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The Master Agreement

posted on Jan 25, 2010 10:38PM
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Master Agreement

Entities:
Date:
2006
Size:
111K
ID:
#2266216

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MASTER AGREEMENT


by and among



PATRIOT SCIENTIFIC CORPORATION

and

TECHNOLOGY PROPERTIES LIMITED INC.

and

CHARLES H. MOORE




Dated as of June 7, 2005









***
Indicates material omitted pursuant to an application for confidential treatment and that material has been filed separately with the Commission.


TABLE OF CONTENTS

Page
ARTICLE I
DEFINITIONS
3
1.1
Definitions
3
1.2
Index of Other Defined Terms
5
ARTICLE II
THE TRANSACTIONS
5
2.1
Execution of Ancillary Agreements
5
2.2
Formation of Delaware Limited Liability Companies
6
2.3
Patriot License to Intel
6
2.4
Stipulated Final Judgment
6
2.5
Delivery of Intel Proceeds
6
2.6
Closing
6
2.7
Actions at Closing
6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PATRIOT
7
3.1
Corporate Existence and Power
7
3.2
Authorization
7
3.3
Governmental Authorization
7
3.4
Non-Contravention
7
3.5
Absence of Certain Changes or Events.
8
3.6
Intellectual Property.
8
3.7
Litigation
8
3.8
Advisory Fees
9
3.9
Bulk Sales
9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TPL
9
4.1
Organization and Existence
9
4.2
Corporate Authorization
9
4.3
Governmental Authorization
9
4.4
Non-Contravention
9
4.5
Absence of Certain Changes or Events.
10
4.6
Intellectual Property.
10
4.7
Litigation
10
4.8
Advisory Fees
11
4.9
Bulk Sales
11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MOORE
11
5.1
Authorization
11
5.2
Governmental Authorization
11
5.3
Non-Contravention
11
5.4
Absence of Certain Changes or Events.
11
5.5
Intellectual Property.
11
5.6
Litigation
12
5.7
Advisory Fees
12
i
ARTICLE VI
COVENANTS OF PATRIOT
12
6.1
Court Approval of Stipulated Final Judgment
12
6.2
Retention of Rights; No Action With Respect to the MSD Patents
12
ARTICLE VII
COVENANTS OF ALL PARTIES
13
7.1
Protection and Maintenance of the MSD Patents
13
7.2
Commercialization Program.
13
7.3
Further Assurances
13
7.4
Certain Filings
14
7.5
Notification
14
7.6
Public Announcements
14
7.7
No Interference
14
7.8
No Transfer
15
7.9
Litigation Cooperation
15
ARTICLE VIII
CONDITIONS TO CLOSING
15
8.1
Conditions to Obligations of Each Party
15
8.2
Conditions to Obligations of TPL
16
8.3
Conditions to Obligations of Patriot
16
ARTICLE IX
INDEMNIFICATION
17
9.1
Patriot Agreement to Indemnify
17
9.2
TPL Agreement to Indemnify
17
9.3
Moore Agreement to Indemnify
18
9.4
Survival of Representations, Warranties and Covenants
18
9.5
Claims for Indemnification
18
9.6
Defense of Claims
18
ARTICLE X
TERMINATION
19
10.1
Grounds for Termination
19
10.2
Effect of Termination.
21
ARTICLE XI
MISCELLANEOUS
21
11.1
Notices
23
11.2
Amendments; No Waivers.
23
11.3
Expenses
23
11.4
Successors and Assigns
23
11.5
Governing Law
23
11.6
Counterparts; Effectiveness
23
11.7
Entire Agreement
23
11.8
Captions
24
11.9
Severability
24
11.10
Construction
24
11.11
Cumulative Remedies
24
11.12
Specific Performance
24
11.13
Third-Party Beneficiaries
24
11.14
No Liability of Intel
24
11.15
No Punitive, Exemplary, or Consequential Damages
25

ii

EXHIBITS

EXHIBIT A Stipulated Final Judgment
EXHIBIT B Operating Agreement (Exhibit 10.42)
EXHIBIT C Newco License
EXHIBIT D Commercialization Agreement (Exhibit 10.41) ***
EXHIBIT E Escrow Agreement ***
EXHIBIT F-1 Consent and Release Agreement
EXHIBIT F-2 Consent and Release Agreement
EXHIBIT G Form of Merger Agreement
EXHIBIT H Patriot License to Intel ***
EXHIBIT I Form of Warrant
EXHIBIT J Form of Registration Rights Agreement

iii

AGREEMENT

This AGREEMENT (this Agreement), dated as of June 7, 2005, is by and among PATRIOT SCIENTIFIC CORPORATION, a Delaware corporation having its principal offices located at 10989 Via Frontera, San Diego, CA 92127 (Patriot), TECHNOLOGY PROPERTIES LIMITED INC., a California corporation having its principal offices located at 21730 Stevens Creek Blvd., Suite 201, Cupertino, CA 95014 (TPL), and Charles H. Moore, an individual whose principal residence is in Sierra County, California (Moore).

R E C I T A L S

WHEREAS, Patriot is engaged in the business of developing, marketing, and selling microprocessors and microprocessor technology, as well as other complementary products;

WHEREAS, TPL is engaged in the business of developing, managing, and commercializing intellectual property assets and proprietary product technology;

WHEREAS, Patriot, TPL and Moore are involved in the Inventorship Litigation (as defined below) with respect to the ownership of rights and interests in certain microprocessor science and design patents identified on Schedule 1 attached hereto (the MSD Patents);

WHEREAS, Patriot has initiated the Infringement Litigation (as defined below), which has been stayed pending the outcome of the Inventorship Litigation;

WHEREAS, the Patriot security holders identified on Schedule 2 attached hereto (the Patriot Rights Holders) have certain rights with respect to the transactions contemplated by this Agreement;

WHEREAS, to resolve the Inventorship Litigation and disagreements among the parties, provide funds to Patriot to finance its operations, and provide for the effective commercialization of the MSD Patents, the parties have agreed that:

A. Patriot, TPL and Moore will enter into this Agreement; Patriot and TPL will enter into the Operating Agreement attached hereto as Exhibit B (the Operating Agreement); Patriot, TPL, and P-Newco will enter into the Commercialization Agreement attached hereto as Exhibit D (the Commercialization Agreement); Patriot and TPL will enter into the Warrant substantially in the form attached hereto as Exhibit I (the Warrant), as well as the Registration Rights Agreement substantially in the form attached hereto as Exhibit J (the Registration Rights Agreement) ; and Patriot and TPL will open an escrow account (the Escrow Account) and enter into an escrow agreement substantially in the form attached hereto as Exhibit E (the Escrow Agreement) to facilitate the transactions contemplated by this Agreement;

B. Patriot has entered into a license in respect of the MSD Patents with Intel Corporation (Intel), attached hereto as Exhibit H (the Patriot License to Intel);

C. As soon as possible after the date hereof, Patriot, TPL and Moore will settle all litigation among them pursuant to the Stipulated Final Judgment substantially in the form attached hereto as Exhibit A (the Stipulated Final Judgment), and will take any and all action necessary to cause the trade secrets litigation currently pending between Patriot and TPL in Santa Clara Superior Court (the Trade Secrets Litigation) to be dismissed without prejudice, and the Infringement Litigation involving Intel and Patriot shall be dismissed with prejudice;

D. As soon as possible after the date hereof, TPL will request that Intel deliver all of the unpaid Milestone Payments (as defined in the Intel Patent License Agreement) pursuant to Section 3.2 of the Intel Patent License Agreement to the account set forth on Exhibit A to the Escrow Agreement, and the rights of Patriot and TPL with regard to the Milestone Payments shall thereafter be as set forth in the Escrow Agreement;

E. Patriot will form a wholly owned subsidiary (P-Newco), and Patriot and P-Newco will enter into a license with respect to certain of Patriots rights in the MSD Patents, substantially in the form attached hereto as Exhibit C;

F. TPL will form a wholly owned subsidiary (T-Newco), and TPL and T-Newco will enter into a license with respect to certain of TPLs rights in the MSD Patents, substantially in the form attached hereto as Exhibit C (collectively with the license entered into between Patriot and P-Newco identified in Recital E above, the Newco Licenses );

G. Patriot, TPL, T-Newco and P-Newco will enter into an agreement and plan of merger substantially in the form attached hereto as Exhibit G (the Merger Agreement) pursuant to which T-Newco will merge with and into P-Newco, with P-Newco continuing as the surviving entity;

H. Upon the earlier of (a) the mutual agreement of Patriot, TPL, and P-Newco, or (b) three months from the date hereof, P-Newco will grant to TPL its rights in the MSD Patents (the Grant) in furtherance of the commercialization program contemplated by the Commercialization Agreement, in the form attached as Exhibit 1 to the Commercialization Agreement;

I. TPL will cause the Patriot Cash Consideration (as defined below) to be paid to Patriot at Closing from the funds in the Escrow Account pursuant to the terms of the Escrow Agreement;

J. TPL will cause One Million Dollars ($1,000,000) of TPLs funds in the Escrow Account, and Patriot will cause at least One Million Dollars ($1,000,000) of Patriots funds in the Escrow Account, to be paid in cash at Closing, to the Patriot Rights Holders in exchange for the Patriot Rights Holders entering into a consent and release agreement substantially in one of the alternate forms attached as Exhibits F-1 or F-2 hereto (the Consent and Release Agreement);

K. TPL will cause Two Million Dollars ($2,000,000) of TPLs funds in the Escrow Account to be contributed in cash at Closing to P-Newco as TPLs first installment of the Working Capital Contribution;

L. Patriot will cause Two Million Dollars ($2,000,000) of Patriots funds in the Escrow Account to be contributed in cash at Closing to P-Newco as Patriots first installment of the Working Capital Contribution; and

M. P-Newco will allocate the proceeds generated from the commercialization program to Patriot and TPL pursuant to the terms of the Commercialization Agreement and the Operating Agreement.

2
A G R E E M E N T

NOW, THEREFORE, in consideration of the foregoing premises, and their respective representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows.

ARTICLE I
DEFINITIONS
1.1 Definitions

. The following terms, as used herein, have the following meanings:

Applicable Law means any domestic or foreign, federal, state or local statute, law, common law, ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree, permit or other requirement of any Governmental Authority.

Business Day means a day other than a Saturday, Sunday or other day on which commercial banks in San Diego, California are authorized or required by law to close.

Damages means all demands, claims, actions or causes of action, assessments, losses (including reasonably foreseeable lost profits), damages, costs, expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges and amounts paid in settlement (net of insurance proceeds and proceeds from related third party indemnification, contribution or similar claims actually received), including (a) interest at a rate equal to 200 basis points above the prime rate, as in effect from time to time, of Citibank, N.A., on cash disbursements in respect of any of the foregoing, compounded quarterly, from the date each such cash disbursement is made until the Person incurring the same shall have been indemnified in respect thereof, (b) reasonable costs, fees and expenses of such Persons Representatives and (c) any reasonable costs, fees and expenses incurred in connection with investigating, defending against, or settling any such claims.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Governmental Authority means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

Gross Cash Proceeds means all cash proceeds received pursuant to licenses, judgments, settlements and other payments with respect to the right to make, use, sell and offer to sell products subject to the MSD Patents.

Indemnifying Party means: (a) with respect to any TPL Indemnitee asserting a claim under Section 9.1, Patriot; (b) with respect to any Patriot Indemnitee asserting a claim under Section 9.2, TPL; and (c) with respect to any Patriot/TPL Indemnitee asserting a claim under Section 9.3, Moore.

Indemnitee means: (a) the TPL Indemnitees with respect to any claim for which Patriot is an Indemnifying Party under Section 9.1; (b) the Patriot Indemnitees with respect to claims for which TPL is an Indemnifying Party under Section 9.2; and (c) the Patriot/TPL Indemnitees with respect to any claim for which Moore is an Indemnifying Party under Section 9.3.

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