WAIVER AND AGREEMENT
THIS WAIVER AND AGREEMENT (the "Agreement" or "Waiver and 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 Xxxxxx Private Equity, LLC
(hereinafter referred to as "SPE" or the "Investor").
RECITALS:
Whereas, pursuant to agreements between the parties, PATRIOT issued
certain warrants and other securities to SPE;
Whereas, SPE has agreed to waive its rights to receive a portion of the
dividends to which it would otherwise entitled under the terms of the following
warrants (collectively, the "Subject Warrants") which remain outstanding as of
the date hereof:
Holder Date of Issuance Warrant # Number of Shares
------ ---------------- --------- ----------------
SPE 1/1/2004 3,051,299
SPE 3/23/2004 8,035,192
SPE 10/1/2003 1,557,653
SPE 4/1/2004 5,240,211
SPE 2/15/2002 206,250
SPE 2/1/2006 7,000,000
Whereas, the PARTIES mutually desire to enter into this Waiver and
Agreement.
TERMS:
NOW, THEREFORE, the parties agree as follows:
1. PARTIAL WAIVER OF DIVIDENDS. Section 5(a) of each of the Subject Warrants is
hereby amended and restated to read in full as follows:
5. Anti-Dilution Adjustments.
(a) Distribution. If at any time after the Issue Date hereof, the
Company shall declare or make any distribution of its assets (or rights to
acquire its assets) or shares of its capital stock (other than Common Stock) to
Holders of Common Stock of the Company as a partial liquidating dividend, by way
of return of capital or otherwise (including any dividend or distribution to the
Company's shareholders in cash or shares [or rights to acquire shares] of
capital stock of any other public or private company, including but not limited
to a subsidiary or spin-off of the Company (a "Distribution")), then the Holder
of this Warrant shall be entitled to immediately receive the amount of such
distribution (in kind) which would have been payable to the Holder with respect
to the shares of Common Stock issuable upon a Full Exercise (as defined below)
of this Warrant as of the declaration of such dividend (without regard to any
contractual, legal or regulatory limitations on the amount of such conversion),
had such Holder been the holder of such shares of Common Stock on the record
date for determination of shareholders entitled to such Distribution. For
purposes of this subsection 5(a), with respect to a given Distribution, "Full
Exercise" (i) shall mean a full Cash Exercise, if the Market Price (as defined
herein), as determined on the record date ("Record Date") for determination of
shareholders entitled to the subject Distribution is less than $.15, and (ii)
shall mean a full Cashless Exercise, if the Market Price, as determined on the
Record Date, is greater than or equal to $.15.
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2. NO FURTHER MODIFICATION. Except as set forth in this Agreement and/or the
Agreement with regard to Exercise Price Resets and 4.99% Limitation entered into
by the parties concurrently with this Agreement, all of the terms and provisions
of the Subject Warrants 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.
COMPANY: XXXXXX PRIVATE EQUITY, LLC
PATRIOT SCIENTIFIC CORPORATION
By: By:
------------------------------------ -----------------------------
Xxxxx X. Xxxx Xxxx X. Xxxxxx, Manager
Chief Executive Officer
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Chief Financial Officer
ADDRESS:
Patriot Scientific Corporation
00000 Xxx Xxxxxxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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