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Amd Distribution Agreement, Dated June 30, 2003

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Sectors: Electronics and Miscellaneous Technology
Governing Law: California , View California State Laws
Effective Date: June 30, 2003
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Exhibit 10.31

Redacted Version

Confidential Treatment Marked

AMD DISTRIBUTION AGREEMENT

JUNE 30, 2003

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

AMD DISTRIBUTION AGREEMENT


THIS DISTRIBUTION AGREEMENT (this " Agreement" ) is made and entered into as of June 30, 2003 (the " Effective Date" ), by and between FASL LLC, a Delaware limited liability company (" FASL" ), and Advanced Micro Devices, Inc., a Delaware corporation (" AMD" ). FASL and AMD are hereinafter also referred to as the " Parties" and individually as a " Party ."


RECITALS


WHEREAS , pursuant to the Amended and Restated Limited Liability Company Operating Agreement, dated June 30, 2003 (the " LLC Operating Agreement" ), among AMD, AMD Investments, Inc., a Delaware corporation (" AMDI" ), Fujitsu Limited, a Japanese corporation (" Fujitsu" ), and Fujitsu Microelectronics Holding, Inc., a Delaware corporation (" FMH" ), and the Contribution and Assumption Agreement (the " Contribution Agreement" ), among AMD, AMDI, Fujitsu, FMH and FASL, AMD and Fujitsu have formed FASL for the purpose of designing, manufacturing and marketing flash memory products; and

WHEREAS, as part of such joint venture arrangement, AMD and Fujitsu have agreed that FASL will appoint AMD and Fujitsu as FASL' s sole initial distributors of Products (as defined below).

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and other terms and conditions contained herein, FASL and AMD agree as follows:


AGREEMENT

1. DEFINITIONS; INTERPRETATION

1.1 Capitalized but Undefined Terms . Capitalized terms used in this Agreement but not defined herein shall have the meaning ascribed to such terms in the LLC Operating Agreement.

1.2 Terms Defined in this Agreement . The following terms when used in this Agreement shall have the following definitions:

1.2.1 " Action Plan" has the meaning set forth in Section 14.2.1.


1.2.2 " Affiliate" is defined in the LLC Operating Agreement.


1.2.3 " AMD Account" means a Customer listed as such on Schedule 2.1 .


1.2.4 " AMD Extended Period Support Customer" means a Customer listed as such on Schedule 2.1 .


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

1.2.5 " AMD PRC Customers" means the Customers set forth in Section A of Schedule 1.2.5 and such other Customers that are specified as AMD PRC Customers in accordance with Section B of Schedule 1.2.5 .

1.2.6 " AMD Short Term Support Customer" means a Customer listed as such on Schedule 2.1 .

1.2.7 " AMD Territory" means the Americas and Europe.


1.2.8 " AMD Transitional Support Customer" means, collectively, the AMD Short Term Support Customers and the AMD Extended Period Support Customers.

1.2.9 " Americas" means the countries and territories of North America, Central America and South America.

1.2.10 " Best Efforts" means the efforts that a prudent Entity or person desiring to achieve a particular result would use in order to achieve such result reasonably expeditiously. An obligation to use " Best Efforts" does not require the Entity or person subject to such obligation to take actions that would result in a materially adverse change in the benefits to such Entity or person of this Agreement.

1.2.11 " Channel Partner" means any Entity other than an AMD Subsidiary who is appointed by AMD as a sub-distributor or sales representative, pursuant to a written agreement between AMD and such Entity in accordance with Section 5.2. A list of Channel Partners as of the Effective Date is set forth in Schedule 1.2.11 . AMD will provide FASL with an updated Schedule 1.2.11 or other reasonable form of notice from time to time whenever it appoints a new Channel Partner or terminates an existing Channel Partner.

1.2.12 " Claims" is defined in Section 19.

1.2.13 " Combined Product" means any Product that contains both (a) FASL Content, and (b) components or products manufactured by any other Entity, which components or products do not constitute FASL Content.


1.2.14 " Confidential Information" has the meaning set forth in Section 16.1.

1.2.15 " Customer" means an Entity, other than AMD in its capacity as distributor hereunder, that purchases Products, but excluding Channel Partners.


1.2.16 " Custom Product" means any Product that has sufficiently unique attributes that it may only be sold to a single Customer or to a limited number of Customers. In addition, if a Product is being discontinued or has been discontinued on a general basis, as set forth in Section 10.2 below, but may still be made available to specific Customers, then it too shall be considered a Custom Product. FASL will identify all Custom Products as such in FASL' s then-current Quarterly price list or other reasonable form of communication to AMD, including an end-of-life notice, if applicable.


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

1.2.17 " Disclosing Party" has the meaning set forth in Section 16.1.

1.2.18 " Documentation" means any and all documents or materials, whether in printed form or in any electronic form or media, that relate to Products and are provided by FASL to AMD hereunder, including marketing materials and brochures, manuals, published Product price lists and Product specifications, but expressly excluding documents that constitute Confidential Information of FASL.


1.2.19 " Entity" means a corporation, partnership, limited liability company, unincorporated organization, business association, firm, joint venture or other legal entity.

1.2.20 " Europe" means the countries and territories of Europe, as listed on Schedule 1.2.20 .


1.2.21 " FAE" means a field applications engineer.


1.2.22 " FASL Board" means the Board of Managers of FASL.


1.2.23 " FASL Content" means components or products manufactured by FASL or a FASL Subsidiary, or components or products specifically manufactured by any other Entity, including AMD or Fujitsu or any third party subcontractor or foundry, on behalf of FASL or a FASL Subsidiary at FASL' s or the FASL Subsidiary' s direction and based on (a) technology or intellectual property owned by FASL, or which FASL otherwise has the right to use, or (b) designs provided by FASL, which designs are proprietary to FASL or a third party licensor of FASL.

1.2.24 " FASL Content Only Product" or " FCO Product" means any Product that contains only FASL Content.

1.2.25 [Intentionally omitted.]

1.2.26 " Force Majeure" has the meaning set forth in Section 21.9.1.


1.2.27 " Forecast" has the meaning set forth in Section 4.1.


1.2.28 " Forecasted Product Requirements" has the meaning set forth in Section 4.1.


1.2.29 " Fujitsu Account" means a Customer listed as such on Schedule 2.1 .

1.2.30 " Fujitsu Extended Period Support Customer" means a Customer listed as such on Schedule 2.1 .

1.2.31 " Fujitsu PRC Customers" means the Customers set forth in Section A of Schedule 1.2.31 and such other Customers that are specified as Fujitsu PRC Customers in accordance with Section B of Schedule 1.2.31 .


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

1.2.32 " Fujitsu Short Term Support Customer" means a Customer listed as such on Schedule 2.1 .


1.2.33 " Fujitsu Territory" means Japan.


1.2.34 " Fujitsu Transitional Support Customers" means, collectively, the Fujitsu Short Term Support Customers and the Fujitsu Extended Term Support Customers.

1.2.35 " Global Account" means a Customer listed as such on Schedule 2.1 .

1.2.36 " Guidelines" has the meaning set forth in Section 6.4.


1.2.37 " INCOTERMS 2000" means the International Rules for the Interpretation of Trade Terms, published by the International Chamber of Commerce in the year 2000.

1.2.38 " Intellectual Property Rights" means, on a world-wide basis, any and all now known or existing, or hereafter known or existing, tangible and intangible (a) rights associated with works of authorship, including copyrights, moral rights and mask-works, (b) rights associated with trademarks, service marks, trade names, logos and similar rights, (c) trade secret rights, (d) rights in patents, designs and algorithms and other industrial property rights, (e) rights in domain names; (f) all other intellectual and industrial property rights of every kind and nature and however designated, whether arising by operation of law, contract, license or otherwise, and (f) all registrations, applications, renewals, extensions, continuations (including continuations in part), divisions, reexaminations or reissues thereof now or hereafter existing, made or in force (including any rights in any of the foregoing).


1.2.39 " Joint Territory" means anywhere in the world other than the AMD Territory and the Fujitsu Territory.

1.2.40 " Leads" has the meaning set forth in Section 11.4.


1.2.41 " Marketing Plan" has the meaning set forth in Section 11.1.2.

1.2.42 " Ownership Interest" means the percentage interest of FASL common membership interests then held collectively by AMD and its Subsidiaries, divided by all then issued and outstanding FASL common membership interests.


1.2.43 " PRC" means the People' s Republic of China.

1.2.44 " Product Distribution Center" has the meaning set forth in Section 7.1.


1.2.45 " Production Volume" means, for a particular Technology for a particular Quarter, FASL' s projected volume of Wafer Outputs for such Technology during such Quarter, as determined by FASL at the beginning of the relevant Quarter using FASL' s then-current QBP for such Quarter.


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

1.2.46 " Product" means any finished product of FASL.

1.2.47 " Purchase Order" has the meaning set forth in Section 3.1.


1.2.48 " Purchase Price" means the price per Product at which FASL shall sell such Product to AMD in accordance with Section 12.


1.2.49 " Q0" has the meaning set forth in Section 4.2.3.

1.2.50 " Q1" has the meaning set forth in Section 4.2.3.


1.2.51 " Q2" has the meaning set forth in Section 4.2.3(b).

1.2.52 " Q3" has the meaning set forth in Section 4.2.3(c).


1.2.53 " Quarter" means a FASL fiscal quarter.


1.2.54 " Receiving Party" has the meaning set forth in Section 16.1.


1.2.55 " RSP" has the meaning set forth in Section 12.1.


1.2.56 " Standard Product" means any Product that is not a Custom Product. FASL will identify all Standard Products as such in FASL' s then-current Quarterly price list.


1.2.57 " Stocking Channel Partner" means a Channel Partner that is designated as such by AMD pursuant to Section 5.3.3.


1.2.58 " Subsidiary" is defined in the Contribution Agreement.


1.2.59 " Technology" means each process technology used by FASL in the production of Products. A list of Technologies as of the Effective Date is set forth in Schedule 1.2.59. FASL will provide AMD with an updated Schedule 1.2.59 or other reasonable form of notice from time to time whenever it adds a new Technology, or whenever it decides to no longer produce Products using a then-existing Technology.


1.2.60 " Term" has the meaning set forth in Section 20.1.

1.2.61 " Trademarks" means any trademarks, trade names, service marks and logos used by FASL in connection with Products, including those marks, names and logos set forth in Schedule 1.2.61 attached hereto.

1.2.62 " Transition Plan" has the meaning set forth in Section 2.1.4.


1.2.63 " VAT" has the meaning set forth in Section 12.8.

1.2.64 " Wafer Output" means a semiconductor wafer manufactured by or for FASL for a specific Technology.


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

1.2.65 " Warranty Period" has the meaning set forth in Section 15.1.

1.3 Interpretation.

1.3.1 Certain Terms . The words " hereof," " herein," " hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The term " including" is not limited and means " including without limitation."


1.3.2 Section References; Titles and Subtitles . Unless otherwise noted, all references to Sections, Schedules and Exhibits herein are to Sections, Schedules and Exhibits of this Agreement. The titles, captions and headings of this Agreement are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.


1.3.3 Reference to Entities, Agreements, Statutes . Unless otherwise expressly provided herein, (a) references to an Entity include its successors and permitted assigns, (b) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements and other modifications thereto or supplements thereof and (c) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such statute or regulation.

2. APPOINTMENT; GRANT OF RIGHTS


2.1 Grant of Distribution Rights; Transitional Support.

2.1.1 Grant of Rights . Subject to the terms and conditions of this Agreement, FASL grants to AMD the right to market, sell and otherwise distribute Products during the Term (a) in the AMD Territory and in the Joint Territory, (b) to AMD Affiliates, AMD Accounts and Global Accounts wherever located and (c) to AMD PRC Customers in the PRC. No other grant of distribution rights to AMD is implied by this Agreement.

2.1.2 Transitional Support.

(a) Subject to the terms and conditions of this Agreement, FASL grants AMD the following rights during the Term with respect to AMD Transitional Support Customers:


(i) With respect to each AMD Short Term Support Customer, FASL grants AMD the right to market, sell and otherwise distribute Products in the Fujitsu Territory to such Customer; provided , however , that (A) AMD shall not engage in any new design activity in the Fujitsu Territory for any such Customer, and (B) AMD shall transition sales support for each such Customer in the Fujitsu Territory to Fujitsu as soon as reasonably practicable (as reasonably determined by FASL, taking into account various factors, including the preservation of Customer relationships and Customer demands and requirements). This right shall terminate as to each such Customer upon completion of the transition with respect to such Customer.

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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

(ii) With respect to each AMD Short Term Support Customer that is also a Fujitsu Account, FASL grants AMD the right to market, sell and otherwise distribute Products throughout the world to such Customer; provided , however , that (A) AMD shall not engage in any new design activity anywhere in the world for such Customer, and (B) AMD shall transition sales support for each such Customer to Fujitsu as soon as reasonably practicable (as reasonably determined by FASL, taking into account various factors, including the preservation of Customer relationships and Customer demands and requirements). This right shall terminate as to each such Customer upon completion of the transition with respect to such Customer.

(iii) With respect to each AMD Extended Period Support Customer, FASL grants to AMD the right to market, sell and otherwise distribute Products in the Fujitsu Territory to such Customer. At such time that FASL reasonably determines that (A) Fujitsu has sufficient resources to provide such Customer with a sufficient level of support in the Fujitsu Territory as AMD (as measured by various factors, including the number of salespeople and the level of technical competence of Fujitsu' s sales force in light of such Customer' s Product needs), and (B) such Customer is open and willing to purchase Products from Fujitsu in the Fujitsu Territory, FASL shall issue a certification in writing to AMD (with a copy to Fujitsu) that FASL has made such determination. Upon receipt of such certification, this right shall terminate.

(b) Subject to the terms and conditions of this Agreement:


(i) With respect to each Fujitsu Short Term Support Customer, AMD agrees and acknowledges that, pursuant to the Fujitsu Distribution Agreement, FASL shall grant to Fujitsu the right during the Term to market, sell and otherwise distribute Products in the AMD Territory to such Customer; provided , however , that upon the transfer of sales support for each such Customer from Fujitsu to AMD in accordance with the Fujitsu Distribution Agreement, this right shall terminate.

(ii) With respect to each Fujitsu Short Term Support Customer that is also an AMD Account, AMD agrees and acknowledges that, pursuant to the Fujitsu Distribution Agreement, FASL shall grant to Fujitsu the right during the Term to market, sell and otherwise distribute Products throughout the world to such Customer; provided, however , that upon the transfer of sales support for each such Customer from Fujitsu to AMD in accordance with the Fujitsu Distribution Agreement, this right shall terminate.

(iii) With respect to each Fujitsu Extended Period Support Customer, AMD agrees and acknowledges that, pursuant to the Fujitsu Distribution Agreement, FASL shall grant to Fujitsu during the Term the right to market, sell and otherwise distribute Products in the AMD Territory to such Customer. At such time that FASL reasonably determines that (A) AMD has sufficient resources to provide such


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

Customer with a sufficient level of support in the AMD Territory as Fujitsu (as measured by various factors, including the number of salespeople and the level of technical competence of AMD' s sales force in light of such Customer' s Product needs), and (B) such Customer is open and willing to purchase Products from AMD in the AMD Territory, FASL shall issue a certification in writing to Fujitsu (with a copy to AMD) that FASL has made such determination. Upon receipt of such certification, this right shall terminate.

2.1.3 Location of Sale . For purposes of determining the location of a sale of any Product, the " ship to" location on the Purchase Order shall be determinative.


2.1.4 Transition Plan . Promptly after the Effective Date, AMD and FASL shall meet and develop written transition plans for each AMD Short Term Support Customer, each such plan setting forth in reasonable detail the steps and actions that each Party shall be required to take, and the events that shall be required to occur, in order for support for the relevant Customer to transfer from AMD to Fujitsu (each, a " Transition Plan" ). Each Party will act in accordance with the Transition Plans. In addition, FASL shall use Best Efforts to require Fujitsu to comply with the transition plans that are developed and agreed by FASL and Fujitsu in accordance with the Fujitsu Distribution Agreement.


2.2 Appointment of Other Distributors by FASL.


2.2.1 In the Joint Territory . FASL shall have the right to appoint additional distributors or sales representatives in the Joint Territory.


2.2.2 In the AMD Territory; Other Customers . Subject to Section 14 and for so long as AMD maintains an Ownership Interest of at least twenty-five percent (25%), FASL shall not have the right to appoint any additional distributors or sales representatives, or grant any existing distributor or sales representative (other than AMD) any additional rights, in the AMD Territory or with respect to an AMD Account, Global Account or AMD PRC Customer without AMD' s prior written consent, which consent may be withheld in its sole discretion.


2.2.3 No Sales by FASL . Notwithstanding anything to the contrary herein, unless otherwise agreed by the parties on a case-by-case basis, in no event shall FASL sell or otherwise distribute any Products (or any wafers, die or work-in-progress), except through (i) AMD pursuant to and in accordance with the terms of this Agreement, (ii) Fujitsu pursuant to and in accordance with the terms of the Fujitsu Distribution Agreement, (iii) the appointment of additional distributors or sales representatives in accordance with the terms of this Agreement or the Fujitsu Distribution Agreement; or (iv) as may otherwise be permitted by procedures that may be added to the LLC Operating Agreement subsequent to the Effective Date in accordance with its terms.


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

2.3 AMD Obligations and Restrictions.

2.3.1 Best Efforts . AMD shall use its Best Efforts to promote the sale of Products in the AMD Territory. In light of the foregoing, the application of the provisions of Section 2306(2) of the California Commercial Code to the Parties is hereby excluded.


2.3.2 Commitments . Notwithstanding anything to the contrary herein, AMD shall have **** on behalf of FASL with respect to Product availability.


2.3.3 Inventory . AMD shall not, and shall cause its Subsidiaries not to, maintain an inventory of Products intended to be used for re-sale by Customers, provided that AMD and any AMD Subsidiary may maintain a limited, reasonable number of Products to use as Product samples in connection with demand creation activities in accordance with Section 11.5. Notwithstanding anything to the contrary in the foregoing, AMD and its Subsidiaries shall have the right, as of the Effective Date, to collectively possess **** inventory of Products across all Technologies, which inventory AMD and its Subsidiaries may retain and sell in the ordinary course of business, provided that such inventory shall be eliminated within a reasonable period of time after the Effective Date. The foregoing restrictions and obligations regarding inventory shall not apply to Channel Partners.


2.3.4 NADC . Notwithstanding anything to the contrary in the foregoing, AMD shall have the right, from and after the Effective Date, to hold up to **** inventory of Product in its North America Distribution Center (" NADC" ), provided that NADC' s target level of Product inventory shall be **** inventory. From time to time, AMD may request the right to hold more than **** inventory at NADC to address special market opportunities and FASL will not unreasonably withhold its consent to permit AMD to hold additional inventory at NADC to address those opportunities, taking into account existing firm purchase orders from Customers and AMD' s then-current good faith forecast for quick-turn business opportunities. Title and risk of loss with respect to such inventory shall remain with FASL until such time that AMD places a Purchase Order for the relevant Products in accordance with Section 3.1. AMD will maintain any such inventory at no cost to FASL, and will report on the amount and status of such inventory from time-to-time as reasonably requested by FASL. Without limiting the foregoing, AMD agrees to use Best Efforts to provide FASL as soon as it may be practicable daily point-of-sales reports in a format and including the information reasonably designated by FASL regarding all such inventory. Initial point-of-sale reports will contain the types of information specified in Schedule 2.3.4. Notwithstanding anything to the contrary in Section 12.5 below, payments for Products held at the NADC in accordance with this Section 2.3.4 shall be made within sixty (60) days from the date of shipment of such Products to a Customer or Channel Partner.


3. ORDERING; SHIPPING


3.1 Orders . AMD will accept purchase orders for Products from Customers and Channel Partners in accordance with its customary practices. To purchase Product(s) from FASL, AMD shall issue purchase orders (" Purchase Orders" ), which shall specify the Purchase Order number, type and quantity of Product(s) ordered, Purchase Price (and the price to be paid to AMD for the Product(s) by the relevant Customer or Channel Partner, but only if such price is


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Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.

**** the **** for the Product(s)), place(s) of delivery (which shall be the location identified in the relevant Customer or Channel Partner purchase order issued to AMD), and delivery date(s). These Purchase Orders may take the form of electronic submissions in a mutually-acceptable format (including submissions currently referred to as " B+B+B files" ) so long as they contain the same information specified above for Purchase Orders, even if such submissions may not be referred to specifically as " purchase orders" when transmitted. AMD shall place each Purchase Order with FASL sufficiently in advance of the delivery date to allow for FASL' s Product delivery lead times, as set forth in FASL' s most recent lead time report provided to AMD. FASL shall accept any Purchase Order submitted by AMD to the extent that such Purchase Order (a) is within the Product allocation assured to AMD in accordance with Section 4.2, (b) conforms to the foregoing lead times, and (c) does not provide for a " ship to" location, Customer or Channel Partner that is inconsistent with AMD' s distribution rights hereunder. FASL will not accept any order to purchase Products under this Agreement from any Entity or person other than AMD without AMD' s prior written consent. Notwithstanding the foregoing, with respect to Purchase Orders for Custom Products, FASL shall not be required to accept such Purchase Orders, but FASL shall not unreasonably withhold acceptance of any such Purchase Order that is consistent with the terms of this Agreement, taking into account such factors as the requested delivery date, pricing and inventory. FASL shall not withhold acceptance of any Purchase Order for Custom Products on a basis that provides AMD less favorable treatment than any other FASL di
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