AGREEMENT WITH REGARD TO EXERCISE PRICE RESETS
AND 4.99% LIMITATION
THIS AGREEMENT WITH REGARD TO EXERCISE PRICE RESETS AND 4.99% LIMITATION
(the "Agreement") is entered into as of February 9, 2006, by and among Patriot
Scientific Corporation, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company" or "Patriot") and Lincoln Ventures, LLC
(hereinafter referred to as "Lincoln" or the "Investor").
RECITALS:
WHEREAS, prior to the date hereof the Company and Lincoln have entered
into each of the convertible debentures (the "Debentures") described in the
table below. Concurrently with each Debenture, the Company and Lincoln entered
into a set of Related Documents. For purposes hereof, "Related Documents" shall
include the Securities Purchase Agreement, Registration Rights Agreement,
Warrant and any other agreement entered into concurrently or in conjunction with
the Debentures.
Chronological Number Date of Issuance
of Debenture and Debenture and Dollar Amount of Number of Shares of
Related Documents Related Documents Debenture Warrant Fixed Price
----------------- ----------------- --------- ------- -----------
1 4-23-2002 Converted 2,514,809 $0.03686
2 6-10-2002 Converted 7,674,853 $0.015
3 12-16-2002 Converted 1,428,571 $0.015
4 1-24-2003 Converted Exercised N/A
5 3-24-2003 Converted 3,963,414 $0.015
6 5-20-2003 Converted Exercised N/A
7 6-9-2003 Converted 2,307,692 $0.015
8 8-5-2003 Converted Exercised N/A
9 9-22-2003 Converted Exercised N/A
10 10-21-2003 Converted 2,142,857 $0.035
11 1-23-2004 Converted Exercised N/A
12 3-24-2004 Converted 3,366,727 $0.015
13 5-11-2004 Converted 6,951,428 $0.0336
14 11-17-04 $25,000 in 9,431,137 $0.0167
outstanding
principal
13 11-18-04 Converted 4,000,000 $0.025
WHEREAS, the warrants described in the table above shall be referred to
herein as the "Lincoln Warrants," and the Securities Purchase Agreements
accompanying the Debentures described in the table above shall be referred to
herein as the "Securities Purchase Agreements."
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WHEREAS, the Company and Lincoln entered into an Amendment to Warrants
dated as of March 24, 2004 (the "First Amendment to the Warrants");
Whereas, any warrants to purchase common stock of PATRIOT that have been
issued to Lincoln by Patriot for any reason at any time in the past up through
and including the date hereof, including but not limited to Lincoln Warrants in
the above table, are referred to herein as the "Lincoln Warrants;"
Whereas, any agreements that have been entered into between Patriot and
Lincoln at any time up through and including the date hereof, including but not
limited to the above listed agreements and Related Documents, and any Debentures
and Warrants issued by the Company to Lincoln, including but not limited to the
Lincoln Debentures and the Lincoln Warrants specified in the above table, are
collectively referred to herein as the "Lincoln Agreements;"
Whereas, the PARTIES mutually desire to enter into this Agreement.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged:
1. LOWEST RESET PRICE. For purposes hereof, "Fixed Price" shall have the meaning
set forth in the above table in the first recital to this Agreement, with
respect to each Debenture and Warrant listed on such table.
2. RESET PROVISION IN THE LINCOLN WARRANTS. Each Lincoln Warrant is hereby
amended to add the following language to the end of last sentence of the first
paragraph of Section 3 thereof:
" provided that, after February 1, 2006, the "Lowest Reset Price" shall
equal the Fixed Price, as defined in that certain Agreement With Regard
to Exercise Price Resets And 4.99% Limitation (the "Reset Fixing
Agreement") entered into as of February 9, 2006, by and among Patriot
Scientific Corporation and Lincoln Ventures, LLC taking into account,
as appropriate, any adjustments made pursuant to Section 5 hereof."
3. RESET PROVISION IN THE LINCOLN DEBENTURES. Each Lincoln Debenture is hereby
amended to add the following language to the end of Section 1.2(b) thereof:
"Notwithstanding the above, after February 1, 2006, the "Conversion
Price" shall be reset to equal the Fixed Price, as defined in that
certain Agreement With Regard to Exercise Price Resets and 4.99%
Limitation (the "Reset Fixing Agreement") entered into as of February
9, 2006, by and among Patriot Scientific Corporation and Lincoln
Ventures, LLC (subject to equitable adjustments for stock splits, stock
dividends or rights offerings by the Borrower relating to the
Borrower's securities or the securities of any subsidiary of the
Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events), and shall not be reset
thereafter."
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4. EXPANSION OF 4.99% PROVISIONS TO 9.99%. To the extent that any provision in
any of the Lincoln Agreements limits the ability of Lincoln, through the
exercise of warrants, the conversion of debentures, or otherwise, to acquire
shares of the Common Stock of the Company, so that Lincoln cannot at any time be
the beneficial owner of more than 4.99% of the Common Stock of the Company, any
and all such provisions are hereby amended to substitute the figure 9.99% for
the figure 4.99%.
5. NO FURTHER MODIFICATION. Except as set forth in this Agreement and in the
Waiver and Agreement entered into by the parties concurrently with this
Agreement, all of the terms and provisions of the Lincoln Agreements in effect
as of the date of this Agreement shall remain unmodified and in full force and
effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this 9th day of February, 2006.
PATRIOT SCIENTIFIC CORP. LINCOLN VENTURES, LLC
By: By:
------------------------------------ -----------------------------
David H. Pohl Roy A. Adams, Manager
Chief Executive Officer
By:
------------------------------------
Thomas J. Sweeney
Chief Financial Officer
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