Document:

Separation Agreement and Release

 Exhibit 10.5 
 SEPARATION AGREEMENT AND RELEASE 
 This Separation
Agreement and Release (“Agreement”) is made by and between James P. Reid (“Executive”) and Spansion Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a
“Party”). 
 RECITALS 
 WHEREAS, Executive is employed by the Company as its Executive Vice President, Sales and Marketing. 
 WHEREAS, on May 20, 2011, Executive’s employment with the Company will be terminated (the “Termination Date”); 

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions,
and demands that the Executive may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with the Company, the
transitional employment, or the resignations provided for herein. 
 NOW, THEREFORE, in consideration of the
mutual promises made herein, the Company and Executive hereby agree as follows: 
 COVENANTS 

1. Termination of Employment. Executive acknowledges that he will cease his employment with the Company effective
on the Termination Date. 
 a. Salary: The Company agrees to pay Executive his accrued and unpaid base
salary and Paid Time Off (PTO), less applicable withholding, through the Termination Date and his base salary, less applicable withholding, as in effect on the Termination Date for a period of six (6) months following the Termination Date, in
accordance with the Company’s regular payroll practices. 
 b. Stock Options: The Company will
accelerate the vesting of thirty thousand (30,000) stock options. 
 c. Health Coverage. As provided
by the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”), and by the Company’s current group health plan, Executive will be eligible to continue Executive’s health benefits following the Termination Date. The
Company’s COBRA administrator will mail a COBRA enrollment packet to Executive’s home within 30 days of his last day of employment. Executive will have 60 days from the date of notification to elect COBRA coverage. Should Executive timely
elect COBRA, Executive’s COBRA coverage will take effect retroactive to the date his current coverage as an active employee ceased. Executive must send in his enrollment forms to the Company’s COBRA administrator to activate coverage.
Executive is entitled to COBRA coverage whether or not 

 
Executive sign this Agreement. If Executive elects continued coverage under COBRA, the Company will pay his COBRA premiums for six (6) calendar months after the Termination Date as part of
this Agreement. The Company’s obligation to make these payments will cease immediately if Executive becomes eligible for other health benefits at the expense of another employer. Executive agrees to immediately provide the Company written
notice of the availability of health coverage within that time period. Although Executive is entitled to COBRA coverage whether or not Executive signs this Agreement, if Executive wants the Company to pay his COVBRA premium(s) for the
above-referenced time period, Executive must sign this Agreement and timely elect COBRA. 
 2. Indemnity.
Nothing in this agreement is intended to modify or terminate the Executive’s Indemnity Agreement with the Company. 
 3. Release of Claims. Executive agrees that terms provided for under this Agreement represent settlement in full of any and all outstanding obligations owed to Executive by the Company and its
current and former officers, directors, Executives, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, divisions, and subsidiaries, and predecessor and successor corporations and
assigns (collectively, the “Releasees”). Executive, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning,
or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess
against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement, including, without limitation: 

a. any and all claims relating to or arising from Executive’s employment relationship with the Company, termination
thereof, and changes to that relationship reflected herein; 
 b. any and all claims relating to, or arising
from, Executive’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law; 
 c. any and all claims for wrongful discharge of
employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; any obligations under his employment offer with the Company or any change of control arrangement; breach of
covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract
or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits; 

d. any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII
of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in
Employment Act 

  
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of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act;
the Sarbanes-Oxley Act of 2002; the Uniformed Services Employment and Reemployment Rights Act; the California Family Rights Act; the California Labor Code; the California Workers’ Compensation Act; and the California Fair Employment and Housing
Act; 
 e. any and all claims for violation of the federal or any state constitution; 

f. any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

 g. any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or
other tax treatment of any of the proceeds received by Executive as a result of this Agreement; and 
 h. any
and all claims for attorneys’ fees and costs. 
 Executive agrees that the release set forth in this section shall be and
remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of
law, including, but not limited to, Executive’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is
authorized to enforce or administer laws related to employment, against the Company (with the understanding that any such filing or participation does not give Executive the right to recover any monetary damages against the Company; Executive’s
release of claims herein bars Executive from recovering such monetary relief from the Company). Executive represents that he has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or
other matter waived or released by this Section. Neither Executive nor the Company intends to release claims that neither may release as a matter of law, including but not limited to claims for indemnity under California Labor Code
Section 2802. 
 4. Acknowledgment of Waiver of Claims under ADEA. Executive understands and
acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary. Executive understands and agrees that this
waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. Executive understands and acknowledges that the consideration given for this waiver and release is in addition to
anything of value to which Executive was already entitled. Executive further understands and acknowledges that he has been advised by this writing that: (a) he should consult with an attorney prior to executing this Agreement;
(b) he has twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following his execution of this Agreement to revoke this Agreement; (d) this Agreement shall not be effective until after the
revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Executive signs this Agreement and returns it to the Company in less than the 21-day period identified above, Executive hereby acknowledges

  
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that he has freely and voluntarily chosen to waive the time period allotted for considering this Agreement. 

5. California Civil Code Section 1542. Executive acknowledges that he has been advised to consult with legal
counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows: 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. 
 Executive, being aware of said code section, agrees to expressly waive any rights he may have there under, as well as under any other statute or common law principles of similar effect. 

6. No Pending or Future Lawsuits. Executive represents that he has no lawsuits, claims, or actions pending in his
name, or on behalf of any other person or entity, against the Company or any of the other Releasees. Executive also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the
Company or any of the other Releasees. 
 7. Trade Secrets and Confidential Information/Company Property.
Executive reaffirms and agrees to observe and abide by the terms of the Confidentiality Agreement dated March 12, 2010 attached as Exhibit A, specifically including the provisions therein regarding nondisclosure of the Company’s trade
secrets and confidential and proprietary information, and non-solicitation of Company employees. 
 8. No
Cooperation. Executive further agrees that he will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any
third party against any of the Releasees, unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Executive agrees both to immediately notify the Company upon receipt of any such subpoena or
court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or other court order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints against any of the Releasees, Executive shall state no more than that he cannot provide counsel or assistance. 
 9. Mutual Non-Disparagement and Communications with Company Employees, Customers and Business Partners. Both parties agree not to disparage each other. Executive agrees to refrain from any
disparagement, defamation, libel, or slander of any of the Releasees, and agrees to refrain from any tortious interference with the contracts and relationships of any of the Releasees. Executive further agrees that he will refrain from discussing
Company confidential business or financial information with third parties, including the Company’s actual and potential customers or business partners. Executive further agrees that he will not discuss the Company’s

  
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business with Company employees, customers, or business partners except as requested by the Company’s Chief Executive Officer or his designee. 

10. Breach. In addition to the rights provided in the “Attorneys’ Fees” section below, Executive
acknowledges and agrees that any material breach of this Agreement, unless such breach constitutes a legal action by Executive challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, or of any
provision of the Confidentiality Agreement shall entitle the Company immediately to recover and/or cease providing the salary provided by this agreement, except to the extent required by law, and to obtain damages, except as provided by law. Except
as provided by law, Executive shall also be responsible to the Company for all costs, attorneys’ fees, and any and all damages incurred by the Company in (a) enforcing Executive’s obligations under this Agreement or the
Confidentiality Agreement, including the bringing of any action to recover payments in the event of a breach, and (b) defending against a claim or suit brought or pursued by Executive in violation of the terms of this Agreement. 

11. No Admission of Liability. Executive understands and acknowledges that this Agreement constitutes a compromise
and settlement of any and all actual or potential disputed claims by Executive. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or
falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Executive or to any third party. 

12. Non-Solicitation. Executive agrees that for a period of twelve (12) months immediately following the End
Date of this Agreement, Executive shall not directly or indirectly solicit any of the Company’s employees to leave their employment at the Company. 
 13. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement. 

14. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of
the payments or other consideration provided to Executive or made on his behalf under the terms of this Agreement. Executive agrees and understands that he is responsible for payment, if any, of local, state, and/or federal taxes on the payments and
any other consideration provided hereunder by the Company and any penalties or assessments thereon. Executive further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments,
executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Executive’s failure to pay or the Company’s failure to withhold, or Executive’s delayed payment of,
federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs. 
 15. Section 409A. The foregoing provisions are intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the
final Treasury Regulations and any guidance promulgated there under (“Section 409A”) so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to 

  
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so comply. Executive and the Company agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A. 
 16. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and
conditions of this Agreement. Executive represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Each Party warrants and
represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein. 

17. No Representations. Executive represents that he has had an opportunity to consult with an attorney, and has
carefully read and understands the scope and effect of the provisions of this Agreement. Executive has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement. 

18. Severability. In the event that any provision or any portion of any provision hereof or any surviving
agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
Notwithstanding, to the extent the Company’s obligation to pay the Consideration provided for under Section 1 (Consideration) of this Agreement is deemed illegal, unenforceable, or void, and the Company fails to otherwise provide for the
Consideration as provided, the Parties shall not remain bound by the terms of this Agreement, and it shall become null and void. 
 19. Attorneys’ Fees. Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either
Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable
attorneys’ fees incurred in connection with such an action. 
 20. Entire Agreement. This Agreement
represents the entire agreement and understanding between the Company and Executive concerning the subject matter of this Agreement and Executive’s employment with the Company and the changes to that employment relationship provided for herein,
and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Executive’s relationship with the Company, including but
not limited to any change of control arrangement, with the exception of the Confidentiality Agreement and the Insider Trading Policy Acknowledgement. 
 21. No Oral Modification. This Agreement may only be amended in a writing signed by Executive and the Company’s Senior Vice President of Human Resources. 

  
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 22. Governing Law. This Agreement shall be governed by the laws of
the State of California, without regard for choice-of-law provisions. Executive consents to personal and exclusive jurisdiction and venue in the State of California. 

23. Counterparts. This Agreement may be executed in counterparts and by facsimile, and each counterpart and
facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. 
 24. Voluntary Execution of Agreement. Executive understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any
third party, with the full intent of releasing all of his claims against the Company and any of the other Releasees. Executive acknowledges that: 
  

	 	 (a)
	 He has read this Agreement; 

  

	 	 (b)
	 He has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice or has elected not to
retain legal counsel; 

  

	 	 (c)
	 He understands the terms and consequences of this Agreement and of the releases it contains; and 

 

	 	 (d)
	 He is fully aware of the legal and binding effect of this Agreement. 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below. 

 

							
		 		 	 JAMES P. REID, an individual

				
	 Dated: May 27, 2011
	 		 	 By
	 	 /s/ James P. Reid

		 		 		 	 James P. Reid

			
		 		 	 SPANSION INC.

				
	 Dated: May 27, 2011
	 		 	 By
	 	 /s/ Carmine Renzulli

		 		 		 	 Carmine Renzulli

		 		 		 	 Senior Vice President, Human Resources

  
 Page 7 of 7Spansion Inc. 2010 Employee Incentive Plan

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

	I.	Introduction 

 The
Spansion Employee Incentive Plan (“Plan”) recognizes and rewards Plan Participants for furthering Spansion’s ongoing success against strategic objectives. A Participant’s award under the Plan is funded based on the company’s
performance against one or more Plan Metrics (e.g., revenue, operating margin) established and approved by the Compensation Committee of the Board of Directors for any given Plan Year. Plan Metrics may change from year-to-year at the sole discretion
of Spansion. 
 A Participant’s eligibility and target opportunity (“Target”) for the Plan Year is based on the
Participant’s role and job level, and may change from year-to-year at the sole discretion of Spansion. Award funding can range from 0% to 200% of Target. A portion of the award may be tied to individual performance depending on the
Participant’s job level. 
 Award payments, if any, are made following evaluation of Plan Metrics and the completion of the
compensation rewards process after the close of the Plan Period. Depending on the Participant’s job level, the plan will be measured and paid on either a quarterly or annual basis. 

Plan participation summary: 
  

					
	  	  	Plan Period	  	Individual
Performance
Modifier
	 Sr. Director & Above
	  	Annual	  	Yes
	 Individual Contributor to Director
	  	Quarterly	  	Yes
	 Support Staff
	  	Quarterly	  	No

  

	II.	Explanation of Terms Base Salary for annual Participants is generally the Participant’s annualized base pay at the end of the Plan Year; for quarterly
participants it is generally the annualized base salary at the end of the Plan Period, divided by 4. (See Section V for further detail on the administrative provisions.) 

Participant is any employee of Spansion who is eligible to participate in the Plan based on their role and job level. Sales
Incentive Plan 

  
 1 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

 
participants and employees otherwise eligible to participate in local broad-based incentive programs are not eligible. 
 Plan Year is Spansion’s fiscal year, approximately each January 1 through December 31. For 2010, the Plan will begin effective January 1, 2010. 

Plan Period, for the purposes of the Plan Metrics, is either the fiscal quarter or fiscal year, depending on the Participant’s
role. 
 Plan Metric is an overarching goal for the Plan Year and is generally financial in nature (e.g., revenue,
operating margin). There may be more than one Plan Metric established for any Plan Year, and metrics may change from year-to-year. 
 Plan Objectives are the parameters by which achievement of a Plan Metric is measured for a Plan Period (e.g., minimum, goal and maximum). For example, for a revenue Plan Metric, minimum, goal and
maximum Plan Objectives might be $1B, $1.2B and $1.5B, respectively. 
 Target is the percentage of base salary for which
a Participant is eligible assuming goals are achieved for the Plan Metrics. (See Exhibit B for Plan Targets) 
 Company Target
Multiplier is the percentage of a Participant’s Target used to calculate initial award amounts. The Company Target Multiplier takes into consideration any applicable weighting for each Plan Metric, and the degree to which each Plan
Objective for each Plan Metric is achieved. 
 Individual Performance Modifier, for eligible Participants, is applied to
the initial award amounts based on the Participant’s performance for the Plan Period. 
  

	III.	Plan Metrics 

 Plan
Metrics and related Plan Objectives are determined for each Plan Year. Exhibit A provides details for the relevant Plan Year, including: 
  

	 	•	 	 Plan Metrics; 

  

	 	•	 	 Percent of Target awards funded when minimum, goal and maximum Plan Objectives are met; and 

 

	 	•	 	 Metrics details specific to the relevant Plan Year. 

  
 2 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

	IV.	Award Determination 

Following the close of a Plan Period, after actual company performance is known, the Plan awards are calculated as follows: 

 

	 	A.	Company Performance Multiplier 

 The Company Performance Multiplier, ranging from 0% to 200%, is determined and applied to the Participant’s assigned Plan Target based on company performance to objectives established at the
beginning of the Plan Period. 
  

	 	B.	Individual Performance Modifier 

 For eligible participants, an Individual Performance Modifier, ranging from 50% to 150%, is determined and approved by the Participants’ management based on achievement against pre-established
objectives (either quarterly or annually, depending upon eligibility). The Modifier applies to the result of the calculation in A above. The individual modifier will be forced through the application of a bell curve rating system each manager will
use to rate his/her employees. 
  

	 	C.	Maximum Spend 

 While
Participants eligible for the Individual Performance Modifier may earn up to 150% of the company-based award based on their individual performance, the maximum plan expenditure cannot exceed the overall budget for the plan period. The overall budget
is the sum of all awards resulting from the calculation in A above. Each senior manager will force a distribution for their direct reports. 
 For Participants for whom the Individual Performance Modifier does not apply, the award is calculated as follows: 
 

 
 For Participants for whom the Individual Performance Modifier does apply, the award is calculated as
follows: 

  
 3 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

 

 
  

	V.	Administrative Provisions 

The following provisions apply generally to all Plan participants on a worldwide basis. However, some variations may exist based on local
legal requirements (e.g., laws regarding base salary calculation, payments upon termination). Please contact the local Division HR Representative for specific details. 
  

	 	A.	Changes in a Participant’s Status 

  

	 	1.	Change in Participation Level (e.g., individual contributor to manager, manager to director) – If a Participant changes participation levels during a Plan
Year, an award is calculated on a pro rata basis (as described in B.2. below) taking into account (i) the time the Participant was in each level, (ii) the ending Base Salary for each level, and (iii) the Targets applicable to each
level. 

  

	 	2.	Plan Participation Ends – If a Participant stops participating in the Plan but continues to be eligible for a pro-rated award, the Base Salary and Target
used to calculate their award are those in effect at the time participation ended. 

  

	B.	Eligibility for Plan Award Payments 

  

	 	1.	Employment at Time of Payment: Subject to the provisions below, to be eligible to receive an award, a Participant must be actively employed by Spansion on the
date awards are paid unless otherwise required by local law. 

  

	 	2.	New Participant/Inactive Status: Participants must be on active status for at least 30 days of the Plan Period to be eligible for an award. Payment to an
employee who was not an active Participant for an entire Plan Period (i.e., became a Participant mid-quarter and/or was on inactive status for part of the Plan Year), is prorated; the amount of the payment is based on the number of days of active
participation in the Plan during the Plan Period. For leaves of absence, proration will occur based on local guidelines; subject to those guidelines, proration will generally occur where inactive status exceeds 14 calendar days (2 work weeks).

  

	 	3.	 Death: A Participant who dies, and has actively participated in the Plan for at least half of the Plan Period, is eligible for a Plan payment.
Payments in these cases are prorated based on the number of days of participation during the Plan Period and will be 

  
 4 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

	 	
calculated and paid at the regularly scheduled time. Payment is made to the participant’s designated beneficiary. 

 

	 	4.	Reduced Work Schedule: A Participant who has a reduced work schedule receives a pro-rated payment based on the percent by which the schedule is reduced.

  

	 	5.	Performance Requirement: Subject to the discretion of a Participant’s Vice President, a Participant may not be eligible to receive an award unless a minimum
level of overall performance has been achieved. An employee is not eligible for an award if he/she has received a warning within 3 months prior to when payments are made. 

 

	 	C.	Timing of Award Payments 

Awards for a Plan Period are paid during the quarter immediately following the end of the Plan Period, following determination of
performance against both company and individual objectives. 
  

	 	D.	Approval of Plan Metrics and Plan Objectives 

 Annual Plan Metrics and Plan Objectives are approved by the Compensation Committee of the Board of Directors at the beginning the Plan Year. Quarterly Objectives, and performance against them, are
determined at the end of each Plan Period and approved by the Compensation Committee of the Board of Directors, the CFO, or the CEO. Plan Objectives and results align with the Company’s forecast and results plus publicly reported
quarterly/annual results unless specifically approved otherwise by the Compensation Committee. 
  

	 	E.	Discretionary Nature of Plan and Award Payments 

 No participant has a vested entitlement to any payment under the Plan; all awards are paid at the sole discretion of Spansion’s executive officers. Specifically, regardless of whether an
award has been consistently paid over any period of time, Spansion, at its sole discretion, reserves the right to (i) increase or decrease Targets and Target Percentages for each Plan Year, (ii) terminate the participation of any
participant in the Plan at any time for any legal reason, and/or (iii) modify or terminate the Plan, in whole or in part, all with or without notice or cause. Award payments will be offset for participants who are eligible for other bonus
plans. 
  

	 	F.	Application of Deferred Compensation Rules 

 The Plan is generally operated in a manner that complies with Internal Revenue Code Section 409A and, as such, all awards paid under the Plan will be paid according to section V.C. 

  
 5 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

 EXHIBIT A 
 2010 Pay for Performance Plan Details 
 Annual Plan Metrics and Objectives

  

																							
	 	 	 	 	2010 Annual Bonus Payout
Matrix
	 	 	 	 	  
 Revenue
(M$)

	

	 	 	 	< $1,100	 	$1,100	 	$1,125	 	$1,150	 	$1,175	 	$1,200	 	$1,275	 	$1,350	 	$1,425	 	$1,500
	 	16.90%	 	0%	 	120%	 	130%	 	140%	 	150%	 	160%	 	170%	 	180%	 	190%	 	200%
	 	16.15%	 	0%	 	110%	 	119%	 	128%	 	136%	 	145%	 	155%	 	165%	 	175%	 	185%
	 	15.40%	 	0%	 	100%	 	108%	 	115%	 	123%	 	130%	 	140%	 	150%	 	160%	 	170%
	 	14.65%	 	0%	 	90%	 	96%	 	103%	 	109%	 	115%	 	125%	 	135%	 	145%	 	155%
	 	13.90%	 	0%	 	80%	 	85%	 	90%	 	95%	 	100%	 	110%	 	120%	 	130%	 	140%
	 	13.65%	 	0%	 	73%	 	78%	 	83%	 	88%	 	93%	 	103%	 	113%	 	123%	 	135%
	 	13.40%	 	0%	 	65%	 	70%	 	75%	 	80%	 	85%	 	95%	 	105%	 	115%	 	130%
	 	13.15%	 	0%	 	58%	 	63%	 	68%	 	73%	 	83%	 	93%	 	103%	 	113%	 	125%
	 	12.90%	 	0%	 	50%	 	55%	 	63%	 	70%	 	80%	 	90%	 	100%	 	110%	 	120%
	 	< 12.9%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%

 These performance metrics are Spansion Confidential and must not be disclosed outside Spansion.

Quarterly Plan Metrics and Objectives 

Metrics for quarterly plan participants will be established separately and tracked each quarter by Finance. The following are the Plan Metrics for Q1 and
Q2 2010 (subject to review and approval: 
  

																							
	 	 	 	 	Q110 Bonus Payout
Matrix
	 	 	 	 	  
 Revenue
(M$)

	

	 	 	 	< $250	 	$250	 	$255	 	$261	 	$266	 	$271	 	$291	 	$311	 	$330	 	$350
	 	16.90%	 	0%	 	120%	 	130%	 	140%	 	150%	 	160%	 	170%	 	180%	 	190%	 	200%
	 	16.15%	 	0%	 	110%	 	119%	 	128%	 	136%	 	145%	 	155%	 	165%	 	175%	 	185%
	 	15.40%	 	0%	 	100%	 	108%	 	115%	 	123%	 	130%	 	140%	 	150%	 	160%	 	170%
	 	14.65%	 	0%	 	90%	 	96%	 	103%	 	109%	 	115%	 	125%	 	135%	 	145%	 	155%
	 	13.90%	 	0%	 	80%	 	85%	 	90%	 	95%	 	100%	 	110%	 	120%	 	130%	 	140%
	 	13.65%	 	0%	 	73%	 	78%	 	83%	 	88%	 	93%	 	103%	 	113%	 	123%	 	135%
	 	13.40%	 	0%	 	65%	 	70%	 	75%	 	80%	 	85%	 	95%	 	105%	 	115%	 	130%
	 	13.15%	 	0%	 	58%	 	63%	 	68%	 	73%	 	83%	 	93%	 	103%	 	113%	 	125%
	 	12.90%	 	0%	 	50%	 	55%	 	63%	 	70%	 	80%	 	90%	 	100%	 	110%	 	120%
	 	< 12.9%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%

 These performance metrics are Spansion Confidential and must not be disclosed outside Spansion.

  
 6 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

																							
	 	 	 	 	Q210 Bonus Payout
Matrix
	 	 	 	 	  
 Revenue
(M$)

	

	 	 	 	< $275	 	$275	 	$281	 	$288	 	$294	 	$300	 	$319	 	$3338	 	$356	 	$375
	 	13.00%	 	0%	 	120%	 	130%	 	140%	 	150%	 	160%	 	170%	 	180%	 	190%	 	200%
	 	12.25%	 	0%	 	110%	 	119%	 	128%	 	136%	 	145%	 	155%	 	165%	 	175%	 	185%
	 	11.50%	 	0%	 	100%	 	108%	 	115%	 	123%	 	130%	 	140%	 	150%	 	160%	 	170%
	 	10.75%	 	0%	 	90%	 	96%	 	103%	 	109%	 	115%	 	125%	 	135%	 	145%	 	155%
	 	10.00%	 	0%	 	80%	 	85%	 	90%	 	95%	 	100%	 	110%	 	120%	 	130%	 	140%
	 	9.75%	 	0%	 	73%	 	78%	 	83%	 	88%	 	93%	 	103%	 	113%	 	123%	 	135%
	 	9.50%	 	0%	 	65%	 	70%	 	75%	 	80%	 	85%	 	95%	 	105%	 	115%	 	130%
	 	9.25%	 	0%	 	58%	 	63%	 	68%	 	73%	 	83%	 	93%	 	103%	 	113%	 	125%
	 	9.00%	 	0%	 	50%	 	55%	 	63%	 	70%	 	80%	 	90%	 	100%	 	110%	 	120%
	 	< 9.00%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%	 	0%

 For subsequent quarters, a similar matrix will be established and approved per the Administrative
Provisions. Quarterly Objectives and results align with the Company’s forecast and results plus publicly reported quarterly/annual results unless specifically approved otherwise by the Compensation Committee 

Where achievement falls between the values in the matrices, the funding percent will be interpolated. Where achievement falls below the minimum level of
either objective, no awards will be funded or distributed based on the guidelines established in these plans. In the event targets are not achieved, but the company is still profitable, a pool of funds totaling 10% of base salary will be available
for distribution to employees at the sole discretion of management. Section 16 officers and employees, at the Senior Vice President Level or above, are not eligible for these bonus awards. The Compensation Committee has the sole authority to
recommend bonus awards for the Section 16 officers or Senior Vice Presidents or above, based on recommendations from the CEO, for exemplary performance to the Board for approval. Special awards made to the CEO are made and recommended by the
Compensation Committee and approved by the Board. 
 Sample Calculation 

 

																																	
	 	  	 	 	  	 	 	 	Employee Incentive Plan Payout Examples	 
									
	 Plan Level
	  	Annual
Salary	 	  	Plan
Target	 	 	Company
Performance
Multiplier
(50% - 200%)	 	 	Initial
Award	 	  	Individual
Performance
Multiplier
(50% - 150%)	 	  	Target ×
Corporate
×
Individual	 	 	Quarterly
Award	 	  	Annual /
Annualized
Award	 
	 Support
	  	$	55,000	  	  	 	5.0	% 	 	 	90	% 	 	$	619	  	  	 	N/A	  	  	 	4.5	% 	 	$	619	  	  	$	2,475	  
	 Support
	  	$	40,000	  	  	 	5.0	% 	 	 	90	% 	 	$	450	  	  	 	N/A	  	  	 	4.5	% 	 	$	450	  	  	$	1,800	  
	 Support
	  	$	60,000	  	  	 	5.0	% 	 	 	90	% 	 	$	675	  	  	 	N/A	  	  	 	4.5	% 	 	$	675	  	  	$	2,700	  

  
 7 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

																																	
		  				  				 	 	Budget:	  	 	$	1,744	  	  				 	 	Spend:	  	 	$	1,744	  	  			
									
	 IC/Manager
	  	$	100,000	  	  	 	15.0	% 	 	 	90	% 	 	$	3,375	  	  	 	80	% 	 	 	10.8	% 	 	$	2,700	  	  	$	10,800	  
	 IC/Manager
	  	$	80,000	  	  	 	15.0	% 	 	 	90	% 	 	$	2,700	  	  	 	125	% 	 	 	16.9	% 	 	$	3,375	  	  	$	13,500	  
	 IC/Manager
	  	$	120,000	  	  	 	15.0	% 	 	 	90	% 	 	$	4,050	  	  	 	100	% 	 	 	13.5	% 	 	$	4,050	  	  	$	16,200	  
		  				  				 	 	Budget:	  	 	$	10,125	  	  				 	 	Spend:	  	 	$	10,125	  	  			
									
	 Sr Director/VP
	  	$	150,000	  	  	 	30.0	% 	 	 	90	% 	 	$	40,500	  	  	 	80	% 	 	 	21.6	% 	 	 	N/A	  	  	$	32,400	  
	 Sr Director/VP
	  	$	140,000	  	  	 	30.0	% 	 	 	90	% 	 	$	37,800	  	  	 	121	% 	 	 	32.7	% 	 	 	N/A	  	  	$	45,738	  
	 Sr Director/VP
	  	$	160,000	  	  	 	30.0	% 	 	 	90	% 	 	$	43,200	  	  	 	100	% 	 	 	27.0	% 	 	 	N/A	  	  	$	43,200	  
		  				  				 	 	Budget:	  	 	$	121,500	  	  				 	 	Spend:	  	 				  	$	121,338	  

  

	*	Support and IC/Manager plan levels have quarterly awards. Sr Director/VP plan levels have annual awards. 

2010 Plan Metrics Definitions 
 Revenue refers to sales generated from all Spansion’s products and services as reported in Spansion’s pro-forma Profit and Loss statement. Pro-forma adjustments to GAAP (Generally
Accepted Accounting Principles) revenue would include: 
  

	 	•	 	 Add back of deferred revenue lost due to fresh start accounting; and 

 

	 	•	 	 Reduction of revenue from companies acquired during fiscal 2010. 

Operating Margin is derived from Operating Income divided by Revenue (as defined above). Operating Income refers to Spansion’s
earnings before interest income/expense, other income/expense, taxes and extraordinary items as reported in Spansion’s pro-forma P&L. Pro-forma adjustments to GAAP Operating Income would include: 

 

	 	•	 	 Revenue adjustments; and 

  

	 	•	 	 Expense adjustments indicated as follows. 

 GAAP Expense Adjustments 
  

	 	•	 	 Elimination of bankruptcy-related reorganization, restructuring, and any other applicable costs, including any items identified as such in the 2010
Annual Budget; 

  

	 	•	 	 Elimination of any other fees or bonuses that are required for or payable upon the company’s successful emergence from Chapter 11 bankruptcy;

  

	 	•	 	 Adjustment for Spansion Japan or Spansion Nihon KK related payments or expenses, settlement, or other such activities; 

 

	 	•	 	 Adjustments for changes in the carrying costs of assets and depreciation levels due to fresh start accounting, including but not limited to inventory,
property and equipment, and intangibles; 

  

	 	•	 	 Adjustments for changes in the liabilities due to fresh start accounting, including but not limited to market valuation of debt, capital leases, and
other such items; 

  

	 	•	 	 Adjustment for change in expenses due to equity grants (valuation, vesting, etc); 

 

	 	•	 	 Elimination of costs and expenses from companies acquired during fiscal 2010 and any administrative costs associated with board-approved transactions;

  
 8 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

	 	•	 	 Elimination of any expenses or credits recorded on unconventional line items in GAAP Operating Income due to unforeseen accounting situations (e.g.,
sort reserve, claims agent, gain on extinguishment of debt, ARS, etc) 

 Due to various accounting
matters not known due to fresh start accounting, the Company may revisit the above definitions after completion of Fresh Start Accounting. 

  
 9 

	
	SPANSION EMPLOYEE INCENTIVE PLAN

 

 EXHIBIT B 
 2010 Pay for Performance Plan Targets 
  

									
	 Participation Level
	  	Plan Target	  	 Plan

Measurement &
 Payout Timing

	 Manager
	  	 Individual

Contributor
	  	Global Task
Level	  	As % of Base	  
	CEO	  		  	99	  	200	  	Annually
	CFO/COO	  		  	98	  	125	  
	EVP	  		  	96	  	80	  
	SVP	  		  	93	  	60	  
	VP	  		  	91	  	50	  
	Sr. Director	  	Sr. Fellow	  	83	  	40	  
					
	Director	  	Fellow	  	82	  	35	  	Quarterly
	Sr. Manager	  	Professional 6	  	43/26	  	25	  
	Manager	  	Professional 5	  	42/25	  	20	  
	Section Manager / Staff Supv.	  	Professional 4	  	34/41/24	  	15	  
	Supervisor	  	Professional 3	  	31-33, 23	  	10	  
		  	Prof. 1 & 2	  	21, 22	  	5	  
					
		  	Support – US	  	1-5	  	5	  	 Quarterly (Based
 on Company
 Performance Only)

		  	Support – Int’l	  	1-5	  	3	  

  
 10

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