Document:

<PAGE>

                                                                EXHIBIT 10.23(a)

AMD'S
U.S. Stock Option
Program

For options granted
after April 24, 2001.

                                     [LOGO]

AMD[LOGO]

<PAGE>

AMD's success is a direct result of the creativity, innovation, and hard work of
employees like you. In recognition of this, we maintain a portfolio of programs
that enable you to share in our success.

..    Cash and deferred profit sharing plans, which entitle you to a share of
     AMD's profits.

..    The stock purchase plan, which enables you to buy AMD common stock at a
     discounted price and participate as an owner of the company.

..    The stock option program, under which you can benefit from AMD's long-term
     success as the company's common stock price grows.

Who Receives Stock Options?

Congratulations on being selected to receive a stock option grant. AMD limits
the granting of stock options to those employees whose individual contributions
most influence AMD's performance and add to shareholder value. The number of
options you are granted reflects competitive compensation practices, your
position at AMD, and, most importantly, your individual performance.

What Are Stock Options?

Stock options give you the right to buy shares of AMD common stock at the
"exercise price" within a specified number of years. You "exercise" your option
by purchasing the underlying shares any time after you "vest" in the option (see
How Your Stock Options Vest), but before the option expires.

The attractiveness of stock options lies in the potential for increases in the
market price of the company's common stock over time. For example, if you are
granted options to buy 100 shares of AMD stock at an exercise price of $35 per
share, and the market price of the stock rises to $45, then your "unrealized"
financial gain is $10 per share (the difference between the exercise price and
the current market price). To realize that gain, you must first have the right
to buy those 100 shares. If you do, you can buy the stock. You can then keep the
shares for potential future gain, or sell them in the market at any time for the
current market price. In this example, if you purchase shares and then sell them
when the market price moved up to $50, you would have a gain of $15 per share
($50-$35).

Enclosed with this brochure is your stock option document. It gives the date
your option was granted, the price to purchase the shares, and the first and
last dates you can purchase the shares.

How Your Stock Options Vest

You earn the right to purchase shares according to the schedule for your grant
("vesting"). Each stock option grant has its own vesting period.

If you receive stock option grants in several years, their vesting periods will
overlap. For example, the following chart illustrates the vesting for a
hypothetical employee who receives and initial grant when he/she joins AMD and
then annual grants thereafter based on varying performance ratings:

Calendar      # of Options         Options Vesting in the Year
                               ------------------------------------
  Year          Granted         2       3       4       5       6
-------------------------------------------------------------------
   1              150           60     45      30      15
   2              100                  25      25      25      25
   3              160                          40      40      40
   4              200                                  50      50
   5              220                                          55
 Total                          60     70      95     130     170

The above vesting chart is based on continuous active service with AMD. The
stock option document for your grant shows the vesting dates for your options.

                                       2

<PAGE>

If AMD Experiences a "Change in Control"

You become 100% vested in your outstanding options if AMD experiences a "change
in control," and your employment is terminated by AMD for any reason other than
for misconduct or, if applicable, by constructive termination within one year
after such a change. A "change in control" occurs when:

..    More than 20% of AMD has acquired by a single person or entity,

..    Certain changes in the majority of AMD's Board of Directors occur during a
     two-year period,

..    A merger or consolidation of the company with or into another company,

..    Stockholders of the company approve a plan of complete liquidation, or

..    There is a sale or disposition of all or substantially all the company's
     assets.

Exercising Your Stock Options

Once your options are vested, you can exercise them--that is, you can purchase
AMD common stock at the exercise price. You have a limited number of years from
the date of grant to exercise the options and take advantage of any increase in
the price of AMD stock above the exercise price. Most grants have a ten-year
life. The document for your stock option grant discloses the date on which your
options expire.

Your final opportunity to purchase your vested options is the last regular
business day of AMD before their expiration date. If you are waiting until that
last day, be sure that Treasury Services receives your completed Stock Option
Exercise form before 5:00 p.m. Pacific time.

If you leave AMD before the expiration date for your options, you have a limited
period of time after your termination date in which to exercise vested options.
See the section When You Leave AMD.

Treasury Services must receive your completed Stock Option Exercise form in
order for you to exercise your options and purchase shares, unless you are doing
an E*TRADE OptionsLink sale. You are responsible for knowing which options can
be exercised and the expiration dates for your options.

Detailed information regarding the number of shares exercisable can be obtained
24 hours a day/7 days a week via the following:

..    The internet at www.optionslink.com, or

..    The OptionsLink interactive voice response system at 1-800-838-0908.

Note: While you may look at your account information at any time through
OptionsLink, if you conduct an electronic transaction on the internet, then
E*Trade will act as your broker for that transaction (see the E*Trade
OptionsLink brochure for further details). If you wish to utilize a broker other
than E*Trade, you will have to contact that broker directly.

For more details on exercising your options, please refer to the summary
entitled "Stock Option Exercise Procedures" which is available at
http://amdonline/treassvc.

There are four ways to exercise vested AMD options that have not expired:

                                       3

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..  Cash Purchase

You can pay for the options yourself or arrange for your broker to pay for them.
On the next business day after receipt of your completed Stock Option Exercise
form, Treasury Services will notify you of the cost for the exercised options
plus applicable federal, state, Social Security and Medicare tax withholding.
You must give Treasury Services a cashier's check or money order for the
exercise cost plus taxes within two weeks from the exercise date. You may elect
to receive either a stock certificate or have your shares electronically
transferred to your brokerage account.

..  Financing through a Broker (also known as "Same Day Sale and Exercise")

You can contact any of AMD's designated brokers or you can do an electronic
trade through E*Trade (refer to the E*Trade OptionsLink brochure). If you elect
a "same day exercise and sale," you may:

..    Sell all shares.

..    Sell enough shares to cover the cost of the exercise and associated
     required taxes. You will then receive the remaining shares from
     your exercise.

..    Sell only the number of shares you decide on and receive the balance of the
     shares. If the shares sold do not cover all the costs of exercising the
     options and associated required taxes, you must pay the balance through
     sending a certified check or bank wire to Treasury Services on the next
     business day following your exercise date. This option may not be available
     through E*Trade.

..  Stock Swap Exercise

You can use AMD shares you have owned at least six months to pay for the
exercise price of the options. To initiate a stock swap, you must complete and
submit a Share Withholding/Delivery Election form in addition to a Stock Option
Exercise form to Treasury Services.

..  Stock Withholding Exercise

You can exercise options and pay the required tax withholding from the shares of
AMD stock that you would otherwise receive through exercising your options. You
receive the balance of the AMD shares obtained through the purchased options. To
withhold shares to pay your taxes, you must send a completed Share
Withholding/Delivery Election form and a Stock Option Exercise form to Treasury
Services. You may not pay the exercise price of your options by having Treasury
Services withhold some of the shares that would otherwise be issued to you.

..  When To Exercise

It is entirely your decision when to exercise vested options, keeping in mind
the expiration date for your options. (See the sections Exercising Stock Options
and When You Leave AMD.)

The timing of an exercise and/or sale can have a large impact on any value you
ultimately obtain from the option. In deciding when to exercise you may wish to
consult with your financial advisor, stockbroker, or reputable publications in
which stock market analysts voice their opinions about future potential stock
values. It is also prudent to consult with a tax advisor to determine the impact
of exercising stock options on your tax obligations.

..  Taxes

Your stock options are what the IRS calls "nonqualified" options. The table on
the next page summarizes the current U.S. federal tax consequences associated
with these options. Depending on your state of residence, you may also owe state
and local taxes when you exercise your options or sell the shares obtained by
exercising your options.

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On the date...      You Owe Federal Taxes on...
--------------------------------------------------------------------------------
Your stock option   No taxes are due.
grant is approved.
--------------------------------------------------------------------------------
You exercise your   The difference (gain) between the market value of the shares
options and sell    of AMD common stock on the exercise date, and the exercise
the shares of AMD   price of the options upon purchasing the options. The
stock at a later    gain is taxable as ordinary income and subject to mandatory
date.               withholding for federal income, FICA, Medicare and
                    applicable state and local taxes.

                    When you sell the shares of stock, you owe tax on the
                    difference between the market value of the shares on the
                    sale date and the market value of the shares on the option
                    exercise date. Gains are taxed at the short-term or long-
                    term capital gains rate based on how long you have held the
                    shares. The holding period starts on the option exercise
                    date.

                    Months Held    Capital Gains Rate
                    12 or less     short-term
                    more than 12   long-term
--------------------------------------------------------------------------------
You exercise your   The difference between the market value of the shares and
options and sell    the exercise price of the options. The gain is taxable as
the shares on the   ordinary income and subject to mandatory withholding for
same day.           federal income, FICA, Medicare and applicable state and
                    local taxes.

If You Die or Become Totally Disabled

If you have at least 15 years of AMD service and your AMD employment is
terminated because of your death or total disability, here's what happens on
your termination date:

.. If you are on an unpaid leave of absence, any options that would have become
  vested in the calendar year in which your leave began are immediately vested.

.. If you are not on an unpaid leave of absence, you become immediately vested
  in any options that would have become vested in that calendar year.

This accelerated vesting of options does not occur if your AMD employment is
terminated because of your death or disability and you have less than 15 years
of service. See the section When You Leave AMD for information on length of time
to exercise after termination.

If You Take a Leave of Absence

You may not exercise any options during an unpaid leave of absence. Also, if
your unpaid leave of absence exceeds 30 consecutive days, the vesting dates for
your unvested options are automatically extended by the number of days by which
your unpaid leave exceeds 30 days. "Unpaid" means that AMD is not paying you a
salary. Unpaid leaves include personal leaves as well as disability, medical,
pregnancy and workers compensation leaves during which you are receiving
disability or workers' compensation benefits through AMD's benefit plans or
insurance. For more details, check with Treasury Services.

When You Leave AMD

You forfeit all unvested options when you leave AMD. If you are not a Vice
President or Officer of AMD, you normally have three months from your
termination date in which to exercise vested options that have not expired. For
example, if March 14 is your final day as an AMD employee, your last day to
purchase vested options is June 14 if it is a regular business day at AMD. If
June 14 is not a regular business day, the final day to buy your options is the
last regular AMD business day before June 14.

However, you (or your beneficiary) have a longer period to exercise options
under the circumstances shown in the table below.

                       Months to Exercise Vested Options
                                After Termination

If you Are Not a VP or Officer
--------------------------------------------------------------------------------
                                                      Months to Exercise
                                           -------------------------------------
                                                Termination
                                                 is Due to
    Age at             Years of                 Death or Total       Other
Termination             Service                   Disability      Terminations +
--------------------------------------------------------------------------------
less than 50              Any                        12                 3
50 or more            less than 15                   12                 3
50 or more         15 but less than 20               24*               15*
50 or more             20 or more                    36*               27*
--------------------------------------------------------------------------------

If You Have Been a VP or Officer For at Least 90 Days
--------------------------------------------------------------------------------
   Age at              Years of
Termination             Service                 Months to Exercise  +
--------------------------------------------------------------------------------
less than 50              Any                        12
50 or more            less than 15                   12
50 or more         15 but less than 20               24*
50 or more             20 or more                    36*
--------------------------------------------------------------------------------
* If you leave AMD to work for a competitor, this extension does not apply and
  you have 3 or 12 months to exercise your options.
+ If you are terminated because of misconduct, AMD reserves the right to cancel
  all your options, whether vested or unvested.

                                       5

<PAGE>

In no event will an exercise period extend beyond the expiration date of the
options.

If you are uncertain about the final day to purchase options, be sure to contact
Treasury Services at least several weeks before the date on which you think your
right to exercise your options ends.

Forfeiting Stock Options

Your stock options are forfeited under the earliest of these circumstances:

.. You do not exercise the options before their expiration date,

.. You are not vested to them when you leave AMD, or

.. You or your beneficiary (if you die) do not exercise your options within the
  applicable period for exercising them after you leave AMD.

If you are terminated because of misconduct, AMD reserves the right to cancel
all your options, whether vested or unvested.

No Reinstatement of Forfeited Stock Options If Rehired By AMD

If you have a break in service with AMD, your nonvested options are canceled and
will not be reinstated, even if you are rehired the day after your break in
service.

Treasury Services Department

Treasury Services is located at AMD's Sunnyvale, California office. The staff
can be contacted as follows:

Phone: 010-408-749-3790
Fax:   010-408-749-3106

Treasury Services' normal hours are between 9:00 a.m. and 5:00 p.m. U.S. Pacific
time during AMD's regular business day.

Transfer of Stock Options

Your stock options may be transferred only as follows:

.. By a court-issued qualified domestic relations order,

.. By your last will and testament, or

.. By the laws of descent and distribution if you left no valid will.

Stock options transferred by a qualified domestic relations order expire twelve
months after the date of transfer.

Any other transfer or assignment of your stock options will not be accepted and
gives AMD the right to terminate your options as of the date of the attempted
transfer or assignment.

Changes in Capitalization of AMD

The Board of Directors will adjust the number of shares or the class of stock
subject to your options if the outstanding number of AMD common stock changes as
a result of changes in the capitalization of the company. These changes in
capitalization include stock dividends, mergers, consolidations,
re-capitalization, or split-up, combinations or exchange of shares.

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                              For More Information

This brochure summarizes some of the important features of the current AMD stock
  option program. For more details, consult the official plan documents, your
individual stock option documents, and the stock option plan prospectus, all of
    which can be obtained from Treasury Services, One AMD Place, Sunnyvale,
  California. The mailing address is Treasury Services, P.O. Box 3453, MS 106,
                           Sunnyvale, CA 94088, U.S.A.

    In the case of any conflict between this brochure and the official plan
 documents, the official plan documents will govern. AMD reserves the right to
  amend or terminate the program in whole or in part, at any time and for any
                reason, with or without notice to participants.

Participation in the AMD stock option program does not confer on any participant
  any rights whatsoever with respect to continued employment with the company.

                                                                       AMD[LOGO]
                                                             Benefits Department
                                                                   One AMD Place
                                                     P.O. Box 3453, Mailstop 181
                                                             Sunnyvale, CA 94088

                                                                       Rev. 4/01<PAGE>

                                                                   Exhibit 10.47

January 31, 2002

Mr. Hector Ruiz
8218 Chalk Knoll Drive
Austin, TX 78735

               Re:  Employment Agreement
                    --------------------

Dear Hector:

     On behalf of the Board of Directors of Advanced Micro Devices, Inc.
(including as successor thereto, "AMD"), I am pleased to offer you the position
of President and Chief Executive Officer of AMD on the terms set forth below.

     1.   Position.
          --------

          (a) You will be employed by AMD as its President and Chief Executive
Officer commencing on April 26, 2002 (the "Commencement Date"). You will have
overall responsibility for the management of AMD and will report directly to its
Board of Directors ("Board"). During the Employment Period (as defined below),
you will also be nominated to and, if elected by the stockholders of AMD, shall
serve on the Board and such committees that you may be appointed to by the
Board. You shall succeed to the position of Chairman of the Board when the
person serving in such capacity on the Effective Date shall cease to hold that
position.

          (b) You will be expected to devote your full business time and
attention to the affairs of AMD, and you will not render services to any other
business without the prior approval of the Board of Directors or, directly or
indirectly, engage or participate in any business that is competitive in any
manner with the business of AMD, except for (i) his current board membership
with Eastman Kodak Company and (ii) managing personal investments, so long as
such activities do not significantly interfere with the performance of your
responsibilities as an employee of AMD in accordance with this Agreement. You
will be expected to comply with and be bound by AMD's operating policies,
procedures and practices that are from time to time in effect during the term of
your employment.

     2.   Term. This Agreement shall be in effect upon the signing by both
          ----
parties (the "Effective Date"), and shall expire five (5) years after the
Commencement Date (the "Employment Period"), unless sooner terminated pursuant
to Section 8 or extended pursuant to this Section 2. Commencing on the fourth
(4th) anniversary of the Effective Date and on each anniversary thereafter, the
Employment Period shall be automatically extended for one (1) -year terms unless
either AMD or you shall give the other party not less than ninety (90) days'
prior written notice of the intention to terminate this Agreement (a "Notice of
Non-Renewal").

     3.   Annual Base Salary. During the Employment Period, you shall receive
          ------------------
an annual base salary (the "Annual Base Salary") of at least $950,000, payable
in accordance with AMD's normal payroll practices. Your Annual Base Salary will
be reviewed on an annual basis by the Compensation Committee of the Board of
Directors and may be increased from time to time, in the discretion of the
Compensation Committee. Any increase in Annual Base Salary shall not

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 2

serve to limit or reduce any other obligation to you under this Agreement.
Annual Base Salary shall not be reduced at any time (including after any such
increase), other than as part of an across-the-board salary reduction applicable
to other senior officers of AMD. The term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as adjusted from time to time.

     4.   Bonus.
          -----

          (a) You will receive an annual bonus ("Annual Bonus") under AMD's 1996
Executive Incentive Plan or any other successor plan in an amount equal to
four-tenths of one percent (0.4%) of Adjusted Operating Profits of AMD in excess
of twenty percent (20%) of the Adjusted Operating Profits of AMD for AMD's
immediately preceding fiscal year. The Annual Bonus shall be paid immediately
upon release by AMD of its operational results for the last quarter of each
fiscal year unless you and AMD shall have previously agreed to a deferred
payment. The amount payable under this Section 4 shall not be subject to the
further discretion of AMD's Compensation Committee and shall not be reduced
except as specifically provided in Section 4(b) or as otherwise agreed to by
you. For purposes of this Agreement, "Adjusted Operating Profits" of AMD shall
be deemed to constitute operating income, as reported on AMD's financial
statements, increased for any pre-tax operating income and decreased for any
pre-tax operating loss from the Fujitsu joint venture (and any other joint
ventures approved by you and the Board for these purposes) and increased by any
expenses accrued for cash profit sharing and contributions to the deferred
profit sharing account under AMD's Retirement Savings and Deferred Profit
Sharing Plan, bonuses under AMD's 1996 Executive Incentive Plan, special bonuses
to the Chairman of the Board and other participating corporate officers of AMD,
and bonuses provided for in this Section 4.

          (b) The maximum bonus initially payable to you under Section 4(a)
above in each fiscal year shall not be greater than $5,000,000. The amount of
the bonus which exceeds the maximum bonus payable in any one fiscal year, if any
(the "Excess Bonus") shall be carried over (on a "first-in, first-out" basis)
and added to the Annual Bonus (if any) determined for any of the next three (3)
fiscal years, whether or not any one or more of such fiscal years ends before or
after the end of the Employment Period; provided the Excess Bonus, or portion
thereof, does not cause the Annual Bonus payable in any fiscal year to exceed
$5,000,000 or any higher maximum bonus payable in that year.

          (c) In addition to the bonus payable in each fiscal year under Section
4(a), you shall be eligible to receive an additional bonus (the "Additional
Bonus") in an amount determined by AMD's Compensation Committee in its
discretion. In determining the amount of such additional bonus, the Compensation
Committee shall consider, among other things, your contribution to the
accomplishment of AMD's long-range business goals, the success of various
corporate strategies in which you participated in reaching those goals, and your
unique services in connection with the maintenance or increase in stockholder
value of AMD.

          (d) If there shall be a combination of AMD with another company or a
reorganization or capital restructuring of AMD, or any other occurrence similar
to any of the foregoing, and as a result thereof the amount or value of the
bonuses payable pursuant to the

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 3

bonus formula set forth in Section 4(a) would be, or could reasonably be
expected to be, significantly affected thereby, appropriate adjustment will, at
the request of either party, be negotiated to establish a substitute formula to
yield an equitable and comparable result.

     5.   Stock Options.
          -------------

          (a) You shall be eligible for the grant of equity compensation awards
from time to time under the equity compensation plans and arrangements
maintained by AMD. Any option grants made to you pursuant to such plans and
arrangements shall be subject to the provisions of this Section 5 and Section 10
hereof.

          (b) On the Effective Date, you shall be granted a time-based option to
purchase 400,000 shares of AMD's Common Stock in accordance with the following
terms: The option shall have an exercise price equal to one hundred percent
(100%) of the fair market value of AMD's Common Stock as of the date of grant.
Of these options shares, 100,000 shares shall become fully exercisable on
October 15, 2002; 100,000 shares shall become fully exercisable on October 15,
2003; 100,000 shares shall become fully exercisable on October 15, 2004; 50,000
shares shall become fully exercisable on October 15, 2005; and 50,000 shares
shall become fully exercisable on October 15, 2006.

          (c) On the Effective Date, you shall be granted a time-based option to
purchase 200,000 shares of AMD's Common Stock in accordance with the following
terms: The option shall have an exercise price equal to one hundred percent
(100%) of the fair market value of AMD's Common Stock as of the date of grant.
Of these options shares, 50,000 shares shall become fully exercisable on October
15, 2003; 50,000 shares shall become fully exercisable on October 15, 2004;
50,000 shares shall become fully exercisable on October 15, 2005; and 50,000
shares shall become fully exercisable on June 19, 2006.

          (d) On the Effective Date, you shall be granted an option to purchase
600,000 shares of AMD's Common Stock ("Performance Accelerated Options"). The
Performance Accelerated Options shall have an exercise price equal to one
hundred percent (100%) of the fair market value of AMD's Common Stock as of the
date of grant. For any Measurement Period, the vesting with respect to 25,000
Performance Accelerated Options will be accelerated to the earliest possible
Measurement Date (the "Release Date") for that Measurement Period if (i) for any
Target Period during that Measurement Period the Average Stock Price meets or
exceeds the Stock Price Target for that Target Period and (ii) you are employed
on that Release Date. The number of Performance Accelerated Options for which
the vesting will be accelerated as of any Release Date will be increased by the
number of Performance Accelerated Options on which the vesting has not been
accelerated but which would have been accelerated on any preceding Measurement
Date had the Stock Price Target been satisfied for a prior Target Period within
the current calendar year or the immediately preceding calendar years.
Notwithstanding the foregoing, 300,000 of the Performance Accelerated Options
shall become fully exercisable on October 31, 2007, reduced by any Performance
Accelerated Options the vesting of which has previously been accelerated
pursuant to this subparagraph 5(d), and 300,000 of the Performance Accelerated
Options shall become fully exercisable on October 31, 2008.

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 4

          (e)  For purposes of this Section 5:

               (i)   "Average Stock Price" means the sum of the closing prices
               of AMD's Common Stock on the New York Stock Exchange as reported
               in The Wall Street Journal during the applicable Target Period,
                  -----------------------
               divided by the number of days in which AMD's Common Stock traded
               during such period.

               (ii)  "Measurement Date" means the fifteenth (15th) calendar day
               after the end of any Target Period.

               (iii) "Target Period" means the calendar month set forth in
               Column (2) of Exhibit A.

               (iv)  "Stock Price Target" means a target stock price as set
               forth in Column (3) of Exhibit A.

               (v)   "Measurement Period" means any consecutive three (3) month
               period commencing on or after May 1, 2002, as set forth in Column
               (1) of Exhibit A.

          (f)  All options granted to you pursuant to Sections 5(b), 5(c) and
5(d) shall be in addition to, and not in lieu of, any grant of equity
compensation awards pursuant to Section 5(a) during the Employment Period. You
shall receive annual option grants no less than the annual option grants made to
other executive officers of AMD commencing in 2003 and continuing throughout the
Employment Period.

          (g)  Each option granted pursuant to Sections 5(a), 5(b), 5(c), 5(d)
and 5(f) shall be transferable upon your election, to the extent consistent with
applicable restrictions under AMD's registration of the underlying shares with
the SEC.

          (h)  All of your options (including any options that are outstanding
on the Effective Date) shall be subject to, and governed by, the terms and
provisions in the applicable AMD stock incentive plan, except to the extent of
modifications that are expressly provided for in this Agreement. Notwithstanding
anything in the applicable AMD stock incentive plan to the contrary, all of your
options that are granted pursuant to Section 5 of this Agreement, and all other
options held by you either (x) after the Effective Date or (y) prior to the
Effective Date with an exercise price on the Effective Date equal to or greater
than the fair market value of AMD's Common Stock on the Effective Date shall be
exercisable, to the extent vested, at least for the following periods after the
Date of Termination (as defined below):

               (i)   in the case of a Termination for Death or Disability (as
               defined below), Retirement (as defined below) or Termination
               without Cause (as defined below) or Involuntary Termination (as
               defined below) on or following a Change in Control (as defined
               below), five (5) years;

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 5

                (ii)    in the case of an Involuntary Termination or a
                Termination without Cause prior to a Change in Control, two (2)
                years.

           (i)  If there is any change in the Common Stock of AMD by reason of
any stock dividend, stock split, spin-off, split up, merger, consolidation,
recapitalization, reclassification, combination or exchange of shares, or any
other similar corporate event or reorganization, however structured, then the
number of shares subject to your options, the exercise price of your options and
the Stock Price Targets for the Performance Accelerated Options shall be
equitably and appropriately adjusted by the Compensation Committee of AMD to
effectuate the intent of this Section 5. Notice of any adjustment shall be given
by AMD to you.

           (j)  Notwithstanding any other provision of this Section 5 to the
contrary, upon an Involuntary Termination, a Termination without Cause, a
Termination for Death or Disability or Retirement, all or a portion of any
unvested options awarded to you shall immediately vest as provided in Section 10
below.

           (k)  AMD shall register the shares issuable under the option on a
Form S-8 registration statement and shall keep such registration statement in
effect for the entire period the options remain outstanding.

     6.    Vacation: You will be eligible for four (4) weeks of paid vacation
           --------
annually.

     7.    Other Employee Benefits.
           -----------------------

           (a)  During the period of any service hereunder, you shall also be
entitled to receive all other benefits and perquisites which are, and which may
be in the future, generally available to members of AMD's senior management,
including without limitation, the group health, disability, and life insurance
benefits and participation in any AMD profit sharing, retirement or pension
plan, and any other benefits generally available to executive officers of AMD.
You shall be permitted use of a leased airplane consistent with AMD policy for
business purposes and an allowance for use of automobiles as provided from time
to time by action of the Board of Directors.

           (b)  AMD will provide up to $17,500 per year for commuting expenses
for your spouse from Austin, Texas to Sunnyvale, California.

           (c)  AMD shall reimburse you up to $25,000 each year for out-of-
pocket expenses incurred by you for estate planning, financial planning, tax
planning and tax return preparation. If such expenses are less than $25,000 in
any year, the unused amounts shall cumulate and be available to you in any year
thereafter, through the end of the year in which the Employment Period ends.

           (d)  If and to the extent that you are required to pay state income
taxes to the State of California, in connection with income attributable to
payments or benefits under this Agreement and the exercise of any option granted
by AMD, no later than March 31st of each year during the Employment Period, AMD
shall pay to you an amount necessary to reimburse

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 6

you for such state income taxes. In addition, AMD shall pay you an amount
necessary to reimburse you for any federal and state income taxes payable with
respect to such reimbursement pursuant to this Section 7(d), such that you will
be in the same after-tax position as if no such state taxes had been imposed. In
no event will the total payments under this Section 7(d) for any year exceed
$400,000 ($800,000 in the event payments are made or benefits are provided
pursuant to Sections 10(a) or 10(e)). If such total payments are less than
$400,000 ($800,000 in the event payments are made or benefits are provided
pursuant to Sections 10(a) or 10(e)) in any year, such excess shall be carried
over (on a "first-in, first-out" basis) and added to the tax reimbursements (if
any) determined for any of the next three (3) years, whether or not any one or
more of such years ends before or after the end of the Employment Period;
provided such payments, or portion thereof, do not cause the tax reimbursement
payable in any year to exceed $400,000 ($800,000 in the event payments are made
or benefits are provided pursuant to Sections 10(a) or 10(e)) in that year; and
further provided that such carried over amounts shall be made available only in
connection with income attributable to payments or benefits under this Agreement
and the exercise of any option granted by AMD. The benefit provided pursuant to
this Section 7(d) is herein referred to as the "California Tax Payment."

     8.    Employment and Termination. Your employment with AMD will be at-will
           --------------------------
and may be terminated by you or by AMD at any time for any reason as follows:

           (a)  You may terminate your employment at any time for Good Reason
(as defined below) and AMD may terminate your employment by providing a timely
Notice of Non-Renewal (an "Involuntary Termination");

           (b)  You may terminate your employment at any time in your discretion
without Good Reason ("Voluntary Termination");

           (c)  AMD may terminate your employment for "Cause" (as defined below)
("Termination for Cause");

           (d)  AMD may terminate your employment without Cause ("Termination
without Cause");

           (e)  Your employment will terminate upon your Disability (as defined
below) and will automatically terminate upon your death ("Termination for Death
or Disability"); or

           (f)  You may terminate your employment at any time after your
sixty-fifth (65th) birthday, and AMD may terminate your employment by providing
a Notice of Non-Renewal which would result in the Employment Period ending after
your sixty-fifth (65th) birthday ("Retirement").

           (g)  Notice of Termination. Any termination by AMD or by you shall be
                ---------------------
communicated by Notice of Termination to the other party given in accordance
with Section 14(f). For purposes of this Agreement, a "Notice of Termination"
means (x) a Notice of Non-Renewal or (y) a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 7

provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty (30) days after the giving of such
notice). The failure by you or AMD to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of yours or of AMD, respectively, hereunder or
preclude you or AMD, respectively, from asserting such fact or circumstance in
enforcing your or AMD's rights hereunder.

           (h)  Date of Termination. "Date of Termination" means (i) if your
                --------------------
employment is terminated by AMD other than for Disability, the date of receipt
of the Notice of Termination or any later date specified therein within thirty
(30) days of such notice (provided that if you receive a Notice of Non-Renewal,
the Date of Termination shall be the date on which the Employment Period ends
unless subparagraph (ii) below is applicable), (ii) if your employment is
terminated by you, thirty (30) days after receipt of the Notice of Termination
(provided that AMD may accelerate the Date of Termination to an earlier date by
providing you with notice of such action, or, alternatively, AMD may place you
on paid leave during such period) and (iii) if your employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of your
death or the Disability Effective Date (as defined below), as the case may be.

     9.    Definitions. As used in this Agreement, the following terms have the
           -----------
following meanings:

           (a)  "Good Reason" shall mean in the absence of your written consent:

                (i)   the assignment to you of any duties inconsistent with your
                title, position, authority, duties or responsibilities as
                contemplated by Section 1, or any other action which results in
                a diminution in such title, position, authority, duties or
                responsibilities, other than an isolated, insubstantial and
                inadvertent action not taken in bad faith and which is remedied
                by AMD promptly after receipt of notice given by you; provided
                that if AMD appoints any person as President other than yourself
                on or after AMD's Annual Meeting in 2002, and you remain Chief
                Executive Officer of AMD, such appointment shall not constitute
                Good Reason;

                (ii)  any failure by AMD to comply with any of the provisions of
                Sections 3, 4 or 5, or any other material breach by AMD of any
                of its obligations hereunder, other than an isolated,
                insubstantial and inadvertent failure not occurring in bad faith
                and which is remedied by AMD promptly after receipt of notice
                thereof given by you;

                (iii) any failure by AMD to nominate you for election to the
                Board or, if so nominated, the failure to be elected to the
                Board;

                (iv)  your not being appointed the Chairman of the Board in
                accordance with Section 1(a) when the person serving in such
                capacity on the Effective Date shall cease to hold that
                position;

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 8

                       (v)    any termination by AMD of your employment
                       otherwise than as expressly permitted pursuant to
                       Section 8 of this Agreement;

                       (vi)   the delivery of a Notice of Non-Renewal by AMD
                       which would result in the Employment Period ending prior
                       to your sixty-fifth (65th) birthday;

                       (vii)  any requirement that you be based, without your
                       consent, anywhere more than fifty (50) miles from
                       Sunnyvale, California;

                       (viii) the occurrence of a Change in Control (as defined
                       below); or

                       (ix)   any failure by AMD to comply with and satisfy
                       Section 14(e).

                  If you do not deliver to AMD a Notice of Termination within
                  sixty (60) days (one hundred eighty (180) days on or following
                  a Change in Control) after you have knowledge that an event
                  constituting Good Reason has occurred, the event will no
                  longer constitute Good Reason.

                  (b)  "Cause" means the termination of your employment by AMD
for repeated failure to perform assigned duties (other than by reason of your
Disability) after being notified in writing of such failure with an opportunity
to correct, or if you are determined by a court of law or pursuant to Section 13
below to have committed or participated in a willful act of embezzlement, fraud
or dishonesty which resulted in material loss, material damage or material
injury to AMD. For purposes of this provision, no act or failure to act, on your
part, shall be considered "willful" unless it is done, or omitted to be done, by
you in bad faith or without reasonable belief that your action or omission was
in the best interests of AMD. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer (while you do not serve as such) or
based upon the advice of counsel for AMD shall be conclusively presumed to be
done, or omitted to be done, by you in good faith and in the best interests of
AMD. The cessation of your employment shall not be deemed to be for Cause unless
and until (i) there shall have been delivered to you a copy of a resolution duly
adopted by the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to you and you are given an opportunity to
be heard by the Board), finding that, in the good faith opinion of the Board,
you are guilty of the conduct described above, and specifying the particulars
thereof in detail; provided, however, that on or following a Change in Control,
any such resolution must be adopted by the affirmative vote of not less than
seventy-five percent (75%) of the entire membership of the Board (excluding you)
and (ii) if you contest such finding, the arbitrators by final determination in
an arbitration proceeding pursuant to Section 13 hereof have concluded that your
conduct met the standard for termination for Cause above and that the Board's
conduct met the standards of good faith and satisfied the procedural and
substantive conditions of this Section 9(b). If AMD does not deliver to you a
Notice of Termination within sixty (60) days after the Board has knowledge that
an event constituting Cause has occurred, the event will no longer constitute
Cause.

                  (c)  "Change in Control" means a change in control of a nature
which would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 9

promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act") or in response to any other form or report to the Securities and Exchange
Commission or any stock exchange on which AMD's shares are listed which requires
the reporting of a change of control. In addition, a Change in Control shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of AMD (not including in the securities
beneficially owned by any person, any securities acquired directly from AMD or
any of its affiliates), representing more than 20% of the combined voting power
of AMD's then outstanding securities; or (ii) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of AMD representing more than 35%
of the combined voting power of AMD's then outstanding securities; or (iii) in
any two-year period without your consent, individuals who were members of AMD's
Board of Directors at the beginning of such period plus each new director whose
election or nomination for election was approved by at least two-thirds of the
directors in office immediately prior to such election or nomination, cease for
any reason to constitute at least a majority of the Board; (iv) there is
consummated a merger or consolidation of AMD with or into any other entity,
other than a merger or consolidation which would result in the holders of the
voting securities of AMD outstanding immediately prior thereto holding
securities which represent immediately after such merger or consolidation more
than 50% of the combined voting power of the voting securities of either AMD or
the other entity which survives such merger or consolidation; (v) the
stockholders of AMD approve a plan of complete liquidation of AMD or there is
consummated the sale or disposition by AMD of all or substantially all of AMD's
assets, other than a sale or disposition by AMD of all or substantially all of
AMD's assets to an entity at least 65% of the combined voting power of the
voting securities of which are owned by persons in substantially the same
proportions as their ownership of AMD immediately prior to such sale; or (vi) a
majority of the members of the Board in office prior to the happening of any
event and who are still in office after such event, determines in its sole
discretion within one year after such event, that as a result of such event
there has been a Change in Control.

           (d) "Disability" means your absence from your duties with AMD on a
full-time basis for 180 days during any consecutive twelve-month period as a
result of incapacity due to mental or physical illness as determined by a
physician selected by AMD and acceptable to you or by the company which
administers AMD's long-term disability plan in which you are eligible to
participate. If AMD determines in good faith that your Disability has occurred
during the Employment Period, it may give you written notice in accordance with
Section 8(g) of this Agreement of its intention to terminate your employment. In
such event, your employment shall terminate effective on the thirtieth (30th)
day after your receipt of such notice (the "Disability Effective Date"), unless,
within the thirty (30) days after such receipt, you shall have been cleared by
the physician to return to work and have returned to full-time performance of
your duties.

     10.   Separation Benefits.
           -------------------

           (a)  Termination Without Cause or Involuntary Termination Prior to a
                ---------------------------------------------------------------
Change in Control. In the event of a Termination without Cause or an Involuntary
-----------------
Termination or your

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 10

termination on account of your accidental death after you have provided a Notice
of Termination for an Involuntary Termination,

     (i)   AMD shall pay to you in a lump sum in cash within thirty (30) days
           after the Date of Termination (or such later date as may be specified
           below for such payment):

           (A)          the amount equal to the sum of (x) the product of (I)
                        two (2) multiplied by (II) your Annual Base Salary plus
                        (y) the sum of the highest Annual Bonus and Additional
                        Bonus paid to you for any of the three (3) years prior
                        to the Date of Termination (this sum of the Annual Bonus
                        and the Additional Bonus shall be referred to as the
                        "Recent Annual Bonus") (including as paid for this
                        purpose any compensation earned but deferred, whether or
                        not at your election);

           (B)          the sum of (x) your Annual Base Salary through the Date
                        of Termination to the extent not theretofore paid, plus
                        (y) the product of (I) the Annual Bonus that you would
                        have received had you remained Chief Executive Officer
                        through the end of the calendar year in which occurs
                        your Date of Termination, multiplied by (II) a fraction,
                        the numerator of which is the number of days in the
                        fiscal year in which the Date of Termination occurs
                        through the Date of Termination and the denominator of
                        which is 365, but only to the extent not previously
                        paid; provided that any payments pursuant to this
                        paragraph (B) shall be made within 30 days following the
                        end of the calendar year in which occurs your Date of
                        Termination; and

           (C)          any remaining Excess Bonus provided that any payments
                        pursuant to this subparagraph (C) shall be paid
                        consistent with the provisions in Section 4(b) (the sum
                        of the amounts described in subparagraphs (B) and (C))
                        shall be hereinafter referred to as the "Accrued
                        Obligations";

           Notwithstanding the foregoing, in the event that an Involuntary
           Termination occurs by reason of subparagraph (a)(vi) of Section 9 or
           by a Notice of Non-Renewal pursuant to Section 8(a) on or after the
           date that you have been appointed to the position of Chairman of the
           Board, AMD shall be required to pay to you instead of the amount
           specified in subparagraph (A) above only an amount equal to two (2)
           times your Annual Base Salary.

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 11

               (ii)   AMD shall pay you the accrued Retirement Benefit (as
               defined below);

               (iii)  For 24 months following the Date of Termination, AMD shall
               continue to provide medical and dental benefits to you, your
               spouse and your eligible dependents on the same basis as such
               benefits are provided during such period to the senior executive
               officers of AMD; provided that such benefits shall be secondary
               to any other coverage obtained by you and further provided that
               the aggregate amount of benefit payments for each of you and your
               spouse shall not exceed $1,000,000 in lifetime benefits or such
               larger limit available under AMD's medical plans (the "Medical
               Benefits"); provided, however, that if AMD's welfare plans do not
               permit such coverage, AMD will provide you the Medical Benefits
               (with the same after tax effect) outside of such plans;

               (iv)   All of the AMD stock options granted pursuant to this
               Agreement and all other AMD stock options granted to you either
               (x) after the Effective Date or (y) prior to the Effective Date
               with an exercise price on the Effective Date equal to or greater
               than the fair market value of AMD's Common Stock on the Effective
               Date shall vest and be fully exercisable. All restrictions on any
               AMD awards granted to you after the Effective Date shall
               immediately lapse and such awards shall become nonforfeitable;

               (v)    To the extent not theretofore paid or provided, AMD shall
               timely pay or provide to you any other amounts or benefits
               required to be paid or provided or which you are eligible to
               receive under any plan, program, policy or practice or contract
               or agreement of AMD and its affiliates, including accrued
               vacation to the extent unpaid through the Date of Termination,
               through the Date of Termination, (such other amounts and benefits
               shall be hereinafter referred to as the "Other Benefits");

               (vi)   AMD shall reimburse you (or your surviving spouse) for all
               reasonable expenses of relocation for you and your family from
               the Sunnyvale, California area to Austin, Texas within twelve
               (12) months of the Termination Date, in accordance with the most
               favorable terms of AMD's relocation policy (whether or not your
               residence in the Sunnyvale, California area is considered your
               primary residence) (the "Relocation Benefit");

               (vii)  The California Tax Payment for the calendar year in which
               your Date of Termination occurs pursuant to Section 7(d); and

               (viii) For a period of ten (10) years following the Date of
               Termination, you shall continue to be indemnified under AMD's
               Certificate of Incorporation and Bylaws at least to the same
               extent as prior to the Date of

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 12

               Termination and you shall continue to be covered by the
               directors' and officers' liability insurance, the fiduciary
               liability insurance and the professional liability insurance
               policies that are the same as, or shall be provided coverage at
               least equivalent to, those carried prior to the Date of
               Termination (the "Indemnification Benefit").

          (b)  Termination for Death or Disability. In the event of a
               -----------------------------------
Termination for death (other than your accidental death after you have provided
a Notice of Termination for an Involuntary Termination) or Disability prior to
your having provided a Notice of Termination, this Agreement shall terminate
without further obligations to you other than to pay and provide you (or your
estate or surviving spouse, as the case may be) with (i) the Accrued
Obligations, (ii) the accrued Retirement Benefit, (iii) the Medical Benefits for
your life and the life of your spouse, (iv) the Other Benefits, (v) the
Relocation Benefit, (vi) the California Tax Payment pursuant to Section 7(d) and
(vii) the Indemnification Benefit. In addition, all of your AMD options that
would have become vested within twenty four (24) months of your Date of
Termination and that are (A) granted pursuant to this Agreement or (B) that were
granted to you either (x) after the Effective Date or (y) prior to the Effective
Date with an exercise price on the Effective Date equal to or greater than the
fair market value of AMD's Common Stock on the Effective Date shall vest and be
fully exercisable. All restrictions on any AMD awards granted to you after the
Effective Date shall immediately lapse and such awards shall become
nonforfeitable.

          (c)  Voluntary Termination. In the event of a Voluntary Termination,
               ---------------------
this Agreement shall terminate without further obligations to you other than to
pay and provide you with (i) your Annual Base Salary to the extent unpaid, (ii)
any Excess Bonus, (iii) the accrued Retirement Benefit, (iv) the Other Benefits
and (v) the Indemnification Benefit.

          (d)  Termination for Cause. In the event of a Termination for Cause,
               ---------------------
this Agreement shall terminate without further obligations to you other than the
obligation to pay and provide you with (i) your Annual Base Salary to the extent
unpaid and (ii) the Other Benefits.

          (e)  Termination without Cause or Involuntary Termination on or
               ----------------------------------------------------------
following a Change in Control. In the event of a Termination without Cause or an
-----------------------------
Involuntary Termination (or your termination on account of your accidental death
after you have provided a Notice of Termination for an Involuntary Termination),
(i) within twelve (12) months after a Change in Control or (ii) prior to a
Change in Control and you reasonably demonstrate that such termination (or event
that constitutes Good Reason) was at the request of a third party who had
indicated an intention or taken steps reasonably calculated to effect a Change
in Control,

               (i)  AMD shall pay to you in a lump sum within thirty (30) days
               after the Date of Termination:

                    (A)  the amount equal to (x) the product of three (3)
                         multiplied by your Annual Base Salary plus (y) the
                         Recent Annual Bonus;

                    (B)  the Accrued Obligations;

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 13

               (ii)  AMD will pay and provide you with (A) the accrued
               Retirement Benefit, (B) the Medical Benefits for your life and
               the life of your spouse, (C) the Other Benefits, (D) the
               Relocation Benefit, (E) the California Tax Payment pursuant to
               Section 7(d); and

               (iii) All of your AMD stock options shall vest and be fully
               exercisable and the restrictions on all of your other AMD awards
               shall immediately lapse and such awards shall become
               nonforfeitable.

          (f)  Retirement. In the event of your Retirement:
               ----------

               (i)   you shall be entitled to an annual retirement benefit
               payable monthly (the "Retirement Benefit") equal to (A) a
               service-related percentage (the "Accrual Percentage") of the
               average of one-twelfth (1/12) of your Annual Base Salary for the
               three (3) years in which such amount was highest within the last
               ten (10) years of the Employment Period less (B) the monthly
               annuity equivalent of any benefit payable to you pursuant to (x)
               AMD's tax-qualified defined benefit retirement plan and (y) any
               nonqualified defined benefit retirement plan maintained by AMD in
               which you participate (it is understood that there shall be no
               reduction relating to amounts payable to you pursuant to the
               Supplemental Agreement referred to in Section 14(g)). In
               calculating the Retirement Benefit, your Accrual Percentage shall
               be four percent (4%) for each of your first ten full years of
               service with AMD. Notwithstanding the foregoing, (i) Annual Base
               Salary shall not exceed $1,000,000, increased by a compound
               annual rate of three percent (3%) from January 1, 2002 and (ii)
               in the event payments are made or benefits are provided pursuant
               to Section 10(e), you shall be credited with additional service
               through April 26, 2007 but in no event will you be credited with
               less than two (2) years of service credit.

               The normal form of payment for the Retirement Benefit shall be a
               life annuity, guaranteed for ten (10) years commencing the first
               month after your sixty-fifth (65th) birthday. In lieu of the
               normal form of payment, you may elect that, upon your death
               (whether prior to or after commencement of the Retirement
               Benefit), your surviving spouse shall be paid an annual benefit
               of up to one hundred percent (100%) of the Retirement Benefit for
               her life. If you make this election, the amount of the benefit
               payable to you shall be actuarially reduced in the same manner as
               any payments to you from AMD's tax-qualified defined benefit
               retirement plan or, if no such tax-qualified plan is maintained
               by AMD, such benefit shall be reduced consistent with the group
               annuity mortality table and interest assumptions specified in the
               General Agreement on Tariffs and Trade (GATT Agreement) as of the
               date which is two (2) months prior to the date of election of the
               alternate form of annuity.

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 14

               In addition, the Retirement Benefit shall be payable
               in such other forms and at such other times as may be
               provided under AMD's tax-qualified defined benefit
               retirement plan.

               The Retirement Benefit shall be an unfunded and
               unsecured obligation of AMD and shall be paid out of
               the general assets of AMD.

               (ii) AMD will pay and provide you with (A) the
               Accrued Obligations, (B) the Medical Benefits for
               your life and the life of your surviving spouse, (C)
               the Other Benefits, (D) the Relocation Benefit, (E)
               the California Tax Payment pursuant to Section 7(d)
               to the extent not otherwise received by you in the
               year in which the Employment Period ends and (F) the
               Indemnification Benefit; and

               (iii) all of your AMD options that are (A) granted
               pursuant to this Agreement or (B) that were granted
               to you either (x) after the Effective Date or (y)
               prior to the Effective Date with an exercise price
               equal to or greater than the fair market value of
               AMD's Common Stock on the Effective Date shall vest.

          (g)  Condition. AMD shall not be required to make the payments and
               ---------
provide the benefits specified in this Section 10 unless you execute and deliver
to AMD a termination and general release agreement (substantially in the form
attached hereto as Exhibit B).
                   ---------

          (h)  Non-exclusivity of Rights. Nothing in this Agreement shall
               -------------------------
prevent or limit your continuing or future participation in any plan, program,
policy or practice provided by AMD or any of its affiliated companies and for
which you may qualify, nor, subject to Section 14(g), shall anything herein
limit or otherwise affect such rights as you may have under any contract or
agreement with AMD or any of its affiliated companies. Amounts which are vested
benefits or which you are otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with AMD or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement; provided that you
shall not be eligible for cash severance benefits under any other program or
policy of AMD.

          (i)  Full Settlement. AMD's obligation to make the payments provided
               ---------------
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which AMD may have against you or others. In no event
shall you be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to you under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not you obtain other
employment.

          (j)  Excise Taxes. If all or any portion of the amounts payable to you
               ------------
on your behalf under this Agreement or otherwise are subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code," or similar state tax and/or

<PAGE>
Mr. Hector Ruiz
January 31, 2002
Page 15

assessment), AMD shall pay to you an amount necessary to place you in the same
after-tax position as you would have been in had no such excise tax been
imposed. The amount payable pursuant to the preceding sentence shall be
increased to the extent necessary to pay income and excise taxes due on such
amount. The determination of the amount of any such tax indemnity shall be made
by the independent accounting firm employed by AMD immediately prior to the
Change in Control.

     11. Indemnification Agreement. In the event you are made, or threatened to
         -------------------------
be made, a party to any legal action or proceeding, whether civil or criminal or
administrative, by reason of the fact that you are or were a director or officer
of AMD or serve or served any other corporation fifty percent (50%) or more
owned or controlled by AMD in any capacity at AMD's request, you shall be
indemnified by AMD, and AMD shall pay your related expenses when and as
incurred, all to the full extent permitted by law. Any termination of your
employment or this Agreement shall have no effect on the continuing operation of
this Section 11.

     12. No Solicitation. During the term of your employment with AMD and for
         ---------------
one (1) year thereafter, you will not, on behalf of yourself or any third party,
solicit or attempt to induce any employee of AMD to terminate his or her
employment with AMD.

     13. Mandatory Arbitration. Subject to the provisions of this Section 13,
         ---------------------
any controversy or claim between you and AMD arising out of or relating to or
concerning this Agreement or any aspect of your employment with AMD or the
termination of that employment will be finally settled by arbitration in San
Jose, California by Judicial Arbitration and Mediation Services ("JAMS") under
the then existing JAMS rules rather than by litigation in court, trial by jury,
administrative proceeding or in any other forum. AMD shall pay all of the fees,
if any, and expenses (other than legal fees, except as provided in Section 14)
of such arbitration, incurred in connection with the arbitration regardless of
the final outcome of such arbitration. The parties will be entitled to
reasonable discovery of essential matters of determination by the arbitrator. In
the arbitration, the parties will be entitled to all remedies that would have
been available if the matter were litigated in a court of law.

14.      Miscellaneous.
         -------------

     (a) Captions and Amendments. The captions of this Agreement are not part of
         -----------------------
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

     (b) Authority to Enter into Agreement. AMD represents that its Chairman of
         ---------------------------------
the Compensation Committee has due authority to execute and deliver this
Agreement on behalf of AMD.

     (c) Absence of Conflicts. You represent that upon the Commencement Date
         --------------------
your performance of your duties under this Agreement will not breach any other
agreement as to which you are a party.

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 16

     (d)    Costs. AMD will pay or reimburse (i) all legal fees and expenses
            -----
incurred by you (A) in contesting or disputing any termination of employment by
AMD or in seeking to obtain or enforce any right or benefit provided by this
Agreement on or after a Change in Control (you shall have no obligation to repay
any such legal fees or expenses regardless of the outcome of any contest or
dispute), or (B) in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder and (ii) all legal fees and expenses incurred by you
in contesting or disputing any termination of employment by AMD prior to a
Change in Control or in seeking to obtain or enforce any right or benefit under
this Agreement prior to a Change in Control, in each case provided you
substantially prevail on your claims.

     (e)    Successors. This Agreement is binding on and may be enforced by AMD
            ----------
and its successors and assigns and is binding on and may be enforced by you and
your heirs and legal representatives. Any successor to AMD or substantially all
of its business (whether by purchase, merger, consolidation or otherwise) will
in advance assume in writing and be bound by all of AMD's obligations under this
Agreement. As used in this Agreement, "AMD" shall mean AMD as hereinbefore
defined and any successor to its business and/or assets as aforesaid.

     (f)    Notices. All notices and other communications hereunder shall be in
            -------
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

     If to you:

     at your current primary residential
     address as shown on the records of AMD

     If to AMD:

     Advanced Micro Devices, Inc.
     One AMD Place
     Sunnyvale, California 94088
     Telecopy Number:  (408) 749-2034
     Attention:  Stanley Winvick

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

     (g) Entire Agreement. This Agreement, including the attached Exhibits,
         ----------------
supercedes the Amended and Restated Employment Agreement, effective as of
January 13, 2000, between AMD and you, a copy of which is attached hereto as
Exhibit C (the "Supplemental Agreement") and represents the entire agreement
between us concerning the subject matter of your employment by AMD; provided
that Section 5 of the Supplemental Agreement shall not be superceded or replaced
by this Agreement and shall continue to be of full force and effect and governed
by the terms of the Supplemental Agreement; and provided further

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 17

that the term "Cause" used in Section 8(a) of the Supplemental Agreement shall
have the meaning ascribed to such term in Section 9(b) hereof.

     (h) Governing Law. This Agreement will be governed by and construed in
         -------------
accordance with the laws of the State of California without reference to
conflict of laws provisions.

     (i) Validity and Enforceability. The invalidity or unenforceability of any
         ---------------------------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

     (j) Tax Withholding. AMD may withhold from any amounts payable under this
         ---------------
Agreement such federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

     (k) Waiver. Failure by you or AMD to insist upon strict compliance with any
         ------
provision of this Agreement or the failure to assert any right you or AMD may
have hereunder, including, without limitation, your right to terminate
employment for Good Reason pursuant to Section 8(a) or AMD's right to terminate
you for Cause pursuant to Section 8(c), shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.

     (l) Sections. Any reference to a Section herein is a reference to a section
         --------
of this Agreement unless otherwise stated.

<PAGE>

Mr. Hector Ruiz
January 31, 2002
Page 18

     Hector, we are very pleased to extend this promotion to you and look
forward to your continuing employment with AMD. Please indicate your acceptance
of the terms of this Agreement by signing in the place indicated below.

Very truly yours,

/s/ Charles M. Blalack
---------------------------------------
Charles M. Blalack, Chairman,
Compensation Committee of
Advanced Micro Devices, Inc.

/s/ W. J. Sanders, III
---------------------------------------
W.J. Sanders, III
Chairman and Chief Executive Officer
Advanced Micro Devices, Inc.

Accepted:

/s/ Hector Ruiz
---------------------------------------      January 31, 2002
Hector Ruiz

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