The Spansion Employee Incentive Plan (“Plan”) recognizes and rewards Plan Participants for furthering Spansion’s ongoing success against strategic objectives. A Participant’s award under the Plan is funded based on the company’s performance against one or more Plan Metrics (e.g., revenue, operating margin) established and approved by the Compensation Committee of the Board of Directors for any given Plan Year. Plan Metrics may change from year-to-year at the sole discretion of Spansion.

A Participant’s eligibility and target opportunity (“Target”) for the Plan Year is based on the Participant’s role and job level, and may change from year-to-year at the sole discretion of Spansion. Award funding can range from 0% to 200% of Target. A portion of the award may be tied to individual performance depending on the Participant’s job level.

Award payments, if any, are made following evaluation of Plan Metrics and the completion of the compensation rewards process after the close of the Plan Period. Depending on the Participant’s job level, the plan will be measured and paid on either a quarterly or annual basis.

Plan participation summary:

Participant is any employee of Spansion who is eligible to participate in the Plan based on their role and job level. Sales Incentive Plan

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participants and employees otherwise eligible to participate in local broad-based incentive programs are not eligible.

Plan Year is Spansion’s fiscal year, approximately each January 1 through December 31. For 2010, the Plan will begin effective January 1, 2010.

Plan Period, for the purposes of the Plan Metrics, is either the fiscal quarter or fiscal year, depending on the Participant’s role.

Plan Metric is an overarching goal for the Plan Year and is generally financial in nature (e.g., revenue, operating margin). There may be more than one Plan Metric established for any Plan Year, and metrics may change from year-to-year.

Plan Objectives are the parameters by which achievement of a Plan Metric is measured for a Plan Period (e.g., minimum, goal and maximum). For example, for a revenue Plan Metric, minimum, goal and maximum Plan Objectives might be $1B, $1.2B and $1.5B, respectively.

Target is the percentage of base salary for which a Participant is eligible assuming goals are achieved for the Plan Metrics. (See Exhibit B for Plan Targets)

Company Target Multiplier is the percentage of a Participant’s Target used to calculate initial award amounts. The Company Target Multiplier takes into consideration any applicable weighting for each Plan Metric, and the degree to which each Plan Objective for each Plan Metric is achieved.

Individual Performance Modifier, for eligible Participants, is applied to the initial award amounts based on the Participant’s performance for the Plan Period.

Plan Metrics and related Plan Objectives are determined for each Plan Year. Exhibit A provides details for the relevant Plan Year, including:

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Following the close of a Plan Period, after actual company performance is known, the Plan awards are calculated as follows:

The Company Performance Multiplier, ranging from 0% to 200%, is determined and applied to the Participant’s assigned Plan Target based on company performance to objectives established at the beginning of the Plan Period.

For eligible participants, an Individual Performance Modifier, ranging from 50% to 150%, is determined and approved by the Participants’ management based on achievement against pre-established objectives (either quarterly or annually, depending upon eligibility). The Modifier applies to the result of the calculation in A above. The individual modifier will be forced through the application of a bell curve rating system each manager will use to rate his/her employees.

While Participants eligible for the Individual Performance Modifier may earn up to 150% of the company-based award based on their individual performance, the maximum plan expenditure cannot exceed the overall budget for the plan period. The overall budget is the sum of all awards resulting from the calculation in A above. Each senior manager will force a distribution for their direct reports.

For Participants for whom the Individual Performance Modifier does not apply, the award is calculated as follows:

For Participants for whom the Individual Performance Modifier does apply, the award is calculated as follows:

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The following provisions apply generally to all Plan participants on a worldwide basis. However, some variations may exist based on local legal requirements (e.g., laws regarding base salary calculation, payments upon termination). Please contact the local Division HR Representative for specific details.

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Awards for a Plan Period are paid during the quarter immediately following the end of the Plan Period, following determination of performance against both company and individual objectives.

Annual Plan Metrics and Plan Objectives are approved by the Compensation Committee of the Board of Directors at the beginning the Plan Year. Quarterly Objectives, and performance against them, are determined at the end of each Plan Period and approved by the Compensation Committee of the Board of Directors, the CFO, or the CEO. Plan Objectives and results align with the Company’s forecast and results plus publicly reported quarterly/annual results unless specifically approved otherwise by the Compensation Committee.

No participant has a vested entitlement to any payment under the Plan; all awards are paid at the sole discretion of Spansion’s executive officers. Specifically, regardless of whether an award has been consistently paid over any period of time, Spansion, at its sole discretion, reserves the right to (i) increase or decrease Targets and Target Percentages for each Plan Year, (ii) terminate the participation of any participant in the Plan at any time for any legal reason, and/or (iii) modify or terminate the Plan, in whole or in part, all with or without notice or cause. Award payments will be offset for participants who are eligible for other bonus plans.

The Plan is generally operated in a manner that complies with Internal Revenue Code Section 409A and, as such, all awards paid under the Plan will be paid according to section V.C.

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EXHIBIT A

2010 Pay for Performance Plan Details

Annual Plan Metrics and Objectives

				2010 Annual Bonus Payout Matrix
				Revenue (M$)
				< $1,100		$1,100		$1,125		$1,150		$1,175		$1,200		$1,275		$1,350		$1,425		$1,500
		16.90%		0%		120%		130%		140%		150%		160%		170%		180%		190%		200%
		16.15%		0%		110%		119%		128%		136%		145%		155%		165%		175%		185%
		15.40%		0%		100%		108%		115%		123%		130%		140%		150%		160%		170%
		14.65%		0%		90%		96%		103%		109%		115%		125%		135%		145%		155%
		13.90%		0%		80%		85%		90%		95%		100%		110%		120%		130%		140%
		13.65%		0%		73%		78%		83%		88%		93%		103%		113%		123%		135%
		13.40%		0%		65%		70%		75%		80%		85%		95%		105%		115%		130%
		13.15%		0%		58%		63%		68%		73%		83%		93%		103%		113%		125%
		12.90%		0%		50%		55%		63%		70%		80%		90%		100%		110%		120%
		< 12.9%		0%		0%		0%		0%		0%		0%		0%		0%		0%		0%

These performance metrics are Spansion Confidential and must not be disclosed outside Spansion.

Quarterly Plan Metrics and Objectives

Metrics for quarterly plan participants will be established separately and tracked each quarter by Finance. The following are the Plan Metrics for Q1 and Q2 2010 (subject to review and approval:

				Q110 Bonus Payout Matrix
				Revenue (M$)
				< $250		$250		$255		$261		$266		$271		$291		$311		$330		$350
		16.90%		0%		120%		130%		140%		150%		160%		170%		180%		190%		200%
		16.15%		0%		110%		119%		128%		136%		145%		155%		165%		175%		185%
		15.40%		0%		100%		108%		115%		123%		130%		140%		150%		160%		170%
		14.65%		0%		90%		96%		103%		109%		115%		125%		135%		145%		155%
		13.90%		0%		80%		85%		90%		95%		100%		110%		120%		130%		140%
		13.65%		0%		73%		78%		83%		88%		93%		103%		113%		123%		135%
		13.40%		0%		65%		70%		75%		80%		85%		95%		105%		115%		130%
		13.15%		0%		58%		63%		68%		73%		83%		93%		103%		113%		125%
		12.90%		0%		50%		55%		63%		70%		80%		90%		100%		110%		120%
		< 12.9%		0%		0%		0%		0%		0%		0%		0%		0%		0%		0%

These performance metrics are Spansion Confidential and must not be disclosed outside Spansion.

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				Q210 Bonus Payout Matrix
				Revenue (M$)
				< $275		$275		$281		$288		$294		$300		$319		$3338		$356		$375
		13.00%		0%		120%		130%		140%		150%		160%		170%		180%		190%		200%
		12.25%		0%		110%		119%		128%		136%		145%		155%		165%		175%		185%
		11.50%		0%		100%		108%		115%		123%		130%		140%		150%		160%		170%
		10.75%		0%		90%		96%		103%		109%		115%		125%		135%		145%		155%
		10.00%		0%		80%		85%		90%		95%		100%		110%		120%		130%		140%
		9.75%		0%		73%		78%		83%		88%		93%		103%		113%		123%		135%
		9.50%		0%		65%		70%		75%		80%		85%		95%		105%		115%		130%
		9.25%		0%		58%		63%		68%		73%		83%		93%		103%		113%		125%
		9.00%		0%		50%		55%		63%		70%		80%		90%		100%		110%		120%
		< 9.00%		0%		0%		0%		0%		0%		0%		0%		0%		0%		0%

For subsequent quarters, a similar matrix will be established and approved per the Administrative Provisions. Quarterly Objectives and results align with the Company’s forecast and results plus publicly reported quarterly/annual results unless specifically approved otherwise by the Compensation Committee

Where achievement falls between the values in the matrices, the funding percent will be interpolated. Where achievement falls below the minimum level of either objective, no awards will be funded or distributed based on the guidelines established in these plans. In the event targets are not achieved, but the company is still profitable, a pool of funds totaling 10% of base salary will be available for distribution to employees at the sole discretion of management. Section 16 officers and employees, at the Senior Vice President Level or above, are not eligible for these bonus awards. The Compensation Committee has the sole authority to recommend bonus awards for the Section 16 officers or Senior Vice Presidents or above, based on recommendations from the CEO, for exemplary performance to the Board for approval. Special awards made to the CEO are made and recommended by the Compensation Committee and approved by the Board.

Sample Calculation

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2010 Plan Metrics Definitions

Revenue refers to sales generated from all Spansion’s products and services as reported in Spansion’s pro-forma Profit and Loss statement. Pro-forma adjustments to GAAP (Generally Accepted Accounting Principles) revenue would include:

Operating Margin is derived from Operating Income divided by Revenue (as defined above). Operating Income refers to Spansion’s earnings before interest income/expense, other income/expense, taxes and extraordinary items as reported in Spansion’s pro-forma P&L. Pro-forma adjustments to GAAP Operating Income would include:

GAAP Expense Adjustments

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Due to various accounting matters not known due to fresh start accounting, the Company may revisit the above definitions after completion of Fresh Start Accounting.

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EXHIBIT B

2010 Pay for Performance Plan Targets

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