Exhibit 10.2

SUPPLY AGREEMENT

This SUPPLY AGREEMENT (the “Agreement”) is dated as of the Closing Date, by and
between Spansion LLC, a Delaware limited liability company (“Purchaser”), and
Powertech Technology Inc., a company organized under the laws of the Republic of
China (Taiwan) (“Supplier”).

WHEREAS, the parties have entered into an Asset and Share Purchase Agreement
dated August 21, 2009, pursuant to which Supplier will purchase the equity of
Spansion Holdings (Singapore) Pte. Ltd. and purchase certain specified assets
and assume certain specified liabilities from Purchaser (the “Purchase
Agreement”);

WHEREAS, Supplier agrees to supply Purchaser with certain wafer assembly,
marking, packaging, distribution and testing services; and

WHEREAS, it is a condition precedent to the closing of the transactions
contemplated by the Purchase Agreement that Purchaser and Supplier enter into
this Agreement;

NOW, THEREFORE, in consideration of the mutual promises of the parties, and of
good and valuable consideration, it is agreed by and between the parties as
follows:

1. DEFINITIONS

Any capitalized terms that are used in this Agreement but are not defined in
this Section 1 or in the body of this Agreement shall have the meaning set forth
in the Purchase Agreement.

1.1 “Change of Control” means a change in the possession, directly or
indirectly, of the power, either to (i) vote fifty percent (50%) or more of the
securities having ordinary voting power with respect to such Party;
(ii) determine the majority of the board of directors of such Party; or
(iii) direct or cause the direction of the management policies of such Party,
whether through ownership of voting securities or by contract or otherwise.

1.2 “Confidential Information” means any information disclosed by one Party to
the other in connection with this Agreement, whether in electronic, written,
graphic, oral, machine readable or other tangible or intangible form, that is
marked or identified at the time of disclosure as “Confidential” or
“Proprietary” or in some other manner so as to clearly indicate its confidential
nature, or that would otherwise reasonably be deemed confidential or proprietary
by the recipient.

1.3 “Consigned Die” means Purchaser-manufactured flash memory die and
Purchaser-procured commercial die supplied by Purchaser to Supplier solely for
the purpose of Supplier performing the Services under this Agreement. Title and
right of possession to all Consigned Die shall at all times remain with
Purchaser and upon termination or expiration of the Agreement shall be returned
to Purchaser if not processed as described in this Agreement.

1.4 “Consigned Materials” means Purchaser-procured Materials, other than
Consigned Die, that are supplied by Purchaser to Supplier solely for the purpose
of Supplier performing the Services under this Agreement. Title and right of
possession to all Consigned Materials shall at all times remain with Purchaser
and upon termination or expiration of the Agreement shall be returned to
Purchaser if not processed as described in this Agreement.

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1.5 “Facility” means the processing facility in Suzhou, China.

1.6 “Intellectual Property Rights” means rights in and to all (a) Patents,
(b) copyrights, (c) unpatented information, trade secrets, data, or materials,
(d) mask work rights, and (e) any other intellectual or other proprietary rights
of any kind now known or hereafter recognized in any jurisdiction, but not for
purposes of this Agreement, any trademarks, service marks, trade names, trade
dress, domain names and similar rights.

1.7 “Lead Time” means the time between the date an order is accepted by Supplier
and the date the Products are made available for shipment by Supplier. The Lead
Time will vary depending on the Products ordered and will be established in
writing in advance by mutual agreement of the parties.

1.8 “Line Item” means the specific weekly quantity for each different Product
that is scheduled to ship per Purchaser’s Release, with one Line Item applicable
to one shipment per week for one Product.

1.9 “Patent” means U.S. and foreign patents and patent applications claiming any
inventions or discoveries made, developed, conceived, or reduced to practice,
including all divisions, substitutions, continuations, continuations-in-part,
and any reissues, re-examinations and extensions thereof.

1.10 “Performance Standard” means the standards and requirements for performance
of the Services, as specified in Exhibit B.

1.11 “Materials” means all material that is part of the final assembled Product
assembled by Suzhou Subsidiary (for example, substrates and gold wire), but not
indirect material used in the assembly process that does not become part of the
final assembled Product (for example, trays and chemicals). For purposes of this
Agreement, commercial die and flash die do not constitute “Materials.”

1.12 “Produce” means to assemble, mark, package and distribute, and if requested
by Purchaser, test the Products as specified in this Agreement.

1.13 “Product(s)” means a Purchaser semiconductor product in a packaged form
that contains a Consigned Die and either the Consigned Materials or the
Materials, and which Supplier Produces pursuant to this Agreement.

1.14 “Purchase Order” means Purchaser’s written or electronic document setting
forth the specific Services to be rendered to Produce the applicable Products in
accordance with the applicable Specifications, Lead Times and other requirements
of Purchaser.

1.15 “Release” means a written or electronic authorization from Purchaser
specifying the Products desired, the Services to be performed, and the specific
quantity of Products required by Purchaser for a specific time period, as well
as the specified location for delivery of the applicable Products.

 

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1.16 “Services” means the assembly, marking, packaging, distribution, and, if
applicable test, services to be performed by Supplier in accordance with the
Performance Standards set forth in Exhibit B.

1.17 “Specifications” shall mean Purchaser’s written specifications for the
Products, on a Product-by-Product basis, as set forth in Exhibit A attached
hereto or in the applicable Purchase Order.

1.18 “Supplier” shall mean and expressly refer to Powertech Technology Inc. and
its designated subsidiaries, including any corporation, limited liability
company, partnership or other entity or organization of which Powertech
Technology Inc. (either alone or through or together with any other subsidiary
of Powertech Technology Inc.) owns, directly or indirectly, a majority of the
stock or other equity interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
entity or organization.

1.19 “Through Put Time” means the number of calendar days required to assemble a
Product, starting when the Consigned Die (as well as Consigned Material, if
applicable) are released from inventory at the Facility in response to a
Release, and ending when the Products are shipped to Purchaser.

1.20 “Tooling” means the Product-specific equipment provided by Purchaser to
Supplier and listed on Exhibit E solely to enable Supplier to perform the
Services.

1.21 “Work in Process” or “WIP” means Product(s) that are in the assembly
process, which begins when Consigned Die are released from inventory at the
Facility in response to a Release and ends when Products are shipped from the
Facility.

2. PRICING

2.1 Price. Purchaser agrees to pay for the Products and Services by paying the
prices for the Products set forth in Exhibit C attached hereto. All prices are
in U.S. dollars. The prices do not include taxes or duties (as further specified
in Section 2.3 below) or shipping costs, each of which shall be separately
itemized on the applicable invoices. In addition, as between the parties,
Supplier shall be responsible for paying any applicable license fees or
royalties required to be paid to third parties relating to the performance of
Services and the sale and import of Products. The prices include all other costs
applicable to the provision of Services.

2.2 Payment. Supplier shall invoice Purchaser monthly for all Products shipped
to Purchaser in the preceding month. Payment shall be made via wire transfer or
other agreed upon method within sixty (60) days after the invoice date.

2.3 Taxes. All value added taxes, sales or use taxes, transaction privilege
taxes, consumption taxes, GST, gross receipts taxes, and other charges such as
duties, customs, tariffs, imposts, and government imposed surcharges, and
similar taxes and charges (in each instance

 

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other than taxes based on the net income of Supplier) shall be stated separately
on Supplier’s invoice and Purchaser will reimburse Supplier for such taxes or
charges. Supplier shall remit all such charges to the appropriate tax authority
unless Purchaser provides sufficient proof of tax exemption. In the event that
Purchaser is required by law to withhold taxes therefrom and to remit such taxes
to the local taxing jurisdiction, Purchaser shall duly withhold such taxes and
shall pay to the Supplier the remaining net amount after the taxes have been
withheld. Purchaser shall not reimburse Supplier for the amount of such taxes
withheld. In the event Supplier does not collect tax from Purchaser and is
subsequently audited by any tax authority, Purchaser shall not be liable for
such tax, interest, or penalties; provided, however, that if Supplier does not
collect tax from Purchaser due to Purchaser’s error or refusal, the liability of
Purchaser shall include tax assessment as well as penalties or other interest
charges. Each party is responsible for its own respective income taxes or taxes
based upon gross revenues, including but not limited to business and occupation
taxes.

2.4 Cost Reconciliation. The parties agree that the pricing specified in Exhibit
C is based upon certain loading and cost assumptions. Purchaser agrees to
reimburse certain costs of Supplier for its performance of the Services if the
prices charged by Supplier during the first six (6) months following the Closing
Date result in a net loss to Supplier as specified in Exhibit C. Any such
request for reimbursement must be made in writing within thirty (30) days
following expiration of the initial six (6) month period following the Closing
Date.

3. CONSIGNMENT

3.1 Test Equipment.

(a) Purchaser shall consign to Supplier and Supplier shall have the right to use
the equipment and assets identified on Exhibit D attached hereto owned by
Purchaser or its Subsidiaries (the “Test Equipment”) in connection with
performing any testing Services under this Agreement. Supplier shall not use the
Test Equipment for any unlawful purpose or act or for any purpose not expressly
authorized by this Agreement.

(b) Supplier shall have the right to return to Purchaser, at Supplier’s expense,
any or all of the Test Equipment upon forty-five (45) days’ prior written notice
to Purchaser requesting the removal of such Test Equipment; provided, however,
that Supplier may not return any such Test Equipment that is required to perform
testing Services required by Purchaser under this Agreement. Purchaser shall
have the right to repossess and remove from the premises of Supplier, at
Purchaser’s expense, any or all of the Test Equipment upon forty-five (45) days’
prior written notice to Supplier informing Supplier of Purchaser’s intention to
remove such Test Equipment. If Supplier reasonably believes that such Test
Equipment is required to perform the Services, Supplier shall immediately notify
Purchaser and the parties shall negotiate in good faith alternatives for
enabling Supplier to perform the required Services or a cancellation of the
affected Services. Nothing in this Section 3.1 shall constitute a leasehold
interest in favor of Supplier with respect to the Test Equipment.

(c) Supplier shall, at its expense, maintain the Test Equipment in good working
condition, normal wear and tear excepted. Title to the Test Equipment shall at
all times remain with Purchaser. Supplier shall not sell, pledge, or otherwise
encumber or dispose of the Test Equipment.

 

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3.2 Tooling.

(a) Purchaser shall consign to Supplier and Supplier shall have the right to use
the Tooling identified on Exhibit E attached hereto owned by Purchaser or its
Subsidiaries in connection with performing the Services. Supplier shall not use
the Tooling for any unlawful purpose or act or for any other purpose not
expressly authorized in this Agreement.

(b) Supplier shall have the right to return to Purchaser, at Supplier’s expense,
any or all of the Tooling upon seven (7) days’ prior written notice to Purchaser
requesting the removal of such Tooling; provided, however, that Supplier may not
return any such Tooling that is required to perform Services required by
Purchaser under this Agreement. Purchaser shall have the right to repossess and
remove from the premises of Supplier, at Purchaser’s expense, any or all of the
Tooling upon seven (7) days’ prior written notice to Supplier informing Supplier
of Purchaser’s intention to remove such Tooling. If Supplier reasonably believes
that such Tooling is required to perform the Services, Supplier shall
immediately notify Purchaser and the parties shall negotiate in good faith
alternatives for enabling Supplier to perform the required Services or a
cancellation of the affected Services. Nothing in this Section 3.2 shall
constitute a leasehold interest in favor of Supplier with respect to the
Tooling.

(c) Supplier shall, at its expense, maintain the Tooling in good working
condition, normal wear and tear excepted. Title to the Tooling shall at all
times remain with Purchaser. Supplier shall not sell, pledge, or otherwise
encumber or dispose of the Tooling.

3.3 Consignment Inventory. Purchaser will provide Consigned Die, and during the
first six (6) months Consigned Materials, to Supplier from time to time for
purposes of Supplier’s performance of Services under this Agreement. Such
Consigned Die and Consigned Materials shall be stored in the locations and in
the manner at the Facility such Consigned Die and Consigned Materials were
stored in prior to the Closing Date or as otherwise specified in the Performance
Standards, unless the parties agree in advance in writing on any changes to the
storage location or procedures at the Facility. Supplier will use the Consigned
Die and Consigned Materials to perform Services and Produce Products on a
first-in, first-out basis. Upon reasonable advance written notice to Purchaser,
Supplier may elect to obtain Materials on its own to perform the Services
instead of receiving Consigned Materials from Purchaser; provided, however, if
the purchase of such Materials instead of receipt of Consigned Materials results
in an increase of costs to Supplier, then Supplier shall not be entitled to
include such additional costs in its calculations for cost reconciliation
pursuant to Section 2.4 above.

3.4 Spare Parts. To the extent that Purchaser has spare parts for any of the
equipment installed at the Facility as of the Closing Date that does not
constitute Test Equipment or Tooling, Purchaser agrees to sell such spare parts
at Purchaser’s cost to Supplier upon written request from Supplier. In no event
will Purchaser be obligated to sell spare parts to Supplier once Purchaser has
supplied Supplier with spare parts equaling One Million U.S. Dollars
($1,000,000) in cost to Purchaser.

 

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4. ORDER AND SHIPMENT

4.1 Forecasts. Purchaser shall endeavor to provide Supplier, in writing and
updated on a Purchaser fiscal quarter (“Quarter”) basis, a non-binding, rolling
three (3) month forecast of its monthly loading requirements for Products on a
Product-by-Product basis by no later than fifty-five (55) days before the start
of each Quarter. Any forecasts or demand projections provided by Purchaser to
Supplier are for planning purposes only and do not constitute a Purchase Order,
a Release, or other commitment by Purchaser to purchase Services or Products.
Purchaser shall have no obligation with respect to the purchase of Services or
Products under this Agreement unless and until such Services and Products are
specified in an issued Release. Purchaser shall have no restrictions on changing
forecasts or demand projections.

4.2 Purchase Orders and Releases. Purchaser will purchase Products and Services
from Supplier pursuant to open Purchase Orders specifying Products and
Performance Standards and specific weekly Releases specifying Line Items and
delivery requirements. The parties will meet weekly to discuss loading and
required Services prior to Purchaser issuing its weekly Release for the
following week. Supplier shall provide written order acknowledgements by
confirmed facsimile, electronic transmission, or other mutually-agreed means
within five (5) Business Days of receipt of Purchase Orders and one Business Day
of receipt of Releases. All Purchase Orders and Releases not specifically
rejected in writing by Supplier during such period shall be deemed accepted.
Supplier shall accept any Purchase Order or Release submitted by Purchaser to
the extent that such Purchase Order or Release is less than ten percent
(10%) greater than forecasted amounts. In the event of any discrepancy between a
Purchase Order, Release or sales acknowledgment form or notice and the terms of
this Agreement, this Agreement shall prevail and any different or additional
terms shall be deemed rejected.

4.3 Acceleration. It is anticipated that from time to time there may be
instances where an accelerated Lead Time is required to serve the needs of
Purchaser. Purchaser shall have the right, without charge, to issue change
orders by providing written notice to Supplier prior to the beginning of the
production of the Products impacted by such change order. Supplier shall use all
reasonable efforts to accommodate Purchaser’s revised Purchase Orders or
Releases in accordance with the Lead Times in effect at the time the Purchase
Order or Release change is requested.

4.4 Cancellations. Purchaser may cancel any Purchase Order or Release or portion
thereof for Services, without charge, upon written notice to Supplier at least
thirty (30) days prior to the applicable delivery date. Where notice of
cancellation is given less than thirty (30) days prior to the applicable
delivery date, Purchaser agrees in such instance to pay Supplier all verified,
reasonable out-of-pocket costs for Materials and Work in Process incurred by
Supplier for the ordered Products under the cancelled Purchase Order or Release,
provided that such raw materials and work in process may not be reasonably used
by Supplier in fulfilling subsequent Purchase Orders.

4.5 Reschedules. Purchaser may reschedule the delivery of some or all Products
pursuant to any particular Release, without charge, upon written notice to
Supplier.

 

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4.6 Allocation. If the Materials are in such short supply that Supplier is
unable to completely fulfill Purchaser’s outstanding Purchase Orders, Supplier
will use all reasonable efforts to allocate available Materials first to
production of the Products for Purchaser.

4.7 Reserved Capacity. Since Purchaser is committing to purchase at least
certain amounts of Services, Supplier agrees to reserve capacity at the Facility
to perform the Services for Purchaser at least as required to perform Services
commensurate with the revenue commitment of Purchaser.

5. SERVICES; DELIVERY

5.1 Services. Supplier will perform the Services at the Facility in accordance
with the Performance Standards and in accordance with the schedule set forth in
the applicable Purchase Orders and Releases. Supplier shall not use any other
location other than the Facility to perform the Services and shall not
subcontract the performance of any Service without the prior written consent of
Purchaser on a case-by-case basis. Supplier acknowledges and agrees that the
Facility, the Products and the Services are qualified as of the Closing Date,
and consequently, Supplier agrees not to make any changes to the Facility or to
the equipment, tooling, or processes used to Produce the Products without the
prior written consent of Purchaser, such consent not to be unreasonably
conditioned, delayed, or withheld. If, however, a change is required by
government regulation or to address a safety issue, then Supplier agrees to
notify Purchaser in writing of such change as soon as possible, identifying in
detail the nature of the change and the reason for the change.

5.2 Testing Services. Supplier acknowledges and agrees that certain testing
equipment applicable to the Products is installed as of the Closing Date at the
Facility and used to test the Products. Purchaser may require Supplier to
perform the testing Services specified in the applicable Purchase Orders and in
accordance with the Performance Standards. Purchaser will pay the Supplier for
any such testing Services as set forth in Exhibit C or the applicable Purchase
Order. Supplier acknowledges that Purchaser is not obligated to purchase any
testing Services.

5.3 Packaging. Supplier will package the Products for shipment in accordance
with the applicable Specifications and Performance Standards.

5.4 Delivery and Risk of Loss. The title and risk of loss with respect to the
Products sold and shipped by Supplier to Purchaser hereunder shall pass to
Purchaser at the delivery point specified in the applicable Purchase Order or
Release. Supplier must conform to the delivery requirements set forth in the
applicable Purchase Order and Release.

6. AUDIT AND INSPECTION

6.1 Site Visits. Purchaser may send its employees or agents or permit employees
or agents of Purchaser’s customers to visit the Facilities to inspect the
production of the Products and Supplier’s performance of the Services specified
in this Agreement. Such visits shall be conducted during Supplier’s normal
working hours. While visiting Supplier’s facilities, each visitor shall at all
times fully comply with Supplier’s plant rules and regulations as well as all
reasonable instructions that may be issued by Supplier employees and personnel
accompanying any such visitor. Purchaser will have the right to audit Supplier’s
performance of the Services and compliance with the Performance Standards upon
at least two (2) Business Days’ prior written notice during normal business
hours.

 

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6.2 Financial Audit Rights. Supplier shall keep records in sufficient detail to
enable Purchaser to verify Supplier’s claims for cost reimbursement under
Section 2.4 above. Supplier shall permit said records to be inspected by
Purchaser or an independent auditor selected by Purchaser, at Purchaser’s
expense, upon at least twenty-four (24) hours notice, during regular business
hours. Inspections conducted under this Section 6.2 shall be at Purchaser’s
expense, unless a variation or error in Supplier’s calculations have produced an
overcharge of three percent (3%) or more for the applicable audited period, in
which case Supplier shall bear the reasonable expense of such audit.

6.3 Program Reviews. Purchaser and Supplier agree to participate in regular
monthly program reviews by a program review committee established by Purchaser
and Supplier to focus on operational details of the Production of the Products.

7. LIMITED WARRANTIES

7.1 Product Warranties. Supplier represents and warrants that (a) all Products
shall be free and clear of any liens, claims or encumbrances, (b) all Products
shall be Produced in accordance with all applicable laws, and (c) for a period
of twelve (12) months from the date any Products are delivered to Purchaser that
such Products shall meet the applicable Specifications and shall be free from
defects in material and workmanship under normal use provided that the defects
of the Products are not attributable to the acts or omissions of Purchaser, and
the Products are not:

(a) modified, altered or neglected prior to the use or installation, where such
modification, alteration or neglect has caused the non-compliance with warranty;

(b) combined with other products not provided by Supplier or otherwise agreed to
by Supplier in writing, where such combination has caused the non-compliance
with warranty; or

(c) used in a manner not permitted or contemplated for the intended purpose of
the Products, where such use has caused the non-compliance with warranty.

7.2 Remedies for Breach of Warranty. Without limiting any other remedy available
in law or equity, if any Products purchased hereunder do not meet the warranty
specified in Section 7.1(c) above, unless such non-conformity is attributable
solely to the Consigned Die or Consigned Materials as delivered to Supplier,
Purchaser may, at Purchaser’s option (i) require Supplier to replace or correct
at no cost to Purchaser any defective or nonconforming Products pursuant to the
Product return procedures set forth in Section 7.3 below, (ii) return any
nonconforming Products to Supplier at Supplier’s expense and recover from
Supplier the full sales price and any packaging or shipping costs related
thereto, or (iii) procure similar Products from an alternate supplier, and
Supplier shall be liable to Purchaser for any and all additional costs or
expenses reasonably incurred by Purchaser in procuring such substitute Products.
Supplier shall bear all packing, transportation, insurance and other costs

 

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incurred in connection with the replacement of defective Products. Furthermore,
if Supplier’s failure to deliver Products to Purchaser that conform with the
warranty set forth in Section 7.1(c) results in a breach of warranty claim
against Purchaser, Supplier will indemnify Purchaser for any liabilities,
losses, damages, costs and expenses incurred by Purchaser as the result of such
breach of warranty.

7.3 Services Warranty. Supplier represents and warrants that it will perform the
Services in accordance with the Performance Standards.

7.4 Intellectual Property Warranty. Supplier represents and warrants that it has
the right to Produce the Products and perform the Services, and to make, have
made, offer to sell and sell the Products to Purchaser and to import the
Products to the United States, including having all necessary licenses from
Tessera Technologies, Inc. to perform such activities.

7.5 No Waiver. No inspection or acceptance, approval or acquiescence by
Purchaser with respect to the Products shall relieve Supplier from any portion
of its warranty obligation nor will waiver by Purchaser of any specification
requirement for one or more items constitute a waiver of such requirements for
remaining items unless expressly agreed by Purchaser in writing.

7.6 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 7, TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, SUPPLIER EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS, WARRANTIES AND CONDITIONS REGARDING THE PRODUCTS AND SERVICES
PROVIDED HEREUNDER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND INCLUDING ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. SUPPLIER
ACKNOWLEDGES AND AGREES THAT ALL CONSIGNED DIE, CONSIGNED MATERIALS, TEST
EQUIPMENT, TOOLING AND SPARE PARTS ARE PROVIDED “AS IS,” WITHOUT ANY WARRANTY OF
ANY KIND. WITHOUT LIMITING THE FOREGOING, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, PURCHASER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS, WARRANTIES
AND CONDITIONS REGARDING THE CONSIGNED DIE, CONSIGNED MATERIALS, TEST EQUIPMENT,
TOOLING AND SPARE PARTS WHETHER EXPRESS, IMPLIED OR STATUTORY, AND INCLUDING ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

8. INDEMNIFICATION

8.1 Purchaser Indemnity. Except as provided for in Section 8.2 below, Purchaser
shall, at its own expense, indemnify, defend and hold Supplier harmless from and
against any liabilities, losses, damages, costs or expenses, including
reasonable attorneys’ fees, arising from any third party action, claim, suit or
proceeding (collectively, “Claims”) alleging infringement or misappropriation of
such third party’s Intellectual Property Rights solely to the extent relating to
the Consigned Die; provided that Supplier (a) gives Purchaser prompt written
notice of any such claim, (b) gives Purchaser through counsel of its choice,
sole control of the defense or settlement of such claim; and (c) gives Purchaser
all necessary information, assistance and authority to defend such claim, at
Purchaser’s request and reasonable expense.

 

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8.2 Supplier Indemnity. Except as expressly provided for in Section 8.1,
Supplier shall, at its own expense, indemnify, defend and hold Purchaser
harmless from and against any liabilities, losses, damages, costs or expenses,
including reasonable attorneys’ fees, arising from any Claims, arising from a
breach of Section 7.4 or alleging infringement or misappropriation of such third
party’s Intellectual Property Rights relating to the performance of Services and
the sale or import of Products; provided that Purchaser (a) gives Supplier
prompt written notice of any such claim, (b) gives Supplier through counsel of
its choice, sole control of the defense or settlement of such claim; and
(c) gives Supplier all necessary information, assistance and authority to defend
such claim, at Supplier’s request and reasonable expense.

9. INTELLECTUAL PROPERTY RIGHTS

9.1 Ownership. As between the parties, Purchaser shall own all Intellectual
Property Rights relating to the Products and nothing in this Agreement shall be
deemed to convey any right, title or interest in or to the Intellectual Property
Rights of Purchaser except for the express license grant set forth below. All
rights not expressly granted are reserved.

9.2 License Grant. Subject to the terms and conditions of this Agreement,
Purchaser grants Supplier a non-exclusive, non-transferable, royalty-free right
and license under the applicable Intellectual Property Rights of Purchaser
solely to perform the Services for Purchaser specified in this Agreement and to
offer to sell, sell and import the Products solely for purchase by Purchaser or
Purchaser’s designees.

9.3 Technical Documentation. Subject to the license grant set forth in
Section 9.2 above as well as to any license restrictions of third parties to
which Purchaser is subject, Purchaser agrees to provide Supplier with copies of
the technical data and documentation in Purchaser’s possession that immediately
prior to the Closing Date were used to perform the assembly, marking, packaging
and distribution activities at the Facility.

10. INSURANCE

Supplier shall maintain in full force and effect during the term of this
Agreement insurance covering its activities and obligations in accordance with
the requirements set forth below:

 

Type of Coverage

  

Minimum Coverage Limits

Worker’s Compensation    Statutory Limits (as required by law) Employer’s
Liability    US$1,000,000 per occurrence

Commercial General Liability*

(including without limitation Premises-Operations, Completed Operations,
Contractual, Broad Form Property Damage, Personal Injury)

  

Bodily Injury: US$1,000,000 per occurrence; US$3,000,000 in aggregate

 

Property Damage: US$10,000,000 per occurrence; US$20,000,000 in aggregate

Umbrella or Excess Liability    US$10,000,000 minimum extending General
Commercial Liability and Auto

Automobile Liability**

[including hired, non-owned auto and mobile equipment (if not covered under the
Commercial General Liability policy)]

  

Bodily Injury: US$100,000 per person; US$200,000 per accident

Property Damage: US$100,000 per accident

 

* Coverage to apply worldwide without geographic limitation.

** Only applicable to the extent Supplier (i) operates motor vehicles on
Purchaser property as a necessary part of performing services, (ii) transports
Purchaser property or Purchaser employees, or (iii) transports hazardous
materials to or from Purchaser property or on Purchaser’s behalf.

 

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All such insurance will provide coverage on the basis of occurrences during the
policy period, and not on the basis of claims made during the policy period.
Supplier will maintain additional insurance coverage if required by law or as
required in the applicable Purchase Order. Purchaser and/or any subsidiary of
Purchaser shall be named as an additional insured on all policies, except
workers’ compensation, and said policies shall waive subrogation against
Purchaser and/or any subsidiary of Purchaser when permitted by law. The
additional insured endorsement shall provide coverage at least as broad as
insurance industry form ISO CG 20 10 11 85. The Workers Compensation policy
shall be endorsed to include a waiver of subrogation against Purchaser and/or
any subsidiary of Purchaser when permitted by law. Supplier’s insurance policy
shall be the primary policy covering claims arising out of Supplier’s or its
contractors’ work or activities under this Agreement, and no insurance
maintained by Purchaser will contribute unless and until such Supplier’s (and
its contractors’) policies are exhausted. Prior to commencing work, Supplier
shall provide executed certificates of insurance to Purchaser evidencing and
certifying compliance with these insurance requirements, but Purchaser’s failure
to object if the certificate of insurance fails to evidence the required
coverage shall not serve as a waiver of these requirements. All insurance shall
be provided by an insurance carrier licensed to do business in the state where
the Services are to be performed and shall be underwritten by insurance carriers
with an AM Best rating of at least A - VII. Supplier will notify Purchaser in
writing at least sixty (60) days prior to any cancellation, material
modification, lapse, or termination of any required insurance policy. If
Supplier uses any contractors to perform any activities under this Agreement,
Supplier shall ensure that the contractor shall procure and maintain insurance
at least as broad (including policy limits) as that required under this
Section 10, including naming Supplier and Purchaser and/or any subsidiary of
Purchaser as additional insureds under their policies of insurance.

11. TERM AND TERMINATION

11.1 Term. This Agreement shall commence on the Closing Date and shall continue
for a period of twelve (12) months, unless terminated earlier by either party
for cause pursuant to Section 11.2. This Agreement will be automatically renewed
thereafter on a month-to-month basis unless one party provides the other party
three (3) months’ advance notice of non-renewal.

11.2 Termination for Cause. This Agreement may be terminated by either party
upon the material breach of this Agreement by the other party and the failure to
cure such breach within sixty (60) days after receipt of notice of intended
termination.

 

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11.3 Effect of Termination. The expiration or termination of this Agreement
shall not release either party from any liability which at said date of
termination has already accrued to the other party. Upon expiration or
termination of this Agreement, Supplier shall promptly deliver all Consigned
Die, Consigned Materials, Test Equipment, Tooling and any Work in Process to the
location designated by Purchaser and shall follow all reasonable instructions
provided by Purchaser regarding such delivery. Unless the Agreement is
terminated by Supplier for Purchaser’s material breach, Supplier shall bear the
reasonable expense of such delivery obligations. In the event that Supplier has
terminated the Agreement for cause, then the reasonable delivery costs shall be
borne by Purchaser.

11.4 Survival. Notwithstanding any termination or expiration of this Agreement,
Sections 1, 7, 8, 9.1, 10, 11.3, 11.4, 12, 13 and 14, and the applicable
provisions of Exhibit B, shall survive any expiration or termination of this
Agreement.

12. CONFIDENTIALITY

12.1 Confidentiality. Except as otherwise expressly provided herein, the parties
agree that the receiving party shall not, except as expressly provided in this
Section 12, disclose to any third party, or use for any purpose except as set
forth in Section 12.2 below, any Confidential Information furnished to it by the
disclosing party pursuant to this Agreement, except in each case to the extent
that it can be established by the receiving party by competent proof that such
information:

(a) was already known to the receiving party, other than under an obligation of
confidentiality, at the time of disclosure;

(b) was generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving party;

(c) became generally available to the public or otherwise part of the public
domain after it disclosure and other than through any act or omission of the
receiving party in breach of this agreement;

(d) was independently developed by the receiving party without use of, or
reference to, the other party’s confidential information, as demonstrated by
documented evidence prepared contemporaneously with such independent
development; or

(e) was disclosed to the receiving party, other than under an obligation of
confidentiality, by a third party authorized and entitled to disclose such
information to others without restriction.

12.2 Permitted Use and Disclosures. Notwithstanding the restrictions of
Section 12.1, each party hereto may (a) use Confidential Information disclosed
to it by the other to the extent necessary for that party to perform its
obligations under this Agreement and (b) use or disclose Confidential
Information disclosed to it by the other party to the extent such use or
disclosure is reasonably necessary in (i) exercising the rights and licenses
granted hereunder, or (ii) complying with applicable laws, governmental
regulations or court orders or submitting information to tax or other
governmental authorities (including the Securities and Exchange

 

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Commission), (provided that if a party is required to make any such disclosure,
other than pursuant to an arrangement to restrict disclosure and use, it will
give reasonable advance notice to the other party of such disclosure
requirement, and in each case it will use reasonable efforts to secure
confidential treatment of such information (whether through protective order or
otherwise) and use reasonable efforts to permit the other Party an opportunity
maintain confidentiality of its affected Confidential Information). Supplier
further acknowledges and agrees that Purchaser may disclose Confidential
Information to formal and informal committees and consortia of its creditors
formed in Purchaser’s bankruptcy proceedings, as well as to the professional
advisors to such creditors, so long as such parties agree to abide by the
confidentiality provisions of this Agreement.

13. LIMITATION OF LIABILITY

EXCEPT FOR A BREACH OF A LICENSE GRANT OR A CONFIDENTIALITY OBLIGATION OR TO
FULFILL AN INDEMNITY OBLIGATION, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, IN NO EVENT SHALL EITHER PARTY OR ITS RESPECTIVE AFFILIATES BE LIABLE FOR
ANY LOST PROFITS, OR FOR ANY SPECIAL, EXEMPLARY, CONSEQUENTIAL OR INCIDENTAL
DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE,
EVEN IF NOTIFIED OF THE LIKELIHOOD OF SUCH A CLAIM. EXCEPT FOR A BREACH OF A
LICENSE GRANT OR A CONFIDENTIALITY OBLIGATION, OR TO FULFILL AN INDEMNITY
OBLIGATION, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL
EITHER PARTY’S CUMULATIVE LIABILITY TO THE OTHER UNDER THIS AGREEMENT EXCEED THE
AMOUNTS PAID OR PAYABLE TO SUPPLIER UNDER THIS AGREEMENT. The parties
acknowledge and agree that the foregoing limitations of liability are an
essential element of this agreement and that in their absence the terms of this
agreement would be substantially different.

14. MISCELLANEOUS

14.1 Governing Law and Arbitration. This Agreement and any dispute arising from
the construction, performance or breach hereof shall be governed by and
construed and enforced in accordance with the laws of Hong Kong, without
reference to its conflict of law principles. All disputes between the parties
will be resolved pursuant to the procedures set forth in Section 9.06 of the
Purchase Agreement.

14.2 Assignment. Neither party may assign this Agreement, in whole or in part,
without the prior written consent of the other party, which consent shall not be
unreasonably conditioned, delayed or withheld; provided, however, that either
party may assign this Agreement and any licenses granted hereunder without such
consent, to a parent, subsidiary, or Affiliate or upon a Change of Control. Any
purported assignment without such consent shall be void and of no effect.
Subject to the foregoing sentence, this Agreement will be binding on and inure
to the benefit of the parties and their respective successors and permitted
assigns.

14.3 Representation by Legal Counsel. Each party hereto represents that it has
been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting hereof. In interpreting
and applying the terms and provisions of this Agreement, the parties agree that
no presumption shall exist or be implied against the Party that drafted such
terms and provisions.

 

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14.4 Waiver. It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.

14.5 Severability. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect to the fullest
extent permitted by law without said provision, and the parties shall amend the
Agreement to the extent feasible to lawfully include the substance of the
excluded term to as fully as possible realize the intent of the parties and
their commercial bargain except to the extent that such amendment can not
preserve the essential purpose of this Agreement.

14.6 Independent Contractors. The relationship of the parties hereto is that of
independent contractors. The parties hereto are not deemed to be agents,
partners or joint ventures of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.

14.7 Compliance with Laws. In exercising their rights under the license granted
hereunder, each party shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of rights and the
performance of obligations by either party under this Agreement.

14.8 Export Control Regulations. The rights and obligations of the parties under
this Agreement, shall be subject in all respects to United States laws and
regulations as shall from time to time govern the license and delivery of
Technology abroad, including the United States Foreign Assets Control
Regulations, Transaction Control Regulations and Export Control Regulations, as
amended, and any successor legislation issued by the Department of Commerce,
International Trade Administration, or Office of Export Licensing.

14.9 Environmental Matters. Supplier will indemnify and hold Purchaser harmless
from and against any liability, loss, damage, cost or expense (including
reasonable attorneys fees) arising from or caused by any toxic or hazardous
substances or chemicals, as those terms are defined by applicable environmental
health or safety laws or regulations, which are used in performance of this
Agreement by Supplier, present in scrap disposed of or destroyed by Supplier, or
are present at any of the facilities in or during Supplier’s performance of this
Agreement.

14.10 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
telecopy with answer back, by express or overnight mail delivered by an
internationally recognized air courier (delivery charges prepaid), by registered
or certified mail (postage prepaid, return receipt requested) or by e-mail with
receipt confirmed by return e-mail to the respective parties as follows:

if to Supplier, to:

Powertech Technology, Inc.

No. 26, Datong Rd., Hsinchu Industrial Park

Hukou, Hsinchu 30352, Taiwan

Attention: Mr. C.C. Liao, Vice President & Deputy Chief Executive Officer

Facsimile No.: +88.63.597.9900

 

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if to Purchaser, to:

Spansion LLC

915 DeGuigne Dr,

Sunnyvale, California 94088, USA

Attention: Nancy Richardson

Facsimile No.: +1.408.616.3762

with a copy to:

Latham & Watkins LLP

140 Scott Drive

Menlo Park, California 94025

Attention: Tad J. Freese

Facsimile No.: (650) 463-2600

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by e-mail, telecopy or by air courier
shall be deemed effective on the first business day following the day on which
such notice or communication was sent. Any notice or communication sent by
registered or certified mail shall be deemed effective on the third business day
following the day on which such notice or communication was mailed.

14.11 Headings; Construction. The headings to the clauses, sub-clause and parts
of this Agreement are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. The terms “this Agreement,” “hereof,” “hereunder” and any similar
expressions refer to this Agreement and not to any particular Section or other
portion hereof. As used in this Agreement, the words “include” and “including,”
and variations thereof, will be deemed to be followed by the words “without
limitation” and “discretion” means sole discretion.

14.12 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.

14.13 Complete Agreement. This Agreement with its Exhibits, and the applicable
portions of the Purchase Agreement, constitute the entire agreement, both
written and oral,

 

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between the parties with respect to the subject matter hereof, and all prior
agreements respecting the subject matter hereof (including confidentiality
agreements), either written or oral, express or implied, shall be abrogated and
canceled. No amendment or change hereof or addition hereto shall be effective or
binding on either of the parties hereto unless reduced to writing and executed
by the respective duly authorized representatives of Purchaser and Supplier.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have signed this Agreement effective as of the
date first set forth above.

 

Powertech Technology, Inc. By:  

/s/    D.K. Tsai

Name:   D.K. Tsai Title:   Chairman

 

Spansion LLC By:  

/s/    John Kispert

Name:   John Kispert Title:   Chief Executive Officer

 

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