Document

Advanced Micro Devices, Inc. (the “Company”) considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders. The Company recognizes that, as is the case with many publicly held corporations, the possibility of a change of control may exist and that the uncertainty and questions which such possibility may raise among management may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. Accordingly, the Compensation and Leadership Resources Committee of the Company’s Board of Directors (the “Board”) has determined that it is imperative to be able to rely upon management’s continuance and that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including you, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change of control of the Company.

In order to induce you to remain in the employ of the Company under such circumstances, this letter agreement (this “Agreement”) sets forth the benefits which the Company agrees will be provided to you in the event there is a “Change of Control” of the Company under the circumstances described below. (“Change of Control” is defined in Section 1.) In addition, the Company is also willing to agree to provide you the benefits described herein in consideration of your agreement to the arbitration provisions set forth in Section 15 hereof. Upon the execution of this Agreement by you and the Company, it shall supersede any prior agreements in respect of the subject matter contained herein and such prior agreements shall be of no further force or effect.

(a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or any corporation, partnership, joint venture or other entity in which the Company holds an equity, profit or voting interest of thirty percent (30%) or more) representing more than 50% of either the then outstanding shares of the common stock of the Company (“Common Stock”) or the combined voting power of the Company’s then outstanding voting securities;

(b) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board and any new director (other than a director designated by a person who has entered into an agreement or arrangement with the Company to effect a transaction described in clause (a) or (b) of this Section 1) whose appointment, election or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose appointment, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board;

result in the holders of the voting securities of the Company outstanding immediately prior thereto holding securities which represent immediately after such merger or consolidation more than 50% of the combined voting power of the voting securities of either the Company or the other entity which survives such merger or consolidation or the parent of the entity which survives such merger or consolidation; or

(d) the stockholders of the Company approve a plan of complete liquidation of the Company or there is consummated the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 80% of the combined voting power of the voting securities of which are owned by persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing: (y) no “Change of Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Common Stock of the Company or the voting power of the voting securities of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately prior to such transaction or series of transactions and (z) “Change of Control” shall exclude the acquisition of securities representing more than 20% of either the then outstanding shares of the Common Stock of the Company or the combined voting power of the Company’s then outstanding voting securities by the Company or any of its wholly owned subsidiaries, or any trustee or other fiduciary holding securities of the Company under an employee benefit plan now or hereafter established by the Company.

2.Term. This Agreement shall become effective immediately on the delivery of fully executed copies to both parties, and shall continue until canceled pursuant to the notice of either party, or if earlier, the date all payments or benefits required to be made or provided under this Agreement have been made. Either party hereto may provide written notice to the other of cancellation of this Agreement, to take effect on the date specified in such notice, but in no event shall such cancellation take effect less than two years from the date on which notice is given. Such notice shall be furnished in accordance with Section 12 of this Agreement.

(a) Notwithstanding anything contained in this Agreement to the contrary, in the event that the benefits provided by this Agreement, together with all other payments and the value of any benefits received or to be received by you (the “Payments”), constitute “parachute payments” (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)), and, but for this Section 3(a), would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Payments shall be made to you either (i) in full or (ii) as to such lesser amount as which would result in no portion of the Payments being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by you on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of the Payments may be subject to the Excise Tax. Unless you shall have given prior written notice specifying a different order to the Company to effectuate any reduction contemplated by the preceding sentence, the Company shall reduce or eliminate the Payments by first reducing or eliminating cash payments and then by reducing those payments or benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by you pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing your rights and entitlements to any benefits or compensation.

(b) Unless the Company and you otherwise agree in writing, an initial determination as to whether the Payments shall be reduced and the amount of such reduction shall be made, at the Company’s expense, by an accounting firm that the Company selects (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Company and you within twenty (20) days of the Date of Termination as defined in Section 4(d) below) if applicable, or such other time as requested by the Company or by you (provided you reasonably believe that any of the Payments may be subject to the Excise Tax). Within ten (10) days of the delivery of the Determination to you, you shall have the right to dispute the Determination (the “Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and you.

4.Termination of Employment Following Change of Control. If the Board has determined that a Change of Control shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the actual termination by the Company without Cause or “Constructive Termination” of your employment that is a “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code) within two years after such Change of Control (a “Change of Control Termination”), unless such termination is by the Company for Cause.

(a) Constructive Termination. For purposes of this Agreement, “Constructive Termination” shall mean a resignation by you upon the occurrence (without your prior written consent) of any of the following: (i) a material diminution of your compensation, authority, duties or responsibilities; (ii) the Company’s relocation of your principal place of employment to a facility that is more than fifty (50) miles from your current principal place of employment and (iii) a material increase in your amount of required business travel on behalf of the Company; provided, however, that you may not resign from your employment for Constructive Termination unless (A) you have provided the Company with at least 30 days prior Notice of Termination of your intent to resign for Constructive Termination (which notice must be provided within 90 days following the occurrence of the event(s) purported to constitute Constructive Termination) and (B) the Company has not remedied the alleged violation(s) within the 30-day period.

(b) Cause. For the purposes of this Agreement, the Company shall have a “Cause” to terminate your employment if you are determined by a court of law or pursuant to arbitration under Section 15 to have (i) committed a willful act of embezzlement, fraud or dishonesty which resulted in material loss, material damage or material injury to the Company or (ii) repeatedly and willfully failed or refused to perform the duties reasonably assigned to you by the Company. In such an event, you shall have no rights under this Agreement.

(a) Amount of Benefits. The Company shall provide to you, subject to your execution and non-revocation of a unilateral waiver and release of claims agreement in the Company’s customary form prior to sixty (60) days following the Change of Control Termination, each of the following benefits not more than ten business days (subject to Section 6 below) following the expiration of the revocation period in such waiver and release of claims agreement:

(1) Severance Benefit. The Company shall pay you a lump sum severance benefit which shall equal the sum of (A) two times your Base Compensation (as defined below), plus (B) two times your target annual bonus for the year in which you terminate. For purposes of this Section 5(a)(1), “Base Compensation” means your rate of annual salary, as in effect for the twelve-month period ending on the date six months prior to the Change of Control or on the Date of Termination, whichever is higher. Base Compensation does not include elements such as bonuses, reimbursement of interest paid on guaranteed loans, auto allowances, nor any income from equity based compensation, such as may result from the exercise of stock options or stock appreciation rights, or the receipt of restricted stock unit awards or the lapse of restrictions on such awards.

(2) Equity Compensation. All unvested stock options, stock appreciation rights, restricted stock units, restricted stock, and similar equity compensation awards (“Company Equity Awards”) held by you at the time of your Date of Termination and that are subject to your continued service (and not subject, in whole or in part, on the achievement of performance-based or other similar vesting criteria) shall be deemed fully vested and exercisable at such Date of Termination, as applicable. With respect to any outstanding and unvested Company Equity Award (or portion thereof) that is subject to the achievement of any performance-based or other similar vesting criteria, then, unless provided otherwise in the award agreement governing the terms of such Company Equity Award, the Company Equity Award (or applicable portion thereof) shall be deemed earned, vested, and exercisable, as applicable, as to one hundred percent (100%) of the amount of the Company Equity Award (or applicable portion thereof) assuming the relevant performance criteria had been achieved at target levels for the relevant performance period(s). All vested stock options held by you as of your Date of Termination, including those deemed fully vested pursuant to this Section 5(a)(2), shall become automatically exercisable for a period of one (1) year from the Date of Termination; provided, however, in no event shall any stock option remain exercisable beyond the maximum period allowed therefor in the equity compensation plan or award agreement under which it was granted, whichever is shorter. This Agreement shall serve as an amendment to all of your outstanding Company Equity Awards as of the date hereof.

(5) Other Benefits. The Company shall provide for a period of twelve (12) months following the Date of Termination, health and welfare benefits at least comparable to those benefits in effect on your Date of Termination, including but not limited to medical, dental, and dependent care insurance coverage. At the Company’s election, health benefits may be provided by reimbursing you for the cost of converting a group policy to individual coverage, or for the cost of COBRA premiums for the shorter of twelve (12) months or the applicable COBRA continuation period. The Company shall also pay you an amount calculated to pay any income taxes due as a result of the payment by the Company on your behalf for such health benefits. Such tax payment shall be calculated to place you in the same after-tax position as if no such income had been imposed and shall be paid to you no later than the end of the calendar year following the calendar year in which such related taxes are remitted to the appropriate tax authorities.

(b) Other Benefits Payable. The benefits described in subsection (a) above shall be payable in addition to, and not in lieu of, all other accrued or vested or earned but deferred compensation, rights, options or other benefits which may be owed to you following termination of your employment, irrespective of whether your termination was preceded by a Change of Control, including but not limited to accrued vacation or sick pay, amounts or benefits payable under any employment agreement or any bonus or other compensation plans, stock option plan, stock ownership plan, stock purchase plan, life insurance plan, health plan, disability plan or similar plan.

(a) Notwithstanding any provision to the contrary in the Agreement, all provisions of the Agreement are intended to be exempt from Section 409A of the Code, and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section 409A”) and to the extent not so exempt, to be compliant with Section 409A, and shall be construed and administered in accordance with such intent. Any payments under the Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon your termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding anything in Section 5(a) to the contrary, if the sixty (60)-day release consideration period in Section 5(a) spans two calendar years, then, to the extent required by Section 409A, any payment or benefit under the Agreement shall be paid or commence to be paid, as applicable, no earlier than January 1 of the later calendar year.

(b) To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no later than the last day of your taxable year following the taxable year in which such expense was incurred by you, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

(c) Notwithstanding any provision to the contrary in the Agreement, if you are deemed by the Company on your Date of Termination to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of your benefits shall not be provided to you prior to the date (the “Section 409A Payment Date”) that is the earlier of (i) the expiration of the six-month period measured from the date of the your “separation from service” (within the meaning of Section 409A) or (ii) the date of your death. On the Section 409A Payment Date, all payments deferred pursuant to this Section 6(c) shall be paid in a lump sum to you, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.

7.Payment Obligations Absolute. Subject to the waiver and release requirement in Section 5(a) above, the Company’s obligation to pay the benefits described herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company or any of its subsidiaries may have against you or anyone else. In the event of any dispute concerning your right to payment, the Company shall nevertheless continue to pay to you your Base Compensation (as such term is defined in Section 5) until the dispute is resolved. Any such amounts paid following your termination of employment shall be credited against the amounts otherwise due to you under this Agreement or, in the event the Company prevails, shall be repaid to the Company.

8.Legal Fees. The Company shall also pay forthwith upon written demand from you all legal fees and expenses reasonably incurred by you in seeking to obtain or enforce any right or benefit provided by this Agreement. In the event you do not prevail in any ensuing arbitration or litigation, the Company shall absorb its own costs, expenses, and attorneys’ fees, and you shall reimburse the Company for one-half of your costs, expenses, and attorneys’ fees.

9.Mitigation. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Agreement be reduced or offset in any way whatsoever by any amount received by you for any reason whatsoever from another employer or otherwise after the Date of Termination.

10.Indemnification. For at least six years following a Change of Control, you shall continue to be indemnified under the Company’s Certificate of Incorporation and Bylaws at least to the same extent as prior to the Change of Control, and you shall be covered by the directors’ and officers’ liability insurance, the fiduciary liability insurance and the professional liability insurance policies that are the same as, or provide coverage at least equivalent to, those the Company carried prior to the Change of Control.

(a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if the Company had terminated your employment without Cause after a Change of Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean the Company as hereinabove defined and any successor to its business and/or assets as

(b) This Agreement shall terminate upon your death except that if you should die while you are entitled to receive any amounts under this Agreement but which are unpaid at your date of death, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee, or other designee or, if there be no such designee, to your estate. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

12.Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by the United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the signature page of this Agreement, provided that all notices to the Company shall be directed to the Chairman of the Board with a copy to the Secretary of the Company, or such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

13.Amendments. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and the Company’s Chief Executive Officer. No waiver by either party hereto at any time or any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

(a) Arbitration shall be the exclusive and final forum for settling any disagreement, dispute, controversy or claim arising out of or in any way related to (i) this Agreement or the subject matter thereof or the interpretation hereof or any arrangements relating hereto or contemplated herein or the breach, termination or invalidity hereof; or (ii) the provision of or failure to provide any other benefits upon a Change of Control pursuant to any other employment agreement, bonus or compensation plans, stock option plan, stock ownership plan, stock purchase plan, life insurance plan or similar plan or agreement with the Company and/or any of its subsidiaries as Change of Control may be defined in such other agreement or plan; or (iii) which benefits constitute “parachute payments” within the meaning of Section 280G of the Code. If this Section 15 conflicts with any provision in any such compensation or bonus plan, stock option plan, or any other similar plan or agreement, this provision requiring arbitration shall control.

(e) Any decision or award of the arbitral tribunal shall be final and binding upon the parties to the arbitration proceeding. The parties hereto hereby waive to the extent permitted by law any rights to appeal or to review of such award by any court or tribunal. The parties hereto agree that the arbitral award may be enforced against the parties to the arbitration proceeding or their assets wherever the award may be entered in any court having jurisdiction thereof.

18.Nonassignability. This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder, except as provided in Section 11 above. Without limiting the foregoing, your right to receive payments hereunder, shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by will or by the laws of descent and distribution and in the event of any attempted assignment or transfer contrary to this Section the Company shall have no liability to pay any amounts so attempted to be assigned or transferred.

20.Miscellaneous. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. This Agreement shall not affect your rights under any pension, welfare or fringe benefit arrangements of the Company under which you are entitled to receive any benefits. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware. The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish your existing rights, or rights which would accrue solely as a result of the passage of time, under any employment agreement or other contract, plan or agreement with the Company.

21.Complete Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and therein and supersedes any prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto, and any prior agreement of the parties hereto in respect of the subject matter contained herein, including without limitation, any prior severance agreements, any contrary or limiting provisions in any Company equity compensation plan. This Agreement shall not limit in any way any obligation you may have under any other agreement with or promise to the Company relating to confidentiality, proprietary rights in technology or the assignment of interests in any intellectual property.