Contract

EXHIBIT 10.38 LICENSE AGREEMENTTHIS Agreement is made and entered into as of this 21st day of February 2005(Effective Date), by and between, Patriot Scientific, Inc., a Delawarecorporation, doing business at 10989 Via Frontera, San Diego, California 92127(hereinafter referred to as PTSC) and Advanced Micro Devices Inc., a Delawarecorporation doing business at 5204 East Ben White Boulevard, Austin, Texas 78741(hereinafter referred to as LICENSEE) including Spansion Inc. and all currentAffiliates of AMD and Affiliates formed by AMD over the course of this Agreementfor which AMD owns or controls more than 50% of the shares, board seats, orequity in the entity. This Agreement shall apply to all current AMD Affiliates,in the same manner it applies to AMD, for the term of this Agreement even ifthese legal entities cease in the future to be an “Affiliate” of AMD, as definedabove.WHEREAS PTSC is the developer of the IGNITE 32-bit microprocessor (hereinafterreferred to as the Licensed Microprocessor), and possesses certain design andengineering drawings relating thereto, and other confidential and trade secretinformation relating to the Register Transfer Level documentation of the IGNITEmicroprocessor (hereinafter collectively referred to as the LicensedTechnology).WHEREAS LICENSEE desires to acquire from PTSC a non-exclusive license tomanufacture, have made, design, and sell products containing the LicensedMicroprocessor.WHEREAS PTSC is willing to grant such a license upon the terms and conditionshereinafter set forth.NOW THEREFORE, for and in consideration of the mutual covenants and agreementshereinafter contained, the parties hereto mutually covenant and agree asfollows:1. LicensePTSC hereby grants and agrees to grant to LICENSEE a worldwide, irrevocable,perpetual, non-exclusive license under LICENSEE’s patent, copyright, tradesecret and other intellectual property rights in or related to the LicensedTechnology and Licensed Microprocessor to manufacture, have made, use, import,create derivatives works of, display, perform, copy, distribute, offer for sell,and sell any products containing the Licensed Microprocessor or any derivativesthereof developed by or for LICENSEE or any portion of any of the foregoing(hereinafter referred to as Products) and engage in any services relatedthereto. PTSC hereby grants and agrees to grant to LICENSEE a worldwide,irrevocable, perpetual, non-exclusive license under LICENSEE’s patent,copyright, trade secret and other intellectual property rights in or related tothe Licensed Technology and Licensed Microprocessor to use and copy the LicensedTechnology, any derivatives thereof, or any portion thereof to make Products orperform any services as licensed herein. LICENSEE may sublicense the rights setforth herein only to third parties (e.g., foundry, distributor, designconsultants, benchmark agencies, etc.) that assist LICENSEE in exercising any ofit’s licensed rights set forth herein. LICENSEE may use or not use the LicensedTechnology in LICENSEE’s sole discretion, and LICENSEE has no obligation to usethe Licensed Technology in any capacity. PTSC agrees to provide all deliverables 1to LICENSEE necessary to engage in the licenses and covenants provided hereinand in the separate Patent License. These deliverables include but are notlimited to all Ignite RTL and other high level language implementations, copiesof all GDSII files, gerber files, PCB information, test vectors, packaginginformation, design rules, product tooling, special CAD software, databases,simulation tools, software, compilers, development tools, and any otherinformation, software, or tangible required to exercise the rights grantedherein. If third party rights are needed to use any such deliverables, PTSC willassist AMD in contacting such third parties and working with such third partiesto obtain all necessary rights.2. Licensing Royalties, Payment, Use of License 2.1 During the term of this Agreement, LICENSEE shall maintain completerecords of Products that are subject to royalty under this Section and aremanufactured, distributed, sold or given away. These records shall be availablefor audit, on reasonable notice by a representative of PTSC, per Section 4. 2.2 Running Royalty. LICENSEE shall aggregate a royalty for every Unitsold as set forth herein. LICENSEE will aggregate such royalties over eachcalendar quarter and shall make payment of such aggregated royalties to PTSC netforty-five (45) days from the end of each calendar quarter. A royalty under thisAgreement shall only be due for Product that was actively derived and designedfrom direct use or incorporation of Licensed Technology or the LicensedMicroprocessor tangibles into the Product. Royalties shall be due for no otherProduct and under no other circumstances. The royalty under this Agreement shallbe a royalty of [***]*.”Sale” as used in this Section shall include anycommercial units given away by AMD for commercial use by another party, however,”sale” shall not include the provision of reference design kits (RDKs) or likedevelopment or beta products that are provided for the purpose of trying tosecure subsequent volume sales of Products from a partner or customer. “Sale”shall also include the consumer end use of Product by AMD internal to theiroperations. 2.3 License Issue Fee and Maintenance Fee. In consideration of the rightsgranted herein LICENSEE shall pay to PTSC a License and Maintenance fee of[***]*. Minimum Royalties. The Parties hereto mutually agree that there shall beno minimum quarterly royalties. 2.4 The term Unit, for the purposes of this License Agreement, means anintegrated circuit Product in the form it is advertised and provided tocustomers by Licensee. One Product is subject to one royalty regardless of theextent of Licensed Technology or Licensed Microprocessors used within that oneProduct. 2.5 Withholding Taxes. All amounts owing from LICENSEE to PTSC under theAgreement and the Patent License are final amounts, and shall not be grossed-upto account for any withholding taxes, value-added taxes or other taxes, leviesor charges with respect to such amounts, including United States taxes, payableby LICENSEE, or any taxes required to be withheld by LICENSEE to the extent suchtaxes are imposed by reason of LICENSEE having a permanent establishment in anycountry or otherwise being subject to taxation by such country. 23. Reports and Audits 3.1 Within forty-five days following the end of each calendar quarterduring the term of this agreement, LICENSEE shall deliver to PTSC theappropriate running royalty payment and a statement duly verified by anexecutive of LICENSEE setting forth, in detail, by Product number the specificnumber of Units that were manufactured and/or sold during the precedingquarterly period and subject to royalty. Said detailed statement shall includeall information necessary, in combination with the current price list andcalculations, to justify the amount due for the reporting period. Such royaltypayment shall be made in U.S. dollars. In the event where no royalties are duefor two (2) consecutive quarters and it is reasonable to assume that no moreroyalties will be due under this Agreement, then all reporting obligationsplaced on LICENSEE under this Agreement shall cease as long as royalties are notactually accumulating. Should royalties ever start to accumulate again thefuture, LICENSEE shall restart quarterly reporting procedures under thisAgreement. AMD only has to begin reporting under this Agreement if the LicensedTechnology or Licensed Microprocessor deliverables begins to be used by AMD in acommercial manner, else no reporting or payment is required. 3.2 In the event PTSC elects to audit the reported sales or royaltypayments and/or reports, made by LICENSEE such audits shall only be made after30 days written notice to LICENSEE by PTSC and shall be conducted at LICENSEEplace of business. Audits cannot be conducted more than once annually.4. Confidentiality and Proprietary Rights 4.1 Confidential Information. For a period of seven (7) years followingfirst disclosure thereof, each party shall maintain in confidence theconfidential information of the other party (including samples) disclosed by theother party and identified as, or acknowledged to be confidential (the”Confidential Information”) at the time of disclosure, and shall not use,disclose or grant the use of the Confidential Information except as licensedherein or on a need-to-know basis to those directors, officers, affiliates,employees, permitted licensees, permitted assignees and agents, consultants,clinical investigators, contractors, or other people or entities reasonablyneeded in connection with such party’s activities as expressly authorized by theAgreement. To the extent that disclosure is authorized by the Agreement, priorto disclosure, each party hereto shall obtain agreement of any such Person tohold in confidence and not make use of the Confidential Information for anypurpose other than those permitted by the Agreement. Each party shall notify theother promptly upon discovery of any unauthorized use or disclosure of the otherparty’s Confidential Information, however, both parties agree to only assert oneof either breach of contract or misappropriation of trade secret claims (notboth) against a party in the event unauthorized use or disclosure ofConfidential Information. 3 4.2 Permitted Disclosures. The confidentiality obligations contained inSection 6.1 above shall not apply to the extent that (a) any receiving party(the “Recipient”) is required (i) to disclose information by law, order orregulation of a governmental agency or a court of competent jurisdiction, or(ii) to disclose information to any governmental agency for purposes ofobtaining approval to test or market a product, provided in either case that theRecipient shall provide written notice thereof to the other party and sufficientopportunity to object to any such disclosure or to request confidentialtreatment thereof; or (b) the Recipient can demonstrate that (i) the disclosedinformation was public knowledge at the time of such disclosure to theRecipient, or thereafter became public knowledge, other than as a result ofactions of the Recipient in violation hereof; (ii) the disclosed information wasrightfully known by the Recipient (as shown by its written records) prior to thedate of disclosure to the Recipient by the other party hereunder; or (iii) thedisclosed information was disclosed to the Recipient on an unrestricted basisfrom a source unrelated to any party to the Agreement and not under a duty ofconfidentiality to the other party. 4.3 Terms of the Agreement. Except as otherwise provided in Section 6.2above or as required in order to operate in accordance with applicable laws andregulations (e.g., disclosure to legal counsel, accounting firms, etc.),LICENSEE shall not disclose any terms or conditions of the Agreement to anythird party without the prior consent of the other party. Notwithstanding theforegoing, during the term of this Agreement, LICENSEE may disclose that itholds a non-exclusive license to the Licensed Technology. 4.4 Proprietary Rights. All ownership of patent rights, copyrights, tradesecret rights and other proprietary rights in the Licensed Technology shallremain with PTSC and their licensors, and no right or license is granted toLICENSEE hereunder except for the non-exclusive license expressly set forth inSection 1 above.5. TermThe term of this Agreement shall begin upon the date of execution hereof andshall continue until all intellectual property under this Agreement has expiredor ceases to be enforceable. 46. Termination 6.1 LICENSEE shall have the right to terminate this Agreement with orwithout cause on thirty (30) days written notice to PTSC provided that LICENSEEpays all fees then due and owed to PTSC. If LICENSEE is terminating for cause,then LICENSEE shall state this reason for termination in the written noticeprovided to PTSC. 6.2 If LICENSEE shall become insolvent, or shall make any assignment forthe benefit of creditors, or if LICENSEE is adjudged bankrupt, or if a voluntaryand/or involuntary bankruptcy is filed on behalf of LICENSEE, and/or if areceiver and/or trustee of LICENSEE property shall be appointed, this agreementshall immediately terminate and all orders in production shall be disposed of inaccordance with paragraph 6.3 below. No other orders shall be accepted formanufacture without the approval in writing by PTSC. LICENSEE if unable tomanufacture said orders shall offer these orders to PTSC, at their option, toproduce said orders. 6.3 If this Agreement is terminated pursuant to paragraph 6.1 or 6.2above, then, for a period of three (3) years following the effective date oftermination, LICENSEE shall have the right to complete any design activity inprogress at the time of termination but shall not begin any new design activityusing the Licensed Technology deliverables thereafter. If this Agreement isterminated pursuant to paragraph 6.1 or 6.2 above, then, LICENSEE may continueall support, marketing, and sale of products containing or using the LicensedTechnology or Licensed Microprocessor until the Products are end-of-lifed inaccordance with LICENSEE’s then current end-of-life policy. However, allproducts that continued to be sold by LICENSEE under this Section using theLicensed technology deliverables shall continue to accrue the royalties and feesset forth in this Agreement, unless this Agreement was terminated for PTSC’sbreach of this Agreement. If this Agreement is terminated by LICENSEE for PTSC’sbreach of this Agreement, LICENSEE shall be entitled to cease all royaltypayments to PTSC until the losses associated with PTSC’s breach are recouped byLICENSEE. And, any such recouped fees actually retained by LICENSEE hereundershall be offset against any monetary remedy that LICENSEE may later receiveagainst PTSC in law or equity. 6.4 The provisions of paragraphs 0, 0, 0 and 0 shall survive anyexpiration or termination hereof. Section 1 shall also survive only to theextent necessary for LICENSEE to perform in accordance with Section 6.3.7. AssignmentNeither party shall assign any rights, duties or obligations of this agreementor the subject matter of this agreement without the prior written consent of theother party, which shall not be unreasonable withheld if the assignment will notmaterial impair the parties ability to conduct business after the assignment.8. SublicenseLICENSEE shall not sublicense or transfer in any way, any right, duty orobligation under this agreement or the subject matter of this agreement unlessexpressly set forth herein.9. Representations and Warranties 9.1 Nothing in this agreement shall be construed as a warranty orrepresentation by PTSC as to the validity or scope of any patent or a warrantyor representation that anything made, used, sold, leased or otherwise disposedof under any License granted in this Agreement is or will be free frominfringement of patents of third parties. 9.2 PTSC represents and warrants that: 5 (i) it has the right to provide the licenses set forth herein; (ii) it has not assigned, exclusively licensed, or transferred any intellectual property rights within the last two years of the Effective Date of this Agreement to another party or any affiliate or subsidiary that claims or covers the Licensed Microprocessor or the Licensed Technology; (iii) any software and Licensed Technology provided under this Agreement contains no open source software and was created with no open source software of which LICENSEE was not notified of in writing prior to the Effective Date; (iv) there are no pending proceedings, mediation, arbitration, or litigation before any court, tribunal, government office, or equivalent authority anywhere in the world or any other adverse written claims or, to the actual knowledge of PTSC, no such proceedings, litigation or adverse claims have been threatened in writing, by any person or legal entity that are related to the Licensed Technology and/or Licensed Microprocessor; (v) to the actual knowledge of the PTSC, the use of the Licensed Technology and Licensed Microprocessor, as conducted by PTSC up until the Effective Date, does not infringe any intellectual property rights of any other party. (vi) the Licensed Technology and Licensed Microprocessor are free from material defect(s), function in accordance with applicable standards and documentation, and are manufactured within standard yields and performance associated generally with the fabrication facilities used by PTSC for a period of one (1) year from the Effective Date of this Agreement., (vii) that all noncompliances of the Licensed Technology and Licensed Microprocessor in the past have been corrected or subject to a proper errata that has been provided to LICENSEE. PTSC agrees to indemnify, defend, and hold LICENSEE harmless, at LICENSEE’s option, for any breach of any warranty under this Section 8. 9.3 PTSC shall be under no obligation whatsoever to institute suits toprosecute infringers under any patent directed to products containing theLicensed Technology nor shall PTSC be in any way responsible or liable toLICENSEE for failure to prosecute infringers. If PTSC elects to prosecute anyinfringers, the conduct of such suit shall be directed by and any recoveriestherefrom shall belong entirely to PTSC.10. LiabilityLICENSEE shall indemnify and hold PTSC harmless against third parties for anyand all claims relating to or arising from the use, manufacture or supply ofProducts by LICENSEE, except to the extent such claim is based on content or usesolely of the Licensed Technology and/or Licensed Microprocessor as provided byPTSC. Except with respect to breaches of confidentiality or indemnityobligations, in no event shall either party be liable for any indirect, specialor consequential damages, such as loss of anticipated profits or any othereconomic loss in connection with or arising out of this Agreement. Except forbreaches of warranty or indemnity obligations under this Agreement, theaggregate liability of a party to this Agreement shall be capped at the totalamount paid by LICENSEE to PTSC under this and related Agreements. 613. NoticesAll notices required or permitted under this agreement shall be in writing andshall be effective upon receipt, and addressed to the respective parties attheir addresses set forth below or to any other address designated by theparties at a later date.LICENSEE PTSC- ——– —-5204 East Ben White Boulevard 10989 Via FronteraAustin, Texas 78741 San Diego, California 92127Attn: General Counsel14. SeverabilityEach provision of this Agreement is severable from all other provisions of thisAgreement and if one or more of the provisions herein is declared invalid, theremaining provisions shall, nevertheless, remain in full force and effect;provided, however, if any paragraph shall be declared invalid, LICENSEE and PTSCshall execute, as soon as possible, a supplemental agreement to restore, to theextent legally possible, the protection by said paragraph.15. Attorney Fees and Choice of LawThis agreement shall be governed by and construed in accordance with the laws ofthe State of California applicable to contracts made and to be performed whollyin that State. Venue for the determination of any dispute or controversy orclaim between PTSC and LICENSEE, arising out of or relating to this LicenseAgreement or the breach, termination, interpretation, or invalidity thereof,shall be proper in California. The prevailing party in any action to enforce orotherwise interpret this Agreement shall be entitled to reasonable legal feesand also for reimbursement of all other costs incurred in such an action.16. HeadingsThe headings or titles of the paragraphs of this agreement are for convenienceonly, are not a part of this agreement, and shall not be used as an aid inconstruction of any provision thereof.17. WaiverNo waiver of, acquiescence in or consent to any breach of or default under thisagreement shall be deemed a waiver of, acquiescence in or consent to any otherbreach or default occurring at any time.18. CounterpartsThis agreement may be executed in several counterparts, each of which shallconstitute an original, but all of which together shall constitute one and thesame instrument. The headings contained in the agreement have been inserted forconvenience of reference only and shall not modify, define, expand or limit anyof the provisions of this agreement.19. Complete AgreementThis document constitutes the complete agreement between the parties andsupersedes any prior understanding and agreements between and among them withrespect to the subject matter. There are no representations, agreements,arrangements or understandings, oral or written, between the parties heretorelating to the subject matter of this Agreement which are not fully expressedherein. This Agreement shall not be amended or rescinded except by a furtherwritten agreement execute by both parties. 7IN WITNESS WHEREOF, LICENSEE and PTSC have caused this License Agreement to beexecuted in duplicate originals by their duly authorized representative each ofwhom in executing this document warrants his or her authority to bind theirrespective company to this Agreement.PTSC: Patriot Scientific, Inc. A Delaware corporation By: /S/ J.E. WALLIN ————————————- J. E. Wallin Title: CEO Dated: February 21, 2005LICENSEE: Advanced Micro Devices By: /S/ HARRY A. WOLIN ————————————- Harry A. Wolin Title: Senior Vice President and General Counsel Dated: February 21, 2005[***]* Confidential treatment has been requested for portions of this exhibit.The copy filed herewith omits the information subject to the confidentialityrequest. Omissions are designated as ***. A complete version of this exhibit hasbeen filed separately with the Securities and Exchange Commission. 8