Exhibit 10.36(b)

 

CONFIDENTIAL TREATMENT REQUESTED

License Reference Number: L044620

 

LETTER AGREEMENT

 

This Letter Agreement (“Agreement”), having an Effective Date of September 13,
2004, is entered into by and between ADVANCED MICRO DEVICES, INC., a Delaware
corporation having an office at Sunnyvale, California (“AMD”), and INTERNATIONAL
BUSINESS MACHINES CORPORATION, a New York corporation, having an office at
Burlington, Vermont (“IBM”).

 

WHEREAS, AMD and IBM previously entered into three (3) technology license
agreements relating to a technology known as C-4 plating technology in which
certain license rights were granted to AMD;

 

WHEREAS, AMD and IBM desire to extend the license rights previously granted
therein to AMD.

 

NOW, THEREFORE, AMD and IBM agree as follows:

 

Section 1 – Definitions

 

“Another Manufacturer” shall have the meaning in the C-4 Plating Technology
Transfer and Licensing Agreement.

 

“Bumping” shall have the meaning in the C-4 Plating Technology Transfer and
Licensing Agreement.

 

“Bumped” shall mean an Integrated Circuit after the process of Bumping has been
performed.

 

“C-4 Agreements” shall mean, collectively, the C-4 Plating Technology Transfer
and Licensing Agreement, C-4 Tighter Pitch Workshop Agreement, and C-4 Technical
Assistance and Short Loop Support Agreement.

 

“C-4 Plating Technology Transfer and Licensing Agreement” shall mean the C-4
Plating Technology Transfer and Licensing Agreement between AMD and IBM having a
last signature date of April 29, 1999.

 

“C-4 Tighter Pitch Workshop Agreement” shall mean the C-4 Tighter Pitch Workshop
Agreement between AMD and IBM having a last signature date of March 23, 2001.

 

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“C-4 Technical Assistance and Short Loop Support Agreement” shall mean the C-4
Technical Assistance and Short Loop Support Agreement between AMD and IBM having
a last signature date of July 16, 2001.

 

“Dresden Facility” shall mean an AMD Subsidiary that owns and operates AMD’s
300mm semiconductor manufacturing production line located in Dresden, Germany,
wherein all of the remaining ownership interest is solely owned or controlled,
directly or indirectly, by (i) one or more corporations, companies or other
entities (including a government entity) which are purely financial investors
who are not engaged in the design, development, manufacture, marketing or sale
of Licensed Products, and/or by (ii) up to two (2) other owners that are neither
government or financial owners; provided, however, that the ownership percentage
of all of such owners other than AMD, singly or in the aggregate, shall not be
at or above fifty percent (50%). Such entity shall be considered the Dresden
Facility which is entitled to retain the licenses and other benefits provided by
this Agreement to the Dresden Facility only so long as such ownership and
control percentage by AMD and other specified entities in the Dresden Facility
exists.

 

“Integrated Circuit” shall have the meaning in the C-4 Plating Technology
Transfer and Licensing Agreement.

 

“Licensed Products” shall have the meaning in the C-4 Plating Technology
Transfer and Licensing Agreement.

 

“Subsidiary” shall have the meaning in the C-4 Plating Technology Transfer and
Licensing Agreement.

 

Section 2 – Licenses

 

2.1 IBM, on behalf of itself and its Subsidiaries, to the extent it has the
right to do so and subject to Sections 2.2 and 3 of this Agreement, hereby
extends the license rights granted to AMD in the C-4 Agreements for AMD to (i)
perform Bumping on 300mm semiconductor wafers solely for AMD only in the Dresden
Facility, (ii) manufacture Licensed Products solely for AMD only in the Dresden
Facility using Bumping on 300mm semiconductor wafers, (iii) use solely for AMD
Licensed Products only in the Dresden Facility using Bumping on 300mm
semiconductor wafers, (iv) sell and have sold worldwide solely under the AMD
brand name Licensed Products manufactured using Bumping on 300mm semiconductor
wafers, and (v) manufacture only in the Dresden Facility and have manufactured
by Another Manufacturer for AMD’s internal use only, any apparatus designed or
modified to implement Bumping of 300mm semiconductor wafers.

 

2.2 The license rights extended to AMD in Section 2.1 are nonexclusive,
nontransferable, royalty-bearing (as provided for in the surviving terms and
conditions of the C-4 Agreements) and revocable (as provided for in the
surviving terms and conditions of the C-4 Agreements).

 

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2.3 Beginning on the Effective Date, IBM hereby grants to AMD, to the extent it
has the right to do so and subject to Section 3, the right to use the Licensed
Technology to perform Bumping of 200mm semiconductor wafers for third parties.

 

2.4. The license rights granted to AMD in Section 2.3 are nonexclusive,
nontransferable, royalty-bearing (as provided for in Section 3) and revocable
(as provided for in the surviving terms and conditions of the C-4 Agreements).

 

Section 3 – Compensation

 

3.1 In consideration for the licenses granted hereunder, AMD agrees to pay IBM a
license fee in the sum of Eleven Million Two Hundred and Fifty Thousand Dollars
($11,250,000.00), which sum shall be nonrefundable and noncancelable,
notwithstanding any termination or expiration of this Agreement.

 

3.2 The sum specified in Section 3.1 shall be payable without invoice from IBM
according to the following schedule:

 

a. Five Million Six Hundred and Twenty Five Thousand Dollars($5,625,000.00) by
September 17, 2004; and

 

b. Five Million Six Hundred and Twenty Five Thousand Dollars ($5,625,000.00) by
March 13, 2005.

 

If the payment pursuant to the obligation set forth in Section 3.2a. is not made
when due, then all licenses and other rights granted herein to AMD shall
automatically terminate, and such termination shall be effective retroactively
to the Effective Date so that such rights granted herein shall be void ab
initio.

 

3.3 AMD shall be permitted to perform Bumping of *** (***) 200mm semiconductor
wafers per calendar quarter for third parties. For each 200mm semiconductor
wafer Bumped for third parties in excess of the *** (***) per calendar quarter,
AMD shall pay IBM a royalty in the amount of *** (***%) of the bumping price
charged by AMD to the third parties. AMD’s royalty obligation under Section 3.3
shall begin on the Effective Date and continue through December 31, ***, after
which AMD shall have no further royalty obligation under this Section 3.3,
irrespective of AMD thereafter Bumping an unlimited number of 200mm
semiconductor wafers for third parties after December 31, ***.

 

3.4 AMD shall maintain a complete, clear and accurate record of the quantity of
all products serviced, sold, leased or otherwise disposed of and any other
relevant information to the extent it is required to determine whether AMD is
paying the correct royalty amount hereunder. To ensure compliance with the terms
and conditions of this Agreement, IBM shall have the right to audit all relevant
accounting and sales books and

 

*** Indicates that certain information in this exhibit has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested pursuant to the Confidential Treatment Request
dated November 4, 2004.

 

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records of AMD and the Dresden Facility. The audit will be conducted by a
mutually acceptable audit firm and shall be conducted following reasonable prior
written notice (at least forty-five (45) days in advance of such audit) during
regular business hours at an office where such records are normally maintained
and in such a manner as not to interfere with AMD’s normal business activities
and shall be restricted only to those records necessary to verify AMD’s
obligations hereunder. The audit report provided to IBM may only include the
information necessary to determine whether or not any underpayment or
overpayment exists, and if it exists, the amount of such underpayment or
overpayment. IBM shall instruct the auditor to include only business information
in the audit report to IBM. IBM shall use the business information reported by
the auditor only for the purpose of determining royalty payments and for no
other purpose. In no event shall audits be made hereunder more frequently than
once in every twelve (12) months and the audit shall not cover any records from
a period of time previously audited. If any audit should disclose any
underpayment or overpayment, the owing party shall within forty-five (45) days
pay the difference. The cost of such audit will be borne by IBM. AMD shall be
provided with a copy of the audit report within a reasonable period of time
after its completion. The independent audit firm shall not be hired on a
contingent fee basis and shall have confidentiality agreements in place
sufficient to protect AMD’s confidential information.

 

3.5 The royalty of Section 3.3 shall accrue when a product is first serviced,
sold, leased or otherwise disposed of. For the purpose of determining such
royalty, products shall be considered serviced, sold, leased or otherwise
disposed of when AMD issues to a third party an invoice therefor. If not
invoiced, then products are to be considered serviced, sold, leased or otherwise
disposed of when delivered to a third party, or when paid for by such third
party if paid for before delivery. If not invoiced, delivered or paid for before
delivery, products are to be considered serviced, sold, leased or otherwise
disposed of at the earlier of when put into use or when possession is
transferred to a third party.

 

3.6 Accrued royalties shall be calculated on a calendar quarter basis. Any
royalties due IBM for any calendar quarter shall be paid to IBM by forty-five
(45) days after the immediately preceding calendar quarter. Any accrued
royalties paid to IBM are nonrefundable and noncancelable. AMD may deduct from
the accrued royalties calculation in this Section 3.6 those royalties accrued on
products which have been returned to AMD and for which credit allowances have
been made.

 

3.7 Within forty-five (45) days after the end of each quarter, AMD shall furnish
to IBM a written statement showing the number of Bumped 200mm semiconductor
wafers for third parties which were serviced, made, used, sold, leased or
otherwise disposed of during the immediately preceding calendar quarter and the
royalties payable thereon. If no royalties are payable, that fact shall be shown
on such statement.

 

3.8 AMD shall bear and pay, and indemnify and hold IBM harmless from any and all
taxes (including sales, royalty, value added, and property taxes) imposed by any
national government (including any political subdivision thereof) of any
country, as the result of the existence of this Agreement or the exercise of
rights hereunder, or arising from the

 

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purchase of goods and services licensed hereunder, and IBM shall not be
responsible for any taxes that arise from the foregoing. Notwithstanding the
foregoing, AMD shall not be liable for any taxes or assessments based on the net
income of IBM.

 

3.9 AMD shall be liable for interest on any and all overdue payments and
royalties required to be paid to IBM under this Agreement, commencing on the
date such overdue payment or royalties become due, at an annual rate of eighteen
percent (18%). If such interest rate exceeds the maximum legal rate in the
jurisdiction where a claim therefor is being asserted, the interest rate shall
be reduced to such maximum legal rate. For avoidance of doubt, all licenses
hereunder shall be suspended during any period in which payments or royalties
are overdue.

 

3.10 All royalties and payments to IBM that result from this Agreement shall be
made in United States Dollars (US$) and are to reference this Agreement and be
sent by electronic funds transfer to the following account:

 

IBM Director of Licensing

International Business Machines Corporation

PNC BANK

500 First Avenue

Pittsburgh, PA 15219

Bank Account Number: ***

ABA Routing Number: ***

 

A License Reference Number will be assigned to this Agreement upon execution.
This number will be included in all wire transfer payments and tax credit
certificates relating to this Agreement.

 

Section 4 – General

 

4.1 The surviving terms and conditions of the C-4 Agreements are incorporated by
reference herein and each of the parties to this Agreement shall be bound by
such surviving terms and conditions as if literally written herein. In addition,
references to “Agreement” in the surviving terms and conditions of the C-4
Agreements shall be deemed to include this Agreement, references to Section 2 in
the surviving terms and conditions of the C-4 Agreements shall be deemed to
include Section 2 of this Agreement and references to Section 6 in the surviving
terms and conditions of the C-4 Agreements shall be deemed to include Section 3
of this Agreement. In the event of conflict or ambiguity between the surviving
terms and conditions of any of the C-4 Agreements, the C-4 Plating Technology
Transfer and Licensing Agreement shall control. In the event of conflict or
ambiguity between the terms and conditions of this Agreement and the C-4 Plating
Technology Transfer and Licensing Agreement, this Agreement shall control.

 

4.2 This Agreement and the terms and conditions made applicable to this
Agreement in Section 4.1 are the sole agreement of the parties with respect to
the subject matter hereof.

 

*** Indicates that certain information in this exhibit has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested pursuant to the Confidential Treatment Request
dated November 4, 2004.

 

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4.3 This Agreement may be executed in two (2) counterparts, each of which shall
be deemed an original, but each of which together shall constitute one and the
same agreement. Fax signatures will have the same legal effect as original
signatures.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the dates written below.

 

ADVANCED MICRO DEVICES, INC.   INTERNATIONAL BUSINESS MACHINES CORPORATION

By:

 

/s/ Daryl Ostrander

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By:

 

/s/ Harry C. Calhoun

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Name:

 

Daryl Ostrander

 

Name:

 

Harry C. Calhoun

Title:  

Senior VP, Logic Technology & Manufacturing, Product

Technology Implementation CPG

 

Title:

  VP Strategy – Technology, IBM Systems and Technology Group

Date: September 15, 2004

 

Date: September 15, 2004

 

AMD/IBM Confidential

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