AMD 2007 Annual Report Download - page 290

Spansion Inc.
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)
otherwise agree, the period of secondment for seconded employees not designated for transfer will end no later than June 30, 2008, and no later than
December 31, 2009 for seconded employees designated for transfer.
The seconded employees remain employees of Spansion Japan and remain eligible to participate in Spansion Japan’s various benefit plans through the
term of the secondment. Fujitsu is required to reimburse Spansion Japan for all compensation and expenses associated with such seconded employees and
incurred by Spansion Japan during the secondment period.
The Secondment Agreement can be terminated (i) by the mutual written agreement of Spansion Japan and Fujitsu, (ii) by either Spansion Japan or Fujitsu
in the event that the other party materially defaults in the performance of a material obligation under the Secondment Agreement and the breaching party has not
cured such breach within 120 days after receipt of notice of default by the non-breaching party and (iii) by either Spansion Japan or Fujitsu in the event that the
other party is subject to bankruptcy or insolvency proceedings. The Secondment Agreement automatically terminates (i) on the transfer date of the last of the
transferred employees or (ii) upon the termination of the Foundry Agreement unless otherwise agreed by Spansion Japan and Fujitsu.
Master Lease Agreement
Spansion Japan and Fujitsu entered into a Master Lease Agreement for certain equipment located at the JV1/JV2 Facilities. On April 2, 2007, Spansion
Japan began to lease to Fujitsu the equipment under the Master Lease Agreement. Fujitsu has the option to renew or extend the lease term for any or all of the
equipment at the end of the initial term or any extension thereof for up to six months. If specified demand targets for wafers are not met, and subject to conditions
described in the Master Lease Agreement, each of Spansion Japan and Fujitsu will have a right to terminate the lease of some or all of the leased equipment on or
after June 30, 2008, by giving notice to the other party prior to December 31, 2007.
Subject to the terms of the Master Lease Agreement, at the expiration of the applicable term, Fujitsu will have a right of first refusal in the event of the sale
by Spansion Japan of any equipment for a purchase price equal to the highest offer received from a third party. In addition, Fujitsu will have the option to
purchase any or all of the equipment at the expiration of the applicable term, upon any early lease termination or if any equipment is not returned in its proper
condition, for a purchase price equal to the fair market value of the equipment at the time of purchase or any other purchase price as may be set forth in the
applicable schedule.
Wafer Processing Services Agreement
Spansion Japan and Fujitsu entered into a Wafer Processing Services Agreement (the “Wafer Processing Agreement”), pursuant to which Fujitsu will
provide certain wafer processing services to Spansion Japan at the JV1/JV2 Facilities. The term of the Wafer Processing Agreement commenced on April 2, 2007
and is effective until December 31, 2009. The Wafer Processing Agreement will automatically terminate upon termination or expiration of the Foundry
Agreement. Either Spansion Japan or Fujitsu may terminate the Wafer Processing Agreement in the event that the other party fails to correct or cure any material
breach by such other party of any covenant or obligation under the Wafer Processing Agreement within 60 days of receipt of written notice from the
non-defaulting party specifying such breach.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008