AMD 2002 Annual Report Download - page 254

5.5 AMD shall maintain a complete, clear and accurate record of the quantity of ASIC Products sold, leased or otherwise transferred and any other
relevant information to the extent it is required to determine whether they are paying the correct royalty amount hereunder. To ensure compliance
with the terms and conditions of this Agreement, IBM shall have the right to audit all relevant accounting and sales books and records of AMD. The
audit will be conducted by the independent audit firm of Pricewaterhouse Coopers & Co., or another mutually acceptable audit firm, and shall be
conducted following reasonable prior written notice (at least forty-five (45) days in advance) during regular business hours at an office where such
records are normally maintained and in such a manner as not to interfere with AMD’s normal business activities and shall be restricted only to those
records necessary to verify AMD’s obligations hereunder. The audit report provided to IBM may only include the information necessary to
determine whether or not any underpayment or overpayment exists, and if it exists, the amount of such underpayment or overpayment. IBM shall
instruct the auditor to include only business information in the audit report to IBM. IBM shall use the business information reported by the auditor
only for the purpose of determining royalty payments and for no other purpose. In no event shall audits be made hereunder more frequently than
once in every twelve (12) months and the audit shall not cover any records from a period of time previously audited. If any audit should disclose any
underpayment or overpayment, the owing Party shall within forty-five (45) days pay the difference. The cost of such audit will be borne by IBM.
AMD shall be provided with a copy of the audit report within a reasonable period of time after its completion. The independent audit firm shall not
be hired on a contingent fee basis and shall have confidentiality agreements in place sufficient to protect AMD’s confidential information.
5.6 If AMD exercises its option under Section 8.7, below, AMD agrees to pay IBM a royalty of *** (***) percent for each SOI wafer for *** provided
to, or purchased by, *** and *** (***) percent for each SOI wafer for *** provided to, or purchased by, a *** for the lesser of a period of four (4)
years beginning on the initial date of *** or the expiration of the confidentiality period for the ***. If a *** is also a ***, the royalty rates will be
*** (***) percent for *** SOI wafers and *** (***) percent for *** SOI wafers. The revenue basis for such qualified SOI wafers shall be the lesser
of *** for processed SOI wafers of the respective ***. If AMD exercises its rights under the third paragraph of Section 8.7, then for the combined
maximum capacity thereunder that IBM refuses pursuant to Section 8.7, AMD will pay IBM a royalty of *** (***) percent for each SOI wafer and
*** (***) percent of each bulk wafer for *** provided to, or purchased by, a Third Party and *** (***) percent for each SOI wafer and *** (***)
percent for each bulk wafer for *** provided to, or purchased by, a Third Party and the obligation to pay this royalty will terminate the lesser of four
(4) years from the initial date of *** or the expiration of the confidentiality period for the ***. Other than as expressly recited in this Section 5, no
royalties will be due for any products. Section 5.2, the payment procedures of Section 5.4, and the audit provisions of Section 5.5 will apply to the
aforementioned wafer royalty payments.
*** Confidential information omitted and filed separately with the Securities and Exchange Commission.
Source: ADVANCED MICRO DEVIC, 10-K, March 14, 2003