Exhibit 10.71

 

Management Service Agreement

 

between

 

1. AMD Saxony Limited Liability Company & Co. KG, Wilschdorfer Landstraße 101,
01109 Dresden

 

- hereinafter referred to as “AMD Saxony” -

 

and

 

2. SI Investment Limited Liability Company & Co. KG, Wilschdorfer Landstraße
101, 01109 Dresden

 

- hereinafter referred to as “AMD Fab X” -

 

and

 

3. SI Investment Holding GmbH, Wilschdorfer Landstraße 101, 01109 Dresden

 

- hereinafter referred to as “AMD Fab X Holding” -

 

and

 

4. Advanced Micro Devices, Inc., One AMD Place, Sunnyvale, CA 94088, USA

 

- hereinafter referred to as “AMD Inc.” -

 

RECITALS

 

WHEREAS, M+W Zander Fünfte Verwaltungsgesellschaft mbH (“M+W”) and the Free
State of Saxony will enter into a Cooperation Agreement pursuant to which a new
factory (“Fab X”) for the production of wafers (“Wafer” means a 300 mm silicon
wafer on which integrated circuits particularly for microprocessors are
manufactured) is to be erected and operated in Dresden. In addition to the
production of Wafers, own research and development to a considerable extent is
to be conducted in the new factory in order to develop technology for the
manufacture of semiconductors up to industrial production

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stage. The factory will be operated by AMD Fab X. The current partners of AMD
Fab X are AMD Fab X Holding, as limited partner, and AMD Fab X LLC, as general
partner holding no share in the capital of the partnership; it is intended that
the further partners of AMD Fab X will be M+W, Leipziger Messe GmbH, both
additionally also as silent partners, as well as a German limited liability
company (GmbH) to be appointed by Leipziger Messe GmbH, the latter as a further
general partner holding no share in the capital of the partnership. AMD Inc. is
the sole shareholder of AMD Fab X Holding and of AMD Fab X LLC.

 

WHEREAS, AMD Fab X Holding and AMD Fab X, as well as AMD Fab X Holding and AMD
Inc., are each entering into cost reimbursement agreements which, as amended,
supplemented or otherwise modified from time to time, in the former case are
referred to as the “AMD Fab X Cost Plus Reimbursement Agreement”) and in the
latter case as the “AMD Fab X Holding Cost Plus Reimbursement Agreement”.
According to the AMD Fab X Cost Reimbursement Agreement, AMD Fab X agrees to
manufacture Wafers in its factory and to sell such Wafers to AMD Fab X Holding
and AMD Fab X Holding agrees to purchase such Wafers from AMD Fab X. According
to the AMD Fab X Holding Cost Plus Reimbursement Agreement, AMD Fab X Holding
agrees to sell to AMD Inc. and AMD Inc. agrees to purchase from AMD Fab X
Holding 100% of all Wafers which AMD Fab X Holding purchases from AMD Fab X
under the AMD Fab X Cost Plus Reimbursement Agreement.

 

WHEREAS, AMD Fab X and AMD Inc. have executed a Buy-In Agreement attached hereto
as Appendix dated as of 31 October 2003 with respect to the start-up costs
incurred prior to the effective date of this Agreement which shall be borne by
AMD Fab X.

 

WHEREAS, AMD Fab X is now interested in obtaining certain technical and
administrative services related to Fab X.

 

NOW THEREFORE, based on the aforesaid contractual situation, the parties hereto
hereby agree as follows:

 

§  1 TECHNICAL AND ADMINISTRATIVE SERVICES

 

1.1 AMD Saxony and AMD Inc. hereby agree to render to AMD Fab X such services
and support (the „Services”) which are reasonably necessary to build up

 

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research and development there as well as for the erection and operation of the
factory of AMD Fab X in accordance with the overall project plan and the
operative business plan and its further development. AMD Saxony or, as the case
may be, AMD Inc. shall use Services and support of their affiliated enterprises,
insofar as legally possible. The Services in support of Fab X shall
particularly, but not conclusively, be rendered in the following areas:

 

(a) the development of the infrastructure for Fab X (traffic access, water
supply, energy supply, telecommunication, and other logistic issues);

 

(b) awarding of contracts, as well as supervision and controlling of the
construction work for Fab X, including negotiations with contractors,
preparation of contracts, compliance with regulatory matters, negotiations with
and use of consultants for construction and other activities in support of the
site and construction;

 

(c) planning and engineering for Fab X, supply, materials and personnel
logistics, warehousing and quality control;

 

(d) call for bids and awarding of contracts, as well as procurement of
equipment, automation systems, materials, assets, supplies and other support;

 

(e) establishing research and development, production, design, and
administrative data systems processing capability and upkeep, including
communications capability;

 

(f) recruiting, relocation and training of personnel, salaries and other
benefits, travel, and other personnel-related matters;

 

(g) finance, banking, legal, taxation, customs, duties and other similar matters
to the extent legally permissible;

 

(h) general administrative, space usage and procurement and other infrastructure
support matters.

 

The parties can define the Services agreed upon in Section 1.1 in more detail
from time to time.

 

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1.2 Services according to Section 1.1 above shall be provided only as may be
considered necessary in the reasonable judgment of AMD Fab X to enable AMD Fab X
to take up the operation of the factory in Dresden and to conduct research and
development there in order to produce and further develop Wafers on an efficient
basis. In this respect, the parties hereto endeavor, without hereby assuming a
legal obligation, that the production can be started in early 2006.

 

1.3 Insofar as AMD Saxony or, as the case may be, AMD Inc. are not able to
perform the Services themselves or through affiliated entities, but only through
third parties, AMD Saxony or, as the case may be, AMD Inc. shall at their own
discretion be entitled, but not obligated to procure them either in their own
name or in the name of AMD Fab X. If they commission third parties in their own
name, all claims against such third party shall be assigned to AMD Fab X and
concurrently therewith AMD Saxony or, as the case may be, AMD Inc. shall be
indemnified by AMD Fab X against any such claims of the third party. AMD Fab X
hereby grants individual power of attorney to each AMD Saxony and AMD Inc. to
commission third parties on behalf of AMD Fab X. AMD Saxony and AMD Inc. each
shall not be liable for the diligent selection of the third party (except for
intent and gross negligence) and shall not be liable for advisory or other
services to be rendered by the third party. The terms of the AMD Fab X Cost Plus
Reimbursement Agreement remain unaffected.

 

1.4 AMD Fab X may cancel any Services provided hereunder upon two Business Days’
(as defined below) notice provided that AMD Fab X shall remain liable to
compensate AMD Saxony, or AMD Inc., as the case may be, for the costs and
expenses in providing the relevant Services to the date of cancellation. For
purposes of this Agreement, “Business Day” means any day of the year on which
banks are open for the purpose of conducting a commercial banking business in
San Francisco, and when used with reference to payment in any currency, on which
dealings are carried out in the London interbank market with respect to such
currency.

 

1.5 AMD Inc. assumes an independent guaranty pursuant to § 311 (1) BGB (German
Civil Code) and warrants that AMD Fab X will receive all Services according to
Section 1.1 which are reasonably necessary to erect the factory and to enable
and further develop the production as well as research and development. The sole
legal consequence of this no-fault warranty shall be that AMD Fab X Holding,
insofar as the AMD Fab X Cost Plus Reimbursement Agreement is

 

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concerned, cannot invoke bad performance or non-performance by AMD Fab X, and
that AMD Inc., insofar as the AMD Fab X Holding Cost Reimbursement Agreement is
concerned, cannot invoke bad performance or non-performance by AMD Fab X
Holding; there shall be no other legal consequences under this warranty.

 

1.6 AMD Fab X may decide at its free discretion whether to accept or refuse any
consulting provided under this Agreement. AMD Inc. and AMD Saxony shall not be
entitled to give any directions to AMD Fab X under this Agreement.

 

§  2 CONSIDERATION

 

2.1 Amount to be compensated. AMD Fab X shall compensate AMD Saxony or AMD Inc.,
as the case may be, on a monthly basis in an amount equal to the costs incurred
by AMD Saxony or AMD Inc., as the case may be, and any reasonable related
expenses (including without limitation salaries and other costs for AMD Saxony
or, as the case may be, AMD Inc. employees) and expenses, plus a markup of 5% on
such costs and expenses (above all, travel expenses) plus value added and/or
sales taxes, if applicable, at the prevailing rate. Expenses in this sense shall
mean services of third parties to AMD Inc. or AMD Saxony, as the case may be,
other than those owed as principal Services according to Section 1.1 hereof.

 

Insofar as the costs were incurred by AMD Saxony or, as the case may be, AMD
Inc. for the compensation of third-party Services, such costs (insofar as they
represent expenses in the sense of the preceding paragraph) shall be passed
through to AMD Fab X without the mark up stated in the preceding paragraph.
Likewise, payments made by AMD Saxony or, as the case may be, AMD Inc. to third
parties for the purchase of assets, materials or other objects the purchase of
which AMD Fab X requests and which are ultimately intended for use by Fab X
shall be charged on to Fab X without markup.

 

Arbitrator. If and insofar as AMD Fab X considers to be inadequate the
remuneration for the Services rendered directly by AMD Saxony or, as the case
may be, AMD Inc. and if the Parties cannot agree on the amount of remuneration,
the Parties will make efforts to promptly agree on an arbitrator and instruct
same in the name of all parties to establish the adequacy of the remuneration
with final

 

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and binding effect on the Parties within the framework of the positions taken by
the parties. The Parties shall be given reasonable opportunity to state their
positions in writing as well as in the course of one or more hearings before the
arbitrator. The arbitrator shall provide reasons for his decision. In his
decision, the arbitrator shall also decide on the distribution of costs of the
arbitration based on who wins and who loses the dispute (§§ 91 et seqq. German
Code of Civil Procedure), although each Party shall bear the costs of its own
advisors. The factual findings of the arbitrator shall be final and binding on
the Parties. If the Parties have not agreed on an arbitrator within 10 bank
working days, on the request of any one Party the President of the Dresden OLG
(Higher Regional Court) shall, with binding effect for the Parties, nominate an
expert or consultancy company as arbitrator. The arbitrator must not have, and
not have had within the past five (5) years, any business relations with any
Party or a company affiliated with it in the sense of § 15 AktG (German Stock
Corporations Act).

 

2.2 Invoices. Each of AMD Saxony and AMD Inc. shall provide, on a monthly basis,
statements of account to AMD Fab X detailing the Services rendered and
specifying the costs incurred within the meaning of Section 2.1.

 

2.3 Payments to AMD Saxony. All invoices that are delivered to AMD Fab X by AMD
Saxony shall be paid by AMD Fab X in cash within thirty days from its receipt of
the relevant invoice. Payments by AMD Fab X shall be made in lawful currency of
the Federal Republic of Germany (“Euro”) by wire transfer.

 

2.4 Payments to AMD Inc. prior to Effective Date. All invoices that are issued
by AMD Inc. to AMD Fab X for Services rendered prior to the Effective Date (as
defined in the AMD Fab X Cost Plus Reimbursement Agreement) shall be paid by AMD
Fab X in cash by the earlier of (i) thirty days from its receipt of the relevant
invoice, or (ii) ten days after the Effective Date. Payments by AMD Fab X shall
be made in lawful currency of the Federal Republic of Germany (“Euro”) by wire
transfer.

 

2.5 Payments to AMD Inc. after the Effective Date (Assignment, Crediting). All
payments to be made by AMD Fab X to AMD Inc. hereunder for Services rendered
after the Effective Date shall be made only in the form of credits against
amounts owed or to be owed by AMD Fab X Holding to AMD Fab X under the AMD Fab X
Cost Plus Reimbursement Agreement, and for this purpose AMD

 

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Inc. hereby assigns to AMD Fab X Holding its entire right, title and interest in
compensation for Services hereunder rendered after the Effective Date. In
consideration of this assignment, AMD Fab X Holding hereby agrees that, promptly
upon being credited for any amount by AMD Fab X under this Section 2.5, it shall
credit AMD Inc. against amounts owed or to be owed by AMD Inc. to AMD Fab X
Holding under the AMD Fab X Holding Cost Plus Reimbursement Agreement.

 

2.6 Maintenance of books and records. AMD Saxony and AMD Inc. shall keep and
maintain, in accordance with generally accepted accounting principles, books and
other records with respect to the costs charged by AMD Saxony or AMD Inc.,
respectively, to AMD Fab X under this Agreement.

 

2.7 No duplication of Article III of the AMD Fab X Cost Plus Reimbursement
Agreement. The Services provided by AMD Saxony or AMD Inc. hereunder shall not
include the assistance and advice provided by or on behalf of AMD Fab X Holding
to AMD Fab X pursuant to Article III of the AMD Fab X Cost Plus Reimbursement
Agreement. Such assistance and advice will be invoiced according to Article III
(4) of the AMD Fab X Cost Plus Reimbursement Agreement.

 

2.8 Audit. AMD Fab X shall, upon reasonable written notice to AMD Saxony or AMD
Inc., as the case may be, have a right to perform a special audit of AMD Saxony
or AMD Inc. by independent outside auditors, at AMD Fab X’s own cost. The scope
of the audit shall be limited to the relevant invoices and supporting
documentation for this Agreement.

 

§  3 RELATIONSHIP OF THE PARTIES

 

3.1 The flow of work at AMD Saxony, at AMD Inc. and at AMD Fab X shall not be
interconnected with respect to personnel, organization or technical aspects.

 

3.2 AMD Fab X, AMD Saxony and AMD Inc. may agree whether the employees
performing the Services shall temporarily be assigned to AMD Fab X or whether
they shall remain subject to the AMD Inc.’s / AMD Saxony’s authority to issue
instructions. AMD Fab is to decide at its free discretion about the scope and
content of the Services to be performed.

 

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3.3 Neither AMD Inc. nor AMD Saxony shall be obligated under this Agreement to
set up or maintain a fixed place of business for performance of the Services at
the location of AMD Fab X or elsewhere in Germany. Nothing in this Agreement
shall be interpreted such that AMD Fab X or one of its partners is to be
considered a representative of AMD Inc.

 

§  4 TERM AND TERMINATION

 

4.1 Effectiveness; Termination

 

This Agreement shall become effective on the date hereof and shall terminate by
ordinary notice of termination given by any of the Parties with three months’
notice, such effective date being the end of any calendar month, however, not
before the Termination Date as defined in Section 5.1 of the AMD Fab X Cost Plus
Reimbursement Agreement or the AMD Fab X Holding Cost Plus Reimbursement
Agreement.

 

4.2 In the event AMD Saxony ceases to be a (directly or indirectly) controlled
entity (abhängiges Unternehmen) within the meaning of Section 17 para. 2 German
Stock Corporation Act (AktG) of AMD Inc., this Agreement shall terminate with
respect to AMD Saxony with immediate effect without a separate notice of
cancellation being required. The termination shall only take effect for the
future. Rights and obligations arising out of circumstances which occurred prior
to such termination shall not be affected. This Agreement shall, however,
continue to be in full force and effect with respect to AMD Inc., AMD Fab X and
AMD Fab X Holding.

 

4.3 Survival. The provisions of Section 9 shall survive any termination of this
Agreement.

 

§  5 ASSIGNMENT

 

AMD Fab X and AMD Saxony shall have the right to assign their respective rights
under this Agreement to banks.

 

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§  6 LIABILITY

 

The liability and warranty assumed by each of AMD Saxony and AMD Inc. vis-à-vis
AMD Fab X are determined by the German law on contracts for work and contracts
for the provision of services. In providing services hereunder, employees of AMD
Saxony and AMD Inc. shall be required to exercise only the same degree of skill
and diligence as they would exercise in performing the same or comparable
services for AMD Saxony or AMD Inc., as the case may be. The cost reimbursement
under the AMD Fab X Holding Cost Plus Reimbursement Agreement remains unaffected
hereof.

 

§  7 WRITTEN FORM

 

Amendments of and supplements to this Agreement shall be made in written form to
be valid. This applies also to a waiver of the written from requirement.

 

§  8 SEVERABILITY

 

8.1 If any provision of this Agreement or a provision later added hereto is or
becomes partially or wholly invalid or unenforceable or should later lose its
validity or enforceability, or if a gap in this Agreement is ascertained, the
validity of the remaining provisions of this Agreement shall not thereby be
affected. In the place of the invalid or unenforceable provision or for filling
in the gap of a provision, a reasonable provision shall be deemed to have been
agreed as, insofar as legally permissible, comes closest to what the Parties had
intended or would have intended according to the meaning and purpose of this
Agreement had they been aware of this point.

 

8.2 If the invalidity or unenforceability of any provision is based on a measure
of the Service or time agreed therein (deadline or time period), such legally
admissible measure shall be deemed agreed which comes closest to the provision.

 

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§  9 ARBITRATION, APPLICABLE LAW

 

9.1 If any claim, difference or dispute (each, a “Dispute”) arises out of or in
connection with this Agreement and its implementation, including any question
regarding its existence, validity, termination or its performance, or in
connection with arrangements regarding the performance of this Agreement, the
parties affected shall attempt to settle such dispute amicably.

 

9.2 Except for Disputes on the adequacy of the remuneration for Services, the
settlement of which is regulated in Section 2.1, if any party to the Dispute
determines that a reasonable attempt at settlement has failed, the Dispute shall
be finally resolved by binding arbitration, to the exclusion of ordinary courts,
under the Rules of Arbitration (“Schiedsgerichtsordnung”) of the German
Arbitration Board (“Deutsche Institution für Schiedsgerichtswesen e.V.”), as
amended from time to time, by three arbitrators nominated in accordance with
said Rules of Arbitration. The place of arbitration shall be Dresden, Germany.
The German Code of Civil Procedure (ZPO) shall apply where the Rules of
Arbitration are silent.

 

9.3 The language to be used in the arbitration proceedings shall be German and
all documents written in a language other than German shall be translated to the
German language for the arbitration proceedings, unless otherwise decided by the
parties to the arbitration proceedings.

 

9.4 The arbitral award shall be substantiated in writing. The arbitral tribunal
shall decide on the matter of costs of the arbitration and on the allocation of
expenditure among the respective parties to the arbitration proceedings.

 

9.5 This Agreement is subject to and governed by the laws of the Federal
Republic of Germany. The German version of this Agreement shall be controlling.

 

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October 31, 2003

/s/ Thomas M. McCoy

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Advanced Micro Devices, Inc.

October 31, 2003

/s/ Thomas M. McCoy

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AMD Saxony Limited Liability Company & Co. KG

October 31, 2003

/s/ Hollis M. O’Brien

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SI Investment Limited Liability Company & Co. KG

October 31, 2003

/s/ Hollis M. O’Brien

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SI Investment Holding GmbH

 

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