Exhibit 10.3
TRANSITION SERVICES
AGREEMENT
This T RANSITION S ERVICES A GREEMENT (this “ Agreement ”) is made
and entered into as of the Closing Date between Powertech
Technology Inc., a company organized under the laws of the Republic
of China (Taiwan) (“ Buyer ”), and Spansion LLC,
a Delaware limited liability company (“ Seller
”).
A. Buyer and Seller have entered
into (i) that certain Asset and Share Purchase Agreement dated
August 21, 2009 (the “ Purchase Agreement
”), pursuant to which Buyer purchased the equity of Spansion
Holdings (Singapore) Pte. Ltd. (the “ Singapore
Subsidiary ”) and purchased certain specified assets and
assumed certain specified liabilities from Seller; and
(ii) that certain Supply Agreement of even date herewith
(“ Supply Agreement ”), pursuant to which Buyer
will provide certain wafer assembly, marking, packaging and testing
services to Seller;
B. In connection with the Purchase
Agreement, Buyer desires that Seller provide Buyer with certain
transition services at and following the Closing Date, as more
fully set forth herein.
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. D EFINITIONS . The defined terms used in this Agreement shall
have the meanings set forth herein or as defined in the text below.
Capitalized terms used herein and not otherwise defined have the
meanings given to such terms in the Purchase Agreement.
(a) “ Buyer ”
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.
(b) “ 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.
(c) “ Facilities
” means the Buyer facilities which may be required for Seller
to perform Services.
(d) “ G&A Services
” means the services associated with certain general and
administrative activities, specified in Exhibit A
.
(e) “ IT Services
” means the services specified in Exhibit B
.
(f) “ Pass Through
Expenses ” means the reasonable and out-of-pocket
expenses incurred by Seller, but not including any overhead costs,
Seller profits or other markups.
(g) “ Seller Hourly Fee
” means (a) for the period beginning on the Effective
Date and ending six (6) months after the Closing Date, an
hourly fee amount to be determined by mutual written agreement by
the parties for Services requested by Buyer that exceed a
reasonable or pre-agreed allotment of Seller personnel time; and
(b) after such six (6) month period, an amount equal to
the fully burdened cost of Seller for the time of the applicable
employee, unless a different hourly rate is specified for a
particular Service in the Exhibits.
(h) “ Services ”
means collectively the G&A Services, the IT Services and any
Additional Services (as defined below in
Section 2(b)).
2. S ERVICES .
(a) Services . During the
term of this Agreement, Seller shall provide, and as necessary
shall cause its Affiliates to provide, Buyer with the (i) the
G&A Services set forth in Exhibit A, and (ii) the IT
Services set forth in Exhibit B.
(b) Additional Services . In
the event that Buyer requests that Seller provide additional
services not otherwise included within the scope of the existing
Services specified in this Agreement (the “ Additional
Services ”), the parties will promptly negotiate in good
faith regarding (i) whether such Additional Services should be
added to this Agreement, (ii) the terms and conditions of
Exhibits to this Agreement that would set forth such Additional
Services, and (iii) any fees and allocation of expenses that
may be paid by Buyer for such Additional Services. Seller will not
be obligated to provide any Additional Services unless the parties
so agree in writing.
(c) Service Levels; Quality of
Services . Buyer acknowledges that the Services to be performed
by the Seller are intended to be minimal. Buyer further
acknowledges that Seller is not in the business of providing
services to third parties and is entering into this Agreement only
as an accommodation to Buyer in connection with the Purchase
Agreement. Seller will use commercially reasonable efforts to
perform, and as necessary will cause its Affiliates to perform, the
Services with approximately the same level of skill, quality, care,
timeliness, and cost-effectiveness as such services, functions, and
tasks were performed by Seller to the applicable business units
during the period immediately prior to the Closing Date, taking
into account the transfer of employees to Buyer as part of the
transactions contemplated by the Purchase Agreement.
(d) Remediation . Buyer
agrees that the remedies available to it in the event of failure of
Seller to provide the Services in accordance with this Agreement
should be addressed to correcting problems that resulted in such
failure rather than to penalizing Seller, and therefore no service
credits, rebates or refunds will be awarded for a failure to
provide Services in accordance with applicable service levels. In
recognition of this, Buyer’s sole and exclusive remedy and
Seller’s sole and exclusive obligation for any such failures
shall be the remediation activities specified in the Exhibits or as
set forth in this Section 2(d). Unless otherwise
specified
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in an Exhibit, in the event Seller does not
provide a particular Service as specified in the applicable
Exhibit, then Seller agrees that it will re-perform the applicable
Service or will assign additional personnel or subcontractors to
perform the require Service as soon as reasonably practicable
thereafter.
(e) Expenses . Except as
otherwise provided in this Agreement, each party will bear its own
expenses in connection with their obligations under this
Agreement.
(f) Subcontractors . The
Services may, at Seller’s sole discretion, be provided in
whole or in party by Affiliates of Seller or by third-party
subcontractors selected by Seller.
(g) Location of Services
Provided . Seller shall provide the Services to Buyer from
locations of its own choice unless Services are required to be
performed at the Facilities or other such location identified in
the Exhibits.
3. M ODIFICATION OF S ERVICES . Seller may, at any time, and with reasonable
notice to Buyer, modify the manner in which any Services are
provided to address any reasonable concerns that Seller may have
regarding such matters as confidentiality, expenses, system
efficiency and the like; provided that the quality and the
timeliness of the Services are not materially adversely affected.
Without limiting the foregoing, the parties acknowledge that the
scope or characteristics of the Services may change during the term
of this Agreement as Buyer completes its transition from dependence
on Seller’s Services. The parties agree to use reasonable
modification procedures to notify the other of intended material
modifications regarding the Services and the potential effects of
such changes (“ Modification Procedures ”). A
party requesting a modification of Services will give the other
party written notice of the proposed modification, as well as the
anticipated effects of the modification. The parties will discuss
in good faith whether to implement the proposed modification;
provided, however, that no modification will be implemented in the
absence of written agreement between the parties to adopt the
change.
4. M ANAGEMENT .
(a) Seller Manager . Seller
will appoint a Seller employee (the “ Seller Manager
”) who shall (i) have overall, day-to-day responsibility
during the term of this Agreement for managing and coordinating the
delivery of the Services; (ii) subject to the supervision of
Seller management, be authorized to act for and on behalf of Seller
with respect to all matters relating to this Agreement, and
(iii) be the primary contact with the Buyer Manager (as
defined below). The Seller Manager or the Seller Manager’s
designees will coordinate and consult with the Buyer Manager.
Seller may, at its discretion, and upon written notice to Buyer,
designate other or additional individuals to serve in these
capacities during the term of this Agreement.
(b) Buyer Manager . During
the term of this Agreement, Buyer will appoint an employee (the
“ Buyer Manager ”) who shall (i) have
overall, day-to-day responsibility during the term of this
Agreement for managing and coordinating the receipt of the
Services; (ii) subject to the supervision of Buyer management,
be authorized to act for and on behalf of Buyer with
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respect to all matters relating to this
Agreement, and (iii) be the primary contact with the Seller
Manager. The Buyer Manager or the Buyer Manager’s designees
will coordinate and consult with the Seller Manager. Buyer may, at
its discretion, designate other or additional individuals to serve
in these capacities during the term of this Agreement.
5. D ISPUTE R ESOLUTION . The Buyer Manager and the Seller Manager will
resolve any disputes between the parties arising out of this
Agreement. If the Buyer Manager and Seller Manager cannot resolve a
dispute, then they will escalate as necessary to resolve the
dispute.
6. P ERSONNEL .
(a) Right to Designate and Change
Seller Personnel . Seller will make available such Seller
employees and agents (“ Seller Personnel ”) as
will reasonably be required to provide the Services. Seller may, in
its sole discretion, designate which Seller Personnel will perform
the Services. Seller also may, in its sole discretion, remove and
replace any Seller Personnel at any time or designate any of its
Affiliates or a subcontractor at any time to perform the Services.
Seller is not obligated to hire any additional employees or
maintain the employment of any specific employee.
(b) Responsibility for Seller
Personnel . All Seller Personnel providing Services under this
Agreement will be deemed to be employees or representatives solely
of Seller (or its Affiliates) for purposes of all compensation and
employee benefits and not to be employees or repre
