1.1 "Affiliate" shall mean, with respect to any entity, any other entity that directly or indirectly Controls, is Controlled by or under common Control with such entity.

1.2 "Capacity Plan" has the meaning set forth in Section 10.2.

1.3 "Charge Trapping Storage Technology" has the meaning set forth in Section 3.3.

1.4 "Confidential Information" means any information obtained by one Party from the other in connection with this Agreement which is in written, graphic, machine readable or other tangible form and is marked "Confidential", "Proprietary" or in some other manner to indicate its confidential nature. Confidential Information may also include oral information disclosed by one Party to the other pursuant to this Agreement, provided that such information is designated as confidential at the time of disclosure and either has previously been provided in an appropriately marked writing or is reduced to a written summary by the disclosing Party, within thirty (30) days after its oral disclosure, which is marked in a manner to indicate its confidential nature and delivered to the receiving Party. Such Confidential Information includes, but is not limited to, technical information transferred hereunder, and all copies and derivatives thereof, and information received as a consequence of rendering or receiving technical assistance, owned or controlled by either Party, which relates to its past, present or future activities with respect to the subject matter of this Agreement, provided that if such Confidential Information is disclosed by one of the Parties to the other Party in written and/or graphic or model form, or in the form of a computer program or data base, or any derivation thereof, the disclosing Party must designate it as confidential, in writing, by an appropriate legend, together with the name of the Party so disclosing it, such as Spansion Confidential Proprietary or SMIC Confidential Proprietary Information.

1.5 "Contract Wafers" means Wafers manufactured by SMIC for Spansion, including unsorted Wafers, qualification Wafers, test Wafers, Risk Start Wafers and un-diced Wafers, the individual Die which are Spansion Products and which are manufactured using the applicable Spansion Process.

1.6 "Control"shall mean: (a) the legal, beneficial, or equitable ownership, directly or indirectly, of at least 50% of the aggregate of all voting equity interests in an entity; (b) the right to appoint, directly or indirectly, a majority of the board of directors; (c) the right to control, directly or indirectly, the management or direction of the entity by contract or corporate governance document.

1.7 "Die" means an individual integrated circuit or components which when completed create an integrated circuit.

1.8 "Facilities" means the SMIC physical manufacturing and managed facility located at [*******], and such other facilities owned or controlled by SMIC as may be qualified by Spansion (and specifically approved by Spansion in writing) to produce Contract Wafers for Spansion.

1.9 "Foundry Services" has the meaning set forth in Section 2.1.

1.10 "Gross Die per Wafer" means the total quantity of Die candidates on each Wafer, whether or not the Die is operational when the Wafer has completed the manufacturing process.

1.11 "Improvements" means with respect to any Technology, all discoveries, innovations, improvements, enhancements, derivative works, or modifications of or to such Technology.

1.12 "Intellectual Property Rights" means any and all: (a) copyrights, mask work rights, trademarks, and patents; (b) rights relating to innovations, know-how, trade secrets, and confidential, technical, and non-technical information; (c) moral rights, author's rights, and rights of publicity; and (d) other industrial, proprietary and intellectual property related rights anywhere in the world, and all applications for, renewals and extensions of the foregoing now or hereafter filed, regardless of whether or not such rights have been registered with the appropriate authorities in such jurisdictions in accordance with the relevant legislation.

1.13 "Jointly Developed Technology" means any New Technology that is written, created, or otherwise made or acquired not solely by one or more employees of one Party but is created jointly by employees or contractors of Spansion together with employees or contractors of SMIC during and in the course of the transactions contemplated by this Agreement provided that: (a) with respect to copyright able material, each contributing Party prepared the work with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole; (b) with respect to inventions subject to patent protection, each contributing Party made some original contribution to the inventive thought and to the final solution; and (c) with respect to matter subject to trade secret protection, each contributing Party made substantial contributions to such matter.

1.14 "Lot" means a group of Contract Wafers which are processed simultaneously. Each Lot will be assigned a specific alpha/numeric identification that distinguishes it from any other group that contains the same type of Die so that each Lot can be separately identified.

1.15 "Minimum Yield" means, with respect to a particular Sorted Contract Wafer, the minimum acceptable Yield for such Sorted Contract Wafer as set forth in the corresponding Product Supplement.

1.16 "Net Die per Wafer" means the total quantity of Die on a Sorted Contract Wafer that pass the Probe Program and the requirements of Section 5.2 applicable to that Sorted Contract Wafer.

1.17 "New Technology" means Technology developed under this Agreement during the Term by or for either party that does not constitute (i) an Improvement to the Pre-Existing Spansion Technology; (ii) an Improvement to the Pre-Existing SMIC Technology or (iii) Charge Trapping Storage Technology.

1.18 "Non-Performance" means the inability of SMIC to completely fulfill Spansion production Purchase Orders within SMIC's standard order lead time.

1.19 "Probe Program" means the specific set of electrical and mechanical tests provided by Spansion when necessary.

1.20 "Process Specifications" mean the technical specifications provided by Spansion for the Spansion Process as further described and delivered as set forth in the applicable Process Supplement.

1.21 "Process Supplement" means a written exhibit to this Agreement in a form substantially as attached hereto as Exhibit A1, duly executed by the Parties that sets forth the particular terms and conditions pursuant to which a specific Spansion Process will be implemented at the Facilities and which exhibit is sequentially identified (i. e., as Exhibit A1, Exhibit A2) for each such Spansion Process and, as applicable, sets forth or includes as an attachment: (a) a description of the particular Spansion Process to be implemented and the specifications therefore; (b) the particular Facilities at which the Spansion Process is to be implemented; (c) the implementation schedule and/or implementation milestones; (d) any Foundry Services not otherwise set forth herein to be provided; (e) the Technology to be provided by the Parties; and (f) any fees, reimbursements or cost allocations in connection with such implementation other than as set forth herein.

1.22 "Product Specifications" mean the technical specifications provided by Spansion for the Spansion Product as further described and delivered as set forth in the applicable Product Supplement.

1.23 "Product Supplement" means a written exhibit to this Agreement in a form substantially as attached hereto as Exhibit B1, as may be duly executed by the Parties from time to time that sets forth particular terms and conditions pursuant to which specific Contract Wafers will be provided pursuant to this Agreement and which exhibit is sequentially identified (i. e., as Exhibit B1,Exhibit B2) for each such Contract Wafer and, as applicable, sets forth or includes as an attachment: (a) a description of the particular Spansion Product to be manufactured on the Contract Wafers to be provided and the specifications therefore; (b) the applicable Spansion Process to be used; (c) any Foundry Services not otherwise set forth herein to be provided; (d) the applicable Probe Program (or process for determining such program); (e) the Quality Standards; (f) the implementation schedule; (g) any SMIC qualification plan, qualification acceptance criteria and SMIC loading plan; (h) the applicable Target Yield and Minimum Yield; (i) any Technology to be provided by the Parties; and (j) the pricing for the Contract Wafers.

1.24 "Purchase Order" has the meaning set forth in Section 11.1.

1.25 "Quality Standards" has the meaning set forth in Section 4.1.

1.26 "Risk Start Wafers" means any fab wafer lot started before all acceptable technology or product qualification tests including reliability and quality have been completed.

1.27 "Scrap" means any Wafer or Die, in any stage of completion, without regard to its ability to function, that is not in conformance with the requirements of this Agreement for Contract Wafers to be sold to Spansion.

1.28 "Sorted Contract Wafer" means Contract Wafers that have been sorted in accordance with the terms of Section 5.2 and the applicable Product Supplement.

1.29 "Spansion Product" means a proprietary integrated circuit product of Spansion set forth on a Product Supplement (including all Technology embodied in and related to the functionality of such device except as may be called out in a Product Supplement) that conforms to the applicable Product Specification and the logic design or architecture provided to SMIC by Spansion hereunder, including all updates thereto.

1.30 "Spansion Process" means the proprietary wafer manufacturing process of Spansion set forth on a Process Supplement (i. e., the process for converting a raw Wafer into a finished Wafer, including Wafer preparation and Wafer processing), but not including: (a) Technology related to the circuitry contained within, or the functionality of, the Spansion Product so produced on a Die by such manufacturing and process technology, such as, by way of example only, the memory cell, program/erase algorithms, layout design or architecture of the circuitry of the memory device or circuitry and (b) SMIC Technology.

1.31 "Spansion Process Technology"shall include process technology (including Spansion Process), electrical design rules, process design rules, process qualification, Product (s) qualification, certain manufacturing process and methodology, if any, and any and all license rights including without limitation, have made rights, to manufacture the Spansion Contract Wafers, Sorted Contract Wafers and Spansion Product, in all cases as transferred by Spansion to SMIC pursuant to this Agreement.

1.32 "Target Yield" means, with respect to a particular Sorted Contract Wafer, the Target Yield for such Sorted Contract Wafer as set forth in the applicable Product Supplement, subject to post qualification confirmation and adjustment.

1.33 "Technology" means any and all technical information, specifications, drawings, records, documentation, works of authorship or other creative works, ideas, algorithms, models, databases, ciphers/keys, systems architecture, network protocols, research, development, and manufacturing information, software (including object code and source code), application programming interfaces (APIs), innovations, logic designs, circuit designs, technical data, processes and methods.

1.34 "Wafer" means the direct material substrate (raw material) which as a result of the semiconductor fabrication process is incrementally transformed to consist of several operational integrated circuit products in unpackaged form.

1.35 "Yield" means the percentage represented by Net Die per Wafer divided by Gross Die per Wafer.

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