Amd Saxonia Research, Design And Development Agreement

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


- --------------------------------------------------------------------------------


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
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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


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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


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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


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Services and Design Activity and not to the completion of the Design
Center shall be reimbursable pursuant to Section (a) of this Article
----------- -------
II.
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(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.


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* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


(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".
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Examples of such tangible personal property may include, but are not
limited to, magnetic tapes, pattern generation tapes, test tapes,
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