Exhibit 10.54

 

ASSET PURCHASE AGREEMENT

 

By and Among

 

ADVANCED MICRO DEVICES, INC.,

 

FUJITSU LIMITED

 

and

 

FASL LLC

 

Dated as of June 30, 2003

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TABLE OF CONTENTS

 

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ARTICLE I.

  

DEFINITIONS

   1

1.1

   Definitions    1

1.2

   Index of Other Defined Terms    10

1.3

   Interpretation    11

ARTICLE II.

  

PURCHASE AND SALE OF ASSETS

   12

2.1

   Transfer of Assets    12

2.2

   Assumption of Liabilities    12

2.3

   Certain Prorations    13

2.4

   Taxes    13

2.5

   Rents    13

ARTICLE III.

  

CONSIDERATION

   13

ARTICLE IV.

  

THE CLOSING

   14

4.1

   The Closing    14

ARTICLE V.

  

REPRESENTATIONS AND WARRANTIES OF AMD

   15

5.1

   Corporate Existence and Power    15

5.2

   Authorization    15

5.3

   Governmental Authorization    15

5.4

   Non-Contravention    16

5.5

   Properties; Leases    16

5.6

   Litigation; Other Proceedings    17

5.7

   Contracts    17

5.8

   Permits    18

5.9

   Compliance with Laws    18

5.10

   Employment Agreements; Change in Control; and Employee Benefits    19

5.11

   Labor and Employment Matters    19

5.12

   Insurance    19

5.13

   Environmental Matters    19

5.14

   Intellectual Property    20

5.15

   Capitalization of AMD Contributed Subsidiaries    20

5.16

   Brokers    21

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TABLE OF CONTENTS

(continued)

 

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5.17

   Related Party Agreements    21

5.18

   No Other Agreements to Sell AMD Sold Assets    21

5.19

   Absence of Changes    21

5.20

   Value of Assets    21

ARTICLE VI.

  

AMD COVENANTS

   21

6.1

   Required Consents    21

6.2

   Maintenance of Insurance Policies    22

6.3

   Litigation and Adverse Developments    22

6.4

   Further Assurances    22

6.5

   No Sale of Assets    23

ARTICLE VII.

  

MUTUAL COVENANTS

   23

7.1

   Transition    23

7.2

   Diligence in Pursuit of Conditions Precedent    23

7.3

   Covenant to Satisfy Conditions    23

7.4

   Taxes    23

7.5

   Ancillary Documents    24

7.6

   Resale and Other Tax Certificates    24

ARTICLE VIII.

  

CONDITIONS TO CLOSING

   24

8.1

   Conditions to AMD’s Obligations    24

8.2

   Conditions to the Joint Venture’s Obligations    25

ARTICLE IX.

  

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS AND INDEMNIFICATION

   26

9.1

   Survival of Representations and Warranties    26

9.2

   Indemnification of Joint Venture by AMD    26

9.3

   Indemnification of AMD by the Joint Venture    26

9.4

   Indemnification of Fujitsu by AMD    27

9.5

   Limitations on Indemnification    27

9.6

   Procedure for Indemnification    28

9.7

   Defense of Tax Claims    30

9.8

   Environmental Management    31

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TABLE OF CONTENTS

(continued)

 

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ARTICLE X.

  

[INTENTIONALLY OMITTED]

   32

ARTICLE XI.

  

MISCELLANEOUS

   32

11.1

   Notices    32

11.2

   Amendments; No Waivers    33

11.3

   Rights and Remedies Cumulative    33

11.4

   Successors and Assigns    33

11.5

   Language    33

11.6

   Construction; Interpretation    33

11.7

   Severability    33

11.8

   Counterparts    34

11.9

   Entire Agreement    34

11.10

   Governing Law    34

11.11

   Dispute Resolution    34

11.12

   Press Release    34

11.13

   Confidential Information    34

11.14

   Expenses    35

11.15

   Consequential Damages    35

11.16

   Third-Party Beneficiaries    35

11.17

   No Other Representations    36

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EXHIBITS

 

EXHIBIT A

  

AMD Listed Assets

EXHIBIT B

  

AMD Contracts

EXHIBIT C

  

AMD Assumed Permits

EXHIBIT D

  

Form of Promissory Note

 

ANNEXES

 

ANNEX A

  

Individuals for Knowledge of AMD

ANNEX B

  

Individuals for Knowledge of AMD Facility Managers

ANNEX C

  

Other Permitted Liens

 

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ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of June 30, 2003,
by and between Advanced Micro Devices, Inc., a Delaware corporation (“AMD”),
Fujitsu Limited, a corporation organized under the laws of Japan (“Fujitsu”),
and FASL LLC, a Delaware limited liability company (the “Joint Venture”).

 

R E C I T A L S

 

A. AMD and its Affiliates are separately engaged in the research and
development, manufacture, marketing, distribution, promotion and sale of
Stand-Alone NVM Products (excluding distribution and sales-related activities)
(the “AMD Flash Memory Business”).

 

B. It is the intention of AMD to sell to the Joint Venture certain assets
related to the AMD Flash Memory Business.

 

A G R E E M E N T

 

NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto intending to be legally bound by the
terms hereof applicable to each of them, hereby agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
the following capitalized terms shall have the following meanings when used
herein:

 

“4-Year Operations Plan” has the meaning set forth in the Operating Agreement.

 

“Affiliate” of a Person means any other Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person. The
term “control” (including, with correlative meaning, the terms “controlled by”
and “under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. A Person shall be
deemed an Affiliate of another Person only so long as such control relationship
exists. The parties acknowledge and agree that AMD is not presently controlled
by any other Person. Notwithstanding the foregoing, neither the Joint Venture
nor FASL (Japan) nor their Subsidiaries shall be deemed to be an Affiliate of
AMD for purposes of this Agreement.

 

“After Tax Basis” means a basis such that any payment received by a Person shall
be decreased by the amount of any reduction in Taxes resulting from the
deduction of the expense indemnified against (and in the case of the Joint
Venture being the indemnified Person,

 

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such payment shall be decreased by any reduction in Taxes resulting from the
deduction by the Member that is not the indemnifying Person (or whose Affiliate
is not the indemnifying Person) of its allocable share (based on such Member’s
Percentage Interest) of the expense indemnified against (“First Amount”), and if
any such decrease is made, then such payment shall be decreased by an additional
amount based on the other Member’s Percentage Interest (“Second Amount”), such
that the First Amount and Second Amount shall be in the same ratio as the
Members’ respective Percentage Interests). In the event that the expense
indemnified against is used to reduce Taxes by way of amortization or
depreciation, payments made on an After Tax Basis shall be refunded in each
taxable year of the Person who receives an indemnification payment by such
Person under the principles of the preceding sentence. In the event a taxing
authority shall treat any indemnification payment as includible in gross income
or disallow any deduction taken into account hereunder, the indemnification
shall be recomputed and further payments or refunds made in respect of the
decrease in the indemnification amount paid. All determinations under Section
9.5(b) as to the existence of a reduction in Taxes shall be made in good faith
by the indemnified Person (and in the case of the Joint Venture being the
indemnified Person, by the Member that is not the indemnifying Person or whose
Affiliate is not the indemnifying Person), and in this regard decisions by the
indemnified Person (and in the case of the Joint Venture being the indemnified
Person by the Member that is not the indemnifying Person or whose Affiliate is
not the indemnifying Person) in respect of the treatment of tax items shall be
made without regard to the fact that indemnity payments will be made on an After
Tax Basis in accordance with the terms of the paragraph. Payments shall be made
on an After Tax Basis taking into account only reductions in Taxes occurring in
the taxable year in which the deduction, amortization or depreciation of the
expense indemnified against first occurs and in the next two succeeding taxable
years. If requested by the indemnifying Person, the indemnified Person (and in
the case of the Joint Venture being the indemnified Person, by the Member that
is not the indemnifying Person or whose Affiliate is not the indemnifying
Person), shall provide a copy of its tax returns to an independent tax
professional (which may be such Person’s auditor) which shall report to the
indemnifying Person whether, in the opinion of such independent tax
professional, (i) the computation as to the amount of a reduction in Taxes, if
any, was accurate and (ii) the judgment as to the existence and amount of any
reduction in Taxes was made in good faith. The determination of the independent
tax professional shall be final and binding and not subject to further review.
The costs of the review by the independent tax professional shall be borne by
the indemnifying Person.

 

“AMD Environmental Condition” means (a) the Handling or Release prior to the
Closing by AMD or its Affiliates or any of its or their Predecessors or
contractors of any Hazardous Substance in, on, from, under or to any AMD
Operating Site, including the effects of such Handling or Release of Hazardous
Substances on resources, Persons, or property inside or outside the boundaries
of any AMD Operating Site whether before or after Closing; (b) any presence or
Release of any Hazardous Substance in, on, from, under or to the AMD Listed
Assets before or at the Closing, including the effects of such presence or
Release on resources, Persons, or property inside or outside the boundaries of
the AMD Listed Assets whether before or after the Closing, and (c) any other act
or omission prior to the Closing of AMD, its Affiliates or any of its or their
Predecessors in connection with the operation of the AMD Flash Memory Business
or the AMD Sold Assets that gives rise to Liability under any Environmental Law.

 

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“AMD Excluded Liabilities” means all Liabilities of AMD and its Affiliates that
are not AMD Assumed Liabilities, including, without limitation (a) Liabilities
related to or arising from AMD Environmental Conditions, (b) Liabilities of AMD
under Sections 2.3, 2.4 and 2.5, (c) Liabilities of AMD or any of its Affiliates
that do not relate to the AMD Flash Memory Business, (d) Liabilities of AMD or
any of its Affiliates related to or arising out of events or circumstances
occurring in connection with the operation of the AMD Flash Memory Business or
the AMD Sold Assets prior to Closing, including Liabilities related to any time
period ending prior to Closing regarding performance or other obligations
required to be performed prior to Closing under Contracts and Permits included
in the AMD Sold Assets, (e) Liabilities related to (A) any Proceedings pending
against AMD or any of its Affiliates prior to the Closing and (B) any
Proceedings instituted after the Closing arising from the operation of the AMD
Flash Memory Business or the AMD Sold Assets prior to the Closing, and (f) any
accounts or notes payable of AMD and its Affiliates outstanding immediately
prior to the Closing.

 

“AMD Investments” means AMD Investments, Inc., a Delaware corporation and
indirect wholly owned subsidiary of AMD.

 

“AMD Operating Site” means any AMD Listed Assets and any Real Property or
Facility owned, operated, leased or used at any time prior to Closing by AMD,
its Affiliates or its or their Predecessors in connection with the operation of
the AMD Sold Assets, including any offsite disposal or treatment facilities used
in connection with the AMD Sold Assets.

 

“AMD Sold Assets” means the AMD Listed Assets, the AMD Contracts and the AMD
Assumed Permits.

 

“Ancillary Documents” means the agreements, certificates, instruments or other
documents to be executed and delivered in connection with this Agreement,
including, without limitation, the agreements, certificates, instruments or
other documents referenced in Section 4.1(b).

 

“Applicable Law” means, with respect to a Person, any domestic or foreign,
national, federal, territorial, state or local constitution, statute, law
(including principles of common law), treaty, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, legally binding directive,
judgment, decree or other requirement or restriction of any arbitrator or
Governmental Authority applicable to such Person or any of its Affiliates or any
of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer’s, director’s,
employee’s, consultant’s or agent’s activities on behalf of such Person or any
of its Affiliates).

 

“Charter Documents” of any Person means such Person’s articles of incorporation,
by-laws, certificate of formation, limited liability company agreement or
equivalent governance and organizational documents.

 

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).

 

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“Contract” means agreements, contracts, notes, loans, evidences of indebtedness,
purchase orders, letters of credit, indentures, security or pledge agreements,
undertakings, practices, covenants not to compete, employment agreements,
severance agreements, licenses, leases, instruments, obligations or commitments,
whether oral or written.

 

“Contribution Agreement” means that Contribution and Assumption Agreement, dated
June 30, 2003, by and among AMD, AMD Investments, Fujitsu, Fujitsu Sub and the
Joint Venture.

 

“Environmental Law” means all Applicable Laws which regulate or relate to the
protection or clean-up of the environment, the Handling or Release of hazardous
substances, waste or materials, or other dangerous substances, wastes, pollution
or materials (whether gas, liquid or solid), the health and safety of persons as
affected by such substances, including protection of the health and safety of
employees, or the preservation or protection of waterways, groundwater, drinking
water, air, wildlife, plants or other natural resources. Environmental Laws
include, but are not limited to, the United States Federal Water Pollution
Control Act, the United States Resource Conservation & Recovery Act, the United
States Clean Water Act, the United States Safe Drinking Water Act, the United
States Atomic Energy Act, the United States Occupational Safety and Health Act,
the United States Toxic Substances Control Act, the United States Clean Air Act,
the United States Comprehensive Environmental Response, Compensation and
Liability Act, the United States Hazardous Materials Transportation Act, all
associated amendments and subsequent related legislation, and all analogous or
related Applicable Laws.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” of any Person means any other Person that, together with such
Person as of the relevant measuring date under ERISA, was or is required to be
treated as a single employer under Section 414 of the Code.

 

“Fab 25 Loan Agreement” means that Amended and Restated Term Loan Agreement by
and among the Joint Venture and General Electric Capital Corporation, Bank of
America, N.A., and Merrill Lynch Capital, a Division of Merrill Lynch Business
Financial Services Inc.

 

“Facilities” means all plants, offices, manufacturing facilities, support
facilities, warehouses, improvements, administration buildings and amenities.

 

“FASL (Japan)” means Fujitsu AMD Semiconductor Limited K.K., a company organized
under the laws of Japan.

 

“FASL (Japan) Flash Memory Business” means the manufacture and supply to AMD and
Fujitsu by FASL (Japan) of certain semiconductor devices, a substantial function
of which is code and/or data storage.

 

4

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“Fixtures and Equipment” means furniture, fixtures, furnishings, machinery,
equipment, vehicles, computer hardware, and other tangible personal property,
whether owned or leased.

 

“Fujitsu Flash Memory Business” means Fujitsu’s and its Affiliates’ research and
development, manufacture, marketing, distribution, promotion and sale of
Stand-Alone NVM Products (excluding (i) Ferro-electric non-volatile memory
technology and products and (ii) distribution and sales-related activities).

 

“Fujitsu Sub” means Fujitsu Microelectronics Holding, Inc., a Delaware
corporation and a wholly owned subsidiary of Fujitsu.

 

“Governmental Authority” means any foreign, domestic, national, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.

 

“Handling” means any use, generation, storage, treatment, processing,
transportation, recycling, disposal, or other handling or disposition of any
kind, including the arrangement by contract, agreement or otherwise for such
handling or disposition by any other Person.

 

“Hazardous Substance” means any pollutants, contaminants, chemicals, waste; any
toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable
chemical or chemical compound; or any hazardous substance, material or waste,
whether solid, liquid or gas, that is subject to regulation, control or
remediation under, or which may form the basis of Liability under, any
Environmental Laws. “Hazardous Substance” includes without limitation any
quantity of asbestos in any form, urea formaldehyde, PCB’s, radon gas, crude oil
or any fraction thereof, all forms of natural gas, petroleum products, fractions
or by-products, radioactive substances, sludges and slag.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.

 

“Intellectual Property Agreement” means that certain Intellectual Property
Contribution and Ancillary Matters Agreement dated June 30, 2003 by and among
AMD, AMD Investments, Fujitsu and the Joint Venture.

 

“Intellectual Property Rights” has the meaning set forth in the Intellectual
Property Agreement.

 

“Joint Venture Business” means the combination of the AMD Flash Memory Business,
the Fujitsu Flash Memory Business and the FASL (Japan) Flash Memory Business.

 

“Judgment” includes any (a) judicial or administrative judgment, order, writ,
injunction, decree or award or (b) any Contract with any Governmental Authority
that is or has been entered into in connection with any Proceeding.

 

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“JV Environmental Condition” means (a) the Handling or Release, after the
Closing Date by the Joint Venture, its Subsidiaries, or JV Predecessors of any
Hazardous Substance, either in, on, from under or to a JV Operating Site,
including, without limitation, the effects of such Handling or Release of
Hazardous Substances on resources, Persons, or property within or outside the
boundaries of any JV Operating Site; and (b) any other act or omission of the
Joint Venture, its Subsidiaries or its or their JV Predecessors, subsequent to
the Closing Date that gives rise to Liability or potential Liability under any
Environmental Law.

 

“JV Operating Site” means any Real Property or Facility owned, leased or used at
any time by the Joint Venture, its Subsidiaries or its or their JV Predecessors,
from and after Closing in connection with the operation of the Joint Venture
Business, including any offsite disposal or treatment facilities utilized in
connection with the Joint Venture Business.

 

“JV Predecessors” means any Person, the assets or obligations of which are
acquired or assumed by the Joint Venture or its Subsidiaries or to which the
Joint Venture or its Subsidiaries succeeds following the Closing Date.

 

“Knowledge of AMD” or “Knowledge” when used with respect to AMD or similar
phrases means the actual knowledge of the individuals listed on Annex A hereto.

 

“Knowledge of the AMD Facility Managers” means the actual knowledge of the
individuals listed on Annex B hereto.

 

“Liability” means, with respect to any Person, any liability, indebtedness,
expense, guaranty, endorsement or obligation of or by such Person of any kind,
character or description, whether known or unknown, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or
several, due or to become due, vested or unvested, executory, determined,
determinable or otherwise and whether or not the same is required to be accrued
on the financial statements of such Person.

 

“Lien” includes any mortgage, lien, pledge, security interest, conditional sale
agreement, charge, claim, easement, right, condition, restriction or other
encumbrance or defect of title of any nature whatsoever (including, without
limitation, (a) any assessment, charge or other type of notice which is levied
or given by any Governmental Authority and for which a lien could be filed and
(b) any restriction on the use, voting, transfer or receipt of income), in each
case excluding licenses of Intellectual Property Rights.

 

“Losses” means any and all costs, losses, Taxes, Liabilities, damages, lawsuits,
deficiencies, claims, demands, and expenses (whether or not arising out of
third-party claims), including without limitation interest, penalties, costs of
mitigation or remediation, losses in connection with any Environmental Law
(including, without limitation, any clean-up or remedial action), damages to the
environment, reasonable attorneys’ fees and all amounts paid in investigation,
defense or settlement of any of the foregoing.

 

“Material Adverse Effect on the Joint Venture” means any facts or circumstances
that would result in a material adverse effect on the business, operations,
affairs, financial

 

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condition, results of operations, assets, Liabilities, reserves or any other
aspect of the Joint Venture, taken as a whole, assuming consummation of the
transactions contemplated hereby.

 

“Material Contract” means Contracts that satisfy one or more of the following
criteria: (a) Contracts not made in the ordinary course of business, (b)
Contracts to purchase, sell or otherwise transfer any (i) Real Property or (ii)
personal property with a purchase price in excess of US$10 million, whether a
party is the buyer, seller, grantor or grantee thereunder, (c) Contracts
involving future expenditures or Liabilities, actual or potential, in excess of
US$10 million, (d) Contracts containing covenants limiting the freedom of AMD,
Joint Venture or their Affiliates to engage in any line of business or compete
with any Person or pursuant to which any material benefit is required to be
given or lost as a result of so competing, (e) operating or other agreements
with respect to partnerships, limited liability companies and joint ventures or
other Contracts involving sharing of profits, (f) Real Property Leases, (g)
Contracts for borrowed money in excess of US$10 million, (h) Material Personal
Property Leases, (i) Contracts to acquire a business or the equity of another
Person and (j) Contracts that involve the license of Intellectual Property
Rights that are material to the operation of the AMD Flash Memory Business.
Notwithstanding the foregoing, “Material Contract” does not include any Contract
one of the principal purposes of which is the granting of a license to Third
Party Other IP Rights (as defined in the Intellectual Property Agreement) to
AMD, Fujitsu or any of their Affiliates.

 

“Material Personal Property Leases” means leases for personal property with
payments that exceed US$2.5 million per year or US$10 million in the aggregate.

 

“Member” has the meaning given to it in the Operating Agreement.

 

“Membership Interest” has the meaning given to it in the Operating Agreement.

 

“NVM” means a non-volatile memory device wherein information stored in a memory
cell is maintained without power consumption and the write time (including erase
time if there is an erase operation prior to a write operation) exceeds the read
time allowing the device to function primarily as a reading device.

 

“Operating Agreement” means that certain Amended and Restated Limited Liability
Company Operating Agreement dated June 30, 2003 by and among AMD, AMD
Investments, Fujitsu, Fujitsu Sub and the Joint Venture.

 

“Percentage Interest” has the meaning given to it in the Operating Agreement.

 

“Permits” means all approvals, authorizations, certificates, consents, licenses,
orders, franchises, qualifications, registrations and permits or other similar
authorizations of a Governmental Authority (and any other Person) required under
Applicable Law necessary for the operation of the AMD Flash Memory Business and
the AMD Sold Assets, in each case, excluding licenses of Intellectual Property
Rights.

 

“Permitted Liens” means (a) Liens for Taxes or charges or claims by a
Governmental Authority (i) not yet due and payable, or (ii) being contested in
good faith in appropriate Proceedings, (b) statutory Liens of landlords, Liens
of carriers, workmen, repairmen,

 

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warehousepersons, mechanics and materialpersons and other similar Liens imposed
by law incurred in the ordinary course of business for sums (i) not yet due and
payable, or (ii) being contested in good faith in appropriate Proceedings, (c)
Liens incurred or deposits made in connection with workers’ compensation,
unemployment insurance and other similar types of social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money bonds
and similar obligations, in each case incurred or made in the ordinary course of
business, consistent with past practice, (d) easements, covenants, restrictions,
rights of way, and other non-monetary imperfections of title or encumbrances
that are a matter of public record and do not, individually or in the aggregate,
materially affect the marketability of the property subject thereto or
materially interfere with the present or proposed use of such property, (e)
other encumbrances or minor matters that individually or in the aggregate are
not material in amount and do not materially detract from or interfere with the
value or the present or intended use of the property to which such
encumbrance(s) relate(s), (f) zoning, building or similar restrictions relating
to or affecting property which would not, individually or in the aggregate,
materially interfere with the present use or intended use of the affected
property, (g) conditions which would be disclosed by a survey or physical
inspection which, in either case, would not individually or in the aggregate
materially interfere with the present use or intended use of the affected
property, (h) Liens securing the Fab 25 Loan Agreement and (i) Liens set forth
on Annex C hereto.

 

“Permitted Title Exceptions” shall have the meaning ascribed to it in the
Contribution Agreement.

 

“Person” means any person or entity, whether an individual, trustee,
corporation, partnership, limited partnership, limited liability company, trust,
unincorporated organization, business association, firm, joint venture, other
legal entity or Governmental Authority.

 

“Personal Property Leases” means all existing leases, subleases, licenses,
options, rights, concessions or other agreements or arrangements with respect to
personal property (excluding licenses of Intellectual Property Rights).

 

“Predecessor” of a Person means any other Person the assets or liabilities of
which have been acquired or assumed by such Person or to which such Person has
succeeded.

 

“Purchase Price” means the sum of the Promissory Note and the AMD Assumed
Liabilities.

 

“Real Property” means real property together with all Facilities, fixtures,
easements, licenses, options and all other rights appurtenant thereto.

 

“Real Property Leases” means all existing leases, subleases, licenses,
sublicenses, occupancy agreements, options, rights, concessions or other
agreements or arrangements with respect to Real Property.

 

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“Release” means any release, threatened release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
or migration into or through the environment.

 

“Remediation Activity” means any cleanup, response, removal, remedial,
corrective or other action to clean up, detoxify, decontaminate, treat, contain,
prevent, cure, mitigate or otherwise remedy any Release of any Hazardous
Substance; any action to comply with any Environmental Law or Permit; and any
inspection, investigation (including subsurface investigations), study,
monitoring, assessment, sampling and testing (including soil and/or groundwater
sampling activities), laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to anything referred to herein.

 

“Representative” means any officer, director, principal, attorney, agent,
employee or other representative.

 

“Required Consents” means the Required AMD Consents.

 

“Required Contractual Consents” means the Required AMD Contractual Consents.

 

“Required Governmental Approvals” means the Required AMD Governmental Approvals.

 

“Stand-Alone NVM Product” means a semiconductor product (including a single chip
or a multiple chip or system product) containing NVM dedicated to data storage
wherein all circuitry (including logic circuitry) contained therein is solely to
accept, store, retrieve or access information or instructions and cannot
manipulate such information or execute instructions.

 

“Subsidiary” of a Person means (i) any corporation, company or other legal
entity (other than a partnership) in an unbroken chain of corporations,
companies or other legal entities beginning with such Person if each of the
corporations, companies or entities other than the last corporation, company or
entity in the unbroken chain then owns stock or other equity interests
possessing more than 50% of the total combined voting power of all classes of
stock or other equity interests in one of the other corporations, companies or
other legal entities in such chain, (ii) any partnership in which the Person is
a general partner, or (iii) any partnership in which the Person possesses more
than a 50% interest in the total capital or total income of such partnership.
Notwithstanding the foregoing, neither the Joint Venture nor FASL (Japan) nor
their Subsidiaries shall be deemed to be a Subsidiary of AMD for purposes of
this Agreement.

 

“Tax” means all taxes, levies, imposts and fees imposed by any Governmental
Authority (domestic or foreign) of any nature including but not limited to
federal, state, local or foreign net income tax, alternative or add-on minimum
tax, profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, FICA or FUTA), real or personal property
tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with any
interest or any penalty, addition to tax or additional

 

9

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amount imposed by any Governmental Authority (domestic or foreign) responsible
for the imposition of any such tax.

 

“Tax Return” means all returns, reports, forms, certificates or other
information required to be filed with any Governmental Authority with respect to
any Tax.

 

“Transaction Documents” means this Agreement and the Ancillary Documents and the
Transaction Documents as defined in the Contribution Agreement.

 

“Transfer Taxes” means all federal, state, local or foreign sales, use,
transfer, real property transfer, mortgage recording, stamp duty, capital,
value-added or similar taxes that may be imposed in connection with the direct
or indirect transfer to the Joint Venture of AMD Sold Assets or assumption of
AMD Assumed Liabilities by the Joint Venture, together with any interest,
additions to tax or penalties with respect thereto and any interest in respect
of such additions to tax and penalties.

 

1.2 Index of Other Defined Terms. In addition to those terms defined above, the
following terms shall have the respective meanings given thereto in the sections
indicated below:

 

Defined Term

   Section

“Agreement”

   Preamble

“AMD”

   Preamble

“AMD Assumed Liabilities”

   2.2

“AMD Assumed Permits”

   2.1(a)

“AMD Contracts”

   2.1(a)

“AMD Leased Real Property”

   5.5(a)

“AMD Listed Assets”

   2.1(a)

“AMD Owned Real Property”

   5.5(b)

“AMD Permits”

   5.8(a)

“AMD Deductible”

   9.5(a)

“AMD Employment Agreements”

   5.10

“AMD Indemnitees”

   9.3

“AMD Pre-Closing Taxes”

   2.4

“AMD Threshold”

   9.5(a)

“Claimant”

   9.6(a)

 

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Defined Term

   Section

“Closing”

   4.1(a)

“Closing Date”

   4.1(a)

“Confidentiality Agreement”

   11.13(b)

“Contribution Consideration”

   Article III

“Fujitsu”

   Preamble

“Indemnifying Party”

   9.6(a)

“Joint Venture”

   Preamble

“JV-AMD Indemnitees”

   9.3

“JV Indemnitees”

   9.2

“Promissory Note”

   Article III

“Proceedings”

   5.6

“Required AMD Consents”

   5.8(a)

“Restructuring”

   6.1

“Straddle Period”

   2.4

“Third Party Claim”

   9.6(a)

 

1.3 Interpretation.

 

(a) Certain Terms. The words “hereof,” “herein,” “hereunder” and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The term “including” is not limited and means “including without
limitation.”

 

(b) Section References; Titles and Subtitles. Unless otherwise noted, all
references to Sections, Annexes, Schedules and Exhibits herein are to Sections,
Annexes, Schedules and Exhibits of this Agreement. The titles, captions and
headings of this Agreement are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement.

 

(c) References to Persons, Agreements and Statutes. Unless otherwise expressly
provided herein, (i) references to a Person include its successors and permitted
assigns, (ii) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements and other modifications thereto or supplements thereof and (iii)
references to any statute or regulation are to be construed as

 

11

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including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such statute or regulation.

 

ARTICLE II.

 

PURCHASE AND SALE OF ASSETS

 

2.1 Transfer of Assets. Upon the terms and subject to the conditions of this
Agreement and in reliance upon the representations, warranties and agreements
herein set forth:

 

(a) On the Closing Date, AMD shall sell, convey, transfer, assign and deliver to
the Joint Venture, and the Joint Venture shall acquire from AMD, free and clear
of all Liens, other than Permitted Liens, all of AMD’s right, title and interest
in, to and under the following:

 

(i) the assets listed on Exhibit A (the “AMD Listed Assets”);

 

(ii) subject to Section 6.1, all Contracts of AMD or any of its Affiliates which
are exclusively related to the AMD Listed Assets or the operation thereof
(collectively, the “AMD Contracts”), including but not limited to all Contracts
listed on Exhibit B; and

 

(iii) subject to Section 6.1, any and all AMD Permits, including but not limited
to all Permits listed on Exhibit C (collectively, the “AMD Assumed Permits”).

 

2.2 Assumption of Liabilities. Notwithstanding anything to the contrary set
forth in the definition of AMD Excluded Liabilities, but otherwise subject to
the terms and conditions of this Agreement and in reliance upon the
representations, warranties and agreements herein set forth, the Joint Venture,
effective as of the Closing, will assume and perform and in due course pay and
discharge (or cause its applicable Affiliates to perform, pay and discharge) the
following Liabilities of AMD and its Affiliates: (a) any Liabilities arising out
of or based upon events or circumstances occurring after the Closing in
connection with or resulting from the operation of the Joint Venture Business,
including product warranty claims made with respect to the sale of products by
the Joint Venture and its Subsidiaries after the Closing, whether or not such
products were manufactured prior to the Closing; (b) any amounts payable by AMD
or its Affiliates and any other Liabilities (executory or otherwise) of AMD or
its Affiliates that accrue or relate to the period after the Closing under any
Contract included in the AMD Sold Assets; and (c) any amounts payable by the
Joint Venture pursuant to Sections 2.3, 2.4 and 2.5 (collectively, the “AMD
Assumed Liabilities”). If AMD or its Affiliates received or receives payment for
the performance of services or the provision of products, which performance of
services or provision of products is an AMD Assumed Liability hereunder, AMD
shall, or shall cause its Affiliates to, pay to the Joint Venture the amounts so
received in respect of such AMD Assumed Liabilities.

 

EXCEPT FOR THE ASSUMED LIABILITIES WHICH ARE HEREBY EXPRESSLY ASSUMED, THE JOINT
VENTURE DOES NOT ASSUME ANY LIABILITIES, DEBTS, OBLIGATIONS OR DUTIES OF AMD OR
ANY OF ITS AFFILIATES OF ANY KIND OR NATURE WHATSOEVER.

 

12

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2.3 Certain Prorations. On the Closing Date, or as promptly as practicable
following the Closing Date, but in no event later than sixty (60) calendar days
thereafter, the water, gas, electricity and other utilities, common area
maintenance reimbursements to lessors, local business or other transferable
license or Permit fees and other similar periodic charges payable with respect
to the AMD Listed Assets shall be prorated between AMD and the Joint Venture,
with AMD bearing such costs and expenses attributable to the period through and
including the Closing Date, and the Joint Venture bearing such costs and
expenses attributable to the period after the Closing Date.

 

2.4 Taxes. Except as otherwise provided in this Agreement, all Taxes (other than
Transfer Taxes) in respect of the AMD Sold Assets for the period or portions of
periods ending at or prior to the Closing shall be borne solely by AMD (“AMD
Pre-Closing Taxes”). For purposes of the foregoing, any Taxes that are imposed
on a periodic basis and are payable for a Tax period that includes (but does not
end on) the Closing Date (a “Straddle Period”), the portion of such Tax that
relates to the portion of such Tax period ending on the Closing Date shall (A)
in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Tax period
multiplied by a fraction the numerator of which is the number of days in the Tax
period ending on the Closing Date and the denominator of which is the number of
days in the entire Tax period, and (B) in the case of any Tax based upon or
related to income or receipts, be deemed equal to the amount which would by
payable if the relevant Tax period ended on the Closing Date. For purposes of
this Section 2.4, all relevant periods in respect of personal property, real
property and similar Taxes imposed by the State of California shall be treated
as beginning after the Closing Date, and such Taxes in respect of the AMD Sold
Assets shall be paid by the Joint Venture. AMD shall pay to the Joint Venture,
within fifteen (15) days prior to the date on which Taxes are due with respect
to Straddle Periods, that amount equal to the applicable portion of such Taxes
which relates to the portion of such Taxable period ending on the Closing Date.
Except as otherwise provided in this Agreement, all Taxes in respect of the AMD
Sold Assets for the period or portions of periods beginning after the Closing
shall be borne by the Joint Venture or, to the extent that the Joint Venture is
taxed as a flow-through entity, with respect to income or franchise Taxes, by
the Members.

 

2.5 Rents. AMD shall, or shall cause its Subsidiaries to, pay minimum or basic
rent under the Personal Property Leases and the Real Property Leases included in
the AMD Sold Assets through the end of the calendar month in which the Closing
Date occurs, and the Joint Venture shall reimburse AMD for such rent accrued
commencing with the Closing Date through the end of such month as part of the
post-Closing proration.

 

ARTICLE III.

 

CONSIDERATION

 

In consideration for the sale, conveyance, transfer, assignment and delivery to
the Joint Venture of the AMD Sold Assets, in addition to the Joint Venture’s
assumption of the AMD Assumed Liabilities, the Joint Venture will issue to AMD a
promissory note in the form attached hereto as Exhibit D (the “Promissory
Note”), with a principal outstanding amount equal to US$ 261,957,114.00.

 

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ARTICLE IV.

 

THE CLOSING

 

4.1 The Closing.

 

(a) The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place on a date which shall be the later to occur of (i)
June 30, 2003 or (ii) the second business day following the satisfaction or
waiver of all conditions to closing set forth in Article VIII, other than those
that by their nature are to be satisfied at the Closing (the “Closing Date”), at
the offices of Latham & Watkins located at 505 Montgomery Street, San Francisco,
California 94111, and shall be effective as of 12:01 a.m. Pacific time on such
date, unless another date, time or place is agreed to in writing by the parties
hereto.

 

(b) On the Closing Date, AMD shall, or shall cause its applicable Affiliates to,
deliver to the Joint Venture the following:

 

(i) duly executed bills of sale, grant deeds or similar instruments with respect
to the AMD Listed Assets in form and substance reasonably satisfactory to AMD;

 

(ii) duly executed assignment and assumption agreements with respect to the AMD
Contracts and the AMD Assumed Permits in form and substance reasonably
satisfactory to AMD and Fujitsu;

 

(iii) duly executed assignment and assumption agreements with respect to the
Real Property Leases and Personal Property Leases included in the AMD Sold
Assets transferred at Closing in form and substance reasonably satisfactory to
AMD and Fujitsu; and

 

(iv) duly executed grant deeds or substantially similar instruments with respect
to the owned real property included in the AMD Sold Assets transferred at
Closing in form and substance reasonably satisfactory to AMD and Fujitsu.

 

(c) On the Closing Date, the Joint Venture shall deliver to AMD:

 

(i) the Promissory Note; and

 

(ii) duly executed assignment and assumption agreements with respect to the AMD
Contracts (including Real Property Leases and Personal Property Leases included
in the AMD Sold Assets) and the AMD Assumed Permits in form and substance
reasonably satisfactory to AMD and Fujitsu.

 

ARTICLE V.

 

REPRESENTATIONS AND WARRANTIES OF AMD

 

As an inducement to Fujitsu and the Joint Venture to enter into this Agreement
and to consummate the transactions contemplated hereby, AMD represents and
warrants to Fujitsu and the Joint Venture as follows:

 

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5.1 Corporate Existence and Power. AMD is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. AMD has all corporate power and corporate authority required to
conduct its business as now conducted and to own, lease and operate its AMD
Listed Assets as now owned, leased and operated, including in connection with
the AMD Contracts and AMD Assumed Permits. AMD is duly qualified to do business
and is in good standing (to the extent such concept exists in the relevant
jurisdiction) as a foreign corporation in each jurisdiction where the character
of the property owned or leased or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified or in good standing is not reasonably likely to result in a
Material Adverse Effect on the Joint Venture.

 

5.2 Authorization. The execution, delivery and performance by AMD of the
Transaction Documents to which it is a party (or is contemplated to be a party
at Closing) and the consummation by AMD of the transactions contemplated hereby
and thereby are within AMD’s organizational powers and have been duly authorized
by all necessary action (including, where necessary, stockholder action) on the
part of AMD. Other than as have been taken or obtained, no Proceeding on the
part of AMD is, and no other organizational approval is, or will be necessary to
authorize the Transaction Documents to which it is a party (or is contemplated
to be a party at Closing) and the transactions contemplated thereby. This
Agreement has been duly and validly executed and delivered by AMD and
constitutes the legal, valid and binding agreement of AMD, enforceable against
AMD in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity. As of the
Closing Date, each of the Ancillary Documents to which AMD is a party will have
been duly and validly executed and delivered by AMD and will constitute the
legal, valid and binding agreements of AMD, enforceable against AMD in
accordance with their terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity.

 

5.3 Governmental Authorization. The execution, delivery and performance by AMD
of each Transaction Document to which it is a party (or is contemplated to be a
party at Closing) require no action by, consent or approval of, or filing with,
any Governmental Authority, except for (a) the Required AMD Governmental
Approvals, (b) under the HSR Act, applicable European Union Commission merger
notification requirements or similar competition laws in other applicable
foreign jurisdictions, and (c) other than any actions, consents, approvals or
filings which, if not taken, obtained or made, are not reasonably likely to
result in (i) a Material Adverse Effect on the Joint Venture or (ii) a material
adverse effect on the ability of AMD to enter into and perform its obligations
under the Transaction Documents to which it is a party (or is contemplated to be
a party at Closing).

 

5.4 Non-Contravention. The execution, delivery and performance by AMD of each
Transaction Document to which it is a party (or is contemplated to be a party at
Closing) does not and will not (a) contravene or conflict with the Charter
Documents of AMD; (b) assuming all filings required to be made to obtain the
Required AMD Governmental Approvals, under the HSR Act, applicable European
Union Commission merger notification requirements and similar competition laws
in other applicable foreign jurisdictions will be made, contravene or conflict
with or constitute a violation of any provision of any Applicable Law binding
upon or applicable

 

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to AMD or any of the AMD Sold Assets; (c) except as set forth on Schedule 5.4,
constitute a default under or give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit, or otherwise
change the existing rights or obligations thereunder to which AMD is entitled
under, any Material Contract or Permit included in the AMD Sold Assets; or (d)
result in the creation or imposition of any Lien on any AMD Sold Asset, other
than Permitted Liens, except, with respect to clauses (b), (c) and (d), to the
extent such contravention, conflict, violation, loss of benefit, default, right,
or other change, individually or in the aggregate, is not reasonably likely to
result in (i) a Material Adverse Effect on the Joint Venture or (ii) material
adverse effect on the ability of AMD to enter into and perform its obligations
under the Transaction Documents to which it is a party (or is contemplated to be
a party at Closing).

 

5.5 Properties; Leases.

 

(a) AMD has a good and valid leasehold or license interest in (i) the leased
Real Property included in the AMD Sold Assets (the “AMD Leased Real Property”)
and (ii) the leased personal property included in the AMD Sold Assets, in each
case, free and clear of all Liens, except to the extent such Liens constitute a
Permitted Title Exception or a Permitted Lien, respectively.

 

(b) AMD holds good and marketable title in fee simple to, and is in possession
of, all of the owned Real Property included in the AMD Sold Assets (the “AMD
Owned Real Property”), free and clear of all Liens, except to the extent such
Liens constitute a Permitted Title Exception.

 

(c) AMD holds good and valid title to all material Fixtures and Equipment owned
by AMD included in the AMD Sold Assets, free and clear of all Liens, other than
Permitted Liens.

 

(d) Schedule 5.5(d) sets forth an accurate and complete list of all Real
Property Leases and Material Personal Property Leases included in the AMD Sold
Assets (including all subleases and sublicenses to which the applicable AMD
Entity is a party related to the AMD Leased Real Property or leased personal
property included in the AMD Sold Assets or any interest therein). AMD has made
available to Fujitsu true and correct copies of such Real Property Leases and
Material Personal Property Leases. To the Knowledge of AMD, there is no pending
or threatened condemnation, expropriation, taking or other form of eminent
domain Proceeding against all or any portion of the AMD Leased Real Property.

 

(e) Schedule 5.5(e)(i) includes a list of all AMD Owned Real Property. Except as
contemplated by the Transaction Documents, none of the AMD Owned Real Property
or any interest thereon is subject to any Real Property Lease. To the Knowledge
of AMD, except as set forth on Schedule 5.5(e)(ii), the current use and
operation of the AMD Owned Real Property and the AMD Leased Real Property are in
material compliance with all Applicable Laws (including without limitation laws
relating to zoning and land use) and public and private covenants and
restrictions, and neither AMD nor its Affiliates has received any notice of
material non-compliance with any Applicable Laws. There is no pending or to the
Knowledge of AMD, threatened, condemnation, expropriation, taking or other form
of eminent domain Proceeding against all or any portion of the AMD Owned Real
Property.

 

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(f) All tangible AMD Listed Assets (and such assets as are subject to Material
Personal Property Leases and Real Property Leases) material to the AMD Flash
Memory Business are in good operating condition and repair, ordinary wear and
tear and immaterial defects excepted.

 

5.6 Litigation; Other Proceedings. Except as set forth on Schedule 5.5(f), there
are no (a) actions, suits, hearings, arbitrations, proceedings (public or
private) or investigations, including special assessment proceedings or other
proceedings to impose Liens, that have been brought by or against any
Governmental Authority or any other Person (collectively, “Proceedings”) pending
or, to the Knowledge of AMD, threatened, against or affecting AMD or the AMD
Sold Assets or (b) existing Judgments of any Governmental Authority affecting
AMD or the AMD Sold Assets, in each case under clauses (a) and (b), which,
individually or in the aggregate, are reasonably likely to have, (i) a Material
Adverse Effect on the Joint Venture or (ii) a material adverse effect on the
ability of AMD to enter into and perform its obligations under the Transaction
Documents to which it is a party (or is contemplated to be a party at Closing).
There are no Proceedings pending or, to the Knowledge of AMD, threatened,
against or affecting AMD or the AMD Sold Assets which seek to enjoin or rescind
the transactions contemplated by this Agreement or otherwise prevent AMD from
complying with the terms and provisions of the Transaction Documents to which it
is a party (or is contemplated to be a party at Closing).

 

5.7 Contracts.

 

(a) Other than Real Property Leases and Material Personal Property Leases,
Schedule 5.7 lists all written Material Contracts (or summaries of oral Material
Contracts) included in the AMD Sold Assets. AMD has made available to Fujitsu
true and complete copies of all such written Material Contracts.

 

(b) Each of the Material Contracts included in the AMD Sold Assets is in full
force and effect and is valid, binding and enforceable against AMD that is a
party thereto and, to the Knowledge of AMD as of the date hereof, each other
party thereto, in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity. AMD
has complied in all material respects with all such Material Contracts to which
it is a party and is not in material default under any of such Material
Contracts and, to the Knowledge of AMD, there exists no condition nor has there
been any occurrence which (with or without notice, lapse of time or both) would
reasonably be expected to result in such a default by AMD under any such
Material Contracts, except where such default is not reasonably likely to result
in (i) a Material Adverse Effect on the Joint Venture or (ii) a material adverse
effect on the ability of AMD to perform its obligations under the Transaction
Documents to which it is a party (or is contemplated to be a party at Closing).
To the Knowledge of AMD, (i) no other contracting party is in material default
under any of the Material Contracts included in the AMD Sold Assets, and (ii)
there exists no condition nor has there been any occurrence which (with or
without notice, lapse of time or both) would reasonably be expected to result in
such a default by any such party under any such Material Contracts, except where
such default is not reasonably likely to result in a Material Adverse Effect on
the Joint Venture.

 

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5.8 Permits.

 

(a) Except as set forth on Schedule 5.8(a), AMD has obtained all material
Permits necessary for the ownership, operation and use of the AMD Sold Assets
and the AMD Flash Memory Business in substantially the same manner as currently
owned, operated and used (the “AMD Permits”), and each AMD Permit is valid and
remains in full force and effect. AMD is not in default (and has not failed to
comply), nor has AMD received any notice of any claim of default or failure to
comply, with respect to any AMD Permit, except where such default is not
reasonably likely to result in (i) a Material Adverse Effect on the Joint
Venture or (ii) a material adverse effect on the ability of AMD to perform its
obligations under the Transaction Documents to which it is a party (or is
contemplated to be a party at Closing). Upon the consummation of the Closing,
each of the AMD Permits shall be in full force and effect and the Joint Venture
shall be entitled to the benefits thereof and rights thereunder, except to the
extent the failure of which is not reasonably likely to result in (i) a Material
Adverse Effect on the Joint Venture or (ii) a material adverse effect on the
ability of any AMD Entity to perform its obligations under the Transaction
Documents to which it is a party (or is contemplated to be a party at Closing).

 

(b) Schedule 5.8(b) lists (i) each governmental or other registration, filing,
application, notice, transfer, consent, approval, order, qualification and
waiver (each, a “Required AMD Governmental Approval”) required under Applicable
Law to be obtained by AMD by virtue of the execution and delivery of Transaction
Documents or the consummation of the transactions contemplated thereby to avoid
the loss of any material AMD Permit, and (ii) each Material Contract included in
the AMD Sold Assets with respect to which the consent of the other party or
parties thereto must be obtained by AMD by virtue of the execution and delivery
of the Transaction Documents or the consummation of the transactions
contemplated thereby to avoid the invalidity of the transfer of such Material
Contract, the termination thereof, a breach or default thereunder or any other
material change or modification to the terms thereof (excluding the consents
required or otherwise addressed under the provisions of the Intellectual
Property Agreement, each, a “Required AMD Contractual Consent” and together with
the Required AMD Governmental Approvals, the “Required AMD Consents”).

 

5.9 Compliance with Laws. AMD is in compliance in all material respects with all
Applicable Laws relating to or applicable to the AMD Flash Memory Business and
the AMD Sold Assets, including all Environmental Laws, currently in effect
including, without limitation, those relating to equal employment opportunity
practices and the import and export of goods except for any non-compliance or
violations which individually or in the aggregate are not reasonably likely to
result in (i) a Material Adverse Effect on the Joint Venture or (ii) a material
adverse effect on the ability of any AMD Entity to perform its obligations under
the Transaction Documents to which it is a party (or is contemplated to be a
party at Closing). AMD has not received any written notice from any Governmental
Authority of any allegation that the AMD Flash Memory Business or any AMD Sold
Assets is not in compliance with any Applicable Law, other than with respect to
matters that have been resolved or that individually or in the aggregate are not
reasonably likely to result in (i) a Material Adverse Effect on the Joint
Venture or (ii) a material adverse effect on the ability of AMD to perform its
obligations under the Transaction Documents to which it is a party (or is
contemplated to be a party at Closing).

 

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5.10 Employment Agreements; Change in Control; and Employee Benefits. Except as
set forth on Schedule 5.10, there are no employment, consulting, agency,
commission, bonus or incentive compensation, severance pay, continuation pay,
termination pay or indemnification agreements or other similar agreements of any
nature whatsoever included in Contracts that are included in the AMD Sold Assets
(collectively, “AMD Employment Agreements”) between AMD or any ERISA Affiliate
of AMD, on the one hand, and any current or former officer, director, employee,
consultant or agent of AMD or any ERISA Affiliate of AMD, on the other hand.
Without limiting the generality of the foregoing, except as set forth on
Schedule 5.10, there are no AMD Employment Agreements or any other similar
agreements to which AMD or its Affiliates is a party under which the
transactions contemplated by this Agreement will require (i) any payment by AMD
or the Joint Venture, or (ii) any consent or waiver from any officer, director,
employee, consultant or agent of AMD, any ERISA Affiliate of AMD or the Joint
Venture.

 

5.11 Labor and Employment Matters. Except as disclosed on Schedule 5.11, there
is no (a) labor strike, slow down or stoppage pending or, to the Knowledge of
AMD, threatened, against or directly affecting the AMD Sold Assets or (b)
grievance or Proceeding arising out of or under any collective bargaining
agreement pending, or, to the Knowledge of AMD, threatened, against or directly
affecting the AMD Sold Assets, that is reasonably likely to result in a Material
Adverse Effect on the Joint Venture.

 

5.12 Insurance. All insurance coverage applicable to AMD, the AMD Flash Memory
Business and the AMD Sold Assets is in full force and effect, insures AMD in
reasonably sufficient amounts against all risks usually insured against by
Persons operating similar businesses or properties of similar size in the
localities where such businesses or properties are located. No notice of
cancellation or nonrenewal of such coverage has been received by AMD.

 

5.13 Environmental Matters. To the Knowledge of AMD and the AMD Facility
Managers, except as set forth in Schedule 5.13:

 

(a) Neither AMD nor it Affiliates or its or their Predecessors has Handled or
Released any Hazardous Substances at, on, under, to or from any AMD Operating
Site in violation of any applicable Environmental Law or that has resulted in,
or could reasonably be expected to result in, any Liability or potential
Liability to AMD or its Affiliates under any Environmental Law.

 

(b) No Release of any Hazardous Substance has occurred, or is occurring, at, on,
under, from or to any AMD Operating Site, and no Hazardous Substances are
present on, in or under any AMD Operating Site, regardless of how the Hazardous
Substance(s) came to rest there, in violation of any applicable Environmental
Law or that could reasonably be expected to result in any Liability to AMD or
its Affiliates under any Environmental Law.

 

(c) No underground tanks are or have been owned or operated by AMD or its
Affiliates at the AMD Listed Assets. No underground storage tanks, landfills,
surface impoundments, waste piles or other land treatment, land storage or
disposal areas are or have been located on, in or under any of the AMD Listed
Assets, and no PCBs or asbestos-containing materials are located on, in or under
any of the AMD Listed Assets.

 

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(d) Neither AMD nor its Affiliates has received written notice of any assertion
by any Governmental Authority or other Person that any of them may be a
potentially responsible party in connection with any AMD Operating Site. There
are no Proceedings that are pending or, to the Knowledge of AMD, threatened by
any Governmental Authority or Person against AMD or its Affiliates relating to
any AMD Operating Site or AMD Sold Asset arising under or pursuant to any
Environmental Law. Neither AMD nor its Affiliates has received any written
notice from any Governmental Authority or Person that is outstanding or has not
been resolved and, to the Knowledge of AMD, no condition or circumstance exists,
that (with or without notice or lapse of time or both) would reasonably be
likely to give rise to, or serve as a basis for, the commencement of any such
Proceeding. Neither AMD nor its Affiliates has entered into or received, nor is
AMD or its Affiliates in default under, any Judgment of any Governmental
Authority under any Environmental Law relating to any AMD Operating Site or AMD
Sold Asset.

 

(e) There are no closures or substantial modifications to any equipment or
Facilities used in connection with the Handling or Release of Hazardous
Substances (including wastewater), or any operational changes that could
reasonably be expected to require such closure or modifications, currently
planned within five (5) years after the date hereof by AMD on, at or relating to
the AMD Flash Memory Business or the AMD Sold Assets, and no such closures or
modifications are required to effect the transactions contemplated hereby.

 

(f) No Lien has arisen or, to the Knowledge of AMD, is threatened on or against
any of the AMD Sold Assets under or as a result of a violation of, or any other
Liability under, any Environmental Laws.

 

5.14 Capitalization. AMD has good and valid title to any securities of FASL
(Japan) included within the AMD Sold Assets, free and clear of any Liens,
options or rights of first offer or first refusal with respect thereto. Upon the
sale of any such securities to the Joint Venture in accordance with the terms of
this Agreement, the Joint Venture has or will have good and valid title thereto,
free and clear of any Liens, options or rights of first offer or first refusal
with respect thereto.

 

5.15 Brokers. Neither AMD nor any of its Affiliates is a party to any contract,
agreement, arrangement or understanding with any Person which will result in the
obligation of the Joint Venture or any of its Subsidiaries (including the AMD
Contributed Subsidiaries (as defined in the Contribution Agreement) and FASL
(Japan)) to pay any finder’s fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.

 

5.16 Related Party Agreements. Except for this Agreement, the agreements
expressly contemplated by this Agreement, the Contribution Agreement and as set
forth in Schedule 5.16, there are no Contracts between AMD or any of its
Affiliates, on the one hand, and any AMD Contributed Subsidiary (as defined in
the Contribution Agreement), the Joint Venture or FASL (Japan), on the other
hand.

 

5.17 No Other Agreements to Sell AMD Sold Assets. Except as provided herein, AMD
does not have any legal obligation, absolute or contingent, to any Person other
than the Joint Venture to sell, assign, lease or sublease or otherwise transfer,
convey or place any Lien on

 

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any of the material AMD Sold Assets, other than (i) agreements regarding the
sale of inventory of the AMD Flash Memory Business which were entered into in
the ordinary course of business and in a manner consistent with past practices
and (ii) agreements among AMD and its Affiliates to sell or transfer AMD Sold
Assets in a manner such that they can be sold, assigned, leased, subleased,
transferred or conveyed to the Joint Venture as contemplated by the Transaction
Documents.

 

5.18 Absence of Changes. Since March 31, 2003, (i) the AMD Flash Memory Business
has been conducted in all material respects in the ordinary course (except in
connection with or as otherwise contemplated by the Transaction Documents)
consistent with past practice and (ii) there has been no change or event
relating to the AMD Flash Memory Business which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect the Joint
Venture.

 

5.19 Value of Assets. Schedule 5.19 lists the AMD Sold Assets and AMD’s good
faith determination of net book value of such AMD Sold Assets.

 

ARTICLE VI.

 

AMD COVENANTS

 

AMD hereby covenants as follows:

 

6.1 Required Consents. AMD shall use its commercially reasonable efforts to
obtain its Required Consents prior to the Closing Date. To the extent that any
Required Consents have not been obtained prior to the Closing Date, AMD shall
use its commercially reasonable efforts to obtain such Required Consents as soon
thereafter as practicable. In the event any Required Consent is not obtained,
AMD shall use its commercially reasonable efforts to structure the transaction
with respect to the Contract or Permit in question in a manner that will not
result in a default under such Contract or Permit but that will result in the
Joint Venture obtaining the benefits and incurring the obligations that it would
have otherwise obtained or incurred had the applicable Required Consent or
Required Governmental Approval been obtained (a “Restructuring”). AMD shall not
be required to make any payments in order to obtain a Required Consent. In the
event any such request for payment is made by a Person with respect to which a
Required Consent is being solicited and both AMD and Fujitsu agree in writing
that AMD should make such payment, such payment shall be reimbursed by the Joint
Venture. In connection with a Restructuring, the Joint Venture shall reimburse
AMD for the reasonable costs or expenses incurred by AMD after the Closing Date
with respect to conferring the benefits of the applicable Contract to the Joint
Venture; provided that without the written consent of both AMD and Fujitsu, in
no event shall the Joint Venture reimburse AMD in excess of the costs the Joint
Venture would have incurred if such Contract had been assigned to the Joint
Venture with a Required Consent on the Closing Date. On and after the Closing
Date, AMD shall comply with all conditions and requirements set forth in (a) all
Required Governmental Approvals that have been obtained as necessary to keep the
same in full force and effect assuming continued compliance with the terms
thereof by the Joint Venture and (b) all Required Contractual Consents that have
been obtained as necessary to keep the same effective and enforceable against
the Persons giving such Required Contractual Consents assuming continued
compliance with the

 

21

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terms thereof by the Joint Venture. Notwithstanding anything to the contrary in
this Agreement, but subject to Article VIII, if AMD is unable to obtain a
Required Consent after having complied with its obligations under this Section
6.1, AMD shall have no liability to the Joint Venture as a result of its failure
to obtain such Required Consent.

 

6.2 Maintenance of Insurance Policies. AMD shall not, after the date hereof,
take or fail to take any action that would adversely affect the applicability of
any insurance in effect on the Closing Date that covers all or any part of the
AMD Sold Assets, as such insurance applies for periods prior to the Closing
Date. AMD shall provide for the continuation of such insurance for a reasonable
period through and following the Closing and at least until the Joint Venture
has initially complied with the provisions of Section 7.18 of the Operating
Agreement; provided that such coverage for periods following the Closing shall
be at the expense of the Joint Venture.

 

6.3 Litigation and Adverse Developments. AMD shall give prompt written notice to
the Joint Venture and Fujitsu of (a) the occurrence, or failure to occur, of any
event which occurrence or failure to occur is reasonably likely to cause any
representation or warranty of AMD contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any material failure of AMD to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder. AMD will promptly advise the Joint Venture and
Fujitsu in writing of the commencement of any dispute, claim or Proceeding,
against or involving the AMD Flash Memory Business or the AMD Sold Assets that
is reasonably likely to result in a Material Adverse Effect on the Joint
Venture.

 

6.4 Further Assurances. At any time or from time to time after the Closing, AMD
shall (a) at the reasonable request of the Joint Venture or Fujitsu, promptly
execute and deliver any further instruments or documents as may reasonably be
requested to effect, record or verify the transfer to and vesting in the Joint
Venture of the right, title and interest in and to the AMD Sold Assets, free and
clear of all Liens (except Permitted Liens) in accordance with the terms of the
Transaction Documents and (b) take all such further action as the Joint Venture
or Fujitsu may reasonably request in order to evidence or otherwise facilitate
the consummation of the transactions contemplated hereby. After the Closing, AMD
shall as reasonably appropriate: (i) refer to the Joint Venture all inquiries
relating to the AMD Sold Assets and (ii) promptly deliver to the Joint Venture
any mail, packages and other communications addressed to AMD relating to the AMD
Flash Memory Business.

 

6.5 No Sale of Assets. Except for the sale of inventory in the ordinary course
of business, consistent with past practice, AMD will not, and will cause its
Affiliates and Representatives not to, directly or indirectly, (a) solicit any
inquiries or proposals or enter into or continue any discussions, negotiations
or agreements relating to the direct or indirect transfer of the AMD Sold Assets
to any Person other than the Joint Venture or its respective Affiliates or (b)
provide any assistance or any information to or otherwise cooperate with any
Person in connection with any such inquiry, proposal or transaction.

 

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ARTICLE VII.

 

MUTUAL COVENANTS

 

The Joint Venture and AMD hereby covenant and agree as follows:

 

7.1 Transition. Prior to the Closing Date, the Joint Venture and AMD each shall
use all commercially reasonable efforts to identify and make appropriate
arrangements for dealing with any transition problems that may be involved in
effectuating the transactions contemplated by the Transaction Documents.

 

7.2 Diligence in Pursuit of Conditions Precedent. The Joint Venture and AMD each
shall use all commercially reasonable efforts to fulfill their respective
obligations hereunder and under the Ancillary Documents and shall reasonably
cooperate with the other parties in regard to the same in order to effect the
Closing. The Joint Venture and AMD each shall use all commercially reasonable
efforts to obtain all Required Consents.

 

7.3 Covenant to Satisfy Conditions. The Joint Venture and AMD each shall use all
commercially reasonable efforts to ensure that the other conditions set forth in
Article VIII hereof are satisfied, insofar as such matters are within the
control of the Joint Venture or AMD, as applicable. The Joint Venture and AMD
each further covenant and agree, with respect to a pending or threatened
preliminary or permanent injunction, or other order, decree or ruling or
statute, rule, regulation or executive order, that would adversely affect the
ability of the parties hereto to consummate the transactions contemplated by the
Transaction Documents to use commercially reasonable efforts to prevent or lift
the entry, enactment or promulgation thereof, as the case may be.

 

7.4 Taxes.

 

(a) Transfer Taxes will be borne by the Joint Venture.

 

(b) AMD will provide the Joint Venture with all Tax information, including, but
not limited to, the tax basis of the AMD Sold Assets at the Closing Date, as
reasonably requested by the Joint Venture. The parties agree to allocate the
Purchase Price among the AMD Listed Assets, the AMD Permits and the AMD
Contracts for all purposes (including financial accounting and Tax purposes) in
accordance with the allocation schedule attached hereto as Schedule 5.19.

 

(c) AMD shall have the right and obligation to timely prepare and file, or cause
to be prepared and filed when due, any Tax Return that is required to include
the operations, ownership, assets or activities of the AMD Sold Assets for
periods ending on or before the Closing Date.

 

(d) The Joint Venture shall have the right and obligation to timely prepare and
file, or cause to be prepared and filed when due, any Tax Return that is
required to include the operations, ownership, assets or activities of the Joint
Venture Business for any periods after the Closing Date, including any Straddle
Periods; provided, that any such Tax Returns relating to a

 

23

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Straddle Period shall not be filed without the prior review and comment of AMD
and shall be prepared on a basis consistent with past practices of AMD to the
extent permitted by Applicable Law and in a manner that does not distort taxable
income (e.g., by accelerating income or deferring deductions).

 

7.5 Ancillary Documents. On the Closing Date, the Joint Venture and AMD shall
execute and shall cause their Affiliates to execute and deliver all documents
required to be delivered pursuant to Sections 4.1(b) and (c) hereof.

 

7.6 Resale and Other Tax Certificates. The Joint Venture shall provide to AMD
such resale or other tax-related certificates reasonably requested by AMD, and
AMD shall provide to the Joint Venture such resale or other tax-related
certificates reasonably requested by the Joint Venture.

 

ARTICLE VIII.

 

CONDITIONS TO CLOSING

 

8.1 Conditions to AMD’s Obligations. The obligation of AMD to sell, convey,
transfer and assign the AMD Sold Assets to the Joint Venture and to take, or
cause its Affiliates to take, the other actions required to be taken by it or
its Affiliates at the Closing, shall be subject to the satisfaction on or prior
to the Closing Date of each of the following conditions (any of which may be
waived by AMD):

 

(a) Contribution Agreement Closing Conditions. All closing conditions contained
in the Contribution Agreement that are required to be performed by Fujitsu or
Fujitsu Sub shall have been performed or satisfied by Fujitsu or Fujitsu Sub in
all material respects.

 

(b) No Injunction, etc. Consummation of the transactions contemplated hereby
shall not have been restrained, enjoined or otherwise prohibited by any
Applicable Law or Judgment of any Governmental Authority. No material Proceeding
pertaining to the transactions contemplated by the Transaction Documents shall
be pending.

 

(c) Approvals. All filings required pursuant to the HSR Act with respect to the
transactions contemplated by the Transaction Documents shall have been made, and
the applicable waiting period, including any extension thereof pursuant to the
HSR Act, shall have expired or been terminated, and neither the United States
Department of Justice nor the Federal Trade Commission shall have instituted any
Proceeding to enjoin or delay the consummation of the transactions contemplated
by the Transaction Documents; and

 

(d) Other Agreements. The Joint Venture shall have executed and delivered all of
the agreements and documents set forth in Section 4.1(c) of this Agreement.

 

8.2 Conditions to the Joint Venture Obligations. The obligation of the Joint
Venture to acquire and accept a conveyance, transfer and assignment of the AMD
Sold Assets and to take, or cause its Affiliates to take, the other actions
required to be taken by it or its Affiliates at

 

24

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the Closing, shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions (any of which may be waived by the
Joint Venture):

 

(a) Representations and Warranties. All representations and warranties of AMD
contained in Article V of this Agreement that are qualified as to materiality or
Material Adverse Effect on the Joint Venture shall be true and correct as of the
date of this Agreement and at and as of the Closing Date as if such
representations and warranties were made on and as of the Closing Date (except
those representations and warranties which are made as of a specific date, which
shall be true and correct only as of such date); and the representations and
warranties of AMD contained in Article V of this Agreement that are not so
qualified shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as if made on and as of the Closing
Date (except those representations and warranties which are made as of a
specific date, which shall be so true and correct only as of such date).

 

(b) Agreements and Covenants. All agreements and covenants of AMD contained in
this Agreement that are required to be performed by AMD prior to or on the
Closing Date shall have been performed or satisfied by AMD in all material
respects.

 

(c) Contribution Agreement Closing Conditions. All closing conditions contained
in the Contribution Agreement that are required to be performed by AMD or AMD
Investments shall have been performed or satisfied by AMD or AMD Investments in
all material respects (unless waived by Fujitsu).

 

(d) No Injunction, etc. Consummation of the transactions contemplated hereby
shall not have been restrained, enjoined or otherwise prohibited by any
Applicable Law or Judgment of any Governmental Authority. No material Proceeding
pertaining to the transactions contemplated by the Transaction Documents shall
be pending.

 

(e) Closing Certificates. Each of AMD and AMD Investments shall have delivered
to the Joint Venture a certificate dated as of the Closing Date, and signed by a
duly authorized officer, representing and confirming that each of the conditions
set forth in Sections 8.2(a) and 8.2(b) have been satisfied (unless waived by
Fujitsu) and that each of the material Required AMD Consents have been obtained
(unless waived by Fujitsu).

 

(f) Approvals. Each of the following shall have occurred:

 

(i) All filings required pursuant to the HSR Act with respect to the
transactions contemplated by the Transaction Documents shall have been made, and
the applicable waiting period, including any extension thereof pursuant to the
HSR Act, shall have expired or been terminated, and neither the United States
Department of Justice nor the Federal Trade Commission shall have instituted any
Proceeding to enjoin or delay the consummation of the transactions contemplated
by the Transaction Documents; and

 

(ii) All other material Required AMD Consents shall have been obtained.

 

25

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(g) Other Agreements. The AMD Entities (as defined in the Contribution
Agreement) and the Joint Venture (and its Subsidiaries, which shall include FASL
(Japan)) shall have executed and delivered all of the agreements and documents
set forth in Section 4.1(b) of this Agreement.

 

ARTICLE IX.

 

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND  

COVENANTS AND INDEMNIFICATION

 

9.1 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing (a) indefinitely,
with respect to the representations and warranties set forth in Section 5.2
(Authorization); (b) for a period of five (5) years with respect to the
representations and warranties set forth in Section 5.13 (Environmental
Matters); and (c) for a period of eighteen (18) months after the Closing Date,
with respect to all other such representations and warranties.

 

9.2 Indemnification of Joint Venture by AMD. Subject to Section 9.5, AMD shall
indemnify and hold harmless the Joint Venture, its Subsidiaries and its and
their Representatives (the “JV Indemnitees”) against and with respect to, and
shall reimburse the JV Indemnitees for, without duplication, any and all Losses
incurred in connection with, arising out of, resulting from or incident to (a) a
breach of any representation or warranty of AMD contained herein; (b) a breach
of any covenant or agreement of AMD contained herein or in any bill of sale,
assignment and assumption agreement or other conveyance documents relating
hereto delivered to the Joint Venture hereunder or in connection herewith; and
(c) any AMD Excluded Liabilities.

 

9.3 Indemnification of AMD by the Joint Venture. Subject to Section 9.5, the
Joint Venture shall indemnify and hold harmless AMD and each of its Affiliates
(excluding the Joint Venture and its Subsidiaries) and its and their
Representatives (collectively, the “AMD Indemnitees”) against and with respect
to, and shall reimburse the AMD Indemnitees for, without duplication, any and
all Losses incurred in connection with, arising out of, resulting from or
incident to (a) a breach of any covenant or agreement by the Joint Venture
contained herein or in any assignment and assumption agreements delivered to AMD
hereunder or in connection herewith; (b) any and all AMD Assumed Liabilities
(other than those caused by a breach of any representation or warranty by AMD or
its Affiliates or nonfulfillment of any covenant or agreement of AMD or its
Affiliates contained herein or in any bill of sale, assignment and assumption
agreement or other conveyance documents relating hereto delivered to the Joint
Venture hereunder or in connection herewith); and (c) any and all Liabilities
incurred or arising after the Closing Date in connection with the operation of
the Joint Venture Business, including, without limitation, JV Environmental
Conditions but excluding any Liability subject to indemnification pursuant to
Section 9.2.

 

9.4 Indemnification of Fujitsu by AMD.

 

Subject to Section 9.5, AMD shall indemnify and hold harmless Fujitsu and each
of its Affiliates and its and their Representatives (collectively, the “Fujitsu
Indemnitees”) against and with respect to, and shall reimburse the Fujitsu
Indemnitees for, without duplication, any and

 

26

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all Losses incurred in connection with, arising out of, resulting from or
incident to (a) a breach of any representation or warranty of AMD contained
herein; (b) a breach of any covenant or agreement of AMD contained herein or in
any bill of sale, assignment and assumption agreement or other conveyance
documents relating hereto delivered to the Joint Venture hereunder or in
connection herewith; and (c) any AMD Excluded Liabilities.

 

9.5 Limitations on Indemnification.

 

(a) Notwithstanding Sections 9.2, 9.3, and 9.4, the rights and obligations under
this Article IX of the JV Indemnitees, the AMD Indemnitees and the Fujitsu
Indemnitees are subject to the following:

 

(i) the JV Indemnitees and the Fujitsu Indemnitees shall not be entitled to any
recovery under Sections 9.2(a) or 9.4(a) unless the claim for indemnification is
made within the time period of survival set forth in Section 9.1; provided, that
if any claim for indemnification pursuant to this Agreement which relates to a
representation or warranty is made prior to the time such representation or
warranty terminates under Section 9.1, then such representation and warranty
shall survive solely for purposes of such claim until such time as it has been
finally resolved in accordance with the terms of this Agreement;

 

(ii) the JV Indemnitees shall not be entitled to any indemnification under
Section 9.2(a) unless and until the Losses that the JV Indemnitees are entitled
to be indemnified for under Section 9.2(a) of this Agreement and Section
10.2(a)(i) of the Contribution Agreement exceed, in the aggregate, US$15 million
(the “AMD Deductible”), in which event the JV Indemnitees shall be entitled to
recover all such Losses, excluding Losses included in the determination of the
AMD Deductible;

 

(iii) a Fujitsu Indemnitee shall not be entitled to any indemnification under
Section 9.4 unless (A) the Loss is the result of a Third Party Claim made or
threatened directly against such Fujitsu Indemnitee, or (B) if clause (A) is not
applicable, Fujitsu determines in good faith that the Losses that the Fujitsu
Indemnitees are entitled to be indemnified for under Section 9.4 of this
Agreement and Section 10.6 of the Contribution Agreement exceed, in the
aggregate, US$100 million (the “AMD Threshold”), in which event the Fujitsu
Indemnitees shall be entitled to recover all such Losses, including Losses
included in the determination of the AMD Threshold;

 

(iv) if, based upon a substantially identical underlying factual basis, (A) an
arbitrator, court, tribunal or other judicial authority determines in an
enforceable award, judgment or decision that AMD or an Affiliate of AMD shall
make payments to, or on behalf of, the Joint Venture, and to or on behalf of
Fujitsu or an Affiliate of Fujitsu, in satisfaction of a breach of contract
claim, indemnification claim, enforcement action or other legal or equitable
claims of the Joint Venture and of Fujitsu or an Affiliate of Fujitsu (other
than in each case for indemnification against a Third Party Claim), related to
any Transaction Document or the transactions contemplated thereunder, and (B)
AMD makes the payments in satisfaction of the claims of the Joint Venture, the
amounts payable to, or on behalf of, Fujitsu or its Affiliate by AMD or its
Affiliate shall be reduced by an amount equal to the product of (X) Fujitsu’s
Membership Interest at the time of the claim of the Joint Venture multiplied by
(Y) the aggregate

 

27

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amount paid by AMD to, or on behalf of, the Joint Venture, in satisfaction of
the claim of the Joint Venture.

 

(v) the aggregate maximum liability of AMD to the JV Indemnitees and the Fujitsu
Indemnitees, collectively, for Losses under Sections 9.2(a) and 9.4(a) of this
Agreement together with Losses under Section 10.2(a)(i) and 10.6(a) of the
Contribution Agreement shall not in any event exceed US$400 million.

 

(b) The parties shall make appropriate adjustments for insurance proceeds
actually received (with respect to Losses) in calculating such Losses under this
Agreement. Any insurance proceeds actually recovered by an indemnified party to
the extent relating to any Losses previously paid by an indemnifying party
hereunder shall be paid over promptly to such indemnifying party. All
indemnification payments made pursuant to this Article IX shall be made on an
After Tax Basis.

 

(c) Following the Closing, the indemnification provisions in this Article IX
shall provide the exclusive remedy for any breach of the representations and
warranties set forth in this Agreement.

 

(d) Notwithstanding anything herein to the contrary, the limitations set forth
in this Section 9.5 shall not apply to any claims arising out of fraud in the
making of the representations and warranties set forth herein.

 

9.6 Procedure for Indemnification. The procedure for indemnification shall be as
follows:

 

(a) The party claiming indemnification (the “Claimant”) shall promptly give
written notice to the party from whom indemnification is claimed (the
“Indemnifying Party”) of any claim, whether between the parties or brought by a
third party, specifying (i) in reasonable detail, the factual basis for such
claim and (ii) in good faith, the estimated amount of such claim. If the claim
relates to a Proceeding filed by any Person other than AMD, the Joint Venture or
any of their Affiliates against the Claimant (a “Third Party Claim”), such
notice shall be given by Claimant promptly and in any event within fifteen (15)
business days after written notice of such Proceeding was received by Claimant.
The failure of the Claimant to provide such written notice within the time
period specified shall not relieve the Indemnifying Party of its indemnification
liability under this Article IX, except to the extent that such failure actually
and materially prejudices the rights of the Indemnifying Party in defending
against the claim or Proceeding.

 

(b) Following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty (30) days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized Representative(s) the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of said thirty (30) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed

 

28

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upon extension thereof), subject to clause (c) below with respect to Third Party
Claims, the Claimant may seek appropriate legal remedy in accordance with
Section 11.11.

 

(c) With respect to any Third Party Claims as to which the Claimant is entitled
to indemnification hereunder, the Indemnifying Party shall have the right, at
its own expense, to participate in or, if the Indemnifying Party acknowledges in
writing its obligation to indemnify the Claimant in accordance with the terms of
this Agreement, assume control of the defense of such claim, and the Claimant
shall cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. The Claimant shall have the right to approve
legal counsel selected by Indemnifying Party, which approval shall not be
unreasonably withheld or delayed. If the Indemnifying Party elects to assume
control of the defense of any Third Party Claim, the Claimant shall have the
right to participate in the defense of such claim with legal counsel of its own
selection; provided, however, that the Claimant shall pay the fees and expenses
of such counsel unless the named parties to any such claim include both the
Claimant and the Indemnifying Party, and the Claimant has been advised by
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party (in
which case, if the Claimant informs the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such claim
on behalf of the Claimant), it being understood that the Indemnifying Party
shall not, in connection with any one claim, be liable for the fees and expenses
of more than one separate firm of attorneys at any time for the Claimant. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any Third Party Claim, it shall be bound by the results obtained
by the Claimant with respect to such claim; provided, however, that no
settlement or compromise of any claim which may result in any indemnification
liability may be made by the Claimant without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
No settlement or compromise of any claim may be made by the Indemnifying Party
without the prior written consent of the Claimant, which consent shall not be
unreasonably withheld or delayed.

 

(d) If a claim, whether between the parties or by a third party, requires
immediate action, the parties will make every effort to reach a decision with
respect thereto as expeditiously as possible.

 

Upon satisfaction of any Third Party Claim pursuant to this Article IX, the
Indemnifying Party shall be subrogated to all rights and remedies of the
Claimant against any third party with respect to such claim; provided that such
right of subrogation shall be limited in amount to the amount actually received
by the Claimant from the Indemnifying Party with respect to such claim; and
provided, further, that any claim by an Indemnifying Party against any such
third party resulting from such right of subrogation shall be subordinated to
any claim of the Claimant against such third party for amounts in excess of the
amount actually received by the Claimant from the Indemnifying Party pursuant to
this Article IX.

 

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9.7 Defense of Tax Claims.

 

(a) Notice. In the event that any Governmental Authority informs AMD, Fujitsu or
the Joint Venture of any notice of a proposed audit or other dispute concerning
an amount of Taxes with respect to which another of such parties may incur
Liability hereunder, the party so informed shall promptly notify the other party
of such matter. Such notice shall contain factual information (to the extent
known) describing any asserted Tax Liability in reasonable detail and shall be
accompanied by copies of any notice or other documents received from any
Governmental Authority with respect to such matter. If a party hereto has
knowledge of an asserted Tax Liability with respect to a matter for which it is
entitled to be indemnified hereunder and such party fails to provide the
Indemnifying Party prompt notice of such asserted Tax Liability, then (i) if the
Indemnifying Party is entirely foreclosed from contesting the asserted Tax
Liability as a result of the failure to give prompt notice, the Indemnifying
Party shall have no obligation to indemnify the indemnified party for Taxes
arising out of such asserted Tax Liability, and (ii) if the Indemnifying Party
is not entirely foreclosed from contesting the asserted Tax Liability, but such
failure to provide prompt notice results in a monetary detriment to the
Indemnifying Party, then any amount which the Indemnifying Party is otherwise
obligated to pay the indemnified party pursuant to this Agreement shall be
reduced by the amount of such detriment.

 

(b) Control of Contest. The party filing the Tax Return subject to audit or
other dispute shall control any audits, disputes, administrative, judicial or
other Proceedings related to Taxes with respect to which either party may incur
Liability hereunder. In the case of a dispute with respect to a Tax for which no
Tax Return is required, the Indemnifying Party shall control any audits,
disputes, administrative, judicial or other Proceedings relating to such Tax.
Subject to the first sentence of this Section 9.7(b), in the event that an
adverse determination may result in each party having a responsibility for any
amount of Tax under this Article IX, each party shall be entitled to fully
participate in that portion of the Proceeding relating to the Taxes for which it
may incur Liability hereunder. For purposes of this Section 9.7(b), the term
“participate” shall include (i) participation in conferences, meetings or
Proceedings with any Governmental Authority, the subject matter of which
includes an item for which such party may have Liability hereunder, (ii)
participation in appearances before any court or tribunal, the subject matter of
which includes an item for which a party may have Liability hereunder, and (iii)
with respect to matters described in the preceding clauses (i) and (ii),
participation in the submission and determination of the content of the
documentation, protests, memoranda of fact and law, and briefs, and the conduct
of oral arguments and presentations.

 

(c) Consent to Settlement. AMD, the Joint Venture and Fujitsu shall not agree to
settle any Tax Liability or compromise any claim with respect to Taxes, which
settlement or compromise may affect the Liability for Taxes hereunder (or right
to Tax benefit) of the other party, without such other party’s consent, which
consent shall not be unreasonably withheld or delayed.

 

9.8 Environmental Management.

 

(a) Environmental Management. Except as otherwise required pursuant to the
Remediation Agreement (as defined in the Contribution Agreement), the
Indemnifying Party

 

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shall have the right to control any indemnified Remediation Activities and, to
the extent the Indemnifying Party elects to exercise such right it shall conduct
such Remediation Activities as expeditiously as reasonably practicable;
provided, however, that the Indemnifying Party may select the most cost
effective, remedial alternative that is protective of human health and the
environment and is consistent with and meets the requirements of the
Environmental Laws and the requirements of any Governmental Authority including,
without limitation, no further action, risk analysis and/or institutional
controls; provided, further, that no Remediation Activity may be based upon or
result in any requirement that the Claimant agree to limit its use of any real
property owed, operated or used by such Claimant pursuant to, or encumber title
to such real property with, any restrictive covenant that would, in either case,
restrict the use of such real property for any purposes that, as of the Closing
Date are permitted under the existing zoning and land use restrictions
applicable thereto. The Claimant shall have the right to comment on, and the
Indemnifying party shall consider in good faith the Claimant’s comments
regarding, the Indemnifying Party’s choice of consultant, scope of work,
remedial work plan and communications with any Governmental Authority or Person
regarding the Remediation Activities. The Claimant and the Indemnifying Party
shall cooperate with each other with respect to the Remediation Activities so
that such matters may be mitigated in a reasonably timely manner, including
entering into such additional agreements as reasonably may be necessary to
provide site access for Remediation Activities and making available information
(including documents, data, reports, Representatives and communications with
Governmental Authorities or other Persons) to the other parties regarding such
Remediation Activities. The Indemnifying Party shall be responsible for the
proper treatment and disposal of any Hazardous Substances associated with the
Remediation Activities, and shall pay all fees and taxes and sign all waste
manifests for any such Hazardous Substances. The Indemnifying Party shall be
responsible for obtaining and maintaining any permits necessary under
Environmental Law for the Remediation Activities, and shall be responsible for
the costs of any utilities (including gas, electric, wastewater treatment, water
extraction and water supply) associated with any Remediation Activities. The
Indemnifying Party shall use its best efforts to design, implement and conduct
all Remediation Activities in a manner that will avoid any interference with
ongoing business operations or other use and enjoyment of the property, and, as
soon as practicable after the Remediation Activity is completed, shall restore
the property insofar as reasonably practicable to the condition that existed
prior to such Remediation Activity.

 

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ARTICLE X.

 

[INTENTIONALLY OMITTED]

 

ARTICLE XI.

 

MISCELLANEOUS

 

11.1 Notices. All notices, requests, instructions or consents required or
permitted under this Agreement shall be in writing and will be deemed given: (a)
when delivered personally; (b) when sent by confirmed facsimile; (c) ten
business days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) three business days after deposit
with an internationally recognized commercial overnight carrier specifying
next-day delivery, with written verification of receipt. All communications will
be sent as follows (or to such other address or facsimile number as may be
designated by a party giving written notice to the other parties pursuant to
this Section 11.1):

 

If to the Joint Venture:

  

FASL LLC

Attention: General Counsel

One AMD Place M/S 150

P.O. Box 3453

Sunnyvale, California 94086

U.S.A.

Facsimile: (408) 774-7399

If to AMD:

  

Advanced Micro Devices, Inc.

Attention: General Counsel

One AMD Place M/S 150

P.O. Box 3453

Sunnyvale, California 94086

Facsimile: (408) 774-7399

 

with a copy (which shall not constitute notice) to:

 

Latham & Watkins LLP

Attention: Tad J. Freese, Esq.

505 Montgomery Street, Suite 1900

San Francisco, California 94111

Facsimile: (415) 395-8095

 

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If to Fujitsu:

  

Fujitsu Limited

Electronic Devices Group

Fuchigami 50 Akiruno-shi

Tokyo 197-0833

Japan

 

Attention: Executive Vice President,

Business Planning &

Promotion Group

Facsimile: +81-42-532-2550

 

11.2 Amendments; No Waivers. Any provision of this Agreement or any provision of
the Promissory Note may be amended or waived if, and only if, such amendment or
waiver is in writing and is duly executed, in the case of an amendment, by the
Joint Venture, Fujitsu and AMD, or, in the case of a waiver, by the party to
whom the waiver is to be enforced. No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof nor shall any single or partial waiver or exercise thereof
preclude the enforcement of any other right, power or privilege.

 

11.3 Rights and Remedies Cumulative. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.

 

11.4 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns, including any entity that is the successor to substantially all of the
assets and businesses of such party. No party may otherwise assign, delegate or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the other parties. Any attempted assignment in violation of
this Section 11.4 shall be null and void.

 

11.5 Language. This Agreement is in the English language only, which language
shall be controlling in all respects, and all versions hereof in any other
language shall be for accommodation only and shall not be binding upon the
Parties. All communications and notices to be made or given pursuant to this
Agreement shall be in the English language.

 

11.6 Construction; Interpretation. No party, nor its counsel, shall be deemed
the drafter of this Agreement for purposes of construing the provisions of this
Agreement, and all provisions of this Agreement shall be construed in accordance
with their fair meaning, and not strictly for or against any party.

 

11.7 Severability. If any provision in this Agreement will be found or be held
to be invalid or unenforceable, then the meaning of said provision will be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save

 

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such provision, it will be severed from the remainder of this Agreement which
will remain in full force and effect unless the severed provision is essential
and material to the rights or benefits received by any party. In such event, the
parties will use their respective best efforts to negotiate, in good faith, a
substitute, valid and enforceable provision or agreement which most nearly
affects the parties’ intent in entering into this Agreement.

 

11.8 Counterparts. This Agreement may be executed in counterparts, each of which
so executed will be deemed to be an original and such counterparts together will
constitute one and the same agreement. Execution and delivery of this Agreement
by exchange of facsimile copies bearing the facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party.

 

11.9 Entire Agreement. This Agreement, together with the Contribution Agreement,
the Exhibits and Schedules and the other agreements, instruments and other
documents executed and/or delivered in connection herewith and therewith,
constitute the entire agreement among the parties pertaining to the subject
matter hereof, and supersede all prior oral and written, and all contemporaneous
oral, agreements and understandings pertaining thereto. There are no agreements,
understandings, restrictions, warranties or representations relating to such
subject matter among the parties other than those set forth herein or in the
other Transaction Documents.

 

11.10 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, United States of America,
as applied to agreements among California residents entered into and wholly to
be performed within the State of California (without reference to any choice or
conflicts of laws rules or principles that would require the application of the
laws of any other jurisdiction and without regard to the United Nations
convention on contracts for the international sale of goods).

 

11.11 Dispute Resolution. The parties hereby agree that claims, disputes or
controversies of whatever nature, arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Agreement (or any
other agreement contemplated by or related to this Agreement), shall be resolved
in accordance with the dispute resolution procedures set forth in Schedule A to
the Operating Agreement, which are incorporated herein by reference and shall be
applied mutatis mutandis.

 

11.12 Press Release. None of the parties shall make any press release or
otherwise announce to the public the transactions described herein without the
approval of the other parties of the form and content of the press release or
other announcement. If a public statement is required to be made by Applicable
Law, the parties shall consult with each other in advance as to the contents and
timing thereof. Fujitsu, AMD and the Joint Venture shall jointly announce the
transactions contemplated by the Transaction Documents after the Closing.

 

11.13 Confidential Information.

 

(a) No Disclosure. The parties acknowledge that the transaction described herein
is of a confidential nature and the terms of the transaction (other than those
that are already in the public domain through no breach of any contractual
obligation by a party) shall not be disclosed except to Representatives and
Affiliates of each party, or as required by Applicable

 

34

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Law, until such time as the parties make a public announcement regarding the
transaction as provided in Section 11.12.

 

(b) Confidentiality Agreement. AMD and Fujitsu will comply with, and will cause
their respective Representatives to comply with, all of their respective
obligations under the Mutual Nondisclosure Agreement dated July 16, 2002, by and
between AMD and Fujitsu (the “Confidentiality Agreement”), which agreement shall
continue in full force and effect in accordance with its terms.

 

(c) Notwithstanding anything to the contrary in this Agreement or in any other
written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, each party to this Agreement has been and is
permitted to disclose the tax treatment and tax structure of the Joint Venture
Business effective no later than the earlier of the date of the public
announcement of discussions relating to the Joint Venture Business, the date of
the public announcement of the Joint Venture Business, or the date of the
execution of this Agreement (with or without conditions) to enter into the Joint
Venture Business. This permission to disclose includes the ability of each party
to this Agreement to consult, without limitation of any kind, any tax advisor
(including a tax advisor independent from all other entities involved in the
Joint Venture Business) regarding the tax treatment or tax structure of the
Joint Venture Business. This provision is intended to comply with Section
1.6011-4(b)(3)(ii)(B) of the Treasury Regulations and shall be interpreted
consistently therewith. The parties to this Agreement acknowledge that this
written authorization does not constitute a waiver by any party of any privilege
held by such party pursuant to the attorney-client privilege or the
confidentiality privilege of Code Section 7525(a).

 

11.14 Expenses. Except (i) for filing fees and local counsel costs related to
antitrust filings in connection with the formation of the Joint Venture, which
shall be paid 60% by AMD and 40% by Fujitsu, (ii) as otherwise provided in this
Agreement and the Contribution Agreement and (iii) as provided in the IT Cost
Sharing Agreement dated as of April 21, 2003 between AMD and Fujitsu, each of
the parties shall pay all costs and expenses incurred by or on its behalf in
connection with the formation and capitalization of the Joint Venture,
including, without limiting the generality of the foregoing, fees and expenses
of their financial consultants, accountants and legal counsel.

 

11.15 Consequential Damages. Except indemnification obligations with respect to
Third Party Claims pursuant to Article IX, no party shall be liable to any other
party under any legal theory for indirect, special, incidental, consequential or
punitive damages, or any damages for loss of profits, revenue or business, even
if such party has been advised of the possibility of such damages (it being
understood that (i) diminution in the value of Membership Interest shall not be
considered to fall within any such category of damages and (ii) a claim seeking
to recover diminution in value shall not be limited by operation of this Section
11.15).

 

11.16 Third-Party Beneficiaries. AMD and the Joint Venture acknowledges that,
although this Agreement is between AMD, the Joint Venture and Fujitsu, Fujitsu
Sub is an intended third party beneficiary hereunder. Nothing herein expressed
or implied is intended to or shall be construed to confer upon or give any
person or entity, other than the parties hereto,

 

35

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Fujitsu Sub, and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.

 

11.17 No Other Representations. Except as set forth in Article V and the related
schedules, neither AMD nor AMD Investments makes any representations or
warranties of any kind in this Agreement to Fujitsu, Fujitsu’s Affiliates or the
Joint Venture with respect to the AMD Sold Assets or the AMD Flash Memory
Business.

 

36

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

THE JOINT VENTURE:

 

FASL LLC

By:

 

/s/ Thomas M. McCoy

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

Name: Thomas M. McCoy

Title: Manager

 

AMD:

 

Advanced Micro Devices, Inc.

By:

 

/s/ Thomas M. McCoy

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

Name: Thomas M. McCoy

Title: Senior Vice President, General Counsel

 

Fujitsu:

 

Fujitsu Limited

By:

 

/s/ Toshihiko Ono

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

Name:

Title:

 

Toshihiko Ono

Corporate Senior Vice President

Group President

Electronics Devices Business Group

 

37