EXHIBIT 10.50(l) AMD SAXONIA WAFER PURCHASE AGREEMENT BETWEEN AMD SAXONY HOLDING GMBH AND AMD SAXONY MANUFACTURING GMBH 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 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; 2 (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 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 (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 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 (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; 7 (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 (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; 9 (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, 10 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 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 12 (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 13 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 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 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 (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 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 "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 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 (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 (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. 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: