Exhibit 10.7

 

AMENDED AND RESTATED

GENERAL ADMINISTRATIVE SERVICES AGREEMENT

 

This AMENDED AND RESTATED GENERAL ADMINISTRATIVE SERVICES AGREEMENT (this
“Agreement”), is made and entered into as of December 21, 2005, (the “Amendment
Date”) by and between SPANSION INC., a Delaware corporation (“Spansion”), on
behalf of itself and its Affiliates, and ADVANCED MICRO DEVICES, INC., a
Delaware corporation (“AMD”), on behalf of itself and its Affiliates. AMD and
Spansion are hereinafter collectively referred to as the “Parties” and
individually as a “Party.”

 

RECITALS

 

WHEREAS, in connection with the creation of Spansion LLC, Spansion Inc.’s
predecessor, the Parties executed a General Administrative Services Agreement
dated as of June 30, 2003 (the “Effective Date”); and

 

WHEREAS, the Parties hereby desire to amend and restate that General
Administrative Services Agreement.

 

NOW, THEREFORE, in consideration of the mutual representations, covenants and
other terms and conditions contained herein, the Parties hereby amend and
restate that General Administrative Services Agreement and agree as follows:

 

1. DEFINITIONS

 

1.1 Definitions. The defined terms used in this Agreement shall have the
meanings set forth in Exhibit 1 or as defined in the text below.

 

1.2 Interpretation.

 

(a) Certain Terms. The words “hereof,” “herein,” “hereunder” and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The term “including” is not limited and means “including without
limitation.”

 

(b) Section References; Titles and Subtitles. Unless otherwise noted, all
references to Sections, Schedules and Exhibits herein are to Sections, Schedules
and Exhibits of this Agreement. The titles, captions and headings of this
Agreement are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.

 

(c) References to Persons, Agreements and Statutes. Unless otherwise expressly
provided herein, (i) references to a person or Entity include its successors and
permitted assigns, (ii) references to agreements (including this Agreement) and
other contractual instruments shall be deemed to include all subsequent
amendments, restatements and other modifications thereto or supplements thereof
and (iii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such statute or regulation. In
addition, any references to

--------------------------------------------------------------------------------

“either Party” and/or the “other Party,” etc. shall be deemed to refer to
Spansion and AMD, respectively, as the context indicates.

 

2. TERM

 

2.1 Term. The initial term of this Agreement shall commence on the Effective
Date and continue until 23:59 (Pacific Daylight Time) on June 30, 2007, or such
earlier date upon which this Agreement may be terminated in accordance with its
terms (the “Initial Term”).

 

2.2 Extension. The Parties may extend the Initial Term of this Agreement by
mutual written agreement; each such agreed upon extension period shall be
referred to as an “Extension Period.”

 

3. MANAGEMENT, COMMUNICATION, INFORMATION AND ESCALATION RIGHTS

 

3.1 In General. AMD shall have day-to-day management control over its receipt of
the Services. Subject to the terms of this Agreement, this will include
decisions regarding (a) its general administrative services budget, (b) the
level of Services it requires, and (c) the performance of its service providers,
including its response to failures by Spansion to provide Services in accordance
with the Service Levels and any material breach by Spansion of its obligations
under this Agreement. To administer its receipt and use of these Services, AMD
will retain an AMD Services Manager as described below and will consult with the
Spansion Services Advisor and Fujitsu Services Advisor in AMD’s reasonable
judgment.

 

3.2 AMD Services Manager. AMD shall employ an individual reasonably
knowledgeable about the provision of general administrative services similar to
those provided by Spansion under this Agreement (the “AMD Services Manager”).
The AMD Services Manager shall (a) have overall responsibility for managing and
coordinating the performance of AMD’s obligations under this Agreement and for
monitoring the performance of obligations by Spansion under this Agreement, (b)
subject to the supervision of AMD management, be authorized to act for and on
behalf of AMD with respect to all matters relating to this Agreement, and (c)
shall be the primary contact with the Spansion Services Advisor and Fujitsu
Services Advisor.

 

3.3 Spansion Services Advisor. Spansion shall appoint at Spansion’s expense an
individual (the “Spansion Services Advisor”) who will serve as the Spansion
representative under this Agreement. The Spansion Services Advisor shall (a)
have overall responsibility for managing and coordinating the performance of
Spansion’s obligations under this Agreement, (b) be authorized to act for and on
behalf of Spansion with respect to all matters relating to this Agreement, and
(c) shall be the primary contact with the AMD Services Manager and Fujitsu
Services Advisor.

 

3.4 Fujitsu Services Advisor. Fujitsu shall appoint at Fujitsu’s expense an
individual (the “Fujitsu Services Advisor”) who will serve as the Fujitsu
representative to Spansion regarding the Services. The Fujitsu Services Advisor
will serve in an advisory capacity

 

2

--------------------------------------------------------------------------------

to Spansion only and will not have independent veto rights or other day-to-day
decision-making authority over Spansion’s performance of the Services. The
Fujitsu Services Advisor will act in the best interests of Spansion, not
Fujitsu. Spansion shall make available to the Fujitsu Services Advisor office
space and facilities upon the Fujitsu Services Advisor’s reasonable request as
and when reasonably required by the Fujitsu Services Advisor to enable the
Fujitsu Services Advisor to perform his or her responsibilities hereunder. In
the performance of the Fujitsu Services Advisor’s functions, the Fujitsu
Services Advisor shall have the right as reasonably necessary to consult with
other Fujitsu employees with appropriate expertise in the respective Service
areas and provide information regarding the Services to such employees. For
purposes of determining the scope of the Fujitsu Services Advisor’s rights and
responsibilities hereunder, the term “Services” will be deemed to include any
services performed by Spansion pursuant to Special Projects. In the event that
Fujitsu’s Aggregate Ownership Interest falls below ten percent (10%) and Fujitsu
no longer provides services to Spansion that are similar to the Services, either
Spansion or Fujitsu may, but shall not be required to, by written notice to the
other and AMD, terminate the role of the Fujitsu Services Advisor, and, upon
such termination, the Fujitsu Services Advisor shall have no further rights or
obligations hereunder.

 

3.5 Information Exchange and Information Rights. AMD shall keep Spansion
informed about those aspects of AMD’s business that could reasonably be expected
to have an effect on the demand for, or provision of, the Services. Spansion
will provide to the Fujitsu Services Advisor copies of all reports and other
written information relating to the Services that Spansion provides AMD herein
at the same time Spansion provides such reports and information to AMD,
including a copy of the quarterly service reports provided AMD under Section
4.7. At any time upon the Fujitsu Services Advisor’s reasonable request, the AMD
Services Manager shall provide the Fujitsu Services Advisor additional
information regarding the performance of the Services and the associated Fees to
the extent such information is available. Spansion and AMD, through the Spansion
Services Advisor and the AMD Services Manager, will give notice and otherwise
keep the Fujitsu Services Advisor informed of all proposals and discussions
between the AMD Services Manager and the Spansion Services Advisor relating to
material aspects of this Agreement and the provision of Services herein,
including all Changes proposed under the Change Control Procedures, any Special
Projects, all audits conducted by AMD and all budget meetings related to the
Services. Such notice shall be given by the Parties promptly upon initiation of
such discussions. In addition, Spansion and AMD will, upon the Fujitsu Services
Advisor’s request and subject to applicable confidentiality restrictions, grant
access to the Fujitsu Services Advisor to any meeting between the Spansion
Services Advisor and the AMD Services Manager, whether telephonic or in person,
regarding performance of the Services, the Fees and any proposed Special
Projects or Changes.

 

3.6 Services Advisor Escalation Rights. If at any time, the Fujitsu Services
Advisor believes in good faith that (a) AMD is in material breach under this
Agreement or (b) an audit pursuant to Section 8.11 should be conducted, then the
Fujitsu Services Advisor will notify the Spansion Services Advisor in writing.
If after a reasonable period of time, the Fujitsu Services Advisor does not
believe that the concern raised has been adequately addressed, the Fujitsu
Services Advisor shall be entitled to notify Spansion’s Board of Directors (the
“Board of Directors”) of the Fujitsu Services Advisor’s concerns. Any such
notice shall be in writing and

 

3

--------------------------------------------------------------------------------

shall be provided to all Board members simultaneously, with a copy also provided
simultaneously to the AMD Services Manager and the Spansion Services Advisor.
The Board of Directors shall consider the Fujitsu Service Advisor’s concerns in
good faith and may take any action it deems reasonable in the circumstances.

 

3.7 Contract Amendments.

 

(a) AMD and Spansion may only amend this Agreement upon the approval of the
Board of Directors. The Board of Directors may delegate its decision-making
authority to Spansion management as it deems appropriate; provided, however,
that any Special Project or new Services purchase of greater than Five Hundred
Thousand Dollars ($500,000) payable in any Spansion fiscal year will require
specific approval from the Board of Directors.

 

(b) For so long as Fujitsu maintains at least a ten percent (10%) Aggregate
Ownership Interest, Spansion and AMD may not amend this Agreement without the
prior written consent of Fujitsu (which consent shall not be unreasonably
conditioned, delayed or withheld), to the extent an amendment (i) reduces the
rights of the Fujitsu Services Advisor set forth herein, (ii) reduces Fujitsu’s
right to consent to amendments set forth in this Section, (iii) establishes a
basis for charging AMD for the Services other than by calculating Spansion’s
reasonable, good faith estimates of actual costs plus five percent (5%), as set
forth in Section 8.6, or materially alters the cost allocation methodologies
described in Section 8.6 or (iv) materially reduces Spansion’s rights under this
Agreement. Notwithstanding the foregoing, changes to Fees or Services resulting
from Change Control Procedures, the Annual Budget Process or the Fee
reconciliation process described in Section 8.6 shall not be deemed to
constitute amendments to this Agreement.

 

3.8 Approvals. AMD shall reasonably cooperate with Spansion by making available,
as requested by Spansion, management decisions, information, approvals or
disapprovals, and acceptances or rejections in a reasonably timely manner so
that Spansion may fulfill its obligations under this Agreement.

 

3.9 Change Control Procedures. The Parties shall use the following procedures
(the “Change Control Procedures”) to implement Changes.

 

(a) General.

 

(i) Changes. Changes shall be implemented only by mutual agreement of the
Parties through these Change Control Procedures, except as may be necessary on
an emergency, temporary basis to maintain the continuity of the Services. The
Parties acknowledge and agree that the implementation of a Change does not
necessarily require an increase in the Fees or other fees payable by AMD or a
reduction in the scope of Services or in Service Levels provided hereunder, and
that any change in the Fees or other amounts payable by AMD as a result of a
Change will be an adjustment in accordance with the provisions of Section 8. All
decisions regarding Changes are subject to the approval by the Board of
Directors, which may delegate its decision-making authority to Spansion
management as it deems appropriate. The Parties acknowledge and agree that not
all modifications to the Services may constitute Changes; as part

 

4

--------------------------------------------------------------------------------

of the routine operation of AMD and Spansion, modifications that are not
material or significant, as determined by Spansion in its reasonable judgment,
may be conducted without recourse to the Change Control Procedures; provided
that the AMD Services Manager is notified — on a regular basis consistent with
Spansion’s internal processes — of the modifications being implemented on AMD’s
behalf, with a copy of such report provided to the Fujitsu Services Advisor.

 

(ii) Schedule. Unless otherwise agreed by AMD, with respect to all Changes,
Spansion shall (a) schedule Changes so as not to unreasonably interrupt AMD’s
business operations, other than those Changes made on a emergency basis to
maintain the continuity of the Services, (b) prepare and deliver to AMD each
quarter a rolling schedule for ongoing and planned agreed upon Changes for the
next quarter, and (c) monitor the status of Changes against the applicable
schedule.

 

(iii) Meetings. The Spansion Services Advisor and the AMD Services Manager shall
meet on a mutually agreed schedule (no less frequently than each quarter) for
the purpose of reviewing Change requests submitted by either Party in accordance
with these Change Control Procedures. The AMD Services Manager will provide the
Fujitsu Services Advisor written or telephonic notice of these meetings and the
Fujitsu Services Advisor may attend.

 

(b) Requests for Changes. Requests for Changes shall be submitted for review in
accordance with the Change Control Procedures, and shall include a reasonably
detailed description of the requested Change together with the basis for such
Change. All requests for Changes by AMD shall be communicated to Spansion
through the AMD Services Manager or his or her authorized designee.

 

(i) Changes Initiated by AMD. Within ten (10) business days after Spansion
receives a request from AMD for a Change, either Spansion or a joint project
team working on the Service to be impacted, as appropriate, shall prepare and
provide to AMD an initial written proposal for the Change (a “Change Proposal”),
which proposal will include Spansion’s initial proposals regarding (A) the
Services and the applicable schedule for performing the Services, including but
not limited to AMD’s related obligations, to effect the Change, (B) the
resources required to perform Services effecting the Change and resulting from
the Change, (C) the Fees for Services, and (D) any additional areas that are
reasonably likely to be impacted by the proposed Change. The Change Proposal
shall also contain a description of any other anticipated costs that AMD will
incur as a result of the Change that it would otherwise not have incurred.
Within ten (10) business days after receiving such Change Proposal, AMD shall
either approve the Change Proposal, notify Spansion that AMD desires to discuss
the Change Proposal further, or withdraw the request for such Change. AMD’s
failure to approve the Change Proposal or notify Spansion that AMD desires to
discuss the Change Proposal further within this ten (10) business day period
shall be deemed a rejection of the Change Proposal, and the Change shall not be
implemented.

 

(ii) Changes Initiated by Spansion. Concurrent with the submission of a request
for a Change by Spansion, either Spansion or a joint project team working on the
impacted Service, as appropriate, shall provide to AMD a Change Proposal
containing the information specified in subparagraph (i) above. Within ten (10)
business days after receiving such proposal, AMD shall either approve the Change
Proposal, notify Spansion that AMD desires to discuss the Change

 

5

--------------------------------------------------------------------------------

Proposal further, or reject the requested Change. AMD’s failure to approve the
Change Proposal or notify Spansion that AMD desires to discuss the Change
Proposal further within this ten (10) business day period shall be deemed a
rejection of such request, and the Change shall not be implemented.

 

(c) Further Discussion of Changes. If within ten (10) business days after
receipt of a Change Proposal, AMD notifies Spansion that AMD desires to discuss
the proposed Change further, the AMD Services Manager and Spansion Services
Advisor will promptly consider the Change Proposal in person or by telephone and
will attempt in good faith to develop a mutually acceptable Change Proposal. The
AMD Services Manager will notify the Fujitsu Services Advisor of the proposed
meeting and the Fujitsu Services Advisor may attend any such meeting.

 

(d) Implementation of Changes. All Changes are subject to the written approval
of the Parties. Only following receipt of each Party’s written approval may
Spansion begin to implement the approved Change, and any Change so approved by
each Party that affects any Statement of Work shall be deemed to be an amendment
to such Statement of Work.

 

(e) Emergency Changes. If a Service Level failure, reasonable safety concern,
Governmental Authority or change in Law, requires an immediate Change to a
Service, then Spansion may implement such Change immediately upon notice to AMD,
with a copy to the Fujitsu Services Advisor. Any change in Fees or equipment or
technology purchases for which Spansion seeks reimbursement from AMD, or any
long-term, material degradation in Service Levels resulting from such Change,
unless such degradation is unavoidably required in the circumstances (in which
event Spansion shall use all reasonable efforts to mitigate the impact of such
degradation), shall be subject to the Change Control Procedures.

 

3.10 Special Projects. AMD may from time to time during the Term request that
Spansion perform Special Projects. Upon receipt of such a request from AMD,
Spansion shall provide AMD with a written proposal for such Special Project
which shall include:

 

(a) a description of the services, functions and responsibilities Spansion
anticipates performing in connection with such Special Project;

 

(b) a description of the obligations of AMD, if any, required for Spansion to
perform such Special Project;

 

(c) a schedule for commencing and completing such Special Project;

 

(d) Spansion’s prospective fees for such Special Project, either on a fixed fee
or time and materials basis; and

 

(e) when appropriate, a description of any new Software or equipment required in
connection with such Special Project.

 

6

--------------------------------------------------------------------------------

Spansion shall not begin performing any Special Project until the Parties have
agreed in writing upon the specifications, requirements, schedule and fees for
such Special Project pursuant to the Change Control Procedures. AMD shall have
the right to contract with a third party to perform any Special Project,
provided that the Special Project does not affect the provision of Services and
would not result in the breach of an obligation that Spansion may have with a
third party. AMD will notify Spansion of any proposal that AMD wants to make to
a third party to perform a Special Project instead of having Spansion perform
that Special Project. If the Parties do not agree upon terms by which Spansion
will perform a Special Project, or if Spansion objects to AMD retaining a third
party to perform the Special Project because Spansion reasonably believes in
good faith that such Special Project, or the third party’s performance of that
Special Project, will negatively affect the Services, either by reducing
performance or functionality, or increasing the cost to Spansion, or by causing
Spansion to breach an obligation to a third party, each Party shall have the
right to escalate the issue to the Board of Directors, and the Parties shall in
good faith negotiate a mutually-acceptable resolution to the matter. If AMD does
retain a third party to perform a Special Project hereunder, then Spansion and
AMD will agree in writing upon any changes to the Services, Service Levels (if
applicable), Fees that result from AMD retaining the third party and
commissioning the Special Project.

 

4. SERVICES

 

4.1 Services; Parity. Pursuant to separate statements of work attached hereto
and made a part hereof (“Statements of Work”), Spansion, either itself or
through its Affiliates or subcontractors (subject to Section 4.5), shall perform
the services, functions, and responsibilities for AMD identified in the separate
Statements of Work (the “Services”). The Statements of Work may be updated by
the Parties from time to time upon mutual agreement pursuant to the Change
Control Procedures or the annual review of the AMD general administrative
services budget and the Services described in Section 8.7 (the “Annual Budget
Process”). Spansion will provide AMD the Services under terms (including those
related to charges, cost allocation and service levels) that are at least as
favorable as those it provides any other Spansion business unit, division or
Spansion Affiliate receiving similar services from Spansion (or an Spansion
subcontractor), subject to any deviations agreed to by the Parties to address
AMD’s specific requirements as communicated to Spansion and taking into account
that this Agreement provides for a cost plus allocation budgeting structure that
may not apply to other Spansion business units, divisions or Affiliates. The
Services (including any new Services added pursuant to mutual agreement by the
Parties) will evolve and be supplemented, modified, enhanced or replaced,
reduced or eliminated over time as agreed upon by the Parties pursuant to the
Change Control Procedures or as part of the Annual Budget Process. Fees are
subject to the quarterly budget reconciliation process described in Section 8.8.

 

4.2 Governmental Approvals. Spansion shall obtain and maintain all Governmental
Approvals required for Spansion to deliver the Services under this Agreement.
AMD shall obtain and maintain all Governmental Approvals required for AMD to use
the Services under this Agreement. Upon request by either Party, the other Party
shall provide to the requesting Party reasonable cooperation and assistance in
obtaining Governmental Approvals hereunder.

 

4.3 Changes in Law. If either Party becomes aware of any changes in Law that
relate to Spansion’s delivery of the Services or AMD’s use of the Services, then
such Party will

 

7

--------------------------------------------------------------------------------

notify the other Party of such changes in Law. With respect to any changes
related to Spansion’s delivery of Services, Spansion and AMD shall work together
pursuant to the Change Control Procedures to identify the impact of such changes
on Spansion’s delivery of the Services, and any changes in the fees charged to
AMD, as a result and shall work together to implement any necessary
modifications to the Services prior to the deadline imposed by the Governmental
Authority having jurisdiction for such requirement or change. Spansion will use
reasonable efforts to minimize the incremental cost to AMD of compliance with
such Laws.

 

4.4 Compliance With Laws. Spansion shall comply with all Laws governing the
provision of the Services and the performance of its obligations, including
identifying and procuring permits, certificates, approvals and inspections
required under such Laws. If a charge of non-compliance by Spansion with any
such Laws occurs, Spansion shall promptly notify AMD of such charge in writing
and Spansion shall promptly remedy such non-compliance in accordance with Law.

 

4.5 Subcontractors. AMD acknowledges that Spansion may outsource to a third
party or third parties the performance of some or all of the Services that
Spansion is obligated to provide under this Agreement; provided however, that in
the event such outsourcing will lead to any Change in Service Levels or Fees,
such outsourcing shall be subject to the Change Control Procedures. Nothing in
this Agreement shall be construed as requiring Spansion to perform directly any
Services outside of the United States and to the extent that Services will be
performed outside the United States, Spansion may engage an Affiliate,
subsidiary or subcontractor to perform such Services (subject to the Change
Control Procedures in accordance with the foregoing). No subcontracting shall
release Spansion from its responsibility for its obligations under this
Agreement. Spansion shall be responsible for the work and activities of each of
the Spansion Agents, including compliance with the terms of this Agreement.
Spansion shall be responsible for all payments to its subcontractors unless the
Parties agree that AMD will pay directly to a Spansion Affiliate providing
Services to AMD.

 

4.6 AMD Agents. Spansion will coordinate and cooperate in good faith with AMD
Agents hired by AMD from time to time to the extent reasonably required by AMD
and with Fujitsu to the extent that Fujitsu supplies similar or complementary
services to AMD. Spansion will promptly notify AMD if a Fujitsu or any AMD Agent
act or omission will cause, or has caused, a problem or delay in providing the
Services. Spansion will be excused from failure to meet a Service Level or
otherwise perform its obligations under this Agreement only to the extent that a
failure to meet such Service Level or otherwise perform its obligations was
caused by the interference of a AMD Agent or Fujitsu; provided such interference
was not at the direction of Spansion and provided that Spansion continues to use
reasonable efforts to perform despite such interference and works with AMD to
resolve the problem and resume conformance with the Service Levels and
performance of Spansion’s obligations under this Agreement as soon as
practicable.

 

4.7 Spansion Reporting. On a semi-annual basis, Spansion shall provide a report
to AMD, with a copy to the Fujitsu Services Advisor, (a) identifying those at
Spansion principally responsible for providing Services in each Service area,
(b) identifying any significant problems or issues encountered in delivering the
Services for each of the Service areas, and (c) identifying

 

8

--------------------------------------------------------------------------------

any major changes in the amount of Services or Fees in the Service areas that
are expected or planned by Spansion for the upcoming two (2) quarters or year.
The Spansion Services Advisor will provide the AMD Services Manager with such
other reports regarding the performance of the Services and the Fees as the AMD
Services Manager shall reasonably require.

 

4.8 AMD Benchmarking. AMD may independently analyze Spansion’s compliance with
the Service Levels and provide Spansion feedback regarding Spansion’s
performance. In addition, if as part of that benchmarking, AMD in good faith
determines that the pricing it is charged for the Services is not within a
reasonable range, AMD may notify Spansion and the Parties will consider whether
changes are appropriate to the Services to enable the Parties to enjoy better
pricing. Any such benchmarking shall be subject to the confidentiality
restriction set forth in Section 11.

 

4.9 Use of Services. AMD may not remarket or sell all or any portion of the
Services provided under this Agreement, or make all or any portion of the
Services available to any party other than AMD or AMD’s Affiliates, without
Spansion’s consent.

 

5. SERVICE LEVELS

 

5.1 Service Levels. Spansion shall perform the Services at a minimum in
conformance with the level of service and with at least the same degree of
accuracy, quality, completeness, timeliness, responsiveness and efficiency as
Spansion provides similar services to its other divisions or Affiliates
(“Service Levels”).

 

5.2 Dispute Escalation Process.

 

(a) Initial Notice; Good Faith Discussion. If the AMD Services Manager
determines that Spansion has failed to perform the Services in accordance with
the applicable Service Levels, the AMD Services Manager may initiate contact
with the Spansion Services Advisor to discuss the deficiency, and if necessary
may submit a Change Proposal regarding a corrective action plan in accordance
with the Change Control Procedures. Upon such contact, the AMD Services Manager
and Spansion Services Advisor will promptly consider the corrective action plan
in person or by telephone and will attempt in good faith to agree to a mutually
acceptable corrective action plan. The AMD Services Manager will invite the
Fujitsu Services Advisor to attend any such meetings. If the Parties cannot
agree upon a corrective action plan within a fifteen (15) day business day
period, the issue will be escalated in accordance with clause (b) below.

 

(b) Management Escalation. If the issue is not resolved in accordance with
clause (a) above, the AMD Services Manager will notify the Spansion chief
financial officer of the issue. If the Spansion chief financial officer
reasonably determines that the issue warrants further escalation, the Spansion
chief financial officer will then contact the person within Spansion in charge
of the provision of the Services at issue to discuss the issue in person or by
telephone and the Parties shall attempt in good faith to resolve the issue for a
period of twenty-five (25) business days. If the issue is not resolved, as
agreed by the Parties, within such twenty-five (25) business day period, the
issue will be escalated in accordance with the dispute resolution proceedings in
accordance with Section 13.

 

9

--------------------------------------------------------------------------------

6. SERVICE LOCATIONS AND SECURITY

 

6.1 Service Locations.

 

(a) The Services shall be provided to AMD from the AMD Service Locations and the
Spansion Service Locations established on the Effective Date or subsequently
changed in accordance with the terms hereof. In the event Spansion desires to
establish or move Services to a AMD Service Location, such action shall either
be approved through the Change Control Procedures or be approved in writing by
the AMD Services Manager.

 

(b) Except as provided in Section 8 and unless otherwise agreed by AMD, any
incremental expenses incurred by AMD or Spansion and any costs incurred in
connection with the performance or use of the Services, in each case as a result
of Spansion’s relocation to, or use of, any different Service Locations at
Spansion’s request, shall be paid by Spansion or reimbursed to AMD by Spansion.
Any incremental expenses incurred by AMD or Spansion as a result of a relocation
to, or use of, any different Service Locations at AMD’s request or direction
shall be paid by AMD or reimbursed to Spansion by AMD.

 

6.2 AMD Resources and Facilities.

 

(a) For so long as Spansion requires the same for the performance of the
Services, subject to AMD’s agreement (not to be unreasonably withheld), AMD
shall provide to Spansion at no charge access to and the use of the space in the
AMD Service Locations, together with personal computers, workstations,
terminals, printers, and other equipment utilized by AMD, office furnishings,
telephone equipment, janitorial services, utilities and other reasonable
resources in connection with Spansion’s performance of the Services. Use of AMD
Service Locations by Spansion does not constitute a leasehold interest in favor
of Spansion, and Spansion shall not have exclusive access or control of the
space provided to Spansion under this Agreement.

 

(b) Spansion and Spansion Agents shall not commit or permit waste or damage to
such facilities, nor use such facilities for any unlawful purpose or act, and
shall comply with all of AMD’s general and site-specific policies and procedures
generally applicable to the applicable AMD Service Location (as in effect from
time to time and of which AMD has provided notice to Spansion), including
procedures for the physical security of the AMD Service Locations.

 

(c) Spansion shall permit AMD and AMD Agents to enter into those portions of the
AMD Service Locations occupied by Spansion’s staff at any time to perform
facilities-related services. AMD shall ensure that AMD and AMD Agents shall not
interfere with Spansion’s performance of Services while exercising access rights
under this Agreement, and Spansion shall not be liable under this Agreement for
its non-performance or its failure to meet the applicable Service Levels to the
extent such non-performance or failure is caused by interference by AMD or AMD
Agents.

 

10

--------------------------------------------------------------------------------

6.3 Conduct of Spansion Personnel. While at the AMD Service Locations, Spansion
and Spansion Agents shall (a) comply with the requests, standard rules and
regulations of AMD regarding safety and health, personal and professional
conduct (including adhering to general safety practices or procedures) generally
applicable to such AMD Service Locations, as notified to Spansion from time to
time and (b) otherwise conduct themselves in a businesslike manner. If AMD
notifies Spansion that a particular member of the Spansion Personnel is not
conducting himself or herself in accordance with this Section, Spansion shall
promptly (y) investigate the matter and take appropriate action which may
include (i) removing the applicable personnel from the Spansion Personnel and
providing AMD with prompt notice of such removal and (ii) replacing the
applicable personnel with a similarly qualified individual, or (z) take other
appropriate disciplinary action to prevent a recurrence. In the event of
multiple violations of this Section 6.3 by a particular member of the Spansion
Personnel, Spansion shall promptly remove the individual from the Spansion
Personnel.

 

6.4 Safety and Security Procedures.

 

(a) Spansion agrees to comply with AMD’s physical safety and security procedures
for all Services it provides at AMD Service Locations.

 

(b) Spansion will promptly notify AMD if any AMD failure to maintain and enforce
(except for enforcement with respect to Spansion Personnel) physical safety and
security procedures at AMD Service Locations will cause, or has caused, a
material problem or delay for Spansion in providing the Services. Spansion will
be excused from failure to meet a Service Level or otherwise perform its
obligations under this Agreement only to the extent that a failure to meet such
Service Level or otherwise perform its obligations was caused by the AMD failure
to maintain and enforce (except for enforcement with respect to Spansion
Personnel) physical safety and security procedures at AMD Service Locations;
provided that Spansion continues to use reasonable efforts to perform despite
such failure and works with AMD to resolve the failure and resume conformance
with the Service Levels and performance of Spansion’s obligations under this
Agreement as soon as practicable.

 

7. CONTINUED PROVISION OF SERVICES

 

7.1 Force Majeure. If and to the extent that a Party’s performance of any of its
obligations pursuant to this Agreement is prevented, hindered or delayed by
fire, flood, earthquake, elements of nature or acts of God, acts of war,
terrorism, riots, civil disorders, rebellions or revolutions, or any other
similar cause beyond the reasonable control of such Party (but specifically
excluding labor and union-related activities) (each, a “Force Majeure Event”),
and such non-performance, hindrance or delay could not have been prevented by
reasonable precautions, then the non-performing, hindered or delayed Party shall
be excused for such non-performance, hindrance or delay, as applicable, of those
obligations affected by the Force Majeure Event for as long as such Force
Majeure Event continues and such Party continues to use reasonable efforts to
recommence performance whenever and to whatever extent possible without delay,
including through the use of alternate sources, workaround plans or other means.
The Party whose performance is prevented, hindered or delayed by a Force Majeure
Event shall immediately notify the other Party of the occurrence of the Force
Majeure Event and describe in

 

11

--------------------------------------------------------------------------------

reasonable detail the nature of the Force Majeure Event. If a Service cannot be
resumed as a result of a Force Majeure Event for a period of time sufficient to
materially hinder AMD’s ability to continue to operate, but in no event less
than thirty (30) days, AMD may obtain such needed Services from a third party;
provided however, that if Spansion is thereafter able to resume providing such
Service, AMD will again retain Spansion to provide such Service in accordance
with this Agreement.

 

8. PAYMENTS AND INVOICING

 

8.1 Fees. In consideration of Spansion providing the Services, AMD shall pay to
Spansion the fees set forth in the Statements of Work, as such fees may be
adjusted pursuant to the terms of this Agreement (the “Fees”). The Fees include
Spansion’s reasonable, good faith estimates of pass through expenses for third
party Software costs and other third party services (such portion of the Fees
referred to herein as the “Pass-Through Expenses”). Pass-Through Expenses shall
be billed at direct cost, without any mark-up. The Fees are subject to change
annually in accordance with the Annual Budget Process, as well as in accordance
with the Change Control Procedures and the quarterly budget reconciliation
process described in Section 8.8. In the event through the Change Control
Procedures or otherwise in accordance with this Agreement additional
Pass-Through Expenses will be incurred, Spansion will separately identify such
additional Pass-Through Expenses in the applicable Statement of Work.

 

8.2 Special Project Fees. Subject to the Change Control Procedures, AMD shall
pay Spansion any Special Project Fees agreed upon by the Parties in writing. As
of the Amendment Date, there are no approved Special Projects Fees.

 

8.3 Invoicing. After the beginning of each fiscal month of the Term, Spansion
shall invoice AMD for (i) all Fees payable for Services performed during the
previous fiscal month and all Pass-Through Expenses paid during the previous
fiscal month, and (ii) all Special Project Fees, if any, payable for services
performed during the previous fiscal month, including in the case of clause (ii)
any Reimbursable Expenses incurred by Spansion in performing a Special Project
and reimbursable pursuant to Section 8.9.

 

8.4 Time of Payment. Spansion’s invoices shall be due and payable within
forty-five (45) days after the end of the fiscal month in which the Services or,
if applicable, agreed upon Special Project services, were provided or the costs
incurred. Any other sum due Spansion pursuant to this Agreement shall be due and
payable within forty-five (45) days after receipt by AMD of an invoice from
Spansion. All payments will be made via wire transfer or other
mutually-acceptable means.

 

8.5 Fee Dispute. Within thirty (30) days after AMD’s receipt of each invoice,
AMD shall give notice to Spansion of any amount shown in such invoice that AMD
disputes in good faith, which notice shall include a reasonably detailed
explanation of the disputed amount and the grounds for the dispute.

 

8.6 Cost Allocation. Spansion will calculate Fees and costs charged to AMD using
a cost allocation methodology that accurately and fairly reflects Spansion’s
reasonable, good faith

 

12

--------------------------------------------------------------------------------

forecasts of its actual costs associated with providing the Services and with a
reasonable allocation to AMD based on the provision of Services to AMD and the
costs therefor as a proportion of total services and costs Spansion provides for
itself, for AMD and for any other division or Affiliate of Spansion. Spansion
agrees that the target of the Fees and costs charged to AMD will be Spansion’s
actual costs in performing the Services. Spansion shall set the Fees each year
as part of the Annual Budget Process at such reasonable, good faith projection
of actual costs (and any overhead costs allocated according to the principle set
forth in the first sentence of this Section) plus five percent (5%) of
Spansion’s costs, excluding Pass-Through Expenses. AMD acknowledges, however,
that due to events that occur in between the quarterly reconciliations described
in Section 8.8, the Fees may not accurately reflect Spansion’s actual costs. In
such event and to such extent, Spansion will not be deemed in breach of its
obligation to charge Fees based on its reasonable, good faith estimates of
actual costs, provided Spansion uses diligent and good faith efforts to
establish its actual costs as the basis for reconciling Fees under Section 8.8
and developing future budgets pursuant to the Annual Budget Process. The Fees
will be analyzed and updated pursuant to Section 8.8 and the Annual Budget
Process.

 

8.7 Annual Budget Process. Each year, in accordance with Spansion’s normal
budget process, AMD and Spansion will meet and address changes to the Services
and the applicable Fees for the succeeding fiscal year and the Parties will
agree in writing upon the Services, Service Levels (as applicable) and Fees for
the succeeding year.

 

8.8 Price Protection; Quarterly Budget Reconciliation. In addition to
adjustments that may be discussed pursuant to the Annual Budget Process, the
Fees shall be adjusted on a prospective basis by mutual written agreement on a
quarterly basis (excluding the quarter when the Annual Budget Process will take
the place of the quarterly reconciliation process) if a major event has occurred
during the quarter that will substantially increase or decrease the actual costs
of the Services in the future versus the then-current mutually-agreed budget
(e.g., Spansion realizes substantial cost savings as the result of an
outsourcing transaction). As part of this quarterly reconciliation process,
adjustments to budgeted Fees (including Pass-Through Expenses), whether
resulting in an increase or decrease in Fees (including Pass-Through Expenses),
will be mutually agreed upon by Spansion and AMD and will apply prospectively
only.

 

8.9 Expenses. AMD shall pay or reimburse Spansion for its Reimbursable Expenses
incurred in connection with its performance of Special Projects as may be agreed
on a project by project basis. Except as provided in the previous sentence or as
otherwise agreed through the Change Control Procedures, Spansion shall not
charge AMD for any expenses or costs incurred by Spansion in providing Special
Project services.

 

8.10 Proration. All periodic Fees under this Agreement are to be computed on a
fiscal month basis and shall be prorated on a per diem basis for any partial
fiscal month.

 

8.11 Audits. In the event AMD in good faith believes that there is a material
difference between actual costs incurred by Spansion and the Fees, AMD shall be
entitled to appoint an auditor reasonably acceptable to Spansion to audit the
cost allocation methodologies used by Spansion to calculate the Fees, the
allocation of Fees and Pass-Through Expenses, and to

 

13

--------------------------------------------------------------------------------

otherwise verify the accuracy of the Fees and expenses that Spansion charges AMD
for provision of Services under this Agreement. AMD may conduct one such audit
annually upon reasonable advance written notice to Spansion delivered through
the Spansion Services Advisor. Spansion agrees to provide such auditor with
access to all data, records, reports, resources, facilities and personnel
necessary to enable the auditor to conduct appropriate audits of the Fees
charged to AMD. The auditor shall promptly report any discrepancies in writing
to AMD, with a copy to the Spansion Services Advisor and the Fujitsu Services
Advisor. Any copies provided the Fujitsu Services Advisor shall only include the
results of the auditor’s analysis and shall be deemed Confidential Information
of AMD. Any discrepancy discovered shall be promptly rectified as part of the
next quarter’s budget reconciliation process, whether such discrepancy resulted
in an overpayment or underpayment of Fees. All such audits shall be at AMD’s
expense. Spansion agrees to retain all pertinent records to justify its
allocation of Fees and costs to AMD for a period of two (2) years after
provision of the applicable Service. In addition, in the event Spansion conducts
an audit (either by itself or through an independent auditor) of a third party
providing any Services (or any part thereof), Spansion shall make all such audit
results available to AMD promptly upon Spansion’s receipt thereof (and shall
pass on to AMD any adjustment pursuant to the budget reconciliation process).

 

9. TAXES

 

9.1 General. Except as specifically set forth in this Section 9, the Fees paid
to Spansion are exclusive of any applicable sales, use, gross receipts, excise,
value-added, personal property, services or other Taxes (other than withholding
taxes) (“Transaction Taxes”) attributable to periods on or after the Effective
Date. In the event that AMD is prohibited by law from making any payment of Fees
unless withholding taxes are deducted or withheld therefrom, then AMD shall
deduct such amounts as are necessary and pay the net amount to Spansion after
such deduction or withholding. AMD shall promptly furnish Spansion with a copy
of an official tax receipt or other appropriate evidence of any withholding
taxes imposed on payments made under this Agreement. As part of this Agreement,
AMD shall issue Spansion such valid tax exemption certificate(s) for the various
state and local taxing authorities as AMD may legally issue and Spansion may
legally and reasonably request to cover Transaction Taxes legally imposed upon
the transactions arising out of this Agreement. In the event that a Transaction
Tax is assessed against Spansion on the provision of the Services by Spansion to
AMD or on the Fees, however levied or assessed, AMD shall reimburse Spansion for
or provide acceptable proof that AMD has paid said amounts directly to the
appropriate taxing authority. AMD shall accrue and pay the appropriate amount of
Taxes due to any state or local taxing authority for Transaction Taxes . AMD
will be responsible for the proper reporting of Transaction Taxes to the taxing
authorities, and any charges associated with such filings, including but not
limited to, interest or penalties due to the taxing authorities. Spansion and
AMD agree to mutually cooperate in a reasonable manner for the purpose of
minimizing all Transaction Taxes that are to be paid directly or indirectly by
AMD. Spansion grants AMD the right to pursue a separate action against any
governmental unit which asserts Transaction Taxes and Spansion agrees to
cooperate in a reasonable manner with AMD if such action is taken.

 

14

--------------------------------------------------------------------------------

9.2 Confidentiality; Disclosure to Taxing Authorities. Notwithstanding anything
to the contrary in this Agreement or in any other written or oral understanding
or agreement to which the Parties hereto are parties or by which they are bound,
each Party shall be permitted to disclose the tax treatment and tax structure of
the transactions contemplated hereby (and any related transactions or
arrangements). This permission to disclose includes the ability of each Party to
consult, without limitation of any kind, any tax advisor regarding the tax
treatment or tax structure of the transactions contemplated hereby (and any
related transactions or arrangements). This provision is intended to comply with
Section 1.6011-4(b)(3)(ii)(B) of the Treasury Regulations and shall be
interpreted consistently therewith. Each Party acknowledges that this written
authorization does not constitute a waiver by any Party of any privilege held by
such Party pursuant to the attorney-client privilege or the confidentiality
privilege of Code Section 7525(a).

 

9.3 Other Taxes. AMD and Spansion shall each bear sole responsibility for
franchise and privilege taxes on its business, taxes based on its net income,
and employment taxes with respect to its employees.

 

9.4 New Equipment. AMD shall bear sole responsibility for all sales, use, gross
receipts, excise, value-added or personal property taxes attributable to new
equipment and any third party maintenance thereon procured by Spansion on behalf
of AMD, with the consent of AMD pursuant to the Change Control Procedures in
connection with Spansion’s performance of Services under this Agreement
(provided AMD obtains unencumbered title to such equipment).

 

9.5 Cooperation. AMD and Spansion shall cooperate to segregate the Fees into the
following separate payment categories: (a) those for taxable Services; and (b)
those for nontaxable Services.

 

9.6 Invoices. For any Taxes that Spansion is entitled to collect from AMD
hereunder for remittance to the applicable Governmental Authority, Spansion
shall separately state the amount of such Taxes on its invoice. If Spansion
fails to timely comply with the foregoing obligation, Spansion shall be
responsible for any resulting noncompliance with Law.

 

10. PROPRIETARY RIGHTS.

 

10.1 In General. In connection with this Agreement, all intellectual property
developed by Spansion in performing the Services, other than intellectual
property based on underlying AMD owned intellectual property, will be owned by
Spansion.

 

10.2 Other Software. The license of Other Software will be agreed upon by the
Parties pursuant to the Change Control Procedures, as a Special Project, or as
part of the Annual Budget Process. At such time, the Parties will agree whether
the Other Software will be licensed by Spansion and sublicensed to AMD, or
whether AMD will obtain the license to the Other Software directly with
sufficient rights for Spansion to use the Other Software on AMD’s behalf. If
licensed by Spansion, AMD will bear any associated license and maintenance fees
as either a Pass-Through Expense or as part of the Spansion internal Fees,
except to the extent already included as an Spansion internal Fee or
Pass-Through Expense, in which case Spansion shall

 

15

--------------------------------------------------------------------------------

itself bear such expense and not charge AMD therefor. In the event AMD must pay
license fees for Other Software directly, and such fees are included in the
Spansion internal Fees or Pass-Through Expenses, Spansion shall reimburse AMD
for such amount, due within ninety (90) days of AMD’s notification to Spansion
thereof. The foregoing shall not apply to Software licensed to AMD under a
Statement of Work attached hereto as of the Amendment Date.

 

11. CONFIDENTIALITY

 

11.1 Obligations. The Parties acknowledge and agree that all proprietary or
nonpublic information disclosed by one Party (the “Disclosing Party”) to the
other Party (the “Receiving Party”) in connection with this Agreement, directly
or indirectly, which information is (a) marked as “proprietary” or
“confidential” or, if disclosed orally, is designated as confidential or
proprietary at the time of disclosure and reduced in writing or other tangible
(including electronic) form that includes a prominent confidentiality notice and
delivered to the Receiving Party within thirty (30) days of disclosure, or (b)
provided under circumstances reasonably indicating that it constitutes
confidential and proprietary information, constitutes the confidential and
proprietary information of the Disclosing Party (“Confidential Information”).
The Receiving Party may disclose Confidential Information only to those
employees who have a need to know such Confidential Information and who are
bound to retain the confidentiality thereof under provisions (including
provisions relating to nonuse and nondisclosure) no less restrictive than those
required by the Receiving Party for its own confidential information. The
Receiving Party shall, and shall cause its employees to, retain in confidence
and not disclose to any third party (including any of its sub-contractors) any
Confidential Information without the Disclosing Party’s express prior written
consent, and the Receiving Party shall not use such Confidential Information
except to exercise the rights and perform its obligations under this Agreement.
Without limiting the foregoing, the Receiving Party shall use at least the same
procedures and degree of care which it uses to protect its own confidential
information of like importance, and in no event less than reasonable care. The
Receiving Party shall be fully responsible for compliance by its employees with
the foregoing, and any act or omission of an employee of the Receiving Party
shall constitute an act or omission of the Receiving Party. The confidentiality
obligations set forth in this Section 11.1 shall apply and continue, with regard
to all Confidential Information disclosed hereunder, during the Term and for a
period of ten (10) years from the date of termination of this Agreement.

 

11.2 Exceptions. Notwithstanding the foregoing, Confidential Information will
not include information that: (a) was already known by the Receiving Party,
other than under an obligation of confidentiality to the Disclosing Party or any
third party, at the time of disclosure hereunder, as evidenced by the Receiving
Party’s tangible (including written or electronic) records in existence at such
time; (b) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the Receiving Party hereunder; (c)
became generally available to the public or otherwise part of the public domain
after its disclosure other than through any act or omission of the Receiving
Party in breach of this Agreement; (d) was subsequently lawfully disclosed to
the Receiving Party by an Entity or person other than the Disclosing Party not
subject to any duty of confidentiality with respect thereto; or (e) was
developed by the Receiving Party without reference to any Confidential
Information disclosed by the Disclosing Party, as evidenced by the Receiving
Party’s tangible (including written or electronic) records in existence at such
time.

 

16

--------------------------------------------------------------------------------

11.3 Confidentiality of Agreement; Publicity. Each Party agrees that the terms
and conditions of this Agreement shall be treated as Confidential Information
and that no reference shall be made thereto without the prior written consent of
the other Party (which consent shall not be unreasonably withheld) except (a) as
required by Law, provided that in the case of any filing with a Governmental
Authority that would result in public disclosure of the terms hereof, the
Parties shall mutually cooperate to limit the scope of public disclosure to the
greatest extent possible, (b) to its accountants, banks, financing sources,
lawyers and other professional advisors, provided that such parties undertake in
writing (or are otherwise bound by rules of professional conduct) to keep such
information strictly confidential, (c) in connection with the enforcement of
this Agreement, or (d) pursuant to agreed joint press releases prepared in good
faith. The Parties will consult with each other, in advance, with regard to the
terms of all proposed press releases, public announcements and other public
statements with respect to the transactions contemplated hereby.

 

12. REPRESENTATIONS AND WARRANTIES.

 

12.1 Services. Spansion represents and warrants that it will perform the
Services in a workmanlike and reasonable manner.

 

12.2 DISCLAIMER. EXCEPT AS SPECIFIED IN THIS SECTION 12, NEITHER AMD NOR
SPANSION MAKES ANY OTHER WARRANTIES WITH RESPECT TO THE SERVICES AND EACH
EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A SPECIFIC PURPOSE.

 

13. DISPUTE RESOLUTION.

 

13.1 The Parties hereby agree that claims, disputes or controversies of whatever
nature, arising out of, in connection with, or in relation to the
interpretation, performance or breach of this Agreement shall be resolved first
in accordance with any dispute escalation procedures set forth in Section 5.2
above, and, to the extent not resolved after such procedures, in accordance with
the dispute resolution procedure set forth in Schedule A attached hereto.

 

14. TERMINATION

 

14.1 Individual Services. AMD shall have the right to terminate all or a part of
any individual Service at any time and for any reason upon at least six (6)
months’ advance notice.

 

14.2 Individual Service Termination for Cause. If Spansion has failed to comply
with the applicable Service Levels for a particular Service and has failed to
rectify its performance failure pursuant to the procedures set forth in Section
5 above, then subject AMD’s compliance with Section 5.2, AMD may terminate
Spansion’s provision of all or part of such Service after sixty (60) days have
elapsed since initial notification of the failure and either perform such
Service itself or obtain the services of a third party. The Fees will be
adjusted accordingly.

 

17

--------------------------------------------------------------------------------

14.3 Termination for Cause.

 

(a) If Spansion defaults in the performance of any of its material obligations
under this Agreement, and does not cure such default within ninety (90) days
after receipt of a notice of default from AMD, then AMD may, without limiting
AMD’s other rights or remedies under this Agreement, by giving notice to
Spansion, terminate this Agreement, in whole or in affected part, as of the
termination date specified in the notice.

 

(b) If AMD fails to make payments due to Spansion under this Agreement and does
not cure such default within ninety (90) days after receipt of a notice of
default from Spansion, then Spansion may, by giving notice to AMD, terminate
this Agreement in its entirety as of the termination date specified in the
notice of default.

 

14.4 Termination Assistance Services. Spansion shall, upon AMD’s request during
the Termination Assistance Period, provide the Termination Assistance Services
for the Fees attributable to the Services received by AMD pursuant to a
termination plan to be agreed upon by the Parties. After the expiration of the
Termination Assistance Period, (a) Spansion shall provide consulting services to
AMD regarding the Services on an “as requested” basis at rates to be agreed upon
by the Parties and (b) each Party shall deliver to the other Party any remaining
reports, documentation and materials still in its possession and owned by the
other Party, other than reports, documentation and materials licensed to the
Party possessing the same after the expiration or termination of this Agreement
in accordance with the terms of this Agreement.

 

14.5 Survival. Sections 8, 9, 10, 11, 12.2, 13, 14, 15 and 16 shall survive any
termination or expiration of this Agreement.

 

15. DAMAGES

 

15.1 Consequential Damages. Except for breaches of confidentiality obligations,
in no event will either AMD or Spansion be liable for, nor shall the measure of
damages include, any damages for lost profits, lost income or lost revenue, or
for any indirect, incidental, special, or consequential damages, arising out of
or relating to its performance or failure to perform under this Agreement,
whether based on an action or claim in contract, equity, negligence or
otherwise, and even if advised of the possibility of such damages.

 

15.2 Direct Damages. Each of the Parties shall be liable to the other for any
direct damages arising out of or relating to its performance or failure to
perform under this Agreement; provided, however, that the liability of AMD and
Spansion, whether based on an action or claim in contract, equity, negligence,
tort or otherwise, for all events, acts or omissions shall not exceed, in the
aggregate, an amount equal to the amounts paid under this Agreement during the
twelve (12) months preceding the claim.

 

15.3 Basis of the Bargain. Each Party acknowledges that the foregoing
limitations are an essential element of the Agreement between the Parties and
that in the absence of such

 

18

--------------------------------------------------------------------------------

limitations the pricing and other terms set forth in this Agreement would be
substantially different.

 

16. MISCELLANEOUS PROVISIONS.

 

16.1 Relationship of the Parties. In the exercise of their respective rights,
and the performance of their respective obligations hereunder, the Parties are,
and will remain independent contractors. Nothing in this Agreement will be
construed to constitute the Parties as partners, or principal and agent for any
purpose whatsoever. Neither Party will bind, or attempt to bind, the other Party
hereto to any contract or other obligation, and neither Party will represent to
any third party that it is authorized to act on behalf of the other Party to
this Agreement.

 

16.2 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, United States of America,
as applied to agreements among California residents entered into and wholly to
be performed within the State of California (without reference to any choice or
conflicts of laws rules or principles that would require the application of the
laws of any other jurisdiction and without regard to the United Nations
Convention on Contracts for the International Sale of Goods).

 

16.3 Language. This Agreement is in the English language only, which language
shall be controlling in all respects, and all versions hereof in any other
language shall be for accommodation only and shall not be binding upon the
Parties. All communications and notices to be made or given pursuant to this
Agreement shall be in the English language.

 

16.4 Successors and Assigns. Except as expressly provided herein, the rights and
obligations hereunder may not be assigned or delegated by any Party without the
prior written consent of the other Party. Any purported assignment, sale,
transfer, delegation or other disposition of such rights or obligations by a
Party, except as permitted herein, shall be null and void. Subject to the
foregoing, this Agreement shall be binding upon and shall inure to the benefit
of the Parties and their respective successors and permitted assigns.

 

16.5 Entire Agreement; Amendment. This Agreement (including the Exhibits hereto)
constitutes the full and entire understanding and agreement between the Parties
with regard to the subject matter hereof, and supercede any prior
communications, representations, understandings and agreements, either oral or
written, between the Parties with respect to such subject matter. Except as
expressly provided otherwise herein, this Agreement may not be altered except by
a written instrument signed by authorized legal representatives of both Parties.
Any waiver of the provisions of this Agreement or of a Party’s rights or
remedies under this Agreement must be in writing to be effective. Failure,
neglect or delay by a Party to enforce the provisions of this Agreement or its
rights or remedies at any time will not be construed and will not be deemed to
be a waiver of such Party’s rights under this Agreement and will not in any way
affect the validity of the whole or any part of this Agreement or prejudice such
Party’s right to take subsequent action. No single or partial exercise of any
right, power or privilege granted under this Agreement shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement are cumulative and
are not exclusive of any rights or remedies provided by law.

 

19

--------------------------------------------------------------------------------

16.6 Notices and Other Communications. All notices required or permitted under
this Agreement shall reference this Agreement and will be deemed given: (a) when
delivered personally; (b) when sent by confirmed facsimile; (c) five (5)
business days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) three (3) business days after deposit
with an internationally recognized commercial overnight carrier specifying
next-day delivery, with written verification of receipt. All such notices,
requests, demands and other communications shall be addressed as follows:

 

If to Spansion:

 

Spansion Inc.

915 DeGuigne Drive

P.O. Box 3453

Sunnyvale, California 94088

Attention: General Counsel

Telephone: (408) 962-2500

Facsimile: (408) 774-7443

 

If to AMD:

 

Advanced Micro Devices, Inc.

One AMD Place

Sunnyvale, California 94086

Attention: General Counsel

Telephone: (408) 749-2022

Facsimile: (408) 774-7399

 

or to such other address or facsimile number as a Party may have specified to
the other Parties in writing delivered in accordance with this Section 16.6.

 

16.7 Expenses. Except as otherwise expressly set forth in this Agreement, each
Party will bear its own costs and expenses, including fees and expenses of legal
counsel and other representatives used or hired in connection with the
transactions described in this Agreement.

 

16.8 Severability. If any provision in this Agreement will be found or be held
to be invalid or unenforceable, then the meaning of said provision will be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it will be severed
from the remainder of this Agreement which will remain in full force and effect
unless the severed provision is essential and material to the rights or benefits
received by any Party. In such event, the Parties will negotiate, in good faith,
a substitute, valid and enforceable provision or agreement which most nearly
effects the Parties’ intent in entering into this Agreement.

 

16.9 No Third Party Beneficiaries. The terms and provisions of this Agreement
are intended solely for the benefit of each Party and their respective
successors and permitted

 

20

--------------------------------------------------------------------------------

assigns, and the Parties do not intend to confer third party beneficiary rights
upon any other Entity or person. Notwithstanding the foregoing, Fujitsu shall be
deemed a third party beneficiary to the rights of the Fujitsu Services Advisor
herein and to Fujitsu’s rights under Sections 3.5, 3.6 and 3.7(b), and Fujitsu
shall have the right to directly enforce such rights against the Parties for so
long as those rights exist.

 

16.10 Construction. This Agreement shall be deemed to have been drafted by all
Parties and, in the event of a dispute, no Party hereto shall be entitled to
claim that any provision should be construed against any other Party by reason
of the fact that it was drafted by one particular Party.

 

16.11 Execution. This Agreement may be executed in counterparts, each of which
so executed will be deemed to be an original and such counterparts together will
constitute one and the same agreement. Execution and delivery of this Agreement
by exchange of facsimile copies bearing the facsimile signature of a Party shall
constitute a valid and binding execution and delivery of this Agreement by such
Party.

 

16.12 Cumulative Remedies. All remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available to
any Party at law, in equity or otherwise.

 

[Signature page follows]

 

21

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of AMD and Spansion has caused this Agreement to be
signed and delivered by its duly authorized representative.

 

Spansion Inc. By:   

/s/ Bertrand F. Cambou

--------------------------------------------------------------------------------

Name:

   Bertrand F. Cambou

Title:

  

President and Chief Executive Officer

Advanced Micro Devices, Inc. By:   

/s/ Hollis M. O’Brien

--------------------------------------------------------------------------------

Name:

   Hollis M. O’Brien

Title:

  

Corporate Vice President and Secretary

--------------------------------------------------------------------------------

 

EXHIBIT 1

 

DEFINITIONS

 

“Affiliate” of a person or Entity means any other person or Entity which,
directly or indirectly, controls, is controlled by, or is under common control
with, such person or Entity. The term “control” (including, with correlative
meaning, the terms “controlled by” and “under common control with”), as used
with respect to any person or Entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or Entity, whether through the ownership of voting
securities, by contract or otherwise. A person or Entity shall be deemed an
Affiliate of another person or Entity only so long as such control relationship
exists. Notwithstanding the foregoing, neither Spansion nor any of its directly
or indirectly majority owned subsidiaries (whether organized as corporations,
limited liability companies or other legal entity) shall be deemed to be an
Affiliate of AMD, except to the extent expressly provided in this Agreement.

 

“Aggregate Ownership Interest” has the meaning set forth in Spansion’s
Certificate of Incorporation.

 

“AMD Agents” means the agents, employees, contractors, and representatives of
AMD, other than Spansion and Spansion Agents.

 

“AMD Service Location(s)” means any service location owned, leased, or operated
by AMD, or used by AMD with the consent of a third party other than Spansion,
from which Spansion provides Services (but excluding Spansion Service
Location(s)).

 

“Change(s)” means any change to the Services that would materially alter the
service content, scope, or performance standards of the Services, or materially
alter the cost to AMD of the Services. Examples of changes would include
replacing a significant vendor, but not day to day operational issues normally
handled by staff in the routine performance of their duties.

 

“Effective Date” means June 30, 2003.

 

“Entity” means a corporation, partnership, limited liability company, or other
enterprise, association, organization, or entity.

 

“Fees” has the meaning set forth in Section 8.1.

 

“Fujitsu” means Fujitsu Limited, a company organized under the laws of Japan.

 

“Governmental Approvals” means all licenses, consents, permits, approvals and
authorizations of any Governmental Authority, or any notice to any Governmental
Authority, the granting of which is required by Law, for the consummation of the
transactions contemplated by this Agreement.

 

“Governmental Authority” means any Federal, state, municipal, local,
territorial, or other governmental department, regulatory authority, judicial or
administrative body, whether domestic, foreign or international.

--------------------------------------------------------------------------------

“Law” means any declaration, decree, directive, legislative enactment, order,
ordinance, regulation, rule or other binding restriction of or by any
Governmental Authority.

 

“Licensed Parent Software” has the meaning given to it in the Amended and
Restated Intellectual Property Contribution and Ancillary Matters Agreement
among the Parties, AMD Investments, Inc. and Fujitsu of even date herewith.

 

“Other Software” means all Software, other than AMD Licensed Parent Software,
which is used by Spansion in the provision of the Services, or Software used by
AMD in the receipt of the Services.

 

“Pass-Through Expenses” has the meaning set forth in Section 8.1.

 

“Reimbursable Expenses” means reasonable out-of-pocket travel and travel-related
expenses reasonably agreed to by AMD and to the extent such expenses are
reimbursable under AMD’s reimbursement policy.

 

“Related Documentation” means, with respect to Software, all materials,
documentation, specifications, technical manuals, user manuals, flow diagrams,
file descriptions and other written information that describe the function and
use of such Software, as applicable.

 

“Service Location(s)” means any AMD Service Location or Spansion Service
Location, or both, as applicable.

 

“Services” has the meaning set forth in Section 4.1.

 

“Software” means the executable code and, if applicable and supplied by
Spansion, source code, versions of any applications programs, operating system
software, computer software languages, utilities, other computer programs and
Related Documentation, in whatever form or media, including the tangible media
upon which such applications programs, operating system software, computer
software languages, utilities, other computer programs and Related Documentation
are recorded or printed, together with all corrections, improvements, updates
and releases thereof.

 

“Spansion Agents” means the agents, subcontractors, and representatives of
Spansion, including Spansion Affiliates.

 

“Spansion Personnel” means the personnel of Spansion and Spansion Agents who
provide the Services.

 

“Spansion Service Location(s)” means any service location owned, leased, or
operated by Spansion, or used by Spansion with the consent of a third party
other than AMD, from which Spansion provides Services.

--------------------------------------------------------------------------------

“Special Project” means any service that is outside the scope of the Services.

 

“Special Project Fees” means the fees for a Special Project agreed upon by the
Parties.

 

“Tax” or “Taxes” means all taxes, levies, imposts and fees imposed by any
Governmental Authority (domestic or foreign) of any nature including but not
limited to federal, state, local or foreign net income tax, alternative or
add-on minimum tax, profits or excess profits tax, franchise tax, gross income,
adjusted gross income or gross receipts tax, employment related tax (including
employee withholding or employer payroll tax, FICA or FUTA), real or personal
property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty,
any withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority (domestic or foreign) responsible for the imposition of
any such tax.

 

“Term” means the Initial Term and the Extension Periods (if any).

 

“Termination Assistance Period” means a period of time designated by AMD,
commencing on the earlier of (i) the date six (6) months prior to the expiration
of the Term or such earlier date as AMD may request and (ii) the date of notice
by either Party that there will be a termination of this Agreement and, in the
case of each of clause (i) and (ii), continuing for up to twelve (12) months
after the effective date of expiration or termination of this Agreement; in the
case of each of clause (i) and (ii), during which Spansion shall provide the
Termination Assistance Services in accordance with Section 14.

 

“Termination Assistance Services” means (a) the Services being performed (and
required under this Agreement to be performed) by Spansion as of the date of
expiration or termination of this Agreement, to the extent AMD requests such
Services during the applicable Termination Assistance Period; (b) Spansion’s
cooperation with AMD, or another service provider designated by AMD in the
transfer of the Services (or portion thereof, as applicable) to AMD or such
other service provider in order to facilitate the smooth and orderly transition
of the Services (or portion thereof, as applicable) to AMD or such other service
provider; (c) Spansion developing, with the cooperation of AMD, and subject to
the approval of AMD, a plan for the smooth and orderly transition of the
performance of the Services (or portion thereof, as applicable) from Spansion to
AMD or to a third party designated by AMD; (d) Spansion providing reasonable
training for personnel of AMD or AMD’s designee in the performance of the
Services then being transitioned to AMD; and (e) Spansion performing the other
services, functions, and responsibilities described in Section 14.