Exhibit 10.11

 

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. Spansion
and AMD 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,

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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 AMD and Spansion, 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. Spansion 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 AMD to provide Services in
accordance with the Service Levels and any material breach by AMD of its
obligations under this Agreement. To administer its receipt and use of these
Services, Spansion will retain a Spansion Services Manager as described below
and will consult with the AMD Services Advisor and Fujitsu Services Advisor in
Spansion’s reasonable judgment.

 

3.2 Spansion Services Manager. Spansion shall employ an individual reasonably
knowledgeable about the provision of general administrative services similar to
those provided by AMD under this Agreement (the “Spansion Services Manager”).
The Spansion Services Manager shall (a) have overall responsibility for managing
and coordinating the performance of Spansion’s obligations under this Agreement
and for monitoring the performance of obligations by AMD under this Agreement,
(b) subject to the supervision of Spansion management, 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 Advisor
and Fujitsu Services Advisor. The Spansion Service Manager will report to the
Spansion chief financial officer or such other senior executive of Spansion as
may be designated by the Spansion chief financial officer.

 

3.3 AMD Services Advisor. AMD shall appoint at AMD’s expense an individual (the
“AMD Services Advisor”) who will serve as the AMD representative under this
Agreement. The AMD Services Advisor shall (a) have overall responsibility for
managing and coordinating the performance of AMD’s obligations under this
Agreement, (b) 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 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 Spansion’s receipt of the Services. The
Fujitsu Services Advisor will serve in

 

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an advisory capacity to Spansion only and will not have independent veto rights
or other day-to-day decision-making authority over Spansion’s receipt, use and
oversight 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 AMD 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. Spansion shall keep AMD
informed about those aspects of Spansion’s business that could reasonably be
expected to have an effect on the demand for, or provision of, the Services. AMD
will provide to the Fujitsu Services Advisor copies of all reports and other
written information relating to the Services that AMD provides Spansion herein
at the same time AMD provides such reports and information to Spansion,
including a copy of the quarterly service reports provided Spansion under
Section 4.7. At any time upon the Fujitsu Services Advisor’s reasonable request,
the Spansion 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. AMD and Spansion,
through the AMD Services Advisor and the Spansion Services Manager, will give
notice and otherwise keep the Fujitsu Services Advisor informed of all proposals
and discussions between the Spansion Services Manager and the AMD 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 Spansion and all
budget meetings related to the Services. Such notice shall be given by the
Parties promptly upon initiation of such discussions. In addition, AMD and
Spansion 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 AMD Services Advisor and the Spansion
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) the Services being provided to Spansion
under this Agreement are not being provided in accordance with the applicable
Service Levels, (b) AMD is in material breach under this Agreement, (c) an audit
pursuant to Section 8.11 should be conducted or (d) Spansion is not being
charged fairly for the Services it is receiving under this Agreement, then the
Fujitsu Services Advisor will notify the Spansion Services Manager and the
Spansion chief financial officer 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

 

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the Fujitsu Services Advisor’s concerns. Any such notice shall be in writing and
shall be provided to all Board members simultaneously, with a copy also provided
simultaneously to Spansion’s chief financial officer and the AMD 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) Spansion and AMD 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 AMD 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, AMD and Spansion 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 Spansion for the Services other than by calculating AMD’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, (iv) eliminates or reduces AMD’s obligation to provide
Services at a level consistent with the level of similar services AMD provides
to its other divisions or Affiliates or (v) materially reduces Spansion’s rights
under this Agreement (e.g., eliminates the requirement that all Changes require
Spansion’s consent). 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. Spansion shall reasonably cooperate with AMD by making available,
as requested by AMD, management decisions, information, approvals or
disapprovals, and acceptances or rejections in a reasonably timely manner so
that AMD 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 Spansion 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 Spansion 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

 

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

 

(ii) Schedule. Unless otherwise agreed by Spansion, with respect to all Changes,
AMD shall (a) schedule Changes so as not to unreasonably interrupt Spansion’s
business operations, other than those Changes made on a emergency basis to
maintain the continuity of the Services, (b) prepare and deliver to Spansion
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 AMD Services Advisor and the Spansion 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 Spansion 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 Spansion shall be communicated to AMD
through the Spansion Services Manager or his or her authorized designee.

 

(i) Changes Initiated by Spansion. Within ten (10) business days after AMD
receives a request from Spansion for a Change, either AMD or a joint project
team working on the Service to be impacted, as appropriate, shall prepare and
provide to Spansion an initial written proposal for the Change (a “Change
Proposal”), which proposal will include AMD’s initial proposals regarding (A)
the Services and the applicable schedule for performing the Services, including
but not limited to Spansion’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 Spansion
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, Spansion
shall either approve the Change Proposal, notify AMD that Spansion desires to
discuss the Change Proposal further, or withdraw the request for such Change.
Spansion’s failure to approve the Change Proposal or notify AMD that Spansion
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.

 

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(ii) Changes Initiated by AMD. Concurrent with the submission of a request for a
Change by AMD, either AMD or a joint project team working on the impacted
Service, as appropriate, shall provide to Spansion a Change Proposal containing
the information specified in subparagraph (i) above. Within ten (10) business
days after receiving such proposal, Spansion shall either approve the Change
Proposal, notify AMD that Spansion desires to discuss the Change Proposal
further, or reject the requested Change. Spansion’s failure to approve the
Change Proposal or notify AMD that Spansion 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, Spansion notifies AMD that Spansion desires to
discuss the proposed Change further, the Spansion Services Manager and AMD
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 Spansion 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 AMD
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 AMD may implement such Change immediately upon notice to Spansion,
with a copy to the Fujitsu Services Advisor. Any change in Fees or equipment or
technology purchases for which AMD seeks reimbursement from Spansion, 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 AMD shall use all reasonable efforts to mitigate the impact of such
degradation), shall be subject to the Change Control Procedures.

 

(f) Omitted Services. In the event the Parties determine that certain general
and administrative services provided by AMD and/or its Affiliates to the AMD
Flash Memory Business prior to Closing have not been included in a Statement of
Work and are not being separately addressed within Spansion, AMD will offer such
services to Spansion or its Affiliates on the terms set forth in this Agreement
and Spansion shall have the option to accept or reject such additional services.
In the event Spansion elects to accept such additional services, the Parties
shall prepare and agree on a Statement of Work to reflect the provision of such
services and the Statement of Work shall be appended to this Agreement.

 

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

 

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

 

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

 

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

 

(d) AMD’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.

 

AMD 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. Spansion 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 AMD may have with a third
party. Spansion will notify AMD of any proposal that Spansion wants to make to a
third party to perform a Special Project instead of having AMD perform that
Special Project. If the Parties do not agree upon terms by which AMD will
perform a Special Project, or if AMD objects to Spansion retaining a third party
to perform the Special Project because AMD 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 AMD, or by causing AMD 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 Spansion does retain a third
party to perform a Special Project hereunder, then AMD and Spansion will agree
in writing upon any changes to the Services, Service Levels (if applicable),
Fees that result from Spansion 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”), AMD, either itself or through its
Affiliates or subcontractors (subject to Section 4.5), shall perform the
services, functions, and responsibilities for Spansion 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 Spansion general
administrative services budget and the Services described in Section 8.7 (the
“Annual Budget Process”). AMD will provide Spansion 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 AMD business unit,
division or AMD Affiliate receiving similar services from AMD (or an AMD
subcontractor), subject to any deviations agreed to by the Parties to address
Spansion’s specific requirements as communicated to AMD and taking into account
that this Agreement provides for a cost plus allocation budgeting structure that
may not apply to other AMD 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

 

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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. AMD shall obtain and maintain all Governmental
Approvals required for AMD to deliver the Services under this Agreement.
Spansion shall obtain and maintain all Governmental Approvals required for
Spansion 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 AMD’s delivery of the Services or Spansion’s use of the Services, then
such Party will notify the other Party of such changes in Law. With respect to
any changes related to AMD’s delivery of Services, AMD and Spansion shall work
together pursuant to the Change Control Procedures to identify the impact of
such changes on AMD’s delivery of the Services, and any changes in the fees
charged to Spansion, 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. AMD
will use reasonable efforts to minimize the incremental cost to Spansion of
compliance with such Laws.

 

4.4 Compliance With Laws. AMD 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 AMD with any such Laws occurs, AMD
shall promptly notify Spansion of such charge in writing and AMD shall promptly
remedy such non-compliance in accordance with Law.

 

4.5 Subcontractors. Spansion acknowledges that AMD may outsource to a third
party or third parties the performance of some or all of the Services that AMD
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 AMD to perform directly any Services
outside of the United States and to the extent that Services will be performed
outside the United States, AMD 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 AMD from its
responsibility for its obligations under this Agreement. AMD shall be
responsible for the work and activities of each of the AMD Agents, including
compliance with the terms of this Agreement. AMD shall be responsible for all
payments to its subcontractors unless the Parties agree that Spansion will pay
directly to an AMD Affiliate providing Services to Spansion.

 

4.6 Spansion Agents. AMD will coordinate and cooperate in good faith with
Spansion Agents hired by Spansion from time to time to the extent reasonably
required by Spansion and with Fujitsu to the extent that Fujitsu supplies
similar or complementary services to Spansion. AMD will promptly notify Spansion
if a Fujitsu or any Spansion Agent act or omission will cause, or has caused, a
problem or delay in providing the Services. AMD 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

 

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obligations was caused by the interference of a Spansion Agent or Fujitsu;
provided such interference was not at the direction of AMD and provided that AMD
continues to use reasonable efforts to perform despite such interference and
works with Spansion to resolve the problem and resume conformance with the
Service Levels and performance of AMD’s obligations under this Agreement as soon
as practicable.

 

4.7 AMD Reporting. On a semi-annual basis AMD shall provide a report to
Spansion, with a copy to the Fujitsu Services Advisor, (a) identifying those at
AMD 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 any major changes in
the amount of Services or Fees in the Service areas that are expected or planned
by AMD for the upcoming two (2) quarters or year. The AMD Services Advisor will
provide the Spansion Services Manager with such other reports regarding the
performance of the Services and the Fees as the Spansion Services Manager shall
reasonably require.

 

4.8 Spansion Benchmarking. Spansion may independently analyze AMD’s compliance
with the Service Levels and provide AMD feedback regarding AMD’s performance. In
addition, if as part of that benchmarking, Spansion in good faith determines
that the pricing it is charged for the Services is not within a reasonable
range, Spansion may notify AMD 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. Spansion 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 Spansion or Spansion’s Affiliates,
without AMD’s consent.

 

5. SERVICE LEVELS

 

5.1 Service Levels. AMD 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 was provided
to the AMD Flash Memory Business prior to the Effective Date (“Service Levels”).

 

5.2 Dispute Escalation Process.

 

(a) Initial Notice; Good Faith Discussion. If the Spansion Services Manager
determines that AMD has failed to perform the Services in accordance with the
applicable Service Levels, the Spansion Services Manager may initiate contact
with the AMD 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 Spansion Services Manager
and AMD 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 Spansion 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.

 

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(b) Management Escalation. If the issue is not resolved in accordance with
clause (a) above, the Spansion 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 AMD 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 ten (10) business days. If the issue is not resolved, as agreed by the
Parties, within such ten (10) business day period, the issue will be escalated
in accordance with clause (c) below.

 

(c) Board Escalation. If the Spansion chief financial officer reasonably
determines that AMD has failed to offer an acceptable remedy for the Service
failure, then the Spansion chief financial officer shall notify the Board of
Directors (a) indicating the nature and the basis of the issue, and (b) listing
the measures that Spansion proposes to take against AMD in order to remedy the
Service failure. The Board of Directors shall consider the measures proposed by
the Spansion chief financial officer against AMD and shall provide its
recommendation or approval for any measures Spansion shall take to remedy the
Service failure.

 

(d) Termination. In the event that the unremediated Service failure has a
material adverse impact on Spansion’s business or operations, and subject to
Board of Directors approval, Spansion may terminate the affected Service in
accordance with the provisions set forth in Section 14 (presuming the applicable
cure period has elapsed as set forth therein) and shall have the right to
contract with a third party to perform such Service.

 

(e) Right to Arbitrate. In the event that the Board of Directors approves
Spansion’s proposed measures, and AMD believes that such measures are
inappropriate, AMD shall have the right to institute dispute resolution
proceedings in accordance with Section 13.

 

6. SERVICE LOCATIONS AND SECURITY

 

6.1 Service Locations.

 

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

 

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

 

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6.2 Spansion Resources and Facilities.

 

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

 

(b) AMD and AMD 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 Spansion’s general and site-specific policies and procedures
generally applicable to the applicable Spansion Service Location (as in effect
from time to time and of which Spansion has provided notice to AMD), including
procedures for the physical security of the Spansion Service Locations.

 

(c) AMD shall permit Spansion and Spansion Agents to enter into those portions
of the Spansion Service Locations occupied by AMD’s staff at any time to perform
facilities-related services. Spansion shall ensure that Spansion and Spansion
Agents shall not interfere with AMD’s performance of Services while exercising
access rights under this Agreement, and AMD 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 Spansion or Spansion Agents.

 

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

 

6.4 Safety and Security Procedures.

 

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

 

(b) AMD will promptly notify Spansion if any Spansion failure to maintain and
enforce (except for enforcement with respect to AMD Personnel) physical safety
and security procedures at Spansion Service Locations will cause, or has caused,
a material problem or delay for AMD in providing the Services. AMD will be
excused from failure to meet a

 

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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 Spansion failure to maintain and enforce (except
for enforcement with respect to AMD Personnel) physical safety and security
procedures at Spansion Service Locations; provided that AMD continues to use
reasonable efforts to perform despite such failure and works with Spansion to
resolve the failure and resume conformance with the Service Levels and
performance of AMD’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 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 Spansion’s ability to continue to
operate, but in no event less than thirty (30) days, Spansion may obtain such
needed Services from a third party; provided however, that if AMD is thereafter
able to resume providing such Service, Spansion will again retain AMD to provide
such Service in accordance with this Agreement.

 

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8. PAYMENTS AND INVOICING

 

8.1 Fees. In consideration of AMD providing the Services, Spansion shall pay to
AMD 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 AMD’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, AMD 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, Spansion
shall pay AMD 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, AMD shall
invoice Spansion 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 AMD in performing a Special Project and
reimbursable pursuant to Section 8.9.

 

8.4 Time of Payment. AMD’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 AMD pursuant to this Agreement shall be due and
payable within forty-five (45) days after receipt by Spansion of an invoice from
AMD. All payments will be made via wire transfer or other mutually-acceptable
means.

 

8.5 Fee Dispute. Within thirty (30) days after Spansion’s receipt of each
invoice, Spansion shall give notice to AMD of any amount shown in such invoice
that Spansion 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. AMD will calculate Fees and costs charged to Spansion using
a cost allocation methodology that accurately and fairly reflects AMD’s
reasonable, good faith forecasts of its actual costs associated with providing
the Services and with a reasonable allocation to Spansion based on the provision
of Services to Spansion and the costs therefor as a proportion of total services
and costs AMD provides for itself, for Spansion and for any other division or
Affiliate of AMD. AMD agrees that the target of the Fees and costs charged to
Spansion will be AMD’s actual costs in performing the Services. AMD 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 AMD’s costs, excluding Pass-Through Expenses.

 

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Spansion acknowledges, however, that due to events that occur in between the
quarterly reconciliations described in Section 8.8, the Fees may not accurately
reflect AMD’s actual costs. In such event and to such extent, AMD will not be
deemed in breach of its obligation to charge Fees based on its reasonable, good
faith estimates of actual costs, provided AMD 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 shall meet with Spansion and assist Spansion as requested in
developing an overall general administrative services budget, including
expenditures that are to be paid directly by Spansion to third parties. Each
such annual meeting will also 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.
The Fujitsu Services Advisor may advise Spansion regarding all such matters in
the Fujitsu Services Advisor’s reasonable judgment.

 

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., AMD 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 AMD and Spansion and will apply prospectively only.

 

8.9 Expenses. Spansion shall pay or reimburse AMD 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, AMD shall not charge
Spansion for any expenses or costs incurred by AMD 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 Spansion in good faith believes there is a material
difference between actual costs incurred by AMD and the Fees, Spansion shall be
entitled to appoint an auditor reasonably acceptable to AMD to audit the cost
allocation methodologies used by AMD to calculate the Fees, the allocation of
Fees and Pass-Through Expenses, and to otherwise verify the accuracy of the Fees
and expenses that AMD charges Spansion for provision of Services under this
Agreement. Spansion may conduct one such audit annually upon reasonable advance
written notice to AMD delivered through the AMD Services Advisor. AMD 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 Spansion. The auditor shall promptly report any
discrepancies in writing to Spansion, with a copy to the AMD Services

 

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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 Spansion. 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 Spansion’s expense. AMD agrees to retain all
pertinent records to justify its allocation of Fees and costs to Spansion for a
period of two (2) years after provision of the applicable Service. In addition,
in the event AMD conducts an audit (either by itself or through an independent
auditor) of a third party providing any Services (or any part thereof), AMD
shall make all such audit results available to Spansion promptly upon AMD’s
receipt thereof (and shall pass on to Spansion 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 AMD 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 Spansion is prohibited by law from making any payment of
Fees unless withholding taxes are deducted or withheld therefrom, then Spansion
shall deduct such amounts as are necessary and pay the net amount to AMD after
such deduction or withholding. Spansion shall promptly furnish AMD 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,
Spansion shall issue AMD such valid tax exemption certificate(s) for the various
state and local taxing authorities as Spansion may legally issue and AMD 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 AMD on the provision of the Services by AMD to Spansion
or on the Fees, however levied or assessed, Spansion shall reimburse AMD for or
provide acceptable proof that Spansion has paid said amounts directly to the
appropriate taxing authority. Spansion shall accrue and pay the appropriate
amount of Taxes due to any state or local taxing authority for Transaction Taxes
. Spansion 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. AMD and
Spansion 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
Spansion. AMD grants Spansion the right to pursue a separate action against any
governmental unit which asserts Transaction Taxes and AMD agrees to cooperate in
a reasonable manner with Spansion if such action is taken.

 

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

 

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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. Spansion and AMD 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. Spansion 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 AMD on behalf
of Spansion, with the consent of Spansion pursuant to the Change Control
Procedures in connection with AMD’s performance of Services under this Agreement
(provided Spansion obtains unencumbered title to such equipment).

 

9.5 Cooperation. Spansion and AMD 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 AMD is entitled to collect from Spansion
hereunder for remittance to the applicable Governmental Authority, AMD shall
separately state the amount of such Taxes on its invoice. If AMD fails to timely
comply with the foregoing obligation, AMD 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 AMD in performing the Services will be owned by AMD.

 

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 AMD and sublicensed to Spansion, or
whether Spansion will obtain the license to the Other Software directly with
sufficient rights for AMD to use the Other Software on Spansion’s behalf. If
licensed by AMD, Spansion will bear any associated license and maintenance fees
as either a Pass-Through Expense or as part of the AMD internal Fees, except to
the extent already included as an AMD internal Fee or Pass-Through Expense, in
which case AMD shall itself bear such expense and not charge Spansion therefor.
In the event Spansion must pay license fees for Other Software directly, and
such fees are included in the AMD internal Fees or Pass-Through Expenses, AMD
shall reimburse Spansion for such amount, due within ninety (90) days of
Spansion’s notification to AMD thereof. The foregoing shall not apply to
Software licensed to Spansion 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

 

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(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.

 

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

 

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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. AMD 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 SPANSION NOR
AMD 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. Upon the approval of the Board of Directors, Spansion
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 AMD 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 Spansion’s compliance with Section 5.2, Spansion may terminate
AMD’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.

 

14.3 Termination for Cause.

 

(a) If AMD 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 Spansion, then Spansion may, without
limiting Spansion’s other rights or remedies under this Agreement, by giving
notice to AMD, terminate this Agreement, in whole or in affected part, as of the
termination date specified in the notice.

 

(b) If Spansion fails to make payments due to AMD 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, by giving notice to Spansion, terminate this
Agreement in its entirety as of the termination date specified in the notice of
default.

 

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14.4 Termination Assistance Services. AMD shall, upon Spansion’s request during
the Termination Assistance Period, provide the Termination Assistance Services
for the Fees attributable to the Services received by Spansion pursuant to a
termination plan to be agreed upon by the Parties. After the expiration of the
Termination Assistance Period, (a) AMD shall provide consulting services to
Spansion 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 Spansion or AMD 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 Spansion
and AMD, 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 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

 

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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.

 

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

 

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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 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.

 

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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]

 

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IN WITNESS WHEREOF, each of Spansion and AMD 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

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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, subcontractors, and representatives of AMD,
including AMD Affiliates.

 

“AMD Flash Memory Business” means the research and development, manufacture,
marketing, distribution, promotion and sale of Stand-Alone NVM Products
(excluding distribution and sales-related activities) by AMD and its Affiliates.

 

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

 

“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 AMD provides Services.

 

“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 Spansion 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.

 

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“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.

 

“NVM” means a non-volatile memory device wherein information stored in a memory
cell is maintained without power consumption and the write time (including erase
time if there is an erase operation prior to a write operation) exceeds the read
time, allowing the device to function primarily as a reading device.

 

“Other Software” means all Software, other than AMD Licensed Parent Software,
which is used by AMD in the provision of the Services, or Software used by
Spansion 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 Spansion and to the extent such expenses are
reimbursable under Spansion’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 Spansion Service Location or AMD 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 AMD,
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

 

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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, employees, contractors, and representatives
of Spansion, other than AMD and AMD Agents.

 

“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 AMD provides Services (but excluding AMD Service
Location(s)).

 

“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.

 

“Stand-Alone NVM Products” means a semiconductor product (including a single
chip or a multiple chip or system product) containing NVM dedicated to data
storage wherein all circuitry (including logic circuitry) contained therein is
solely to accept, store, retrieve or access information or instructions and
cannot manipulate such information or execute instructions.

 

“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 Spansion,
commencing on the earlier of (i) the date six (6) months prior to the expiration
of the Term or such earlier date as Spansion 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 AMD 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 AMD as of the date of
expiration or termination of this Agreement, to the extent Spansion requests
such Services during the

 

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

 

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