permitted under law.
(c) The obligations of AMD Holding under this Agreement are intended by
the parties to be absolute and unconditional under any and all circumstances
except to the extent expressly stated in this Agreement, and are intended to be
independent of the rights and obligations of AMD Saxonia and AMD Holding or of
any of their Affiliates or of any third party under this Agreement or any other
agreement or arrangement in each case except as expressly stated in this
Agreement.
21
<PAGE>
(d) The parties hereto hereby expressly acknowledge, agree, and
understand that the payment by AMD Holding of all amounts payable by it
hereunder as required by this Agreement shall in no way be prevented, delayed,
or otherwise affected as a result of any dispute between the parties (or between
any of the parties and their Affiliates) or by any breach of this Agreement or
any other agreement entered into in connection herewith and/or any adverse
change in the financial or economic condition of AMD Saxonia or any Affiliate
thereof, including without limitation AMD Saxonia's or any such Affiliate's
liquidation or bankruptcy, or any kind of insolvency proceeding in respect
thereof.
(e) Except as otherwise expressly provided herein, no obligations of AMD
Holding under this Agreement shall be subject to any counterclaim, set-off,
deduction, withholding, or defense based upon (and without prejudice to) any
claim that AMD Holding may have against AMD Saxonia, any of its Affiliates, or
any other Person, or released, discharged, or in any way affected for any reason
or through any circumstances whatsoever (other than as required by any mandatory
non-waivable requirements of law) including, without limitation, (i) any breach
of any representation or warranty on the part of AMD Saxonia under or in
connection with this Agreement or any other agreement entered into in connection
herewith or any failure of AMD Saxonia to perform any of its agreements,
covenants, or other obligations hereunder or thereunder, or (ii) any other
circumstance which might constitute a legal or equitable discharge or defense of
AMD Holding; provided that, as between AMD Holding and AMD Saxonia (and without
prejudice to any rights of subrogation that may arise), payment or performance
by AMD Inc. or any other Person of any obligation of AMD Holding hereunder shall
constitute payment or performance (as applicable) of such obligation hereunder.
(f) Any amounts that are due from AMD Saxonia to AMD Holding hereunder
shall be payable only in the form of credit against amounts owed or to be owed
by AMD Holding to AMD Saxonia under this Agreement, except to the extent
expressly provided in Section 4.04. Any amount that is due from AMD Holding to
AMD Saxonia hereunder may be set-off against any payment then due (whether as a
credit or otherwise) under Sections 3.03, 3.04, 3.06, 3.10, 3.12 or 6.02,
Article IV or the Management Service Agreement, from AMD Saxonia to AMD Holding.
SECTION 3.11. METHOD OF PAYMENT. Payments under this Agreement from
-----------------
AMD Holding to AMD Saxonia, if made other than by set-off permitted by Section
3.10, shall be made by wire transfer deposited into [*] or such other account of
AMD Saxonia specified by AMD Saxonia with the prior written consent of the Agent
(a copy of which consent shall be delivered by AMD Saxonia to AMD Holding) with
not less than 15 days written notice to AMD Holding, and all such payments shall
be made in DM.
SECTION 3.12. POST COMPLETION ALLOCATION OF ORDERS BETWEEN THE PLANT AND
----------------------------------------------------------
OTHER AMD INC. FACILITIES.
- -------------------------
(a) AMD Holding agrees that, to the extent (i) the Actual Volume for
any 4 Quarter Period following Completion is less than 75% of Anticipated
Capacity for such 4
22
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
Quarter Period and (ii) there is an Uneven Capacity Allocation, AMD Holding
shall pay, no later than 60 days after the end of that 4 Quarter Period, to AMD
Saxonia a "PARI PASSU COMPENSATION AMOUNT", calculated according to the formula
set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pari Passu
Compensation = Adj.4QTC x ECV - Adj.4QTC x 4QAV + [4QVC x [ ECV - 1] x .10]
Amount _____________________________ ____________________________ ____
Amount 4Q Anticipated Capacity Limit 4Q Anticipated Capacity Limit [ [ 4QAV ] ]
</TABLE>
where:
"ADJ.4QTC" means the Total Costs (without giving effect to clause
(h) of the definition thereof) for such 4 Quarter Period,
multiplied by the Applicable Percentage under Section
3.03(b) for the Periods included in such 4 Quarter
Period;
"ECV" means the "EVEN CAPACITY VOLUME" for such 4 Quarter
Period, which is the minimum number of Wafers that would
have been Shipped during that 4 Quarter Period if there
were no Uneven Capacity Allocation (as defined below),
provided that if such minimum number exceeds 75% of the 4
--------
Quarter Anticipated Capacity for that 4 Quarter Period,
the Even Capacity Volume shall be such number of Wafers
that represents 75% of such 4 Quarter Anticipated
Capacity;
"4QAV" has the meaning assigned to it in Section 3.06 for such 4
Quarter Period; and
"4Q ANTICI-
PATED
CAPACITY
LIMIT" has the meaning assigned to it in Section 3.06 for such 4
Quarter Period;
"4QVC" means the Variable Costs for such 4 Quarter Period.
(b) In this regard, an "UNEVEN CAPACITY ALLOCATION" shall be determined
to exist with respect to any 4 Quarter Period where AMD Saxonia's Capacity
Utilization for that 4 Quarter Period is less than the AMD Inc.'s Average
Capacity Utilization for that 4 Quarter Period, where:
(i) "AMD SAXONIA'S CAPACITY UTILIZATION" for a particular 4 Quarter
Period means the fraction (x) whose numerator is the Adjusted Actual Volume
(as defined below for such 4 Quarter Period), and (y) whose denominator is
the Plant's Anticipated Capacity for Products during each 4 Quarter Period;
(ii) "ADJUSTED ACTUAL VOLUME" means the Actual Volume during such 4
Quarter Period plus (without duplication) (x) the number of Wafers that
----
would reasonably have been expected to have been Shipped during that period
but for the
23
<PAGE>
occurrence of Force Majeure with respect to AMD Saxonia and (y) the number
of Wafers that would reasonably have been expected to have been Shipped
during that period but for Production Problems but expressly excluding from
such Wafers, Wafers in respect of each Production Problem, to the extent
lasting more than 30 days, from the 30th day of such Production Problem;
(iii) "AMD INC.'S AVERAGE CAPACITY UTILIZATION" means the fraction (x)
whose numerator is the sum of:
(A) the actual number of Comparable Products, the manufacture of
which is completed by AMD Inc. and its Subsidiaries and Affiliates,
excluding AMD Saxonia and third party suppliers, during that 4 Quarter
Period; and
(B) the number of Comparable Products delivered to AMD Inc. or
one of its Subsidiaries by third party suppliers during that 4 Quarter
Period;
and (y) whose denominator is the sum of:
(A) the Capacity of any Wafer Fabrication Plant (other than the
Plant) for Comparable Products for the part of that 4 Quarter Period
during which it is owned or operated by AMD Inc. or one or more of its
Subsidiaries and Affiliates; and
(B) the number of Comparable Products delivered to AMD Inc. or
one of its Subsidiaries by third party suppliers during that 4 Quarter
period.
(c) The above calculations shall be prepared by AMD Saxonia and
delivered to AMD Holding and the Agent as soon as reasonably practicable
following the conclusion of each 4 Quarter Period in which Actual Volume is less
than 75% of Anticipated Capacity for such 4 Quarter Period, but in any event
within 60 days of the end of such 4 Quarter Period accompanied by a certificate
signed by one of its managing directors setting out the Actual Volume during
such 4 Quarter Period.
(d) AMD Holding shall supply, or arrange to be supplied by AMD Inc., to
AMD Saxonia and the Agent as soon as reasonably practicable but in any event
within 60 days of the end of each 4 Quarter Period in which Actual Volume is
less than 75% of Anticipated Capacity for such 4 Quarter Period, a certificate
signed by one of its officers setting out in reasonable detail the information
specified in the fraction set out in Section 3.12(b).
SECTION 3.13. ADJUSTMENTS FOR CHANGES IN LAWS OR GERMAN GAAP. In the
----------------------------------------------
event that there is a change in applicable Law or in German GAAP, and such
change results in (i) payments due from AMD Holding to AMD Saxonia, or due from
AMD Saxonia to AMD Holding (as the case may be), being materially different in
aggregate amount or (ii) the timing of the receipt of such payments being
materially different from the payments contemplated by this Article III without
giving effect to such change, the affected party shall
24
<PAGE>
promptly notify the other party, AMD Inc. and the Agent, and AMD Holding and AMD
Saxonia shall negotiate in good faith with a view to agreeing to such reasonable
amendments to this Article III and the definitions used therein (which
amendments shall be made only with the prior written consent of the Agent), as
are necessary as a result of such change. In order to restore the position
contemplated by this Article III in the event AMD Holding and AMD Saxonia fail
to reach agreement on such amendments within 30 days of becoming aware of such
change, or if the Agent reasonably withholds its consent to any proposed
amendments, all payments under this Article III shall be calculated without
giving effect to such change.
SECTION 3.14. PRODUCT WARRANTY. Subject to Section 3.15, AMD Saxonia
----------------
represents and warrants that all Products sold to AMD Holding pursuant to this
Agreement shall conform in all material respects to the Specifications for such
Products and, if expressly agreed by AMD Saxonia in writing in advance, to any
specific changes thereto contained in a specific purchase order.
SECTION 3.15. DISCLAIMER. THE WARRANTY CONTAINED IN SECTION 3.14 IS THE
----------
SOLE AND EXCLUSIVE WARRANTY AS TO THE PRODUCTS AND IS EXPRESSLY IN LIEU OF ANY
EXPRESS OR IMPLIED WARRANTIES, IN FACT OR IN LAW, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY SIMILAR
WARRANTIES IMPLIED BY APPLICABLE LAW. REPAIR OR REPLACEMENT OF DEFECTIVE
PRODUCTS SHALL BE AMD HOLDING'S EXCLUSIVE REMEDY WITH RESPECT TO DEFECTIVE
PRODUCTS. AMD SAXONIA ASSUMES NO LIABILITY IN TORT OR STRICT LIABILITY, NOR
SHALL AMD SAXONIA BE LIABLE TO AMD HOLDING OR ANY SUBSIDIARY OR AFFILIATE
THEREOF FOR LOSS OR USE OF PRODUCTS OR ANY OTHER INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES INCURRED BY AMD HOLDING OR ANY SUBSIDIARY OR AFFILIATE
THEREOF. IN NO EVENT SHALL THE LIABILITY OF AMD SAXONIA ARISING IN CONNECTION
WITH ANY PRODUCTS SOLD HEREUNDER EXCEED THE ACTUAL AMOUNT PAID BY AMD HOLDING TO
AMD SAXONIA FOR PRODUCTS INVOLVED IN SUCH CLAIM.
SECTION 3.16. LIMITATION OF LIABILITY. In furtherance of the parties'
-----------------------
selection of California law to govern this Agreement, the parties hereby
expressly exclude rescission (Wandlung) and price reduction (Minderung) as
-------- ---------
remedies for defective Products and agree that in no event shall German Civil
Code Paragraph 462 be applicable. To the extent permissible under applicable
law, AMD Saxonia assumes no liability in tort or strict liability, nor shall AMD
Saxonia be liable to AMD Holding, AMD Inc. or any AMD Inc. Affiliate for loss of
use of Products or any other incidental, special, indirect or consequential
damages or lost profits incurred by AMD Holding, AMD Inc. or an AMD Inc.
Affiliate. Without prejudice to Section 3.15, in no event shall the liability
of AMD Saxonia arising in connection with any Products sold hereunder exceed the
actual amount paid by AMD Holding to AMD Saxonia for Products involved in such
claim.
25
<PAGE>
ARTICLE IV
TECHNICAL ASSISTANCE
--------------------
SECTION 4.01. PROVISION OF KNOW-HOW AND ADVICE BY OR ON BEHALF OF AMD
-------------------------------------------------------
HOLDING TO AMD SAXONIA.
- ----------------------
(a) AMD Holding shall from time to time disclose, or shall arrange for
AMD Inc. to disclose, to AMD Saxonia such of the Know-how and Specifications of
AMD Inc. and its Subsidiaries, and any Improvements to such Know-how and
Specifications made by AMD Inc. or one or more of its Subsidiaries after such
disclosure, as is necessary or, in the judgment of AMD Saxonia, reasonably
desirable to enable AMD Saxonia to manufacture Products on an efficient and
timely basis in accordance with the Specifications for the relevant Product
(such Know-how, Specifications and Improvements together being the "INTELLECTUAL
PROPERTY"). Without limiting the generality of the foregoing, AMD Holding shall
from time to time provide, or shall arrange for AMD Inc. to provide, one (1)
copy (or if requested by AMD Saxonia, two (2) copies), on a non-exclusive basis,
of any Technical Documentation for such Intellectual Property in the possession
of AMD Inc. or one or more of its Subsidiaries.
(b) To the extent necessary or, in the judgment of AMD Saxonia,
reasonably desirable, AMD Holding shall from time to time advise, or shall
arrange for AMD Inc. to advise, AMD Saxonia, upon AMD Saxonia's request in
writing, in relation to (i) the configuration of the equipment installed or to
be installed at the Plant and used for the production of each Product, the
Specifications for which are disclosed to AMD Saxonia hereunder, and (ii) the
requirements for such configuration, the installation of the equipment and the
machinery in the Plant necessary for the manufacture of such Products and the
calibration and testing of such equipment and machinery.
(c) AMD Holding shall from time to time permit, or shall arrange for AMD
Inc. to permit, AMD Saxonia to make such number of copies of the Technical
Documentation, or any part thereof, provided or disclosed to it hereunder or in
connection herewith as AMD Saxonia may require for the purposes of this
Agreement.
(d) AMD Holding shall from time to time notify, or shall arrange for AMD
Inc. to notify, AMD Saxonia promptly of any material errors in the Intellectual
Property or Technical Documentation provided or disclosed to AMD Saxonia
hereunder or in connection herewith upon AMD Inc. or one or more of its other
Subsidiaries becoming aware thereof and, to the extent AMD Inc. or one or more
of its Subsidiaries develops or obtains a correction for such error, shall
promptly provide, or shall arrange for AMD Inc. to promptly provide, to AMD
Saxonia the Intellectual Property and/or Technical Documentation to enable AMD
Saxonia to correct such error.
(e) Without derogating from AMD Holding's obligation to provide, or to
arrange for AMD Inc. to provide, disclosure to AMD Saxonia of such of the Know-
how and Specifications of AMD Inc. and its Subsidiaries, or which AMD Inc. or
its Subsidiaries have
26
<PAGE>
the right to use, as is necessary to enable AMD Saxonia to manufacture Products
hereunder, but notwithstanding any other provision of this Section 4.01, AMD
Holding shall not be required to disclose or arrange for AMD Inc. to disclose
any Intellectual Property or Technical Documentation which AMD Inc. and its
Subsidiaries do not have a right to disclose or the disclosure of which would
require the payment of compensation to a third party.
SECTION 4.02. EXPERT SUPPORT, TRAINING AND TECHNICAL ASSISTANCE.
-------------------------------------------------
(a) AMD Holding shall, upon AMD Saxonia's request in writing, provide,
or arrange for AMD Inc. to provide, to AMD Saxonia, at the Plant, technical
discussions, lectures, guidance and/or technical training in order to enable AMD
Saxonia to use, on a continuing basis for the purposes of this Agreement, the
Intellectual Property and Technical Documentation disclosed or to be disclosed
to AMD Saxonia hereunder or in connection herewith. Such discussions, lectures,
guidance and training shall be by AMD Holding and/or AMD Inc. personnel who are
qualified to provide advice with respect to the relevant Intellectual Property
and Technical Documentation ("QUALIFIED PERSONNEL").
(b) The timing of visits of such AMD Holding and/or AMD Inc. personnel
shall be arranged by agreement between AMD Holding and AMD Saxonia.
(c) AMD Holding shall, upon AMD Saxonia's request in writing, provide,
or arrange for AMD Inc. to provide, to AMD Saxonia, at the Plant, all technical
assistance necessary to remedy a Production Problem.
SECTION 4.03. ACCESS TO COMPARABLE PLANTS. AMD Holding shall arrange for
---------------------------
AMD Inc. to permit AMD Saxonia to send, at the expense of AMD Saxonia or as
otherwise agreed by AMD Inc., employees of AMD Saxonia to visit AMD Inc.'s Wafer
Fabrication Plants, including in particular AMD Inc.'s plant in Austin, Texas
known as "Fab 25" for so long as such plant is owned or controlled by AMD Inc.
or one or more of its Subsidiaries, at reasonable times for the purpose of
witnessing and training in the use of any of the Intellectual Property and
Technical Documentation provided or disclosed to it hereunder. AMD Holding shall
upon AMD Saxonia's request in writing, provide, or arrange for AMD Inc. to
provide, to such AMD Saxonia employees at such Wafer Fabrication Plants
technical discussions, lectures, guidance and/or technical training by Qualified
Personnel in order to enable such AMD Saxonia employees to understand the usage
being made at such Wafer Fabrication Plants of the relevant Intellectual
Property and Technical Documentation.
SECTION 4.04. CHARGE FOR TECHNICAL ASSISTANCE.
-------------------------------
(a) As compensation in full for the performance of the services
contemplated under this Article IV, AMD Saxonia shall reimburse AMD Holding for
(i) all reasonable out-of-pocket expenses incurred by AMD Holding or AMD Inc.,
as the case may be, in connection with providing such services, plus (ii) the
reasonable salaries and other remuneration of the relevant personnel involved.
In this regard, AMD Holding shall issue quarterly invoices to AMD Saxonia
itemizing in detail the basis for each invoiced amount.
27
<PAGE>
Prior to the Effective Date, all such invoiced amounts shall, notwithstanding
Section 3.10, be paid by AMD Saxonia within thirty (30) days of its receipt of
the relevant invoice. Payments shall be made in DM by wire transfer. From and
after the Effective Date and subject to Section 6.02(c), payments shall be made
only in the form of credits against amounts owed or to be owed by AMD Holding to
AMD Saxonia under this Agreement.
(b) The parties agree that any invoiced amounts to be paid or credited
by AMD Saxonia under this Section 4.04 shall not duplicate amounts charged for
services provided directly by AMD Inc. pursuant to the Management Service
Agreement.
(c) The foregoing notwithstanding, (i) in no event shall the aggregate
amounts to be paid by AMD Saxonia under this Section 4.04 and under the
Management Service Agreement prior to the Effective Date exceed DM 135,000,000
(One Hundred Thirty-Five Million), and (ii) the parties agree that, without
prejudice to the License Agreement, any Intellectual Property provided in any
form to AMD Saxonia for its use hereunder is provided at no charge.
ARTICLE V
ACCOUNTING REPORTS; OTHER REPORTS;
----------------------------------
RIGHT OF INSPECTION BY OR ON BEHALF OF AMD HOLDING
--------------------------------------------------
SECTION 5.01. ANNUAL ACCOUNTING REPORTS FROM AMD SAXONIA. AMD Holding
------------------------------------------
and its duly authorized representatives (which may include duly authorized
representatives of AMD Inc.) and, if the Loan Agreement Termination Date has not
yet taken place, the Agent shall at all reasonable times have access to the
books and accounts kept by AMD Saxonia and annually upon the closing of the
Fiscal Year all such books and accounts shall be audited by Ernst & Young GmbH
or such other firm of independent and internationally known public accountants
as may be selected by AMD Saxonia with the approval of AMD Holding and, if the
Loan Agreement Termination Date has not yet taken place, the Agent (the consent
of the Agent not to be unreasonably withheld). A copy of each such report of
audit, together with a reconciliation of AMD Saxonia's fiscal year figures to
the statutory financial statements of AMD Saxonia, shall be sent promptly to AMD
Holding and, prior to the Loan Agreement Termination Date, the Agent. AMD
Holding and its duly authorized representatives (which may include duly
authorized representatives of AMD Inc.) shall also have the right to examine and
inspect at any reasonable time all properties and operations of AMD Saxonia to
which this Agreement relates.
SECTION 5.02. PERIODIC WRITTEN REPORT REGARDING AMD INC. AMD Holding
-----------------------------------------
shall prepare and deliver, or shall arrange for AMD Inc. to prepare and deliver,
to AMD Saxonia and, if the Loan Agreement Termination Date has not yet taken
place, the Agent not later than 30 days after the end of each Period commencing
on or after the Effective Date a written report in form and substance reasonably
satisfactory to the Agent and AMD Saxonia discussing in reasonable detail AMD
Inc.'s production volumes of all Comparable Products and AMD Inc.'s purchase
volumes of Comparable Products produced
28
<PAGE>
by third parties and the Capacity as well as Capacity Utilization levels of
other AMD Inc. Wafer Fabrication Plants producing Comparable Products and, to
the extent relevant to this Agreement, other information that AMD Saxonia
and/or, if the Loan Agreement Termination Date has not yet taken place, the
Agent may reasonably request in connection with this Agreement.
SECTION 5.03. ACCOUNTANTS' CERTIFICATION; OFFICER'S CERTIFICATE.
-------------------------------------------------
(a) The amount of Excess Start-up Cost or Start-up Cost Savings
shall be determined promptly, but in no event later than 60 days, after the
Effective Date pursuant to Section 3.04(b). Such determination shall be
evidenced by a Start-up Cost Adjustment Certification duly signed by AMD Saxonia
and duly signed by AMD Saxonia's certified public accountants.
(b) Promptly, but in no event later than 60 days, after the end of each
4 Quarter Period, AMD Saxonia shall provide AMD Holding and, if the Loan
Agreement Termination Date has not yet taken place, the Agent with an Annual
Pricing Compliance Certificate duly examined and certified by AMD Saxonia's
certified public accountant stating that the Adjusted Selling Price Per Wafer
has been calculated in accordance with the formulas set out in Section 3.03, and
that all necessary adjustments pursuant to Sections 3.04 through 3.06 have been
made.
(c) Promptly, but in no event later than 30 days, after the end of each
Period, AMD Saxonia shall provide AMD Holding and, if the Loan Agreement
Termination Date has not yet taken place, the Agent with a Quarterly Pricing
Compliance Certificate duly signed by one of its managing directors stating that
the Adjusted Selling Price Per Wafer has been calculated in accordance with the
formulas set out in Section 3.03 and that all necessary adjustments pursuant to
Sections 3.04 and 3.05 have been made.
(d) Promptly, but in no event later than 60 days, after the end of each
4 Quarter Period following Completion in which Actual Volume for such 4 Quarter
Period was less than 75% of Anticipated Capacity for such 4 Quarter Period, AMD
Saxonia shall provide AMD Holding and, if the Loan Agreement Termination Date
has not yet taken place, the Agent with a Pari Passu Compliance Certificate duly
signed and certified by AMD Saxonia's certified public accountant confirming
whether or not there has been an Uneven Capacity Allocation and setting out all
relevant details therefor.
(e) Promptly, but in no event later than 30 days, after the end of each
Period, AMD Saxonia shall provide AMD Holding and, if the Loan Agreement
Termination Date has not yet taken place, the Agent with a Certificate
certifying the amounts invoiced and/or paid or credited under the Management
Service Agreement and Section 4.04. Promptly, but in no event later than 60
days, after the end of each 4 Quarter Period, AMD Saxonia shall provide AMD
Holding and, if the Loan Agreement Termination Date has not taken place, the
Agent with a certificate duly signed and certified by AMD Saxonia's certified
public accountant confirming the amounts invoiced and/or paid or credited under
the Management Service Agreement and Section 4.04.
29
<PAGE>
SECTION 5.04. ACCESS TO AMD INC. FACILITIES. If the Loan Agreement
-----------------------------
Termination Date has not yet taken place, AMD Holding agrees to arrange for AMD
Inc. to give reasonable access upon reasonable notice, to any Person duly
designated by the Agent, to any of AMD Inc.'s Wafer Fabrication Plants and other
AMD Inc. manufacturing or research facilities and all books, records, facilities
and information the Agent may reasonably require for purposes of this Agreement.
ARTICLE VI
EFFECTIVENESS; TERMINATION
--------------------------
SECTION 6.01. EFFECTIVENESS; TERMINATION.
-----------------------------------------
(a) This Agreement shall become effective on the date hereof and
(unless otherwise extended as hereinafter provided) shall terminate on the date
(the "INITIAL TERMINATION DATE") which is the earlier of (i) the Loan Agreement
Termination Date and (ii) the Termination Date. At the option of AMD Holding,
exercised by giving notice to AMD Saxonia and AMD Inc. at least six months prior
to the Loan Agreement Termination Date, and provided that no Termination Event
has occurred and is continuing, this Agreement may be extended for one
additional three year term. At the option of AMD Saxonia, exercised by giving
notice to AMD Holding and AMD Inc. at least six months prior to the Loan
Agreement Termination Date, and provided that no Termination Event has occurred
and is continuing, the initial term of this Agreement may be extended for one
additional three year term (to the extent not previously extended by AMD Holding
pursuant to the preceding sentence).
(b) Each of the events described in this Section 6.01(b), whether or not
such events directly or indirectly affect AMD Saxonia or AMD Holding, shall
constitute a Termination Event. If a Termination Event has occurred and is
continuing, AMD Saxonia (or, if prior to the Loan Agreement Termination Date,
the Security Agent on behalf of AMD Saxonia pursuant to and in accordance with
the Security Documents (as defined in the Sponsors' Support Agreement)) may, by
notice to AMD Holding and AMD Inc. and, if prior to the Loan Termination Date,
with the consent of the Agent, which consent shall be communicated by the Agent
to both AMD Holding and AMD Inc., terminate this Agreement in case of any of the
Termination Events described in clauses (vii) through (xv) below. In addition,
this Agreement shall automatically terminate (without any requirement for any
action by any party hereto) immediately upon the occurrence of the Termination
Event described in clauses (i) through (vi) below, and in the case of any other
Termination Event shall terminate on the date any such notice is given (the date
of any such automatic or other termination being the "TERMINATION DATE"). The
Termination Events are as follows:
(i) the expropriation or condemnation of the Plant or any substantial
part of the assets or business of AMD Saxonia or AMD Holding by any
Governmental Authority, or the involuntary suspension, or curtailment below
seventy-five percent of capacity, by AMD Saxonia of the operation of the
Plant for six months or more as a
30
<PAGE>
result of any change in or introduction of any Law, or any change in the
interpretation or application thereof, in each case occurring after the
date hereof;
(ii) AMD Inc. or AMD Holding being required by any Governmental
Authority to divest itself of all or a substantial portion of its direct or
indirect interest in AMD Saxonia, or AMD Saxonia being required by any
Governmental Authority to divest itself or all or a substantial portion of
the Plant;
(iii) the destruction of the Plant or a substantial portion thereof and
a decision by AMD Saxonia not to rebuild the same after having received
insurance proceeds in respect of such destruction in an amount at least
equal to the depreciated book value of such Plant or substantial portion
thereof;
(iv) obligations of AMD Saxonia being accelerated following lapse of
any applicable grace periods as a result of the occurrence of an event
described in Section 21 of the Loan Agreement which would allow the Banks
to terminate the Loan Agreement, and/or the Agent, Security Agent or any of
the Banks exercising remedies pursuant to any of the Security Documents (as
defined in the Loan Agreement);
(v) the involuntary (including without limitation as a result of
enforcement of any rights of security granted in shares of AMD Holding
and/or AMD Saxonia or performance of any undertakings to transfer such
shares made to secure obligations of AMD Holding and/or AMD Saxonia)
transfer of a controlling interest in AMD Holding and/or AMD Saxonia from
AMD Inc. and its Subsidiaries to one or more third parties;
(vi) the involuntary dissolution or winding up of the business of AMD
Holding and/or AMD Saxonia;
(vii) failure by AMD Holding or AMD Inc. to make any payment required
from it hereunder or under the AMD Inc. Guaranty, AMD Holding Wafer
Purchase Agreement, AMD Saxonia Research Agreement, AMD Holding Research
Agreement or Sponsors' Support Agreement within 45 days of the date due
therefor, or default by AMD Holding or AMD Inc. in the performance of or
compliance with any other term contained in this Agreement or any such
other agreement and such default shall not have been remedied or waived
within 30 days after receipt of notice from AMD Saxonia or, if the Loan
Agreement Termination Date has not yet taken place, the Agent of such
default;
(viii) any of AMD Holding's representations or warranties made herein or
in any statement or certificate at any time given by AMD Holding in writing
pursuant to this Agreement being false in any material respect on the date
as of which made, or any of AMD Inc.'s representations or warranties made
in the AMD Holding Wafer Purchase Agreement or the AMD Holding Research
Agreement or in any statement or certificate at any time given by AMD Inc.
in writing pursuant to any thereof being false in any material respect on
the date as of which made;
31
<PAGE>
(ix) bankruptcy (Konkursverfahren), composition (Vergleichsverfahren)
---------------- -------------------
or enforcement proceedings (Gesamtvollstreckungsverfahren) are instituted
-----------------------------
against the assets (Vermogen) of AMD Holding and not withdrawn or denied
--------
within 30 days of the date the application for such proceedings is made; or
the institution of such proceedings is denied for lack of assets to cover
the costs of such proceedings;
(x) execution is issued (Einleitung der Zwangsvollstreckung) against
----------------------------------
all or a substantial part of the assets of AMD Holding unless such
execution is withdrawn within three weeks of the issuance thereof;
realization of such execution; or the realization of execution on the
equity shares of AMD Saxonia owned by AMD Holding;
(xi) the discontinuance of payments generally (Zahlungseinstellung) by
-------------------
AMD Holding;
(xii) the adoption of a resolution by the managing directors
(Geschaftsfuhrer) of AMD Holding for the institution of liquidation
---------------
proceedings (Liquidationsverfahrens) for AMD Holding;
----------------------
(xiii) a court having jurisdiction in the premises entering a decree or
order for relief in respect of AMD Inc. in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief
being granted under any applicable federal or state law;
(xiv) a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over AMD Inc. or over all
or a substantial part of its property, having been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of AMD Inc. for all or a substantial part of its property; or the issuance
of a warrant of attachment, execution or similar process against any
substantial part of the property of AMD Inc.; and the continuance of any
such events in this clause (xiv) for 90 days unless stayed, dismissed,
bonded or discharged; or
(xv) AMD Inc. having an order for relief entered with respect to it or
commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consenting to the entry of
an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or consenting to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by AMD
Inc. of any assignment for the benefit of creditors; or the inability or
failure by AMD Inc. or the admission by AMD Inc. in writing of its
inability to pay its debts as such debts become due; or the Board of
Directors of AMD Inc. (or any committee thereof) adopting any resolution or
otherwise authorizing action to approve any of the foregoing.
32
<PAGE>
SECTION 6.02. RIGHTS UPON TERMINATION.
-----------------------
(a) Promptly, but in no event later than 20 days following the
Termination Date,
(i) the Adjusted Selling Price Per Wafer for the Period ending
on the Termination Date shall be calculated in accordance with Section
3.03;
(ii) in the event that the Termination Date occurs before all of
the Excess Start-up Costs or the Start-up Cost Savings, whichever the case
may be, has been paid in accordance with Section 3.04, the amount of any
unpaid Excess Start-up Costs or Start-up Costs Savings shall be calculated
in accordance with Section 3.04;
(iii) if no Products were Shipped in the Period ending on the
Termination Date, the final Advance Payment Adjustment Amount for that
Period shall be calculated in accordance with Section 3.05;
(iv) the Fixed Cost Compensation Amount for the Period ending on
the Termination Date shall be calculated in accordance with Section 3.06;
and
(v) the Pari Passu Compensation Amount shall be calculated in
accordance with Section 3.12.
(b) Upon termination of this Agreement for any reason, AMD Holding
shall purchase all inventory and work-in-process of AMD Saxonia as of the
Termination Date. The purchase price shall be equal to the value thereof as
shown in the books of AMD Saxonia in accordance with German GAAP.
(c) Upon termination of this Agreement for any reason, any amounts due
from AMD Holding to AMD Saxonia pursuant to Sections 3.03, 3.04, 3.05, 3.06,
3.07, 3.10, 3.12, and/or 6.02 (b) (including any amounts calculated in respect
thereof pursuant to Sections 6.02(a) and (b)) shall be aggregated, and any
amounts due (whether in the form of an obligation to pay or credit) from AMD
Saxonia to AMD Holding pursuant to Sections 3.03, 3.04, 3.06, 3.10 and 4.04
(including any amounts calculated in respect thereof pursuant to Sections
6.02(a)) and the Management Service Agreement shall be aggregated. If the
aggregate amount payable by AMD Holding exceeds the aggregate amount payable
and/or to be credited by AMD Saxonia, then each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and
replaced by an obligation upon AMD Holding to pay to AMD Saxonia the excess of
the larger aggregate amount over the smaller aggregate amount. If the aggregate
amount payable by AMD Saxonia exceeds the aggregate amount payable by AMD
Holding, then each party's obligation to make payment of any such amount will be
automatically discharged and the amount of such excess shall be additional
compensation, to be retained by AMD Saxonia for the early termination of this
Agreement, and AMD Saxonia shall have no obligation to pay such amount to AMD
Holding.
SECTION 6.03. SURVIVAL. The provisions of Sections 3.14, 3.15, 3.16,
--------
6.02, 7.09, 7.10, 7.11 and 7.13 shall survive any termination of this Agreement.
33
<PAGE>
ARTICLE VII
MISCELLANEOUS
-------------
SECTION 7.01. REPRESENTATIONS AND WARRANTIES GENERALLY. Each of AMD
----------------------------------------
Holding and AMD Saxonia hereby represents and warrants to the other as follows:
(a) Organization; Corporate Power. It is duly incorporated and validly
-----------------------------
existing under the laws of the jurisdiction of its organization, and has all
necessary power and authority to (i) own its assets and to carry on the business
in which it is engaged; and (ii) execute, deliver and perform its obligations
under this Agreement;
(b) Corporate Authority; No Conflict. The execution, delivery and
--------------------------------
performance by it of this Agreement have been duly authorized by all necessary
corporate action (including any necessary shareholder action) on its part, and
do not and will not (i) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to it, or of its charter or by-laws or (ii) result
in a breach of, result in a mandatory prepayment or acceleration of indebtedness
evidenced by or secured by, or constitute a default under, any indenture or loan
or credit agreement, or any other agreement or instrument to which it is a party
or by which it or its properties may be bound, or require the creation or
imposition of any encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by it, and it is not in default under
or in violation of its charter or by-laws or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination, award, indenture or
instrument, which default or violation, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on its financial
condition, business, operations, or prospects;
(c) Valid and Binding Obligations. This Agreement constitutes its
-----------------------------
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject, however, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and, as to enforceability, by general equitable principles; and
(d) No Litigation. No litigation, arbitration proceedings or
-------------
governmental proceedings are pending or to its knowledge, threatened, which
pertain to this Agreement or any of the transactions contemplated thereby.
AMD Holding acknowledges that it has no right to terminate this Agreement or
offset payments hereunder because of any breach by AMD Saxonia of the
representations and warranties contained herein.
SECTION 7.02. FORCE MAJEURE.
-------------
(a) A party to this Agreement shall not be liable for the consequences
of any failure to perform, or default in performing, any of its obligations,
other than its payment
34
<PAGE>
obligations, under this Agreement if that party can show that such failure is
caused by Force Majeure.
(b) Where there has been any such failure, the said failure shall not
be considered non-compliance with any term or condition of this Agreement, and
all the obligations (other than payment obligations) and times which because of
such failure could not be fulfilled shall be deemed to have been suspended while
the failure continues. In addition, the party for whom such obligations and/or
times have been suspended shall be entitled to take reasonable steps during the
pendency of the relevant Force Majeure to limit its losses resulting from such
Force Majeure, and following the termination of such Force Majeure such
obligations and/or times shall continue to be suspended for such further
reasonable period as is necessary for such party to restore its capacity to
perform such obligations and/or meet such times.
SECTION 7.03. RELATIONSHIP OF PARTIES. AMD Holding and AMD Saxonia
-----------------------
shall at all times be independent contractors with respect to each other.
Nothing in this Agreement shall constitute either party hereto as the partner,
joint venturer, employee or agent of the other such party or of AMD Inc., and
neither AMD Holding nor AMD Saxonia shall act or omit to act in such a way as to
suggest the contrary to any Person.
SECTION 7.04. ASSIGNMENT. This Agreement shall be binding upon and
----------
enure to the benefit of each party hereto and their respective successors and
assigns; provided, however, that neither party hereto shall have the right to
transfer or assign its interest in this Agreement without the prior written
consent of both the other party hereto, AMD Inc. and, prior to the Loan
Agreement Termination Date, of the Agent; provided further that AMD Saxonia may
----------------
assign this Agreement to the Agent as security for obligations of AMD Saxonia
under the Loan Agreement and the Agent may assign this Agreement to any direct
transferee of the Plant in the proper exercise of the Agent's enforcement rights
in respect of such security.
SECTION 7.05. WAIVERS. No delay or omission in exercise of any right
-------
or remedy of either party or any default by the other, and no custom or practice
of the parties at variance with the terms of this Agreement, shall impair any
right or remedy otherwise available nor shall it be construed as a waiver of any
right or remedy. Any waiver by either party or any default must be in writing
and shall not be a waiver of any other default concerning the same or any other
provision. AMD Saxonia shall have no right to waive any of its rights or
remedies under this Agreement without the prior written consent of AMD Inc. and,
prior to the Loan Agreement Termination Date, the Agent.
SECTION 7.06. RIGHTS CUMULATIVE. The rights, remedies and powers of
-----------------
each of the parties contained in this Agreement are cumulative and not exclusive
of any rights, remedies or powers provided to the parties by Law. No single or
partial exercise by any of the parties hereto of any right, remedy or power
under this Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
35
<PAGE>
SECTION 7.07. NOTICES. All notices and other communications required
-------
or permitted to be given to or made upon any party hereto shall be in writing
and shall be personally delivered or sent by registered or certified mail,
postage pre-paid, return receipt requested, or by pre-paid telex, TWX or
telegram, or by pre-paid courier service, or by telecopier, to the respective
parties hereto at their respective addresses (or to their respective telex, TWX
or telecopier numbers) indicated below, or such other addresses or numbers
specified in a notice sent or delivered in accordance with the provisions of
this Section 7.07. Any such notice or communication shall be deemed to be given
for purposes of this Agreement on the day that such writing or communication is
delivered or, in the case only of a telex, TWX or telegram, sent to the intended
recipient thereof, or in the case only of telecopier, sent to the intended
recipient thereof with confirmation of receipt, all in accordance with the
provision of this Section 7.07.
If to AMD Holding:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: +49 351 8412 150
with a copy to AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
P.O. Box 3453
Sunnyvale, California 94088
Attention: General Counsel
Facsimile: +1 408 774 7399
If to AMD Saxonia:
AMD Saxony Manufacturing GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: +49 351 8412 150
with a copy to:
Dresdner Bank AG
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: + 49 351 489 1350
36
<PAGE>
SECTION 7.08. NO EFFECT ON OTHER AGREEMENTS. No provision of this
-----------------------------
Agreement shall be construed so as to negate, modify or affect in any way the
provisions of any other agreement among any of AMD Inc., AMD Holding and AMD
Saxonia except as specifically provided in any such other agreement.
SECTION 7.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES. THE PARTIES
EXPRESSLY EXCLUDE APPLICATION OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR
THE SALE OF GOODS OF APRIL 11, 1980.
SECTION 7.10. DISPUTE RESOLUTION. Subject to Section 7.10 (j) below,
------------------
arbitration under this Section 7.10 shall be the exclusive means for a party to
seek resolution of any dispute arising out of, relating to or connected with
this Agreement, except that either party may bring an action before a competent
court for the issuance of provisional or protective measures.
(a) The parties hereto agree to submit any dispute, controversy or
claim ("DISPUTE") arising out of, relating to or in any way connected with this
Agreement to final and binding arbitration in Santa Clara County, California,
under the Commercial Arbitration Rules and Supplementary Procedures for
International Commercial Arbitration of the American Arbitration Association
("AAA") then in force except as modified in accordance with the provisions of
this Section 7.10.
(b) The arbitral tribunal shall be composed of three arbitrators, one
appointed by each party, and the two arbitrators so appointed shall, within 15
days appoint a third arbitrator who shall be chosen from a country other than
those of which the parties are nationals, who shall be fluent in English, and
who shall act as Chairman of the tribunal.
(c) In arriving at decisions, the arbitrators shall apply the terms and
conditions of this Agreement in accordance with the laws of California.
(d) The award shall be deemed a U.S. award for purposes of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958
(the "NEW YORK CONVENTION"). The English language shall be used in the arbitral
proceedings and all exhibits and other evidence in a language other then English
shall be accompanied by English translations when submitted into evidence before
the arbitral tribunal.
(e) The arbitrators are empowered to render the following awards in
accordance with any provision of this Agreement or any related agreement: (i)
enjoining a party from performing any act prohibited, or compelling a party to
perform any act required, by the terms of this Agreement or any related
agreement and any order entered pursuant to this Agreement and (ii) ordering
such other legal or equitable relief, including any provisional legal or
equitable relief, or specifying such procedures as the arbitrator deems
appropriate, to resolve any Dispute submitted for arbitration. The parties shall
be entitled to discover all
37
<PAGE>
documents and other information reasonably necessary for a full understanding of
any legitimate issue raised in the arbitration. They may use all methods of
discovery customary under U.S. federal law, including but not limited to
depositions, requests for admission, and requests for production of documents.
The time periods for compliance shall be set by the arbitrators, who may also
set limits on the scope of such discovery. The arbitrators shall not be
empowered to award consequential or punitive damages.
(f) Either party may file an application in any proper court described
in Section 7.11 hereof for a provisional remedy in connection with an arbitrable
controversy hereunder, but only upon the ground that the award to which the
applicant may be entitled may be rendered ineffectual without provisional
relief.
(g) The arbitrators shall issue to both parties a written explanation
in English of the reasons for the award and a full statement of the facts as
found and the rules of law applied in reaching the decision.
(h) Any monetary award shall be made and shall be payable in DM free of
any tax or any deduction.
(i) The award of the arbitral tribunal will be the sole and exclusive
remedy between the parties regarding any and all claims and counterclaims with
respect to the subject matter of the arbitrated dispute. An award rendered in
connection with an arbitration pursuant to this Section 7.10 shall be final and
binding upon the parties, and any judgment upon which an award may be entered
and enforced in any court of competent jurisdiction.
(j) Notwithstanding the foregoing, the parties agree that any disputes
hereunder relating solely to accounting matters shall be resolved by an auditor,
appointed as provided below, acting as an expert (and not as an arbitrator), and
that the resolution by such independent auditor of any such matter shall be
conclusive between the parties absent manifest error. Such auditor shall be
appointed by mutual agreement of the parties' respective auditors, and, if prior
to the Loan Agreement Termination Date, of the Agent and shall be an independent
and internationally known certified public accounting firm with no affiliation
with either the parties, the Agent or any of their respective auditors.
(k) Notwithstanding the foregoing, the parties agree that any dispute
between the parties and/or the Technical Advisor as to the Capacity of the Plant
or any Wafer Fabrication Plant shall be resolved by an independent technical
consultant, appointed by the parties as provided below, acting as an expert (and
not as an arbitrator), and that the resolution of the independent technical
consultant shall be conclusive between the parties absent manifest error. Such
technical consultant shall be appointed by mutual agreement of the parties and,
prior to the Loan Agreement Termination Date, the Agent, and shall be an
independent and internationally known technical consultant with relevant
expertise regarding the manufacture of Wafers and similar products.
SECTION 7.11. CONSENT TO JURISDICTION AND FORUM; AMD HOLDING AND AMD
------------------------------------------------------
SAXONIA APPOINTMENT OF AGENT FOR SERVICE OF PROCESS.
- ---------------------------------------------------
38
<PAGE>
(a) Subject to Section 7.10, all judicial proceedings brought against
either party hereto with respect to this Agreement may be brought in Santa Clara
County, California, and by execution and delivery of this Agreement, each such
party accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of such courts. In addition, each
such party hereby irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such proceedings, and hereby further irrevocably and
unconditionally waives and agrees to the fullest extent permitted by law not to
plead or claim that any such proceeding brought in any such court has been
brought in an inconvenient forum.
(b) AMD Holding hereby irrevocably appoints CT Corporation Services as
its agent to receive on behalf of AMD Holding and its property service of copies
of the summons and complaint and any other process which may be served in any
proceeding in any state or federal court of competent jurisdiction in the State
of California.
(c) AMD Saxonia hereby irrevocably appoints CT Corporation Services as
its agent to receive on behalf of AMD Saxonia and its property service of copies
of the summons and complaint and any other process which may be served in any
proceeding in any state or federal court of competent jurisdiction in the State
of California.
SECTION 7.12. JUDGMENT CURRENCY. The parties hereto agree that,
-----------------
without prejudice to Sections 7.10 and 7.11 above:
(a) if, for purposes of obtaining hereunder an arbitral award or
judgment of any court, it is necessary to convert a sum due hereunder in DM into
another currency, the rate of exchange used shall be that at which in accordance
with normal banking procedures the prevailing party could purchase DM with such
other currency on the Business Day preceding that on which the final award or
judgment (as applicable) is given; and
(b) the obligation of each of the parties hereto in respect of any sum
due hereunder from it (the "PAYOR") to the other party (the "RECIPIENT") shall,
notwithstanding any judgment in a currency other than DM, be discharged only to
the extent that on the Business Day following receipt by the Recipient of any
sum adjudged to be so due in such other currency, the Recipient may, in
accordance with normal banking procedures, purchase DM with such other currency;
in the event that the DM so purchased is less than the sum originally due to the
Recipient, the Payor, as a separate obligation and notwithstanding any such
judgment or award, hereby agrees to indemnify and hold harmless the Recipient
against such loss, and if the DM so purchased exceeds the sum originally due to
the Recipient, the Recipient shall remit to the Payor the excess.
SECTION 7.13. LANGUAGE. This Agreement is in the English language,
--------
which language shall be controlling in all respects.
SECTION 7.14. ENTIRE AGREEMENT. This Agreement, the AMD Saxonia Research
----------------
Agreement, the License Agreement, the Sponsors' Subordination Agreement (as
39
<PAGE>
defined in the Loan Agreement) and the Management Service Agreement embody the
entire agreement and understanding between the parties with respect to the
subject matter hereof. Neither party has relied upon any representation or
warranty of the other party in entering into this Agreement except as expressly
set forth herein. AMD Holding further acknowledges and agrees that its
obligations hereunder shall remain in full force and effect notwithstanding the
breach by AMD Saxonia of any representation or warranty contained herein.
SECTION 7.15. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple counterparts and attached to a
single counterpart so that all signature pages are physically attached to the
same document.
SECTION 7.16. AMENDMENTS. No modifications or amendments to this
----------
Agreement shall be binding unless in writing and executed by each of the parties
hereto. In addition, no modification or amendment to this Agreement may be made
without the prior written consent of AMD Inc. and, if prior to the Loan
Agreement Termination Date, the Agent.
SECTION 7.17. EMU. The European Economic and Monetary Union
---
anticipates the introduction of a single currency and the substitution of the
national currencies of Member States participating in the Monetary Union. On the
date on which the DM is replaced by the single currency, conversion into such
currency shall take effect. The denomination of the original currency shall be
retained for so long as this is legally permissible. Conversions shall be based
on the officially fixed rate of conversion. Neither the introduction of the
single currency nor the substitution of the national currencies of the Member
States participating in European Monetary Union nor the fixing of the official
rate of conversion nor any economic consequences that arise from any of the
aforementioned events or in connection with European Monetary Union shall give
rise to any right to terminate prematurely, contest, cancel, rescind, modify, or
renegotiate this Agreement or any of its provisions or to raise any other
objections and/or exceptions or to assert any claims for compensation. This
Agreement shall continue in full force and effect in accordance with its terms.
IN WITNESS OF THE FOREGOING, AMD Holding and AMD Saxonia have caused this
Agreement to be executed by their authorized representatives as of the date
first written above.
AMD SAXONY HOLDING GMBH
/s/ Marvin D. Burkett
_______________________________________
Its: Managing Director
AMD SAXONY MANUFACTURING GMBH
/s/ Jack L. Saltich
_______________________________________
Its: Managing Director
<PAGE>
EXHIBIT 10.50(m)
- --------------------------------------------------------------------------------
AMD SAXONIA
RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT
Dated 11 March 1997
between
AMD SAXONY MANUFACTURING GMBH,
and
AMD SAXONY HOLDING GMBH
- --------------------------------------------------------------------------------
<PAGE>
AMD SAXONIA
RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT
THIS AMD SAXONIA RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT (this "Agreement")
---------
dated as of 11 March, 1997 is entered into between AMD SAXONY MANUFACTURING
GMBH, a limited liability company organized and existing under the laws of
Germany and registered in the Commercial Register of the Dresden County Court,
HRB 13186 ("AMD Saxonia"), and AMD SAXONY HOLDING GMBH, a limited liability
-----------
company organized and existing under the laws of Germany and registered in the
Commercial Register of the Dresden County Court, HRB 13931 ("AMD Holding").
-----------
WHEREAS, AMD Saxonia is a wholly-owned Subsidiary of AMD Holding which in turn
is a wholly-owned Subsidiary of Advanced Micro Devices, Inc., a corporation
organized and existing under the laws of the State of Delaware, United States of
America ("AMD Inc."), and
-------
WHEREAS, AMD Saxonia, AMD Holding and AMD Inc. (together, the "AMD Companies")
-------------
are currently involved in the initial planning stages of a project pursuant to
which AMD Saxonia will construct, own and operate inter alia a manufacturing
plant to manufacture Wafers using high-volume semiconductor Wafer fabrication
processes and an adjoining research and development center (the "Design Center")
-------------
to be located in Dresden, Germany, and
WHEREAS, it is expected that the Design Center will employ qualified
individuals, mostly hired from local colleges, universities and technical
institutes and having advanced educational degrees, to conduct bona fide
research on advanced semiconductor products and on the redesign and development
of variants of existing semiconductor products, and
WHEREAS, this research is expected to focus on system architecture of
microprocessors, circuit designs and improvements of computation and compression
algorithms, and the products involved are expected to cover a range of advanced
logic devices such as microprocessors and circuits for telecommunications and
multimedia applications, and
WHEREAS, AMD Inc. is engaged in research, development, design, manufacturing and
marketing of semiconductor products, and
WHEREAS, concurrently herewith AMD Inc. and AMD Holding are entering into an AMD
Holding Research, Design and Development Agreement (as amended, supplemented or
otherwise modified from time to time, the "AMD Holding Research Agreement"),
------------------------------
pursuant to which AMD Inc. will obtain, and AMD Holding will provide, assistance
in the area of research, design and development of semiconductor products, and
WHEREAS, in order to enable it to fulfill its obligations under the AMD Holding
Research Agreement, AMD Holding wishes to obtain assistance in the area of
research, design and development of semiconductor products from AMD Saxonia, and
AMD Saxonia is willing to
2
<PAGE>
provide such assistance, in each case on the terms and subject to the conditions
of this Agreement, and
WHEREAS, concurrently herewith (i) AMD Saxonia and AMD Holding are entering into
that certain AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the "AMD Saxonia Wafer Purchase
--------------------------
Agreement"), and (ii) AMD Saxonia, AMD Holding and AMD Inc. are entering into
- ---------
that certain License Agreement (as amended, supplemented or otherwise modified
from time to time, the "License Agreement"), and
-----------------
WHEREAS, capitalized terms not defined herein shall have the meaning assigned to
them in the AMD Saxonia Wafer Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants expressed herein, the
parties hereby agree as follows:
ARTICLE I
STATEMENT OF WORK
(a) On the terms and subject to the conditions provided herein, (i) AMD
Holding hereby retains AMD Saxonia to provide research, design and
development services ("Services") related to semiconductor products to
--------
or for the benefit of AMD Holding or, at its request, to or for the
benefit of AMD Inc., Fujitsu AMD Semiconductor Limited ("FASL") or
----
Subsidiaries of AMD Inc. other than AMD Saxonia, and (ii) AMD Saxonia
hereby agrees to use its reasonable commercial efforts to provide the
Services. In furtherance of the foregoing, AMD Saxonia shall furnish
all personnel, facilities, labor, materials, tools, equipment and
supervision as may be necessary and commercially reasonable to provide
the Services, including without limitation to research, design and
develop custom circuits, schematics and layouts, and to perform such
other activities, as AMD Holding shall from time to time reasonably
request (the "Design Activity"); it being understood and agreed that,
---------------
for all purposes of this Agreement, the Services and the Design
Activity shall be in all respects comparable and consistent with the
Services and the Design Activity under, and as defined in, the AMD
Holding Research Agreement.
(b) AMD Holding acknowledges that AMD Saxonia's obligation is to use
its reasonable commercial efforts to provide the Services and Design
Activities, and that AMD Saxonia therefore does not undertake and
cannot guarantee that the results of the Services and Design Activities
will achieve the goals set therefor or that such results will have any
commercial value. AMD Holding further acknowledges and agrees that AMD
Saxonia shall not be required at any time to take any steps hereunder
to provide the Services and/or Design Activities to the extent such
steps at such time could
3
<PAGE>
reasonably be expected to delay the "Completion Date" under, and as
---------------
defined in, the AMD Saxonia Wafer Purchase Agreement.
(c) AMD Saxonia further agrees, during the term of this Agreement, (i)
only to perform Services and engage in Design Activities specifically
requested by AMD Holding which request may be made by AMD Inc., FASL or
one of AMD Inc.'s Subsidiaries acting pursuant to authorization from
AMD Holding hereunder and (ii) not to provide research, design and
development services for persons or entities other than AMD Inc., its
Subsidiaries or FASL, without the prior consent of AMD Holding.
(d) AMD Saxonia and AMD Holding agree that this Agreement is limited to
research, design and development of semiconductor products. Any
activities of AMD Saxonia relating to the production of semiconductors,
including the transfer of production tooling, shall not be deemed to be
Services or Design Activities hereunder and, to the extent covered
thereby, shall be subject to the AMD Saxonia Wafer Purchase Agreement.
In the event of any conflict or inconsistency between this Agreement
and the AMD Saxonia Wafer Purchase Agreement, the terms of the AMD
Saxonia Wafer Purchase Agreement shall prevail.
ARTICLE II
PAYMENTS
(a) AMD Holding agrees to pay AMD Saxonia for the Services and Design
Activities performed under this Agreement an amount equal to AMD
Saxonia's total cost of labor, materials, overhead and all other costs
incurred for and reasonably allocated by AMD Saxonia to such Services
and Design Activities in accordance with German generally accepted
accounting principles, plus (i) a surcharge of ten percent (10%) on
such costs and (ii) Value Added Tax ("Tax"), if applicable. Any net
---
interest expense or other taxes incurred by AMD Saxonia are
specifically excluded as a reimbursable cost under this Agreement. Such
expenses shall be subject to the AMD Saxonia Wafer Purchase Agreement,
to the extent covered thereby. To the extent certain expenses are
incurred in support of both the Services and Design Activities, on the
one hand, and other activities of AMD Saxonia, on the other hand, a
reasonable allocation by AMD Saxonia of such expenses shall be made
between the Services and Design Activities, on the one hand, and such
other activities, on the other hand.
(b) Subject to Section (b) of Article I hereof, AMD Holding will
----------- ---------
authorize the commencement of Services when AMD Saxonia is able to
perform the Services contemplated under this Agreement, but in any
event no later than when the Design Center is completed to AMD
Holding's reasonable satisfaction. The parties may agree that the
Services and Design Activity may be phased in over a period of time
prior to the completion of the Design Center, but only those costs
specifically related to the
4
<PAGE>
Services and Design Activity and not to the completion of the Design
Center shall be reimbursable pursuant to Section (a) of this Article
----------- -------
II.
--
(c) AMD Saxonia shall within 30 days after the end of each of its
fiscal months, provide AMD Holding with an installment invoice in
respect of such fiscal month detailing the Services rendered and the
Design Activity undertaken and specifying costs with respect to such
Services and Design Activity, and the amount payable by AMD Holding
under this Article II with respect thereto. Some of these costs may be
----------
estimated, budgeted or accrued costs, but shall be subject to a
quarterly adjustment to reflect actual costs when finally determined.
(d) Under this Agreement, invoices shall be rendered and payments shall
be made in the lawful currency of the Federal Republic of Germany
("DM"). Invoices shall be paid in full within thirty (30) days of the
--
receipt of such invoice. Payments under this Agreement from AMD Holding
to AMD Saxonia shall be made by wire transfer deposited into [*], or
such other account of AMD Saxonia specified by AMD Saxonia with the
prior written consent of Dresdner Bank AG as Agent for the Lenders
under the Loan Agreement (including any successor thereto in such
capacity, the "Agent") (a copy of which consent shall be delivered by
-----
AMD Saxonia to AMD Holding) with not less than 15 days written notice
to AMD Holding. All amounts under this Agreement not paid when due from
AMD Holding shall bear interest at the rate of 7.0% per annum from the
date due until paid, calculated on the basis of actual days and months
elapsed. Accrued interest hereunder shall be due and payable at the end
of each calendar month.
(e) The obligations of AMD Holding hereunder, including, without
limitation, the obligation to pay for any Services or Design Activity
actually performed by AMD Saxonia, are intended to be absolute and
unconditional. The parties hereto hereby expressly acknowledge, agree,
and understand that the payment by AMD Holding of all amounts payable
by it hereunder shall in no way be prevented, delayed, or otherwise
affected as a result of any dispute between the parties (or between any
of their Affiliates) nor by any breach of this Agreement or any other
agreement entered into in connection herewith and/or any adverse change
in the financial or economic condition of AMD Saxonia or any Affiliate
thereof, including situations or conditions which would render any or
all of AMD Saxonia or any Affiliate thereof in liquidation, bankruptcy,
or any kind of insolvency. All obligations of AMD Holding under or in
connection with this Agreement shall be paid and performed in all
events in the manner and at the times herein provided, irrespective of
and without prejudice to, any rights or remedies that are available to
the other parties hereto under any agreements or any applicable laws.
The foregoing notwithstanding, AMD Holding shall be entitled to setoff,
and to raise rights of retention, in respect of payment claims due from
it hereunder only to the extent its counterclaim is undisputed by AMD
Saxonia or has been the subject of a final, binding arbitral or court
decision.
5
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
<PAGE>
(f) AMD Saxonia shall keep and maintain, in accordance with German
generally accepted accounting principles, books of account and other
records with respect to the costs and other amounts charged by AMD
Saxonia to AMD Holding under this Agreement.
(g) AMD Holding shall, upon reasonable written notice to AMD Saxonia,
have a right to perform special audits of AMD Saxonia by either outside
auditors or one or more of the internal auditors of the AMD Companies,
at AMD Holding's own cost. The scope of the audit shall not be limited
in any manner.
(h) AMD Saxonia and AMD Holding agree that the purpose of this
Agreement and the related Services and Design Activity is the creation
of intellectual property. However, from time to time, such intellectual
property may be transferred in the form of tangible personal property.
The transfer of any tangible personal property is solely for the
purpose of conveying or exchanging intellectual property or "Ideas".
-----
Examples of such tangible personal property may include, but are not
limited to, magnetic tapes, pattern generation tapes, test tapes,
schematic diagrams, prototypes and prototype tooling. Both parties
agree that, in the aggregate, the fair market value of such tangible
property transferred to AMD Holding shall not exceed U.S. $5,000
dollars per year. The provisions of this paragraph are intended solely
for valuation purposes under the various state sales and use tax rules
in the U.S.A. and do not in any way alter the compensation provisions
of this Article II, which is the sole and controlling provision for the
----------
compensation to AMD Saxonia for the Services and Design Activities
under this Agreement.
ARTICLE III
WORK PERFORMED OUTSIDE GERMANY
(a) The parties recognize that to implement the intent and purpose of
this Agreement, and to bring the research, design and development
efforts of AMD Saxonia to the stage at which production of
semiconductor products is possible, essential work related to the
Design Activity which AMD Saxonia is unable to perform may have to be
performed by AMD Inc. on behalf of AMD Holding at AMD Inc. facilities
outside Germany.
(b) It is expressly agreed that all cost for work performed by or on
behalf of AMD Holding, at any facility other than the Design Center,
will be absorbed by AMD Holding and will not be charged back to AMD
Saxonia.
6
<PAGE>
ARTICLE IV
CHANGES IN SPECIFICATIONS
(a) AMD Holding may from time to time request changes in the
specifications of semiconductor products undergoing research, design
and development during the course of the Design Activity, which request
may be made by AMD Inc., FASL or one of AMD Inc.'s Subsidiaries acting
pursuant to authorization from AMD Holding. AMD Holding acknowledges
that such changes may result in additional delays as well as alteration
of designs, drawings, materials, and other items used in the
development process and consequently may result in changed costs or
delay, that AMD Saxonia shall include such changed costs in its costs
reimbursed or to be reimbursed pursuant to Section (a) of Article II,
----------- ----------
and that AMD Saxonia shall have no liability or obligation as a result
of any such delays.
(b) AMD Saxonia will use its reasonable commercial efforts to inform
AMD Holding of the changes in cost in sufficient time to authorize or
approve such changed costs before they are incurred provided that the
--------
failure by AMD Saxonia to do so will not excuse AMD Holding of the
obligation to compensate AMD Saxonia in respect of any such changes in
cost.
ARTICLE V
EFFECTIVE DATE: TERM AND TERMINATION
(a) This Agreement shall become effective on the date hereof and shall
terminate on the earliest of (i) the Loan Agreement Termination Date
and (ii) any date upon which the AMD Saxonia Wafer Purchase Agreement
terminates in accordance with its terms.
(b) The provisions of Articles V(c), XV, XVII, XVIII, XIX, and XX of
------------------------------------ --
this Agreement shall survive any termination of this Agreement.
(c) Within 30 days after termination of this Agreement, AMD Saxonia
shall send a final invoice to AMD Holding for any uninvoiced Services
or Design Activity. Such invoice shall be paid in accordance with the
payment provisions set forth in Section (d) of Article II hereof.
----------
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
AMD Holding represents and warrants to AMD Saxonia as follows:
(a) Organization; Corporate Power. AMD Holding is a Gesellschaft mit
-----------------------------
beschrankter Haftung duly organized and existing under the laws of the
Federal Republic of Germany and registered in Dresden, Germa
7
<PAGE>
ny; AMD Holding is duly qualified or licensed and (where the term has a
technical meaning) is in good standing as a foreign corporation
authorized to do business in each jurisdiction where, because of the
nature of its activities or properties, such qualification or licensing
is required, except for such jurisdictions where the failure to be so
qualified or licensed will not materially adversely affect its
financial condition, business, operations, or prospects; and AMD
Holding has all requisite corporate power and authority (i) to own,
operate, and lease its assets and properties and to carry on the
business in which it is engaged and in which it currently proposes to
engage; and (ii) to execute, deliver, and perform its obligations under
this Agreement.
(b) Corporate Authority; No Conflict. The execution, delivery, and
--------------------------------
performance by AMD Holding of this Agreement have been duly authorized
by all necessary corporate action (including any necessary shareholder
action) on the part of AMD Holding, and do not and will not (i) violate
any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award presently in effect binding
on AMD Holding (which violation, in the case of performance only,
individually or in the aggregate could reasonably be expected to have a
material adverse effect on the financial condition, business,
operations or prospects of AMD Holding) or violate the charter of AMD
Holding, or (ii) result in a breach of, result in a mandatory
prepayment or acceleration of indebtedness evidenced or secured by, or
constitute a default under, any indenture or loan or credit agreement,
or any other agreement or instrument, to which AMD Holding is a party
or by which AMD Holding or its properties are bound or affected, or
(iii) result in or require (in either case except as contemplated by
the Operative Documents), the creation or imposition of any encumbrance
of any nature upon or with respect to any of the properties now owned
or hereafter acquired by AMD Holding, and AMD Holding is not in default
under or in violation of its charter, or any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination,
award, indenture, agreement, or instrument, which default or violation,
individually or in the aggregate, could reasonably be expected to have
a material adverse effect on the financial condition, business,
operations, or prospects of AMD Holding.
(c) Valid and Binding Obligations. This Agreement constitutes the
-----------------------------
legal, valid, and binding obligation of AMD Holding, enforceable
against AMD Holding in accordance with its respective terms, subject,
however, to applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally and
except as the enforceability thereof may be limited by general
principles of equity (regardless of whether considered in a proceeding
in equity or law).
8
<PAGE>
ARTICLE VII
WARRANTY AND DISCLAIMER
(a) AMD Saxonia covenants and warrants (i) that it will perform all
Services and Design Activity under this Agreement substantially in
accordance with the standards and practices of care, skill and
diligence customarily observed by similar firms under similar
circumstances at the time they are rendered, and (ii) that all Services
and Design Activities shall be free of material defects in workmanship.
(b) THE WARRANTY CONTAINED IN THIS ARTICLE VII IS THE SOLE AND
EXCLUSIVE WARRANTY AS TO THE SERVICES AND DESIGN ACTIVITIES RENDERED
AND PROVIDED HEREUNDER, AND IS EXPRESSLY IN LIEU OF ANY EXPRESS OR
IMPLIED WARRANTIES, IN FACT OR IN LAW, INCLUDING WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. AMD
SAXONIA ASSUMES NO LIABILITY IN TORT OR STRICT LIABILITY, NOR SHALL AMD
SAXONIA BE LIABLE TO AMD HOLDING OR ANY SUBSIDIARY OR AFFILIATE THEREOF
FOR LOSS OF USE OF SERVICES OR DESIGN ACTIVITY OR ANY OTHER INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES INCURRED BY AMD HOLDING OR ANY
SUBSIDIARY OR AFFILIATE THEREOF. IN NO EVENT SHALL THE LIABILITY OF AMD
SAXONIA ARISING IN CONNECTION WITH ANY SERVICES OR DESIGN ACTIVITY
PROVIDED HEREUNDER EXCEED THE ACTUAL AMOUNT PAID BY AMD HOLDING TO AMD
SAXONIA FOR SERVICES OR DESIGN ACTIVITY INVOLVED IN SUCH CLAIM.
ARTICLE VIII
SEVERABILITY
If any term or provision of this Agreement or the application of this Agreement
to any person, entity or circumstance is found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remainder of this Agreement shall not be affected, but shall be valid and
enforceable as if the invalid term, condition or provision were not a part of
this Agreement.
ARTICLE IX
HEADINGS
The headings contained in this Agreement are for convenience of reference only
and shall not be deemed to be a part of this Agreement or to affect the meaning
or interpretation of this Agreement.
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ARTICLE X
FORCE MAJEURE
(a) A party to this Agreement shall not be liable for the consequences
of any failure to perform, or default in performing, any of its
obligations, other than its payment obligations, under this Agreement,
if that party can show that such failure is caused by Force Majeure (as
defined below).
(b) Where there has been any such failure, the said failure shall not
be considered non-compliance with any term or condition of this
Agreement, and all the obligations and times which because of such
failure could not be fulfilled shall be deemed to have been suspended
while the failure continues. In addition, the party for whom such
obligations and/or times have been suspended shall be entitled to take
reasonable steps during the pendency of the relevant Force Majeure to
limit its losses resulting from such Force Majeure, and following the
termination of such Force Majeure such obligations and/or times shall
continue to be suspended for such further reasonable period as is
necessary for such party to restore its capacity to perform such
obligations and/or meet such times.
(c) For purposes of this Article X, "Force Majeure" means an event
--------- -------------
which is not within the reasonable control of the party seeking to rely
on the existence of Force Majeure, where the adverse effect of such
event on such party's compliance with its obligations under this
Agreement is not preventable by such party using all reasonable care
and diligence. Such events may include, without limitation, the
following: acts of war (whether declared or undeclared), invasion,
armed conflict, acts of one or more enemy of the United States of
America, Germany or any other country or jurisdiction; blockade or
embargo, revolution, riot, bombs, insurrection, or other civil
disturbance, sabotage, terrorism, or the threat of any of the
foregoing, nuclear explosion, radioactive or chemical contamination or
ionizing radiation, strikes, lockouts, industrial action or labor
disputes, any effect of the natural elements including, without
limitation, lightning, fire, earthquake, flood, strike and other
unusual or extreme adverse weather, or environmental conditions or
actions of the elements, epidemic or plague, loss of or damage to the
Design Center and/or machinery, equipment or materials at, for or in
transit to the Design Center, acts of God and any events or
circumstances analogous to any of the above.
ARTICLE XI
RELATIONSHIP OF PARTIES
AMD Holding and AMD Saxonia shall at all times be independent contractors with
respect to each other. Nothing in this Agreement shall constitute either party
hereto as the partner, joint venturer, employee or agent of the other such party
and neither AMD Holding nor AMD Saxonia shall act or omit to act in such a way
as to suggest the contrary to any third party.
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ARTICLE XII
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of each party
hereto and their respective successors and assigns; provided, however, that this
--------
Agreement contemplates personal services of AMD Saxonia and accordingly neither
party hereto shall have the right to transfer or assign its interest in this
Agreement or, in the case of AMD Saxonia, delegate any obligation hereunder,
without the prior written consent of both the other party hereto and, prior to
the Loan Agreement Termination Date, of the Agent, and provided further that AMD
----- ----------------
Saxonia may assign this Agreement to the Agent as security for obligations of
-----
AMD Saxonia under the Loan Agreement and the Agent may further assign this
-----
Agreement to the extent permitted in the proper exercise of the Agent's
-------
enforcement rights in respect of such security.
ARTICLE XIII
WAIVERS
No delay or omission in exercise of any right or remedy of either party or any
default by the other, and no custom or practice of the parties at variance with
the terms of this Agreement, shall impair any right or remedy otherwise
available nor shall it be construed as a waiver of any right or remedy. Any
waiver by either party of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision. AMD
Saxonia shall have no right to waive any of its rights or remedies under this
Agreement without the prior written consent of the Agent. AMD Holding shall have
-----
no right to waive any of its rights or remedies under this Agreement without the
prior written consent of AMD Inc.
ARTICLE XIV
RIGHTS CUMULATIVE
The rights, remedies and powers of each of the parties contained in this
Agreement are cumulative and not exclusive of any rights, remedies or powers
provided to the parties by applicable law. No single or partial exercise by any
of the parties hereto of any right, remedy or power under this Agreement shall
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
ARTICLE XV
NOTICES
All notices and other communications required or permitted to be given to or
made upon either party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage pre-paid, return
receipt requested, or by pre-paid telex, TWX or
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telegram, or by pre-paid courier service, or by telecopier, to the respective
parties hereto at their respective addresses (or to their respective telex, TWX
or telecopier numbers) indicated below, or such other addresses or numbers
specified in a notice sent or delivered in accordance with the provisions of
this Article XV. Any such notice or communication shall be deemed to be given
----------
for purposes of this Agreement on the day that such writing or communication is
delivered or, in the case only of a telex, telecopier, TWX or telegram, sent to
the intended recipient thereof, with confirmation of receipt, in accordance with
the provision of this Article XV, or
----------
If to AMD Holding:
AMD Saxony Holding GmbH
Washingtonstr. 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: 49-351-8412-150
with a copy to:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile: (408) 749-3945
If to AMD Saxonia:
AMD Saxony Manufacturing GmbH
Washingtonstr. 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: 49-351-8412-150
with a copy to:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: 49-351-489-1350
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ARTICLE XVI
NO EFFECT ON OTHER AGREEMENTS
No provision of this Agreement shall be construed so as to negate, modify or
affect in any way the provisions of any other agreement between AMD Holding and
AMD Saxonia except as specifically provided in any such other agreement.
ARTICLE XVII
GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.
ARTICLE XVIII
ARBITRATION OF DISPUTES
Arbitration under this Article XVIII shall be the exclusive means for a party to
-------------
seek resolution of any dispute arising out of, relating to or connected with
this Agreement, except that either party may bring an action before a competent
court for the issuance of provisional or protective measures.
(a) The parties hereto agree to submit any dispute, controversy or
claim ("Dispute") arising out of, relating to or in any way connected
-------
with this Agreement to final and binding arbitration in the County of
Santa Clara, California, under the Commercial Arbitration Rules and
Supplementary Procedures for International Commercial Arbitration of
the American Arbitration Association ("AAA") then in force except as
---
modified in accordance with the provisions of this Article XVIII.
-------------
(b) The arbitral tribunal shall be composed of three arbitrators, one
appointed by each party, and the two arbitrators so appointed shall,
within 15 days appoint a third arbitrator who shall be chosen from a
country other than those of which the parties are nationals, who shall
be fluent in English, and who shall act as Chairman of the tribunal.
(c) In arriving at decisions, the arbitrators shall apply the terms and
conditions of this Agreement in accordance with the laws of the State
of California.
(d) The award shall be deemed a U.S. award for purposes of the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards of 1958 (the "New York Convention"). The English language shall
-------------------
be used in the arbitral proceedings and all
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exhibits and other evidence in a language other than English shall be
accompanied by English translations when submitted into evidence before
the arbitral tribunal.
(e) The arbitrators are empowered to render the following awards in
accordance with any provision of this Agreement or any related
agreement: (i) enjoining a party from performing any act prohibited, or
compelling a party to perform any act required, by the terms of this
Agreement or any related agreement and any order entered into pursuant
to this Agreement and (ii) ordering such other legal or equitable
relief, including any provisional legal or equitable relief, or
specifying such procedures as the arbitrator deems appropriate, to
resolve any Dispute submitted for arbitration. The parties shall be
entitled to discover all documents and other information reasonably
necessary for a full understanding of any legitimate issue raised in
the arbitration. They may use all methods of discovery customary under
U.S. federal law, including but not limited to depositions, requests
for admission, and requests for production of documents. The time
periods for compliance shall be set by the arbitrators, who may also
set limits on the scope of such discovery. The arbitrators shall not be
empowered to award consequential or punitive damages.
(f) Either party may file an application in any proper court described
in Article XIX hereof for a provisional remedy in connection with an
-----------
arbitrable controversy hereunder, but only upon the ground that the
award to which the applicant may be entitled may be rendered
ineffectual without provisional relief.
(g) The arbitrators shall issue to both parties a written explanation
in English of the reasons for the award and a full statement of the
facts as found and the rules of law applied in reaching the decision.
(h) Any monetary award shall be made and shall be payable in DM free of
any tax or any deduction.
(i) The award of the arbitral tribunal will be the sole and exclusive
remedy between the parties regarding any and all claims and
counterclaims with respect to the subject matter of the arbitrated
dispute. An award rendered in connection with an arbitration pursuant
to this Article XVIII shall be final and binding upon the parties, and
-------------
any judgment upon which an award may be entered and enforced in any
court of competent jurisdiction.
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ARTICLE XIX
CONSENT TO JURISDICTION AND FORUM:
AMD HOLDING AND AMD SAXONIA APPOINTMENT OF
AGENT FOR SERVICE OF PROCESS
(a) Subject to Article XVIII, all judicial proceedings brought against
-------------
either party hereto with respect to this Agreement may be brought in
the United States District Court for the Northern District of
California or in any branch of the Superior Court of the State of
California sitting in the City of San Francisco, and by execution and
delivery of this Agreement, each such party accepts for itself and in
connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of such courts. In addition, each such party
hereby irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to
the laying of venue of any such proceedings, and hereby further
irrevocably and unconditionally waives and agrees to the fullest extent
permitted by law not to plead or claim that any such proceeding brought
in any such court has been brought in an inconvenient forum.
(b) AMD Saxonia hereby irrevocably appoints CT Corporation Services as
its agent to receive on behalf of AMD Saxonia and its property service
of copies of the summons and complaint and any other process which may
be served in any proceeding in any state or federal court of competent
jurisdiction in the State of California.
(c) AMD Holding hereby irrevocably appoints CT Corporation Services as
its agent to receive on behalf of AMD Holding and its property service
of copies of the summons and complaint and any other process which may
be served in any proceeding in any state or federal court of competent
jurisdiction in the State of California.
ARTICLE XX
JUDGMENT CURRENCY
The parties hereto agree that, without prejudice to Articles XVII, XVIII and XIX
------------- ----- ---
above:
(a) if, for purposes of obtaining hereunder an arbitral award or
judgment of any court, it is necessary to convert a sum due hereunder
in DM into another currency, the rate of exchange used shall be that at
which in accordance with normal banking procedures the prevailing party
could purchase DM with such other currency on the Business Day
preceding that on which the final award or judgment (as applicable) is
given; and
(b) the obligation of each of the parties hereto in respect of any sum
due hereunder from it (the "Payor") to the other party (the
-----
"Recipient") shall, notwithstanding any judgment in a currency other
---------
than DM, be discharged only to the extent that on the
15
<PAGE>
Business Day following receipt by the Recipient of any sum adjudged to
be so due in such other currency, the Recipient may, in accordance with
normal banking procedures purchase DM with such other currency; in the
event that the DM so purchased is less than the sum originally due to
the Recipient, the Payor, as a separate obligation and notwithstanding
any such judgment or award hereby agrees to indemnify and hold harmless
the Recipient against such loss, and if the DM so purchased exceeds the
sum originally due to the Recipient, the Recipient shall remit to the
Payor the excess.
ARTICLE XXI
LANGUAGE
This Agreement is in the English language, which language shall be controlling
in all respects.
ARTICLE XXII
ENTIRE AGREEMENT
This Agreement, the AMD Holding Research Agreement, the AMD Saxonia Wafer
Purchase Agreement, the Confidentiality and Intellectual Property Agreement, the
License Agreement and that certain Amended and Restated Management Services
Agreement, dated as of even date hereof, embody the entire agreement and
understanding between the parties with respect to the subject matter hereto. AMD
Holding acknowledges and agrees that it has not relied upon any representation
or warranty of the AMD Saxonia in entering into this Agreement and that this
Agreement shall remain in force notwithstanding the breach by AMD Saxonia of any
such representation or warranty, and AMD Saxonia acknowledges and agrees that it
has not relied upon any representation or warranty of AMD Holding in entering
into this Agreement except as expressly set forth herein.
ARTICLE XXIII
COUNTERPARTS
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
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<PAGE>
ARTICLE XXIV
AMENDMENTS
No modifications or amendments to this Agreement shall be binding unless in
writing and executed by each of the parties hereto and AMD Inc. and, prior to
the Loan Agreement Termination Date, without the prior written consent of the
Agent.
- -----
ARTICLE XXV
EUROPEAN MONETARY UNION
The European Economic and Monetary Union anticipates the introduction of a
single currency and the substitution of the national currencies of Member States
participating in the Monetary Union. On the date on which the Deutsche Mark is
replaced by the single currency, conversion into such currency shall take
effect. The denomination of the original currency shall be retained for so long
as this is legally permissible. Conversions shall be based on the officially
fixed rate of conversion. Neither the introduction of the single currency nor
the substitution of the national currencies of the Member States participating
in European Monetary Union nor the fixing of the official rate of conversion nor
any economic consequences that arise from any of the aforementioned events or in
connection with European Monetary Union shall give rise to any right to
terminate prematurely, contest, cancel, rescind, modify, or renegotiate this
Agreement or any of its provisions or to raise any other objections and/or
exceptions or to assert any claims for compensation. This Agreement shall
continue in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals as of the date first written above by causing their duly authorized
representatives to sign below.
AMD SAXONY MANUFACTURING GMBH AMD SAXONY HOLDING GMBH
/s/ Jack L. Saltich /s/ Marvin D. Burkett
- --------------------------------- ---------------------------------
Geschaftsfuhrer Geschaftsfuhrer
17
<PAGE>
EXHIBIT 10.50(n)
LICENSE AGREEMENT
Dated 11 March 1997
between
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY HOLDING GMBH,
and
AMD SAXONY MANUFACTURING GMBH
================================================================================
<PAGE>
LICENSE AGREEMENT
This LICENSE AGREEMENT (this "Agreement") dated as of 11 March, 1997 is
between:
(1) Advanced Micro Devices, Inc., a corporation organized and existing
under the laws of the State of Delaware, United States of America, with its
principal place of business at One AMD Place, Sunnyvale, California 94088,
United States of America ("AMD Inc.");
(2) AMD Saxony Holding GmbH, a Gesellschaft mit beschrankter Haftung
organized and existing under the laws of Germany and registered in the
Commercial Register of the Dresden County Court, HRB 13931 ("AMD Holding");
and
(3) AMD Saxony Manufacturing GmbH, a Gesellschaft mit beschrankter Haftung
organized and existing under the laws of Germany and registered in the
Commercial Register of the Dresden County Court, HRB 13186 ("AMD Saxonia").
RECITALS
WHEREAS, AMD Saxonia is a wholly-owned Subsidiary (such and other
capitalized terms having the meanings assigned thereto in Section 1 below) of
AMD Holding, which in turn is a wholly-owned Subsidiary of AMD Inc.;
WHEREAS, AMD Inc., AMD Holding and AMD Saxonia are currently involved in
the initial planning stages of a project pursuant to which AMD Saxonia will
construct, own and operate inter alia a manufacturing plant to manufacture
Wafers using high-volume semiconductor wafer fabrication processes and an
adjoining research and development center, each of which is to be located in
Dresden, Germany (collectively referred to as the "Plant"); and
WHEREAS, AMD Inc. and AMD Holding are entering into an AMD Holding Wafer
Purchase Agreement (as amended, supplemented or otherwise modified from time to
time, the "AMD Holding Wafer Purchase Agreement"), pursuant to which, among
other things, AMD Inc. will agree to purchase from AMD Holding, and AMD Holding
will agree to supply on an exclusive basis to AMD Inc., all Products as are
ordered from time to time by AMD Inc. from AMD Holding, in each case on the
terms and conditions of the AMD Holding Wafer Purchase Agreement; and
WHEREAS, concurrently herewith, AMD Holding and AMD Saxonia are entering
into an AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the "AMD Saxonia Wafer Purchase
Agreement"; together with the AMD Holding Wafer Purchase Agreement, the "Wafer
Purchase Agreements"), pursuant to which, among other things, AMD Holding will
agree to purchase from AMD Saxonia, and AMD Saxonia will agree to manufacture
and sell to AMD Holding, on an exclusive basis, such Products, all on the terms
and conditions of the AMD Saxonia Wafer Purchase Agreement; and
2
<PAGE>
WHEREAS, concurrently herewith, AMD Inc. and AMD Holding are entering into
an AMD Holding Research, Design and Development Agreement (as amended,
supplemented or otherwise modified from time to time, the "AMD Holding Research
Agreement"), and AMD Holding and AMD Saxonia concurrently herewith are entering
into an AMD Saxonia Research, Design and Development Agreement (as amended,
supplemented or otherwise modified from time to time, the "AMD Saxonia Research
Agreement"; together with the AMD Holding Research Agreement, the "Research
Agreements") pursuant to which AMD Holding will provide certain research, design
and development Services and Design Activities relating to semiconductor
products to AMD Inc., and pursuant to which AMD Holding will obtain AMD
Saxonia's assistance in providing such Services and Design Activities, in each
case on the terms and subject to the conditions of the relevant Research
Agreement; and
WHEREAS, in furtherance of the AMD Saxonia Research Agreement, all rights,
title and interest in and to the Developed Intellectual Property shall at all
times be vested solely in AMD Inc.; and
WHEREAS, it is a condition to the parties entering into the Purchase
Agreements that AMD Inc. grant to AMD Saxonia a perpetual, royalty-free,
non-exclusive license to use the Developed Intellectual Property at the Plant to
design, develop, manufacture, use, distribute and sell products other than the
Products, all on the terms and subject to the conditions contained herein; and
WHEREAS, concurrently herewith, AMD Saxonia is entering into that certain
Loan Agreement (the "Loan Agreement") among Dresdner Bank AG, as Agent and
Security Trustee (the "Agent"), and certain other financial institutions named
in the Loan Agreement, pursuant to which such institutions will make loans from
time to time to AMD Saxonia on the terms and conditions set forth therein; and
WHEREAS, as the capital stock of AMD Saxonia and all or substantially all
of AMD Saxonia's property and assets are being pledged as security for the full
and timely performance by AMD Saxonia of all of its obligations under the Loan
Agreement, the parties wish to clarify certain questions relating to the
ownership of various intellectual property used in the operation of the Plant
and/or developed by AMD Saxonia under the AMD Saxonia Research Agreement and to
identify certain permitted uses of the Plant and such intellectual property
following termination of the Service Agreements.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
Section 1. Definitions. The following terms shall, unless the context
-----------
requires otherwise, have the respective meanings assigned to them as follows:
(a) "Affiliates" means, with respect to any Person, a Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such other Person; and, for purposes of this definition, the concept of
"control," with respect to any Person, signifies the
3
<PAGE>
possession of the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, the
possession of voting rights, by contract, or otherwise; provided that FASL shall
--------
be deemed to be an Affiliate of AMD Inc. for purposes of this Agreement;
(b) "Agent" means Dresdner Bank AG, as Agent under the Loan Agreement,
including any successor to Dresdner Bank AG in that capacity;
(c) "AMD Companies" means the Subsidiaries of AMD Inc. other than AMD
Saxonia;
(d) "AMD Saxonia Persons" means the directors, officers, employees,
self-employed consultants or sub-contractors, and agents of AMD Saxonia;
(e) "Banks" means, collectively, the Agent and the other financial
institutions named in the Loan Agreement.
(f) "Beneficiary" shall mean each of the Banks, any receiver appointed to
operate the Plant and any third party purchaser of the capital stock of or all
or substantially all of the assets of AMD Saxonia;
(g) "Confidential Information" means confidential technical information
relating to the Proprietary Product Know-how or to the design, manufacture, use
and sale of Products and Improvements as well as other non-public business
information relating to AMD Inc. and the AMD Companies, including, but not
limited to, non-public business plans, marketing plans, sales data and customer
lists; provided that such information is of a nature that would be treated by a
--------
reasonable recipient under arms-length circumstances as confidential, regardless
of whether provided in writing or orally;
(h) "Design Activity" means the activities of AMD Saxonia to provide the
Services, including without limitation to research, design and develop custom
circuits, schematics and layouts and such other activities as shall from time to
time be requested of it pursuant to the AMD Saxonia Research Agreement;
(i) "Developed Intellectual Property" means all intellectual property,
including, but not limited to, ideas, conceptions and inventions (whether or not
patentable, reduced to practice or made the subject of a pending patent
application), copyrights (whether or not registered), copyrighted or
copyrightable works, mask works or registrations thereof, software,
semi-conductor topography rights, know-how, trade secrets, manufacturing and
production processes and techniques, research and development information and
other confidential technical information, which intellectual property was made,
conceived or actually or constructively reduced to practice prior to the
termination of the AMD Saxonia Research Agreement, to the extent such
intellectual property was developed wholly by AMD Saxonia or an AMD Saxonia
Person for AMD Saxonia or, with respect to such intellectual property as is
incapable of division into discreet items, where AMD Saxonia or an AMD Saxonia
Person
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<PAGE>
working for AMD Saxonia expended at least 50% of the quantitative or qualitative
man-hours expended in the development thereof;
(j) "FASL" means Fujitsu AMD Semiconductor Limited, a joint venture
organized under the laws of Japan between AMD Inc. and Fujitsu Limited;
(k) "Improvements" means any and all developments, enhancements,
improvements, upgrades, modifications, updates (including error corrections),
translations and derivative works developed prior to the termination of the AMD
Saxonia Research Agreement with respect to Products;
(l) "Information Residuals" means all information which (i) is remembered
by an AMD Saxonia Person after having been exposed thereto in connection with
his or her duties at AMD Saxonia either before or during the term of the AMD
Saxonia Wafer Purchase Agreement or the AMD Saxonia Research Agreement, and (ii)
pertains to the general operation, calibration, configuration and functionality
of the equipment, facilities and fixtures in the Plant or pertains to the
processes, methods, techniques and materials used in connection with the
manufacture of semiconductor products; provided, however, that Information
-----------------
Residuals shall not include any specific design aspects of the Products (or any
part thereof), nor shall it include any Proprietary Product Know-how;
(m) "Loan Agreement" has the meaning set forth in the Recitals hereof, as
may be amended, supplemented or otherwise modified from time to time;
(n) "Loan Agreement Termination Date" means the first day on which (i) no
obligations of AMD Saxonia are then owing under the Loan Agreement and all
principal of and accrued interest on any loans under the Loan Agreement have
been paid or repaid (as the case may be) in full, and (ii) the Banks have no
further commitments of any kind to extend credit to AMD Saxonia under the Loan
Agreement;
(o) "Management Service Agreement" means, together, that certain Management
Service Agreement dated as of January 1, 1996 and that certain letter agreement
dated April 9, 1996 between AMD Inc. and AMD Saxonia, as amended and restated by
AMD Inc., AMD Holding and AMD Saxonia as of the date hereof, and as such amended
and restated agreement may be further amended, supplemented or otherwise
modified from time to time;
(p) "Non-Proprietary Know-how" means all knowledge and information relating
to the design, manufacture, use and sale of semiconductor products which does
not constitute Proprietary Product Know-how or Confidential Information;
(q) "Person" means an individual, partnership, joint venture, trustee,
trust, corporation, unincorporated association or other entity, or a government,
state or agency or political subdivision thereof;
(r) "Plant" means, collectively, the "Plant" and the " Design Center," as
those terms are defined in the AMD Saxonia Wafer Purchase Agreement.
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<PAGE>
(s) "Post Research Agreement AMD Saxonia Developed Improvements" means any
and all improvements to the Developed Intellectual Property, which are made,
conceived or actually or constructively reduced to practice by AMD Saxonia after
the termination of the AMD Saxonia Research Agreement;
(t) "Post Research Agreement AMD Saxonia Developed Intellectual Property"
means any and all intellectual property independently made, conceived or
actually reduced to practice by AMD Saxonia after the termination of the AMD
Saxonia Research Agreement.
(u) "Products" means Wafers containing identical individual circuits
meeting Specifications which have been supplied to AMD Saxonia by or on behalf
of AMD Holding in accordance with the AMD Saxonia Wafer Purchase Agreement.
(v) "Proprietary Product Know-how" means all knowledge and information of
AMD Inc. or of any of the AMD Companies, including show-how, methods,
techniques, procedures, formulations, formulae, assembly, installation,
operating and quality control procedures and manuals, quality control standards,
technical information, technical and product specifications, equipment
requirements, writings, plans, drawings, designs, layouts, data, equipment,
descriptions, masks, mask works, systems, toolings, software, data,
copyrightable material, trade secrets, customer lists, inventions (whether
patentable or not), improvements, developments and discoveries relating to the
design, fabrication, manufacture, use and sale of Products, including the
implementation of circuit design on such Products, such testing procedures as
are proprietary to AMD Inc., the cutting and sorting of the individual circuits
or die on such Products and the packaging and testing of such die, which
knowledge and information, or any part thereof: (i) derives independent economic
value from not being known to, and not being readily ascertainable by proper
means of, other Persons who can obtain economic value from its disclosure; and
(ii) is the subject of efforts that would be reasonable under arms-length
circumstances to maintain its secrecy.
(w) "Proprietary Technical Documentation" means all documentation
(including that recorded in electronic media) relating to the Proprietary
Product Know-how, including, but not limited to, process recipe books, flow
charts, data bases, lab books, programs, software, formulae, diagrams,
specifications, drawings, sketches, schematics, plans, models, blueprints and
design materials. Proprietary Technical Documentation shall not include any
documentation that pertains to the general operation of the equipment in the
Plant or operation of the Plant itself, such as maintenance histories, service
logs and manuals and operating manuals;
(x) "Service Agreements" means the Wafer Purchase Agreements, the Research
Agreements, and the Management Service Agreement;
(y) "Services" means the research, design and development services to be
performed by AMD Saxonia under the AMD Saxonia Research Agreement;
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(z) "Specifications" means, with respect to a Product, the tooling, masks,
mask-works, specifications, blueprints, drawings, assembly instructions and
other instructions required for the manufacture of that Product;
(aa) "Subsidiary" means, with respect to any Person, any other Person of
which more than 50% of the total voting power of shares of stock or other
ownership interest entitled to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof; and
(bb) "Wafer" means a silicon wafer onto which many identical individual
integrated circuits have been etched or otherwise imprinted.
Section 2. Ownership of Intellectual Property.
----------------------------------
(a) Each of AMD Holding and AMD Saxonia acknowledges and agrees that it
shall promptly disclose to AMD Inc. any and all intellectual property made,
conceived or actually or constructively reduced to practice by it and its
Affiliates prior to the termination of the Service Agreements and that AMD Inc.
shall have all ownership rights, title and interest in and to such intellectual
property, subject to the grant of license contained in Section 3 hereof. Each of
AMD Holding and AMD Saxonia further acknowledges and agrees that it is engaged
under its respective Service Agreement in work for hire and hereby assigns to
AMD Inc. any and all such intellectual property referred to in the preceding
sentence; provided, that to the extent any such intellectual property comprises
copyrights which, for purposes of German law, cannot be so assigned, each of AMD
Holding and AMD Saxonia hereby grants and assigns to AMD Inc., to the fullest
extent permitted by applicable law and on a fully-paid and royalty-free basis,
the exclusive right to exploit such copyright worldwide for the entire duration
of such copyright, including without limitation the right to assign or license
such right to any other Person on an exclusive or non-exclusive basis, as the
case may be. Each of AMD Holding and AMD Saxonia agrees to assist AMD Inc., at
AMD Inc.'s expense, in every proper way to enable AMD Inc. to obtain, perfect,
defend and enforce its rights in and to all such intellectual property in any
and all countries, including by the disclosure to AMD Inc. of all pertinent
information and dates with respect thereto and the execution of all
applications, specifications, declarations, oaths, assignments, licenses and all
other instruments which are, or AMD Inc. shall deem, necessary, in order to
apply for and obtain copyright protection, mask or mask-work registration and/or
letters patent and/or in order to assign and convey to AMD Inc., its successors,
assigns and nominees, sole and exclusive rights, title and interest in and to
such intellectual property by copyrights, mask works, patent applications,
patents or other forms of industrial or intellectual property protection.
(b) Each of AMD Holding's and AMD Saxonia's obligation to execute (or cause
to be executed) instruments or papers such as those described in Section 2(a)
shall continue after the termination of this Agreement and any Service Agreement
with respect to any and all copyrights, masks, mask works, inventions and/or
other industrial or intellectual property rights owned by, assigned to or
required to be assigned to AMD Inc. under the provisions of this Agreement. Each
of AMD Holding and AMD Saxonia agrees that, if testimony or information relative
to any of said matters or related to any interference or litigation is required
by AMD Inc. either during the term of this Agreement or any Service Agreement or
following such termina
7
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tion, it shall give all information and testimony and do all things reasonably
requested of it that it may lawfully do; provided that, if such matters shall be
--------
required of it, it will receive reasonable compensation from AMD Inc. for its
costs and time so consumed.
(c) Each of AMD Holding and AMD Saxonia agrees that, prior to the
termination of its respective Service Agreements, any employee inventions of its
respective employees, as defined in the "Employee Invention Law" shall be
claimed by it within the time limits set by law. Each of AMD Holding and AMD
Saxonia agrees that it shall use all reasonable efforts to obtain, to the
fullest extent permitted by law, exclusive rights for AMD Inc. for such employee
inventions. Each of AMD Holding and AMD Saxonia further agrees that for free
inventions, as defined in the Employee Invention Law, of its employees, it
shall, on request of AMD Inc., acquire for AMD Inc. a non-exclusive right to use
such free invention. The calculation and payment of the amount of any
consideration for employee inventions qualifying under the Employee Invention
Law shall be the responsibility of AMD Holding or AMD Saxonia as applicable.
(d) AMD Saxonia hereby acknowledges and agrees that, except to the extent
that such intellectual property qualifies as Developed Intellectual Property so
as to be covered by the license set forth in Section 3 hereof, AMD Saxonia shall
have no rights to use any intellectual property partially made, conceived, or
actually or constructively reduced to writing by AMD Saxonia during the term of
the AMD Saxonia Research Agreement or the AMD Saxonia Wafer Purchase Agreement.
(e) In accordance with the terms of this Agreement and the Service
Agreements, the parties hereto acknowledge and agree that all right, title and
interest in and to the Developed Intellectual Property and the Proprietary
Product Know-how shall at all times be vested solely in AMD Inc. and that no
rights or licenses, express or implied, are granted by this Agreement other than
as expressly granted in Section 3 hereof.
(f) Each of AMD Holding and AMD Saxonia agrees that, from the date of
termination of its respective Service Agreements, it shall discontinue all use
of Confidential Information including all Proprietary Product Know-how and
Proprietary Technical Documentation, unless otherwise agreed upon in writing
with AMD Inc., and that it will, and will cause its Affiliates to, make
available to AMD Inc. all such documents containing Confidential Information for
removal in accordance with the terms of Section 9 hereof.
(g) AMD Inc. hereby acknowledges and agrees that it and the AMD Companies
shall have no right, title or interest in or to any Post Research Agreement AMD
Saxonia Developed Intellectual Property or Post Research Agreement AMD Saxonia
Developed Improvements and that AMD Saxonia shall be entitled to apply for and
exploit, at its own expense, any patent or other intellectual property
protection for any such Post Research Agreement AMD Saxonia Developed
Intellectual Property.
(h) In addition, AMD Inc. hereby waives, and agrees to cause each other AMD
Company to waive, any and all rights, claims and/or causes of action such entity
now has or in the future may have against AMD Saxonia, its successors and
assigns, or against a Beneficiary, based on: (i) its use, in any manner
whatsoever, of any Non-Proprietary Know-how or of
8
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Information Residuals; (ii) its use, within the scope of the license granted in
Section 3(a) hereof, of the Developed Intellectual Property; or (iii) its use,
in any manner whatsoever, of Post Research Agreement AMD Saxonia Developed
Improvements or Post Research Agreement AMD Saxonia Developed Intellectual
Property. The preceding sentence notwithstanding, AMD Inc. does not waive any
rights, claims or causes of action based on the infringement and/or
misappropriation of any patents, copyrights, mask works, trademarks and trade
secrets, whether registered or not, which are owned by AMD Inc. or by an
Affiliate of AMD Inc. other than AMD Saxonia and not licensed to AMD Saxonia
hereunder; provided, however, that the use of Information Residuals shall not be
deemed to constitute an infringement and/or misappropriation of any intellectual
property rights of AMD Inc. or any AMD Company.
(i) Anything in this Agreement to the contrary notwithstanding, nothing
contained herein shall prohibit or restrain in any way AMD Saxonia from using
any know-how which has become publicly known other than through the action or
breach by AMD Saxonia, an AMD Saxonia Person or a Beneficiary of this Agreement.
(j) AMD Inc. shall pay any fees for the registration, maintenance and
renewal of any of the Developed Intellectual Property. Notwithstanding the
foregoing, AMD Inc. shall not be obliged to maintain any registration relating
to the Developed Intellectual Property which, in its sole discretion, does not
justify the expense of maintenance. Before allowing any registration relating to
the Developed Intellectual Property to lapse, however, AMD Inc. shall give AMD
Saxonia at least thirty (30) days' prior notice of its intention to allow such
registration to lapse and shall (if the whole of the rights in such Developed
Intellectual Property are exclusively owned by AMD Inc.) offer to AMD Saxonia an
assignment thereof for nominal consideration; provided that all expense of any
such transfer or assignment shall be borne solely by AMD Saxonia. In addition,
to the extent AMD Inc. in its sole discretion determines not to pursue any
material registrable but as yet unregistered copyright or patent forming a part
of the Developed Intellectual Property and if such copyright or patent is
capable of being pursued, AMD Inc. shall notify AMD Saxonia promptly after AMD
Inc.'s decision not to pursue such copyright or patent, and AMD Saxonia may, at
its option, take any necessary actions at its sole expense to pursue such
copyright design or patent in AMD Inc.'s name.
Section 3. Grant of License.
----------------
(a) AMD Inc. hereby grants to AMD Saxonia and AMD Saxonia hereby accepts,
upon the terms and conditions herein set forth, a perpetual, worldwide,
fully-paid, royalty-free, non-exclusive license to: (i) use the Developed
Intellectual Property to design, develop, manufacture and/or assemble at the
Plant products other than the Products or Improvements; (ii) use the Developed
Intellectual Property in the marketing, distribution and sale, throughout the
world, of products manufactured at the Plant incorporating, or assembled at the
Plant using, such Developed Intellectual Property; and (iii) (x) create and
produce at the Plant derivative works of the Developed Intellectual Property,
(y) use such derivative works for the design, development, manufacture and/or
assembly of products at the Plant and (z) market, distribute and sell,
throughout the World, products manufactured or assembled at the Plant
incorporating some or all of such derivative works.
9
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(b) AMD Saxonia shall observe reasonable requirements of AMD Inc. and all
requirements of applicable laws with respect to the marking of any product
covered by a claim of a patent or copyright which is part of the Developed
Intellectual Property and which is incorporated in any product manufactured,
sold or otherwise transferred by AMD Saxonia. In the event that such marking of
such a product is not feasible, AMD Saxonia shall observe the reasonable
requirements of AMD Inc. and all requirements of applicable laws with respect to
the marking of any packaging and advertising, sales or technical literature
pertaining thereto, including without limitation with words and numbers
identifying the patents applicable thereto.
(c) It is hereby acknowledged and agreed that AMD Saxonia shall have no
right to use any trademark or service mark of AMD Inc. without the prior written
consent of AMD Inc. or as expressly contemplated in the AMD Saxonia Wafer
Purchase Agreement (and, if such consent is given by AMD Inc., AMD Saxonia shall
only use such trademarks or service marks on any AMD Saxonia products that are
sold to AMD Inc. and/or under AMD Inc.'s supervision).
Section 4. Royalties. The license and rights granted to AMD Saxonia
---------
hereunder shall be royalty free, and AMD Saxonia shall have no obligations to
pay royalties, license fees or other fees to AMD Inc. or its Subsidiaries or
Affiliates in connection with (i) AMD Saxonia's use of the license and rights
granted to it pursuant to this Agreement or (ii) the grant of the licenses and
rights hereunder.
Section 5. Permitted Uses. Anything herein to the contrary notwithstanding,
--------------
the parties hereby acknowledge and agree that, following the termination of the
AMD Saxonia Wafer Purchase Agreement, the operation of the Plant by AMD Saxonia,
its successors and assigns, or by a Beneficiary shall not, absent a separate
infringement or other unlawful violation, under this Agreement or otherwise, of
a proprietary, substantial and identifiable right of AMD Inc. or of any AMD
Company, constitute: (i) a breach of the terms of this Agreement or of any of
the Service Agreements, or (ii) an infringement upon any intellectual property
right of AMD Inc. or another AMD Company.
Section 6. Infringement Procedures.
-----------------------
(a) In the event AMD Saxonia has actual knowledge of (i) any products or
processes that may infringe or misappropriate or in any way adversely affect AMD
Inc.'s right in and to any of the Developed Intellectual Property, or (ii) any
actual or potential challenge to or claim against its or AMD Inc.'s use of any
of the Developed Intellectual Property, AMD Saxonia will promptly give notice
thereof (including reasonable details) to AMD Inc. In the event that AMD Inc.
elects to undertake any demand, suit or other action on account of any actual or
suspected infringement, or any defense of any such challenge or claim, AMD
Saxonia shall cooperate fully, as AMD Inc. may reasonably request and at AMD
Inc.'s expense, in connection with any such demand, suit, action or defense;
provided that nothing herein shall obligate AMD Inc. or AMD Saxonia to make any
such demand, suit, action or defense.
(b) AMD Inc. may at any time instruct AMD Saxonia that AMD Saxonia's use of
any of the Developed Intellectual Property must be modified or discontinued,
whereupon AMD Saxonia shall immediately modify or discontinue (as the case may
be) such Developed
10
<PAGE>
Intellectual Property in accordance with such notification at AMD Saxonia's sole
expense; provided that (i) AMD Inc. consults with AMD Saxonia prior to making
such instruction, and (ii) AMD Inc. reasonably believes that AMD Saxonia's
continued use of such Developed Intellectual Property may cause AMD Inc. and/or
another AMD Company to incur liability or expense or may otherwise have an
adverse effect on the market or competitive position (other than with respect to
AMD Saxonia) of AMD Inc. or one or more other AMD Company; provided, further,
that AMD Inc. shall modify or discontinue its use of the Developed Intellectual
Property to the same extent that AMD Inc. requires AMD Saxonia to modify or
discontinue AMD Saxonia's use of such Developed Intellectual Property under this
Section 6(b).
Section 7. Confidentiality.
---------------
(a) AMD Saxonia shall hold all Confidential Information in strict
confidence and shall not disclose and shall cause the AMD Saxonia Persons not to
disclose any such Confidential Information to any Person without the prior
written consent of AMD Inc., except to the extent: (i) specifically required by
applicable law, by this Agreement, by the Service Agreements or by the Loan
Agreement (ii) such Confidential Information is or becomes generally available
to the public other than as a result of a disclosure by AMD Saxonia, one of the
AMD Saxonia Persons or a Beneficiary, (iii) such Confidential Information
becomes available to AMD Saxonia on a non-confidential basis from a third party
(not including any Subsidiary or Affiliate of AMD Inc.) provided such third
party is not bound by confidentiality agreements or by legal, fiduciary or
ethical constraints on disclosure of such information; or (iv) the recipient is
a Beneficiary or a legal or other professional advisor to AMD Saxonia and, in
any such case, is either bound by legal, fiduciary or ethical constraints on
disclosure of such information, or agrees (for the benefit of AMD Inc.) to hold
such Confidential Information in confidence on the terms of this Section 7. The
parties hereto agree that, the foregoing notwithstanding, to the extent AMD
Holding requests that AMD Saxonia perform Design Activities and/or Services
under the AMD Saxonia Research Agreement in conjunction with a third party, AMD
Saxonia may disclose Confidential Information to such third party to the extent
reasonably necessary or desirable for purposes of such Design Activities and
Services; provided that such third party enters into a confidentiality
undertaking in form and substance reasonably satisfactory to AMD Inc.
(b) Subject to compliance with the terms of Sections 21 and 22 hereof, AMD
Saxonia agrees and acknowledges that money damages would not be sufficient
remedy for any breach of this Section 7 by AMD Saxonia and that AMD Inc. shall
be entitled to injunctive relief, specific performance and/or any other
appropriate equitable remedy.
(c) AMD Inc. hereby waives, and agrees to cause all other AMD Companies to
waive, any and all rights, claims and/or causes of action such entity now has or
in the future may have against AMD Saxonia, its successors and assigns, or
against a Beneficiary, based on: (i) its use, in any manner whatsoever, of any
Non-Proprietary Know-how or Information Residuals; (ii) its use, within the
scope of the license granted in Section 3(a) hereof, of the Developed
Intellectual Property; or (iii) its use, in any manner whatsoever, of Post
Research Agreement AMD Saxonia Developed Improvements or Post Research Agreement
AMD Saxonia Developed Intellectual Property. The preceding sentence
notwithstanding, AMD Inc. does not waive any rights, claims or causes of action
based on the infringement and/or misappropriation of any patents, copyrights,
mask works, trademarks and trade secrets, whether registered or not,
11
<PAGE>
which are owned by AMD Inc. or by an Affiliate of AMD Inc. other than AMD
Saxonia and not licensed to AMD Saxonia hereunder; provided, however, that the
use of Information Residuals shall not be deemed to constitute an infringement
and/or misappropriation of any intellectual property rights of AMD Inc. or any
AMD Company.
Section 8. Term and Termination.
--------------------
(a) This Agreement shall commence on the date hereof and remain in full
force and effect until the date five (5) years from the Loan Agreement
Termination Date, unless sooner terminated as hereinafter provided.
(b) This Agreement may be terminated: (i) by AMD Inc. if, subsequent to the
occurrence of a Trigger Event (as defined below), AMD Saxonia is in material
breach of any of its express obligations hereunder in respect of the
restrictions on its use of, or in respect of its affirmative obligations with
regard to, the Developed Intellectual Property, and such breach is not
substantially cured by AMD Saxonia within thirty (30) days of its receipt of
notice thereof; or (ii) by either AMD Inc. or AMD Saxonia at any time on or
after the date on which both (x) the last copyright or patent for any of the
Developed Intellectual Property expires, and (y) all principal, interest and
other amounts owed or to be owed by AMD Saxonia under the Loan Agreement have
been paid in full by or for the account of AMD Saxonia (and the Federal Republic
of Germany has been reimbursed in full by or for the account of AMD Saxonia to
the extent the Federal Republic of Germany makes any payment in respect of its
guarantee of amounts outstanding under the Loan Agreement). Any such termination
will be effective immediately upon receipt of notice of such termination by the
non-terminating party. Upon termination of this Agreement, unless otherwise
agreed among AMD Inc. and AMD Saxonia, AMD Saxonia agrees to immediately
discontinue all use of the Developed Intellectual Property. In the event of a
breach by AMD Saxonia of any of its obligations contained in this Agreement that
do not relate to restrictions on the use of, or affirmative obligations with
regard to, the Developed Intellectual Property, such breach shall not give rise
to any right on the part of AMD Inc. to terminate this Agreement.
(c) For purposes of this Section 8, any of the events described in
subsections (i)-(v) below shall be a "Trigger Event":
(i) termination of the AMD Saxonia Research Agreement for any reason
whatsoever other than upon or following repayment by or for the account of
AMD Saxonia) of the Loan Agreement and reimbursement in full of the Federal
Republic of Germany by or for the account of AMD Saxonia to the extent the
Federal Republic of Germany makes any payment in respect of its guarantee
of amounts outstanding under the Loan Agreement;
(ii) AMD Inc. ceasing to beneficially own, directly or indirectly,
more than 50% of the share capital of AMD Saxonia having ordinary voting
power for the election of directors of AMD Saxonia or AMD Saxonia ceasing
to beneficially own the Plant;
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(iii) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of AMD Inc. in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief
shall be granted under any applicable federal or state law;
(iv) a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over AMD Inc. or over all
or a substantial part of its property, shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of AMD Inc. for all or a substantial part of its property; or the issuance
of a warrant of attachment, execution or similar process against any
substantial part of the property of AMD Inc.; and the continuance of any
such events in this subpart (iv) for 90 days unless stayed, dismissed,
bonded or discharged; or
(v) AMD Inc. shall have an order for relief entered with respect to it
or commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or shall consent to the entry
of an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by AMD
Inc. of any assignment for the benefit of creditors; or the inability or
failure by AMD Inc. or the admission by AMD Inc. in writing of its
inability to pay its debts as such debts become due; or the Board of
Directors of AMD Inc. (or any committee thereof) adopting any resolution or
otherwise authorizing action to approve any of the foregoing.
(d) Section 8(b) above notwithstanding and without derogating from any
obligations of AMD Holding under the AMD Saxonia Wafer Purchase Agreement to
purchase inventory and/or work-in-progress upon a termination of that agreement,
AMD Saxonia shall have the right to market and sell all of its inventory of
products which utilizes any of the Developed Intellectual Property (including
derivative works of such Developed Intellectual Property) existing as of the
effective date of termination of this Agreement for the three month period
following such effective date to the extent AMD Saxonia may do so at the time of
such termination in accordance with rights and licenses granted to it under this
Agreement. At the termination of such three-month period, however, AMD Saxonia
shall destroy any such products, including any derivative works, which remain in
the possession or control of AMD Saxonia or any of the AMD Saxonia Persons.
(e) The provisions of Sections 2, 5, 7, 9, 10, 19, 20, 21 and 22 shall
survive any termination of this Agreement, unless this Agreement has been
terminated by mutual consent of AMD Inc., AMD Holding and AMD Saxonia after the
Loan Agreement Termination Date.
Section 9. Proprietary Technical Documentation.
-----------------------------------
(a) Each of AMD Holding and AMD Saxonia acknowledges and agrees that any
and all Proprietary Technical Documentation, including all copies or parts
thereof, shall be and remain the sole property of AMD Inc. and AMD Inc. shall
retain the sole right to obtain
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<PAGE>
copyright protection, mask or mask work registration and/or letters patent in
any and all countries upon such Proprietary Technical Documentation.
(b) Each of AMD Holding and AMD Saxonia further agrees that, upon the
termination of the respective Service Agreements to which it is a party, AMD
Inc. shall be entitled to remove all Proprietary Technical Documentation and all
other documentation containing Confidential Information in accordance with the
procedure set forth below, and that it shall not, without the written consent of
AMD Inc., retain or take any copies or other reproductions of, nor shall it
knowingly withhold from AMD Inc., any such Proprietary Technical Documentation
or other documentation containing Confidential Information in its possession.
(c) Promptly following the termination of the AMD Saxonia Research
Agreement or of this Agreement, AMD Inc. shall be entitled to enter the Plant
and any other AMD Saxonia premises for the purposes of removing all Confidential
Information, including Proprietary Technical Documentation. AMD Saxonia shall
cooperate with AMD Inc. and shall provide AMD Inc. with full access to its
records and the records of all AMD Saxonia Persons and Affiliates (including
without limitation any digital or other media on which Proprietary Product
Know-how or other Confidential Information has been recorded) for purposes of
allowing AMD Inc. to remove such Proprietary Technical Documentation and any
other documentation containing Confidential Information. Representatives of AMD
Saxonia shall be entitled to accompany AMD Inc. at all times while AMD Inc. is
in the Plant for the purposes of recording those documents that are removed by
AMD Inc. and/or lodging an objection to such removal on the basis that such
documentation does not constitute Confidential Information. To the extent AMD
Inc. desires to remove documentation that is not Confidential Information, AMD
Inc. shall be permitted to do so at its sole expense.
(d) As soon as AMD Inc. has completed the foregoing exercise, it shall
certify to AMD Saxonia in writing that it has removed all Confidential
Information known to it. AMD Inc. hereby acknowledges and agrees, on behalf of
itself and all other AMD Companies, that any and all documentation or other
items that it knowingly chooses not to remove from the Plant shall thereafter be
deemed not to constitute Proprietary Technical Documentation or to contain
Confidential Information.
(e) Except where such failure was due to circumstances beyond its control
(in which case, the removal process shall be completed as soon as reasonably
practicable) or due to a breach by AMD Saxonia of its covenants to cooperate
with AMD Inc., if AMD Inc. fails to complete the foregoing document removal
process within thirty (30) days following the termination of the AMD Saxonia
Research Agreement, AMD Inc. and all other AMD Companies shall be deemed to have
waived any and all rights, claims and/or causes of action they have or in the
future may have against AMD Saxonia, its successors and assigns, or against a
Beneficiary based on the disclosure or use, for any purpose, by such Person of
any documentation left in the Plant on the grounds that such documentation or
the information contained therein is in any manner proprietary to AMD Inc. or
another AMD Company.
(f) In connection with the foregoing, AMD Inc. agrees to indemnify and hold
harmless AMD Saxonia from and against any and all losses, costs and expenses
resulting from
14
<PAGE>
any damage caused to the Plant by AMD Inc. during the course of conducting the
document removal process.
Section 10. Disclaimer.
----------
(a) EACH PARTY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, IN CONNECTION WITH THE DEVELOPED INTELLECTUAL PROPERTY AND
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, NEITHER PARTY SHALL HAVE ANY LIABILITY IN TORT OR
STRICT LIABILITY, NOR SHALL IT BE LIABLE TO THE OTHER FOR ANY ORDINARY,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED BY SUCH OTHER PARTY IN
RELATION TO THE DEVELOPED INTELLECTUAL PROPERTY.
(b) IN FURTHERANCE OF THE FOREGOING, NEITHER PARTY WARRANTS THAT THE
MANUFACTURE OF ANY PRODUCTS INTEGRATING THE DEVELOPED INTELLECTUAL PROPERTY WILL
NOT INFRINGE ANY PATENT OR SIMILAR INTELLECTUAL PROPERTY RIGHTS OWNED OR
POSSESSED BY ANY THIRD PARTIES.
Section 11. Indemnification. AMD Saxonia agrees to indemnify, defend and
---------------
hold harmless AMD Inc. from and shall pay all costs, fees and expenses
(including reasonable attorney's fees) incurred by AMD Inc. arising out of a
breach by AMD Saxonia of this Agreement, but only to the extent the breach takes
place after the termination of the AMD Saxonia Research Agreement. AMD Inc.
agrees to indemnify, defend and hold harmless AMD Saxonia from and shall pay all
costs, fees and expenses (including reasonable attorney's fees) incurred by AMD
Saxonia arising out of a breach by AMD Inc. of this Agreement.
Section 12. Representations and Warranties. Each of AMD Holding and AMD
------------------------------
Inc. hereby represents and warrants to AMD Saxonia that:
(a) Organization; Corporate Power. It is duly incorporated and validly
-----------------------------
existing under the laws of the jurisdiction of its organization; it is duly
qualified or licensed and (where the term has a technical meaning) is in good
standing as a foreign corporation authorized to do business in each jurisdiction
where, because of the nature of its activities or properties in such
jurisdiction, such qualification or licensing is required, except for such
jurisdictions where the failure to be so qualified or licensed will not
materially adversely affect its financial condition, business, operations or
prospects; and it has all requisite corporate power and authority (i) to own,
operate, and lease its assets and properties and to carry on the business in
which it is engaged and in which it currently proposes to engage; and (ii) to
execute, deliver and perform its obligations under this Agreement.
(b) Corporate Authority; No Conflict. The execution, delivery and
--------------------------------
performance by it of this Agreement have been duly authorized by all necessary
corporate action (including any necessary shareholder action) on its part and do
not and will not (i) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination,
15
<PAGE>
or award presently in effect binding on it (which violation, the case of
performance only, individually or in the aggregate could reasonably be expected
to have a material adverse effect on the financial condition, business,
operations or prospects of AMD Inc. and its Subsidiaries on a consolidated
basis) or violate its charter, or (ii) result in a breach of, result in a
mandatory prepayment or acceleration of indebtedness evidenced or secured by, or
constitute a default under, any indenture or loan or credit agreement, or any
other agreement or instrument, to which it is a party or by which it or its
properties are bound, or (iii) result in or require (in either case except as
contemplated by the Operative Documents as defined in the Loan Agreement) the
creation or imposition of any encumbrance of any nature upon or with respect to
any of the of the properties now owned by it, and it is not in default under or
in violation of its charter, or any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination, award, indenture, agreement or
instrument, which default or violation, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the financial
condition, business, operations or prospects of it and its Subsidiaries on a
consolidated basis.
(c) Valid and Binding Obligation. This Agreement constitutes its legal,
----------------------------
valid and binding obligation, enforceable against it in accordance with its
terms, subject, however, to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally and except as
the enforceability thereof may be limited by general principles of equity
(regardless of whether considered in a proceeding in equity or law).
Section 13. Relationship of Parties. Each of the parties shall at all times
-----------------------
be independent contractors with respect to each other. Nothing in this Agreement
shall constitute either party hereto as the partner, joint venturer, employee or
agent of the other such party, and none of AMD Inc., AMD Holding or AMD Saxonia
shall act or omit to act in such a way as to suggest the contrary to any third
party.
Section 14. Assignment. This Agreement shall be binding upon and enure to
----------
the benefit of each party hereto and their respective successors and assigns;
provided, however, that AMD Saxonia shall not have the right to transfer or
- -------- -------
assign its interest in this Agreement without the prior written consent of both
AMD Inc. and, prior to the Loan Agreement Termination Date, the Agent; provided
--------
further, that AMD Saxonia may assign this Agreement to the Agent as security for
- -------
the obligations of AMD Saxonia under the Loan Agreement and that, in connection
with the enforcement of rights under such security, the rights of AMD Saxonia
may be assigned to a transferee of the capital stock or all or substantially all
of the assets of AMD Saxonia, so long as any transfer of the rights of AMD
Saxonia under this Agreement in connection with the enforcement of rights under
such security shall include the obligations of AMD Saxonia, including that any
such transfer shall not change the location where and the manner in which the
Developed Intellectual Property may be used pursuant to the rights and licenses
granted under this Agreement.
Section 15. Waivers. No delay or omission in exercise of any right or
-------
remedy of either party or any default by the other, and no custom or practice of
the parties at variance with the terms of this Agreement, shall impair any right
or remedy otherwise available nor shall it be construed as a waiver of any right
or remedy. Any waiver by either party of any default must be in writing and
shall not be a waiver of any other default concerning the same or any other
provision. Prior to the Loan Agreement Termination Date, AMD Saxonia shall have
no right to
16
<PAGE>
waive any of its rights or remedies under this Agreement without the prior
written consent of the Agent.
Section 16. Rights Cumulative. The rights, remedies and powers of each of
-----------------
the parties contained in this Agreement are cumulative and not exclusive of any
rights, remedies or powers provided to the parties by applicable law. No single
or partial exercise by any of the parties hereto of any right, remedy or power
under this Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
Section 17. Further Assurances. At any time from time to time, upon the
------------------
request of either party, the parties agree to execute and deliver such further
documents and do such other acts and things as any party may reasonably request
in order to effect fully the purpose of this Agreement. Without limiting the
foregoing, each of AMD Inc. and AMD Holdings agrees to prepare and execute from
time to time, at the expense of AMD Saxonia, such license agreements
substantially on the terms hereof confirming the licenses and rights of AMD
Saxonia granted hereby in any specific patent or copyright comprising Developed
Intellectual Property as AMD Saxonia may reasonably request.
Section 18. Notices. All notices and other communications required or
-------
permitted to be given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered or certified mail, postage
pre-paid, return receipt requested, or by pre-paid telex, TWX or telegram, or by
pre-paid courier service, or by telecopier, to the respective parties hereto at
their respective addresses (or to their respective telex, TWX or telecopier
numbers) indicated below, or such other addresses or numbers specified in a
notice sent or delivered in accordance with the provisions of this Section 18.
Any such notice or communication shall be deemed to be given for purposes of
this Agreement on the day that such writing or communication is delivered or, in
the case only of a telex, TWX or telegram, sent to the intended recipient
thereof, or in the case only of a telecopier, sent to the intended recipient
thereof with confirmation of receipt, all in accordance with the provision of
this Section 18.
If to AMD Inc.: Advanced Micro Devices, Inc.
One AMD Place
P.O. Box 3453
Sunnyvale, California 94088-3453
Attention: General Counsel
Facsimile: (408) 774-7399
If to AMD Holding: AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden, GERMANY
Attention: Geschaftsfuhrer
Facsimile: 49-351-8412-150
17
<PAGE>
If to AMD Saxonia: AMD Saxony Manufacturing GmbH
Washingtonstra(beta)e 16 A/B
01139 Dresden, GERMANY
Attention: Geschaftsfuhrer
Facsimile: 49-351-8412-150
with a copy to: Dresdner Bank A.G.
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: 49-351-489-1350
Section 19. No Effect on Other Agreements. No provision of this Agreement
-----------------------------
shall be construed so as to negate, modify or affect in any way the provisions
of any other agreement among AMD Inc., AMD Holding, AMD Saxonia and/or any other
person or entity except as specifically provided in any such other agreement.
Section 20. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
-------------
BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 21. Expert Resolution of Certain Disputes.
-------------------------------------
(a) In the event that following the termination of the AMD Saxonia Research
Agreement or the AMD Saxonia Wafer Purchase Agreement: (i) AMD Inc. reasonably
asserts that any information used by AMD Saxonia constitutes Proprietary Product
Know-how or that any action by AMD Saxonia constitutes an infringement on any
intellectual property rights of AMD Inc., or (ii) AMD Saxonia reasonably asserts
that any document in the Plant that AMD Inc. wishes to remove does not
constitute Proprietary Technical Documentation, the parties agree that they will
refer the dispute between them to a technical expert for binding determination.
Pending resolution of any such dispute, AMD Saxonia shall be entitled to
continue to use the information or document in question on the terms of this
Agreement.
(b) In the event a dispute of the type set forth in Section 21(a) arises,
the parties shall, within three (3) business days thereafter, appoint a mutually
agreeable, appropriately qualified expert to resolve the dispute between the
parties. If the parties cannot agree on the choice of the expert within such
time frame, either party may request that the President of the European Patent
Office appoint a suitably qualified expert to resolve the dispute. The decision
of the President shall be final and binding on the parties.
(c) The expert appointed by the parties, or in default, by the Institute,
shall determine what information is required (and in what format) from either or
both parties for the purposes of resolving the dispute and the parties agree to
cooperate with such expert. In no event shall the expert take more than two (2)
weeks from the date of appointment within which to reach his or her decision and
the expert shall provide its decision in writing to both parties. All costs of
the expert shall be shared equally by the parties. The decision of the expert
shall be
18
<PAGE>
appealable only pursuant to the dispute resolution procedures set forth in
Section 22, and the decision of the expert shall be admissible to the record in
any proceeding. The decision of the expert shall be final and binding on both
parties unless appealed by the commencement of proceedings pursuant to Section
22 within ten (10) days of such decision.
(d) With regard to the disputes referred to in Section 21(a), it is the
intent of the parties that the expert resolution procedures contained in this
Section 21 shall be completed and the expert decision rendered before any other
type of dispute resolution procedure, proceeding or action (including, but not
limited to, the arbitration proceedings referred to in Section 22 or any other
form of provisional or preliminary remedies) is commenced, prosecuted or
otherwise pursued.
Section 22. Arbitration of Disputes. Except as expressly provided in
-----------------------
Section 21, arbitration under this Section 22 shall be the exclusive means for a
party to seek resolution of any dispute arising out of, relating to or connected
with this Agreement, except that either party may bring an action before a
competent court for the issuance of provisional or protective measures.
(a) The parties hereto agree to submit any dispute, controversy or claim
("Dispute") arising out of, relating to or in any way connected with this
Agreement to final and binding arbitration in Santa Clara County, California
under the Commercial Arbitration Rules and Supplementary Procedures for
International Commercial Arbitration of the American Arbitration Association
("AAA") then in force except as modified in accordance with the provisions of
this Section.
(b) The arbitral tribunal shall be composed of three arbitrators, one
appointed by each party, and the two arbitrators so appointed shall, within 15
days appoint a third arbitrator who shall be chosen from a country other than
those of which the parties are nationals, who shall be fluent in English, and
who shall act as Chairman of the tribunal.
(c) In arriving at decisions, the arbitrators shall apply the terms and
conditions of this Agreement in accordance with the laws of the State of
California.
(d) The award shall be deemed a U.S. award for purposes of the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New
York Convention"). The English language shall be used in the arbitral
proceedings and all exhibits and other evidence in a language other then English
shall be accompanied by English translations when submitted into evidence before
the arbitral tribunal.
(e) The arbitrators are empowered to render the following awards in
accordance with any provision of this Agreement or any related agreement: (i)
enjoining a party from performing any act prohibited, or compelling a party to
perform any act required, by the terms of this Agreement or any related
agreement and any order entered pursuant to this Agreement and (ii) ordering
such other legal or equitable relief, including any provisional legal or
equitable relief, or specifying such procedures as the arbitrator deems
appropriate, to resolve any Dispute submitted for arbitration. The parties shall
be entitled to discover all documents and other information reasonably necessary
for a full understanding of any legitimate issue raised in the
19
<PAGE>
arbitration. They may use all methods of discovery customary under U.S. federal
law, including but not limited to depositions, requests for admission, and
requests for production of documents. The time periods for compliance shall be
set by the arbitrators, who may also set limits on the scope of such discovery.
The arbitrators shall not be empowered to award consequential or punitive
damages.
(f) Either party may file an application in any proper court described in
Section 23 below for a provisional remedy in connection with an arbitrable
controversy hereunder, but only upon the ground that the award to which the
applicant may be entitled may be rendered ineffectual without provisional
relief.
(g) The arbitrators shall issue to both parties a written explanation in
English of the reasons for the award and a full statement of the facts as found
and the rules of law applied in reaching the decision.
(h) The award of the arbitral tribunal will be the sole and exclusive
remedy between the parties regarding any and all claims and counterclaims with
respect to the subject matter of the arbitrated dispute. An award rendered in
connection with an arbitration pursuant to this Section shall be final and
binding upon the parties, and any judgment upon which an award may be entered
and enforced in any court of competent jurisdiction.
Section 23. Consent to Jurisdiction and Forum; AMD Saxonia Appointment of
-------------------------------------------------------------
Agent for Service of Process.
- ----------------------------
(a) Subject to Sections 21 and 22, all judicial proceedings brought against
any party hereto with respect to this Agreement may be brought in the United
States District Court for the Northern District of California or in any branch
of the Superior Court of the State of California sitting in Santa Clara County,
California, and by execution and delivery of this Agreement, each such party
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of such courts. In addition, each
such party hereby irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such proceedings, and hereby further irrevocably and
unconditionally waives and agrees to the fullest extent permitted by law not to
plead or claim that any such proceeding brought in any such court has been
brought in an inconvenient forum.
(b) AMD Saxonia hereby irrevocably appoints CT Corporation Services as its
agent to receive on behalf of AMD Saxonia and its property service of copies of
the summons and complaint and any other process which may be served in any
proceeding in any state or federal court of competent jurisdiction in the State
of California.
(c) AMD Holding hereby irrevocably appoints CT Corporation Services as its
agent to receive on behalf of AMD Holding and its property service of copies of
the summons and complaint and any other process which may be served in any
proceeding in any state or federal court of competent jurisdiction in the State
of California.
20
<PAGE>
Section 24. Language. This Agreement is in the English language, which
--------
language shall be controlling in all respects.
Section 25. Entire Agreement. This Agreement, the Wafer Purchase Agreements
----------------
and the Research Agreements embody the entire agreement and understanding
between the parties with respect to the subject matter hereto. Neither party has
relied upon any representation or warranty of the other party in entering into
this Agreement except as expressly set forth herein.
Section 26. Counterparts. This Agreement may be executed in one or more
------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple counterparts and attached to a
single counterpart so that all signature pages are physically attached to the
same document.
Section 27. Amendments. No modifications or amendments to this Agreement
----------
shall be binding unless in writing and executed by each of the parties hereto.
In addition, prior to the Loan Agreement Termination Date, no modification or
amendment to this Agreement may be made without the prior written consent of the
Agent.
Section 28. EMU. The European Economic and Monetary Union anticipates the
---
introduction of a single currency and the substitution of the national
currencies of Member States participating in Monetary Union. On the date on
which DM is replaced by the single currency, conversion into such currency shall
take effect. The denomination of the original currency shall be retained for so
long as this is legally permissible. Conversions shall be based on the
officially fixed rate of conversion. Neither the introduction of the single
currency nor the substitution of the national currencies of the Member States
participating in European Monetary Union nor the fixing of the official rate of
conversion nor any economic consequences that arise from any of the
aforementioned events or in connection with European Monetary Union shall give
rise to any right to terminate prematurely, contest, cancel, rescind, modify or
renegotiate this Agreement or any of its provisions or to raise any other
objections and/or exceptions or to assert any claims for compensation. This
Agreement shall continue in full force and effect in accordance with its terms.
[Remainder of page intentionally left blank]
21
<PAGE>
IN WITNESS OF THE FOREGOING, AMD Inc., AMD Holding and AMD Saxonia have
caused this Agreement to be executed by their authorized representatives as of
the date first written above.
ADVANCED MICRO DEVICES, INC.
By: /s/ Marvin D. Burkett
---------------------------------
Its:
---------------------------------
AMD SAXONY MANUFACTURING GMBH
/s/ Jack L. Saltich
----------------------------------
Geschaftsfuhrer
AMD SAXONY HOLDING GMBH
/s/ Marvin D. Burkett
----------------------------------
Geschaftsfuhrer
22
<PAGE>
EXHIBIT 10.50(o)
AMD INC. SUBORDINATION AGREEMENT
Dated 11 March 1997
between
ADVANCED MICRO DEVICES, INC.,
AMD SAXONY HOLDING GMBH,
and
DRESDNER BANK AG
as Agent and Security Agent
<PAGE>
AMD INC. SUBORDINATION AGREEMENT
THIS AMD INC. SUBORDINATION AGREEMENT, dated 11 March 1997, is made between
ADVANCED MICRO DEVICES, INC., a corporation organised and existing under the
laws of the State of Delaware, United States of America, with its chief
executive office and principal place of business at One AMD Place, Sunnyvale,
California 94088, United States of America ("AMD Inc."), AMD SAXONY HOLDING
-------
GMBH, Dresden, registered in the Commercial Register of the Dresden County Court
HRB 13931 ("AMD Holding"; and, together with AMD Inc., collectively, the
-----------
"Sponsors" together with AMD Inc., collectively, the "Sponsors"), and DRESDNER
-------- --------
BANK AG ("Dresdner"), as Agent (in such capacity, the "Agent") for the Banks
-------- -----
under the Loan Agreement referred to below and as Security Agent (in such
capacity, the "Security Agent") for the Secured Parties under such Loan
--------------
Agreement.
WHEREAS, AMD Saxony Manufacturing GmbH, Dresden, registered in the Commercial
Register of the Dresden County Court HRB 13186 ("AMD Saxonia"), a wholly-owned
-----------
Subsidiary (such and other capitalised terms being used herein with the meanings
provided in Section 1.1), of AMD Holding, which is, in turn, a wholly-owned
-----------
Subsidiary of AMD Inc., has been formed for the purpose of constructing, owning,
and operating (i) the Plant and (ii) the integrated Design Center (the
construction, ownership, and operation of the Plant and the Design Center being
hereinafter called the "Project");
-------
WHEREAS, in order to finance the construction of the Plant and the Design
Center, and start-up costs of the operation of the Plant, (i) the Sponsors
expect to make substantial subordinated loans to, and AMD Holding expects to
make substantial equity investments in, AMD Saxonia, and (ii) AMD Saxonia has
entered into a Syndicated Loan Agreement, dated 11 March 1997 (the "Loan
----
Agreement"), with the banks from time to time party thereto (hereinafter
- ---------
collectively called the "Banks" and individually called a "Bank"), Dresdner, as
----- ----
Agent and Security Agent, and Dresdner Bank Luxembourg S.A., as Paying Agent (in
such capacity, the "Paying Agent"), providing, inter alia, for two separate
------------ ----- ----
senior secured term and standby facilities aggregating up to DM1,650,000,000
(one billion six hundred fifty million Deutsche Marks);
WHEREAS, the Sponsors desire that the Project be constructed and completed and
are entering into this Agreement with the Agent and the Security Agent for the
benefit of the Banks and the Paying Agent (hereinafter collectively called the
"Secured Parties" and individually called a "Secured Party"), for the purpose,
--------------- -------------
among other things, of providing (i) certain assurances with respect to the
completion of the Project, and (ii) certain undertakings to and for the benefit
of the Secured Parties; and
WHEREAS, a condition precedent to the initial Advance is, inter alia, the
----------
execution by the Sponsors of this Agreement, and, in extending credit to AMD
Saxonia under the Loan Agreement, the Banks are relying on the undertakings of
the Sponsors contained herein;
NOW, THEREFORE, the Sponsors, the Agent (for itself and on behalf of and the
Banks), and the Security Agent (on behalf of the Secured Parties), agree as
follows:
SECTION 1. Definitions. Unless otherwise defined herein, terms used herein have
the meanings assigned to such terms in the Sponsors' Support Agreement. In
addition, the following terms (whether or not underlined) when used in this
Agreement, including its preamble and
<PAGE>
recitals, shall, except where the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):
"Agent" has the meaning assigned to such term in the introduction to this
----- ------------
Agreement.
"Agreement" means this AMD Inc. Subordination Agreement, as the same may at
---------
any time be amended or modified in accordance with the terms hereof and in
effect.
"AMD Holding" has the meaning assigned to such term in the introduction to
----------- ------------
this Agreement.
"AMD Inc." has the meaning assigned to such term in the introduction to
------- ------------
this Agreement.
"AMD Saxonia" has the meaning assigned to such term in the first recital of
----------- -------------
this Agreement.
"Bank" and "Banks" have the respective meanings assigned to such term in
---- -----
the second recital of this Agreement.
--------------
"Dresdner" has the meaning assigned to such term in the introduction to
-------- ------------
this Agreement.
"Junior Liabilities" means all obligations and liabilities of AMD Holding
------------------
to AMD Inc., howsoever created, arising, or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing, or due or to
become due.
"Loan Agreement" has the meaning assigned to such term in the second
-------------- ------
recital of this Agreement.
- -------
"Loan Agreement Termination Date" means the first date on or as of which (i) all
-------------------------------
Primary Secured Obligations under the Loan Agreement have been paid in full, and
(ii) the Banks have no commitments under or in connection with the Loan
Agreement.
"Paying Agent" has the meaning assigned to that term in the second recital
------------ --------------
of this Agreement.
"Project" has the meaning assigned to such term in the first recital to
------- -------------
this Agreement.
"Security Agent" has the meaning assigned to such term in the introduction
-------------- ------------
to this Agreement.
"Secured Parties" and "Secured Party" have the respective meanings assigned
--------------- -------------
to such terms in the third recital of this Agreement.
-------------
"Senior Liabilities" means all obligations and liabilities of AMD Holding
------------------
to the Agent, the Security Agent, the Paying Agent, any Bank, or either
Guarantor under or arising out of any Financing Document, howsoever created,
arising, or evidenced, whether direct or indirect,
<PAGE>
absolute or contingent or now or hereafter existing, or due or to become due, it
being expressly understood and agreed that the term "Senior Liabilities" shall
------------------
include, without limitation, any and all interest accruing on any of the Senior
Liabilities after the commencement of any proceedings referred to in Section 4
---------
hereof, notwithstanding any provision or rule of law which might restrict the
rights of the Security Agent, as against AMD Holding or any other Person, to
collect such interest.
"Sponsors" has the meaning assigned to such term in the introduction to
-------- ------------
this Agreement.
"Sponsors' Support Agreement" means the Sponsors' Support Agreement, of
---------------------------
even date herewith, between the Sponsors, the Agent, and the Security Agent, as
the same may at any time be amended or modified in accordance with the terms
thereof and in effect.
In this Agreement, unless the context requires otherwise, (i) any reference
to an Operative Document shall be to such Operative Document as the same may
have been or from time to time may be amended, varied, re-issued, replaced,
novated or supplemented, in each case, in accordance with the terms thereof and
hereof, and in effect; (ii) any statutory re-encacted, or replaced from time to
time; (iii) words importing a gender include every gender; and (iv) references
to Sections are to Sections of this Agreement. Section headings are inserted for
reference only and shall be ignored in construing this Agreement. A time of day,
unless otherwise specified, shall be construed as a refence to Frankfurt am Main
time.
SECTION 2. Obligations of AMD Inc. AMD Inc. will, from time to time, promptly
notify the Security Agent of the creation of any Junior Liabilities pursuant to
the Sponsors' Loan Agreement.
SECTION 3. Subordination. Except as expressly provided in this Agreement, or as
the Agent (acting on the instructions of an Instructing Group) may hereafter
otherwise expressly consent in writing, the payment of all Junior Liabilities
shall be postponed and subordinated to the payment in full of all Senior
Liabilities, and no payments or other distributions whatsoever in respect of any
Junior Liabilities shall be made, nor shall any property or assets of AMD
Holding be applied to the purchase or other acquisition or retirement of any
Junior Liabilities; provided, however, that as long as no Event of Default, or
-------- -------
Unmatured Event of Default with respect to AMD Inc. which is of the type
described in Section 8.01(f) or (g) of the AMD Inc. 1996 Bank Credit Agreement
------- ---
has occurred and is continuing, there are excepted from the terms of the
provisions of this Section 3 (i) those payments to AMD Inc. made by AMD Holding
---------
pursuant to Article II of the Management Service Agreement or pursuant to
----------
Article IV of the AMD Holding Wafer Purchase Agreement, in either case without
- ----------
duplication and to the extent not paid by AMD Saxonia pursuant thereto, (ii)
those payments to AMD Inc. made by AMD Holding in accordance with Section 4.4 of
-----------
the Sponsors' Support Agreement, and (iii) those payments to AMD Inc. made by
AMD Holding in accordance with Section 6.3 of the Sponsors' Support Agreement;
-----------
and provided, further, that there are excepted from the terms of the foregoing
provisions of this Section 3, (i) distributions in respect of the Junior
Liablities to the extent such distributions constitute non cash credits
expressly permitted to be made under the Management Service Agreement or the AMD
Holding Wafer Purchase Agreement, and (ii) performance by AMD Holding of its
obligations (other than payment obligations, if any) under the AMD Holding Wafer
Purchase Agreement, the AMD Holding Research Agreement, or the License
Agreement.
<PAGE>
Moreover, if the AMD Holding Wafer Purchase Agreement or the Management Service
Agreement terminates for any reason whatsoever, AMD Holding shall be entitled to
credit the amounts payable thereunder against the amounts receivable by it
thereunder strictly in accordance with the terms and provisions of each such
Operative Document.
SECTION 4. Bankruptcy, Insolvency, etc. In the event of any dissolution, winding
up, liquidation, reorganization, or other similar proceedings relating to AMD
Holding or to its creditors, as such, or to its property (whether voluntary or
involuntary, partial or complete, and whether in bankruptcy, insolvency,
compromise proceedings (Vergleichsverfahren) or any other marshalling of the
assets and liabilities of AMD Holding, or any sale of all or substantially all
of the assets of AMD Holding, or otherwise), the Senior Liabilities shall first
be paid in full before AMD Inc. shall be entitled to receive and to retain any
payment or distribution in respect of the Junior Liabilities, and in order to
implement the foregoing, (a) AMD Inc. hereby irrevocably agrees that in such
event all payments and distributions of any kind or character in respect of the
Junior Liabilities to which AMD Inc. would be entitled if the Junior Liabilities
were not subordinated pursuant to this Agreement, shall be made directly to the
Security Agent; (b) upon the commencement and during the continuance of any
proceedings referred to in this Section 4, the Security Agent shall have the
---------
right to require AMD Inc. to claim, enforce, prove, or vote in respect of the
Junior Liabilities in such manner as is directed by the Security Agent and is
permitted by applicable law, including, without limitation, to direct that all
payments and distributions of any kind or character in respect of the Junior
Liabilities to which AMD Inc. would be entitled if the Junior Liabilities were
not subordinated pursuant to this Agreement, shall be made directly to the
Security Agent; provided, that if the Security Agent shall not have required AMD
--------
Inc. to claim, enforce, prove, or vote in respect of any of the Junior
Liabilities on or before the day which is 10 Business Days before a date on
which the failure to so claim, enforce, prove, or vote would invalidate or
otherwise materially adversely affect the rights of AMD Inc., AMD Inc. shall
have the right to claim, enforce, prove, or vote in respect of such Junior
Liabilities in AMD Inc.'s sole discretion; and (c) AMD Inc. hereby irrevocably
agrees that, for purposes hereof, the Security Agent may, at its sole discretion
for purposes hereof, in the name of AMD Inc. or otherwise, demand, sue for,
collect, receive, and receipt for any and all such payments or distributions,
and file, prove, and vote, or consent in any such proceedings with respect to,
any and all claims of AMD Inc. relating to the Junior Liabilities.
SECTION 5. Payments Not to be commingled. In the event that AMD Inc. receives
any payment or other distribution of any kind or character from AMD Holding or
from any other source whatsoever in respect of any of the Junior Liabilities,
other than as expressly permitted by the terms of this Agreement, such payment
or other distribution shall not be commingled with other assets of AMD Inc. and
shall be promptly turned over by AMD Inc. to the Security Agent. AMD Inc. will
mark its books and records, and cause AMD Holding to mark its books and records,
as to clearly indicate that the Junior Liabilities are subordinated in
accordance with the terms of this Agreement, and will cause to be clearly
inserted in any instrument which at any time evidences any of the Junior
Liabilities a statement to the effect that the payment thereof is subordinated
in accordance with the terms of this Agreement. AMD Inc. will execute such
further documents or instruments and take such further action as the Security
Agent may reasonably request from time to time to carry out the intent of this
Agreement.
SECTION 6. Application of Payments; No Subrogation. All payments and
distributions
<PAGE>
received by the Security Agent in respect of the Junior Liabilities in
accordance with the terms thereof, to the extent received in or converted into
cash, may be applied by the Security Agent first to the payment of any and all
expenses (including reasonable attorneys' fees and legal expenses) paid or
incurred by the Security Agent in enforcing this Agreement or in endeavouring to
collect or realize upon any of the Junior Liabilities or any security therefor
in accordance with the terms hereof, and any balance thereof shall, solely as
between AMD Inc. and the Security Agent, be applied by the Security Agent, in
the manner provided by the Loan Agreement, toward the payment of the Senior
Liabilities remaining unpaid; but, as between AMD Holding and its creditors, no
such payments or distributions of any kind or character shall be deemed to be
payments or distributions in respect of the Senior Liabilities; and,
notwithstanding any such payments or distributions received by the Security
Agent in respect of the Junior Liabilities and so applied by the Security Agent
toward the payment of the Senior Liabilities, AMD Inc. shall be subrogated to
the then-existing rights of the Agent, the Security Agent, and the Banks, if
any, in respect of the Senior Liabilities only at such time as the Agent, the
Security Agent, and the Banks, shall have received payment of the full amount of
the Senior Liabilities, as provided for in Section 9, or (ii) this Agreement
---------
shall terminate pursuant to Section 15. Each Secured Party shall, at AMD Inc.'s
----------
request and expense made after such time, execute and deliver to AMD Inc.
appropriate documents (without recourse or warranty whatsoever) to evidence the
transfer by subrogation to AMD Inc. of an interest in the Senior Liabilities
resulting from the application of payments in the manner contemplated by this
Section 6. The obligations of the Secured Parties under the preceding sentence
- ---------
shall survive any termination of this Agreement.
SECTION 7. Waivers by AMD Inc. AMD Inc. hereby waives: (a) notice of acceptance
by the Agent, the Security Agent, or any Bank, of this Agreement; (b) notice of
the existence or creation or non-payment of all or any of the Senior
Liabilities; and (c) all diligence in collection or protection of or realization
upon the Senior Liabilities or any thereof or any security therefor.
SECTION 8. Obligations of AMD Inc. AMD Inc. will not, without the prior written
consent of the Security Agent: (a) transfer or assign, or attempt to enforce or
collect, any Junior Liabilities or any rights in respect thereof except as
expressly permitted to be paid pursuant to Section 3 above; provided, that
--------- --------
nothing in this Agreement shall be deemed to prevent AMD Inc. from seeking
damages, equitable relief, or otherwise enforcing any rights it may have against
AMD Holding arising out of (x) any tort or infringement of AMD Inc. tangible or
intangible property rights (including without limitation rights under applicable
patent, copyright and trade secret laws and similar principles) to the extent,
but only to the extent, such tort or infringement arises after the date of
termination of the AMD Holding Wafer Purchase Agreement or (y) any breach by AMD
Holding of its obligations under the License Agreement to the extent, but only
to the extent, that such breach arises after the date of termination of the AMD
Holding Wafer Purchase Agreement; (b) take any collateral security for any
Junior Liabilities or (c) commence, or join with any other creditor commencing,
any bankruptcy, reorganisation, or insolvency proceedings with respect to AMD
Holding. Nothing in this Agreement shall prevent AMD Inc. from forgiving all or
any portion of the Junior Liabilities or from converting all or any portion of
such Junior Liabilities into, or exchanging such Junior Liabilities for, equity
of AMD Holding, and any such equity shall not be deemed to be a distribution or
payment on such Junior Liabilities for purposes of this Agreement.
<PAGE>
SECTION 9. Continuing Subordination. This Agreement shall in all respects be a
continuing agreement and shall remain in full force and effect (notwithstanding,
without limitation, the dissolution of AMD Inc. or that at any time or from time
to time all Senior Liabilities may have been paid in full), but shall
automatically terminate on the Loan Agreement Termination Date.
SECTION 10. Rights of the Agent, the Security Agent, and the Banks. The Agent,
the Security Agent, and each Bank may, from time to time, at its sole discretion
and without notice to AMD Inc., take any or all of the following actions without
affecting its or their rights under this Agreement: (a) retain or obtain a
security interest in any property of any Person to secure any of the Senior
Liabilities; (b) retain or obtain the primary or secondary obligations of any
other obligor or obligors with respect to any of the Senior Liabilities; (c)
extend or renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Liabilities, or release or
compromise any obligation of any nature of any obligor with respect to any of
the Senior Liabilities; (d) compromise, settle, release, renew, extend, indulge,
amend, change, waive, modify, or supplement in any respect any of the terms or
conditions of any of the Operative Documents; and (e) release its lien on or
security interest in, or surrender, release, or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter, or exchange any
obligations of any nature of any obligor with respect to any such property.
SECTION 11. Transfer of Obligations; Enforcement. The Security Agent, the Agent,
or any Bank may, from time to time, without notice to AMD Inc., but subject
however, to the provisions of Section 26 of the Loan Agreement, assign or
----------
transfer any or all of the Senior Liabilities or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Senior Liabilities shall be and remain Senior Liabilities
for purposes of this Agreement, and every immediate and successive assignee or
transferee of any of the Senior Liabilities or of any interest therein, shall,
to the extent of the interest of any such assignee or transferee in the Senior
Liabilities, be entitled to the benefits of this Agreement to the same extent as
if such assignee or transferee were the transferor. The rights of the Secured
Parties hereunder shall be exercisable solely by the Security Agent on behalf of
the Secured Parties, unless either the Security Agent is not able pursuant to
------
applicable law to realize the practical benefits of such rights on behalf of the
Secured Parties or the limitations set forth in this sentence would otherwise
--
materially adversely affect the rights of the Secured Parties hereunder.
SECTION 12. Additional Provisions. None of the Agent, the Security Agent, or the
Banks shall be prejudiced in its rights under this Agreement by any act or
failure to act of any of AMD Holding or AMD Inc., or any noncompliance of AMD
Holding or AMD Inc. with any agreement or obligation, regardless of any
knowledge thereof which the Agent, the Security Agent, or such Bank may have or
with which the Agent, the Security Agent, or such Bank may be charged; and no
action of the Agent, the Security Agent, or any Bank permitted hereunder shall
in any way affect or impair the rights of the Agent, the Security Agent, or any
Bank, and the obligations of AMD Inc., under this Agreement. For the purposes of
this subordination, Senior Liabilities shall include all obligations of AMD
Holding under or in connection with any of the Operative Documents to the Agent,
the Security Agent, and each Bank, notwithstanding any right or power of any AMD
Holding or anyone else to assert any claim or defence as to the invalidity or
unenforceability of any such obligation, and no such claim or defence shall
affect or impair the
<PAGE>
agreements and obligations of AMD Inc. hereunder; provided, however, that Senior
-------- -------
Liabilities shall not include any obligations or liabilities of AMD Holding
which a court of competent jurisdiction shall have determined (which
determination shall be final and unappealable) are invalid or unenforceable.
SECTION 13. Cumulative Remedies; Modifications in Writing. The remedies provided
for herein are cumulative and are not exclusive of any remedies that may be
available to the Agent or the Security Agent at law, in equity, or otherwise. No
amendment, modification, supplement, termination, or waiver of or to any
provision of this Agreement, or consent to any departure by AMD Inc. or AMD
Holding therefrom, shall be effective unless the same shall be in writing and
signed by or on behalf of the Agent and the Security Agent.
SECTION 14. Severability of Provisions. In case any provision of this Agreement
is invalid or unenforceable, the validity or enforceability of the remaining
provisions hereof shall remain unaffected. The parties hereto shall have an
obligation to replace any invalid provision by a valid provision which
approximates best the economic purpose of the invalid provision.
SECTION 15. Termination. This Agreement and the obligations of the parties
hereunder shall terminate on the Loan Agreement Termination Date; provided, that
--------
such obligations shall automatically revive and be reinstated if and to the
extent that AMD Holding shall subsequently have obligations to any of the
Secured Parties under or arising out of any of the Financing Documents.
SECTION 16. Assignment. This Agreement shall be binding upon and shall inure to
the benefit of each party hereto and their respective successors and assigns;
provided, however, that the Security Agent, the Agent, and the Banks may
- -------- -------
transfer their rights under this Agreement, subject, however, to the provisions
of Section 26 of the Loan Agreement; provided, further, that neither AMD Inc.
---------- -------- -------
nor AMD Holding shall have the right to transfer or assign its rights under this
Agreement without the prior written consent of the Agent and the Security Agent;
and provided, further, that AMD Holding may assign this Agreement to the
-----------------
Security Agent as security for the obligations of AMD Holding under the Loan
Agreement and the other Operative Documents. Notwithstanding any such assignment
or transfer or any subsequent assignment or transfer thereof, Senior Liabilities
shall be and remain Senior Liabilities for the purposes of this Agreement, and
every immediate and successive assignee or transferee of any of the Senior
Liabilities or of any interest therein shall, to the extent of the interest of
such assignee or transferee in the Senior Liabilities, be entitled to the
benefits of this Agreement to the same extent as if such assignee or transferee
were the transferor, subject, however, to the provisions of Section 11;
----------
provided, however, that, in addition to its rights under Section 11, unless
----------
the Security Agent (acting on the instructions of an Instructing Group) shall
otherwise consent in writing, the Security Agent shall have an unimpaired right,
prior and superior to that of any such assignee or transferee, to enforce this
Agreement for the benefit of the Secured Parties as to those of the Senior
Liabilities which have not been so assigned or transferred.
SECTION 17. Notice. All notices, demands, instructions, and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing and shall be personally delivered or sent by registered or certified
mail, postage pre-paid, return receipt requested, or by pre-paid telex, TWX, or
telegram, or by pre-paid courier service, or by telecopier, and shall be
<PAGE>
deemed to be given for purposes of this Agreement on the day that such writing
is delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 17. Unless otherwise specified in a notice sent or
----------
delivered in accordance with the foregoing provisions of this Section 17,
----------
notices, demands, instructions, and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telex, TWX or telecopier numbers) indicated
below.
To the Security Agent:
Dresdner Bank AG, as Security Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To the Agent:
Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile No.: (49) 351 489-1350
To AMD Inc.:
Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile No.: (1) (408) 774 7399
To AMD Holding:
AMD Saxony Holding GmbH
Washingtonstrasse 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile No.: (49) 351 8412 150
SECTION 18. Relationship to Other Agreements. The rights of the Agent and the
Security Agent pursuant to this Agreement are in addition to any other rights or
remedies which the Agent and the Security Agent may have under statutory law or
other agreements between one or more of the Agent, the Security Agent, the
Banks, AMD Inc., and AMD Holding. Where such rights
<PAGE>
and remedies are in conflict with the provision of this Agreement, the provision
of this Agreement shall prevail.
SECTION 19. Governing Law. The form and execution of this Agreement and all
rights and obligations of the parties arising hereunder shall be governed by the
Laws of the Federal Republic of Germany.
SECTION 20. Jurisdiction. AMD Inc. and AMD Holding hereby submit to the
exclusive jurisdiction of the courts in Frankfurt am Main for any dispute
arising out of or in connection with this Agreement. AMD Inc. states that
Advanced Micro Devices GmbH, Rosenheimerstrasse 143b, 81671 Munich, Germany,
Tel.: +49 89 450 530, Fax: +49 89 906 490, is its accredited agent for service
of process and hereby undertakes to maintain an agent for service in Germany.
The foregoing submission to jurisdiction shall not (and shall not be construed
so as to) limit the rights of the Agent or the Security Agent to take suits,
actions, or proceedings against a Sponsor to enforce any judgment rendered by
the courts in Frankfurt am Main in any other court or entity of competent
jurisdiction where such Sponsor has assets, nor shall the taking of suits,
actions, or proceedings to enforce any such judgment in one or more
jurisdictions preclude the taking of enforcement proceedings in any other
jurisdiction, whether concurrently or not.
SECTION 21. Use of English Language. This Agreement has been executed in the
English language. All certificates, reports, notices, and other documents and
communications given or delivered pursuant to this Agreement shall be in the
English language and, if reasonably requested by the Agent, a certified German
translation thereof shall be furnished promptly thereafter. In the event of any
inconsistency, the English language version of any such document shall control.
SECTION 22. Operative Document. This Agreement is an Operative Document executed
pursuant to the Loan Agreement.
IN WITNESS WHEREOF, each of the parties set out below has caused this Agreement
to be duly executed and delivered by its respective officer or agent thereunto
duly authorized as of the date first above written.
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
------------------------------------------
Its
------------------------------------------
AMD SAXONY HOLDING GMBH
/s/ Marvin D. Burkett
---------------------------------------------
DRESDNER BANK AG, as Agent and Security Agent
/s/ Dr. Hans-Jurgen Menzel /s/ Horst Oechsler
----------------------------------------------
<PAGE>
EXHIBIT 10.50(p)
================================================================================
ISDA AGREEMENT
Dated 11 March 1997
between
ADVANCED MICRO DEVICES, INC.,
and
AMD SAXONY MANUFACTURING GMBH
================================================================================
<PAGE>
(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swaps & Derivatives Association, Inc.
MASTER AGREEMENT
dated as of 11 March 1997
-------------
ADVANCED MICRO DEVICES INC. and AMD SAXONY MANUFACTURING GMBH
- --------------------------- ------------------------------
have entered and/or anticipate entering into one of more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS:
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value on
that date in the place of the account specified in the relevant Confirmation
or otherwise pursuant to this Agreement, in freely transferable funds and
in the manner customary for payments in the required currency. Where
settlement is by delivery (that is, other than by payment), such delivery
will be made for receipt on the due date in the manner customary for the
relevant obligation unless otherwise specified in the relevant Confirmation
or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
Copyright (C) 1992 by International Swap Dealers Association, Inc.
<PAGE>
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:-
(i) in the same currency; and
(ii) in respect of the same Transaction.
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by
the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess of
the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:-
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net
amount actually received by Y (free and clear of Indemnifiable
Taxes, whether assessed against X or Y) will equal the full amount
Y would have received had no such deduction or withholding been
required. However, X will not be required to pay any additional
amount to Y to the extent that it would not be required to be paid
but for:-
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by
Y pursuant to Section 3(f) to be accurate and
true unless such failure would not have occurred but
for (I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or
after the date on which a Transaction is entered
into (regardless of whether such action is taken or
brought with respect to a party to this Agreement)
or (II) a Change in Tax Law.
2
<PAGE>
(ii) Liability. If:-
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any deduction
or withholding in respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgement) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:-
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorize such execution delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgement of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law)).
3
<PAGE>
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:-
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:-
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that
may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and
to be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
4
<PAGE>
organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party:
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such party
to comply with or perform any agreement or obligation to be complied
with or performed by it in accordance with any Credit Support
Document if such failure is continuing after any applicable grace
period has elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction of
all obligations of such party under each Transaction to which such
Credit Support Document relates without the written consent of the
other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the
validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation under
Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party (1)
defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however
5
<PAGE>
described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of them
(individually or collectively) in an aggregate amount of not less than the
applicable Threshold Amount (as specified in the Schedule) which has
resulted in such Specified Indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified Entity
(individually or collectively) in making one or more payments on the due
date thereof in an aggregate amount of not less than the applicable
Threshold Amount under such agreements or instruments (after giving effect
to any applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:-
(1) is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or fails
or admits in writing its inability generally to pay its debts as they
become due; (3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or
other similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of any
such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order
for its winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to
the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets; (7) has a secured party
take possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within
30 days thereafter; (8) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at the
time of such consolidation, amalgamation, merger or transfer:-
(1) the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under this
Agreement or any Credit Support-Document to which it or its predecessor
was a party by operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend (without
the consent of the other party) to the performance by such resulting,
surviving or transferee entity of its obligations under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:-
(i) ILLEGALITY. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a result
of a breach by the party of Section 4(b)) for such party (which will be the
Affected Party):-
(1) to perform any absolute or contingent obligation to make a payment
or delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction:
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on which
a Transaction is entered into (regardless of whether such action is taken
or brought with respect to a party to this Agreement) or (y) a Change in
Tax Law, the party (which will be the Affected Party) will, or there is a
substantial likelihood that it will, on the next succeeding Scheduled
Payment Date (1) be required to pay to the other party an additional amount
in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
payment from which an amount is required to be deducted or withheld for or
on account of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid in
respect of such Tax under Section 2(d)(i)(4) (other than by reason of
Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which the
other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker then that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate, will
be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the Schedule
or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
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6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii),(3),(5),(6) or, to the extent
analogous thereto, (8), and as of the time immediately preceding the institution
of the relevant proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(4) or, to the extent analogous thereto,
(8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will, promptly
upon becoming aware of it, notify the other party, specifying the nature of
that Termination Event and each Affected Transaction and will also give such
other information about that Termination Event as the other party may
reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(l) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days after
it gives notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another of its
Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to
and conditional upon the prior written consent of the other party, which
consent will not be withheld if such other party's policies in effect at
such time would permit it to enter into transactions with the transferee on
the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(l) or a
Tax Event occurs and there are two Affected Parties, each party will use all
reasonable efforts to reach agreement within 30 days after notice thereof is
given under Section 6(b)(i) on action to avoid that Termination Event.
(iv) RIGHT TO TERMINATE, IF:--
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to
all Affected Transactions within 30 days after an Affected Party gives
notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger
or an Additional Termination Event occurs, or a Tax Event Upon Merger
occurs and the Burdened Party is not the Affected Party.
either party in the case of an Illegality, the Burdened Party in the case of
a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an
Additional Termination Event if there is more than one Affected Party, or
the party which is not the Affected Party in the case of a Credit Event Upon
Merger or an Additional Termination Event if there is only one Affected
Party may, by not more than 20 days notice to the other party and provided
that the relevant Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective has an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving details
of the relevant account to which any amount payable to it is to be paid.
In the absence of written confirmation from the source of a quotation
obtained in determining a Market Quotation, the records of the party
obtaining such quotation will be conclusive evidence of the existence
and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including) the
relevant Early Termination Date to (but excluding) the date such amount
is paid, at the Applicable Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall
apply. The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:-
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the Non-
defaulting Party the excess, if a positive number, of (A) the sum
of the Settlement Amount (determined by the Non-defaulting Party)
in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the Non-
defaulting Party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the
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Non-defaulting Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the Non-
defaulting Party less (B) the Termination Currency Equivalent of the Unpaid
Amounts owing to the Defaulting Party. If that amount is a positive number,
the Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(4) SECOND METHOD AND LOSS. If the Second Method and Loss apply, and amount
will be payable equal to the Non-defaulting Party's Loss in respect of this
Agreement. If that amount is a positive number, the Defaulting Party will
pay it to the Non-defaulting Party; if it is a negative number, the Non-
defaulting Party will pay the absolute value of that amount to the
Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:-
(1) ONE AFFECTED PARTY. If there is one Affected Party, the amount payable
will be determined in accordance with Section 6(e)(i)(3), if Market
Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in
either case, references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party and the party
which is not the Affected Party, respectively, and, if Loss applies and
fewer than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:-
(A) if Market Quotation applies, each party will determine a Settlement
Amount in respect of the Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of the difference between
the Settlement Amount of the party with the higher Settlement Amount
("X") and the Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid
Amounts owing to X less (II) the Termination Currency Equivalent of the
Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in respect of
this Agreement (or, if fewer than all the Transactions are being
terminated, in respect of all Terminated Transactions) and an amount
will be payable equal to one-half of the difference between the Loss of
the party with the higher Loss ("X") and the Loss of the party with the
lower Loss("Y").
If the amount payable is a positive number, Y will pay it to X; if it is a
negative number, X will pay the absolute value of that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination
Date occurs because "Automatic Early Termination" applies in respect of a party,
the amount determined under this Section 6(e) will be subject to such
adjustments as are appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained by
such other party) during the period from the relevant Early Termination Date to
the date for payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount
recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not
a penalty. Such amount is payable for the loss of bargain and the loss of
protection against future risks and except as otherwise provided in this
Agreement neither party will be entitled to recover any additional damages as a
consequence of such losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:-
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the"Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
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9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
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to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's facsimile
machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered or
its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement is
expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if this
Agreement is expressed to be governed by the laws of the State of New York;
and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any
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reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgement) and (v) execution or enforcement of any judgement to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect to obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
14
<PAGE>
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"ILLEGALITY" has the meaning specified in section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice or any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not
reasonably practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in the
relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of
the relevant Early Termination Date, have
15
<PAGE>
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotation having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organized, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, form or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
16
<PAGE>
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of other such party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii) to such party under Section 2(a)(i) on or prior to such Early
Termination Data and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17
<PAGE>
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
ADVANCED MICRO DEVICES INC. AMD SAXONY MANUFACTURING GMBH
-------------------------------- ---------------------------------
(Name of Party) (Name of Party)
By: /s/ MARVIN D. BURKETT By: /s/ JACK L. SALTICH
------------------------------- -------------------------------
Name: Name:
Title: Title:
Date: Date:
18
<PAGE>
(Multicurrency-Cross Border)
ISDA(R)
International Swaps & Derivatives Association, Inc.
SCHEDULE
to the
Master Agreement
dated as of 11 March, 1997
between ADVANCED MICRO DEVICES, INC. and AMD SAXONY MANUFACTURING GmbH
("Party A") ("Party B")
Part 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY" means in relation to Party A or Party B for any
purpose:-
None
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
of this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A and will apply to Party B.
If such provisions apply:-
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14
of this Agreement.
"THRESHOLD AMOUNT" means, in respect of Party A or Party B, DM
15,000,000.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will
apply to Party A and will apply to Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to Party A or to Party B.
(f) PAYMENTS ON EARLY TERMINATION For the purpose of Section 6(e) of this
Agreement:-
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means either
(i) any freely available currency of a Terminated Transaction,
chosen by the party which is not the Affected Party (if there is
an Affected Party) or is the Non-defaulting Party (if there is a
Defaulting Party); or
<PAGE>
2
(ii) if there are two Affected Parties, a currency of a Terminated
Transaction, chosen by mutual agreement,
provided always that, if such currency chosen pursuant to (i) or (ii)
above is not freely available or if mutual agreement is not reached
pursuant to (ii), the Termination Currency shall be United States
Dollars.
(h) ADDITIONAL TERMINATION EVENT will not apply.
Part 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A will make the following representation and Party B
will make the following representation:-
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on (i)
the accuracy of any representations made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
satisfaction of the agreement of the other party contained in Section
4(d) of this Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial position.
(b) PAYEE REPRESENTATION. For the purposes of Section 3(f) of this
Agreement, Party A and Party B make no representations.
Part 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:-
<PAGE>
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH COVERED BY SECTION
TO DELIVER CERTIFICATE TO BE DELIVERED 3(d) REPRESENTATION
DOCUMENT
Party A & (a) a certificate Within 21 days Yes
Party B (or an extract of of execution
the list of of this Agree-
authorised ment
signatories) as to
the incumbency and
specimen signature
of each officer of
the relevant party
authorised to sign
this Agreement and
any Confirmation
hereunder.
(b) such financial Upon reasonable Yes
information as the request by the
other party may other party
reasonably request.
Part 4. MISCELLANEOUS.
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
Agreement:-
Address for notices or communications to Party A:-
Address: One AMD Place
Sunnyvale
California 94088
Attention: Director of Finance
Facsimile No: (1)(408) 749 2489 Telephone No: (1)(408) 774 7010
Address for notices or communications to Party B:-
Address: Washingtonstrasse 16A/B
01139 Dresden Germany
Attention: Geschaftsfuhrer
Facsimile No: (49) 351 8412 150 Telephone No: (49) 351 841 2500
(b) PROCESS AGENT. For the purposes of Section 13(c) of this Agreement:-
Party A appoints as its Process Agent..Not applicable
Party B appoints as its Process Agent..Not applicable
<PAGE>
4
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement,
neither party is a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party B unless otherwise
specified in a Confirmation in relation to the relevant Transaction. The
Calculation Agent's calculations and determinations shall be conclusive
and binding in the absence of manifest error.
(f) Credit Support Document. Details of any Credit Support Document: The
Sponsors Support Agreement, dated 11 March 1997 (the "Sponsors' Support
Agreement") between Party A, AMD Saxony Holding GmbH and Dresdner Bank
AG, as Agent and Security Agent and each of the Sponsors' Consent and
Agreement, the Sponsors' Loan Agreement, the AMD Inc. Guarantee, the
Sponsors' Guarantee, the Sponsors' Subordination Agreement, and the AMD
Inc. Subordination Agreement, in each case as such terms are defined in
the Sponsors' Support Agreement, are each a Credit Support Document with
respect to Party A.
(g) Credit Support Provider. Credit Support Provider means in relation to
Party A or Party B: None
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California (without reference to
the choice of law doctrine).
(i) Netting of Payment. Sub-paragraph (ii) of Section 2(c) of this Agreement
will not apply.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
Part 5. Other Provisions.
(1) Escrow Payments
Either party (or Dresdner Bank AG) may at its option and in its sole
discretion give five Local Business Days' prior written notice to the
other party (or both parties as the case may be) specifying that payments
which are required to be made hereunder on a specified date by both
parties are to be made in escrow. In such case, each party will make its
payment on that date in accordance with
<PAGE>
Section 2(a)(ii) with Dresdner Bank, AG as escrow agent (which shall waive
all rights of set off in respect of the escrow) and each such payment shall
satisfy the paying party's obligations under Section 2(a)(i) and (ii) in
respect of the amount paid. Each such payment shall be accompanied by
irrevocable instructions (a) to release each payment to the intended
recipient upon receipt by the escrow agent of the required payment from the
other party on the same date accompanied by irrevocable payment
instructions to the same effect or (b) if the required payment is not made
on that same date, to return the payment to the party that paid it into
escrow, in either case together with any interest accrued on the escrow
deposit. Any amount returned as envisaged by subparagraph (b) above shall
constitute an Unpaid Account for the purposes of Section 6 in respect of
any Early Termination Date. The escrow arrangements shall provide for
interest to be paid to the party to which the payment is released or
returned, as the case may be, on the escrow deposit, if held overnight, for
each day in the period of its deposit at the rate offered by the escrow
agent for that day for overnight deposits in the relevant currency in the
office where it holds that deposited payment (at 11.00 a.m. local time on
that day). The party that elects to have payments made in escrow shall pay
the costs of the escrow arrangements (provided that if the other party
defaults on its payment obligations, it will, on demand, reimburse the
electing party for such costs).
(2) Subordination
The rights of Party A hereunder are subordinated to the extent set forth in
the Sponsors' Subordination Agreement, and Party A and Party B agree to
comply therewith.
ADVANCED MICRO DEVICES, INC. AMD SAXONY MANUFACTURING GmbH
By /s/ MARVIN D. BURKETT By /s/ JACK L. SALTICH
-------------------------- ----------------------------
(name) (name)
<PAGE>
AMD SAXONY MANUFACTURING GMBH 11 March 1997
Dear Sirs
The purpose of this communication is to set forth the terms and conditions of
the Transaction, entered into between Advanced Micro Devices, Inc. ("Party A")
and AMD Saxony Manufacturing GmbH ("Party B") on the Trade Date specified below
(the "Transaction"). This communication will constitute a "Confirmation" as
referred to in the Master Agreement (the "ISDA Agreement") of even date
herewith, entered into between us together with this Confirmation, the
("Agreement").
The definitions and provisions contained in the 1991 ISDA Definitions (the "1991
Definitions") and the 1992 ISDA FX and Currency Option Definitions (the "FX
Definitions") (as published by the International Swap Dealers Association, Inc)
(together, the "Definitions") are incorporated by reference into this
Confirmation without regard to any revision or subsequent edition thereof. In
the event of any inconsistency between the 1991 Definitions and the FX
Definitions, the FX Definitions shall control with respect to paragraph 2(a)
below and the 1991 Definitions shall control with respect to any other
provisions of this Confirmation. This Confirmation wi11 supplement, form a part
of and be subject to the terms and conditions of the Agreement.
All provisions contained in the Agreement will govern this Confirmation except
as expressly modified below. In the event of any inconsistency among or between
the ISDA Agreement, the Definitions and this Confirmation, this Confirmation
will govern.
Each party is hereby advised, and each such party acknowledges, that the other
party has engaged in (or refrained from engaging in) substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which Confirmation relates on the terms and
conditions set forth below.
<PAGE>
2
1. This Confirmation will be governed and construed in accordance with
California law (without reference to the choice of law doctrine).
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
Trade Date: 11 March 1997
Effective Date: 11 March 1997
Termination Date: July 1, 2006, provided that if the obligations
of Party B under the Loan Agreement dated 11
March 1997, between Party B and Dresdner
Bank AG, as agent, and certain other financial
institutions have not been satisfied in full on
or before such date, the Termination Date shall
be extended to fall on the date on which such
obligations are fully and finally satisfied
Business Days: San Francisco, Frankfurt and Dresden
<PAGE>
3
/1/(a) CURRENCY OPTIONS
----------------
(i) Common terms
Buyer: Party B
Seller: Party A
Premium: DEM 51,608,500 in aggregate for all
Currency Options
Premium Payment Date: The Termination Date
Currency Option style: European
Currency Option Type: Call
(ii) Unique terms
Call Option #1
Call Currency and Amount: USD37,500,000
Strike Price: DEM 1.45
Expiration Date: March 15, 1999
- ------------------------
/1/ If on the signing date, the forward rate for any year is 1.48 or greater,
the Transactions for that year will be Currency Options structured as
follows (paragraphs (a) and (b) illustrating this for all years)
<PAGE>
Call Option #2
Call Currency and Amount: USD37,500,000
Strike Price: DEM 1.45
Expiration Date: June 15, 1999
Call Option #3
Call Currency and Amount: USD37,500,000
Strike Price: DEM 1.45
Expiration Date: September 15, 1999
Call Option #4
Call Currency and Amount: USD37,500,000
Strike Price: DEM 1.45
Expiration Date: December 15, 1999
<PAGE>
Call Option #5
Call Currency and Amount: USD20,000,000
Strike Price: DEM 1.45
Expiration Date: March 15, 2000
Call Option #6
Call Currency and Amount: USD20,000,000
Strike Price: DEM 1.45
Expiration Date: June 15, 2000
Call Option #7
Call Currency and Amount: USD20,000,000
Strike Price: DEM 1.45
Expiration Date: September 15, 2000
<PAGE>
Call Option #8
Call Currency and Amount: USD20,000,000
Strike Price: DEM 1.45
Expiration Date: December 15, 2000
Call Option #9
Call Currency and Amount: USD17,500,000
Strike Price: DEM 1.45
Expiration Date: March 15, 2001
Call Option #10
Call Currency and Amount: USD17,500,000
Strike Price: DEM 1.45
Expiration Date: June, 15, 2001
<PAGE>
Call Option #11
Call Currency and Amount: USD17,500,000
Strike Price: DEM 1.45
Expiration Date: September 15, 2001
Call Option #12
Call Currency and Amount: USD17,500,000
Strike Price: DEM 1.45
Expiration Date: December 15, 2001
(b) Additional Party B Fixed Amount
-------------------------------
Notional Amount: DEM 51,608,500
Party B Fixed Amount:
Fixed Rate Payer: Party B
Fixed Rate Payer
Payment Date: The Termination Date
Fixed Rate Option: 7%
<PAGE>
8
Fixed Rate Day
Count Fraction: Actual/365
Reset Dates: The first day of each Compounding Period
Compounding: Applicable
Compounding Dates: March 15, June 15, September 15 and
December 15
Calculation Agent: Party B
For purposes of applying the 1991 Definitions, references in this
sub-paragraph (b) to "Fixed" shall be deemed references to "Floating."
/2/(c) FX FORWARDS: PARTY A AND PARTY B FIXED AMOUNTS
----------------------------------------------
[Remainder of page intentionally left blank]
- ------------------------
/2/ If for any year the forward rate is less than 1.48, the Transactions for
that year may be Currency Options as illustrated above or Forwards
structured as follows (the example illustrating this for all years).
<PAGE>
9
3. ACCOUNT DETAILS:
---------------
(a) Payments to Party A:
Party A's account with [*]
(b) Payments to Party B:
to be supplied
4. OFFICES:
-------
(a) The Office of Party A for the Transaction in San Francisco.
* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
[Remainder of page intentionally left blank]
<PAGE>
10
(b) The Office of Party B for the Transaciton is Dresden.
5. BROKER/ARRANGER: None
---------------
[Remainder of page intentionally left blank]
<PAGE>
11
Please promptly confirm that the preceding correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely
ADVANCED MICRO DEVICES, INC.
By: /s/ Marvin D. Burkett
-------------------------
Name:
Title:
Confirmed as of the date first written:
AMD SAXONY MANUFACTURING GmbH
By: /s/ Jack L. Saltich
----------------------------
Name:
Title:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<CASH> 225,385
<SECURITIES> 403,502
<RECEIVABLES> 292,570
<ALLOWANCES> (9,980)
<INVENTORY> 149,218
<CURRENT-ASSETS> 1,252,756
<PP&E> 3,456,077
<DEPRECIATION> (1,606,143)
<TOTAL-ASSETS> 3,426,126
<CURRENT-LIABILITIES> 601,179
<BONDS> 0
0
0
<COMMON> 1,400
<OTHER-SE> 2,042,357
<TOTAL-LIABILITY-AND-EQUITY> 3,426,126
<SALES> 551,601
<TOTAL-REVENUES> 551,999
<CGS> 349,076
<TOTAL-COSTS> 349,076
<OTHER-EXPENSES> 199,427
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,410
<INCOME-PRETAX> 7,408
<INCOME-TAX> 2,148
<INCOME-CONTINUING> 12,951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,951
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
