EXHIBIT 10.31
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
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This Agreement is entered into as of __________, 19__ by and between
Advanced Micro Devices, Inc. (the "Company") and _______________________
("Employee") in reference to the following facts:
1. Employee is a valued employee of __________ _______________________.
2. The Company has simultaneously with the execution of this Agreement
caused The Manufacturers Life Insurance Company of America (the "Insurance
Company") to issue policy number ___________________ (the "Policy") on the life
of Employee. The first annual premium has been paid by the Company as of the
date of this Agreement.
3. For purposes of this Agreement, the Company and its subsidiaries shall
constitute the "Employer." For this purpose, a subsidiary is a corporation of
which the Company owns, directly or indirectly, more than 50% of such
corporation's outstanding securities. If Employee is employed by a corporation
which, as a result of a sale or other corporate reorganization, ceases to be a
subsidiary, such sale or other corporate reorganization shall be treated as a
termination of Employee by Employer without Cause (as defined in Section 8)
unless immediately following the event and without any break in employment the
Employee remains employed by the Company or another corporation which is a
subsidiary.
NOW THEREFORE, in consideration of the facts set forth above and the
various promises and covenants set forth below, the parties to this Agreement
agree as follows:
1. Ownership of Policy.
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The Company acknowledges that Employee is the owner of the Policy and that
Employee is entitled to exercise all of his or her ownership rights granted by
the terms of the Policy, except to the extent that the power of the Employee to
exercise those rights is specifically limited by this Agreement. Except as so
limited, it is the expressed intention of the parties to reserve to Employee all
rights in and to the Policy granted to its owner by the terms thereof,
including, but not limited to, the right to change the beneficiary of that
portion of the proceeds to which the Employee is entitled under Section 4 of the
Agreement and the right to exercise settlement options.
2. The Company's Security Interest.
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The Company's security interest in the Policy is conditioned upon its
satisfactorily performing all of the covenants under this Agreement. Each
period covered by any individual premium payment described in Section 3 shall be
considered a discrete extension of the Company's security interest in the
Policy. The Company shall not have nor exercise any right in and to the Policy
which could, in any way, endanger, defeat, or impair any of the rights of
Employee in the Policy, including by way of illustration any right to collect
the proceeds of the Policy in excess of the amount due the Company as provided
in this Agreement and in the Policy. The only rights in and to the Policy
granted to the Company in this Agreement shall be limited to the Company's
security interest in and to the cash value of the Policy, as defined herein, and
a portion of the death benefit of the Policy as hereinafter provided (the
"Security Interest"). The Company shall not assign any of its Security Interest
in the Policy to anyone other than Employee.
3. Premium payments.
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So long as Employee is employed by the Employer and the Company's Security
Interest has not been released, the Company agrees to pay an annual premium on
the Policy on or before the last day of each "Policy Year" (as such term is used
in the Policy) in an amount equal to the sum of (a) the compensation deferred by
Employee under the Advanced Micro Devices Executive Savings Plan (the "Plan")
during the pay periods ending during such Policy Year plus (b) the "cost of
insurance" (as defined in the Policy) for the excess, if any, of (i) the death
benefit required under Section 4 hereof (determined in compliance with the 7-pay
test set forth in Section 7702A of the Code) over (ii) the minimum death benefit
(determined in compliance with such 7-pay test) which could be provided by that
portion of the accumulated premiums actually paid under the Policy which were
paid pursuant to clause (a) of this sentence. The premium payment shall be
transmitted directly by the Company to the Insurance Company. Consistent with
the preceding sentences, prior to the release of the Company's Security Interest
in the Policy, Employee and the Company agree that the Company shall from time
to time designate one or more individuals (the "Designee"), who may be officers
of the Company, who shall be entitled to adjust the death benefit under the
Policy and to direct the investments under the Policy; provided, however, that
the Designee may only increase, but not decrease, the death benefit in effect on
the date that the Policy is issued; provided further, that the Designee may only
direct the investments under the Policies in funds offered by the Insurance
Company under the Policy. During the period of time that this Agreement is in
effect, Employee irrevocably agrees that all dividends paid on the Policy shall
be applied to purchase from the Insurance Company additional paid up life
insurance on the life of Employee.
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4. Death of Employee while employed by Employer.
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(a) If Employee dies prior to termination of employment with Employer and
prior to his or her Security Release Date (as defined in Section 10 below),
Employee's designated beneficiary shall be entitled to receive as a death
benefit an amount equal to three times the Employee's annual base salary at the
time of death, subject to a maximum benefit of Two Million Dollars ($2,000,000).
The amount described in the preceding sentence shall be paid from the proceeds
of the Policy; to the extent such amount exceeds such proceeds, the difference
shall be paid from any other source that the Company may designate, which may be
either another life insurance policy on the life of Employee or the general
assets of the Company. To the extent that the death benefit under the Policy
exceeds such amount, the balance of the death benefit shall be payable to the
Company. The designation of the beneficiaries under the Policy shall be in
accordance with this Section.
(b) Employee agrees that, during the period of this Agreement, Employee
will obtain and provide to the Company and/or the Insurance Company the written
consent of the spouse of the Employee, in the form attached hereto as Exhibit C,
to any designation by Employee of anyone other than the Employee's spouse as the
beneficiary to receive the benefits under this Section 4.
5. Employee's attaining his or her Security Release Date or termination of
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Employee's employment on account of a Qualifying Termination.
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(a) By making timely payment of the premiums described in Section 3, the
Company may renew its Security Interest in the Policy for the period commencing
with the due date of such payment until the later of (1) the due date of the
next payment described in Section 3, or (2) the date that Employee attains his
or her Security Release Date or terminates employment with the Employer on
account of a Qualifying Termination (either of which events described in this
clause 2 is referred to herein as a "Qualifying Event"). The Company may not
extend its Security Interest in the Policy under the Collateral Security
Assignment Agreement attached as Exhibit A after the occurrence of a Qualifying
Event. After such Qualifying Event, Employee shall be entitled to exercise all
of his or her ownership rights in the Policy without any limitation and this
Agreement and its accompanying Collateral Security Assignment Agreement shall no
longer constitute a restriction on Employee's rights.
(b) Notwithstanding paragraph (a), the Company shall continue to have its
Security Interest in the Policy, to the extent required to satisfy its
withholding obligations as described in Section 12 and to recover any amounts
owed by Employee as described in paragraph (c) below.
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(c) Employee agrees that if, at the time of the occurrence of a Qualifying
Event, Employee has any outstanding balances on any loans made by the Company to
Employee, then, unless Employee otherwise pays such outstanding balances,
Employee shall cause, either by withdrawing from or borrowing on a non-recourse
basis against the Policy, to be transferred to the Company, that portion of the
cash value of the Policy which is equal to the sum of the outstanding balances
on all such loans.
6. Termination of an Employee for a reason other than a Qualifying
---------------------------------------------------------------
Termination.
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If the employment of Employee with Employer is terminated prior to his or
her Security Release Date for a reason other than a Qualifying Termination (as
described below), Employee shall cause, either by withdrawing from or borrowing
against the Policy, on a nonrecourse basis, to be transferred to the Company an
amount equal to the maximum amount that may then be obtained under the Policy.
In the event that the amount that can be withdrawn from or borrowed against the
Policy is less than the cash surrender value of the Policy, the Company shall
withhold from other compensation payable to Employee the amount of such
difference unless Employee has previously transferred to the Company an amount
equal to such difference. In no event shall Employee's voluntary resignation
prior to attaining his or her Security Release Date (as such concept is further
defined below) ever constitute a Qualifying Termination, except in certain
situations following a Change in Control (see Section 9).
7. Definition of a Qualifying Termination.
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A Qualifying Termination is either of the following events: the termination
of Employee by Employer for any reason other than "Cause," as described in
Section 8; or the termination of Employee after a Change in Control under the
circumstances described in Section 9(a). Both of these concepts are further
defined below.
8. Qualifying Termination because Employee is terminated for a reason other
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than "Cause".
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For purposes of this Section, "Cause" shall mean (1) an act or acts of
dishonesty or moral turpitude (including but not limited to conviction of a
felony) taken by Employee; (2) Employee's willful failure to substantially
perform Employee's duties where such willful failure results in demonstrable
material injury and damage to the Employer; (3) Employee's misrepresentation or
concealment of a material fact for the purpose of securing employment with the
Employer; or (4) performance by Employee which is substantially below the
standard of performance which can reasonably be expected from an individual
occupying Employee's position or Employee's substantially failing to meet
performance objectives (such as
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performance objectives relating to profit) which have been previously agreed to
between Employee and Employer.
9. Qualifying Termination on account of a Change in Control.
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(a) A Qualifying Termination shall be treated as occurring on account of a
"Change in Control" (as defined below) if within six (6) months prior to or 36
months following such Change in Control, either (1) Employee's employment with
the Employer is terminated without "Cause" (as defined in Section 8) or (2)
Employee terminates his or her employment with the Employer for "Good Reason"
(as defined in subsection (c) below).
(b) For purposes of this Section, a "Change in Control" shall mean a
change of control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), or in response to any
other form or report to the Securities and Exchange Commission or any stock
exchange on which the Company's shares are listed which requires the reporting
of a change of control. In addition, a Change of 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 the Company representing more than 20% of the
combined voting power of the Company's then outstanding securities; or (ii) in
any two-year period, individuals who were members of the Board of Directors (the
"Board') 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; or (iii) 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 of
Control. Notwithstanding the foregoing definition, "Change of Control" shall
exclude the acquisition of securities representing more than 20% of the combined
voting power of the Company by the Company, any of its wholly-owned
subsidiaries, or any trustee or other fiduciary holding securities of the
Company under an employee benefit plan now or hereafter established by the
Company. As used herein, the term "beneficial owner" shall have the same
meaning as under Section 13(d) of the Exchange Act and related case law.
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(c) For purposes of this Section, "Good Reason" shall mean the occurrence
of one of the following events without Employee's consent:
(1) An adverse and significant change in the Employee's position,
duties, responsibilities, or status with the Employer, or a
change in Employee's office location to a point which is more
than 30 miles from his or her office location prior to the Change
in Control.
(2) A reduction by the Employer in Employee's base salary or
incentive compensation opportunity not agreed to by Employee; and
(3) The taking of any action by the Employer to eliminate benefit
plans without providing substitutes therefor, to reduce benefits
thereunder or to substantially diminish the aggregate value of
incentive awards or other fringe benefits.
(d) A termination of employment by Employee shall be for Good Reason if
one of the occurrences specified in paragraph (c) shall have occurred,
notwithstanding that Employee may have other reasons for terminating employment,
including employment by another employer which Employee desires to accept.
10. Employee's attaining his or her Security Release Date.
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(a) Employee's "Security Release Date" shall mean the later of: (i) the
date which is two years following the date on which the Company receives from
Employee a completed notice in the form attached hereto as Exhibit B (ii) the
date specified in such notice as the Security Release Date; provided that
Employee continues to be employed by Employer until such date. Notwithstanding
the preceding sentence, Employee may elect, by completing a notice in the form
attached hereto as Exhibit D, that his or her Security Release Date be later
than the date selected in accordance with the preceding sentence, so long as
such election is filed with the Company at least two years prior to the date
which would otherwise constitute his or her Security Release Date. For example,
if Employee originally selects January 1, 1998 as his or her Security Release
Date, he or she may elect at any time prior to January 1, 1996 that his or her
Security Release Date be postponed. Each election to postpone a Security
Release Date, once filed with the Company shall be irrevocable with regard to
said election. Employee is entitled to make a maximum of two elections to
postpone his or her initial Security Release Date under this Agreement.
(b) Employee shall attain his or her Security Release Date upon becoming
disabled while employed by the Employer. Employee
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shall be considered "disabled" at the time that the Administrator (as defined in
Section 13(a) below) determines, based upon competent medical advice, that an
Employee is incapable of rendering substantial services to the Employer by
reason of mental or physical disability.
(c) The Company's Security Interest in the Policy is contingent upon the
timely payment of premiums under Section 3 of this Agreement. Each period
covered by any individual premium payment shall be considered an independent
extension of the Company's Security Interest in the Policy. In the event that
the Company waives its rights by reason of failure to make payments under
Section 3 of this Agreement, Employee shall immediately attain his or her
Security Release Date. The Company's failure to extend its rights in no way
affects the Company's duties and obligations under this Agreement.
11. Limitation on Employee's rights prior to a Qualifying Event.
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In order to protect the Company's Security Interest and notwithstanding any
other provisions in this Agreement, prior to a Qualifying Event, Employee agrees
that he or she will not modify the death benefit under the Policy, borrow
against the Policy, assign the Policy, direct the investment of the cash
surrender value of the Policy, or obtain any portion of the cash value of the
Policy. Notwithstanding the preceding sentence, if Section 6 applies to a
termination, Employee may borrow or withdraw from the Policy, so long as the
borrowing or withdrawal request is submitted to the Insurance Company along with
a directive that the borrowed or withdrawn amount be transferred directly to the
Company.
12. Tax Withholding.
---------------
It is recognized by the parties that the rights of Employee in the Policy
(as modified by the Agreement) may cause Employee to be treated under certain
circumstances as in receipt of gross income. These circumstances may also
impose upon the Company an obligation to deduct and withhold federal, state or
local taxes. Unless Employee otherwise provides the Company the amounts it is
required to withhold, Employee shall cause, either by withdrawing from or
borrowing on a nonrecourse basis against the Policy, to be transferred to the
Company that portion of the cash value of the Policy which is equal to the
amount of any federal, state or local taxes required to be withheld.
13. Disputes.
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(a) The Compensation Committee of the Board of Directors of the Company
(the "Administrator") shall administer this Agreement. The Administrator
(either directly or through its designees) will have power and authority to
interpret, construe,
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and administer this Agreement (for the purpose of this section, the Agreement
shall include the Collateral Security Assignment Agreement); provided that, the
Administrator's authority to interpret this Agreement shall not cause the
Administrator's decisions in this regard to be entitled to a deferential
standard of review in the event that Employee or his or her beneficiary seeks
review of the Administrator's decision as described below.
(b) Neither the Administrator, its designee nor its advisors, shall be
liable to any person for any action taken or omitted in connection with the
interpretation and administration of this Agreement.
(c) Because it is agreed that time will be of the essence in determining
whether any payments are due to Employee or his or her beneficiary under this
Agreement, Employee or his or her beneficiary may, if he or she desires, submit
any claim for payment under this Agreement or dispute regarding the
interpretation of this Agreement to arbitration. This right to select
arbitration shall be solely that of Employee or his or her beneficiary and
Employee or his or her beneficiary may decide whether or not to arbitrate in his
or her discretion. The "right to select arbitration" is not mandatory on
Employee or his or her beneficiary and Employee or his or her beneficiary may
choose in lieu thereof to bring an action in an appropriate civil court. Once an
arbitration is commenced, however, it may not be discontinued without the
mutual consent of both parties to the arbitration. During the lifetime of the
Employee only he or she can use the arbitration procedure set forth in this
section.
(d) Any claim for arbitration may be submitted as follows: if Employee or
his or her beneficiary disagrees with the Administrator regarding the
interpretation of this Agreement and the claim is finally denied by the
Administrator in whole or in part, such claim may be filed in writing with an
arbitrator of Employee's or beneficiary's choice who is selected by the method
described in the next four sentences. The first step of the selection shall
consist of Employee or his or her beneficiary submitting a list of five
potential arbitrators to the Administrator. Each of the five arbitrators must
be either (1) a member of the National Academy of Arbitrators located in the
State of California or (2) a retired California Superior Court or Appellate
Court judge. Within one week after receipt of the list, the Administrator shall
select one of the five arbitrators as the arbitrator for the dispute in
question. If the Administrator fails to select an arbitrator in a timely
manner, Employee or his or her beneficiary shall then designate one of the five
arbitrators as the arbitrator for the dispute in question.
(e) The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No continuance of
said hearing shall be allowed without the mutual consent of Employee or his or
her beneficiary
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and the Administrator. Absence from or nonparticipation at the hearing by
either party shall not prevent the issuance of an award. Hearing procedures
which will expedite the hearing may be ordered at the arbitrator's discretion,
and the arbitrator may close the hearing in his or her sole discretion when he
or she decides he or she has heard sufficient evidence to satisfy issuance of an
award.
(f) The arbitrator's award shall be rendered as expeditiously as possible
and in no event later than one week after the close of the hearing. In the
event the arbitrator finds that the Company has breached this Agreement, he or
she shall order the Company to immediately take the necessary steps to remedy
the breach. The award of the arbitrator shall be final and binding upon the
parties. The award may be enforced in any appropriate court as soon as possible
after its rendition. If an action is brought to confirm the award, both the
Company and Employee agree that no appeal shall be taken by either party from
any decision rendered in such action.
(g) Solely for purposes of determining the allocation of the costs
described in this subsection, the Administrator will be considered the
prevailing party in a dispute if the arbitrator determines (1) that the Company
has not breached this Agreement and (2) the claim by Employee or his or her
beneficiary was not made in good faith. Otherwise, Employee or his or her
beneficiary will be considered the prevailing party. In the event that the
Company is the prevailing party, the fee of the arbitrator and all necessary
expenses of the hearing (excluding any attorneys' fees incurred by the Company)
including stenographic reporter, if employed, shall be paid by the other party.
In the event that Employee or his or her beneficiary is the prevailing party,
the fee of the arbitrator and all necessary expenses of the hearing (including
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all attorneys' fees incurred by Employee or his or her beneficiary in pursuing
his or her claim), including the fees of a stenographic reporter if employed,
shall be paid by the Company.
14. Collateral Security Assignment of Policy to the Company.
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In consideration of the promises contained herein, the Employee has
contemporaneously herewith granted the Security Interest in the Policy to the
Company as collateral, under the form of Collateral Security Assignment attached
hereto as Exhibit A, which Collateral Security Assignment gives the Company the
limited power to enforce its rights to recover the cash value of the Policy
under the circumstances defined herein, or a portion of the death benefit
thereof. The Company's Security Interest in the Policy shall be specifically
limited to the rights set forth above in this Agreement, notwithstanding the
provisions of any other documents including the Policy. Employee agrees to
execute
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any notice prepared by the Company requesting a withdrawal or non-recourse loan
in an amount equal to the amount to which the Company is entitled under Sections
5, 6 or 12 of this Agreement.
15. Employee's beneficiary rights and security interest.
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(a) The Company and Employee intend that in no event shall the Company
have any power or interest related to the Policy or its proceeds, except as
provided herein and in the Collateral Security Assignment. In the event that the
Company ever receives or may be deemed to have received any right or interest in
the Policy or its proceeds beyond the limited rights described herein and in the
Collateral Security Assignment, such right or interest shall be held in trust
for the benefit of Employee and be held separate from the property of the
Company.
(b) In order to further protect the rights of the Employee, the Company
agrees that its rights to the Policy and proceeds thereof shall serve as
security for the Company's obligations as provided in this Agreement to
Employee. The Company grants to Employee a security interest in and
collaterally assigns to Employee any and all rights the Company has in the
Policy, and products and proceeds thereof whether now existing or hereafter
arising pursuant to the provisions of the Policy, this Agreement, the Collateral
Security Assignment or otherwise, to secure any and all obligations owed by the
Company to Employee under this Agreement. In no event shall this provision be
interpreted to reduce Employee's rights to the Policy or expand in any way the
rights or benefits of the Company under this Agreement, the Policy or the
Collateral Security Assignment. This security interest granted to Employee from
the Company shall automatically expire and be deemed waived if Employee
terminates employment with Employer prior to a Qualifying Event. Nothing in
this provision shall prevent the Company from receiving its share of the death
benefits under the Policy as provided in Section 4 of this Agreement.
16. Amendment of Agreement.
----------------------
Except as provided in a written instrument signed by the Company and
Employee, this Agreement may not be cancelled, amended, altered, or modified.
17. Notice under Agreement.
----------------------
Any notice, consent, or demand required or permitted to be given under the
provisions of this Agreement by one party to another shall be in writing, signed
by the party giving or making it, and may be given either by delivering it to
such other party personally or by mailing it, by United States
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Certified mail, postage prepaid, to such party, addressed to its last known
address as shown on the records of the Company. The date of such mailing shall
be deemed the date of such mailed notice, consent, or demand.
18. Binding Agreement.
-----------------
This Agreement shall bind the parties hereto and their respective
successors, heirs, executor, administrators, and transferees, and any Policy
beneficiary.
19. Controlling law and characterization of Agreement.
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(a) To the extent not governed by federal law, this Agreement and the
right to the parties hereunder shall be controlled by the laws of the State of
California.
(b) If this Agreement is considered a "plan" under the Employee Retirement
Income Security Act of 1974 (ERISA), both the Company and Employee acknowledge
and agree that for all purposes the Agreement shall be treated as a "welfare
plan" within the meaning of section 3(1) of ERISA and that any rights that might
arise under ERISA if this Agreement were treated as a "pension plan" within the
meaning of Section 3(2) of ERISA are hereby expressly waived. Consistent with
the preceding sentence, Employee further acknowledges that his or her rights to
the Policy and the release of the Company's Security Interest are strictly
limited to those rights set forth in this Agreement. In furtherance of this
acknowledgement and in consideration of the Company's payment of the initial
premiums for this Policy, Employee voluntarily and irrevocably relinquishes and
waives any additional rights in the Policy or any different restrictions on the
release of the Company's Security Interest that he or she might otherwise argue
to exist under either state, federal, or other law. Employee further agrees that
he or she will not argue in any judicial or arbitration proceeding that any such
additional rights or different restrictions exist. Similarly, the Company
acknowledges that its Security Interest is strictly limited as set forth in this
Agreement and voluntarily and irrevocably relinquishes and waives any additional
interest or different interest or advantages that the Company would have or
enjoy if the Agreement were not treated as a "welfare plan" within the meaning
of Section 3(1) of ERISA.
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20. The Company and Employee agree to execute any and all documents
necessary to effectuate the terms of this Agreement.
EMPLOYEE ADVANCED MICRO DEVICES, INC.
____________________ By: __________________________
Its __________________________
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EXHIBIT A
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COLLATERAL SECURITY ASSIGNMENT AGREEMENT
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This Collateral Security Assignment is made and entered into effective
as of __________, 19__, by the undersigned as the owner (the "Owner") of Life
Insurance Policy Number ______________ (the "Policy") issued by The
Manufacturers Life Insurance Company of America (the "Insurer") upon the life of
Owner and by Advanced Micro Devices, Inc. a __________ corporation (the
"Assignee").
WHEREAS, the Owner is a valued employee of Assignee or a subsidiary of
Assignee, and the Assignee wishes to retain him or her in its or its
subsidiary's employ; and
WHEREAS, to encourage the Owner's continued employment, the Assignee wishes
to pay premiums on the Policy, as more specifically provided for in that
certain Split-Dollar Life Insurance Agreement dated as of ________________,
19__, and entered into between the Owner and the Assignee as such agreement may
be hereafter amended or modified (the "Agreement") (unless otherwise indicated
the terms herein shall have the definitions ascribed thereto in the Agreement);
WHEREAS, in consideration of the Assignee agreeing to make the premium
payments, the Owner agrees to grant the Assignee a security interest in the
Policy as collateral security; and
WHEREAS, the Owner and Assignee intend that the Assignee have no greater
interest in the Policy than that prescribed herein and in the Agreement and that
if the Assignee ever obtains any right or interest in the Policy or the proceeds
thereof, except as provided herein and in the Agreement, such right or interest
shall be held in trust for the Owner to satisfy the obligations of Assignee to
Owner under the Agreement and the Assignee additionally agrees that its rights
to the Policy shall serve as security for its obligations to the Owner under the
Agreement;
NOW, THEREFORE, the Owner hereby assigns, transfers and sets over to the
Assignee for security the following specific rights in the Policy, subject to
the following terms, agreements and conditions:
1. This Collateral Security Assignment is made, and the Policy is to be
held, as collateral security for all liabilities of the Owner to the Assignee
pursuant to the terms of the Agreement, whether now existing or hereafter
arising (the "Secured Obligations"). The Secured Obligations include: (i) the
obligation of the Owner to transfer an amount equal to the entire cash value in
the event that the Owner terminates employment with Employer for a reason other
than a Qualifying Termination and before attaining his or her Security Release
Date; (ii) the obligation of the Owner to pay an amount of cash to Assignee or
transfer to Assignee that portion of the cash value which is equal to any
federal, state or local taxes that Assignee may be required
A-1
to withhold and collect (as set forth in Section 12 of the Agreement); and (iii)
the obligation of the Owner to pay an amount of cash to the Company or transfer
to the Company that portion of the cash surrender value of the Policy which is
equal to the sum of the outstanding balances on any loans made by Assignee to
the Owner in the event of a Qualifying Event (as set forth in Section 5(c) of
the Agreement; and (iv) the obligation of the Owner to name the Assignee as
beneficiary for a portion of the death benefit under the Policy in the event of
the death of the insured prior to Owner's termination of employment with
Employer in accordance with Section 4 of the Agreement.
2. The Owner hereby grants to Assignee a security interest in and
collaterally assigns to Assignee the Policy and the cash value to secure the
Secured Obligations. However, the Assignee's interest in the Policy shall be
strictly limited to:
(a) The right to be paid the Assignee's portion of the death benefit in
the event of the death of the Owner prior to Owner's termination of employment
with Employer in accordance with Section 4 of the Agreement;
(b) The right to receive an amount equal to the entire cash value of the
Policy (which right may be realized by Assignee's receiving a portion of the
death benefit under the Policy or Owner's causing such amount to be transferred
to Assignee (through withdrawing from or borrowing against the Policy), in
accordance with the terms of the Agreement) if the Owner terminates employment
with Employer for a reason other than a Qualifying Termination (unless he or she
has previously attained his or her Security Release Date);
(c) The right to receive an amount equal to the sum of the outstanding
balances on any loans made by Assignee to the Owner in the event of a Qualifying
Event (as set forth in Section 5(c) of the Agreement); and
(d) The right to receive an amount equal to any federal, state or local
taxes that Assignee may be required to withhold and collect (as set forth in
Section 12 of the Agreement).
3. (a) Owner shall retain all incidents of ownership in the Policy, and
may exercise such incidents of ownership except as otherwise limited by the
Agreement and hereunder. The Insurer is only authorized to recognize (and is
fully protected in recognizing) the exercise of any ownership rights by Owner if
the Insurer determines that the Assignee has been given notice of Owner's
purported exercise of ownership rights in compliance with the provisions of
Section 3(b) hereof and as of the date thirty days after such notice is given,
the Insurer has not received written notification from the Assignee of
Assignee's objection to such exercise; provided that, the designation of the
beneficiary to receive the death benefits not otherwise payable to Assignee
pursuant to Section 4 of the Agreement may be changed by the Owner without prior
A-2
notification of Assignee. The Insurer shall not be responsible to ensure that
the actions of the Owner conform to the Agreement.
(b) Assignee hereby acknowledges that for purposes of this Collateral
Security Assignment, Assignee shall be conclusively deemed to have been
properly notified of Owner's purported exercise of his or her ownership rights
as of the third business day following either of the following events: (1)
Owner mails written notice of such exercise to Assignee by United States
certified mail, postage paid, at the address below and provides the Insurer with
a copy of such notice and a copy of the certified mail receipt or (2) the
Insurer mails written notice of such exercise to Assignee by regular United
States mail, postage paid, at the address set forth below:
Advanced Micro Devices, Inc.
One AMD Place
M/S 181
Sunnyvale, California 94088
Attn: Corporate Compensation Manager
The foregoing address shall be the appropriate address for such notices to be
sent unless and until the receipt by both Owner and the Insurer of a written
notice from Assignee of a change in such address.
(c) Notwithstanding the foregoing, Owner and Assignee hereby agree that,
until Assignee's security interest in the Policy is released, Assignee shall
from time to time designate one or more individuals (the "Designee"), who may be
officers of Assignee, who shall be entitled to adjust the death benefit under
the Policy and to direct the investments under the Policy; provided, however,
that the Designee may only increase, but not decrease, the death benefit in
effect on the date that the Policy is issued; provided further, that the
Designee may only direct the investments under the Policy in funds offered by
the Insurer under the Policy. Assignee shall notify the Insurer in writing of
the identity of the Designee and any changes in the identity of the Designee.
Until Assignee's security interest in the Policy is released, no other party may
adjust the death benefit or direct the investments under the Policy without the
consent of the Assignee and the Owner.
4. If the Policy is in the possession of the Assignee, the Assignee
shall, upon request, forward the Policy to the Insurer without unreasonable
delay for endorsement of any designation or change of beneficiary or the
exercise of any other right reserved by the Owner.
5.(a) Assignee shall be entitled to exercise its rights under the
Agreement by delivering a written notice to Insurer, executed by the Assignee
and the Owner or the Owner's beneficiary, requesting either (1) a withdrawal or
nonrecourse policy
A-3
loan equal to the amount to which Assignee is entitled under Sections 5, 6 or 12
of the Agreement and transfer of such withdrawn or borrowed amount to Assignee
or (2) the payment to the Assignee of that portion of the death benefit under
the Policy to which the Assignee is entitled under Section 4 of the Agreement.
So long as the notice is also signed by Owner or his or her beneficiary, Insurer
shall pay or loan the specified amounts to Assignee without the need for any
additional documentation.
(b) Upon receipt of a properly executed notice complying with the
requirements of subsection (a) above, the Insurer is hereby authorized to
recognize the Assignee's claims to rights hereunder without the need for any
additional documentation and without investigating (1) the reason for such
action taken by the Assignee; (2) the validity or the amount of any of the
liabilities of the Owner to the Assignee under the Agreement; (3) the existence
of any default therein; (4) the giving of any notice required herein; or (5) the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The receipt of the Assignee for any sums received by it shall be a
full discharge and release therefor to the Insurer.
6. Upon the full payment of the liabilities of the Owner to the Assignee
pursuant to the Agreement, the Assignee shall execute an appropriate release of
this Collateral Security Assignment.
7. The Assignee shall have the right to request of the Insurer and/or the
Owner notice of any action taken with respect to the Policy by the Owner.
8.(a) The Assignee and the Owner intend that in no event shall the
Assignee have any power or interest related to the Policy or its proceeds,
except as provided herein and in the Agreement, notwithstanding the provisions
of any other documents including the Policy. In the event that the Assignee
ever receives or may be deemed to have received any right or interest beyond the
limited rights described herein and in the Agreement, such right or interest
shall be held in trust for the benefit of the Owner and be held separate from
the property of the Assignee.
(b) In order to further protect the rights of the Owner, the Assignee
agrees that its rights to the Policy and proceeds thereof shall serve as
security for the Assignee's obligations to the Owner as provided in the
Agreement. Assignee hereby grants to Owner a security interest in and
collaterally assigns to Owner any and all rights it has in the Policy, and
products and proceeds thereof, whether now existing or hereafter arising
pursuant to the provisions of the Policy, the Agreement, this Collateral
Security Assignment or otherwise, to secure Assignee's obligations ("Assignee
Obligations") to Owner under the Agreement, whether now existing or hereafter
arising. The Assignee Obligations include all obligations owed by the
A-4
Assignee to Owner under the Agreement, including without limitation: (i) the
obligation to purchase the Policy designating Owner as the owner and to make the
premium payments required under Section 3 of the Agreement and (ii) the
obligation to do nothing which may, in any way, endanger, defeat or impair any
of the rights of Owner in the Policy as provided in the Agreement. In no event
shall this provision be interpreted to reduce Owner's rights in the Policy or
expand in any way the rights or benefits of the Assignee under the Agreement. In
the event that Owner terminates employment with Employer for any reason prior to
a Qualifying Event, this security interest and collateral assignment granted by
Assignee to Owner shall auto matically expire and be deemed waived. Nothing in
this provision shall prevent the Assignee from receiving its share of the death
benefits under the Policy as provided in Section 4 of the Agreement.
9. Assignee and Owner agree to execute any documents necessary to
effectuate this Collateral Security Assignment pursuant to the provisions of the
Agreement. All disputes shall be settled as provided in Section 13 of the
Agreement. The rights under this Collateral Security Assignment may be enforced
pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Collateral
Security Assignment effective the day and year first above written.
___________________________________
, Owner
ADVANCED MICRO DEVICES, INC.
By: ______________________________
Title: ___________________________
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EXHIBIT B
SPLIT-DOLLAR LIFE INSURANCE SECURITY RELEASE NOTICE
Pursuant to the Split-Dollar Life Insurance Agreement entered into
between Advanced Micro Devices, Inc. ("the Company") and me as of
______________, 199__ (the "Agreement"), I hereby notify the Company that I
request to be released on __________, ____ ("Security Release Date") from the
Company's collateral security interest in Policy Number ________ issued by The
Manufacturers Life Insurance Company of America. I understand that my Security
Release Date must be at least two years from the date the Company receives this
Notice. I also understand that my Security Release Date may be changed no more
than twice, and then only to a later date, not an earlier date, and that any
change in my Security Release Date must be made at least two years before the
date that would otherwise be my Security Release Date. I further understand that
in order for the Company's collateral security interest to be released on my
Security Release Date, I must continue to be employed by the Employer (as
defined in the Agreement) until such date.
______________________
Participant
Date:_________________
Received by the Company on _____________________________________________
by ______________________________________
EXHIBIT C
SPOUSAL CONSENT TO DESIGNATION OF NONSPOUSAL BENEFICIARY
My spouse is _____________________. I hereby consent to the
designation made by my spouse of _______________________ as the beneficiary
(subject to any rights collaterally assigned to Advanced Micro Devices, Inc.)
under Life Insurance Policy No. _________________ which Advanced Micro Devices,
Inc. has caused The Manufacturers Life Insurance Company of America to issue to
him/her. I also understand that this consent is valid only with respect to the
naming of the beneficiary indicated above and that the designation of any other
beneficiary will not be valid unless I consent in writing to such designation.
This consent is being voluntarily given, and no undue influence or
coercion has been exercised in connection with my consent to the designation
made by my spouse of the beneficiary named above rather than myself as the
beneficiary under the Split-Dollar Life Insurance Policy.
___________________________
Spouse's Signature
___________________________
Print Spouse's Name
Date: ______________________________
EXHIBIT D
NOTICE TO POSTPONE SPLIT-DOLLAR LIFE INSURANCE SECURITY RELEASE DATE
First Election to Postpone Security Release Date
- - ------------------------------------------------
Pursuant to the Split-Dollar Life Insurance Agreement entered into
between Advanced Micro Devices (the "Company") and me as of ____________ (the
"Agreement"), I hereby notify the Company that I request to postpone my initial
Security Release Date from ____________, _______ until ___________, _____
("Security Release Date"). I understand that this first election to postpone
must be received by the Company at least two years prior to the date which would
otherwise constitute my Security Release Date. I further understand that in
order for the Company's collateral security interest to be released on my
Security Release Date as postponed, I must continue to be employed by the
Company or one of it subsidiaries until such date.
____________________________________ _______________________________
Participant Date
Received by Advanced Micro Devices
on __________________________ By ___________________________________
- - --------------------------------------------------------------------------
Second Election to Postpone Security Release Date.
- - -------------------------------------------------
Pursuant to the Split-Dollar Life Insurance Agreement entered into
between Advanced Micro Devices (the "Company") and me as of __________________
(the "Agreement"), I hereby notify the Company that I request to further
postpone by Security Release Date from ____________________, _____ until
___________________, _____. I understand that this second election to postpone
must be received by the Company at least two years prior to the date which would
otherwise constitute my Security Release Date. I further understand that in
order for the Company's collateral security interest to be released on my
Security Release Date as postponed, I must continue to be employed by the
Company or one of its subsidiaries until such date.
____________________________________ _______________________________
Participant Date
Received by Advanced Micro Devices
on ___________________ By ____________________________________________