Exhibit 10.2
SUPPLY AGREEMENT
This S UPPLY A GREEMENT (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.
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
Materi
