THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Spansion Inc. (SPSN)

4/3/2006 Proxy Information

Transactions with AMD and Fujitsu

AMD and Fujitsu have each entered into various agreements with Spansion as described below. Mr. Ono is a Fujitsu board member in addition to serving as Corporate Executive Vice President of Fujitsu and President of Fujitsu’s Electronic Devices Business Group. Dr. Ruiz is Chairman of the Board, President and Chief Executive Officer of AMD. Mr. Rivet is Executive Vice President and Chief Financial Officer of AMD. Due to their positions with AMD and Fujitsu, each of Mr. Rivet and Dr. Ruiz could be deemed to have an indirect material interest in the transactions with AMD (as described below) and Mr. Ono could be deemed to have an indirect material interest in the transactions with Fujitsu (as described below).

Contribution Agreement

Spansion LLC, the former joint venture 60% owned by AMD and 40% owned by Fujitsu, was reorganized into Spansion Inc. (the “Reorganization”) and on December 15, 2005, Spansion Inc. commenced its underwritten initial public offering of its Class A common stock.

The reorganization from Spansion LLC into Spansion Inc. occurred through the following steps pursuant to a Contribution Agreement dated December 13, 2005. First, AMD Investments, Inc., an indirect wholly-owned subsidiary of AMD, contributed its 60 percent ownership interest in Spansion LLC to Spansion Inc. in exchange for 43,529,402 shares of Class A common stock and one share of Class B common stock of Spansion Inc. Fujitsu contributed all of the outstanding capital stock of Fujitsu Microelectronics Holding, Inc. (“FMH”), the wholly-owned Fujitsu subsidiary that held Fujitsu’s 40 percent ownership interest in Spansion LLC, to Spansion Inc. in exchange for one share of Class C common stock and 29,019,601 shares of Class D common stock of Spansion Inc. FMH was then renamed Spansion Technology Inc. and is a wholly-owned subsidiary of Spansion Inc. As a result, Spansion Inc. became the holding company that both directly and indirectly through Spansion Technology Inc. owns all of the interests in the operating company subsidiary Spansion LLC.

Stockholders Agreement

Spansion entered into a Stockholders Agreement, dated as of December 21, 2005, with AMD and Fujitsu. The Stockholders Agreement imposes certain restrictions and obligations on AMD and Fujitsu and on their respective shares of Spansion’s common stock and provides for certain matters pertaining to Spansion’s management and governance.

Pursuant to the Stockholders Agreement, AMD and Fujitsu agree to vote all shares of common stock held by them or their affiliates so as to cause:

• after the conversion of Spansion’s Class D common stock into Class A common stock, the election of each Class A director proposed for election by the Nominating Committee of Spansion’s Board of Directors;

• for so long as each of AMD and Fujitsu, or their respective affiliates, own at least 15 percent of Spansion’s capital stock, the election of Spansion’s Chairman of the Board: (i) to be a Class C Director, subject to approval of a majority of the Class B Directors, until Spansion’s 2007 annual stockholders meeting, provided, however, that until that annual stockholder meeting (but not thereafter) the holder of Class C common stock may, at its discretion, select any Class B Director, instead of the Class C Director, as the Chairman of the Board; (ii) from the Class B Directors, subject to approval of the Class C Director, from Spansion’s 2007 annual stockholders meeting until Spansion’s 2010 annual stockholders meeting; and (iii) thereafter, from either the Class B Directors or the Class C Director, with the right to elect rotating every three years.

Spansion agrees to allow AMD or Fujitsu, as the case may be, to have one representative attend Spansion’s Board meetings as a non-voting participant for so long as such stockholder owns at least five percent of Spansion’s capital stock, on an as converted to common stock basis.

The Stockholders Agreement also provides that neither stockholder can transfer any shares, except to majority-owned subsidiaries, until the earlier of one year from December 15, 2005 or the conversion of the Class D common stock into Class A common stock. In addition, neither stockholder can transfer shares in an amount equal to or greater than one percent of the then outstanding common stock to any entity whose principal business competes with Spansion, without first obtaining the consent of the non-transferring stockholder, such consent not to be unreasonably withheld after June 30, 2007.

The Stockholders Agreement also provides that Spansion will agree with AMD and Fujitsu to provide, subject to limitations, various financial and other information relating to Spansion and to assist them in connection with their respective reporting, disclosure and other obligations. Each party has agreed that it will use any information provided under the agreement, unless otherwise made public, only in connection with these obligations and that it will not use the information for any other purpose, including in connection with the sale or purchase of securities issued by Spansion.

Pursuant to the Stockholders Agreement, Spansion has agreed to grant AMD and Fujitsu rights to request Spansion to register all or any part of their shares of Class A common stock under the Securities Act. In addition, subject to limitations, AMD and Fujitsu have rights to request that their shares be included in any registration of Spansion’s common stock that Spansion initiates.

With the exception of board observer rights and registration rights, the Stockholders Agreement shall terminate when each of AMD’s and Fujitsu’s aggregate ownership interest in Spansion falls below ten percent.

Amended and Restated Fujitsu Distribution Agreement

Spansion and Fujitsu were previously party to the Fujitsu Distribution Agreement which the parties amended and restated as of December 21, 2005. The Amended and Restated Fujitsu Distribution Agreement provides that Fujitsu acts as Spansion’s sole distributor for sales of its products in Japan and to specified customer accounts associated with Fujitsu. Fujitsu also acts as a distributor throughout the rest of the world, other than Europe and the Americas with limited exceptions and with respect to customer accounts that have been associated with AMD. We license use of the Spansion trademark to Fujitsu so that our products are sold under the Spansion brand name. We also indemnify Fujitsu from and against any third-party action claiming our products infringe upon a third-party’s intellectual property rights up to the amounts paid to Fujitsu by their customers for the affected products.

Under the Fujitsu Distribution Agreement, Spansion’s prices are based on its recommended sales prices, subject to adjustment in certain cases based on Fujitsu’s sales prices to their customers, less an agreed-upon distribution margin, currently 4.3 percent. Spansion has the right to sell or appoint additional distributors to sell its products outside of Japan. Spansion’s right to appoint additional distributors to sell products in Japan or to sell to specified accounts associated with Fujitsu is subject to Fujitsu’s consent for so long as Fujitsu’s aggregate ownership interest in Spansion remains above 12.5 percent. Fujitsu has agreed to use its best efforts to promote the sale of Spansion’s products in Japan and to specified customers served by Fujitsu. In the event that Spansion reasonably determines that Fujitsu’s sales performance is not satisfactory based on specified criteria, then Spansion has the right to require Fujitsu to propose and implement an agreed-upon corrective action plan. If Spansion reasonably believes that the corrective action plan is inadequate, Spansion can take steps to remedy deficiencies through means that include selling products itself or appointing another distributor as a supplementary distributor. Fujitsu is entitled to up to 35 percent of Spansion’s quarterly production volume in short supply situations. That percentage is subject to reduction based on Fujitsu’s level of ownership in Spansion and its level of purchases in previous quarters.

AMD Distribution and Agency Agreements

AMD’s sales force responsible for selling our products and related personnel was transferred to us as of April 1, 2005 and AMD ceased to earn any distribution margin on the sale of our products. Although the transition of some related support functions, including booking and billing, is still underway, we expect to sell directly to AMD’s current customers, as well as potential customers not served by Fujitsu. To achieve this goal, as of April 1, 2005, Spansion and AMD entered into an Agency Agreement pursuant to which AMD appointed us as its sales agent to assist AMD in fulfilling AMD’s obligations under the AMD Distribution Agreement (described below) and to carry out AMD’s sales, marketing and customer support activities on AMD’s behalf and in AMD’s name with existing and new Flash memory customers. After AMD’s sales support and operations are fully transitioned to us, which we expect will occur in the first half of fiscal 2006, the Agency Agreement and the AMD Distribution Agreement described below will be terminated.

Spansion and AMD are party to the AMD Distribution Agreement, pursuant to which AMD acts as our sole distributor for sales of our products in the Americas and Europe and specified customer accounts associated with AMD. AMD also acts as a distributor throughout the rest of the world except in Japan and with respect to customer accounts associated with Fujitsu, which are served by Fujitsu. We license use of the Spansion trademark to AMD so that our products are sold under our own brand name. Spansion also indemnifies AMD from and against any third-party action claiming our products infringe upon a third-party’s intellectual property rights up to the amounts paid to AMD by their customers for the affected products.

Under the AMD Distribution Agreement, our prices are based on our recommended sales prices, subject to adjustment in specified cases based on AMD’s sales prices to their customers. AMD earns no distribution margin on the sale of our products. Spansion has the unconditional right to appoint additional distributors to sell our products outside of the Americas and Europe. Spansion’s right to appoint additional distributors to sell products in the Americas and Europe or to sell to specified customers served by AMD is subject to AMD’s consent for so long as AMD’s aggregate ownership interest in Spansion remains above 25 percent. AMD has agreed to use its best efforts to promote the sale of our products in the Americas and Europe and to specified customers served by AMD. In the event that Spansion reasonably determines that AMD’s sales performance is not satisfactory based on specified criteria, then Spansion has the right to require AMD to propose and implement an agreed-upon corrective action plan. If Spansion reasonably believes that the corrective action plan is inadequate, Spansion can take steps to remedy deficiencies ourselves through means that include appointing another distributor as a supplementary distributor. AMD is entitled to up to 35 percent of our quarterly production volume in short supply situations. That percentage is subject to reduction based on AMD’s level of ownership in us and its level of purchases in previous quarters. Spansion and AMD can mutually agree to terminate the AMD Distribution Agreement at any time. Either party can terminate the agreement for a material breach of performance thereunder after a failure to cure the breach within 120 days. Spansion also has the right to terminate the agreement upon 90 days notice if AMD’s ownership interest in us falls below ten percent.

Margin Split Agreement

In April 2005, as a result of the anticipated termination of the AMD Distribution Agreement we reached an understanding with AMD and Fujitsu that the Margin Split Agreement described below will be terminated after AMD’s support operations are fully transitioned to us, which we expect will occur in the first half of fiscal 2006. In connection with their roles as sole distributors of our products, AMD and Fujitsu entered into a Margin Split Agreement with Spansion whereby they share distribution margins resulting from sales of our products that involve the efforts of both Fujitsu and AMD under specific circumstances. Under this agreement, AMD and Fujitsu may provide to each other referrals of potential customers for sales of products by the other distributor. AMD and Fujitsu may also perform design-in work on products to be sold by the other distributor. In return for each referral or design-in, Fujitsu and AMD agree to pay each other a portion of the distribution margin they earn on the end sale of our products to their customers.

Amended and Restated Intellectual Property Contribution and Ancillary Matters Agreement

AMD and Fujitsu have each contributed to Spansion various intellectual property rights pursuant to an Amended and Restated Intellectual Property Contribution and Ancillary Matters Agreement dated as of December 21, 2005. Under this agreement, Spansion became owner, or joint owners with each of Fujitsu and AMD, of certain patents, patent applications, trademarks, and other intellectual property rights and technology. AMD and Fujitsu reserved rights, on a royalty-free basis, to practice the contributed patents and to license these patents to their affiliates and successors-in-interest to their semiconductor groups. AMD and Fujitsu each have the right to use the jointly-owned intellectual property for their own internal purposes and to license such intellectual property to others to the extent consistent with their non-competition obligations to Spansion. Subject to our confidentiality obligations to third parties, and only for so long as AMD’s and Fujitsu’s ownership interest remains above a specific minimum level, we agreed to identify any of our technology to each of AMD and Fujitsu, and to provide copies of and training with respect to that technology to them. In addition, we have granted a non-exclusive, perpetual, irrevocable fully paid and royalty-free license of our rights in that technology to each of AMD and Fujitsu.

Under this agreement, for as long as AMD continues to hold a majority of Spansion’s shares entitled to vote for the election of directors, AMD has agreed to enforce its applicable patents to minimize, to the extent reasonably possible, any of Spansion’s losses, provided that the details of the manner in which AMD enforces its patents, including which of its patents AMD enforces, is left to AMD’s reasonable discretion. AMD may grant licenses under Spansion’s patents, provided that these licenses are of no broader scope than, and are subject to the same terms and conditions that apply to, any license of AMD’s patents granted in connection with such license, and the recipient of such license grants to Spansion a license of similar scope under its patents. Until the earlier of December 21, 2007 or when our Board of Directors adopts a resolution to convert the Class D Common Stock to Class A Common Stock, Fujitsu has agreed to consider conditionally granting us an extension of rights under additional patents in circumstances where Spansion can reasonably assert such patents as a claim or counterclaim to third party infringement claims asserted against Spansion.

Amended and Restated Patent Cross-License Agreements

Spansion was previously party to a patent cross-license agreement with each of AMD and Fujitsu, each of which was amended and restated as of December 21, 2005. Under these patent cross-license agreements, Spansion granted to each of AMD and Fujitsu, and AMD and Fujitsu each granted to Spansion, non-exclusive licenses under certain patents and patent applications of their semiconductor groups to make, have made, use, sell, offer to sell, lease, import and otherwise dispose of certain semiconductor-related products anywhere in the world. The patents and patent applications that are licensed are those with an effective filing date prior to the termination of Spansion’s patent cross-license agreements. The agreements will automatically terminate on the later of June 30, 2013 and the date AMD or Fujitsu, as applicable, sells its entire equity interest in Spansion. The agreements may be terminated by a party on a change in control of the other party or its semiconductor group. The licenses to patents under license at the time of the termination will survive until the last such patent expires.

In cases where there is a change of control of Spansion, AMD, Fujitsu, or the semiconductor group of AMD or Fujitsu, as the case may be, each other party to the cross-license agreement shall have the right to terminate the agreement (or to invoke the provisions described in this paragraph if the agreement had been previously terminated) by giving 30 days written notice within 90 days after receiving notice of the change of control. If so terminated, the rights, licenses and immunities granted under the agreement will continue solely with respect to those licensed patents that are entitled to an effective filing date that is on or before, and are licensed as of, the date of such change of control, and will continue until the expiration of the last to expire of such licensed patents. Moreover, with respect to circuit patents, which are patents (other than process patents) covering elements relating to electrical signals to achieve a particular function, the rights, licenses and immunities granted to the party undergoing the change of control are limited solely to:

(i) each existing and pending product of such party as of the date of change of control;

(ii) each existing and pending product of the acquiring third party of such party as of the date of change of control that would have been in direct competition with products described in (i) above; and

(iii) successor products of products described in (i) and (ii) above.

In fiscal 2005, Spansion incurred royalty expenses of approximately $14 million to each of AMD and Fujitsu under their respective patent cross-license agreements. Spansion will continue to make royalty payments associated with licenses that survive the termination of the agreement. Under the respective amended and restated patent cross-license agreements, Spansion will pay royalties to each of AMD and Fujitsu in the amount of 0.3 percent of net sales of Spansion’s products. The royalty rates will be further reduced to 0.15 percent at the time the Class D Common Stock is converted into Class A Common Stock, and thereafter to zero percent on the second anniversary of the date of such conversion. The royalty rates were negotiated by AMD, Fujitsu and us.

Amended and Restated Non-Competition Agreement

Spansion, AMD and Fujitsu executed an Amended and Restated Non-Competition Agreement, dated as of December 21, 2005. Pursuant to this Agreement, AMD and Fujitsu each agree not to directly or indirectly engage in a business that manufactures or supplies standalone semiconductor devices (including single chip, multiple chip or system devices) containing only Flash memory, which is the business in which Spansion primarily competes. This non-competition agreement does not prevent AMD or Fujitsu from manufacturing or selling products that incorporate Flash memory (whether it be Spansion Flash memory or a competitive product). Although AMD currently has no other operations that compete in the Flash memory market, Fujitsu currently produces and sells products that incorporate Spansion Flash memory or competitive Flash memory. Furthermore, AMD and Fujitsu each agree that if either of them acquires a business that has a division or other operations that manufactures or supplies standalone semiconductor devices (including single chip, multiple chip or system devices) containing only Flash memory, AMD and Fujitsu will provide Spansion with a right of first offer to acquire the competing division or operations. AMD and Fujitsu are required to use their commercially reasonable efforts to divest the competing division or operations if Spansion does not purchase them. These non-competition obligations of AMD will last until the earlier of (i) the dissolution of Spansion, and (ii) two years after the date on which AMD’s ownership interest in Spansion is less than or equal to five percent. These non-competition obligations of Fujitsu will last until the earlier of (i) the dissolution of Spansion, and (ii) two years after the date on which Fujitsu’s ownership interest in Spansion is less than or equal to five percent.

Spansion, AMD and Fujitsu also agreed not to solicit each other’s employees. Without Spansion’s prior written consent, each of AMD and Fujitsu will not directly or indirectly either for itself or another person, (i) hire any individual employed by Spansion or (ii) solicit or encourage any individual to terminate his or her employment with Spansion. These obligations not to solicit or hire do not apply if (A) Spansion has terminated the employment of such individual or (B) at least two years has elapsed since such individual has voluntarily terminated his or her employment with Spansion. Similarly, without the prior written consent of AMD or Fujitsu, Spansion agreed not to directly or indirectly either for ourselves or another person, (i) hire any individual employed by AMD or Fujitsu or (ii) solicit or encourage any individual to terminate his or her employment with AMD or Fujitsu. These obligations not to solicit or hire do not apply if (A) AMD or Fujitsu, as applicable, has terminated the employment of such individual or (B) at least two years has elapsed since such individual has voluntarily terminated his or her employment with AMD or Fujitsu, as applicable. These non-solicitation obligations of AMD will last until the earlier of (i) the dissolution of Spansion, and (ii) two years after the date on which AMD’s ownership interest in Spansion is less than or equal to five percent. These non-solicitation obligations of Fujitsu will last until the earlier of (i) the dissolution of Spansion, and (ii) two years after the date on which Fujitsu’s ownership interest in Spansion is less than or equal to five percent. These non-solicitation obligations of Spansion with respect to AMD employees or Fujitsu employees will terminate at the same time as the non-solicitation obligations of AMD or Fujitsu, as applicable, terminate.

Amended and Restated AMD/Fujitsu Service Agreements

Spansion is party to various service agreements with each of AMD and Fujitsu. Under its Amended and Restated IT Services Agreement dated as of December 21, 2005 and its Amended and Restated General Administrative Services Agreement dated as of December 21, 2005, AMD provides, among other things, information technology, facilities, logistics, legal, tax, finance, human resources, and environmental health and safety services to us. Under its IT Services Agreement and General Services Agreement, Fujitsu provides, among other things, information technology, research and development, quality assurance, insurance, facilities, environmental, and human resources services primarily to our manufacturing facilities in Japan. For services rendered, AMD and Fujitsu are each paid fees in an amount equal to cost plus five percent except for services procured by AMD and Fujitsu from third parties, which are provided to Spansion at cost. AMD and Fujitsu each has the right to approve certain amendments to the other’s service agreements with Spansion.

Unless otherwise earlier terminated, each of these service agreements expires on June 30, 2007, but the applicable parties may extend the term by mutual agreement. Spansion has the ability to terminate individual services under the general services agreements at any time and for any reason upon at least six months’ advance notice. With respect to the IT service agreements and general administrative service agreements, if AMD or Fujitsu has failed to comply with applicable service levels for a particular service and has failed to rectify such performance failure, we may terminate such service after 60 days have elapsed since initial notification of the failure to perform the service. Moreover, Spansion may terminate an entire IT service agreement or general administrative services agreement if AMD or Fujitsu breaches its material obligations under the respective agreement and does not cure such default within 90 days after receipt of a notice of default from us. Similarly, AMD or Fujitsu can terminate the respective agreement for our failure to make payments when due if Spansion fails to cure such default within 90 days after receipt of notice of default.

For fiscal 2005, the total charges to Spansion for services from AMD were approximately $97 million and the total charges to Spansion for services from Fujitsu were approximately $20 million.

Spansion and AMD also executed an Amended and Restated Reverse General Administrative Services Agreement dated as of December 21, 2005. Pursuant to this agreement, Spansion provides certain research and design services to AMD and Spansion (China) Limited provides manufacturing support services to AMD Technologies (China) Co. Ltd., AMD’s microprocessor assembly and test facility in Suzhou, China. For services rendered, Spansion is paid fees generally in an amount equal to cost plus five percent. Unless otherwise earlier terminated, this service agreement expires on June 30, 2007, but the parties may extend the term by mutual agreement. AMD has the ability to terminate individual services under these agreements at any time and for any reason upon at least six months’ advance notice. In addition, if Spansion has failed to comply with applicable service levels for a particular service and has failed to rectify such performance failure, AMD may terminate such service after 60 days have elapsed since initial notification of the failure to perform the service. Moreover, AMD may terminate the entire agreement if Spansion breaches its material obligations under the agreement and does not cure such default within 90 days after receipt of a notice of default from AMD. Similarly, Spansion can terminate the agreement for AMD’s failure to make payments when due if it fails to cure such default within 90 days after receipt of notice of default. For fiscal 2005, the total charge to AMD for these services was approximately $46 million.

Manufacturing Services Agreement

Spansion and Fujitsu are party to a Manufacturing Services Agreement dated as of June 30, 2003, as amended by a First Amendment, dated as of August 31, 2005, pursuant to which Fujitsu provides manufacturing services to us at volumes ordered by Spansion and prices established on a quarterly basis. Prices are on the basis of product-type, and are equal to Fujitsu’s good faith estimate of its projected material, labor and overhead costs for the applicable product-type plus three percent. If Fujitsu’s aggregate expended labor and overhead costs for the manufacturing services actually purchased by Spansion during a fiscal quarter are less than 97 percent of the projected labor and overhead costs for such fiscal quarter, then Spansion is required to pay Fujitsu the amount of such deficiency in order to protect Fujitsu’s labor and overhead commitments from situations where the actual amounts of services purchased by Spansion is materially different from projected orders. These services consist of assembly and testing services for Spansion products. The amended manufacturing service agreement will expire on September 30, 2006, provided that Spansion can terminate this agreement at any time upon four months’ notice, and Spansion and Fujitsu may agree to terminate at any time. In addition, if either party materially defaults in the performance of a material obligation under the agreement, the non-defaulting party may terminate the agreement if the defaulting party has failed to cure the breach within a reasonable period of time of not less than 120 days after receipt of a notice of default from the other party. As a result of manufacturing services provided by Fujitsu, Spansion incurred approximately $35 million of expenses in fiscal 2005.

Spansion Japan/Fujitsu Foundry Agreement

On March 31, 2005, Spansion Japan, one of Spansion’s subsidiaries, entered into a foundry manufacturing agreement with Fujitsu. Under this agreement, Spansion Japan provides wafer process foundry manufacturing services for Fujitsu’s microcontroller products which contain embedded Flash memory. The agreement has a term of three years and is automatically renewed for additional one-year periods absent notification of termination by a party at least two years prior to the termination date. Fees paid by Fujitsu to Spansion Japan under this agreement during fiscal 2005 were $1.5 million.

Remediation Agreement

In connection with Spansion’s reorganization as of June 30, 2003, AMD contributed to Spansion assets, including real property located in Sunnyvale, California which is a Superfund listed property under CERCLA. A clean up order was issued by the San Francisco Bay Regional Water Quality Control Board, and a record of decision for remedial action for the site was issued by the U.S. Environmental Protection Agency in 1991, pursuant to which AMD must conduct groundwater remediation activities. To clarify their respective responsibilities regarding the release of hazardous substances at the Sunnyvale property prior to its contribution to Spansion, Spansion entered into a remediation agreement with AMD and Fujitsu, pursuant to which AMD agreed to conduct remediation activities in accordance with the U.S. EPA’s record of decision and the San Francisco Bay Regional Water Quality Control Board’s order. AMD also agreed to indemnify Fujitsu and Spansion against any losses incurred by Fujitsu and Spansion in connection with this environmental condition for actions taken prior to the contribution of the property to Spansion.

Leases

In connection with Spansion’s reorganization, AMD’s subsidiary, Advanced Micro Devices Export SDN BHD (AMD Penang), agreed to lease land and premises in Penang, Malaysia, to Spansion (Penang) SDN BHD, our subsidiary in Malaysia, for a term of three years expiring on June 30, 2006. The lease covers use of approximately 81,000 square feet of space, including use of the common areas shared with AMD Penang. Spansion must use the premises for test, mark, pack, assembly, research and development and related services and operations. Pursuant to the lease, Spansion pays a monthly rental amount equal to a percentage of the total operating expenses of the premises. Upon expiration of the initial term of the lease, Spansion will have the option of renewing the agreement for up to two additional three-year terms. As a result of the lease from AMD, Spansion incurred approximately $44,000 of rental expenses in fiscal 2005.

In connection with Spansion’s reorganization, Fujitsu’s subsidiary, Fujitsu VLSI, agreed to lease premises in Aichi, Japan, to Spansion Japan for a term of one year, to be automatically renewed for one year periods unless three months prior notice is given by either party. Under this lease, Fujitsu VLSI also provides various office services to Spansion Japan. Spansion pays Fujitsu VLSI approximately $16,000 per month (based on December 25, 2005 exchange rates) for the premises lease and the office services.

Spansion leases from Fujitsu the land upon which JV1, JV2 and JV3, Spansion’s fabs in Aizu-Wakamatsu, Japan, are located. As a result of Spansion’s lease with Fujitsu, we incurred approximately $2.3 million in expenses in fiscal 2005.

Purchase and Sale Agreement for Austin, Texas Properties

Spansion entered into a Purchase and Sale Agreement, dated as of December 21, 2005, with AMD for the purchase of properties located in Austin, Texas, for approximately $6 million. The purchase price represents the net book value of the properties as of October 24, 2005. Spansion paid a portion of the purchase price in cash with the remaining amount payable to AMD pursuant to a promissory note with a principal outstanding amount equal to $5,687,621. The interest rate on the promissory note was equal to seven percent per annum. The indebtedness evidenced by the promissory note is secured by a vendor’s lien retained in the deed and a lien granted by Spansion to AMD pursuant to a Deed of Trust and Security Agreement executed in connection with the Purchase and Sale Agreement.

Purchase and Sale Agreement for Penang, Malaysia Properties

Spansion’s wholly-owned subsidiary, Spansion (Penang) Sdn. Bhd. entered into a Sale and Purchase Agreement, dated as of December 20, 2005, with Advanced Micro Devices Export Sdn. Bhd. for the purchase of properties located in Penang, Malaysia, for approximately $5 million. The purchase price represents the net book value of the properties as of October 24, 2005. Spansion (Penang) Sdn. Bhd. issued to Advanced Micro Devices Export Sdn. Bhd. a promissory note with a principal amount equal to the aggregate purchase price. The interest rate on the promissory note was equal to seven percent per annum.

Cerium Purchase Agreement

Spansion and AMD entered into a purchase agreement on December 19, 2005, effective as of October 24, 2005, for the purchase of all of the membership units of Cerium Laboratories LLC, a Delaware limited liability company and a wholly-owned subsidiary of AMD. Spansion issued to AMD a promissory note with a principal amount equal to the aggregate purchase price of $335,453. The purchase price represents the net book value of the Cerium membership units as of October 24, 2005. The interest rate on the promissory note was equal to seven percent per annum. The principal amount of the promissory note and all accrued an unpaid interest was paid to AMD on December 21, 2005.

Financial Obligations

Spansion is party to several third-party loan agreements and lease financings, where Spansion’s repayment or payment obligations thereunder are, in the aggregate, guaranteed by AMD and Fujitsu approximately in proportion to their percentage ownership interest in Spansion immediately prior to our initial public offering (60 percent by AMD, 40 percent by Fujitsu). On September 19, 2005, Spansion used funds from Spansion’s senior secured revolving credit facility to repay the outstanding principal and interest of approximately $24 million under a term loan with a certain financial institution. As a result of the repayment of this loan, the guarantees of AMD and Fujitsu were released. As of December 26, 2004, the outstanding amount guaranteed by AMD was approximately $26.8 million and the outstanding amount guaranteed by Fujitsu was approximately $17.8 million.

Exchange Agreement

In connection with Spansion’s initial public offering, Spansion, AMD and Fujitsu executed an Exchange Agreement dated December 15, 2005, pursuant to which on December 21, 2005 (1) Fujitsu cancelled $40 million of the aggregate principal amount outstanding under Spansion’s promissory note issued to Fujitsu on June 30, 2003, in exchange for 3,333,333 shares of the Company’s Class D common stock, and (2) AMD cancelled $60 million of the aggregate principal amount outstanding under Spansion’s promissory note issued to AMD on June 30, 2003, in exchange for 5,000,000 shares of the Spansion’s Class A common stock.

12.75% Senior Subordinated Notes Due 2016

On December 21, 2005, Spansion LLC issued to AMD $175 million aggregate principal amount of its 12.75% Senior Subordinated Notes Due 2016. The senior subordinated notes were issued at 90.828% of face value, resulting in net proceeds of approximately $158.9 million. The senior subordinated notes are general unsecured obligations of Spansion LLC and rank junior to any existing and future senior debt of Spansion Inc., STI or Spansion LLC. Interest is payable on April 15 and October 15 of each year beginning April 15, 2006 until the maturity date of April 15, 2016. Certain events may result in the accelerated maturity of the senior subordinated notes, including a default in any interest, principal or premium amount payment; a merger, consolidation or sale of all or substantially all of Spansion’s property; a breach of covenants in the senior subordinated notes or the respective indenture; a default in certain debts; or if a court enters certain orders or decrees under any bankruptcy law. Upon occurrence of one of these events, the principal of and accrued interest on all of the senior subordinated notes may be immediately due and payable. If Spansion Inc., STI or Spansion LLC incurs any judgment for the payment of money in an aggregate amount in excess of $50 million or takes certain voluntary actions in connection to insolvency, all amounts on the senior subordinated notes shall be due and payable immediately.

We applied the net proceeds from the sale of the senior subordinated notes to repay the outstanding principal and interest on two notes which we issued to AMD in connection with our reorganization as Spansion LLC in June 2003. These notes bore interest at the London Interbank Offered Rate, or LIBOR, plus four percent, subject to a maximum of seven percent, to be paid quarterly.

Voting Agreement

AMD has agreed with Spansion that, with respect to the election of Class A Directors, AMD will vote its shares of Class A Common Stock, or will cause such shares to be voted, in the same manner and percentage as the other holders of Class A Common Stock vote for Class A Directors that are up for election. This agreement will terminate at such time as Spansion’s Class D Common Stock is converted into Class A Common Stock, which conversion will occur no later than December 15, 2006.

Separation Agreement and General Release

On February 3, 2006, Spansion and Steven Geiser entered into a Separation Agreement and General Release in connection with Mr. Geiser’s resignation from his positions as Corporate Vice President, Chief Financial Officer and Treasurer of Spansion. Pursuant to this agreement, Spansion has agreed to pay Mr. Geiser a lump sum separation payment of $350,000.

Indemnification Agreements

Spansion has entered into an indemnification agreement with each of Spansion’s directors. In addition, indemnification agreements and our certificate of incorporation and bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law.