Document:

Amendment No. 2, entered into as of May 8, 2003.

  
 HECO Exhibit 10.2(e)

  
 AMENDMENT NO. 2 
 TO 
 POWER PURCHASE AGREEMENT 
 BETWEEN 
 AES HAWAII, INC. 
 AND 
 HAWAIIAN ELECTRIC COMPANY, INC.

  
 This Amendment No. 2 is made and entered into as of the 8th
day of May, 2003, by and between HAWAIIAN ELECTRIC COMPANY, INC. (“HECO”), a Hawaii corporation, and AES HAWAII, INC. (“AES Hawaii”, formerly known as AES Barbers Point, Inc.), a Delaware corporation, with principal offices in
Arlington, Virginia, doing business in Hawaii. 
  
 R E C I T A L S: 
  
 WHEREAS, The AES Corporation (“AES”) owns indirectly 100% of AES Hawaii, which in turn owns the Facility (including the circulating fluidized
bed coal-fired power plant and associated properties) located in HECO’s service territory; 
  
 WHEREAS, AES Barbers Point, Inc. (now known as AES Hawaii as of September 12, 1997) and HECO entered into a power purchase agreement dated March 25, 1988,
which has been amended by Amendment No. 1 dated August 28, 1989, and modified by a letter agreement “Re: Conditional Notice of Acceptance” dated January 15, 1990 as a result of Decision and Order No. 10448 (December 29, 1989) and Decision
and Order No. 10296 (July 28, 1989) issued by the Public Utilities Commission of the State of Hawaii (“PUC”) in PUC Docket No. 6177 (as amended and modified, the “PPA”), under which HECO purchases 180 megawatts of capacity and
associated energy from AES Hawaii through the Term of the PPA; 
  
 WHEREAS, AES Hawaii entered into a Credit and Reimbursement Agreement dated as of March 20, 1990 to arrange secured financing, non-recourse to AES, to construct and operate the Facility; 
  
 WHEREAS, HECO has a security interest in the Facility, which is subordinate
to the security interest of the Facility lenders, securing the performance obligations of AES Hawaii under the PPA; 
  
 WHEREAS, AES Hawaii desires to refinance the Facility on terms that (1) result in the full repayment of AES Hawaii’s existing secured financing, (2)
provide for secured debt in a total principal amount up to $450 million, or up to $525 million if AES Hawaii can use the additional proceeds to improve its cost structure, and sufficiently improve its cash flow, and (3) provide for HECO’s
subordinated security interest in the Facility as described in the PPA and related security documents (such refinancing being hereinafter referred to as the “AES Hawaii Refinancing” and the lenders for the AES Hawaii Refinancing being
hereinafter referred to as the “AES Hawaii Lenders”), and AES 

  

 
Hawaii is in the process of negotiating a commitment for the AES Hawaii Refinancing that is acceptable to AES Hawaii; 
  
 WHEREAS, HECO’s consent is required in connection with the AES Hawaii
Refinancing, as provided in Section 24.12 of the PPA; 
  
 WHEREAS,
AES Hawaii and HECO desire to have HECO’s ratepayers share in the benefit derived from a favorable refinancing in the form of lower rates under the PPA; 
  
 WHEREAS, AES Hawaii acknowledges how important it is for HECO and HECO’s customers for AES Hawaii to maintain nothing but the highest standards of
service quality and technical reliability, and that AES Hawaii has the responsibility and obligation to comply with Good Engineering and Operating Practices (“GEOP”) as outlined in Section 3.2B of the PPA, and AES Hawaii will be subject to
any maintenance reserve requirements to be included in the AES Hawaii Refinancing, which will be established by the AES Hawaii Lenders on market-based terms based on the advice of the AES Hawaii Lenders’ independent engineer, to facilitate the
reliable operation of the Facility consistent with GEOP; 
  
 NOW,
THEREFORE, in consideration of the premises and the mutual agreements and covenants contained herein and for other good and valuable consideration, HECO and AES Hawaii (collectively referred to herein as “the Parties”) hereby agree as
follows: 
  
 1. Amendment to Section 5.1B. Section 5.1B of
the PPA is hereby amended by replacing the section in its entirety to read as follows: 
  

	 	B.	Capacity Charge. 

  
 The Capacity Charge to be paid by HECO to AES-BP during the full Term of this Agreement shall be at a fixed rate equal to $0.045995 per
kilowatthour for each hour in which the capacity is available through May 31, 2003, and equal to $0.044095 per kilowatthour for each hour in which the capacity is available from June 1, 2003, through the end of the Term. 
  
 To determine the available capacity, the Committed Capacity
of the Facility will be multiplied by the hours in the prior month, and then any outage and/or derated hours occurring during the prior month (other than those excluded pursuant to Sections 3.2B(3) and 4.2) times the capacity value of the outage
and/or derating (in kilowatts) will be subtracted. The available capacity in kilowatthours for the month in question shall then be multiplied by the rate to obtain the monthly capacity payment due to AES-BP as illustrated in Exhibit 6. 

 
 2. PUC Approval. This Amendment No. 2, and HECO’s consent to
the AES Hawaii Refinancing, are contingent upon the issuance of a decision and order by the PUC (“PUC Order”) that (a) does not contain terms and conditions deemed to be unacceptable to HECO, and is in a form deemed to be reasonable by
HECO, in its sole discretion, 

  

 2 

 
ordering that this Amendment No. 2 is approved, and finding that HECO’s consent to the AES Hawaii Refinancing is reasonable, and (b) is deemed final by
HECO, in its sole discretion, because it is satisfied that no party to the proceeding in which the PUC Order is issued intends to seek a change in such PUC Order through motion or appeal. Promptly after issuance of the PUC Order, HECO shall provide
to AES Hawaii a copy of the PUC Order and written confirmation of whether the PUC Order meets the requirements of the preceding sentence. HECO shall endeavor to obtain such PUC Order in a form meeting the requirements of this paragraph by June 17,
2003, or such later date as the Parties may agree to as provided in paragraph 4 of this Amendment No. 2, but HECO shall not have any liability if such PUC Order is not obtained for any reason. 
  
 3. Effective Date. This Amendment No. 2 shall be effective upon
execution; provided that paragraph 1 of this Amendment No. 2 shall not be effective until the Refinancing Closing, and the change in the Capacity Charge made pursuant to such paragraph shall be effective retroactive to June 1, 2003 if the
Refinancing Closing occurs after such date. “Refinancing Closing” shall mean the initial closing of the AES Hawaii Refinancing in which the AES Hawaii Lenders commit to lend, and AES Hawaii draws down, any amount that is sufficient to
repay in full AES Hawaii’s existing secured financing. 
  
 4.
Timing of PUC Order. If the PUC Order meeting the requirements of paragraph 2 of this Amendment No. 2 is not obtained on or before June 17, 2003, or such later date as the Parties may agree to by a subsequent written agreement, then either
Party, by written notice delivered within ten (10) days of such date and before the Refinancing Closing, may terminate this Amendment No. 2, in which case this Amendment No. 2 shall be null and void, and the Parties shall be free of all obligations
under this Amendment No. 2 and shall pursue no remedies against one another arising out of or related to this Amendment No. 2. 
  
 5. Timing of Refinancing. If the Refinancing Closing has not occurred on or before the Refinancing Closing Deadline, then either Party may
terminate this Amendment No. 2, in which case this Amendment No. 2 shall be null and void, and the Parties shall be free of all obligations under this Amendment No. 2 and shall pursue no remedies against one another arising out of or related to this
Amendment No. 2. The Refinancing Closing Deadline shall be June 30, 2003; provided that such deadline shall be extended until August 31, 2003 if, prior to July 1, 2003, AES Hawaii provides HECO with a written notice, signed by an officer of AES
Hawaii, stating that AES Hawaii is pursuing in good faith the AES Hawaii Refinancing and reasonably believes that such refinancing could be completed (in a timely manner) by August 31, 2003, but neither AES Hawaii nor the officer signing such notice
shall have any liability if such refinancing is not completed. 
  
 6. Other Terms Not Changed. The PPA, as expressly amended by this Amendment No. 2, shall remain in full force and effect. In the event that a conflict arises between the PPA and this Amendment No. 2, this Amendment No. 2 shall
prevail, but the 

  

 3 

 
respective documents shall be interpreted to be in harmony with each other where possible. 
  
 7. Defined Terms. Capitalized terms used but not defined in this Amendment No. 2 shall have the respective meanings
ascribed to such terms in the PPA. 
  
 8. Governing Law.
This Amendment No. 2 shall be governed by and construed in accordance with the law of the State of Hawaii, excluding any choice of law rules or principles that would result in the application of the laws of a different jurisdiction. 
  
 9. Counterparts. This Amendment No. 2 may be executed in counterparts
and all counterparts so executed shall constitute one Amendment No. 2, binding on both Parties, notwithstanding that both Parties may not be signatories to the original or the same counterpart. 
  
 IN WITNESS WHEREOF, HECO and AES Hawaii have caused this Amendment No. 2 to
be executed by their respective duly authorized officers as of the date first above written. 
  

			
	HAWAIIAN ELECTRIC COMPANY, INC.
		
	By:	 	/s/ Thomas L. Joaquin
	 	 	

	 	 	Thomas L. Joaquin
	Its:	 	Senior Vice President

  

			
		
	By:	 	/s/ Richard A. von Gnechten
	 	 	

	 	 	Richard A. von Gnechten
	Its:	 	Financial Vice President

  

			
	AES HAWAII, INC.
		
	By:	 	/s/ Patrick G. Murphy
	 	 	

	 	 	Patrick G. Murphy
	Its:	 	President and General Manager

  

 4Vice President Performance Recognition Plan

 Exhibit 10.14 
  
 VP PERFORMANCE RECOGNITION PROGRAM 
  

	I.	Purpose 

  
 The Vice President Incentive Program (VPIP) recognizes and rewards AMD’s and FASL LLC’s Vice Presidents (Participants) for furthering AMD’s
and FASL LLC’s ongoing success against both short- and long-term objectives. 
  

	II.	Plan Overview 

  

	 	•	The Short-Term Plan (STP) provides an award for meeting or exceeding planned performance for the current fiscal year (Plan Year). 

  

	 	•	The Long-Term Plan (LTP) provides an annual award for sustained corporate performance over a three-fiscal-year period relative to external measures. 

 
 Within these plans, the performance objectives are as follows:

  

					
	 Plan

	  	 Component

	  	 Metric(s)

	STP	  	Corporate Performance Award (CPA)	  	 •      Corporate Operating Profit vs. Plan

	 	  	Group Performance Award (GPA)	  	 •      Group Operating Profit vs. Plan

	 	  	Individual Performance Award (IPA)	  	 •      Performance against Balanced Scorecard

			
	LTP	  	Relative Profitability	  	 •      AMD Return on Equity (ROE) vs. S&P 500 Return on Equity (ROE) over 3 years

			
	 	  	Relative Sales Growth	  	 •      AMD Sales Growth vs. WSTS Sales Growth over 3 years

  
 The following
sections discuss the plan provisions in further detail. All awards are subject to the Plan funding, maximum and carryover provisions detailed in Section V. A separate communication outlining the assigned target percentages for each component of the
Plans, and division assignments and financial goals for the STP, will be provided to Participants each year. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  

	III.	Short Term Plan (STP) 

  
 The STP uses three different components to measure and reward the Participant’s annual contributions: Corporate, Group and
Individual.  
  
 The payout opportunity and
the weight of each component vary depending upon the Participant’s role and the tier to which he/she is assigned by management. 
  
 The Corporate and Group Performance components of the Plan are split into two six-month performance periods. Planned corporate and operating group
objectives for the first half of the year are generally based on the Board Approved Corporate Budget. Objectives for the second half are established using the mid-year update of the Corporate Budget. 
  

	 	A.	Corporate Performance Award (CPA) 

  
 The CPA is earned by meeting or exceeding specific levels of Operating Profit (OP) against the Plan for the performance period. 
  
 For each half-year performance period a multiplier is derived based on
Actual OP vs. Planned OP. The multiplier is then applied against the CPA target bonus to determine the accrued award. 
  

	 	•	The threshold level, below which the multiplier is zero, is 80% of Planned OP by default. This threshold will be confirmed or revised for any Plan Year at the discretion of the CEO.

  

	 	•	The multiplier is 1.0 when Actual OP equals Planned OP. 

  

	 	•	For performance between 80% and 100% of Planned OP, the multiplier is prorated on a straight-line basis. 

  
 For performance above Planned OP in each half-year performance period, a pool of funds is created using a percentage of the
OP above Planned OP. This percentage is determined each year by the Office of the CEO. 
  

	 	•	This pool is used to pay individual discretionary awards beyond target performance. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  

	 	•	Any pool award generated for the first-half performance period is held in reserve pending the final OP for the year. If, for the year, Actual OP is below the combined threshold for
the two separate performance periods, any pool generated for the first half of the year is forfeited. 

  
 There is no maximum accrued award on this component of the Plan. The maximum paid in any year is subject to the Plan funding, maximum
and carryover provisions explained in section V. 
  
 The
following table illustrates four payment calculation examples for a participant with a CPA target of 10% of pay, a base salary of $225,000, and a pool of 10% of excess OP: 
  

													
	 	  	First Half ($M)

	 	  	Planned
OP

	  	OP Threshold
(80%)

	  	Actual
OP

	  	Perf.
%

	  	Target Mult.
(Max=1.00)

	  	 $ Pool
 for Distribution

	 Case 1
	  	200	  	160	  	240	  	120	  	1.00	  	4.00
	 Case 2 (Target Perf.)
	  	200	  	160	  	200	  	100	  	1.00	  	0.00
	 Case 3
	  	200	  	160	  	220	  	110	  	1.00	  	2.00
	 Case 4
	  	200	  	160	  	170	  	85	  	0.25	  	0.00

  

													
	 	  	Second Half ($M)

	 	  	Planned
OP

	  	OP Threshold
(80%)

	  	Actual
OP

	  	Perf.
%

	  	Target Mult.
(Max=1.00)

	  	 $ Pool
 for Distribution

	 Case 1
	  	300	  	240	  	315	  	105	  	1.00	  	1.50
	 Case 2 (Target Perf.)
	  	300	  	240	  	300	  	100	  	1.00	  	0.00
	 Case 3
	  	300	  	240	  	165	  	55	  	0.00	  	0.00
	 Case 4
	  	300	  	240	  	150	  	50	  	0.00	  	0.00

  

																								
	 	  	Annual ($M)

	  	 
	 	  	Base
Salary

	  	Combined
OP Threshold

	  	Actual
OP

	  	CPA
Mult.

	  	CPA
Target

	 	 	Award
%

	 	 	 Award
 $

	  	Total $ Pool for
Distribution

	  	 
	 Case 1
	  	$	225,000	  	400	  	555	  	1.00	  	10.0	%	 	10.00	%	 	$	22,500	  	5.50	  	 	Pool eliminated
	 Case 2 (Target Perf.)
	  	$	225,000	  	400	  	500	  	1.00	  	10.0	%	 	10.00	%	 	$	22,500	  	0.00	  	 	from First Half 
	 Case 3
	  	$	225,000	  	400	  	385	  	0.50	  	10.0	%	 	5.00	%	 	$	11,250	  	0.00	  	¬	since combined
	 Case 4
	  	$	225,000	  	400	  	320	  	0.13	  	10.0	%	 	1.30	%	 	$	2,925	  	0.00	  	 
 	threshold not
met

  

	 	B.	Group Performance Award (GPA) 

  
 The GPA depends on Actual Group Operating Profit (OP) versus Planned Group OP. Similar to the CPA, for each half-year performance period a multiplier is
derived based on Actual Group OP vs. Planned Group OP as illustrated in the following graph: 

 VP PERFORMANCE RECOGNITION PROGRAM 
  
 

 
  
 The multiplier is then applied
against the GPA target award to determine the accrued award. 
  

	 	•	The threshold is 80% of planned Group OP, by default. 

  

	 	•	The multiplier is 1.0 when Actual GOP equals Planned GOP. 

  

	 	•	The maximum multiplier in each half-year period is 2.0, generally when 125% performance is achieved. 

  

	 	•	The threshold and maximum are confirmed or revised in any Plan Year at the discretion of the CEO. 

  

	 	•	The annual GPA is derived by taking the average of the two half year multipliers. 

  
 The following table illustrates four sample payout calculations for a participant with a 25% GPA target: 
  

																							
	 	  	First Half

	  	Second Half

	 	  	Planned
Group
Profit

	  	Threshold
(80%)

	  	Actual

	  	Perf.
%

	 	 	Mult.

	  	Planned
Group
Profit

	  	Threshold
(80%)

	  	Actual

	  	Perf
%

	 	 	Mult.

	 Case 1
	  	100	  	80	  	85	  	85	%	 	0.25	  	125	  	100	  	120	  	96	%	 	0.80
	 Case 2 (Target Perf.)
	  	100	  	80	  	100	  	100	%	 	1.00	  	125	  	100	  	125	  	100	%	 	1.00
	 Case 3
	  	100	  	80	  	75	  	75	%	 	0.00	  	125	  	100	  	145	  	116	%	 	1.64
	 Case 4
	  	100	  	80	  	150	  	130	%	 	2.00	  	125	  	100	  	150	  	125	%	 	2.00

  

															
	 	  	Annual

	 	  	Base
Salary

	    	GPA
Mult.

	  	GPA
Target

	 	 	GPA
%

	 	 	GPA
Award

	 Case 1
	  	$	225,000	    	0.53	  	25.0	%	 	13.1	%	 	$	29,531
	 Case 2 (Target Perf.)
	  	$	225,000	    	1.00	  	25.0	%	 	25.0	%	 	$	56,250
	 Case 3
	  	$	225,000	    	0.82	  	25.0	%	 	20.5	%	 	$	46,125
	 Case 4
	  	$	225,000	    	2.00	  	25.0	%	 	50.0	%	 	$	112,500

 VP PERFORMANCE RECOGNITION PROGRAM 
  

	 	C.	Individual Performance Award (IPA) 

  
 The IPA is based on performance against the established Balanced Scorecard for the year. The IPA target is generally 10% of base salary. However,
executive management may adjust the average target percent in any given Plan Year based on the performance of the Company, competitive practices and/or the role of a particular executive. 
  

	 	D.	STP Award Calculation 

  
 The total STP award is calculated as follows: 
  
 STP Award = CPA + GPA + IPA 
  
 The following table illustrates this payment calculation, combining the previous examples: 
  

																														
	 	  	Base
Salary

	  	CPA

	  	GPA

	  	IPA

	  	Total Bonus Award

	 	  	  	%

	 	 	$

	  	%

	 	 	$

	  	%

	 	 	$

	  	%

	 	 	$

	  	Additional
CPA Pool
Award

	 Case 1
	  	$	225,000	  	10.00	%	 	$	22,500	  	13.13	%	 	$	29,531	  	5.00	%	 	$	11,250	  	28.13	%	 	$	63,281	  	Yes
	 Case 2 (Target Perf.)
	  	$	225,000	  	10.00	%	 	$	22,500	  	25.00	%	 	$	56,250	  	10.00	%	 	$	22,500	  	45.00	%	 	$	101,250	  	 
	 Case 3
	  	$	225,000	  	5.00	%	 	$	11,250	  	20.50	%	 	$	46,125	  	12.00	%	 	$	27,000	  	37.50	%	 	$	84,375	  	 
	 Case 4
	  	$	225,000	  	1.30	%	 	$	2,925	  	50.00	%	 	$	112,500	  	16.00	%	 	$	36,000	  	67.30	%	 	$	151,425	  	 

  

	IV.	Long-Term Plan (LTP) 

  
 The LTP rewards sustained corporate performance for both Return on Equity (ROE) and sales growth relative to competitive measures over a rolling
three-year period. The LTP has an annual target award of 30% of base salary and a maximum opportunity of 60% for all Participants, subject to proration provisions in Section VII F. The model below illustrates the LTP cycles. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  
 

 
  

	 	A.	LTP Plan Components 

  

	 	•	ROE Component: compares AMD’s three-year ROE against the three-year ROE for the S&P 500. This component is weighted at 50%. 

  

	 	•	Sales Component: compares the difference between AMD’s three-year sales growth and the three-year semiconductor industry sales growth, as published by Worldwide
Semiconductor Trade Statistics (WSTS) 2. This component is weighted at 50%. 

  
 Target multipliers are derived as follows: 
  

											
	 	  	 	  	Weighting

	 	Performance Level

	 	  	 	  	 	Threshold

	 	 Target
 (1.0 Multiplier)

	  	 Maximum
 (2.0 Multiplier)

	 Roe Component
	  	AMD ROE minus S&P 500 ROE (3-year)	  	50%	 	  -6%	 	0	  	  6%
						
	 Sales Component
	  	AMD Sales Growth % minus WSTS Sales Growth % (3-year)	  	50%	 	-30%	 	0	  	20%

	2	Semiconductor industry data may be modified to be more representative of AMD’s product offerings. For instance, the DRAM market segment may be excluded from the
Total Semiconductor Sales data. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  
 For example, if AMD’s 3-year ROE is 10% and the S&P ROE is 10%, the difference is 0. Therefore, a multiplier
of 1.0 is generated for the ROE component. If AMD’s 3-year Sales Growth is 30% and the WSTS Sales Growth is 10%, the difference is 20%. Therefore, a multiplier of 2.0 is generated for the Sales component. 
  
 The Combined LTP Target Multiplier is calculated as follows: 
  
 (ROE Component Multiplier x 50%) + (Sales Component Multiplier x 50%) =
Combined LTP Multiplier 
  
 So, in the example above, the
Combined LTP Multiplier is 1.5: 
  
 (1.0 x 50%) + (2.0 x 50%) =
1.5 
  
 For either factor, the threshold performance level
must be met in order for an LTP award to be generated. The maximum multiplier when both factors are added is two (2.0). 
  

	 	B.	LTP Award Calculation 

  
 The LTP award is calculated as follows: 
  
 Combined LTP Multiplier x LTP Target (30%) x Base Salary = LTP 
  

	V.	Plan Funding, Maximum Awards and Carryovers 

  

	 	•	The Corporate Component of the STP is funded by a maximum of three percent of AMD’s adjusted Operating Profit, as defined in section VIII, for any given Plan Year. In the
aggregate, if the Corporate awards exceed the 3 percent limit, each Participant’s award will be scaled back to conform. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  

	 	•	The Corporate Component will not be paid for any Plan Year in which Corporate OP is less than or equal to $0. 

  

	 	•	The 3% of OP funding limitation applies to all STP Components for Officer participants 

  

	 	•	For Vice Presidents below the Officer Level, the Group and the Individual Components are not affected by the 3% funding limitation. 

  

	 	•	Assuming the 3% funding limitations above are met, accrued STP awards can be paid in amounts up to 3 times the target award. 

  

	 	•	Any accrued STP award in excess of the 3 times target maximum will be carried forward and paid out over the following two years. One half of any carryover award will be paid
following the first year of the carryover period. The remaining half will be paid following the second year of the carryover period. Carryover payments will be made coincident with the regular Plan payment schedule. 

  

	 	•	Payment of LTP awards is subject to the 3% funding limitation. Awards generated but not paid due to the limitations will be carried over for possible payout in future Plan years.
That amount will be carried over for up to three following Plan Years. Carryover award amounts will be paid at the earliest possible payout date (on a first in, first out basis) during the three-year carryover period, subject to the three percent
maximum payout cap and other eligibility provisions. Any amount carried over but not payable during the three-year carryover period reverts to zero. 

  

	VI.	Timing of Payouts 

  
 Awards for the STP are generally paid out by the end of the first quarter following the close of a Plan Year. For the LTP, awards are paid as soon as
possible after actual external performance data become available. Typically this will be in the 4th quarter
following the plan year. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  

	VII.	Eligibility for Participation and Receipt of Awards 

  

	 	A.	Unless otherwise determined by the CEO, all non-Sales Vice Presidents, Officers, Sr. Vice Presidents, and Group Vice Presidents are Participants in the Plan.

  

	 	B.	To be eligible to receive any accrued award under the Plan, a participant must be actively employed by AMD or FASL LLC on the actual date of payment of the award.

  

	 	C.	Payment to a Participant of any calculated award for which the Participant is otherwise eligible is contingent upon that Participant’s sustained satisfactory performance during
the Plan period for which the award was calculated, as determined by the Participant’s immediate superior. 

  

	 	D.	To be eligible to receive an accrued STP award of any amount, a participant must have been actively employed in the Plan for some portion of the Plan Year. A
participant who is actively employed for less than an entire Plan Year (i.e., became a participant mid-year or was on an unpaid leave), and who is otherwise eligible, will receive a prorated STP award, according to the number of months of active
employment in the 12-month STP Plan Year. For purposes of this provision, a full month’s credit will be given where the Participant was actively employed in the Plan for at least 15 days of a partial month. 

  

	 	E.	In the event of an employee status change resulting in an approved change of Plan tier (for which different target award levels exist or a group assignment changes), the
participation period for each tier is determined using the proration method described above. The monthly salary immediately prior to the status change is used to compute all portions of the award for the first tier. The monthly salary at the end of
the Plan Year is used to compute the award for the new tier. Calculations take into account the appropriate targets and maximums for each Plan tier. 

  

	 	F.	To be eligible to receive an LTP award of any amount, a participant must have been actively employed in the Plan for at least 12 months. A participant who is actively
employed for less than an entire three-year LTP award period (i.e., became a Participant at some time during the period, or was on an unpaid leave), and who is otherwise eligible to receive an LTP award, will receive an LTP award that is prorated
according to the number of months of active employment out of the 36-month LTP award period. For purposes of this provision, a full 

 VP PERFORMANCE RECOGNITION PROGRAM 
  
 month’s credit will be given where the Participant was actively employed for at least 15 days of a partial month.

  

	 	G.	A participant who voluntarily terminates employment with AMD or FASL LLC and 1) has reached 60 years of age, 2) has 15 years of AMD and/or FASL LLC service, and 3) has been
actively employed for at least 6 months in the Plan Year is eligible for a payment of an accrued award that is not prorated for less than a full-year’s service. Participants actively employed for less than 6 months are eligible for a prorated
accrued award. The payment will be based on year-end financial performance and will be made at the same time as other Plan payments. The proration provisions, as discussed in D and F above, will apply. The above conditions apply to any LTP
carryover. Any STP carryover is forfeited upon termination of any kind. 

  

	 	H.	If a participant dies during the Plan Year, any accrued award for the current Plan Year will be paid in full so long as the Participant was on active status for at least 6 months of
that year. If active for less than 6 months, any award generated at the end of the year will be prorated as above. Payments of any accrued award, including any earned LTP carryover amounts, will be made to the designated recipient of the
participant’s final paycheck. Any STP carryover awards are forfeited. 

  

	 	I.	No allowance will be made for factors beyond the control of the Plan Participants that either adversely or favorably affect the Plan’s performance. There is no vested
entitlement to any accrued award as described above. Award payments are made at the sole discretion of the CEO. 

  

	 	J.	AMD reserves the right to retroactively or prospectively modify or terminate the Plan, in whole or in part, and AMD reserves the right to deny the participation of, or payout of an
award to, a Participant, at its sole discretion, with or without notice or cause. 

  

	VIII.	Definition of Terms 

  
 Base Salary is defined as the Participant’s annualized base pay rate at the end of the Plan Year or, in the case of Plan tier changes, the
Participant’s annualized base pay rate at the end of the participation period for each separate tier. For a participant who exits the Plan, but retains eligibility, or changes Plan tiers during the year, the annualized salary will be calculated
based on the salary in effect at the time of the change in status. 

 VP PERFORMANCE RECOGNITION PROGRAM 
  
 Participant is defined as a proven contributor in an eligible position subject to the participation guidelines
established by senior management. The individual must be nominated by his or her Vice President and approved by senior management each Plan Year. 
  
 Operating Profit, for Plan purposes, is adjusted for pre-tax income/loss from FASL LLC, also referred to as Operating Profit on the Non-GAAP profit
and loss statement. Operating Profit is also adjusted to add back any award payments from Corporate award plans. 
  
 Corporate Budget is defined as the Corporate Financial Budget established in the 4th quarter of the previous year, generally during the month of November (unless defined otherwise by executive management for the Plan Year in question.)

  
 Mid-Year Update is defined as the update of the
Corporate Financial Budget established in the 2nd quarter of the current year, generally in May (unless defined
otherwise by executive management for the Plan Year in question.) 
  
 Plan Year is defined as the period between January 1 and December 31 of any given year. 
  
 The specifics of the Plan are highly confidential and are to be discussed only with the appropriate Vice President, Division Human Resources, or
Compensation.

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