Exhibit 10.4


 




 





 


AMENDMENT
NO. 2


TO NOTE
PURCHASE AGREEMENT


DATED AS
OF SEPTEMBER 5, 2008


 


 


dated as of November 5, 2009


 


 


by and among


 


XPLORE TECHNOLOGIES CORP.,


 


 


XPLORE TECHNOLOGIES CORPORATION OF AMERICA,


 


 


PHOENIX
VENTURE FUND LLC,


as
Agent for the Purchasers,


 


and


 


MAJORITY
PURCHASERS


 




 





 

















 


This AMENDMENT NO.
2 TO  NOTE PURCHASE AGREEMENT DATED AS OF SEPTEMBER 5, 2008
is entered into as of November 5, 2009 (this “Amendment Agreement”) by and among
XPLORE TECHNOLOGIES CORP., a Delaware corporation (the “Parent”), XPLORE
TECHNOLOGIES CORPORATION OF AMERICA, a Delaware corporation (the “Subsidiary”,
and together with the Parent, the “Borrowers”), PHOENIX VENTURE FUND
LLC, a Delaware limited liability company, as agent for the Purchasers (the “Agent”),
and the Purchasers holding at least 51% of the aggregate principal amount of
the Notes currently outstanding (the “Majority Purchasers”), as such
Majority Purchasers are identified on the signature pages hereto.


 


W I T N E S S E T H:


 


WHEREAS, the Borrowers
and certain Purchasers are parties to the Note Purchase Agreement, dated as of September
5, 2008, as amended by that certain side letter dated October 21, 2008, that
certain side letter dated February 27, 2009 and that certain Amendment No. 1 to
Note Purchase Agreement dated as of September 5, 2008 (such Note Purchase
Agreement, as so amended, the “Original NPA”), pursuant to which the
Borrowers (a) on the Initial Closing Date, sold to the Initial Purchasers the
Initial Closing Notes and issued to the Initial Purchasers the Initial Closing
Warrants, and such Initial Purchasers purchased such Initial Closing Notes and such
Initial Closing Warrants from the Borrowers, and (b) on the Subsequent Closing
Date, sold to the Additional Purchasers the Additional Notes and issued to the
Additional Purchasers the Additional Warrants, and such Additional Purchasers
purchased such Additional Notes and such Additional Warrants from the
Borrowers;


 


WHEREAS,
the Borrowers desire to issue one or more senior secured promissory notes in
the aggregate principal amount of up to $3,300,000 (the “Fall 2009 Notes”),
pursuant to that certain Note Purchase Agreement, dated as of November 5, 2009
(the “Fall 2009 Note Purchase Agreement”), by and among the Borrowers
and the purchasers listed on the Schedule I and Schedule II thereto from time
to time (the “Fall 2009 Purchasers”);


 


WHEREAS,
in connection with the sale and issuance of the Fall 2009 Notes, the Borrowers
desire the Purchasers to subordinate the indebtedness under the Notes and the
security interest of the Purchasers in the Collateral to the indebtedness under
the Fall 2009 Notes pursuant to the terms of the Fall 2009 Note Purchase
Agreement;


 


WHEREAS,
Section 11.8 of the Original NPA provides that, subject to Section 11.18 of the
Original NPA, any term of the Original NPA may be amended, and the observance
of any term hereof may be waived (either generally or in a particular
instance), with the written consent of the Agent, acting on behalf of the
Purchasers, and the Borrowers, and that any amendment or waiver effected in
accordance with such Section 11.8 shall be binding upon each of the parties to
the Original NPA;


 


WHEREAS,
Section 11.18(b) of the Original NPA provides that the Agent and the Borrowers
shall not, without the prior written consent and approval of the Majority
Purchasers, amend, modify, terminate or obtain a waiver of any provision of the
Original NPA, or any


 

















 


other
Loan Document, which will have the effect of (a) reducing the principal amount
of any Notes or of any payment required to be made to the holders thereof, or
modifying the terms of a payment or prepayment thereof, (b) reducing the rate
or extending the time for payment of principal or interest under any Notes, or (c)
releasing any Collateral; and


 


WHEREAS,
the Majority Purchasers are willing to (a) agree to the subordination described
in the third whereas clause hereof and to enter into this Amendment Agreement
to provide for the amendments described herein and (b) consent to the Agent’s
entry into that certain Subordination Agreement, dated as of the date hereof
(as amended, supplemented or modified from time to time, the “Subordination
Agreement”), among the Borrowers, SG Phoenix LLC, as agent for the Fall
2009 Purchasers, the Agent, the Majority Purchasers and the purchasers holding
at least 51% of the aggregate principal amount of the notes issued under that
certain Note Purchase Agreement, dated as of February 27, 2009, as amended, by
and among the Borrowers and the purchasers thereunder (the “Spring 2009
Majority Purchasers”), to permit, among other things, such subordination.


 


NOW,
THEREFORE, in consideration of the premises and agreements contained in this
Agreement, and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, THE PARTIES HERETO AGREE AS FOLLOWS:


 


SECTION 1.         DEFINITIONS IN THIS AMENDMENT AGREEMENT


 


Except
as otherwise defined in this Amendment Agreement (including the preamble and
the whereas clauses hereof), capitalized terms are used herein with the
meanings ascribed to such terms in the Original NPA.


 


SECTION 2.         CONSENT OF MAJORITY
PURCHASERS TO AMENDMENTS TO ORIGINAL NPA


 


Each
of the undersigned Majority Purchasers hereby represents and warrants that it holds
the principal amount of the Notes currently outstanding as set forth below its
signature hereto. Such undersigned Majority Purchaser hereby consents to entry
into this Amendment Agreement and the Agent’s entry into this Amendment
Agreement and the Subordination Agreement, such consent to be evidenced by the
execution of this Amendment Agreement by such Majority Purchasers.


 


SECTION 3.         AMENDMENTS TO
ORIGINAL NPA


 


3.1           Amendment to Section 2.3 of the
Original NPA.  Section 2.3 of the
Original NPA is hereby amended and restated in its entirety to read as follows:


 


“2.3         Subordination.  The right of repayment of the Note
Indebtedness and the Liens of the Purchasers in the assets of the Borrowers
shall be subordinated only to (a) the rights and Liens of Silicon Valley Bank (“SVB”)
under the Amended and Restated Loan and Security Agreement by and between SVB
and the Subsidiary dated as of September 11, 2009 (as the same may from 


 


2

















 


time to time be further
amended, modified, supplemented or restated, the “Senior Credit Agreement”),
in accordance with the subordination agreement in substantially the form
attached hereto as Exhibit D (the “SVB Subordination Agreement), (b)
the rights and Liens of the purchasers listed on Schedule I and Schedule II
(the “Fall 2009 Purchasers”) to the Note Purchase Agreement, dated as of
November 5, 2009, by and among the Borrowers and the Fall 2009 Purchasers (as
the same may from time to time be further amended, modified, supplemented or
restated, the “Fall 2009 Note Purchase Agreement”), under the Fall 2009
Note Purchase Agreement in accordance with the subordination agreement in
substantially the form attached hereto as Exhibit F (the “Subordination
Agreement”), and (c) the rights of any Senior Lender in connection with any
Senior Credit Facility acceptable to the Agent, acting on behalf of the
Purchasers, pursuant to a subordination agreement containing terms no less
favorable, as a whole, to the Purchasers than the terms of the SVB Subordination
Agreement.”


 


3.2.          Amendments to, and Addition of,
Certain Definitions in Section 9 of the Original NPA.


 


(a)           Amendment to Definition of “Loan
Documents” in Section 9 of the Original NPA.  The definition of “Loan Documents” in Section
9 of the Original NPA is hereby amended and restated in its entirety to read as
follows:


 


““Loan Documents” shall mean the
Notes, the Security Agreement, Amendment No. 1 to the Security Agreement,
Amendment No. 2 to the Security Agreement, Amendment No. 3 to the Security
Agreement, the SVB Subordination Agreement, the Subordination Agreement, the
Warrants and all agreements related hereto and thereto.”


 


(b)           Amendment to Definition of “Maturity
Date” in Section 9 of the Original NPA. 
The definition of “Maturity Date” in Section 9 of the Original NPA is
hereby amended and restated in its entirety to read as follows:


 


““Maturity Date” shall mean, with respect to
any Note, December 31, 2011.”


 


(c)           Amendment to Definition of “Permitted
Liens” in Section 9 of the Original NPA. 
Clauses (vi) and (vii) of the definition of “Permitted Liens” in Section
9 of the Original NPA are hereby amended and restated in their entireties to
read as follows:


 


“(vi) the Liens evidenced by UCC-1 filings in
favor of CIT Bank regarding all computer equipment and peripherals referenced
in the Loan Agreement #007139097-005 dated August 24, 2005, and secured by
UCC-1 filing number 52719061, and (vii) Liens in favor of the Fall 2009
Purchasers granted to them by the Borrowers under the Fall 2009 Note Purchase
Agreement.”


 


3

















 


(d)           Amendment to Definition of “Warrant
Exercise Price” in Section 9 of the Original NPA.  The definition of “Warrant Exercise Price” in
Section 9 of the Original NPA is hereby amended and restated in its entirety to
read as follows:


 


““Warrant Exercise Price” shall mean $0.10
per share.”


 


(e)           Addition of Certain Definitions to
Section 9 of the Original NPA.  The
following definitions are hereby added to Section 9 of the Original NPA:


 


““Amendment No. 1 to the Security
Agreement” shall mean that certain Amendment No. 1 to the Security
Agreement, dated as of February 27, 2009, to the Security Agreement by and
among the Borrowers and the Agent.”


 


““Amendment No. 2 to the Security
Agreement” shall mean that certain Amendment No. 2 to the Security
Agreement, dated as of May 29, 2009, to the Security Agreement by and among the
Borrowers and the Agent.”


 


““Amendment No. 3 to the Security
Agreement” shall mean that certain Amendment No. 3 to the Security
Agreement, dated as of November 5, 2009, to the Security Agreement by and among
the Borrowers and the Agent.”


 


““Fall 2009 Note Purchase Agreement”
shall have the meaning ascribed to it in Section 2.3.”


 


““Fall 2009 Purchasers” shall have the
meaning ascribed to it in Section 2.3.”


 


““SVB Subordination Agreement” shall
have the meaning ascribed to it in Section 2.3.”


 


(f)            Deletion of Certain Definitions to Section 9 of the
Original NPA.  The definition of
Additional Subordination Agreement is hereby deleted in its entirety from Section
9 of the Original NPA.


 


3.3           Amendment to Section 11.18(a) of
the Original NPA.  Section 11.18(a) of
the Original NPA is hereby amended by deleting in its entirety clause (i) and
inserting in lieu thereof the following:


 


“(i) be its true and lawful attorney in its name and
on its behalf to execute, deliver, amend, waive, terminate or otherwise modify
any Loan Document, subject to Section 11.18(b), and exercise all rights and
powers granted to the Purchasers, and/or the Agent, acting on behalf of the
Purchasers, under this Agreement and the Loan Documents, together with such
powers as are reasonably 


 


4

















 


incidental
thereto (including entering into any amendment, waiver or modification subject
to Section 11.18(b)),”


 


3.4           Amendment of Exhibit F to the
Original NPA.  Exhibit F to the
Original NPA is hereby deleted and replaced by the Subordination Agreement as
defined in Section 2.3, as such Exhibit F is set forth under the Appendix
hereto.


 


3.5           Acknowledgment of Termination of Additional
Subordination Agreement.  The Majority
Purchasers acknowledge and agree to the termination, as of the date hereof, of
that certain subordination agreement, dated as of May 29, 2009, by and among
Philip Sassower and Susan Sassower, the Agent, the Majority Purchasers and the
Spring 2009 Majority Purchasers.


 


SECTION 4.         EFFECTIVENESS OF AMENDMENTS


 


The amendments to the
Original NPA contained in this Amendment Agreement shall become effective on
and as of the date hereof.  From and
after such date, each reference in the Original NPA (including the schedules
and exhibits thereto) to the “Agreement”, or any like expression referring to
the Original NPA, shall be deemed to refer to the Original NPA as amended by
this Amendment Agreement.  The Original NPA,
other than as amended hereby, shall remain unchanged and in full force and
effect.


 


SECTION 5.         MISCELLANEOUS


 


5.1           Severability.  Whenever possible, each provision of this
Amendment Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Amendment Agreement is
held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Amendment Agreement will be reformed, construed and enforced in such
jurisdiction to the greatest extent possible to carry out the intentions of the
parties hereto.


 


5.2           Titles and Subtitles.  The titles and subtitles used in this
Amendment Agreement are used for convenience only and are not to be considered
in construing or interpreting this Amendment Agreement.


 


5.3           Governing Law; Consent to
Jurisdiction.  This Amendment Agreement
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of New York, excluding the
application of any conflicts of laws principles which would require the
application of the Laws of another state. Each of the parties hereto hereby
irrevocably consents to the (non-exclusive) jurisdiction of the courts of the
State of New York and of any Federal court located therein in connection with
any suit, action or other proceeding arising out of or relating to this
Amendment Agreement and waives any objection to venue in the State of New York.


 


5

















 


5.4           Counterparts. This Amendment
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


 


[Signatures follow.]


 


6

















 


IN WITNESS WHEREOF, the parties hereto have
caused this Amendment Agreement to be duly executed by their respective
officers as of the day and year first above written.


 


 


	
  BORROWERS:

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael J. Rapisand

  
	
   

  	
   

  	
  Name:
  

  	
  Michael
  J. Rapisand

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael J. Rapisand

  
	
   

  	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AGENT:

  	
  PHOENIX
  VENTURE FUND LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  SG
  Phoenix Ventures LLC,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Andrea Goran

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrea
  Goran

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Member

  
						



 


Amendment
No. 2 to Note Purchase Agreement dated as of September 5, 2008


 

















 


	
  MAJORITY
  PURCHASERS:

  	
  PHOENIX
  VENTURE FUND LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  SG
  Phoenix Ventures LLC,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Andrea Goran

  
	
   

  	
   

  	
  Name:
  

  	
  Andrea
  Goran

  
	
   

  	
   

  	
  Title:

  	
  Member

  
	
   

  	
  Principal
  amount of Notes currently outstanding held: $940,000.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PHOENIX
  ENTERPRISES FAMILY FUND LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Philip Sassower

  
	
   

  	
   

  	
  Name:
  

  	
  Philip
  Sassower

  
	
   

  	
   

  	
  Title:

  	
  Manager
  Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Principal amount of Notes currently outstanding
  held: $717,500.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JAG
  MULTI INVESTMENTS LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Andrea Goran

  
	
   

  	
   

  	
  Name:
  

  	
  Andrea
  Goran

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  
	
   

  	
  Principal
  amount of Notes currently outstanding held: $717,500.

  



 


Amendment
No. 2 to Note Purchase Agreement dated as of September 5, 2008


 

















 


Appendix to Amendment No. 2


 


EXHIBIT F


 


FORM OF FALL 2009 SUBORDINATION AGREEMENT


 


[See attached.]