AMD 2009 Annual Report Download - page 99

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third-party debt, ATIC is not obligated to make up the difference. To the extent the Company chooses not to
participate in an equity financing of GF, ATIC is obligated to purchase its share of GF securities, subject to
ATIC’s funding commitments under the Funding Agreement.
ATIC’s obligations to provide funding are subject to certain conditions including the accuracy of GF’s
representations and warranties in the Funding Agreement, the absence of a material adverse effect on GF or
AMD and the absence of a material breach or default by GF or AMD under the provisions of any transaction
document. There are additional funding conditions for each of the phases which are set forth in more detail in the
Funding Agreement.
Additional funding from ATIC to GF. In July 2009, pursuant to a funding request from GF in accordance
with the Funding Agreement, ATIC contributed $260 million of cash to GF in exchange for GF securities
consisting of $52 million aggregate principal amount of Class A Notes and $208 million aggregate principal
amount of Class B Notes. The Company declined to participate in the funding. As of December 26, 2009, the
Company’s ownership interest in GF (on a fully converted to Ordinary Shares basis) was approximately 31.6
percent.
Wafer Supply Agreement. The Wafer Supply Agreement governs the terms by which the Company
purchases products manufactured by GF. Pursuant to the Wafer Supply Agreement, the Company purchases,
subject to limited exceptions, all of its microprocessor unit (MPU) product requirements from GF. If the
Company acquires a third-party business that manufactures MPU products, it will have up to two years to
transition the manufacture of such MPU products to GF. In addition, once GF establishes certain specific
qualified processes for bulk silicon wafers, the Company will purchase from GF, where competitive, specified
percentages of its graphics processor unit (GPU) requirements, which percentages will increase linearly over a
five-year period. At its request, GF will also provide sort services to the Company on a product-by-product basis.
The Company will provide GF with product forecasts of its MPU and GPU product requirements. The price
for MPU products is related to the percentage of the Company’s MPU-specific total cost of sales. The price for
GPU products will be determined by the parties when GF is able to begin manufacturing GPU products for the
Company.
The Wafer Supply Agreement is in effect through May 2, 2024, however, the Wafer Supply Agreement may
be terminated if a business plan deadlock exists and ATIC elects to enter into a transition period pursuant to the
Funding Agreement. GF has agreed to use commercially reasonable efforts to assist the Company to transition
the supply of products to another provider, and continue to fulfill purchase orders for up to two years following
the termination or expiration of the Wafer Supply Agreement.
On December 18, 2009, ATIC International Investment Company (ATIC II) acquired Chartered
Semiconductor Manufacturing Ltd. (Chartered). On December 28, 2009, with the Company’s consent, ATIC II,
Chartered and GF entered into a Management and Operating Agreement (MOA), which provides for the joint
management and operation of GF and Chartered, thereby allowing GF and Chartered to share costs, take
advantage of operating synergies and market wafer fabrications services on a collective basis. In order to allow
for the signing of the MOA on December 28, 2009 prior to obtaining any regulatory approvals, the Company
agreed to irrevocably waive rights under the Shareholders Agreement with respect to certain matters that require
unanimous GF board approval. Additionally, if any such matters come before the GF board, the Company has
agreed that its designated GF directors will vote in the same manner as the majority of ATIC-designated GF
board members voting on any such matters. As a result of waiving such approval rights, as of December 28,
2009, for financial reporting purposes the Company no longer shared the control with ATIC over GF.
In June 2009, the FASB issued an amendment to improve financial reporting by enterprises involved with
variable interest entities. This new guidance became effective for the Company beginning the first day of fiscal
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