Exhibit 10.1


 


NOTE PURCHASE AGREEMENT


 


 


Among


 


 


XPLORE TECHNOLOGIES CORP.


 


 


XPLORE TECHNOLOGIES
CORPORATION OF AMERICA


 


 


and


 


 


THE PURCHASERS


 


 


Dated November 5, 2009


 

















 


TABLE OF CONTENTS


 


	
  1.

  	
  Purchase and Sale of
  the Notes and the Warrants

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Authorization
  of Issuance of the Notes and the Warrants

  	
  2

  
	
   

  	
  1.2

  	
  Purchase
  and Sale of Initial Closing Notes and Initial Closing Warrants

  	
  2

  
	
   

  	
  1.3

  	
  Purchase
  and Sale of Additional Notes and Additional Warrants

  	
  2

  
	
   

  	
  1.4

  	
  Use
  of Proceeds

  	
  2

  
	
   

  	
  1.5

  	
  Initial
  Closing

  	
  2

  
	
   

  	
  1.6

  	
  Subsequent
  Closings

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Term
  of the Notes; Security for the Notes; Subordination; Priority

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  General

  	
  3

  
	
   

  	
  2.2

  	
  Security

  	
  4

  
	
   

  	
  2.3

  	
  Subordination

  	
  4

  
	
   

  	
  2.4

  	
  Priority

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations
  and Warranties of the Borrowers

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Organization
  and Qualification

  	
  4

  
	
   

  	
  3.2

  	
  Certificate
  of Incorporation and Bylaws

  	
  5

  
	
   

  	
  3.3

  	
  Corporate
  Power and Authority

  	
  5

  
	
   

  	
  3.4

  	
  Capitalization

  	
  5

  
	
   

  	
  3.5

  	
  Authorization

  	
  5

  
	
   

  	
  3.6

  	
  Title
  to Properties and Assets; Leases; Insurance

  	
  6

  
	
   

  	
  3.7

  	
  Related-Party
  Transactions

  	
  6

  
	
   

  	
  3.8

  	
  Permits;
  Compliance with Applicable Laws

  	
  6

  
	
   

  	
  3.9

  	
  Proprietary
  Rights

  	
  7

  
	
   

  	
  3.10

  	
  Material
  Contracts

  	
  7

  
	
   

  	
  3.11

  	
  Absence
  of Undisclosed Liabilities

  	
  8

  
	
   

  	
  3.12

  	
  Absence
  of Conflicts

  	
  8

  
	
   

  	
  3.13

  	
  Litigation

  	
  8

  
	
   

  	
  3.14

  	
  Consents

  	
  8

  
	
   

  	
  3.15

  	
  Labor
  Relations; Employees

  	
  9

  
	
   

  	
  3.16

  	
  Employee
  Benefit Plans

  	
  9

  
	
   

  	
  3.17

  	
  Tax
  Returns, Payments and Elections

  	
  9

  
	
   

  	
  3.18

  	
  Brokers
  or Finders

  	
  9

  
	
   

  	
  3.19

  	
  Offering
  Exemption

  	
  10

  
	
   

  	
  3.20

  	
  Environmental
  Matters

  	
  10

  
	
   

  	
  3.21

  	
  Offering
  of Purchased Shares and Warrants

  	
  10

  
	
   

  	
  3.22

  	
  SEC
  Reports; Disclosure

  	
  10

  
	
   

  	
  3.23

  	
  Financial
  Statements

  	
  11

  
	
   

  	
  3.24

  	
  Suppliers
  and Customers

  	
  11

  



 


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  4.

  	
  Representations
  and Warranties of the Purchasers

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization
  and Qualification

  	
  12

  
	
   

  	
  4.2

  	
  Power
  and Authority

  	
  12

  
	
   

  	
  4.3

  	
  Authorization

  	
  12

  
	
   

  	
  4.4

  	
  Purchase
  Entirely for Own Account

  	
  12

  
	
   

  	
  4.5

  	
  Disclosure
  of Information

  	
  12

  
	
   

  	
  4.6

  	
  Investment
  Experience

  	
  13

  
	
   

  	
  4.7

  	
  Accredited
  Investor

  	
  13

  
	
   

  	
  4.8

  	
  Restricted
  Securities; Legends

  	
  13

  
	
   

  	
  4.9

  	
  No
  General Solicitation

  	
  13

  
	
   

  	
  4.10

  	
  Absence
  of Conflicts

  	
  13

  
	
   

  	
  4.11

  	
  Brokers
  or Finders

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Conditions
  of the Parties

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Conditions
  of Purchasers’ Obligations at any Closing

  	
  14

  
	
   

  	
  5.2

  	
  Conditions
  of Initial Purchasers’ Obligations at the Initial Closing

  	
  15

  
	
   

  	
  5.3

  	
  Conditions
  of Additional Purchasers’ Obligations at any Subsequent Closing

  	
  16

  
	
   

  	
  5.4

  	
  Conditions
  of Borrowers’ Obligations at any Closing

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Events
  of Default and Remedies

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Events
  of Default

  	
  18

  
	
   

  	
  6.2

  	
  Exercise
  of Remedies

  	
  19

  
	
   

  	
  6.3

  	
  Waiver
  of Defaults

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Covenants

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Debt
  Covenants

  	
  20

  
	
   

  	
  7.2

  	
  Additional
  Authorized Common Stock

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Indemnification

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  General
  Indemnification

  	
  20

  
	
   

  	
  8.2

  	
  Indemnification
  Principles

  	
  20

  
	
   

  	
  8.3

  	
  Claim
  Notice; Right to Defend

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Certain
  Definitions

  	
  21

  
	
   

  	
   

  	
   

  
	
  10.

  	
  [RESERVED]

  	
  26

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Miscellaneous

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Survival
  of Representations and Warranties

  	
  26

  
	
   

  	
  11.2

  	
  Successors
  and Assigns

  	
  26

  
	
   

  	
  11.3

  	
  Governing
  Law

  	
  26

  
	
   

  	
  11.4

  	
  Counterparts

  	
  26

  
	
   

  	
  11.5

  	
  Titles
  and Subtitles

  	
  27

  



 


ii

















 


	
   

  	
  11.6

  	
  Notices

  	
  27

  
	
   

  	
  11.7

  	
  Expenses

  	
  27

  
	
   

  	
  11.8

  	
  Consents,
  Amendments and Waivers

  	
  27

  
	
   

  	
  11.9

  	
  Severability

  	
  27

  
	
   

  	
  11.10

  	
  Entire
  Agreement

  	
  28

  
	
   

  	
  11.11

  	
  Delays
  or Omissions

  	
  28

  
	
   

  	
  11.12

  	
  Facsimile
  and E-Mail Signatures

  	
  28

  
	
   

  	
  11.13

  	
  Other
  Remedies

  	
  28

  
	
   

  	
  11.14

  	
  Further
  Assurances

  	
  28

  
	
   

  	
  11.15

  	
  Exchanges;
  Lost, Stolen or Mutilated Notes and Warrants

  	
  28

  
	
   

  	
  11.16

  	
  Termination

  	
  29

  
	
   

  	
  11.17

  	
  Pro
  Rata

  	
  29

  
	
   

  	
  11.18

  	
  Appointment and Authorization of SG Phoenix LLC as
  Agent

  	
  29

  



 


iii

















 


Exhibit & Schedules List


 


	
  Exhibit A

  	
  -

  	
  Form of
  Note

  
	
  Exhibit B

  	
  -

  	
  Form of
  Warrant

  
	
  Exhibit C

  	
  -

  	
  Form of
  Security Agreement

  
	
  Exhibit D

  	
  -

  	
  Form of
  SVB Subordination Agreement

  
	
  Exhibit E

  	
  -

  	
  Form of
  Subordination Agreement

  
	
  Exhibit F

  	
  -

  	
  Debt
  Covenants

  
	
  Exhibit G

  	
   

  	
  Appointment
  of Agent by Individual in New York

  
	
   

  	
   

  	
   

  
	
  Schedule
  I

  	
   

  	
  List
  of Initial Purchasers

  
	
  Schedule
  II

  	
   

  	
  List
  of Additional Purchasers

  



 


iv
















 


NOTE
PURCHASE AGREEMENT


 


THIS NOTE PURCHASE AGREEMENT (this “Agreement”)
is made on the 5th day of November, 2009, by and among Xplore Technologies
Corp., a Delaware corporation (the “Parent”), Xplore Technologies
Corporation of America, a Delaware corporation and wholly-owned subsidiary of
the Parent (the “Subsidiary” and collectively with the Parent, the “Borrowers”),
and the purchasers listed on Schedule I hereto, each of which is herein
referred to as an “Initial Purchaser” and the purchasers listed from
time to time on Schedule II hereto, each of which is herein referred to
as an “Additional Purchaser”, and collectively, as the “Purchasers”.


 


W I T N E S S E T H:


 


WHEREAS, subject to the terms and conditions
set forth herein, the Borrowers desire to issue and sell to the Initial
Purchasers on the Initial Closing Date (i) senior secured subordinated
promissory notes in the aggregate principal amount of not greater than
$3,300,000 maturing on the Maturity Date (each, an “Initial Closing Note”
and, collectively, the “Initial Closing Notes”) and (ii) warrants to
purchase up to such number of shares of Common Stock as determined by dividing
(x) 100% of the aggregate principal amount of the Initial Closing Notes
purchased by such Initial Purchasers, by (y) the Warrant Exercise Price (each,
an “Initial Closing Warrant” and, collectively, the “Initial Closing
Warrants”), and the Initial Purchasers shall purchase the Initial Closing
Notes and the Initial Closing Warrants from the Borrowers on the terms and
conditions set forth herein;


 


WHEREAS, subject to the terms and conditions
set forth herein, the Borrowers desire to issue and sell to the Additional
Purchasers on any Subsequent Closing Date (i) senior secured subordinated
promissory notes (each, an “Additional Note” and, collectively, the “Additional
Notes” and, together with the Initial Closing Notes, the “Notes”),
in an aggregate principal amount which together with the aggregate principal
amount of the Initial Closing Notes does not exceed $3,300,000 maturing on the
Maturity Date and (ii) warrants to purchase such number of shares of Common
Stock as determined by dividing (x) 100% of the aggregate principal amount of
the Additional Notes purchased by such Additional Purchasers, by (y) the
Warrant Exercise Price (each, an “Additional Warrant” and, collectively,
the “Additional Warrants” and together with the Initial Closing
Warrants, the “Warrants”), and such Additional Purchasers shall purchase
such Additional Notes and such Additional Warrants from the Borrowers on the
terms and conditions set forth herein; and


 


WHEREAS, the board of directors of each of
the Parent and of the Subsidiary has approved the execution and delivery of
this Agreement, all ancillary agreements related hereto, and the transactions
contemplated hereby.


 


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 HEREBY AGREE AS FOLLOWS:


 

















 


SECTION 1.           Purchase
and Sale of the Notes and the Warrants.


 


1.1     Authorization of Issuance
of the Notes and the Warrants. 


 


(a)           Subject
to the terms and conditions of this Agreement, on or prior to the Initial
Closing Date, the Borrowers shall have authorized the issuance and sale to the
Initial Purchasers of (i) the Initial Closing Notes, in the form attached
hereto as Exhibit A, and (ii) the Initial Closing Warrants, in the form
attached hereto as Exhibit B.


 


(b)       Subject
to the terms and conditions of this Agreement, on or prior to any Subsequent
Closing Date, the Borrowers shall have authorized the issuance and sale to the
Additional Purchasers of (i) all Additional Notes to be issued at any
Subsequent Closing in the form attached hereto as Exhibit A, and (ii)
the Additional Warrants, in the form attached hereto as Exhibit B.


 


1.2           Purchase
and Sale of Initial Closing Notes and Initial Closing Warrants.    Subject to the terms and
conditions of this Agreement, each Initial Purchaser, severally and not
jointly, agrees to purchase at the Initial Closing, and the Borrowers agree to
issue and sell to each such Initial Purchaser at the Initial Closing (i) an
Initial Closing Note, dated as of the Initial Closing Date in the original
principal amount equal to the dollar amount set forth opposite such Initial
Purchaser’s name under the heading “Initial Closing Note Purchase Price”
on Schedule I hereto and (ii) Initial Closing Warrants for such shares
of Common Stock as set forth opposite such Initial Purchaser’s name under the
heading “Number of Initial Closing Warrant Shares” on Schedule I
hereto, in exchange for the amount set forth opposite such Initial Purchaser’s
name under the heading “Initial Closing Note Purchase Price” on Schedule
I hereto.


 


1.3           Purchase
and Sale of Additional Notes and Additional Warrants. At any time and from
time to time, but in no event later than sixty (60) days after the Initial
Closing Date, one or more Additional Purchasers may purchase at one or more
Subsequent Closings, (i) Additional Notes, the aggregate purchase price of
which, together with the aggregate purchase price of the Initial Closing Notes,
shall not exceed $3,300,000 and (ii) Additional Warrants for the number of
shares of Common Stock as determined by dividing (x) 100% of the principal
amount of such Additional Notes purchased by such Additional Purchasers by the
Warrant Exercise Price. Schedule II attached hereto shall be amended
from time to time concurrent with each Subsequent Closing to include the names
of the Additional Purchasers purchasing Additional Notes and Additional
Warrants at such Subsequent Closing, as well as the purchase price of the
Additional Notes, and the number of shares of Common Stock that can be
purchased on exercise of the Additional Warrants.  The aggregate purchase price for the Notes
and Warrants shall not exceed $3,300,000.


 


1.4           Use
of Proceeds.  The Borrowers agree to
use the net proceeds from the sale and issuance of the Notes and Warrants
pursuant to this Agreement for working capital, product development, repayment
of non-formula indebtedness of the Subsidiary to its Senior Lender and other
general corporate purposes.


 


1.5           Initial
Closing.  The purchase and sale of
the Initial Closing Notes and the Initial Closing Warrants shall take place at
the offices of Pillsbury Winthrop Shaw Pittman LLP,


 


2

















 


1540 Broadway,
New York, New York 10036, promptly upon the satisfaction or waiver of the
closing conditions set forth in Section 5.1, 5.2 and 5.4 hereto, but not later
than November 5, 2009, or on such other date and at such other time as the
Borrowers and SG Phoenix LLC, as Agent for the Purchasers (the “Agent”),
mutually agree upon in writing (which time and place is designated as the “Initial
Closing”).  The date of the Initial
Closing is referred to herein as the “Initial Closing Date.”  At the Initial Closing, the Borrowers shall
deliver to each Initial Purchaser (i) Initial Closing Notes, in an original
principal amount equal to the dollar amount set forth opposite such Initial
Purchaser’s name under the heading “Initial Closing Note Purchase Price”
on Schedule I hereto and (ii) Initial Closing Warrants entitling such
Initial Purchaser to purchase the number of shares of Common Stock set forth
opposite such Initial Purchaser’s name under the heading “Number of Initial
Closing Warrant Shares” on Schedule I hereto, all against payment in
the amounts set forth opposite such Initial Purchaser’s name under the heading
“Initial Closing Note Purchase Price” on Schedule I hereto, by
any combination of (i) check, (ii) wire transfer of immediately available funds
to such account as the Borrowers designate, or (iii) surrender to the Borrowers
for cancellation, in whole but not in part, of those certain secured demand
promissory notes previously issued by the Borrowers on September 29, 2009 and
October 13, 2009 (the “Demand Notes”). 
Each Purchaser surrendering Demand Notes pursuant hereto hereby
acknowledges and agrees that, notwithstanding any provisions of the Demand
Notes, the rights granted and security interests provided in the Demand Notes
are terminated as of the Initial Closing Date.


 


1.6           Subsequent
Closings.  Upon the purchase of any
Additional Notes and Additional Warrants subject to the satisfaction or waiver
of the closing conditions set forth in Sections 5.1, 5.3 and 5.4, Subsequent
Closings shall take place at the offices of Pillsbury Winthrop Shaw Pittman
LLP, 1540 Broadway, New York, New York 10036, on such date and at such time as
the Borrowers and the Agent, acting on behalf of the Purchasers, mutually agree
upon in writing (each, a “Subsequent Closing” and collectively, the “Subsequent
Closings”).  The date of each
applicable Subsequent Closing is referred to herein as a “Subsequent Closing
Date.” At each Subsequent Closing, the Borrowers shall deliver to each
Additional Purchaser (i) an Additional Note, dated as of such Subsequent
Closing Date, in an original principal amount equal to the dollar amount set
forth opposite such Additional Purchaser’s name under the heading “Additional
Note Purchase Price” on Schedule II hereto, which shall be updated
by the Borrower and the Agent, acting on behalf of the Purchasers, from time to
time as necessary upon each Subsequent Closing, with respect to such Additional
Purchaser and (ii) Additional Warrants for the number of shares of Common Stock
set forth opposite such Additional Purchaser’s name under the heading “Number
of Additional Closing Warrant Shares” in Schedule II hereto, all
against payment in the amounts set forth opposite such Additional Purchaser’s
name under the heading “Additional Note Purchase Price” on Schedule
II hereto, by any combination of (i) check or (ii) wire transfer of
immediately available funds to such account as the Borrowers designate.


 


SECTION 2.           Term
of the Notes; Security for the Notes; Subordination; Priority.


 


2.1           General.  The Notes shall be issued in the aggregate
principal amount of up to $3,300,000 and shall bear interest, and otherwise be
in the form attached hereto as Exhibit A.  Payment of all principal and accrued and
unpaid interest on any Note shall be made in full no later than the Maturity
Date.


 


3

















 


2.2           Security.  The Notes shall be equally and ratably secured
by all of the assets of the Borrowers pursuant to a security agreement to be
entered into on or prior to the Initial Closing Date by the Borrowers and the
Agent, acting on behalf of the Purchasers, substantially in the form attached
hereto as Exhibit C (as the same may be amended, modified, supplemented
or amended and restated from time to time, the “Security Agreement”),
pursuant to which the Borrowers shall grant to the Agent, acting on behalf of
the Purchasers, a security interest in all of the assets of the Borrowers,
subject to the Permitted Liens.


 


2.3           Subordination.  The indebtedness under the Notes (including
the right of repayment of principal of and interest on the Notes) and the
security interest of the Purchasers in the assets of the Borrowers shall be subordinated
to (a) the indebtedness and security interest 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 time to time be further
amended, modified, supplemented or restated or refinanced with SVB, the “Senior
Credit Agreement”), in accordance with the SVB Subordination Agreement in
substantially the form attached hereto as Exhibit D (the “SVB
Subordination Agreement) and (b) the indebtedness of any other Senior
Lender in connection with any future Senior Credit Facility acceptable to the
Agent, acting on behalf of the Purchasers, pursuant to a subordination
agreement containing terms that are materially no less favorable, as a whole,
to the Purchasers than the terms of the SVB Subordination Agreement and shall
be subject to the Permitted Liens.


 


2.4           Priority.  The indebtedness under the Notes and the
distribution of any Collateral secured by the Notes shall rank senior in right
of repayment to the subordinated secured notes issued by the Borrowers in
September and October 2008 in the aggregate principal amount of $3,000,000 (the
“Fall 2008 Notes”) and in February, March, May and June 2009 in the
aggregate principal amount of $1,090,000 (the “Spring 2009 Notes”).  The security interest of the Purchasers in
the Notes shall rank senior to the security interest of the purchasers of the
Fall 2008 Notes and the Spring 2009 Notes in the assets of the Borrowers,
whether upon liquidation or dissolution, or otherwise.  The priority of the rights and security
interest of the Purchasers under the Notes in relation to the rights and
security interests of the purchasers of the Fall 2008 Notes and the Spring 2009
Notes shall be in accordance with a subordination agreement to be entered into
on or prior to the Initial Closing Date by the Agent, acting on behalf of the
Purchasers, Phoenix Venture Fund LLC, as agent on behalf of the purchasers of
the Fall 2008 Notes and the Spring 2009 Notes, the Fall 2008 Majority
Purchasers and the Spring 2009 Majority Purchasers, in substantially the form
attached hereto as Exhibit E (the “Subordination Agreement”).


 


SECTION 3.           Representations
and Warranties of the Borrowers.


 


The Borrowers, jointly and
severally, hereby represent and warrant to each Purchaser as of the Initial
Closing Date and in the case of any Additional Purchasers as of such Subsequent
Closing Date, the following, except as expressly set forth on the Disclosure
Schedule, specifically identifying or cross-referencing the relevant Sections
hereof, which Disclosure Schedule shall be deemed to be part of the
representations and warranties as if made hereunder:


 


3.1           Organization
and Qualification.  Each of the
Borrowers is duly organized, validly existing and in good standing under the
Laws of the State of Delaware and has the


 


4

















 


requisite
power and authority to own, lease and operate its assets, properties and
business and to carry on its business as it is now being conducted or proposed
to be conducted.  Each of the Borrowers
is duly qualified as a foreign corporation to transact business, and is in good
standing, in each jurisdiction where it owns or leases real property or
maintains employees or where the nature of its activities make such
qualification necessary, except where such failure to qualify could not
reasonably be expected to have a Material Adverse Effect.


 


3.2           Certificate
of Incorporation and Bylaws.  The
Parent has delivered to the Agent, acting on behalf of the Purchasers, true,
correct, and complete copies of the certificate of incorporation of the Parent
and the Subsidiary as in effect on the date hereof (each a “Certificate of
Incorporation” and collectively the “Certificates of Incorporation”)
and each of their bylaws as in effect on the date hereof (each a “Bylaw”
and collectively the “Bylaws”).


 


3.3           Corporate
Power and Authority.  Each of the
Borrowers has all requisite corporate power and authority to execute and
deliver the Loan Documents and this Agreement to which it is a party.  The Borrowers have all requisite corporate
power and authority to issue and sell the Notes and the Warrants to the
Purchasers hereunder.  Each of the
Borrowers has all requisite corporate power and authority to carry out and
perform its obligations under the terms of this Agreement and the Loan
Documents.


 


3.4           Capitalization.  Immediately prior to the date hereof, the
Parent is authorized to issue 410,000,000 shares of capital stock of which (i)
300,000,000 are designated as Common Stock, of which 112,824,619 shares are issued and outstanding (ii) and
110,000,000 are designated as Preferred Stock, of which (A) 64,000,000 are
designated as Series A Preferred Stock of which 62,873,781 shares are issued and outstanding, (B) 10,000,000 of
which are designated Series B Preferred Stock of which 8,382,041 shares are issued and outstanding, (C) 20,000,000 of
which are designated Series C Preferred Stock of which 17,184,000 shares are
issued and outstanding.  The Parent owns
all of the issued and outstanding capital stock of the Subsidiary.


 


3.5           Authorization.  The execution, delivery and performance by
each Borrower of this Agreement and the Loan Agreements, the sale, issuance and
delivery of the Notes and the Warrants and the performance of all of the
obligations of the Borrowers under this Agreement and each of the Loan
Documents have been authorized by each Borrower’s Board of Directors, no other
corporate action on the part of any Borrower and, except as set for the on Schedule
3.5, no other corporate or other approval or authorization is required on
the part of any Borrower or any other Person, by Law or otherwise, in order to
make this Agreement and the Loan Documents the valid, binding and enforceable
obligations (subject to (i) Laws of general application relating to bankruptcy,
insolvency, and the relief of debtors, and (ii) rules of Law governing specific
performance, injunctive relief, or other equitable remedies) of the Borrowers,
as the case may be.  This Agreement and
each of the Loan Documents, when executed and delivered by each of the
Borrowers that is a party thereto, will constitute a valid and legally binding
obligation of such Borrower, enforceable against such Borrower in accordance
with its respective terms, subject to (i) Laws of general application relating
to bankruptcy, insolvency, and the relief of debtors, and (ii) rules of Law
governing specific performance, injunctive relief, or other equitable remedies.


 


5

















 


3.6           Title to Properties and Assets; Leases;
Insurance.


 


(a)       Neither
Borrower currently owns any real property nor has ever owned any real
property.  Each of the Borrowers has good
and marketable title to or has a valid leasehold interest in, or license to
use, all of the property or assets used by it or located on its premises and
necessary for the conduct of business as presently conducted, free and clear of
all Liens, other than Permitted Liens.


 


(b)       With
respect to the insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers and directors
of each Borrower, there is no claim by either Borrower pending under any of
such policies or bonds as to which coverage has been denied or disputed by the
underwriters of such policies or bonds which could reasonably be expected to
have a Material Adverse Effect.  All
premiums due and payable under all such policies and bonds have been paid and
each Borrower, as applicable, is otherwise in compliance in all material
respects with the terms of such policies and bonds.  Neither Borrower has any Knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.  Each Borrower maintains
insurance in such amounts, including (as applicable) self-insurance, retainage
and deductible arrangements, and of such a character as is reasonable for
companies engaged in the same or similar business similarly situated.


 


3.7           Related-Party
Transactions.  No employee, officer,
shareholder, director or consultant of the Borrowers or member of the immediate
family (defined as parents, spouse, siblings or lineal descendants) of any such
officer or director is indebted to either of the Borrowers for borrowed money,
and except as set forth in the SEC Reports or the exhibits attached thereto or
pursuant to this Agreement, neither Borrower is indebted for borrowed money (or
committed to make loans or extend or guarantee credit) to any of them other
than for reimbursement of expenses incurred in connection with their service to
such Borrower, and amounts accrued but not yet due to employees and other
service providers. To the Knowledge of the Borrowers, except as provided for in
this Agreement and the Loan Documents or as set forth in the SEC Reports, (a)
no employee, officer, shareholder, director or consultant of such Borrower or
any member of the immediate family of any such officer or director is, directly
or indirectly, interested in any Material Contract or has any other material
business relationship with any Borrower, except stock ownership in or
employment with a Borrower and (b) no officer, director of such Borrower or any
member of the immediate family of such officer or director has any material
business relationship with any competitor of such Borrower.


 


3.8           Permits;
Compliance with Applicable Laws. 
Each Borrower has all franchises, permits, licenses, authorizations,
approvals, registrations and any similar authority necessary for the conduct of
its business as now being conducted by it except for those the absence of which
could not reasonably be expected to have a Material Adverse Effect (the “Permits”).  Neither Borrower is in violation in any
material respect of, or default in any material respect under, any such Permits.
All such Permits are in full force and effect, and to the Borrower’s Knowledge,
no violations in any material respect have been recorded in respect of any such
Permits; no proceeding is pending or, to the Borrower’s Knowledge, threatened
to revoke or limit any such Permit; and no such Permit will be suspended,
cancelled or adversely modified as a result of the execution and delivery of
this Agreement and the Loan Documents.  


 


6

















 


Each Borrower
is in compliance in all respects with all applicable Laws, except where the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect.


 


3.9           Proprietary Rights.   Each
Borrower is the sole owner, free and clear of any Liens, other than Permitted
Liens, or has a valid license, without the payment of any royalty (except with
respect to off-the-shelf software that is licensed by such Borrower) and
otherwise on commercially reasonable terms, to, all Proprietary Rights material
to the business of such Borrower.  As
used herein, the term “Proprietary Rights” means each Borrower’s
patents, trademarks, trade names, service marks, logos, designs, formulations,
copyrights, and other trade rights and all registrations and applications
therefor, all know-how, trade secrets, technology or processes, research and
development, all Internet domain addresses, Web sites and computer programs,
data bases and software documentation and all other intellectual property
owned, licensed or otherwise used by such Borrower (other than off-the-shelf
software that is licensed by such Borrower). 
Neither Borrower has received any written demand, claim, notice or
inquiry from any person or entity in respect of the Proprietary Rights material
to the business of such Borrower which challenges, threatens to challenge or
inquires as to whether there is any basis to challenge, the validity of, or the
rights of such Borrower in such Proprietary Rights, and neither Borrower has
Knowledge of any basis for any such challenge. 
To each Borrower’s Knowledge, such Borrower is not in violation or
infringement of, and has not violated or infringed, any intellectual property
rights of any other person or entity.  To
such Borrower’s Knowledge no third party is infringing on the rights of such
Borrower in and to such Proprietary Rights.


 


3.10         Material
Contracts.  (a)  All material agreements of each Borrower
(collectively, the “Material Contracts”) are included as exhibits to the
Parent’s filings with the SEC.  Other
than the Demand Notes, the SEC Reports disclose all financing arrangements of
the Borrowers relating to the assets or liabilities of the Borrowers.


 


(b)       Assuming
the due execution and delivery by the other parties thereto, each of such
Material Contracts is as of the date hereof a legal, valid and binding
obligation of the Borrower that is a party thereto and, to such Borrower’s
Knowledge, the counterparty thereto, and in full force and effect, and
enforceable in accordance with its terms, subject to (i) Laws of general
application relating to bankruptcy, insolvency, and the relief of debtors, and
(ii) rules of Law governing specific performance, injunctive relief, or other
equitable remedies.  There is no material
breach, violation or default by a Borrower under any such Material Contract,
and to each Borrower’s Knowledge, (x) no Material Contract has expired or been
terminated in accordance with its terms that is material to the Borrower’s
business taken as a whole and (y) no event (including, without limitation, the
transactions contemplated by this Agreement) has occurred which, with notice or
lapse of time or both, would (A) constitute a material breach, violation or
default by a Borrower under any such Material Contract, or (B) give rise to any
Lien (other than a Permitted Lien) or right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration
against a Borrower under any such Material Contract, which expiration,
termination or event would cause a Material Adverse Effect.  Except as disclosed in the SEC Reports,
neither Borrower is and, to the such Borrower’s Knowledge, no other party to
any of such Material Contract is in arrears in respect of the performance or
satisfaction of any material terms or conditions on its part to be performed or
satisfied under any of such Material Contract, and neither Borrower has and, to
such Borrower’s Knowledge, no other party thereto has granted 


 


7

















 


or been granted any material waiver or indulgence under any of such
Material Contract or repudiated any provision thereof.


 


3.11         Absence of Undisclosed
Liabilities.  Except as set forth in
the SEC Reports or those arising in the ordinary course of business consistent
with past practice since the date of the most recent balance sheet filed with
the SEC, neither Borrower has any liabilities of any type, whether absolute or
contingent.


 


3.12         Absence
of Conflicts.  Neither Borrower is in
violation of or default under any provision of its Certificate of Incorporation
or its Bylaws.  The execution, delivery,
and performance of, and compliance with the Loan Documents and this Agreement,
and the consummation of the transactions contemplated hereby and thereby, have
not and will not:


 


(a)       violate,
conflict with or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, any of the terms, conditions or provisions of (i) Borrower’s
Certificate of Incorporation or its Bylaws, or (ii) any Material Contract, or
result in the creation of any Lien (other than a Permitted Lien or the liens
granted under the Security Agreement) upon any of the assets, properties or
business of either Borrower; or


 


(b)       violate
any judgment, ruling, order, writ, injunction, award, decree, or any Law or
regulation of any court or federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority which is
applicable to either Borrower or any of their assets, properties or businesses.


 


3.13         Litigation.  Except as disclosed in the SEC Reports or as
otherwise set forth on Schedule 3.13, there is no action, claim,
litigation, tax or compliance audit, suit or proceeding, regulatory or
administrative enforcement action or governmental inquiry or investigation,
pending, or, to such Borrower’s Knowledge, any threat thereof, against such
Borrower or any of their officers or directors or the assets of either
Borrower.  To the Borrower’s Knowledge,
there is no reason to believe that any of the foregoing may occur which, in the
aggregate, could reasonably be expected to have a Material Adverse Effect.  Neither Borrower is subject to any outstanding
judgment, order or decree directed against such Borrower or any officer or
director of any thereof.


 


3.14         Consents.  No consent, approval, waiver or
authorization, or designation, declaration, notification, or filing with any
person or entity (governmental or private), is required by any Borrower in
connection with the valid execution, delivery and performance of the Loan
Documents or this Agreement, the offer, sale or issuance of the Notes and
Warrants (other than such notifications or filings required under applicable
federal or state securities Laws, if any), except for such consents, approvals,
waivers, authorizations, designations, declarations, notifications, or filings
that will be received prior to or as of the Initial Closing Date or in the
event of a Subsequent Closing, the Subsequent Closing Date or as otherwise
provided on Schedule 3.14.


 


8

















 


3.15         Labor
Relations; Employees.  Each Borrower
is in compliance in all material respects with all Laws relating to the
employment of labor and classification of persons as employees.


 


3.16         Employee
Benefit Plans.  (a)  Except as set forth in the SEC Reports, the
Borrowers have no employment agreements or labor or collective bargaining
agreements and there are no employee benefit or compensation plans, agreements,
arrangements or commitments (including “employee benefit plans,” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) maintained by either Borrower for any employees of such
Borrower or with respect to which such Borrower has liability, or makes or has
an obligation to make contributions (each a “Company Employee Plan” and
together the “Company Employee Plans”).


 


(b)       Each
Company Employee Plan by its terms and operation is in compliance in all
material respects with all applicable Laws and all required filings, if any,
with respect to such Company Employee Plan has been made.  The events contemplated by this Agreement
(either alone or together with any other event) will not (i) entitle any
employees to severance pay, unemployment compensation, or other similar
payments under any Company Employee Plan or Law, (ii) accelerate the time of
payment or vesting or increase the amount of benefits due under any Company
Employee Plan or compensation to any employees of the Borrowers or (iii) result
in any payments (including parachute payments) under any Company Employee Plan
or Law becoming due to any employee.


 


3.17         Tax
Returns, Payments and Elections.  Each
Borrower has filed all tax returns and reports (including information returns
and reports) as required by Law that are material to the Borrowers’ business
taken as a whole, and such tax returns and reports are true and correct in all
material respects.  Each Borrower has
paid or made provision for payment of all taxes and other assessments shown as
due on such returns.  The provision for
taxes of each Borrower as shown in the Financial Statements (as hereinafter defined)
is adequate in all material respects for all taxes, assessments and
governmental charges due or accrued as of the date thereof with respect to its
business, properties and operations. 
Neither Borrower has elected pursuant to the Internal Revenue Code of
1986, as amended (the “Code”), to be treated as a Subchapter S
corporation pursuant to Section 1362(a) or a collapsible corporation pursuant
to Section 341(f) of the Code, nor has a Borrower made any other elections
pursuant to the Code (other than elections that relate solely to methods of
accounting, depreciation or amortization) that could reasonably be expected to
have a Material Adverse Effect.  Except
as set forth on Schedule 3.17, neither Borrower has had any tax
deficiency proposed or assessed against it by the Internal Revenue Service or
any other foreign, federal, state or local taxing authority and none have been
asserted in writing or, to a Borrower’s Knowledge, threatened at any time for
additional taxes.  Neither Borrower has
executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge and none of the foreign, federal,
state or local income or franchise tax or sales or use tax returns have ever
been audited by governmental authorities. 
Since June 30, 2009, neither Borrower has incurred any taxes,
assessments or governmental charges other than in the ordinary course of
business.


 


3.18         Brokers
or Finders. Neither Borrower has incurred, or will incur, directly or
indirectly, as a result of any action taken by either Borrower, any liability
for brokerage or


 


9

















 


finders’ fees
or agents’ commissions or any similar charges in connection with this Agreement
or the issuance of the Notes and the Warrants or any transaction contemplated
hereby or thereby other than as contemplated by the term sheet regarding the
transactions contemplated hereby.  The
Borrowers agree to indemnify and hold harmless each Purchaser from any
liability for any commission or compensation in the nature of a finder’s fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Borrowers or any of their respective officers,
employees or representatives is responsible.


 


3.19         Offering
Exemption.  Assuming the truth and
accuracy of the representations and warranties contained in Section 5, the
offer and sale of the Notes and the Warrants as contemplated hereby and the
issuance and delivery to the Purchasers of the Notes and the Warrants are
exempt from registration under the Securities Act of 1933, as amended (the “Securities
Act”), and will be registered or qualified (or exempt from registration or
qualification) under applicable state securities and “blue sky” Laws, as
currently in effect.


 


3.20         Environmental Matters.


 


(a)           Each
Borrower complies and has at all times complied with all federal, state and
local Laws, judgments, decrees, orders, consent agreements, authorizations,
permits, licenses, rules, regulations, common or decision law (including,
without limitation, principles of negligence and strict liability) relating to
the protection, investigation or restoration of the environment (including,
without limitation, natural resources) or the health or safety matters of
humans and other living organisms, including the Resource Conservation and
Recovery Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Federal Clean Water Act, as
amended, the Federal Clean Air Act, as amended, the Toxic Substances Control
Act, or any state and local analogue (hereinafter “Environmental Laws”),
except where the failure to comply could not reasonably be expected to have a
Material Adverse Effect.


 


(b)           Neither
Borrower has Knowledge of any claim, and has not received notice of a written
complaint, order, directive, claim, request for information or citation, and to
such Borrower’s Knowledge no proceeding has been instituted raising a claim
against such Borrower indicating or alleging any damage to the environment or
any liability or obligation under or violation of any Environmental Law and
(ii) neither Borrower is subject to any order, decree, injunction or other
directive of any Governmental Authority.


 


3.21         Offering
of Purchased Shares and Warrants.  No
form of general solicitation or general advertising was used by the Borrowers
or any of their agents or representatives in connection with the offer and sale
of the Notes and the Warrants.


 


3.22         SEC
Reports; Disclosure.  (a)  The Parent has filed all required forms,
reports and documents with the Securities and Exchange Commission (the “SEC”)
since June 22, 2007, each of which has complied in all material respects with
all applicable requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations promulgated thereunder, each as in effect on the date such forms,
reports and documents were filed.  The
Parent has made available to the Purchasers, in the form 


 


10

















 


filed with the
SEC (including any amendments thereto) its (i) Annual Report on Form 10-K for
the year ended March 31, 2009; (ii) Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2009; (iii) Current Report on Form 8-K dated
September 21, 2009 and (iv) all definitive proxy statements relating to the
Parent’s meeting of shareholders (whether annual or special) held since June
22, 2007 (collectively, the “SEC Reports”).


 


(b)       None
of (i) this Agreement (including, without limitation, the Disclosure Schedule
and the Schedules and Exhibits attached hereto), (ii) any Loan Document, or
(iii) the SEC Reports contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein in light of the circumstances under which they were made not
misleading.  There is no fact which, to
the Knowledge of either Borrower, has not been disclosed to the Purchasers,
which could reasonably be expected to have a Material Adverse Effect on the
ability of either Borrower to perform its obligations under the Loan Documents
or this Agreement.


 


3.23         Financial
Statements.  Included in the SEC
Reports are the audited consolidated financial statements of the Parent as at
and for the years ended March 31, 2009 and 2008 and the unaudited consolidated
financial statements of the Parent for the fiscal quarter ended June 30, 2009
(the “Financial Statements”).  The
Financial Statements have been prepared in accordance with GAAP and fairly
present the financial condition and operating results of the Borrowers on a
Consolidated basis as of the dates and for the periods, indicated therein,
except that the unaudited financial statements as at and for the quarter ended
June 30, 2009 are subject to normal year-end adjustments and do not contain all
notes required under GAAP.  Except as set
forth in the Financial Statements, the Borrowers have no liabilities, obligations
or commitments of any nature (whether accrued, absolute, contingent,
unliquidated or otherwise, due or to become due and regardless of when
addressed), which are required to be included in the Financial Statements in
accordance with GAAP other than (a) liabilities that have arisen in the ordinary
course of business since the date of the Parent’s most recent quarterly report
on Form 10-Q that are not reasonably be expected to have a Material Adverse
Effect and (b) obligations to perform after the date hereof any contracts or
agreements which have been disclosed or which are not required to be disclosed
in the SEC Reports because such contracts and agreements are not material to
the Borrowers.


 


3.24         Suppliers
and Customers.  Since June 30, 2009,
none of the Borrowers’ suppliers, vendors, or customers has: (i) terminated or
cancelled a Material Contract or material business relationship with any
Borrower; (ii) threatened in writing to terminate or cancel a Material Contract
or material business relationship with any Borrower; (iii) expressed dissatisfaction
in writing with the performance of a Borrower with respect to a Material
Contract or material business relationship with any Borrower; or (iv) demanded
in writing any material modification, termination or limitation of a Material
Contract or material business relationship with any Borrower (excluding any
contracts or business relationship which, if so terminated, cancelled, modified
or limited, would not reasonably be expected to result in a Material Adverse
Effect).


 


11
















 


SECTION 4.           Representations and
Warranties of the Purchasers.  As of the Initial Closing Date or any
Subsequent Closing Date, as the case may be, each Purchaser severally and not
jointly hereby represents and warrants to the Borrowers that:


 


4.1           Organization
and Qualification.  Each
Purchaser, if such person is not an individual, is duly organized, validly
existing and in good standing under the Laws of its jurisdiction of
incorporation or organization to carry on its business as it is now being
conducted or proposed to be conducted.


 


4.2           Power and
Authority.  Each
Purchaser has all requisite power and authority (or if such Purchaser is an
individual, the legal capacity) to execute and deliver the Loan Documents and
this Agreement to which it is a party, to purchase the Notes and the Warrants
from the Borrowers hereunder, and to carry out and perform its obligations
under the terms of the Loan Documents and this Agreement.


 


4.3           Authorization.  The execution, delivery and performance by
such Purchaser of the Loan Documents and this Agreement to which it is a party,
and the performance of all of the obligations of such Purchaser under each of
such Loan Documents and this Agreement have been duly and validly authorized,
and no other action, approval or authorization is required on the part of such
Purchaser or any Person by Law or otherwise in order to make the Loan Documents
and this Agreement the valid, binding and enforceable obligations (subject to (i) Laws
of general application relating to bankruptcy, insolvency, and the relief of
debtors, and (ii) rules of Law governing specific performance,
injunctive relief, or other equitable remedies) of such Purchaser that is a
party thereto.  Each of the Loan
Documents and this Agreement, when executed and delivered by such Purchaser
that is a party thereto, will constitute a valid and legally binding obligation
of such Purchaser, enforceable against such Purchaser in accordance with its
terms subject to: (i) Laws of general application relating to bankruptcy,
insolvency, and the relief of debtors, and (ii) rules of Law
governing specific performance, injunctive relief, or other equitable remedies.


 


4.4           Purchase
Entirely for Own Account.  The
Notes and the Warrants will be acquired for investment for such Purchaser’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof.  Such
Purchaser’s address is listed on Schedule I and II, as
applicable, attached hereto.  Such
Purchaser is aware that the Borrowers are issuing the Notes and the Warrants
pursuant to Section 4(2) of the Securities Act and Regulation D
promulgated thereunder without complying with the registration provisions of
the Securities Act or other applicable federal or state securities laws.  Such Purchaser is also aware that the
Borrowers are relying upon, among other things, the representations and
warranties of such Purchaser contained in this Agreement for purposes of
complying with Regulation D.


 


4.5           Disclosure of
Information.  Each
Purchaser represents that the Borrowers have made available to such Purchaser,
at a reasonable time prior to the date of this Agreement, an opportunity to (a) ask
questions and receive answers from the Borrowers regarding the terms and
conditions of the offering of the Notes and the Warrants and the business,
properties and financial condition of the Borrowers, all of which questions (if
any) have been answered to the reasonable satisfaction of such Purchaser, and (b) obtain
additional information, all of which was furnished by the Borrowers to the
reasonable satisfaction of such Purchaser. 
The foregoing,


 


12

















 


however,
does not limit or modify the representations and warranties of the Borrowers in
Section 3 of this Agreement or the right of the Purchasers to rely
thereon.


 


4.6           Investment
Experience.  Such
Purchaser acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
investing in companies similar to the Borrowers and in financial or business
matters such that it is capable of evaluating the merits and risks of the
investment in the Notes and the Warrants. 
Such Purchaser has made the determination to enter into this Agreement
and the Loan Agreements and the other agreements contemplated hereby and to
acquire the Notes and the Warrants based upon its own independent evaluation
and assessment of the value of the Borrowers and its present and prospective
business prospects.


 


4.7           Accredited
Investor.  Such
Purchaser is an “accredited investor” within the meaning of SEC Rule 501
of Regulation D, as presently in effect.


 


4.8           Restricted
Securities; Legends.  Such
Purchaser recognizes that the Notes and the Warrants will not be registered
under the Securities Act or other applicable federal or state securities
laws.  Such Purchaser understands that
the Notes and the Warrants it is purchasing are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Borrowers in a transaction not involving a public
offering.  Such Purchaser acknowledges
that it may not sell or transfer the Notes and the Warrants unless such Notes
and Warrants are registered under the Securities Act and under any other
applicable securities laws and that certificates evidencing the Notes and
Warrants will bear the following legend or similar legend as applicable:


 


THIS SECURITY AND THE SHARES OF
COMMON STOCK WHICH MAY BE PURCHASED UPON THE EXERCISE OF THIS SECURITY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION AND REGISTRATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM UNDER THE ACT AND
THE RULES AND REGULATIONS THEREUNDER AND SUCH APPLICABLE STATE SECURITIES LAWS.


 


4.9           No General
Solicitation.  Such
Purchaser acknowledges that the Notes and the Warrants were not offered to such
Purchaser by means of: (a) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium, or
broadcast over television or radio, or (b) any other form of general
solicitation or advertising.


 


4.10         Absence of
Conflicts.  Such
Purchaser’s execution, delivery, and performance of, and compliance with the
Loan Documents and this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have not and will not:


 


(a)       violate, conflict with or result in a breach of any
provision of or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, any of the terms,


 


13

















 


conditions or provisions of (i) its
certificate/articles of formation or organization or any of its other formation
or organizational documents (if any), or (ii) any material contract to
which it is a party, or result in the creation of any Lien upon any of the
assets, properties or business of such Purchaser; or


 


(b)       violate any judgment, ruling, order, writ, injunction,
award, decree, or any Law or regulation of any court or federal, state, county
or local government or any other governmental, regulatory or administrative
agency or authority which is applicable to such Purchaser or any of its assets,
properties or businesses.


 


4.11         Brokers or
Finders.  Such Purchaser has not
incurred, nor will it incur, directly or indirectly, as a result of any action
taken by such Purchaser, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with this Agreement or the
issuance of the Notes and the Warrants or any transaction contemplated hereby
or thereby.  Such Purchaser agrees to
indemnify and hold harmless the Borrowers from any liability for any commission
or compensation in the nature of a finders’ fee (and the costs and expenses of
defending against such liability or asserted liability) for which such
Purchaser, or any of its respective officers, employees or representatives is
responsible.


 


SECTION 5.                                Conditions of
the Parties.


 


5.1           Conditions of Purchasers’
Obligations at any Closing.  The obligations of each Purchaser under Section 1
of this Agreement are subject to the satisfaction by the Borrowers on or before
such Closing of each of the following conditions:


 


(a)       Representations and Warranties. 
The representations and warranties of the Borrowers contained in Section 3
shall be true and correct on and as of the Initial Closing Date and shall be
true and correct in all material respects on and as of any Subsequent Closing
Date with the same force and effect as though such representations and
warranties had been made on such date.


 


(b)       Performance.  The Borrowers
shall have performed and complied with all conditions contained in this
Agreement that are required to be performed or complied with by it on or before
such Closing.


 


(c)       No Material Adverse Effect; Officer’s Certificate. 
No Material Adverse Effect shall have occurred between the date hereof
and such Closing Date and the President and/or Chief Executive Officer of each
Borrower shall deliver to the Agent, acting on behalf of the Purchasers, at
each such Closing a certificate stating that the conditions specified in
Sections 5.1(a), (b) and (c) have been fulfilled.


 


(d)       Consents and Approvals.  All
authorizations, approvals, permits, or consents, if any, of any governmental
authority or regulatory body of the United States or of any state or any
creditor of the Borrowers or any other Person that are required in connection
with the lawful issuance and sale of the Notes and the Warrants at such Closing
pursuant to this Agreement shall be duly obtained and effective as of each such
Closing other than as provided on Schedule 3.14 and the purchase and
payment of the Notes and the Warrants to be purchased by the Purchasers at each
such Closing on the terms and conditions as provided herein shall not violate
any applicable Law.


 


14

















 


(e)       Good Standing.  The Parent
shall have delivered to the Agent, acting on behalf of the Purchasers,
certificates of good standing with respect to each Borrower dated as of a date
no earlier than 15 days prior to the any such Closing from the jurisdiction of
incorporation of such Borrower.


 


(f)        Secretary’s Certificate.  The Parent
shall have delivered to the Agent, acting on behalf of the Purchasers, a
certificate executed by the Secretary of each Borrower dated such Closing Date
certifying with respect to (i) a copy of the such Borrower’s Certificate
of Incorporation and its Bylaws as amended to and in effect on such Closing
Date and that such Borrower is not in violation of or default under any
provision of its Certificate of Incorporation or Bylaw as of and on such
Closing Date, (ii) board resolutions of such Borrower authorizing the
transactions contemplated by this Agreement and the Loan Documents.


 


(g)       Compliance with Covenants. 
On any such Closing Date the Borrowers shall be in compliance with each
of the covenants set forth in Section 7.


 


5.2       Conditions of Initial
Purchasers’ Obligations at the Initial Closing.  In addition to the conditions set forth in Section 5.1,
the obligations of each Initial Purchaser under Section 1.2 of this
Agreement are subject to the satisfaction by the Borrowers on the Initial
Closing Date of each of the following conditions:


 


(a)       Security Agreement.  The Borrowers
shall have executed and delivered to the Agent, acting on behalf of the
Purchasers, the Security Agreement.


 


(b)       SVB Subordination Agreement. 
The Borrowers shall have executed and delivered to the Initial
Purchasers the SVB Subordination Agreement.


 


(c)       Senior Credit Agreement Amendment. 
The Borrowers and SVB shall have executed and delivered to the Agent,
acting on behalf of the Purchasers, an amendment to the Senior Credit Agreement
terminating the non-formula indebtedness and the provision for non-formula
advances.


 


(d)       Initial Closing Notes.  The Borrowers
shall deliver to each Initial Purchaser its respective Initial Closing Note.


 


(e)       Initial Closing Warrants. 
The Borrowers shall deliver to each Initial Purchaser its respective
Initial Closing Warrants.


 


(f)        Subordination Agreement.  Phoenix
Venture Fund LLC, as agent on behalf of the purchasers of the Fall 2008 Notes
and Spring 2009 Notes, the Fall 2008 Majority Purchasers, the Spring 2008
Majority Purchasers and the Borrowers shall have executed and delivered to the
Agent, acting on behalf of the Purchasers, the Subordination Agreement.


 


(g)       Termination and Lien Release Letter Agreement. 
Philip Sassower and Susan Sassower, and Phoenix Venture Fund LLC, as
agent on behalf of the purchasers of the Fall 2008 Notes and Spring 2009 Notes
shall have executed and delivered the Termination and Lien Release Agreement to
the Borrowers.


 


15

















 


(h)       Administrative Fee to Agent. 
The Borrowers shall have paid to the Agent, acting on behalf of the
Purchasers, or its designee, an administrative fee equal to five percent (5%)
of the aggregate amount of Notes being purchased on the Initial Closing Date.


 


5.3       Conditions of Additional Purchasers’ Obligations at
any Subsequent Closing.  In addition to the conditions
set forth in Section 5.1, the obligations of each Additional Purchaser
under Section 1.3 of this Agreement are subject to the satisfaction by the
Borrowers on each Subsequent Closing Date of the following conditions:


 


(a)       Supplemental Schedule II. 
On or before any Subsequent Closing Date, the Parent shall deliver to
the Agent, acting on behalf of each Additional Purchaser, a supplement to
Schedule II reflecting the amount of the Additional Notes and the Additional
Warrants that the Borrowers will issue to each Additional Purchaser on such
Subsequent Closing Date and the aggregate purchase price therefor.


 


(b)       Additional Notes.  The Parent
shall deliver to the Agent, acting on behalf of each Additional Purchaser, such
Additional Purchaser’s Additional Notes.


 


(c)       Additional Warrants.  With respect
to any Subsequent Closing, the Parent shall deliver to the Agent, acting on
behalf of each Additional Purchaser, such Additional Purchaser’s Additional
Warrants.


 


(d)       SVB Subordination Agreement. 
The Borrowers shall have executed and delivered to each Additional
Purchaser the SVB Subordination Agreement.


 


(e)       Subordination Agreement.  Phoenix
Venture Fund LLC, as agent on behalf of the purchasers of the Fall 2008 Notes
and Spring 2009 Notes, the Fall 2008 Majority Purchasers and the Spring 2008
Majority Purchasers shall have executed and delivered to the Agent, acting on
behalf of the Purchasers, the Subordination Agreement.


 


(f)        Administrative Fee to Agent. 
The Borrowers shall have paid to the Agent, acting on behalf of the
Purchasers, or its designee, an administrative fee equal to five percent (5%)
of the aggregate amount of Notes being purchased on any Subsequent Closing
Date.


 


5.4       Conditions of Borrowers’ Obligations at any Closing. 
The obligations of the Borrowers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction by the
Purchasers on or before any such Closing of each of the following conditions:


 


(a)       Representations and Warranties. 
The representations and warranties of each of the Purchasers contained
in Section 4 shall be true and correct in all material respects on and as
of such Closing  with the same force and effect as though such representations and
warranties had been made on and as of the date of such Closing; provided,
however, that representations and warranties that contain a materiality
qualification shall be true and correct in all respects.


 


(b)       Performance.  Each
Purchaser shall have performed and complied with all conditions contained in
this Agreement that are required to be performed or complied with by it on or
before such Closing.


 


16

















 


(c)       Consents and Approvals.  All
authorizations, approvals, or permits, if any, of any Governmental Authority or
any other Person that are required in connection with the lawful issuance and
sale of the Notes and the Warrants to such Purchaser pursuant to this Agreement
shall be duly obtained and effective as of such Closing other than as provided
on Schedule 3.14 and the purchase and payment of the Notes and the
Warrants to be purchased by the Purchasers at such Closing on the terms and
conditions as provided herein shall not violate any applicable Law.


 


(d)       Purchase Price.  The
Purchasers shall have delivered to the Borrowers the purchase price for the
Notes and the Warrants being purchased pursuant hereto on such Closing Date.


 


(e)       SVB Subordination Agreement. Each Purchaser shall have executed and
delivered to the Borrowers and SVB, the SVB Subordination Agreement.


 


(f)        Senior Credit Agreement Amendment. 
SVB shall have executed and delivered to the Borrowers, an amendment to
the Senior Credit Agreement terminating the non-formula indebtedness and the
provision for non-formula advances.


 


(g)       Security Agreement.  The Agent
shall have executed and delivered to the Borrowers, the Security Agreement.


 


(h)       Subordination Agreement.  Phoenix
Venture Fund LLC, as agent on behalf of the purchasers of the Fall 2008 Notes
and Spring 2009 Notes, the Fall 2008 Majority Purchasers and the Spring 2008
Majority Purchasers and the Agent, acting on behalf of the Purchasers shall
have executed and delivered to the Borrowers, the Subordination Agreement.


 


(i)        Termination and Lien Release Letter Agreement. 
Philip Sassower and Susan Sassower, and Phoenix Venture Fund LLC, as
agent on behalf of the purchasers of the Fall 2008 Notes and Spring 2009 Notes
shall have executed and delivered the Termination and Lien Release Agreement to
the Borrowers.


 


(j)        Termination and Lien Release. 
JAG Multi Investments LLC shall have released the lien and security
interests granted to it by the Borrowers pursuant to a Demand Note and shall
have terminated, or caused the termination of, the security filing related
thereto.


 


(k)       Amendment of Fall 2008
Note Purchase Agreement and Spring 2009 Note Purchase Agreement.  (i) Phoenix Venture Fund LLC, as agent on behalf of the
purchasers of the Fall 2008 Notes, and the Fall 2008 Majority Purchasers shall
have executed and delivered to the Borrowers, an amendment to that certain Note
Purchase Agreement, dated as of September 5, 2008, extending the maturity
date of the Fall 2008 Notes to December 31, 2011 and the expiration date
of the warrants issued in connection therewith to January 15, 2013 and (ii) Phoenix
Venture Fund LLC, as agent on behalf of the purchasers of the Spring 2009
Notes, and the Spring 2009 Majority Purchasers shall have executed and
delivered to the Borrowers, an amendment to that certain Note Purchase
Agreement, dated as of February 27, 2009, extending the maturity date of
the Spring 2009 Notes to December 31, 2011 and the expiration date of the
warrants issued in connection therewith to January 15, 2013.


 


17

















 


(l)        Surrender of Demand Note Warrants. 
Each Purchaser surrendering to the Borrowers for cancellation a Demand
Note pursuant to Section 1.5 shall have also surrendered to the Borrowers
for cancellation the warrants issued in connection with such Demand Notes.


 


SECTION 6.                                Events of
Default and Remedies.


 


6.1     Events of
Default.  So long as the Notes are
outstanding an “Event of Default” with respect to the Notes shall mean the
occurrence and existence of one or more of the following events or conditions
(for any reason, whether voluntary, involuntary or effected or required by any
Law applicable to the Borrowers):


 


(a)       The Borrowers fail to pay when due and payable any
portion of the Note Indebtedness at stated maturity, upon acceleration or
otherwise.


 


(b)       The Borrowers fail or
neglect to perform, keep, or observe in any material respect any term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Document and such failure or neglect (other than those set forth in Section 2
of Exhibit F) to perform remains in effect for a period of 10 days.


 


(c)       Any material portion of the Borrowers’ assets is
seized, attached, subjected to a writ or distress warrant, is levied upon or
comes into the possession of any judicial officer unless such action is stayed
and such attachment is dismissed within 30 days.


 


(d)       If an event of default occurs in the payment or
performance of any obligation in favor of any person from whom the Borrowers
have borrowed money aggregating in excess of $300,000 which would entitle the
holder to accelerate repayment of the borrowed money, and such default is not
waived in writing within 10 days of the occurrence of such default.


 


(e)       Either Borrower institutes proceedings to be
adjudicated as bankrupt or insolvent, or the consent by such Borrower to the
institution of bankruptcy or insolvency proceedings against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief under
any applicable federal, provincial or state law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or the consent by it to the
filing of any such petition or to the appointment under any such law of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Borrower or of substantially all of its property, or the
making by it of a general assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they
become due.


 


(f)        If there is the entry of a decree or order by a court
having jurisdiction in the premises adjudging either Borrower as bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement or adjustment of or in respect of such Borrower under any
applicable Law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or appointing under any such Law a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Borrower or of
substantially all of its property, or ordering pursuant to any such Law the
winding-up or liquidation of its affairs, and the continuance of any such
decree, petition, appointment or order unstayed and in effect for a period of
45 consecutive days.


 


18

















 


(g)       If any act, matter or thing is done to, or any action
or proceeding is launched or taken to, terminate the corporate existence of
either Borrower, whether by winding-up, surrender of charter or otherwise.


 


(h)       If either Borrower ceases to carry on its business or
makes or proposes to make any sale of its assets in bulk or any sale of its
assets out of the usual course of its business.


 


(i)        If any judgment or order for the payment of money in
excess of $200,000 shall be rendered against either Borrower and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order, or (ii) there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.


 


(j)        If any action is taken or power or right be exercised
by any Governmental Authority which has a Material Adverse Effect on either
Borrower.


 


(k)       If there shall occur or arise any change (or any
condition, event or development involving a prospective change) in the
business, operations, affairs, assets, liabilities (including any contingent
liabilities that may arise through outstanding pending or threatened
litigation or otherwise), capitalization, financial condition, licenses,
permits, rights or privileges, whether contractual or otherwise, or prospects
of either Borrower which, in the judgment of the Agent, acting on behalf of the
Purchasers, acting reasonably, has or is reasonably expected to have a Material
Adverse Effect on any Borrower or on its ability to perform its obligations
hereunder or under the Loan Documents.


 


(l)        Any representation or warranty made or deemed to be
made by the Borrowers in this Agreement or any Loan Document shall proved to
have been misleading in any material respect at the time that it was made.


 


6.2           Exercise of Remedies.  If an Event
of Default has occurred and is continuing hereunder:


 


(a)       The Agent, acting on behalf of the Purchasers, may
declare the entire unpaid Note Indebtedness, immediately due and payable,
without presentment, notice or demand, all of which are hereby expressly waived
by the Borrowers; and


 


(b)       The Agent, acting on behalf of the Purchasers, may
exercise any remedy permitted by this Agreement, or the Loan Documents or at
law or in equity.


 


6.3           Waiver of
Defaults.  No Event of
Default shall be waived by the Purchasers except in a writing signed by an
officer of the Agent, acting on behalf of the Purchasers.  No waiver of any Event of Default shall
extend to any other or further Event of Default.


 


19
















 


SECTION 7.        Covenants.


 


7.1           Debt Covenants.  So long as the Notes are outstanding, each
Borrower jointly and severally covenants and agrees that, until all Note
Indebtedness has been paid in full, it will comply with the covenants set forth
in Exhibit F attached hereto.


 


7.2           Additional Authorized Common
Stock.  The Parent shall, by not later
than January 15, 2010, obtain shareholder approval to increase its
authorized shares of Common Stock so that following such approval the total
number of authorized shares of Common Stock shall be sufficient to fully
reserve against the shares of Common Stock issuable upon exercise of any
Warrants issued hereunder, and, within one (1) Business Day following such
approval, take all requisite actions (including the filing of an amendment to
its certificate of incorporation and/or other organizational documents, if
applicable, with the Secretary of State of the State of Delaware) to effect
such increase in its authorized shares of Common Stock.


 


SECTION 8.        Indemnification.


 


8.1           General
Indemnification.  Each of the
Borrowers shall jointly and severally indemnify, defend and hold each
Purchaser, its affiliates and their respective officers, directors, partners
(general and limited), employees, agents, attorneys, successors and assigns
(each a “Purchaser Entity”) harmless from and against all Losses
incurred, suffered or arising out or by reason of any matter relating, directly
or indirectly, to this Agreement or any other Loan Document, unless such Losses
are the result of the gross negligence, willful misconduct or fraud of such
Purchaser Entity.  Each Purchaser,
severally and not jointly, shall indemnify, defend and hold the Borrowers,
their respective officers, directors, employees, agents, attorneys, successors and
assigns (each a “Borrower Entity”) harmless against all Losses as a
result of the breach of any of the representations, warranties, covenants or
agreements made by such Purchaser in this Agreement or any of the Loan
Documents, unless such Losses are a result of the gross negligence, willful
misconduct or fraud of such Borrower Entity.


 


8.2           Indemnification
Principles.  For
purposes of this Section 8, “Losses” shall mean each and all of the
following items:  claims, losses
(excluding losses of earnings), liabilities, obligations, payments, damages
(actual and direct), charges, judgments, fines, penalties, amounts paid in
settlement, costs and expenses (including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and reasonable fees, expenses
and disbursements of counsel, consultants and other experts).  Each Purchaser and the Borrowers hereby agree
that Losses shall not include punitive or consequential damages except to the
extent that such Losses are the result of the gross negligence, willful
misconduct or fraud of the party from whom the indemnification is being sought
(the “Indemnifying Party”).


 


8.3           Claim Notice;
Right to Defend.  A party seeking
indemnification (the “Indemnified Party”) under this Section 8
shall promptly upon becoming aware of the facts indicating that a claim for
indemnification may be warranted, give to the Indemnifying Party a claim notice
relating to such Loss (a “Claim Notice”).  Each Claim Notice shall specify the nature of
the claim, the applicable provision(s) of this Agreement or other
instrument under which the claim for indemnity arises, and, if possible, the
amount or the estimated amount 


 


20

















 


thereof.  No failure or delay in giving a Claim Notice
(so long as the same is given prior to expiration of the representation or
warranty upon which the claim is based) and no failure to include any specific
information relating to the claim (such as the amount or estimated amount
thereof) or any reference to any provision of this Agreement or other
instrument under which the claim arises shall affect the obligation of the
Indemnifying Party unless such failure materially and adversely prejudices the
Indemnifying Party.  If such Loss relates
to the commencement of any action or proceeding by a third person, the
Indemnified Party shall give a Claim Notice to the Indemnifying Party regarding
such action or proceeding and the Indemnifying Party shall be entitled to
participate therein. After the delivery of notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such action
or proceeding, the Indemnifying Party shall not be liable (except to the extent
the proviso to this sentence is applicable, in which event it will be so
liable) to the Indemnified Party under this Section 8 for any legal or
other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof, provided that each Indemnified Party shall
have the right to employ separate counsel to represent it and assume its
defense (in which case, the Indemnifying Party shall not represent it) in the
event the Indemnifying Party has not assumed the defense thereof within 10 days
of receipt of notice of such claim or commencement of action, and in which case
the fees and expenses of one such separate counsel shall be paid by the
Indemnifying Party.  If any Indemnified
Party employs such separate counsel it will not enter into any settlement
agreement which is not approved by the Indemnifying Party, such approval not to
be unreasonably withheld.  If the
Indemnifying Party so assumes the defense thereof, it may not agree to any
settlement of any such claim or action as the result of which any remedy or
relief, other than monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party which consent shall
not be unreasonably withheld.  In any
action hereunder as to which the Indemnifying Party has assumed the defense
thereof with counsel reasonably satisfactory to the Indemnified Party, the Indemnified
Party shall continue to be entitled to participate in the defense thereof, with
counsel of its own choice, but, except as set forth above, the Indemnifying
Party shall not be obligated hereunder to reimburse the Indemnified Party for
the costs thereof.


 


SECTION 9.        Certain
Definitions.  For the purposes of
this Agreement the following terms will have the following meanings:


 


“Additional Note(s)”
shall have the meaning ascribed to it in the recitals.


 


“Additional Purchaser(s)”
shall have the meaning ascribed to it in the preliminary paragraph.


 


“Additional Warrant(s)”
shall have the meaning ascribed to it in the recitals.


 


“Affiliate(s)” shall
mean, with respect to any Person, any other Person directly or indirectly
controlling (including but not limited to all directors and executive officers
of such Person), controlled by, or under direct or indirect common control with
such Person.  A Person shall be deemed to
control a corporation for the purposes of this definition if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of
the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause 


 


21

















 


the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.


 


“Agreement” shall
have the meaning ascribed to it in the preliminary paragraph.


 


“Borrowers” shall
have the meaning ascribed to it in the preliminary paragraph.


 


“Borrower Entity”
shall have the meaning ascribed to it in Section 8.1.


 


“Business Day” shall
mean any day other than a Saturday, Sunday, public holiday under the Laws of
the State of New York or any other day on which banking institutions are
authorized to close in New York City.


 


“Bylaw(s)” shall have
the meaning ascribed to it in Section 3.2.


 


“Certificate(s) of
Incorporation” shall have the meaning ascribed to it in Section 3.2.


 


“Claim Notice” shall
have the meaning ascribed to it in Section 8.3.


 


“Closing” shall mean
each of the Initial Closing and any Subsequent Closing.


 


“Closing Date” shall
mean each of the Initial Closing Date and any Subsequent Closing Date.


 


“Code” shall have the
meaning ascribed to it in Section 3.17.


 


“Collateral” shall
have the meaning ascribed to it in Section 11.18(a)


 


“Company Employee Plan(s)”
shall have the meaning ascribed to it in Section 3.16(a).


 


“Common Stock” shall
mean the common stock, par value $.001 per share, of the Parent.


 


“Consolidated” shall
mean, when used with reference to any financial term in this Agreement, the
aggregate for two or more Persons of the amounts signified by such term for all
such Persons determined on a consolidated basis in accordance with GAAP.  Unless otherwise specified herein, references
to consolidated financial statements or data of Parent includes consolidation
with its subsidiaries in accordance with GAAP.


 


“Default” shall mean
an event which, with the passage of time or giving of notice, will constitute
an Event of Default.


 


“Demand Notes” shall
have the meaning ascribed to it in Section 1.5.


 


“Environmental Laws”
shall have the meaning ascribed to it in Section 3.20(a).


 


“ERISA” shall have
the meaning ascribed to it in Section 3.16(a).


 


22

















 


“Event of Default”
shall have the meaning ascribed to it in Section 6.1.


 


“Exchange Act” shall
have the meaning ascribed to it in Section 3.22(a).


 


“Fall 2008 Majority
Purchasers” shall mean the purchasers holding at least 51% of the aggregate
principal amount of the Fall 2008 Notes issued under that certain Note Purchase
Agreement, dated as of September 5, 2008, as amended, by and among the
Borrowers and the purchasers thereunder.


 


“Fall 2008 Notes”
shall have the meaning ascribed to it in Section 2.4.


 


“Financial Statements”
shall have the meaning ascribed to it in Section 3.23.


 


“GAAP” shall mean
generally accepted accounting principles for financial reporting in the United
States, applied on a consistent basis.


 


“Governmental Authority”
shall mean any government or political subdivision or any agency, authority,
bureau, central bank, commission, department or instrumentality of either, or
any court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.


 


“Hereof”, “hereto”,
“hereunder” and similar terms shall refer to this Agreement and not to
any particular paragraph or provision of this Agreement.


 


“Indemnified Party”
shall have the meaning ascribed to it in Section 8.3.


 


“Indemnifying Party”
shall have the meaning ascribed to it in Section 8.2.


 


“Initial Closing”
shall have the meaning ascribed to it in Section 1.5.


 


“Initial Closing Date”
shall have the meaning ascribed to it in Section 1.5.


 


“Initial Closing Note(s)”
shall have the meaning ascribed to it in the recitals.


 


“Initial Closing
Warrant(s)” shall have the meaning ascribed to it in the recitals.


 


“Initial Purchaser(s)”
shall have the meaning ascribed to it in the preliminary paragraph.


 


“Knowledge” shall
mean with respect to each Borrower, the knowledge, after diligent investigation,
of the directors, executive officers and other senior management of such
Borrower and of the person or persons in such entity with responsibility for
the matter with respect to which the knowledge is applicable.


 


“Law” shall mean any
foreign, federal, state or local law, statute, rule, regulation, ordinance,
code, directive, writ, injunction, decree, judgment or order applicable to the
Borrowers.


 


23

















 


“Loan Documents”
shall mean the Notes, the Security Agreement, the Subordination Agreement, the
SVB Subordination Agreement, the Warrants and all agreements related hereto and
thereto.


 


“Losses” shall have
the meaning ascribed to it in Section 8.2.


 


“Lien(s)” shall mean
any mortgage, deed of trust, pledge, lien, security interest, charge or other
encumbrance or security arrangement of any nature whatsoever, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.


 


“Material Adverse Effect”
shall mean an effect which is materially adverse to the business, assets,
properties, operations, results of operations or condition (financial or
otherwise) of each of the Borrowers individually or of the Borrowers taken as a
whole (excluding general economic conditions or acts of war or terrorism).


 


“Material Contracts”
shall have the meaning ascribed to it in Section 3.10(a).


 


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


 


“Note Indebtedness”
shall mean without duplication principal, interest, fees, expenses and other
charges or other indebtedness related to the Notes and indemnification
obligations with respect to the Notes, whether direct or indirect, absolute or
contingent, of the Borrowers to any of the Purchasers or to the Agent, acting
on behalf of the Purchasers, in any manner and at any time, whether evidenced
by the Notes or arising under this Agreement, due or hereafter to become due,
now owing or that may be hereafter incurred by the Borrowers to, any of the
Purchasers or the Agent, acting on behalf of the Purchasers, and any judgments
that may hereafter be rendered on such indebtedness or any part thereof, with
interest according to the rates and terms specified, or as provided by Law, and
any and all consolidation, amendments, renewals, replacements, substitutions or
extensions of any of the foregoing.


 


“Notes” shall have
the meaning ascribed to it in the recitals.


 


“Parent” shall have
the meaning ascribed to it in the preliminary paragraph.


 


“Permits” shall have
the meaning ascribed to it in Section 3.8.


 


“Permitted Liens”
shall mean the following: (i) mechanics’, materialmen’s or similar
inchoate Liens arising or incurred in the ordinary course of business relating
to liabilities not yet due and payable; (ii) Liens for current taxes not
yet delinquent, or the validity of which is being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
foreclosure or enforcement of such Liens and where adequate reserves are
established and maintained in accordance with generally accepted accounting
principles; (iii) Liens or pledges in connection with workmen’s
compensation, unemployment insurance or other social security obligations; (iv) deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of alike nature incurred in the ordinary course of business, (v) Liens in
favor of the Senior Lender or otherwise permitted by the Senior Credit
Facility, and (vi) the Liens evidenced by UCC-1 filings 


 


24

















 


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.


 


“Person” shall mean
an individual, corporation, limited liability company, partnership, trust,
incorporated or unincorporated organization, joint venture, joint stock
company, or a government or any agency or political subdivision thereof or
other entity of any kind.


 


“Proprietary Rights”
shall have the meaning ascribed to it in Section 3.9.


 


“Purchasers” shall
have the meaning ascribed to it in the preliminary paragraph.


 


“Purchaser Entity”
shall have the meaning ascribed to it in Section 8.1.


 


“SEC” shall have the
meaning ascribed to it in Section 3.22(a).


 


“SEC Reports” shall
have the meaning ascribed to it in Section 3.22(a).


 


“Securities Act”
shall have the meaning ascribed to it in Section 3.19.


 


“Security Agreement”
shall have the meaning ascribed to it in Section 2.2.


 


“Senior Credit Agreement”
shall have the meaning ascribed to it in Section 2.3.


 


“Senior
Credit Facility” shall mean, at any time, the credit facility
evidencing Senior Indebtedness.


 


“Senior
Indebtedness” means indebtedness under the Senior Credit
Agreement, indebtedness under any future Senior Credit Facility approved by the
Agent, acting on behalf of the Purchasers, and all indebtedness under the
Wistron Agreement.


 


“Senior
Lender” means each holder of Senior Indebtedness.


 


“Spring 2009 Majority
Purchasers” shall mean the purchasers holding at least 51% of the aggregate
principal amount of the Spring 2008 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.


 


“Spring 2009 Notes”
shall have the meaning ascribed to it in Section 2.4.


 


“Subordination Agreement”
shall have the meaning ascribed to it in Section 2.4.


 


“Subsidiary” shall
have the meaning ascribed to it in the preliminary paragraph.


 


“Subsequent Closing(s)”
shall have the meaning ascribed to it in Section 1.6.


 


“Subsequent Closing Date”
shall have the meaning ascribed to it in Section 1.6.


 


25

















 


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


 


“Termination and Lien
Release Letter Agreement” shall mean the Termination and Lien Release
Letter Agreement, of even date herewith, among the Borrowers, Phoenix Venture
Fund LLC, as agent on behalf of the purchasers of the Fall 2008 Notes and the
Spring 2009 Notes, and Philip Sassower and Susan Sassower, whereby Philip
Sassower and Susan Sassower agree to, among other things, terminate the Letter
of Credit Reimbursement, Compensation and Security Agreement, dated as of May 29,
2009 and release all liens and security interests granted to them by the
Borrowers under such agreement.


 


“Warrant Exercise Price”
shall mean the lower of (i) $0.10 per share, or (ii) the volume
weighted average trading price of the Company’s Common Stock for the 5 trading
days (which must be a date on which the Common Stock traded on the OTC Bulletin
Board) immediately prior to the Initial Closing Date.


 


“Warrants” shall have
the meaning ascribed to it in the recitals.


 


“Wistron Agreement”
Turnkey Design and Manufacturing Agreement, dated July 1, 2003, by and
between the Subsidiary and Wistron Corporation.


 


SECTION 10.      [RESERVED].


 


SECTION 11.      Miscellaneous.


 


11.1         Survival of
Representations and Warranties.  The representations and warranties of the
Borrowers and Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Loan Documents.


 


11.2         Successors and
Assigns.  Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any the Notes and the Warrants).  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.


 


11.3         Governing Law.  This Agreement and the Loan Documents 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 Agreement or the Loan Documents
and waives any objection to venue in the State of New York.


 


11.4         Counterparts.  This 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.


 


26

















 


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


 


11.6         Notices.  All notices and other communications required
or permitted hereunder shall be in writing. 
Notices shall be delivered personally, via recognized overnight courier
(such as Federal Express, UPS or Airborne Express) or via certified or
registered mail.  Notices may be
delivered via facsimile or e-mail, provided that by no later than two days
thereafter such notice is confirmed in writing and sent via one of the methods
described in the previous sentence. 
Notices shall be addressed as follows:


 


(a)       if to an Initial Purchaser, to such Initial Purchaser’s
address set forth on Schedule I hereto; or at such other address or
facsimile number as such Initial Purchaser shall have furnished to the Parent
in writing; or


 


(b)       if to an Additional Purchaser, to such Additional
Purchaser’s address set forth on Schedule II hereto, or at such other
address or facsimile number as such Additional Purchaser shall have furnished
to the Parent in writing; or


 


(c)       if to the Agent, to SG Phoenix LLC, 110 East 59th
Street, Suite 1901, New York, NY 10022, facsimile number (212) 319-4970,
Attention: Philip S. Sassower, or at such other address or facsimile number as
such Agent shall have furnished to the Parent in writing; or


 


(d)       if to the Borrowers, to Xplore Technologies Corp.,
14000 Summit Drive, Suite 900, Austin, Texas 78728, facsimile number (512)
249-5630, Attention: Michael J. Rapisand, or at such other address or facsimile
number as the Parent shall have furnished in writing to the Agent, acting on
behalf of the Purchasers.


 


All notices shall be
effective upon receipt.


 


11.7         Expenses  The
Borrowers shall pay all reasonable legal fees and expenses incurred by Agent as
representative of the Purchasers in connection with this Agreement and the
transactions contemplated herein whether or not a Closing occurs.


 


11.8         Consents,
Amendments and Waivers. Subject to Section 11.18 hereof, any
term of this Agreement may be amended, and the observance of any term hereof
may be waived (either generally or in a particular instance), only with the
written consent of the Agent, acting on behalf of the Purchasers, and the
Borrowers.  Any amendment or waiver
effected in accordance with this Section 11.8 or Section 11.18 shall
be binding upon each of the parties hereto.


 


11.9         Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this 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 Agreement will
be reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.


 


27

















 


11.10       Entire
Agreement.  Each party
hereby acknowledges that no other party or any other person or entity has made
any promises, warranties, understandings or representations whatsoever, express
or implied, not contained in this Agreement and the Loan Documents and
acknowledges that it has not executed this Agreement or the Loan Documents in
reliance upon any such promises, representations, understandings or warranties
not contained herein or therein and that this Agreement and the Loan Documents
supersede all prior agreements and understandings between the parties with
respect thereto.  There are no promises,
covenants or undertakings other than those expressly set forth or provided for
in this Agreement and the Loan Documents.


 


11.11       Delays or
Omissions.  No delay or
omission to exercise any right, power or remedy accruing to any party under
this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such nonbreaching or
nondefaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.


 


11.12       Facsimile and
E-Mail Signatures.  Any
signature page delivered by a fax machine or email shall be binding to the
same extent as an original signature page, with regard to any agreement subject
to the terms hereof or any amendment thereto. 
Any party who delivers such a signature page agrees to deliver
promptly an original counterpart to each party to whom the faxed or emailed
signature page was sent.


 


11.13       Other Remedies.  In addition to those remedies specifically
set forth herein and in the Loan Documents, if any, the Agent, on behalf of the
Purchasers, may proceed to protect and enforce the rights of any party under
this Agreement and the Loan Documents either by suit in equity and/or by action
at law, including, but not limited to, an action for damages as a result of any
such breach and/or an action for specific performance of any such covenant or
agreement contained in this Agreement or in the Loan Documents.  No right or remedy conferred upon or reserved
under this Agreement or the Loan Documents is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right and remedy given under this Agreement and the
Loan Documents or now and hereafter existing under applicable Law.


 


11.14       Further
Assurances.  At any time
or from time to time after any Closing, the Borrowers, on the one hand, and the
Purchasers, on the other hand, agree to cooperate with each other, and at the
request of the other party, to execute and deliver any further instruments or
documents and to take all such further action as the other party may reasonably
request in order to evidence or effectuate the consummation of the transactions
contemplated hereby relating to the purchase contemplated herein and to
otherwise carry out the intent of the parties hereunder.


 


11.15       Exchanges;
Lost, Stolen or Mutilated Notes and Warrants.  Upon surrender by any Purchaser to the
Borrowers of any Note or Warrant, the Borrowers at their expense shall issue in
exchange therefor, and deliver to such Purchaser, a replacement Note, or
Warrant. Upon receipt of evidence satisfactory to the Borrowers of the loss,
theft, destruction or mutilation of any Note or Warrant and in case of any such
loss, theft or destruction, upon 


 


28

















 


delivery
of an indemnity agreement, satisfactory to the Borrowers, or in case of any
such mutilation, upon surrender and cancellation of such Note or Warrant, the
Borrowers shall issue and deliver to such Purchaser a new Note or Warrant of
like tenor, in lieu of such lost, stolen or mutilated Note or Warrant.


 


11.16       Termination.  This Agreement may be terminated at any time
prior to the Initial Closing by mutual agreement of the Borrowers and all
Initial Purchasers set forth in writing; provided that Section 11.7 shall
survive any such termination.


 


11.17       Pro Rata.  Each
Purchaser agrees that, for the benefit of the other Purchasers, any proceeds
received by such Purchaser as a result of the exercise of rights and remedies
under this Agreement will be divided, pro rata, among all Purchasers.


 


11.18       Appointment and Authorization of SG Phoenix LLC as Agent.


 


(a)      Appointment.  Each
Purchaser hereby irrevocably appoints and authorizes the Agent to (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 incidental thereto
(including entering into any amendment, waiver or modification subject to Section 11.18(b)),
and (ii) to hold, dispose, or otherwise deal with the Collateral (as
defined in the Security Agreement) for its own benefit and the pro rata benefit
of the Purchasers, subject to the terms and conditions of the obligations of
the Agent as provided in this Agreement and in the Loan Documents.  Each Purchaser that is an individual and that
executes this Agreement in the State of New York agrees to execute and deliver
the appointment contained in Exhibit G hereto.


 


(b)       Exceptions to General Appointment. 
Notwithstanding anything to the contrary contained herein, the Agent and
the Borrowers shall not, without the prior written consent and approval of the
Purchasers holding at least 51% of the aggregate principal amount of the Notes
then outstanding (the “Majority Purchasers”), amend, modify, terminate
or obtain a waiver of any provision of this Agreement, or any other Loan
Document which will have the effect of (i) 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 or (ii) reducing
the rate or extending the time for payment of principal or interest under any
Notes or (iii) releasing any Collateral.


 


(c)       No Action.  The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement, any other Loan Document or any other related document or any other
document or instrument referred to or provided for herein or therein unless it
shall first receive such advice or concurrence of the Majority Purchasers as it
deems appropriate, or it shall first be indemnified to its satisfaction by the
Purchasers against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.  The Agent shall in all cases be fully
protected from the Purchasers in acting, or in refraining from acting, under
this Agreement, any other Loan Document or any other related document or any
other document or instrument referred to or provided for herein or therein in
accordance with the


 


29
















 


request of the Majority Purchasers, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Purchasers and all future holders of the Notes.


 


(d)       No Fiduciary Relationship, Limitation
of Responsibility.  Notwithstanding
any provision to the contrary elsewhere in this Agreement or any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein or therein, or any fiduciary relationship with any
Purchaser, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement, any other Loan
Document or any other related document or otherwise exist against the
Agent.  The Agent (which term shall
include its affiliates and its own and its affiliates’ officers, directors,
partners, shareholders, employees and agents) shall not be responsible to the
Purchasers for (i) any statements, representations or warranties contained
in this Agreement or any Loan Document or for the failure by a Borrower or any
other party to perform its obligations hereunder or thereunder and shall not by
reason of this Agreement or any other Loan Document be a trustee for any
Purchaser, (ii) any action taken or omitted to be taken by it hereunder or
under any other Loan Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct or (iii) any
recitals, statements, representations or warranties made by a Borrower or any
officer or official of a Borrower or any other party contained in this
Agreement, any other Loan Document or any other related document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement, any Loan Document, or any other
related document, or for the value, legality, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Loan Document,
or any other related document or any other document or instrument referred to
or provided for herein or therein, for the perfection or priority of any lien
security for the Notes or for any failure by a Borrower to perform any of its
obligations hereunder or thereunder.  The
Agent shall not be under any obligation to any Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement, any other Loan Document or any other
related document or any other document or instrument referred to or provided
for herein or therein, or to inspect the properties, books or records of the a
Borrower.


 


(e)       Reliance.  As between the Purchasers and the Agent, the
Agent shall be entitled to rely, and shall be fully protected in relying upon
any promissory note, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper person(s), organization(s) or
entity or entities and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrowers or any of them), independent accountants
and other experts selected by the Agent. 
The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless a written notice of assignment or transfer thereof
shall have been filed with the Agent.


 


(f)        Knowledge of Events of Default.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless the Agent
has received notice from a Purchaser or a Borrower referring to this Agreement,
or a Loan Document, describing such Event of Default and stating that such
notice is a “notice of default”.  In the
event that the Agent receives such a notice, the Agent shall give notice
thereof to the Purchasers.


 


30

















 


(g)       Acknowledgments, Representations and
Warranties of Purchasers to Agent. 
Each Purchaser expressly acknowledges that neither the Agent nor any of
its officers, directors, partners, shareholders, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Agent hereafter taken, including any review of the
affairs of the Borrowers or any affiliate of the Borrowers, shall be deemed to
constitute any representation or warranty by the Agent to any Purchaser.  Each Purchaser represents to the Agent that
it has, independently and without reliance upon the Agent or any other
Purchaser, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the Borrowers
and their affiliates and made its own decision to purchase the Notes and
Warrants hereunder and enter into this Agreement.  Each Purchaser also represents that it shall,
independently and without reliance upon the Agent or any other Purchaser, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement or any other Loan Document or
any other related document and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and their affiliates.  Except for notices, reports and other
documents expressly required to be furnished to the Purchasers by the Agent
hereunder and under the Loan Documents, the Agent shall have no duty or responsibility
to provide any Purchaser with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects
or creditworthiness of the Borrowers or any affiliate of the Borrowers which
may come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.


 


(h)       Purchasers Indemnification.  The Purchasers agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrowers and
without limiting the obligation of the Borrowers to do so), ratably in
accordance with the aggregate principal amount of the Notes held by the
Purchasers for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Agent in its capacity as such (including by any Purchaser) arising
out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Loan Document provided, that no
Purchaser shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to be
indemnified.  The agreements in this Section 11.18
shall survive the payment of the Notes and all other amounts payable hereunder.


 


(i)        Agent in its Individual Capacity, and
not as Agent.  The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrowers as though the Agent were not the
Agent.  With respect to its Notes
purchased hereunder the Agent shall have the same rights and powers under this
Agreement, the Loan Documents and any related document as any Purchaser and may
exercise the same as though it were not the Agent, and the terms “Purchaser”
and “Purchasers” shall include the Agent in its individual capacity.


 


(j)        Agent’s Ability to Employ Agents and
Attorneys-in-Fact.  The Agent may
employ agents and attorneys-in-fact and shall not be responsible, except as to
money or 


 


31

















 


securities received by it or its authorized agents,
for the negligence or misconduct of any such agents or attorneys-in-fact
selected and monitored by it with reasonable care.


 


(k)       Resignation of Agent.  The Agent may resign as Agent upon 30 days’
written notice to the Purchasers and the Borrowers.  If the Agent shall resign as Agent under this
Agreement and the Loan Documents, then the Majority Purchasers shall appoint from
among the Purchasers or their affiliates a successor agent for the Purchasers,
which successor agent shall (unless an Event of Default shall have occurred and
be continuing) be approved by the Borrowers (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of the Agent, and the term “Agent” shall mean
such successor agent effective upon such appointment and approval, and the
former Agent’s rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement, the Loan Document or any holders of the Notes.  If no successor agent has accepted
appointment as Agent by the date that is 30 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Purchasers (taking actions by approval of
the Majority Purchasers) shall assume and perform all of the duties of the
Agent hereunder until such time, if any, as the Purchasers appoint a successor
agent as provided for above.  After any
retiring Agent’s resignation as Agent, the provisions of this Section 11.18
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the Loan Documents.


 


(l)        Borrower’s Ability to Rely on Agent’s
Authority. The Borrowers shall be entitled to rely upon any certificate,
notice or other document or other advice, statement or instruction provided to
it by Agent pursuant to this Agreement or the Loan Documents, and the Borrowers
shall generally be entitled to deal with Agent with respect to matters under
this Agreement or the Loan Documents which Agent is authorized to deal with
without any obligation whatsoever to satisfy itself as to the authority of
Agent to act on behalf of the Purchasers and without any liability whatsoever
to the Purchasers for relying upon any certificate, notice or other document or
other advice, statement or instruction provided to it by Agent, notwithstanding
any lack of authority of Agent to provide the same.


 


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32

















 


IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.


 


	
   

  	
  The
  Borrowers:

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  J. Rapisand

  
	
   

  	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  J. Rapisand

  
	
   

  	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer
  and Secretary

  



 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $1,000,000.00

  	
   

  	
  By:

  	
  /s/ Philip
  Sassower

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  JAG
  MULTI INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $300,000.00

  	
   

  	
  By:

  	
  /s/ Alexander M.
  Goren

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Alexander
  M. Goren

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  






 


Signature
Page to Note Purchase Agreement


 
















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $175,000.00

  	
   

  	
  By:

  	
  /s/ Leonard
  Pearlman

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  DOLPHIN
  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $150,000.00

  	
   

  	
  By:

  	
  /s/ Mitch
  Bredefeld

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mitch
  Bredefeld

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Trustee

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  SUNSHINE
  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $150,000.00

  	
   

  	
  By:

  	
  /s/ Mitch
  Bredefeld

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mitch
  Bredefeld

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Trustee

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $120,000.00

  	
   

  	
  By:

  	
  /s/ Jason Rabin

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  DARYL
  LEE SCOTT LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $100,000.00

  	
   

  	
  By:

  	
  /s/ Jonathan Tick

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jonathan
  Tick

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Partner

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $100,000.00

  	
   

  	
  By:

  	
  /s/ James
  O’Donnell

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $100,000.00

  	
   

  	
  By:

  	
  /s/ Keith
  Guenther

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  RAVICH
  REVOCABLE TRUST OF 1989

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $100,000.00

  	
   

  	
  By:

  	
  /s/ Jess
  Ravich

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jess
  Ravich

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Trustee

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  RIVERSIDE
  MFG., LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $100,000.00

  	
   

  	
  By:

  	
  /s/ Fred J.
  Merritt

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Fred
  J. Merritt

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $100,000.00

  	
   

  	
  By:

  	
  /s/ Ian Scott

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 
















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $60,000.00

  	
   

  	
  By:

  	
  /s/ Michael H.
  Spector

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Michael
  Engmann

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Fred Halpern

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Joshua
  Halpern

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  LEGEND
  MERCHANT GROUP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ David
  W. Unsworth, Jr.

  
	
   

  	
   

  	
   

  	
  Name:

  	
  David
  W. Unsworth, Jr.

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Andre Marcus

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  MIKMIK
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Micaela Goren

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Micaela
  Goren

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Martin
  Rosenman

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $50,000.00

  	
   

  	
  By:

  	
  /s/ Jonathan Tick

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


Signature
Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  682501
  ALBERTA LTD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Jeff Green

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jeff
  Green

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  






 


Signature
Page to Note Purchase Agreement


 
















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  Andax
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Andrea Goren

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrea
  Goren

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Howard
  Blitman

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Joshua
  Cammaker

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Victor
  Levinson

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Bernard
  Shavitz

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
  CHARGE
  CARD SYSTEMS INC. DEFINED BENEFIT PLAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $10,000.00

  	
   

  	
  By:

  	
  /s/ Anthony
  L. Andreozzi

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Anthony
  L. Andreozzi

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Administrator

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $10,000.00

  	
   

  	
  By:

  	
  /s/ Bernard
  Levenberg

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $10,000.00

  	
   

  	
  By:

  	
  /s/ Mitchell Sassower

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $7,500.00

  	
   

  	
  By:

  	
  /s/ Keith
  Gutstein

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $7,500.00

  	
   

  	
  By:

  	
  /s/ Barton
  Schwartz

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 
















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $5,000.00

  	
   

  	
  By:

  	
  /s/ Ivan Dolowich

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $5,000.00

  	
   

  	
  By:

  	
  /s/ Sean Kelly

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $5,000.00

  	
   

  	
  By:

  	
  /s/ Andrew
  Richards

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $25,000.00

  	
   

  	
  By:

  	
  /s/ Aron Schnell

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 

















 




	
   

  	
   

  	
   

  	
  The
  Initial Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Initial Closing Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $20,000.00

  	
   

  	
  By:

  	
  /s/ Henry G.
  Elkins

  
	
   

  	
   

  	
  By:

  	
  /s/ Nancy P.
  Elkins

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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  The
  Additional Purchasers:

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Additional Notes and Warrants to be Purchased:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $                                                          

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  






 


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Page to Note Purchase Agreement


 
















 


Schedule I


 


	
  NAME
  AND ADDRESS

  OF INITIAL

  PURCHASERS

  	
   

  	
  INITIAL

  CLOSING NOTE 

  PURCHASE PRICE

  	
   

  	
  NUMBER OF

  INITIAL CLOSING

  WARRANT SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Philip S. Sassower

  110 East 59th Street, Suite 1901

  New York, NY 10022

  	
   

  	
  $

  	
  1,000,000.00

  ($170,000.00 of which is

  paid by conversion of a

  Demand Notice)

  	
   

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JAG
  Multi Investments, LLC

  1211 Avenue of the Americas

  Suite 3300

  New York, NY 10036

  	
   

  	
  $

  	
  300,000.00

  (all which is paid
  by

  conversion of a

  Demand Notice)

  	
   

  	
  3,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leonard
  Pearlman

  112 West 56th Street, Suite 20S

  New York, NY 10019

  	
   

  	
  $

  	
  175,000.00

  	
   

  	
  1,750,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dolphin
  Trust

  c/o Raia, Bredefeld & Associates P.C.

  163 Washington Valley Road, Suite 103

  Warren, NJ 07059

  Attn. Mitch Bredefeld

  	
   

  	
  $

  	
  150,000.00

  	
   

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sunshine
  Trust

  c/o Raia, Bredefeld & Associates P.C.

  163 Washington Valley Road. Suite 103

  Warren, NJ 07059

  Attn. Mitch Bredefeld

  	
   

  	
  $

  	
  150,000.00

  	
   

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jason
  Rabin

  23 East 74th Street

  Penthouse Apartment

  New York, NY 10021

  	
   

  	
  $

  	
  120,000.00

  	
   

  	
  1,200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Daryl
  Lee Scott LLC

  Tick & Co.

  One Hollow Lane

  Lake Success, NY 11042-1215

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James
  O’Donnell

  845 United Nations Plaza

  New York, NY 10017

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Keith
  Guenther

  27562 San Blas

  Mission Viejo, CA 92692

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  1,000,000

  	
   

  



 

















 


	
  NAME
  AND ADDRESS

  OF INITIAL

  PURCHASERS

  	
   

  	
  INITIAL

  CLOSING NOTE 

  PURCHASE PRICE

  	
   

  	
  NUMBER OF

  INITIAL CLOSING

  WARRANT SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ravich
  Revocable Trust of 1989

  11766 Wilshire Blvd., Suite 870,

  Los Angeles, CA 90025

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Riverside
  Mfg LLC

  14510 Lima Road

  Ft. Wayne, IN 46818

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ian
  Scott

  The Court House

  Ryme Intrinseca, Sherborne

  Dorset DT9 6JX, England

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Michael
  H. Spector

  73 Bacon Road

  Old Westbury, NY 11568

  	
   

  	
  $

  	
  60,000.00

  	
   

  	
  600,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Michael
  Engmann

  Engmann Options

  220 Bush Street, Suite 660

  San Francisco, CA 94104

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fred
  Halpern

  300 St. Andrews Drive

  Schereville, IN 46375

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joshua
  Halpern

  1258 Wildflower Way

  Schererville, IN 46375

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legend
  Merchant Group

  30 Broad Street, 38th Floor

  New York, NY 10004-2946

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Andre
  Marcus

  Prokopova 10, 130 00

  Prague 3, Czech Republic

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MikMik LLC

  c/o Mattia Monti

  1040 Park Avenue, Apt. 10J

  New York, NY 10028

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Martin
  Rosenman

  3 Chestnut Drive

  Great Neck, NY 11021

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  



 


Signature
Page to Note Purchase Agreement


 

















 


	
  NAME
  AND ADDRESS

  OF INITIAL

  PURCHASERS

  	
   

  	
  INITIAL

  CLOSING NOTE 

  PURCHASE PRICE

  	
   

  	
  NUMBER OF

  INITIAL CLOSING

  WARRANT SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jonathan
  Tick

  Tick & Co.

  One Hollow Lane

  Lake Success, NY 11042-1215

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  682501 Alberta Ltd

  c/o Jeff Green

  Jovian Capital

  26 Wellington Street East, Suite 920

  Toronto, Ontario M5E 1S2 Canada

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Andax
  LLC

  131 Riverside Drive, Apt. 10C

  New York, NY 10024

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Howard
  Blitman

  118 North Bedford Road, Suite 102

  Mount Kisco, NY 10549

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joshua
  Cammaker

  750 Park Avenue, Apt. 12C

  New York, NY 10021

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Victor
  Levinson

  565 Park Avenue

  New York, NY 10065

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bernard
  Shavitz

  7777 Afton Villa Ct.

  Boca Raton, FL 33433

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aron
  Schnell

  121 Harold Road

  Woodmere, NY 11598

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Henry
  G. and Nancy Elkins

  750 Weaver Dairy Road Apt 199

  Chapel Hill, NC 27514-1466

  	
   

  	
  $

  	
  20,000.00

  	
   

  	
  200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charge
  Card Systems Inc. Defined

  Benefit Plan

  1515 South Federal Highway

  Boca Raton, FL 33432

  Attn. Bernard Shavitz

  	
   

  	
  $

  	
  10,000.00

  	
   

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bernard
  Levenberg

  8431 E. Del Camino Drive

  Scottsdale, AZ 85258

  	
   

  	
  $

  	
  10,000.00

  	
   

  	
  100,000

  	
   

  



 


Signature
Page to Note Purchase Agreement


 

















 


	
  NAME
  AND ADDRESS

  OF INITIAL

  PURCHASERS

  	
   

  	
  INITIAL

  CLOSING NOTE 

  PURCHASE PRICE

  	
   

  	
  NUMBER OF

  INITIAL CLOSING

  WARRANT SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mitchell
  Sassower

  110-11 Queens Boulevard, 29C

  Forest Hills, NY 11375

  	
   

  	
  $

  	
  10,000.00

  	
   

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Keith
  Gutstein

  275 Willard Drive

  Hewlett, NY 11557

  	
   

  	
  $

  	
  7,500.00

  	
   

  	
  75,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Barton
  Schwartz

  950 Carol Avenue

  Woodmere, NY 11598

  	
   

  	
  $

  	
  7,500.00

  	
   

  	
  75,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ivan
  Dolowich

  35 Moss Lane

  Jericho, NY 11753

  	
   

  	
  $

  	
  5,000.00

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sean
  Kelly

  6 Pondside Ct.

  Mt. Sinai, NY 11766

  	
   

  	
  $

  	
  5,000.00

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Andrew
  Richards, Esq.

  “Personal and Confidential”

  Kaufman Dolowich Voluck &

  Gonzo, LLP

  135 Crossways Park Drive, Suite 201

  Woodbury, NY 11797

  	
   

  	
  $

  	
  5,000.00

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  3,210,000.00

  	
   

  	
  32,100,000

  	
   

  



 


Signature
Page to Note Purchase Agreement


 

















 


Schedule II


 


	
  NAME
  AND ADDRESS

  OF

  ADDITIONAL PURCHASERS

  	
   

  	
  ADDITIONAL NOTE

  PURCHASE PRICE

  	
   

  	
  NUMBER OF

  ADDITIONAL CLOSING

  WARRANT SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT A


 


FORM OF NOTE


 
















 


THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND SUCH
NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE RULES
AND REGULATIONS THEREUNDER AND SUCH APPLICABLE STATE SECURITIES LAWS.


 


THIS NOTE AND THE RIGHTS AND
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE TO THE INDEBTEDNESS (INCLUDING
INTEREST) OF THE BORROWERS REPRESENTED BY THAT CERTAIN AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT DATED AS OF SEPTEMBER 11, 2009 (THE “A&R LOAN
AGREEMENT”), BY AND AMONG THE SUBSIDIARY AND THE SENIOR LENDER, AS SUCH A&R
LOAN AGREEMENT MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE
MODIFIED FROM TIME TO TIME OR ANY REFINANCINGS THEREOF.


 


SENIOR SECURED SUBORDINATED PROMISSORY NOTE


 


	
  $                    

  	
                      ,
  2009

  



 


FOR VALUE RECEIVED, the
undersigned, Xplore Technologies Corp., a Delaware corporation, (the “Parent”)
and Xplore Technologies Corporation of America, a Delaware corporation and a
wholly-owned subsidiary of the Parent (the “Subsidiary” and collectively
with the Parent, the “Borrowers”), promise to pay to
                  
(the “Holder”), the principal sum of
                                
DOLLARS
($                )
with interest on the unpaid balance from the date hereof, at the rate of 10%
per annum on the unpaid principal amount, in lawful money of the United States
of America or as otherwise provided in Section 3 hereof, at
                                                                       ,
or at such other place as the Holder may designate in writing. This Note is one
of the senior secured subordinated promissory notes (collectively, the “Notes”)
referred to in, and purchased pursuant to, the Note Purchase Agreement dated November 5,
2009, as amended from time to time, among the Borrowers and the Purchasers
named therein (the “Note Purchase Agreement”) and evidences a borrowing
from the Holder by the Borrowers under the Note Purchase Agreement.  The obligations of the Borrowers under this
Note are secured as provided in the Note Purchase Agreement and the Loan
Documents.


 

















 


SECTION 1.           Maturity Date.  The principal of this Note, together will all
unpaid interest and any other fees or expenses otherwise due and owed to the
Holder under the Note Purchase Agreement, shall be due and payable on December 31,
2011 (the “Maturity Date”). The Borrowers
may prepay the Note in whole or in part, at any time prior to the Maturity
Date, without penalty.


 


SECTION 2.           Pro-Rata
Payment.  If the Borrowers are not
able to pay to the holders of the Notes the full amounts due at any time when
payments under the Notes become due and payable by the Borrowers, either on the
Maturity Date or upon the occurrence of an Event of Default, or upon prepayment
at the option of the Borrowers, the holders of the Notes shall share ratably in
any distribution of the Borrowers pro rata in proportion to the respective
principal amounts of each such holder’s Notes and senior to the holders of the
Fall 2008 Notes (as defined in the Note Purchase Agreement) and the Spring 2009
Notes (as defined in the Note Purchase Agreement).


 


SECTION 3.           Payment
of Interest.


 


(a)           Interest on the unpaid principal
amount of this Note shall be due and payable quarterly on March 31, June 30,
September 30 and December 31 of each calendar year the Note is
outstanding commencing on December 31, 2009 and ending with a final
quarterly interest payment on the Maturity Date in cash or, at the option of
the Parent, in shares of the Parent’s Common Stock at 75% of the then current
market price of such Common Stock on the interest payment date. For purposes
hereof, the term then current market price means the volume weighted average
trading price, as traded on the OTC Bulletin Board or such other securities
exchange or quotation system which on the date of determination constitutes the
principal securities market for the shares of the Parent’s Common Stock, for
the five (5) trading days prior to the applicable interest payment date.


 


(b)           All computations of interest payable
hereunder shall be made on the basis of the actual number of days in the period
for which such interest is payable and a year of 365 or 366 days, as
applicable.


 


(c)           Notwithstanding any other provision
of this Note, to the extent permitted by applicable law, interest shall be due
and payable on any overdue installment of principal or interest on this Note
(including amounts due and unpaid upon any acceleration of this Note) at a rate
equal to the lesser of (i) fourteen percent (14%) and (ii) the
maximum rate permitted by applicable law (the “Maximum Rate”).


 


SECTION 4.           Event
of Default; Remedies.  Upon the
occurrence and during the continuance of an Event of Default, this Note may be
accelerated in the manner described in the Note Purchase Agreement and the
Holder and the Agent shall have all of the rights and remedies provided in the
Note Purchase Agreement and the Loan Documents.


 


SECTION 5.           Waiver
of Certain Rights.  Subject to any
applicable notice periods, all parties to this Note, including Borrowers and
any sureties, endorsers, or guarantors, hereby waive protest, presentment,
notice of dishonor, and notice of acceleration of maturity and agree to
continue to remain bound for the payment of principal, interest and all other
sums due under this Note notwithstanding any change


 


79

















 


or changes by way of release, surrender, exchange,
modification or substitution of any security for this Note or by way of any
extension or extensions of time for the payment of principal and interest; and
all such parties waive all and every kind of notice of such change or changes
and agree that the same may be without notice or consent of any of them.


 


SECTION 6.           Enforcement.  The Holder may enforce this Note as described
in the Note Purchase Agreement.


 


SECTION 7.           Subordination.  Repayment of this Note shall be subordinated
to the extent and in the manner set forth in any subordination agreement
between the Borrowers, the Agent on behalf of all the holders of the Notes and
any Senior Lender of the Borrowers.


 


SECTION 8.           Security.  This Note is entitled to the benefits,
granted to the Agent on behalf of the Purchasers, set forth in the Security
Agreement.


 


SECTION 9.           Priority.  The indebtedness under this Note shall rank
senior to  the indebtedness under the Fall 2008
Notes and the Spring 2009 Notes.


 


SECTION 10.         Definitions.  Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the Note
Purchase Agreement.


 


SECTION 11.         Miscellaneous.  The following general provisions apply:


 


(a)           This Note, and the obligations and
rights of the Borrowers and the Holder hereunder, shall be binding upon and
inure to the benefit of the Borrowers, the Holder, and their respective heirs,
personal representatives, successors and assigns.


 


(b)           All notices, requests, consents and
demands hereunder shall be made in writing in the manner described in the Note
Purchase Agreement.


 


(c)           Whenever possible, each provision of
this Note will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note 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 Note will be
reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.


 


(d)           This Note 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. 
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 Note and waives any objection to venue in the State
of New York.


 


(e)           Recourse under this Note shall be
solely as provided in the Note Purchase Agreement and the Loan Documents and in
no event to the officers, directors or shareholders of the Borrowers.


 


(f)            No provision in this Note, or in any
instrument or any other document evidencing the obligations hereunder, executed
by the Borrowers or any guarantor, endorser or other party now or hereafter
becoming liable for payment of this


 


80

















 


Note, shall require the payment or permit the
collection of interest in excess of the Maximum Rate.  If any excess of interest in such respect is
provided for herein or in any such instrument, or other document, the
provisions of this paragraph shall govern, and neither of the Borrowers nor any
guarantor, endorser or other party shall be obligated to pay the amount of such
interest to the extent that it is in excess of the Maximum Rate.  The intention of the Borrowers and the Holder
being to conform strictly to any applicable federal or state usury laws now in
force, all promissory notes, instruments and other documents executed by the
Borrowers or any guarantor, endorser or other party evidencing the obligations
under this Note shall be held subject to reduction to the amount allowed under said
usury laws as now or hereafter construed by the courts having jurisdiction.


 


(g)           Reference is hereby made to Section 11.18
of the Note Purchase Agreement that authorizes the Agent and/or the holders of
the Notes holding at least 51% of the aggregate principal amount of the Notes
then outstanding to take action on behalf of all the holders of the Notes.


 


Signature on the following
page


 


81

















 


IN WITNESS WHEREOF, each Borrower has caused this instrument to be
executed in its corporate name by a duly authorized officer, by order of its
Board of Directors as of the day and year first above written.


 


	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Michael
  J. Rapisand

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES

  CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Michael
  J. Rapisand

  
	
   

  	
   

  	
  Chief
  Financial Officer

  



 

















 


EXHIBIT B


 


FORM OF WARRANT


 


83
















 


THIS SECURITY AND THE SHARES
OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE EXERCISE OF THIS SECURITY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION AND REGISTRATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM UNDER THE ACT AND
THE RULES AND REGULATIONS THEREUNDER AND SUCH APPLICABLE STATE SECURITIES LAWS.


 


WARRANT TO PURCHASE

SHARES OF


COMMON STOCK OF

XPLORE TECHNOLOGIES CORP.


 




	
  No.:
  W        -    

  	
   

  	
  Number of Warrant Shares:                 

  
	
   

  	
   

  	
   

  
	
  Date
  of Issuance:
                  
      , 2009

  	
   

  	
   

  






 


FOR VALUE RECEIVED, subject
to the provisions hereinafter set forth, the undersigned, Xplore Technologies
Corp., a corporation incorporated under the laws of the State of Delaware
(together with its successors and assigns, the “Issuer”), hereby
certifies that
                    
or [his/her/its] registered assigns is entitled to subscribe for and purchase,
during the period specified in this Warrant, up to
                  
shares of Common Stock of the duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock of the Issuer, at an exercise price per share equal to the
Warrant Price then in effect, subject, however, to the provisions and upon the
terms and conditions hereinafter set forth.


 


This Warrant is issued
pursuant to the terms of a Note Purchase Agreement dated November 5, 2009,
among the Issuer, Xplore Technologies Corporation of America, a Delaware
corporation and wholly-owned subsidiary of the Issuer, and the purchasers
listed on Schedule I and Schedule II thereto (the “Note Purchase Agreement”).


 


Capitalized terms used in
this Warrant and not otherwise defined herein shall have the respective
meanings specified in Section 8 hereof.


 


1.                                       Expiration Date. This Warrant shall expire at 5:00 p.m.
(Austin, Texas time) on January 15, 2013 (the “Expiration Date”).  On the Expiration Date, all rights of the
Holder to purchase Common Stock pursuant to this Warrant shall immediately
terminate.


 


2.                                       Method of Exercise; Issuance of New
Warrant; Transfer and Exchange.


 


(a)           Time of Exercise. 
The purchase rights represented by this Warrant may be exercised by the
Holder, in whole or in part, at any time beginning on January 15, 2010 and
ending on the Expiration Date.


 


2

















 


(b)           Method of Exercise. 
The Holder hereof may exercise this Warrant, in whole or in part, by the
surrender of this Warrant, with the exercise form in the form attached hereto
as Exhibit A, duly executed, at the principal office of the Issuer,
and by the payment to the Issuer of an amount of consideration therefor equal
to the Warrant Price in effect on the date of such exercise multiplied by the
number of Warrant Shares with respect to which this Warrant is then being
exercised. Payment may be made by (i) certified check payable to the
Issuer’s order or (ii) wire transfer of funds to the Issuer.


 


(c)           Net Issue Election. 
The Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion, together with
a duly executed notice of exercise in the form attached hereto as Exhibit B,
at the principal office of the Issuer. 
Thereupon, the Issuer shall issue to the Holder such number of shares of
Common Stock as is computed using the following formula:


 


X = Y (A-B)


A


 


Where


 


X =                            the number of
shares of Common Stock to be issued to the Holder pursuant to this Section 2(c).


 


Y =                             the number of
shares of Common Stock covered by this Warrant in respect of which the net
issue election is made pursuant to this Section 2(c).


 


A =                           the Per Share
Market Value of one share of Common Stock on the date immediately prior to the
date the net issue election is made pursuant to this Section 2(c).


 


B =                             the Warrant
Price in effect under this Warrant at the time the net issue election is made
pursuant to this Section 2(c).


 


(d)                                 Issuance of Common Stock Certificates. 
In the event of any exercise of the rights represented by this Warrant
in accordance with and subject to the terms and conditions hereof, (i) certificates
for the Warrant Shares so purchased shall be dated the date of such exercise
and delivered to the Holder hereof within a reasonable time, not exceeding ten (10) Trading
Days after such exercise, and the Holder hereof shall be deemed for all
purposes to be the Holder of the Warrant Shares so purchased as of the date of
such exercise, and (ii) unless this Warrant has expired, a new Warrant
representing the number of Warrant Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder
hereof at the Issuer’s expense within such time.


 


(e)                                  Transferability of Warrant. 
Subject to Section 2(f), this Warrant may be transferred by a
Holder without the consent of the Issuer, subject to applicable law and the
right of the Issuer to require that the transferee be an “accredited investor”
as defined in Rule 501(a) promulgated under the Securities Act. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (f) of this Section 2, this Warrant may be transferred on
the books of the 


 


3

















 


Issuer by the Holder
hereof, upon surrender of this Warrant at the principal office of the Issuer,
properly endorsed by the Holder executing an assignment in the form attached
hereto. This Warrant is exchangeable at the principal office of the Issuer for
Warrants for the purchase of the same aggregate number of Warrant Shares.


 


(f)                                    Compliance with Securities Laws.


 


(i)            The Holder of this Warrant, by acceptance
hereof, acknowledges that this Warrant is being acquired by the Holder as
principal and solely for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder will not offer, sell,
pledge or otherwise dispose of this Warrant except pursuant to an effective
registration statement under the Securities Act, or an opinion of counsel in a
form reasonably satisfactory to the Issuer that such registration is not
required under the Securities Act, and in accordance with the rules and
regulations of all applicable securities laws.


 


(ii)           The Holder acknowledges and agrees that
it will comply with all applicable stock exchange or quotation system rules and
any applicable securities legislation, orders, rules or policy statements
concerning the purchase of Warrant Shares. All certificates representing
Warrant Shares issued upon exercise hereof shall be stamped or imprinted with a
legend in substantially the following form:


 


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN OPINION OF
COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS.


 


3.                                       Shares Fully Paid; Covenants; Loss of
Warrants.


 


(a)           Shares Fully Paid. 
The Issuer represents, warrants, covenants and agrees that all Warrant
Shares which may be issued upon the exercise of this Warrant in accordance with
the terms hereof will, at the time of issuance, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and
charges created by Issuer.  The Issuer
further covenants and agrees that during the period within which this Warrant
may be exercised, the Issuer will at all times have authorized and reserved for
the purpose of the issue upon exercise of this Warrant a sufficient number of
shares of Common Stock to provide for the exercise of this Warrant.


 


(b)           Covenants.  The Issuer
shall not by any action including, without limitation, amending the Articles of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may 


 


4

















 


be reasonably necessary
or appropriate to protect the rights of the Holder hereof against dilution (but
only to the extent specifically provided in Section 4 hereof) or
impairment. Without limiting the generality of the foregoing, the Issuer will (i) take
all such action as may be reasonably necessary in order that the Issuer may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
such restrictions as are expressly set forth herein and subject to applicable
securities laws) upon the exercise of this Warrant; and (ii) use its
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.


 


(c)           Loss, Theft, Destruction of Warrants. 
Upon receipt of evidence reasonably satisfactory to the Issuer of the
ownership of and the loss, theft, destruction or mutilation of any Warrant and,
in the case of any such loss, theft or destruction, upon receipt of indemnity
or security reasonably satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.


 


4.                                       Adjustment of Warrant Price. 
The Warrant Price and kind of Securities purchasable upon the exercise
of this Warrant shall be subject to adjustment from time to time upon the happening
of certain events as follows:


 


(a)           Recapitalization; Reorganization;
Reclassification; Consolidation; Merger or Sale.


 


(i)            In case the Issuer at any time prior to
the Expiration Date shall do any of the following (each, a “Triggering Event”):  (A) consolidate with or merge into any
other Person and the Issuer shall not be the continuing or surviving
corporation of such consolidation or merger, or (B) permit any other
Person to consolidate with or merge into the Issuer and the Issuer shall be the
continuing or surviving Person but, in connection with such consolidation or
merger, any Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (C) transfer,
sell or otherwise dispose all or substantially all of its properties or assets
to any other Person, then, and in the case of each such Triggering Event,
proper provision shall be made so that, upon the basis and the terms and in the
manner provided in this Warrant, the Holder of this Warrant shall be entitled,
upon the exercise hereof at any time after the consummation of such Triggering
Event, to the extent this Warrant is not exercised prior to such Triggering
Event, to receive, and shall accept, at the Warrant Price in effect at the time
immediately prior to the consummation of such Triggering Event in lieu of the
shares of Common Stock issuable upon such exercise of this Warrant prior to
such Triggering Event, the Securities, cash and property to which such Holder
would have been entitled upon the consummation of such Triggering Event if such
Holder had exercised the rights represented by this Warrant immediately prior
thereto, subject to adjustments and increases (subsequent to such corporate
action) as nearly equivalent as possible to the adjustments provided for in
this Section 4.


 


5

















 


(ii)           Notwithstanding anything contained in
this Warrant to the contrary, the Issuer will not, at any time prior to the
Expiration Date, effect any Triggering Event (other than a merger involving the
Issuer and one or more of its wholly-owned subsidiaries), unless, prior to the
consummation thereof, each Person (other than the Issuer) which as a result of
such Triggering Event may be required to deliver any Securities, cash or
property upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the Holder, (A) the
obligations of the Issuer under this Warrant (and if the Issuer shall survive
the consummation of such Triggering Event, such assumption shall be in addition
to, and shall not release the Issuer from, any continuing obligations of the
Issuer under this Warrant) and (B) the obligation to deliver to such
Holder such Securities, cash or property as in accordance with the foregoing
provisions of this subsection (a).


 


(b)           Subdivision or Consolidation of Common
Stock.  If the Issuer, at any time prior to the
Expiration Date, shall subdivide or consolidate the outstanding shares of
Common Stock (A) in case of subdivision of shares, the Warrant Price shall
be proportionately reduced (as at the effective date of such subdivision) to
reflect the increase in the total number of shares of Common Stock outstanding
as a result of such subdivision, or (B) in the case of a consolidation of
the outstanding shares of Common Stock, the Warrant Price shall be
proportionately increased (as at the effective date of such consolidation) to
reflect the reduction in the total number of shares of Common Stock outstanding
as a result of such consolidation.


 


(c)           Certain Dividends and Distributions. 
If the Issuer, at any time prior to the Expiration Date, shall:


 


(i)            Stock Dividends. 
Pay a stock dividend to, or make any other distribution to, its holders
of Common Stock, the Warrant Price shall be adjusted, as at the date of such
payment or other distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such payment or other
distribution, by a fraction (1) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution, and (2) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution (plus in the event that the Issuer paid cash for fractional
shares, the number of additional shares which would have been outstanding had
the Issuer issued fractional shares in connection with said dividends); or


 


(ii)           Other Dividends. 
Pay a cash dividend on, or make any distribution of its assets upon or
with respect to (including, but not limited to, a distribution of its property
as a dividend in liquidation or partial liquidation or by way of return of
capital), the Common Stock (other than as described in clause (i) of this
subsection (c)), then on the record date for such payment or distribution, this
Warrant shall represent a right to acquire upon exercise, in addition to the
number of Warrant Shares under this Warrant, and without payment of any
additional consideration therefor, the amount of such dividend or additional
stock or other Securities or property of the Issuer to which such Holder would
have been entitled upon such date if such Holder had exercised this Warrant immediately
prior thereto.


 


(d)   Adjustment of Warrant Price Upon Issuance
of Additional Common Stock. If the Issuer, at any time prior to the Expiration
Date, shall issue Additional Common Stock at a 


 


6

















 


price per share, or with
an exercise price or conversion price (as the case may be), lower than the
Warrant Price in effect at such time, then the Warrant Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest
one-hundredth of a cent) determined in accordance with the following formula:


 


WP2 = (WP1 * (A + B)) /
(A + C)


 


For purposes of the
foregoing formula, the following definitions shall apply:


 


(A)          “WP2”
shall mean the Warrant Price in effect immediately after such issue of
Additional Common Stock;


 


(B)           “WP1”
shall mean the Warrant Price in effect immediately prior to such issue of
Additional Common Stock;


 


(C)           “A” shall mean the number of shares of
Common Stock outstanding immediately prior to such issue of Additional Common
Stock (treating for this purpose as outstanding all shares of Common Stock
issuable upon conversion or exchange of all Convertible Securities outstanding
immediately prior to such issue);


 


(D)          “B” shall mean the number of shares of
Common Stock that would have been issued if such Additional Common Stock had
been issued at a price per share equal to WP1;
and


 


(E)           “C” shall mean the number of such
Additional Common Stock issued in such transaction.


 


(e)           Outstanding Common Stock. With respect to the making of
adjustments in the Warrant Price, the number of shares of Common Stock at any
time outstanding shall not include any shares thereof then directly or
indirectly owned or held by or for the account of the Issuer or any of its
Subsidiaries.


 


(f)            Other Action Affecting the Common Stock. In case the Issuer at any time prior to
the Expiration Date shall take any action affecting its shares of Common Stock,
other than an action described in any of the foregoing subsections (a) through
(d) of this Section 4, inclusive, and the failure to make any
adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principle of this Section 4,
then, the Warrant Price shall be adjusted in such manner and at such time as
the Board may in good faith determine to be equitable in the circumstances.


 


(g)           Form of Warrant after Adjustments. 
The form of this Warrant need not be changed because of any adjustments
in the Warrant Price or the number and kind of Securities purchasable upon the
exercise of this Warrant.


 


5.                                       Notice of Adjustments. 
Whenever the Warrant Price shall be adjusted pursuant to Section 4
hereof (for purposes of this Section 5, an “adjustment”), the
Issuer shall deliver notice to the Holder of such adjustment and shall cause
its Chief Financial Officer to prepare and execute a certificate setting forth,
in reasonable detail, the event requiring the adjustment, the 


 


7

















 


amount of the adjustment,
the method by which such adjustment was calculated (including a description of
the basis on which the Board made any determination hereunder), the
calculations made in connection therewith and the Warrant Price after giving
effect to such adjustment, and shall cause copies of such certificate to be
delivered to the Holder of this Warrant promptly after each adjustment. Any
failure of the Chief Financial Officer to deliver such certificate shall not
prejudice the rights of the Holder in connection with the applicable
adjustment. Any dispute between the Issuer and the Holder with respect to the
matters set forth in such certificate shall be determined by the Issuer’s
independent outside auditors or, if they are unable to act, by such firm of
independent chartered accountants as may be selected by the Board, and any such
determination shall be conclusive and binding on the Issuer, the Holder and the
transfer agent for the Common Stock. The firm selected by the Issuer as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. 
The fees and expenses of such accounting firm shall be borne equally by
such Holder and the Issuer.


 


6.                                       Fractional Shares. 
No fractional Warrant Shares will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Issuer shall make a
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Per Share Market Value then in effect.


 


7.                                       Rules Regarding Calculation of
Adjustment of Warrant Price.


 


(a)           No adjustment in the Warrant Price will
be required unless such adjustment would result in a change of at least 1% in
the prevailing Warrant Price; provided, however, that any adjustments which,
except for the provisions of this subsection would otherwise have been required
to be made, will be carried forward and taken into account in any subsequent
adjustment.


 


(b)           If the Issuer sets a record date to
determine the holders of Common Stock for the purpose of entitling them to
receive any dividend or distribution or sets a record date to take any other
action and thereafter and before the distribution to such shareholders of any
such dividend or distribution or the taking of any other action, legally
abandons its plan to pay or deliver such dividend or distribution or take such
other action, then no adjustment in the Warrant Price shall be made.


 


8.                                       Definitions. 
For the purposes of this Warrant, the following terms have the following
meanings:


 


“Additional Common Stock” means all shares of
Common Stock and Convertible Securities issued by the Issuer prior to the
Expiration Date, except (i) the Warrant Shares, (ii) Common Stock or
Convertible Securities issued in connection with a bona fide business
acquisition of or by the Issuer, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise; (iii) Common Stock
(including Common Stock issued upon the conversion or exercise of Convertible
Securities) or Convertible Securities issued to financial institutions, other
financing sources, or lessors, vendors, suppliers and other third party service
providers in connection with commercial credit arrangements, equipment
financings, supply and materials purchases, third party service procurement or
similar transactions as approved by the Board; (iv) 


 


8

















 


Common Stock issued
pursuant to the exercise of options and warrants outstanding on the date of
issuance of this Warrant; (v) Common Stock issued in a bona fide firm
commitment underwritten public offering, (vi) Common Stock (including
Common Stock issued upon the conversion or exercise of Convertible Securities)
or Convertible Securities issued to joint venture or strategic partners
pursuant to agreements authorized by the Board, (vii) Common Stock
(including Common Stock issued upon the conversion or exercise of Convertible
Securities) or Convertible Securities issued to employees, consultants,
officers or directors of the Issuer pursuant to compensatory stock purchase or
stock option plans, agreements or arrangements approved by the Board, (viii) Common
Stock (including Common Stock issued upon the conversion or exercise of
Convertible Securities) or Convertible Securities issued to underwriters,
brokers, dealers, finders or others in connection with fundraising (debt or
equity) activities, (ix) Common Stock issued upon conversion or exercise
of Convertible Securities outstanding on the date of issuance of this Warrant, (x) Common
Stock issued as dividends on any series of the Issuer’s preferred stock or
debt, whether existing now or in the future, and (xi) Common Stock issued in
connection with a stock dividend or distribution covered by Section 4(c)(i) or
(ii).


 


“Articles of the Issuer” means the Certificate
of Incorporation and by-laws of the Issuer as in effect on the date of issuance
of this Warrant, and as hereafter from time to time amended, modified,
supplemented or restated in accordance with the terms hereof and thereof and
pursuant to applicable law.


 


“Board” shall mean the Board of Directors of
the Issuer.


 


“Business Day” means any day other than
Saturday, Sunday or a day on which chartered banks are closed for business in
New York, New York.


 


“Capital Stock” means (i) any and all
shares, interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation, shares of
preferred stock, (ii) all partnership interests (whether general or
limited) in any Person which is a partnership, 
(iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or
ownership interests in any Person of any other type.


 


“Common Stock” means the shares of Common
Stock, par value $0.001 per share, of the Issuer and any other shares of
Capital Stock into which such stock may hereafter be changed.


 


“Convertible Securities” means evidences of
indebtedness, Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable or exercisable for shares of Common
Stock.  The term “Convertible Security”
means one of the Convertible Securities.


 


“Exchange Act” means the Securities Exchange
Act of 1934, as amended, or any similar Federal statute then in effect.


 


“Expiration Date” has the meaning specified in Section 1
hereof.


 


9

















 


“Governmental Authority” means any
governmental, regulatory or self-regulatory entity, department, body, official,
authority, commission, board, agency or instrumentality, whether Federal,
state, provincial or local, and whether domestic or foreign.


 


“Holder” mean the Person who shall from time to
time own this Warrant.


 


“Issuer” means Xplore Technologies Corp., and
its successors.


 


“Person” means an individual, corporation,
limited liability company, partnership, joint stock company, trust,
unincorporated organization, joint venture, Governmental Authority or other
entity of whatever nature.


 


“Per Share Market Value” means on any
particular date the average of the closing bid and ask prices on a national
securities exchange or quotation system which on the date of determination
constitutes the principal trading market for the shares of Common Stock.


 


“Securities” means any debt or equity
securities of the Issuer, whether now or hereafter authorized, any instrument
convertible into or exchangeable for Securities or a Security, and any option,
warrant or other right to subscribe for, purchase or acquire any Security.


 


“Securities Act” means the Securities Act of
1933, as amended, or any similar Federal statute then in effect.


 


“Security” means one of the Securities.


 


“Subsidiary” means any corporation a majority
of whose outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by the
Issuer and one or more of its Subsidiaries.


 


“Trading Day” means a day on which the Common
Stock is traded on a national securities exchange or quotation system which on
the date of determination constitutes the principal trading market for the
shares of Common Stock.


 


“Triggering Event” has the meaning specified in
Section 4(a)(i) hereof.


 


“Voting Stock”, as applied to the Capital Stock
of any corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority of the
members of the Board of Directors (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the
happening of a contingency.


 


“Warrant Price” means
$           per share,
subject to adjustment pursuant hereto.


 


“Warrant Shares” means shares of Common Stock
issuable upon exercise of this Warrant or any portion thereof, as the case may
be, issued pursuant to the terms hereof, or 


 


10

















 


otherwise issuable
pursuant to any other warrants of like tenor issued pursuant to the provisions
of hereof.


 


9.                                       Other Notices. 
In case at any time:


 


(A)          the Issuer shall make any distributions
to the holders of Common Stock; or


 


(B)           the Issuer shall authorize the granting
to all holders of its Common Stock of rights to subscribe for or purchase any
shares of Common Stock of any class or of any Convertible Securities or other
rights; or


 


(C)           there shall be any reclassification of
the Capital Stock of the Issuer; or


 


(D)          there shall be any (i) consolidation
or merger involving the Issuer or (ii) sale, transfer or other disposition
of all or substantially all of the Issuer’s property, assets or business
(except a merger or other reorganization in which the Issuer shall be the
surviving corporation and its Common Stock shall continue to be outstanding and
unchanged and except a consolidation, merger, sale, transfer or other
disposition involving a wholly-owned Subsidiary); or


 


(E)           there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Issuer or any partial liquidation
of the Issuer or distribution to holders of Common Stock;


 


then, in each of such cases,
the Issuer shall give written notice to the Holder of the date on which (i) the
books of the Issuer shall close or a record shall be taken for such dividend,
distribution or subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, disposition, dissolution, liquidation or winding-up, as
the case may be, shall take place.  Such
notice also shall specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their certificates for Common Stock, for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be.  Such
notice shall be given at least twenty days prior to the action in question and
not less than twenty days prior to the record date or the date on which the
Issuer’s transfer books are closed in respect thereto.


 


10.                                 Amendment and Waiver.  Any term,
covenant, agreement or condition in this Warrant may be amended, or compliance
therewith may be waived (either generally or in a particular instance and
either retroactively or prospectively), by a written instrument or written
instruments executed by the Issuer and the Holder.  Notwithstanding the foregoing, reference is
hereby made to Section 11.18 of the Note Purchase Agreement that
authorizes the Agent (as defined in the Note Purchase Agreement) and/or holders
of the Notes (as defined in the Note Purchase Agreement) holding at least 51%
of the aggregate principal amount of the Notes then outstanding to take action
on behalf of all the holders of the Notes to amend, modify or obtain a waiver
of any provision of this Warrant.


 


11
















 


11.           Governing Law.  THIS
WARRANT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARDS TO ITS CONFLICT OF LAW
PRINCIPLES.  THE HOLDER HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION AND VENUE OF ANY COURT WITHIN THE
STATE OF DELAWARE, IN CONNECTION WITH ANY MATTER BASED UPON OR ARISING OUT OF
THIS WARRANT OR THE MATTERS CONTEMPLATED HEREIN, AND AGREES THAT PROCESS MAY BE
SERVED UPON THE HOLDER IN ANY MANNER AUTHORIZED BY THE LAWS OF THE STATE OF
DELAWARE FOR SUCH PERSONS.


 


12.           Notices.  Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice prior to 5:00 p.m., (Austin, Texas time), on a
Business Day, (ii) the Business Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., (Austin, Texas
time), on any date and earlier than 11:59 p.m., (Austin, Texas time), on
such date, (iii) the Business Day following the date of mailing, if sent
by nationally recognized overnight courier service, (iv) five (5) days
following the date of mailing, if sent by registered or certified mail (postage
prepaid return receipt requested), or (v) actual receipt by the party to
whom such notice is required to be given. 
The addresses for such communications shall be with respect to the
Holder of this Warrant or of Warrant Shares issued pursuant hereto, addressed
to such Holder at its last known address or facsimile number appearing on the
books of the Issuer maintained for such purposes, or with respect to the
Issuer, addressed to:


 


Xplore Technologies Corp.


14000 Summit Drive, Suite 900


Austin, Texas 78728


Attention: Michael J. Rapisand


Facsimile: (512) 249-5630


 


13.           Remedies.  The Issuer
stipulates that the remedies at law of the Holder of this Warrant in the event
of any default or threatened default by the Issuer in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.


 


14.           Successors and Assigns. 
This Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors and assigns of the Issuer, the Holder
hereof and (to the extent provided herein) the Holders of Warrant Shares issued
pursuant hereto, and shall be enforceable by any such Holder or Holder of
Warrant Shares.


 


15.           Modification and Severability. 
If, in any action before any court or agency legally empowered to
enforce any provision contained herein, any provision hereof is found to 


 


12

















 


be unenforceable, then
such provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.  If
any such provision is not enforceable as set forth in the preceding sentence,
the unenforceability of such provision shall not affect the other provisions of
this Warrant, but this Warrant shall be construed as if such unenforceable
provision had never been contained herein.


 


16.           Headings.  The headings
of the Sections of this Warrant are for convenience of reference only and shall
not, for any purpose, be deemed a part of this Warrant.


 


[REMAINDER OF PAGE LEFT
INTENTIONALLY BLANK]


 


13

















 


IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.


 


 


	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Michael
  J. Rapisand

  
	
   

  	
  Chief
  Financial Officer

  



 

















 


EXHIBIT A


 


Form of Exercise


 


(to be executed by the
Holder)


 


                The Holder hereby exercises its
rights to subscribe for and purchase
         shares of Common Stock as
defined in the attached Warrant of XPLORE TECHNOLOGIES CORP. evidenced by the
attached Warrant and herewith makes payment of the Warrant Price, as defined in
the within Warrant, in the amount of
$                    
by way of:


 


                $                    
certified check payable to the Issuer’s order; or


 


                $                    
wire transfer of funds to the Issuer.


 


Please
issue a certificate in the name of the Holder for the shares of Common Stock in
accordance with the instructions given below and issue a replacement Warrant in
the name of the Holder for the unexercised balance, if any, of the right to
purchase Warrant Shares evidenced by the within Warrant which were not
exercised hereby.


 




	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature
  of Holder

  
	
   

  	
   

  	
   

  
	
  Instructions
  for registration of shares

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security or Employer Identification

  	
   

  	
   

  
	
  Number
  of Holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address
  of Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Street

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City,
  State and Zip Code

  	
   

  	
   

  
					






 


A-1

















 


EXHIBIT B


 


NET
ISSUE NOTICE OF EXERCISE


 


TO:                 Xplore Technologies Corp


14000 Summit Drive, Suite 900


Austin, Texas 78728


facsimile number (512)
336-7791


Attention: Michael Rapisand


 


                1.   The undersigned hereby elects to purchase
                  
shares of Common Stock as defined in the attached Warrant of XPLORE
TECHNOLOGIES CORP. pursuant to the terms of this Warrant, and hereby elects
under Section 2(c) of this Warrant to surrender the right to purchase
              
shares of Common Stock pursuant to this Warrant for a net issue exercise with
respect to
                
shares of Common Stock.


 


                2.   Please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned or in
such other name as is specified below:


 




	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
							






 




	
   

  	
   

  
	
  (Date)

  	
   

  	
   

  	
   

  	
   

  	
   

  
						






 


B-1

















 


ASSIGNMENT


 


FOR VALUE RECEIVED,
                                  
hereby sells, assigns and transfers unto
                                    
the within Warrant and all rights evidenced thereby and does irrevocably
constitute and appoint
                          ,
attorney, to transfer the said Warrant on the books of the within named
corporation.


 


	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  



 


PARTIAL ASSIGNMENT


 


FOR VALUE RECEIVED,
                                  
hereby sells, assigns and transfers unto
                                    
the right to purchase
                  
Warrant Shares evidenced by the within Warrant together with all rights
therein, and does irrevocably constitute and appoint                                       ,
attorney, to transfer that part of the said Warrant on the books of the within
named corporation.


 


	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  



 


B-2

















 


EXHIBIT C


 


FORM OF SECURITY
AGREEMENT


 
















 


XPLORE TECHNOLOGIES CORP.


 


SECURITY AGREEMENT


 


SECURITY AGREEMENT dated as of November 5,
2009 (“Security Agreement”), among Xplore Technologies Corp., a Delaware
corporation (the “Parent”) Xplore Technologies Corporation of America, a
Delaware corporation (the “Subsidiary” and collectively with the Parent,
the “Borrowers”), and SG Phoenix LLC, a Delaware limited liability
company, as agent for the Purchasers (as defined below) (in such capacity, the “Collateral
Agent”).


 


PRELIMINARY STATEMENTS.


 


1.             The
Borrowers and the Collateral Agent, as agent for the Purchasers, desire to
enter into this Security Agreement on the terms and conditions set forth herein
to grant the Collateral Agent a security interest in the Collateral (as defined
herein) for the ratable benefit of each of the Purchasers.


 


2.             The
Borrowers and the Purchasers are parties to a Note Purchase Agreement, dated November 5,
2009 (the “Note Purchase Agreement”), pursuant to which the Purchasers
will purchase, and the Borrowers have agreed to issue and sell to the
Purchasers, senior secured subordinated promissory notes (the “Notes”,
and each individually, a “Note”) in an aggregate original principal
amount not to exceed $3,300,000.


 


3.             Pursuant to the Note Purchase Agreement, each Purchaser
irrevocably appointed and authorized the Collateral Agent to (i) be its
attorney in its name and on its behalf to exercise all rights and powers
granted to the Purchasers under the Note Purchase Agreement, this Agreement and
the Loan Documents, together with such powers as are reasonably incidental
thereto, and (ii) hold the Collateral for the pro rata benefit of the
Purchasers, subject to the terms and conditions of the Note Purchase Agreement,
this Agreement and the Loan Documents.


 


4.             It is a condition precedent to the obligation of the
Purchasers to purchase the Notes as provided in the Note Purchase Agreement
that the Borrowers shall have granted the security interest contemplated by
this Security Agreement.


 


NOW, THEREFORE, in consideration of the premises and in order to induce
the Purchasers to purchase the Notes as provided in the Note Purchase
Agreement, the Borrowers and the Collateral Agent hereby agree as follows:


 

















 


SECTION 1.           Grant of Security.  Each Borrower hereby grants to the Collateral
Agent, as agent for the Purchasers and for the ratable benefit of each
Purchaser, a security interest in and lien on all of such Borrower’s right,
title and interest in and to all of such Borrower’s assets, including but not
limited to all of the following, whether now owned or hereafter acquired or
existing (the “Collateral”):


 


(a)       All machinery, furnishings, fixtures,
service vehicles, supplies and other equipment, together with all attachments,
components, parts and accessories installed thereon or affixed thereto (“Equipment”);


 


(b)       All goods held for sale or lease or to be
furnished under contracts of service, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same; in all
stages of production, from raw materials through work-in-process to finished
goods (“Inventory”);


 


(c)       All other goods, of any nature
whatsoever;


 


(d)       All (i) (A) rights to payment
for goods sold or services rendered by such Borrower, including all accounts
arising from sales or rendition of services made under any of such Borrower’s names, trade names or styles or through any
of such Borrower’s properties or
divisions, regardless of how such right is evidenced, whether secured or
unsecured (and whether or not specifically listed on schedules furnished to the
Collateral Agent) (“Accounts Receivable”), and (B) other accounts; (ii) unpaid
seller’s rights (including rights of rescission, replevin, reclamation and stoppage in
transit) relating to the foregoing or arising therefrom; (iii) rights to
any goods represented by any of the foregoing, including rights to returned or
repossessed goods; (iv) reserves and credit balances arising under any of
the foregoing; (v) guarantees, letters of credit, collateral or other
supporting obligations supporting or securing any of the foregoing; and (vi) insurance
policies or rights relating to any of the foregoing (collectively, including
Accounts Receivable, the “Accounts”);


 


(e)       All (i) instruments, (ii) documents,
(iii) contract rights, (iv) chattel paper, (v) letters of
credit, (vi) letter-of-credit rights, (vii) claims and causes of
action against any other person, however arising, and (viii) general
intangibles, whether or not for the payment of money, including, but not
limited to, all (A) rights to tax refunds or other payments of every kind
or nature, including rights to the payment of letters of credit; (B) copyrights,
rights in or licenses of copyrights and marks subject to copyright protection,
in whole or in part, and all renewals or extensions of any of the foregoing
(the “Copyrights”); (C) trade names, trademarks, service marks, trade
styles, designs, logos, indicia, corporate names and fictitious business names,
in each case, together with all associated goodwill including, without
limitation, the trademark applications set forth on Schedule II hereto (the “Trademarks”);
(D) (i) patents now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country
or any political subdivision thereof, including, without limitation,


 





















 


those listed on Schedule II hereto together with all
the rights, benefits and privileges derived therefrom, (ii) all design and
utility patents, utility models and registered designs (including all reissues,
divisions, continuations, continuations-in-part, reexaminations and extensions
thereof), and (iii) all proceeds of the foregoing (the “Patents”); (E) designs,
schemes, computer programs and all intellectual property rights associated
thereto (other than such programs and rights in which, by their terms
enforceable under applicable law, no security interest may be granted); and (F) other
proprietary information;


 


(f)        All investment property, including,
without limitation, all securities and capital stock or other interests in any
other Person whether certificated or uncertificated; all warrants, options and
other rights to acquire securities, capital stock or other interests in any
other Person; all securities entitlements; and all securities accounts,
together with all financial assets credited thereto;


 


(g)       All cash and cash equivalents, including,
without limitation, money, demand deposit accounts and other deposit accounts;


 


(h)       All governmental approvals, licenses,
franchises and authorizations, to the maximum extent permitted by applicable
law;


 


(i)        All property and interests in property
of such Borrower now or hereafter coming into its actual possession, custody or
control in any way and for any purpose (whether for safekeeping, deposit,
custody, pledge, transmission, collection or otherwise);


 


(j)        All books and records;


 


(k)       All other property and interests in
property of such Borrower constituting personal property; and


 


(l)        All accessions and additions to,
substitutions for, and replacements, products and proceeds of any of the
foregoing (including, without limitation, proceeds that constitute property of
the types described in clauses (a) through (k) of this Section 1,
and, to the extent not otherwise included, all (i) payments under
insurance (whether or not any Purchaser is the loss payee thereof), or any
indemnity, warranty, guaranty or letter of credit, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing; and (ii) any
and all supporting obligations in respect of any of the foregoing).


 


SECTION 2.           Security for Obligations;
Definitions.


 


(a)           This Security Agreement and the Collateral secure the
prompt and complete payment and performance when due of (i) all Note
Indebtedness (as defined in the Note Purchase Agreement), and (ii) all
obligations of Borrowers hereunder (collectively, the “Secured Obligations”).


 


(b)           Capitalized terms used herein and not defined shall have
the meanings assigned to such terms in the Note Purchase Agreement and terms
defined in the Uniform Commercial Code as adopted by the State of Delaware (“UCC”)
shall have the meanings assigned to such terms in the UCC.


 


SECTION 3.           Security Interest Absolute.  This Security Agreement shall


 


6

















 


be construed as a continuing, absolute and
unconditional irrevocable grant of security interest and shall remain in full
force and effect until payment in full of all of the Secured Obligations.  The liability of the Borrowers under this
Security Agreement shall be absolute and unconditional irrespective of:


 


(a)       any lack of validity or enforceability of
the Note Purchase Agreement, or any Loan Document or any other agreement or
instrument relating to any thereof;


 


(b)       to the extent permitted by applicable
law, any occurrence or condition whatsoever, including without limitation, (i) any
compromise, settlement, release, waiver, renewal, extension, indulgence or
modification of, or any change in, any of the obligations of the Borrowers
contained in the Note Purchase Agreement or any Loan Document, (ii) the
assertion or exercise by any Borrower, the Collateral Agent or the Purchasers
of any rights or remedies, (iii) the extension of the time for payment by
the Borrowers of any payments or other sums or any part thereof owing or
payable under any of the terms and provisions of any Loan Document or of the
time for performance by the Borrowers of any other obligations under or arising
out of any terms or provisions or the extension of the renewal of any thereof, (iv) the
modification or amendment (whether material or otherwise) of any duty,
agreement or obligation of the Borrowers set forth in any Loan Document, or (v) the
release or discharge of the Borrowers from the performance or observance of any
agreement, covenant, term or condition contained in any of such instruments by
operation of law; or


 


(c)       to the extent permitted by applicable
law, any exchange, release or non-perfection of any Collateral, or any release
or amendment or waiver of or consent to departure from any other security
agreement, for all or any of the Secured Obligations.


 


SECTION 4.           Borrowers Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each Borrower shall remain liable under the contracts
and agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release Borrowers
from any of their duties or obligations under the contracts and agreements
included in the Collateral, and (c) the Collateral Agent shall not have
any obligation or liability under the contracts and agreements included in the
Collateral by reason of this Security Agreement, nor shall the Collateral Agent
be obligated to perform any of the obligations or duties of the Borrowers
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.


 


SECTION 5.           Representations and Warranties.  Each Borrower jointly and severally
represents and warrants to the Collateral Agent as follows:


 


(a)           All of such Borrower’s Equipment and
Inventory (i) were acquired in the ordinary course of business and (ii) are
located at the places specified in Schedule I hereto.  The principal place of business and chief
executive office of such Borrower and the office where such Borrower keeps its
records concerning Accounts Receivable and other Collateral are located at the
address specified in Schedule I hereto. 
All originals of all chattel paper which evidence Accounts Receivable
that are not required to be delivered to the Senior Lenders have been delivered
to the Collateral Agent.  None of the
Accounts Receivable is evidenced by a promissory note or other instrument.


 


7

















 


(b)       Such Borrower owns its Collateral free
and clear of any Lien (as defined below), except for the security interest
created by this Security Agreement and Permitted Liens existing on the date
hereof.  No effective financing statement
or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except (i) for financing
statements filed in favor of the Collateral Agent relating to this Security
Agreement and (ii) in connection with Permitted Liens.  For purposes of this Agreement, “Lien” means
any mortgage, deed of trust, pledge, security interest, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference or other security agreement or preferential arrangement, charge or
encumbrance of any kind or nature whatsoever (including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing), except for reasonable security
interests in purchase- money collateral (as such term is defined in §9-103 of
the UCC) to the extent such security interests secure purchase-money
obligations to finance acquisitions of such purchase money collateral.


 


(c)       Such Borrower conducts no business under
any name or trade name other than its proper corporate name, which is the name
set forth in the preamble hereto.


 


(d)       Such Borrower has exclusive possession
and control of its Equipment and Inventory.


 


(e)       Schedule II sets forth a complete and
correct list of all Patents, Trademarks and Registered Copyrights owned or
applied for by such Borrower on the date hereof.  Such Borrower has the right to use all its
Patents, Trademarks, and Copyrights and all computer programs and other similar
or related rights, free from restrictions, which are necessary for the
operation of its businesses as presently conducted.  There is not pending or, to the knowledge of
such Borrower, threatened, any claim or litigation against or affecting such
Borrower contesting the validity of any of its Patents, Trademarks or
Copyrights or computer program or other right.


 


(f)        All other actions legally necessary to
perfect and protect the security interests in such Borrower’s Collateral, upon
the filing of a financing statement on Form UCC-1 with the Secretary of
State of the State of Delaware no later than the close of business on the fifth
day following the Initial Closing, will have been duly taken, except with
respect to such Borrower’s Patents, Trademarks and Registered Copyrights, which
shall be prepared no later than the close of business on the thirtieth (30th) day following the Initial Closing and filed within
ten (10) days following the request of the Collateral Agent.


 


(g)       Such Borrower has all requisite corporate
power and authority to execute and deliver this Security Agreement and to grant
the security interests granted hereby.


 


(h)       No authorization, approval or other
action by, and no notice to or filing with, any governmental or regulatory
agency or authority is required either (1) for the grant by such Borrower
of the security interest granted hereby or for the execution, delivery


 


8

















 


or performance of this Security Agreement by such
Borrower or (2) other than the filing of a financing statement on Form UCC-1
with the Secretary of State of the State of Delaware and with the United States
Patent and Trademark Office (“PTO”), for the perfection of such security
interest or the exercise by the Collateral Agent of its respective rights and
remedies hereunder.


 


(i)        All known existing commercial tort
claims owned by such Borrower are set forth and described in Schedule III
hereto.


 


(j)        The security interest in and liens on
the Collateral granted hereby represents a first priority security interest in
such Collateral, subject to Permitted Liens.


 


SECTION 6.           Further Assurances; Limitations on
Changes to Corporate Structure, Name, etc.


 


(a)           Each Borrower agrees that from time
to time, at the expense of such Borrower, such Borrower will promptly execute
or otherwise authenticate and deliver all further instruments, documents and
other records and take all further action, that may be necessary or desirable,
or that the Collateral Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to such Borrower’s Collateral.  Without limiting the generality of the
foregoing, each Borrower will: (1) following an Event of Default, mark
conspicuously each document and agreement included in such Borrower’s
Collateral and, at the request of the Collateral Agent, each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to the Collateral Agent, indicating that such Collateral is subject to the
security interest granted hereby; (2) subject to the rights of the Senior
Lenders, if any Account Receivable shall be evidenced by a promissory note or
other instrument or chattel paper, deliver such to the Collateral Agent duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral Agent; and
(3) authenticate (if necessary) and file such financing or continuation
statements, or amendments thereto, and such other instruments, notices or other
records, as may be legally necessary, or as the Collateral Agent may request,
in order to perfect and preserve the security interest granted or purported to
be granted hereby.


 


(b)       Each Borrower hereby authorizes the
Collateral Agent to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of such Borrower’ s Collateral.


 


(c)       Each Borrower will furnish to the
Collateral Agent from time to time statements and schedules further identifying
and describing such Borrower’s Collateral and such other reports in connection
with such Collateral as the Collateral Agent may reasonably request, all in reasonable
detail. Without limiting the generality of the foregoing:  (i) each Borrower shall, from time to
time, execute and deliver to the Collateral Agent, in such form and manner as
the Collateral Agent may reasonably require, solely for the Collateral Agent’s
convenience in maintaining records of such Borrower’s Collateral, such
confirmatory schedules of such Borrower’s Accounts Receivable, and such other
appropriate reports designating, identifying and describing such Borrower’s
Accounts Receivable, as the Collateral Agent may reasonably request; and (ii) if
any material


 


9

















 


commercial tort claim should hereafter arise (“Additional
Tort Claim”), such Borrower shall promptly advise the Collateral Agent in writing,
supplementing Schedule III hereto, which supplement shall constitute a grant by
such Borrower to the Collateral Agent of a security interest therein, on the
terms, and subject to the conditions, set forth in the Security Agreement, and
such Borrower’s authorization to file, or to amend, such financing statements
as the Collateral Agent may deem necessary or advisable to perfect its security
interest in such Additional Tort Claim. 
In addition, upon the Collateral Agent’s request, each Borrower shall provide
the Purchasers with copies of agreements with, or purchase orders from, such
Borrower’s customers, of invoices to customers and proof of shipment or
delivery and such other documentation and information relating to its Accounts
Receivable and its other Collateral as the Collateral Agent may from time to
time reasonably request to the extent such Borrower maintains such
documentation in the ordinary course of its business.  Failure to provide the Collateral Agent with
any of the foregoing shall in no way affect, diminish, modify or otherwise
limit the Lien granted herein.  Each
Borrower hereby authorizes the Collateral Agent to regard its printed name or
rubber stamp signature on assignment schedules or invoices as the equivalent of
a manual signature by an authorized officer or agent of such Borrower.


 


(d)       Such Borrower will defend its Collateral
against all claims and demands of all persons (other than the Collateral Agent
or a Senior Lender) claiming an interest therein.


 


(e)       Such Borrower will, no later than the
close of business on the fifth day following the Initial Closing, file a
financing statement on Form UCC-1 with the Delaware Secretary of State and
no later than thirty (30) days after the Initial Closing, prepare all necessary
filings with the PTO with respect to the security interest created hereby and
no later than ten (10) days following the request of the Collateral Agent,
file such necessary filings with the PTO, such filings to be, in form and
substance, acceptable to the Collateral Agent.


 


(f)        Such Borrower will not change its name
or jurisdiction of incorporation, or its corporate structure, or merge with or
into any other Person, or become domesticated under the laws of any other
jurisdiction without giving at least 10 days prior notice to the Collateral
Agent.


 


SECTION 7.           As to Equipment, Inventory and
Trademarks.  Each Borrower shall:


 


(a)           Keep its Equipment and Inventory
(other than its Inventory sold in the ordinary course of business) at the
places therefor specified in Schedule I hereto or, upon 30 days’ prior written
notice to the Collateral Agent, at such other places in jurisdictions where all
action required by Section 6 shall have been taken with respect to its
Equipment and Inventory;


 


(b)       Permit the Collateral Agent or any agent
thereof to have access to its Inventory and Equipment for purposes of
inspection during normal business hours and upon reasonable notice to such
Borrower;


 


10

















 


(c)       Promptly notify the Collateral Agent in
writing of any material loss or damage to its Inventory or Equipment;


 


(d)       Except for collateral securing a
purchase-money obligation incurred in compliance with §9-103 of the UCC, not
permit its Equipment to become a part of or to be affixed to any real property
of any person; and


 


(e)       Advise the Collateral Agent of all its
Trademarks, Patents and Copyrights or applications for or registration of the
same, created or obtained by such Borrower on or after the date of this
Security Agreement.


 


SECTION 8.           Insurance. 


 


(a)           Each policy for liability and
property damage insurance shall within 30 days following the Initial Closing
provide for all losses to be paid on behalf of a Senior Lender, the Collateral
Agent and the Borrowers as their respective interests may appear.  Each such policy shall in addition: (1) name
the Collateral Agent as insured party thereunder (without any representation or
warranty by or obligation upon the Collateral Agent) as its interests may
appear; and (2) provide that at least thirty (30) days’ prior written
notice of amendment to or lapse and at least thirty (30) days’ prior written
notice of cancellation shall be given to the Collateral Agent by the
insurer.  Each Borrower shall use
commercially reasonable efforts to cause each policy to contain the agreement
by the insurer that any loss thereunder shall be payable to the Collateral
Agent whose rights with respect to any loss thereunder shall be unaffected by
any action, inaction or breach of representation and warranty by such Borrower.  Each Borrower shall, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or duplicate
policies of such insurance and, as often as the Collateral Agent may request, a
report of a reputable insurance broker with respect to such insurance.  Further, each Borrower shall, at the request
of the Collateral Agent, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of Section 6 and
cause the respective insurers to acknowledge notice of such assignment.


 


(b)       Reimbursement under any liability
insurance maintained by a Borrower pursuant to this Section 8 may be paid
directly to the person who shall have incurred liability covered by such
insurance.  In case of any loss involving
damage to a Borrower’s Equipment or Inventory when subsection (c) of this Section 8
is not applicable, such Borrower shall make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance maintained by such Borrower pursuant to this Section 8 shall be
paid to such Borrower as reimbursement for the costs of such repairs or
replacements.


 


(c)       Upon the occurrence and during the
continuation of any Event of Default (as defined in the Note Purchase
Agreement), subject to Section 11(b) hereof, all insurance payments
in respect of such Equipment or Inventory shall be paid to the Collateral Agent
and applied to payment of the amounts due under the Secured Obligations.


 


SECTION 9.           As to Accounts Receivable.


 


(a)           Each Borrower shall keep its
principal place of business and chief executive office and the office where it
keeps its


 


11

















 


records concerning its Accounts Receivable, at the
location therefor specified in Schedule I hereto or, upon thirty (30) days’
prior written notice to the Collateral Agent, at such other locations in a
jurisdiction where all action required by Section 6 shall have been taken
with respect to its Accounts Receivable. 
Each Borrower will hold and preserve such records and will permit
representatives of the Collateral Agent to inspect and make abstracts from such
records upon reasonable notice to such Borrower and during normal business
hours.


 


(b)       Except as otherwise provided in this
subsection (b), each Borrower shall continue to collect, at its own expense,
all amounts due or to become due to such Borrower under its Accounts
Receivable.  In connection with such
collections, each Borrower may take such action as such Borrower may deem
necessary or advisable to enforce collection of its Accounts Receivable;
provided, however, that, subject to the rights of the Senior Lenders,  the Collateral Agent shall have the right at
any time, upon the occurrence and during the continuance of an Event of Default
upon written notice to such Borrower of its intention to do so, to notify the
account debtors or obligors under any of such Borrower’s Accounts Receivable of
the assignment of such Accounts Receivable to the Collateral Agent and to
direct such account debtors or obligors to make payment of all amounts due or
to become due to such Borrower thereunder directly to the Collateral Agent and,
upon such notification and at the expense of such Borrower, to enforce
collection of any such Accounts Receivable, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
such Borrower might have done.  As long
as an Event of Default has occurred and is continuing, subject to Section 11(b) hereof,
(1) all amounts and proceeds (including instruments) received by such
Borrower in respect of its Accounts Receivable shall be received in trust for
the benefit of the Collateral Agent hereunder, shall be segregated from other
funds of such Borrower and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary endorsement) to be applied
as provided by Section 16(c) or if it cannot be so applied under
applicable Law, held as cash collateral, as determined by the Collateral Agent,
and (2) such Borrower shall not adjust, settle or compromise the amount or
payment of any of its Account Receivable, or release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon,
other than any discount allowed for prompt payment.


 


SECTION 10.         Assignment of Claims Act.  Neither Borrower shall permit any notice to
be filed under the Assignment of Claims Act with respect to any of its
Collateral, except for such notice in favor of a Senior Lender and the
Collateral Agent.


SECTION 11.         Notes Equally and Ratably Secured;
Subordination.


 


(a)       The Notes shall be equally and ratably
secured pursuant to the terms of this Security Agreement.  The Borrowers shall not make any offer to
purchase or otherwise pay any Purchaser without making the same offer to each
Purchaser.


 


(b)       The Collateral Agent acknowledges and
agrees that all of the Secured Obligations are subordinated to the rights of
any Senior Lender in connection with the Senior Credit Facility including as
set forth in the SVB Subordination Agreement.


 


SECTION 12.         [RESERVED].


 


12
















 


SECTION 13.         Collateral Agent Appointed Borrowers’ Attorney-in-Fact. 
Each Borrower hereby irrevocably appoints the Collateral Agent as such
Borrower’s attorney-in-fact, with full authority in the place and stead of such
Borrower and in the name of such Borrower, the Collateral Agent or otherwise,
to, after the occurrence and during the continuance of an Event of Default,
take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Security
Agreement, subject to Section 11(b) hereof, including, without
limitation: 


 


(a)       to obtain and adjust insurance required to be paid to
the Collateral Agent pursuant to Section 8;


 


(b)       to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;


 


(c)       to receive, endorse, assign, and collect any and all
checks, notes, drafts and other negotiable and non-negotiable instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and each Borrower waives notice of presentment, protest and non-payment of any
instrument, document or chattel paper so endorsed or assigned;


 


(d)       to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Collateral;


 


(e)       to sell, transfer, assign or otherwise deal in or with
the Collateral or the proceeds or avails thereof, as full and effectually as if
the Collateral Agent were the absolute owner thereof;


 


(f)        to perform or cause the performance of any obligation
of the Borrowers hereunder;


 


(g)       to receive, open and dispose of all mail addressed to
each of the Borrowers and to notify postal authorities to change the address
for delivery thereof to such address as the Collateral Agent may designate; and


 


(h)       to transmit to customers indebted on Accounts notice
of the Collateral Agent’s interest therein and to notify customers indebted on
Accounts to make payment directly to the Collateral Agent for the Borrowers’
account.


 


Each
Borrower hereby ratifies and approves all acts other than those which directly
result from the Collateral Agent’s gross negligence or willful misconduct, of
the Collateral Agent, as its attorney in-fact, pursuant to this Section 13,
and the Collateral Agent, as its attorney in-fact, will not be liable for any
acts of commission or omission, nor for any error of judgment or mistake of
fact or law other than those which are finally determined by a court of
competent jurisdiction to be the direct result of the Collateral Agent’s gross
negligence or willful misconduct.  This
power, being coupled with an interest, is irrevocable so long as this Security
Agreement remains in effect.


 


13

















 


Each
Borrower also authorizes the Collateral Agent, at any time after the occurrence
and during the continuance of an Event of Default, to communicate in its own
name with any party to any contract, agreement or instrument included in the
Collateral with regard to the assignment of such contract, agreement or
instrument and other matters relating thereto.


 


SECTION 14.         Collateral Agent May Perform. 
If the Borrowers fail to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by the Borrowers under Section 17(b).


 


SECTION 15.         Collateral Agent’s Duties. 
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers.  Except for the
safe custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall not have any duty
as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.


 


SECTION 16.         Remedies.  Subject to Section 11(b) hereof,
if any Event of Default shall have occurred and not have been waived or cured:


 


(a)       The Collateral Agent has the right to take the actions
described in the proviso of Section 9(b).


 


(b)       The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a Collateral Agent on
default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may (i) require the Borrowers to, and each Borrower
hereby agrees that it will at its expense and upon the request of the Collateral
Agent forthwith, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a place to be
designated by the Collateral Agent which is reasonably convenient to both
parties and (ii) to the extent permitted by Law, enter the premises where
any of the Collateral is located and take and carry away the same, by any of
its representatives, with or without legal process, to Collateral Agent’s place
of storage, and (iii) without notice except as specified in the next
sentence, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent’s offices or elsewhere,
for cash, on credit or for future delivery and upon such other terms as the
Collateral Agent may deem commercially reasonable.  Each Borrower agrees that, to the extent
notice of disposition is required by Law, notice to the Borrowers of at least
ten (10) business days prior to the earliest time of disposition set forth
in such notice shall constitute reasonable notification.  The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given.  The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place it was so adjourned.


 


(c)       Subject to Section 11(b), all cash proceeds
received by the Collateral Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, to the extent
required by applicable Law, be held by the Collateral Agent as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Collateral Agent pursuant to Section 17) to the payment in
full of 


 


14

















 


the Secured Obligations, in each case equally and
ratably in accordance with the respective amounts thereof then due and owing or
as the Purchasers holding the same may otherwise agree.  Any surplus of such cash or cash proceeds
held by the Collateral Agent and remaining after payment in full of all the
Secured Obligations to the Collateral Agent shall be paid over to the Borrowers
(subject to the rights and remedies of other secured lenders).  If the proceeds of the sale of the Collateral
are insufficient to pay all of the Secured Obligations, the Borrowers agrees to
pay upon demand any deficiency to the Collateral Agent.


 


(d)       The Collateral Agent may use (and is hereby granted a
license to use), in connection with any assembly, preparation for disposition
or disposition of the Collateral, any of the trademarks, copyrights, patents,
technical processes, trade names, service marks or trade styles and other
intellectual property used by the Borrowers, without payment or additional
compensation therefor.


 


(e)       The Borrowers recognize that the Collateral Agent may
be unable to effect a public sale of all or part of the Collateral consisting
of investment property by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, or in applicable Delaware or other states’
securities laws as now or hereafter in effect, unless registration or
qualification, as the case may be, is accomplished. To the extent permitted by
Law, the Borrowers acknowledges that the Collateral Agent may resort to one or
more private sales to a single purchaser or a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such investment
property for their own account, for investment and not with a view to the
distribution or resale thereof.  To the
extent permitted by Law, the Borrowers agree that private sales may be at prices
and other terms less favorable to the Borrowers than if such investment
property were sold at a public sale and that the Collateral Agent shall have no
obligation to delay the sale of any such portion of the Collateral for the
period of time necessary to permit the issuer of such investment property to
register or qualify such investment property, even if such issuer would, or
should, proceed to register or qualify such investment property for public
sale.  The Borrowers agree that private
sales made under the foregoing circumstances shall be deemed to have been made
in a “commercially reasonable” manner.


 


SECTION 17.         Indemnity and Expenses.


 


(a)       Without limiting any indemnity provided under the Note
Purchase Agreement or any Loan Document, each Borrower agrees to indemnify and
defend the Collateral Agent (including, for the purposes of this Section 17,
its agents and affiliates and its officers, directors, employees, consultants
and advisors and any of their affiliates (each an “Indemnified Party”)), from
and against any and all claims, losses and liabilities growing out of or
resulting from this Security Agreement or any Loan Document (including, without
limitation, enforcement of this Security Agreement), except claims, losses or
liabilities resulting from an Indemnified Party’s gross negligence or willful
misconduct.


 


(b)       Each Borrower will upon demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including the fees and
out-of-pocket expenses 


 


15

















 


or disbursements of its counsel and of any experts and
agents, which the Collateral Agent may incur in connection with (1) the
negotiation or preparation of, or any closing under, and the perfection of
(including any filing or recording fees) any and all Liens contemplated by this
Security Agreement and any other related documents, (2) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, and (3) the interpretation,
performance or enforcement of any of the rights of the Collateral Agent.  Without limiting in any manner the generality
of the foregoing, each Borrower will pay all reasonable out-of-pocket costs and
expenses of the Collateral Agent or any Purchaser upon failure by the Borrowers
to perform or observe any of the provisions of this Agreement or upon demand in
connection with the bankruptcy or other insolvency proceeding involving a
Borrower; in each case, including without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Collateral Agent and of any
consultants or expert witnesses retained by the Collateral Agent, with respect
to any aspect of the Secured Obligations or otherwise relating to the
transactions contemplated hereby.  All
amounts payable by the Borrowers under this Section 17(b) shall be
paid together with interest thereon, from the date incurred by the Collateral
Agent until paid, calculated on the basis of a year of 365 or 366 days, as
applicable, and for the actual number of days elapsed, at the highest rate of
interest then applicable to any of the Secured Obligations.  The Collateral Agent shall not be liable to
the Borrowers for damages as a result of delays, temporary withdrawals of the
Equipment from service or other causes other than those caused by the
Collateral Agent’s gross negligence or willful misconduct.  This Section 17 shall survive
satisfaction of the Secured Obligations and termination of this Security
Agreement.


 


SECTION 18.         Amendments; Etc.  No amendment or waiver of any provision of this
Security Agreement nor consent to any departure by a party herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Borrowers and the Collateral Agent and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  


 


SECTION 19.         Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be (i) mailed by
registered or certified mail, postage prepaid, (ii) delivered by
nationally recognized overnight courier service, or (iii) otherwise
delivered by hand or by messenger, addressed, 
if to the Collateral Agent or a Purchaser, to:


 


SG
Phoenix LLC, as Collateral Agent


110
East 59th Street, Suite 1901


New
York, NY 10022


Facsimile
Number: (212) 319-4970


Attention:
Philip S. Sassower


 


or
at such other address as the Collateral Agent shall have furnished to Borrower
in writing, or, if to the Borrowers, to:


 


Xplore
Technologies Corp


14000
Summit Drive, Suite 900


Austin,
Texas 78728


Facsimile
Number (512) 336-7791


Attention:
Michael J. Rapisand


 


16

















 


All
notices shall be effective upon receipt.


 


SECTION 20.         Continuing
Security Interest; Transfer of Note.  This Security Agreement shall create a
continuing security interest in the Collateral and shall (1) remain in
full force and effect until the payment in full of the Secured Obligations, (2) be
binding upon the Borrowers, their successors and permitted assigns and (3) inure
to the benefit of the Collateral Agent and its successors.  Without limiting the generality of the
foregoing clause (3), the Collateral Agent may resign and a successor agent may
become vested with the rights, powers and duties of the Collateral Agent pursuant
to Section 11.18 of the Note Purchase Agreement.  Upon the payment in full of the Secured
Obligations the security interest granted hereby shall automatically terminate
and all rights to the Collateral shall revert to the Borrowers; provided,
however that the parties hereto agree that if at any time all or any part of
any payment theretofore applied by any party to this Security Agreement is, or
must be, rescinded or returned for any reasons whatsoever, including without
limitation, the insolvency, bankruptcy or reorganization of a Borrower, this
Security Agreement shall, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence notwithstanding
such application, and this Security Agreement shall continue to be effective or
be reinstated, as the case may be, as though such application had not been
made.  Upon any such termination, the
Collateral Agent will, at the Borrowers’ expense, execute and deliver to the
Borrowers such documents as the Borrowers shall reasonably request to evidence
such termination.


 


SECTION 21.         Governing Law. This Security
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, except to the extent that the validity or perfection of the security
interest hereunder, or remedies hereunder, in respect of any particular
Collateral are governed by the laws of a jurisdiction other than the State of
New York. 


 


SECTION 22.         Miscellaneous.  This Security Agreement is in addition to and
not in limitation of any other rights and remedies the Collateral Agent may
have by virtue of any other instrument or agreement heretofore,
contemporaneously herewith or hereafter executed by the Borrowers or by law or
otherwise.  If any provision of this
Security Agreement is contrary to applicable law, such provision shall be
deemed ineffective without invalidating the remaining provisions hereof and
this Security Agreement shall be enforced to the greatest extent possible to
carry out the intentions of the parties hereto. 
If and to the extent that applicable Law confers any rights in addition
to any of the provisions of this Security Agreement, the affected provision
shall be considered amended to conform thereto. 
The Collateral Agent shall not by any act, delay, omission or otherwise
be deemed to have waived any of its rights or remedies hereunder.  A waiver by the Collateral Agent of any right
or remedy hereunder on any one occasion, shall not be construed as a bar to or
waiver of any such right or remedy which the Collateral Agent would have had on
any future occasion nor shall the Collateral Agent be liable for exercising or
failing to exercise any such right or remedy. 
This Security Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and
the parties hereto may execute this Security Agreement by signing any such
counterpart.


 


[Signature Page Follows]


 


17

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered as of the date first above
written.


 


 


	
   

  	
  (a)  BORROWERS:

  
	
   

  	
  (b)

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Michael J. Rapisand

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Michael J. Rapisand

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  (c)

  
	
   

  	
  (d) 
  COLLATERAL AGENT:

  
	
   

  	
  (e)

  
	
   

  	
  SG
  PHOENIX LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  (f)

  
					



 


Signature
Page to Security Agreement


 
















 


SCHEDULE I


to Security Agreement


 


Place of Business and Locations of Collateral


 


Principal
Place of Business and Chief Executive Office of Parent:


 


Xplore
Technologies Corp


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Principal
Place of Business and Chief Executive Office of Subsidiary:


 


Xplore
Technologies Corporation of America


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Locations
of Parent Equipment:


 


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


The
Parent owns certain tooling assets that are in the possession of Wistron
Corporation (one of the Parent’s suppliers) and physically located in Taiwan.


 


Locations
of Subsidiary Equipment:


 


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Locations
of Parent Inventory:


 


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Locations
of Subsidiary Inventory:


 


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Signature Page to Security Agreement


 

















 


Location
of Records Evidencing Parent Accounts Receivable and other Collateral:


 


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Location
of Records Evidencing Subsidiary Accounts Receivable and other Collateral:


 


14000
Summit Drive, Suite 900


Austin,
Texas 78728


 


Signature Page to Security Agreement


 

















 


SCHEDULE II


to Security Agreement


 


PATENTS


 


	
  Patent
  #

  	
   

  	
  Jurisdiction

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,028,765

  	
   

  	
  US

  	
   

  	
  Removable
  Hand Grips For A Portable Pen Based Computer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,101,087

  	
   

  	
  US

  	
   

  	
  Portable
  Pen Based Computer and Auxiliary Unit For Use With A Vehicular Docking
  Station

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,426,872
  B1

  	
   

  	
  US

  	
   

  	
  Portable
  Pen Based Computer With A Vehicular Docking Station

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,504,710
  B2

  	
   

  	
  US

  	
   

  	
  Method
  of Interconnecting of a Hand-Held Auxiliary Unit, a Portable Computer and a
  Peripheral Device

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patent
  Application

  11/065,903

  	
   

  	
  US

  	
   

  	
  Apparatus
  providing multi-mode digital input

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2,367,773

  	
   

  	
  CDN

  	
   

  	
  Removable
  hand grips for a portable pen-based computer.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Published
  CA Application 

  2,239,846

  	
   

  	
  CDN

  	
   

  	
  Portable
  pen-based computer with removable hand grips with vehicular docking station.

  



 


COPYRIGHTS


 


None


 


TRADEMARKS


 


	
  Registration
  #

  	
   

  	
  Jurisdiction

  	
   

  	
  Mark

  
	
  525,452

  	
   

  	
  CDN

  	
   

  	
  Xplore

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  525,417

  	
   

  	
  CDN

  	
   

  	
  GeneSys

  



 


Signature Page to Security Agreement


 

















 


SCHEDULE III

to Security Agreement


 


Existing Commercial Tort
Claims


 


XPLORE
TECHNOLOGIES CORP. (the “Parent”)


 


On
November 9, 2006, the Parent issued a Statement of Claim against Deloitte &
Touche LLP (“Deloitte”) in the Ontario Superior Court of Justice.
In the Statement of Claim, the Parent has alleged negligence against Deloitte
with respect to the auditing services provided to us in connection with its
audit in accordance with Canadian generally accepted accounting principles of
the 2002, 2003 and 2004 audited financial statements. The Statement of Claim
seeks damages in the amount of Cdn. $4,070,000 for direct and indirect losses.
On December 22, 2006, Deloitte filed an answer to the Statement of Claim.
On March 28, 2008, Deloitte filed an amended defense and counterclaim
against the Parent, seeking indemnification for damages, costs and expenses
(including legal fees and disbursements and personnel time) allegedly incurred
by Deloitte in responding to regulatory inquiries, requests, reviews or
investigations relating to, arising out of or associated with Deloitte’s review
or audit engagements for or during the Parent’s fiscal years 2002, 2003 and
2004.


 


Signature Page to Security Agreement


 

















 


EXHIBIT D


 


FORM OF SVB
SUBORDINATION AGREEMENT


 




















 


SUBORDINATION AGREEMENT


 


This Subordination Agreement
is made by and between each of the undersigned creditors (each a “Creditor”
and, collectively, “Creditors”), and SILICON VALLEY BANK,
a California-chartered bank, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 (“Bank”).  This Subordination Agreement shall be deemed
to have been made between Bank and each Creditor who becomes a party hereto as
of the date that each such Creditor executes a counterpart signature page to
this Subordination Agreement.


 


Recitals


 


A.            XPLORE
TECHNOLOGIES CORPORATION OF AMERICA (“Borrower”) has requested and/or obtained
certain loans or other credit accommodations from Bank to Borrower which are or
may be from time to time secured by assets and property of Borrower.  XPLORE TECHNOLOGIES CORP., a Delaware
corporation (“Guarantor” and together with Borrower, each a “Credit Party” and
collectively, the “Credit Parties”), has executed that certain Amended and
Restated Unconditional Guaranty in favor of Bank dated as of September 11,
2009 (the “Guaranty”), guarantying all amounts owing from Borrower to Bank and
Guarantor has granted Bank a security interest in all of Guarantor’s assets
pursuant to that certain Amended and Restated Security Agreement dated as of September 11,
2009 (the “Security Agreement”).


 


B.            Each Creditor
has extended loans or other credit accommodations to the Credit Parties, and/or
may extend loans or other credit accommodations to the Credit Parties from time
to time.


 


C.            In order to
induce Bank to extend credit to Borrower and, at any time or from time to time,
at Bank’s option, to make such further loans, extensions of credit, or other
accommodations to or for the account of Borrower, or to purchase or extend
credit upon any instrument or writing in respect of which a Credit Party may be
liable in any capacity, or to grant such renewals or extension of any such
loan, extension of credit, purchase, or other accommodation as Bank may deem
advisable, each Creditor is willing to subordinate, subject to the terms and
conditions hereof: (i) all of the Credit Parties’ indebtedness for
borrowed money to such Creditor, whether presently existing or arising in the
future (the “Subordinated Debt”) to all of the Credit Parties’ indebtedness and
obligations to Bank; and (ii) all of such Creditor’s security interests,
if any, to all of Bank’s security interests in the Credit Parties’ property.


 


NOW,
THEREFORE, THE PARTIES AGREE AS FOLLOWS:


 


1.             Subject to the
terms and conditions hereof, each Creditor subordinates to Bank any security
interest or lien that such Creditor may have in any property of the Credit
Parties.  Notwithstanding the respective
dates of attachment or perfection of the security interest of such Creditor and
the security interest of Bank, the security interest of Bank in (i) the
Collateral, as defined in that certain Amended and Restated Loan and Security
Agreement between Borrower and Bank dated as of September 11, 2009 (as may
be amended and supplemented from time to time, the “Loan Agreement”) and (ii) the



 


F-24

















 


Collateral, as defined in the Security Agreement (collectively, the “Collateral”),
shall at all times be senior to the security interest of such Creditor. The
Loan Agreement, the Guaranty and the Security Agreement shall collectively be
referred to herein as the “Loan Documents”.


 


2.             All
Subordinated Debt is subordinated in right of payment to all obligations of the
Credit Parties to Bank now existing or hereafter arising, together with all
costs of collecting such obligations (including attorneys’ fees), including,
without limitation, all interest accruing after the commencement by or against
a Credit Party of any bankruptcy, reorganization or similar proceeding, and all
obligations under the Loan Documents (the “Senior Debt”).


 


3.             No Creditor
will demand or receive from the Credit Parties (and the Credit Parties will not
pay to any Creditor) all or any part of the Subordinated Debt, by way of
payment, prepayment, setoff, lawsuit or otherwise, nor will any Creditor
exercise any remedy with respect to the Collateral, nor will any Creditor
accelerate the Subordinated Debt, or commence, or cause to commence, prosecute
or participate in any administrative, legal or equitable action against the
Credit Parties, until such time as both (i) the Senior Debt is paid in
full and (ii) Bank has no commitment or obligation to lend any further
funds to Borrower under the Loan Documents. 
The foregoing notwithstanding,
provided that an Event of Default, as defined in the Loan Agreement, has not
occurred and is not continuing and would not exist immediately after such
payment, (i) Creditors shall be entitled to receive each regularly
scheduled, non-accelerated payment of non-default interest as and when due and
payable and (ii) Creditors shall be entitled to receive prepayments of
principal and interest provided such payments are made solely with the proceeds
of the sale of a Credit Party’s equity securities, in either case, in accordance
with the terms of those certain Notes executed by the Credit Parties in favor
of Creditors pursuant to that certain Note Purchase Agreement between the
Credit Parties and the Creditors dated as of November 5, 2009.  Nothing in the foregoing paragraph
shall prohibit a Creditor from converting all or any part of the Subordinated
Debt into equity securities of a Credit Party.


 


4.             Each Creditor
shall promptly deliver to Bank in the form received (except for endorsement or
assignment by such Creditor where required by Bank) for application to the
Senior Debt any payment, distribution, security or proceeds received by such
Creditor with respect to the Subordinated Debt other than in accordance with
this Agreement.


 


5.             In the event of
a Credit Party’s insolvency, reorganization or any case or proceeding under any
bankruptcy or insolvency law or laws relating to the relief of debtors, these
provisions shall remain in full force and effect, and Bank’s claims against the
Credit Parties and the estate of the Credit Parties shall be paid in full
before any payment is made to any Creditor.


 


6.             Until the
Senior Debt is paid in full and Bank’s arrangements to lend any funds to
Borrower under the Loan Documents have been terminated, each Creditor
irrevocably appoints Bank as such Creditor’s attorney-in-fact, and grants to
Bank a power 


 


F-25

















 


of attorney with full power of substitution, in the name of such
Creditor or in the name of Bank, for the use and benefit of Bank, with notice
to such Creditor, to perform at Bank’s option the following acts in any
bankruptcy, insolvency or similar proceeding involving a Credit Party:


 


(i)            To file the appropriate claim or claims in respect
of the Subordinated Debt on behalf of such Creditor if such Creditor does not
do so prior to 30 days before the expiration of the time to file claims in such
proceeding and if Bank elects, in its sole discretion, to file such claim or
claims; and


 


(ii)           To accept or reject any plan of reorganization or
arrangement on behalf of such Creditor and to otherwise vote such Creditor’s
claims in respect of any Subordinated Debt in any manner that Bank deems
appropriate for the enforcement of its rights hereunder.


 


7.             Each Creditor
shall immediately affix a legend to the instruments evidencing the Subordinated
Debt stating that the instruments are subject to the terms of this
Agreement.  By the execution of this
Agreement, each Creditor hereby authorizes Bank to amend any financing
statements filed by such Creditor against either of the Credit Parties as
follows: “In accordance with a certain Subordination Agreement by and among the
Secured Party, the Debtor and Silicon Valley Bank, the Secured Party has
subordinated any security interest or lien that Secured Party may have in any
property of the Debtor to the security interest of Silicon Valley Bank in all
assets of the Debtor, notwithstanding the respective dates of attachment or
perfection of the security interest of the Secured Party and Silicon Valley
Bank.”


 


8.             No amendment of
the documents evidencing or relating to the Subordinated Debt shall directly or
indirectly modify the provisions of this Agreement in any manner which might
terminate or impair the subordination of the Subordinated Debt or the subordination
of the security interests or liens that Creditors may have in any property of
the Credit Parties.  By way of example,
such instruments shall not be amended to (i) increase the rate of interest
with respect to the Subordinated Debt, or (ii) accelerate the payment of
the principal or interest or any other portion of the Subordinated Debt.  Bank shall have the sole and exclusive right
to restrict or permit, or approve or disapprove, the sale, transfer or other
disposition of Collateral except in accordance with the terms of the Senior
Debt. Upon written notice from Bank to Creditors of Bank’s agreement to release
its lien on all or any portion of the Collateral in connection with the sale,
transfer or other disposition thereof by Bank in accordance with the terms of
the Loan Documents (or by a Credit Party with consent of Bank), each Creditor
shall be deemed to have also, automatically and simultaneously, released its
lien on such Collateral, and each Creditor shall upon written request by Bank,
immediately take such action as shall be necessary or appropriate to evidence
and confirm such release.  All proceeds
resulting from any such sale, transfer or other disposition shall be applied
first to the Senior Debt until payment in full thereof, with the balance, if
any, to the Subordinated Debt, or to any other entitled party.  If any Creditor fails to release its lien as
required hereunder, such Creditor hereby appoints Bank as attorney in fact for
such Creditor with full power of substitution to release such Creditor’s liens
as provided 


 


F-26

















 


hereunder.  Such power of
attorney being coupled with an interest shall be irrevocable.


 


9.             All necessary
action on the part of each Creditor, its officers, directors, partners, members
and shareholders, as applicable, necessary for the authorization of this
Agreement and the performance of all obligations of such Creditor hereunder has
been taken.  Additionally, the execution,
delivery and performance of and compliance with this Agreement will not result
in any material violation or default of any term of any of Creditors’ charter,
formation or other organizational documents (such as Articles or Certificate of
Incorporation, bylaws, partnership agreement, operating agreement, etc.).


 


10.           If, at any time after payment in full of the Senior
Debt any payments of the Senior Debt must be disgorged by Bank for any reason
(including, without limitation, the bankruptcy of a Credit Party), this
Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not
been made and each Creditor shall immediately pay over to Bank all payments
received with respect to the Subordinated Debt to the extent that such payments
would have been prohibited hereunder.  At
any time and from time to time, without notice to any Creditor, Bank may take
such actions with respect to the Senior Debt as Bank, in its sole discretion,
may deem appropriate, including, without limitation, terminating advances to
Borrower, increasing the principal amount, extending the time of payment,
increasing applicable interest rates, renewing, compromising or otherwise
amending the terms of any documents affecting the Senior Debt and any collateral
securing the Senior Debt, and enforcing or failing to enforce any rights
against a Credit Party or any other person. 
No such action or inaction shall impair or otherwise affect Bank’s
rights hereunder. Each Creditor waives any benefits of California Civil Code
Sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.


 


11.           This Agreement shall bind any successors or
assignees of Creditors and shall benefit any successors or assigns of
Bank.  This Agreement shall remain
effective until such time as both (i) the Senior Debt is paid in full and (ii) Bank
has no commitment or obligation to lend any further funds to Borrower under the
Loan Documents. This Agreement is solely for the benefit of Creditors and Bank
and not for the benefit of the Credit Parties or any other party.


 


12.           Each Creditor hereby agrees to execute such
documents and/or take such further action as Bank may at any time or times
reasonably request in order to carry out the provisions and intent of this
Agreement, including, without limitation, ratifications and confirmations of
this Agreement from time to time hereafter, as and when requested by Bank.


 


13.           This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which together
shall constitute one instrument.


 


14.           This Agreement
shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to conflicts of laws principles.  Creditors and Bank submit to the exclusive
jurisdiction of the state and federal courts 


 


F-27

















 


located
in Santa Clara County, California in any action, suit, or proceeding of any
kind, against it which arises out of or by reason of this Agreement.  CREDITORS AND BANK
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN.


 


WITHOUT INTENDING IN ANY WAY
TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY, if the above waiver of the right to a trial by jury is not enforceable,
the parties hereto agree that any and all disputes or controversies of any
nature between them arising at any time shall be decided by a reference to a
private judge, mutually selected by the parties (or, if they cannot agree, by
the Presiding Judge of the Santa Clara County, California Superior Court)
appointed in accordance with California Code of Civil Procedure Section 638
(or pursuant to comparable provisions of federal law if the dispute falls
within the exclusive jurisdiction of the federal courts), sitting without a
jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The
reference proceedings shall be conducted pursuant to and in accordance with the
provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive.  The private judge shall have
the power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. 
All such proceedings shall be closed to the public and confidential and
all records relating thereto shall be permanently sealed.  If during the course of any dispute, a party
desires to seek provisional relief, but a judge has not been appointed at that
point pursuant to the judicial reference procedures, then such party may apply
to the Santa Clara County, California Superior Court for such relief.  The proceeding before the private judge shall
be conducted in the same manner as it would be before a court under the rules of
evidence applicable to judicial proceedings. 
The parties shall be entitled to discovery which shall be conducted in the
same manner as it would be before a court under the rules of discovery
applicable to judicial proceedings.  The
private judge shall oversee discovery and may enforce all discovery rules and
order applicable to judicial proceedings in the same manner as a trial court
judge.  The parties agree that the
selected or appointed private judge shall have the power to decide all issues
in the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to the California Code of Civil
Procedure § 644(a).  Nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against collateral, or obtain provisional remedies.  The private judge shall also determine all
issues relating to the applicability, interpretation, and enforceability of
this paragraph.


 


15.           This Agreement represents the entire agreement with
respect to the subject matter hereof, and supersedes all prior negotiations,
agreements and commitments.  No Creditor
is relying on any representations by Bank or either of the Credit Parties in
entering into this Agreement, and each Creditor has kept and will continue to
keep itself fully apprised of the financial and other condition of the Credit
Parties.  This Agreement may be amended
only by written instrument signed by Creditors and Bank.


 


16.           In the event of any legal action to enforce the
rights of a party under this 


 


F-28

















 


Agreement, the party prevailing in such action shall be entitled, in
addition to such other relief as may be granted, all reasonable costs and
expenses, including reasonable attorneys’ fees, incurred in such action.


 


17.           For so long as this Subordination Agreement is in
full force an effect, the Subordinated Debt shall constitute “Permitted
Indebtedness” and the liens granted to the Creditors in the property of the
Credit Parties shall constitute “Permitted Liens” pursuant to the Loan
Documents.


 


[Signature page follows.]


 


IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
written below.


 


 


	
  “Creditor”

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  



 


F-29

















 


IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the date written
below.


 


 


	
  “Bank”

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The undersigned
  approve of the terms of this Agreement.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  “Borrower”

  	
   

  
	
   

  	
   

  
	
  XPLORE
  TECHNOLOGIES CORPORATION OF AMERICA

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Michael J.
  Rapisand

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Guarantor”

  	
   

  
	
   

  	
   

  
	
  XPLORE
  TECHNOLOGIES CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Michael J.
  Rapisand

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
						



 


F-30

















 


EXHIBIT E


 


FORM OF SUBORDINATION
AGREEMENT


 


F-1




















 


SUBORDINATION AGREEMENT


 


This Subordination Agreement
(as amended, supplemented or modified from time to time, this “Agreement”),
dated as of November 5, 2009, is made by and among SG Phoenix LLC, a
Delaware limited liability company, as agent acting for the benefit of the Fall
2009 Purchasers (the “Fall 2009 Collateral Agent”), PHOENIX VENTURE FUND
LLC, a Delaware limited liability company, as agent for the Existing Purchasers
(in such capacity, the “Existing Collateral Agent”), the Fall 2008
Purchasers holding at least 51% of the aggregate principal amount of the notes
currently outstanding under the Fall 2008 Note Purchase Agreement (the “Fall
2008 Majority Purchasers”), and the Spring 2009 Purchasers holding at least
51% of the aggregate principal amount of the notes currently outstanding under
the Spring 2009 Note Purchase Agreement (the “Spring 2009 Majority
Purchasers”), as such Fall 2008 Majority Purchasers and Spring 2009
Majority Purchasers are identified on the signature pages hereto. The Fall
2008 Majority Purchasers, the Spring 2009 Majority Purchasers, and each of the
other Fall 2008 Purchasers and Spring 2009 Purchasers not signatory hereto are
collectively referred to herein as the “Existing Purchasers”. The
Existing Collateral Agent and the Existing Purchasers are collectively referred
to herein as “Creditors” and, each individually, a “Creditor”.


 


W I
T N E S S E T H:


 


WHEREAS, Xplore Technologies
Corp., a Delaware corporation (the “Parent”), Xplore Technologies
Corporation of America, a Delaware corporation (the “Subsidiary” and,
collectively with the Parent, the “Borrowers”, and, each individually, a
“Borrower”), and certain purchasers (such purchasers, collectively, the “Fall
2008 Purchasers”) are parties to that certain Note Purchase Agreement,
dated as of September 5, 2008 (as amended, modified or supplemented from
time to time, the “Fall 2008 Note Purchase Agreement”);


 


WHEREAS, the Borrowers and
certain purchasers (such purchasers, collectively, the “Spring 2009
Purchasers”) are parties to that certain Note Purchase Agreement, dated as
of February 27, 2009 (as amended, modified or supplemented from time to
time, the “Spring 2009 Note Purchase Agreement”, and such Spring 2009
Note Purchase Agreement, together with the Fall 2008 Note Purchase Agreement,
the “Existing Note Purchase Agreements”);


 


WHEREAS, the Borrowers and
the Existing Collateral Agent entered into that certain Security Agreement,
dated as of September 5, 2008, as amended (as amended, modified or
supplemented from time to time, the “Existing Security Agreement’),
whereby the Borrowers granted to the Existing Collateral Agent a security
interest in the collateral described in the Existing Security Agreement for the
ratable benefit of each of the Existing Purchasers;


 


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 (as
amended, supplemented or modified from time to time, the “Fall 2009 Note
Purchase Agreement”), by and among the Borrowers and the purchasers listed
on Schedule I and Schedule II thereto from time to time (such purchasers,
collectively, the “Fall 2009 Purchasers”);


 


2

















 


WHEREAS, in connection with
the issuance of the Fall 2009 Notes, the Borrowers and the Fall 2009 Collateral
Agent are entering into that certain Security Agreement, dated as of November 5,
2009 (as amended, modified or supplemented from time to time, the “Fall 2009
Security Agreement’), whereby the Borrowers will grant to the Fall 2009
Collateral Agent a security interest in the collateral described in the Fall
2009 Security Agreement (the “Collateral”) for the ratable benefit of
each of the Fall 2009 Purchasers;


 


WHEREAS, in connection with
the issuance of the Fall 2009 Notes, the Borrowers and the Fall 2009 Purchasers
desire the Existing Purchasers to (i) subordinate the indebtedness
(including the right of repayment of principal of and interest) under the notes
issued under the Existing Note Purchase Agreements (collectively, the “Subordinated
Debt”) and (ii) subordinate their security interest in the Collateral
to the rights and security interest of the Fall 2009 Purchasers in the
Collateral, pursuant to the terms of the Fall 2009 Note Purchase Agreement and
the terms hereof; and


 


WHEREAS, the Existing
Collateral Agent, the Fall 2008 Majority Purchasers and the Spring 2009
Majority Purchasers are willing to agree to the subordination described above.


 


NOW,
THEREFORE, for and in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


1.             Subject
to the terms and conditions hereof, each Creditor subordinates to the Fall 2009
Collateral Agent and each of the Fall 2009 Purchasers any security interest or
lien that such Creditor may have in the Collateral. Notwithstanding the
respective dates of attachment or perfection of the security interest of such
Creditor and the security interest of the Fall 2009 Collateral Agent and the
Fall 2009 Purchasers, the security interest of the Fall 2009 Collateral Agent
and the Fall 2009 Purchasers in the Collateral shall at all times be senior to
the security interest of such Creditor.


 


2.     All
Subordinated Debt is subordinated to all obligations of the Borrowers to the
Fall 2009 Collateral Agent and the Fall 2009 Purchasers now existing or
hereafter arising under the Fall 2009 Note Purchase Agreement, together with
all costs of collecting such obligations (including attorneys’ fees),
including, without limitation, all interest accruing after the commencement by
or against a Borrower of any bankruptcy, reorganization or similar proceeding
(collectively, the “Senior Debt”).


 


3.     No
Creditor will demand or receive from the Borrowers (and the Borrowers will not
pay to any Creditor) all or any part of the Subordinated Debt, by way of
payment, prepayment, setoff, lawsuit or otherwise, nor will any Creditor
exercise any remedy with respect to the Collateral, nor will any Creditor
accelerate the Subordinated Debt, or commence, or cause to commence, prosecute
or participate in any administrative, legal or equitable action against the Borrowers,
until such time as the Senior Debt is indefeasibly paid in full in accordance
with the terms of the Fall 2009 Note Purchase Agreement. The foregoing notwithstanding, provided that
no Event of Default, as defined in the Fall 2009 Note Purchase Agreement, has occurred and is continuing, or would
exist immediately after such payment, the Creditors shall be entitled to
receive (i) each regularly scheduled, non-accelerated payment of
non-default interest as and 


 


3

















 


when due and payable and (ii) prepayments
of principal and interest provided such payments are made solely with the
proceeds of the sale of a Borrower’s equity securities, in either case, in
accordance with the terms of the Note Purchase Agreements. Nothing in the
foregoing paragraph shall prohibit a Creditor from converting all or any part
of the Subordinated Debt into equity securities of a Borrower.


 


4.     Each
Creditor shall promptly deliver to the Fall 2009 Collateral Agent, in the form
received (except for endorsement or assignment by such Creditor where required
by the Fall 2009 Collateral Agent) for application to the Senior Debt (subject,
however, to that certain Subordination Agreement, dated as of November 5,
2009, between Silicon Valley Bank, a California-chartered bank, as senior
creditor, and the Fall 2009 Purchasers, as subordinated creditors (as amended,
modified or supplemented from time to time, the “SVB Subordination Agreement”))
any payment, distribution, security or proceeds received by such Creditor with
respect to the Subordinated Debt other than in accordance with this Agreement.


 


5.     In the
event of a Borrower’s insolvency, reorganization or any case or proceeding
under any bankruptcy or insolvency law or laws relating to the relief of
debtors, the provisions of this Agreement shall remain in full force and
effect, and the Fall 2009 Collateral Agent’s and Fall 2009 Purchasers’ claims
against the Borrowers and the estate of the Borrowers shall be paid in full
before any payment is made to any Creditor.


 


6.     Until
the Senior Debt is indefeasibly paid in full, each Creditor irrevocably
appoints the Fall 2009 Collateral Agent as such Creditor’s attorney-in-fact,
and grants to the Fall 2009 Collateral Agent a power of attorney with full
power of substitution, in the name of such Creditor or in the name of the Fall
2009 Collateral Agent, for the use and benefit of the Fall 2009 Collateral
Agent and the Fall 2009 Purchasers, with notice to such Creditor, to perform at
the Fall 2009 Collateral Agent’s option the following acts in any bankruptcy,
insolvency or similar proceeding involving a Borrower:


 


(i)            To
file the appropriate claim or claims in respect of the Subordinated Debt on
behalf of such Creditor if such Creditor does not do so prior to 30 days before
the expiration of the time to file claims in such proceeding and if the Fall
2009 Collateral Agent elects, in its sole discretion, to file such claim or
claims; and


 


(ii)           To
accept or reject any plan of reorganization or arrangement on behalf of such
Creditor and to otherwise vote such Creditor’s claims in respect of any
Subordinated Debt in any manner that the Fall 2009 Collateral Agent deems
appropriate for the enforcement of its rights and the rights of the Fall 2009
Purchasers hereunder.


 


7.     Each
Creditor shall immediately affix a legend to the instruments evidencing the
Subordinated Debt stating that the instruments are subject to the terms of this
Agreement. By the execution of this Agreement, each Creditor hereby authorizes
the Fall 2009 Collateral Agent to amend any financing statements filed by such
Creditor against either of the Borrowers to indicate that the liens evidenced
by such financing statements are subordinated pursuant to the terms hereof.


 


4

















 


8.     No amendment of the
documents evidencing or relating to the Subordinated Debt shall directly or
indirectly modify the provisions of this Agreement in any manner which might
terminate or impair the subordination of the Subordinated Debt or the
subordination of the security interests or liens that Creditors may have in any
property of the Borrowers. By way of example, such instruments shall not be
amended to (i) increase the rate of interest with respect to the
Subordinated Debt, or (ii) accelerate the payment of the principal or
interest or any other portion of the Subordinated Debt. The Fall 2009
Collateral Agent shall have the sole and exclusive right to restrict or permit,
or approve or disapprove, the sale, transfer or other disposition of the
Collateral except in accordance with the terms of the Senior Debt. Upon written
notice from the Fall 2009 Collateral Agent to the Creditors of the Fall 2009
Purchasers’ agreement to release their liens on all or any portion of the
Collateral in connection with the sale, transfer or other disposition thereof
by the Fall 2009 Collateral Agent in accordance with the terms of the Fall 2009
Note Purchase Agreement (or by a Borrower with consent of the Fall 2009
Collateral Agent), each Creditor shall be deemed to have also, automatically
and simultaneously, released its lien on such Collateral, and each Creditor
shall, upon written request by the Fall 2009 Collateral Agent, immediately take
such action as shall be necessary or appropriate to evidence and confirm such
release. All proceeds resulting from any such sale, transfer or other
disposition shall be applied first to the Senior Debt until indefeasible
payment in full thereof (subject to the SVB Subordination Agreement), with the
balance, if any, to the Subordinated Debt, or to any other entitled party. If
any Creditor fails to release its lien as required hereunder, such Creditor
hereby appoints the Fall 2009 Collateral Agent as attorney in fact for such
Creditor with full power of substitution to release such Creditor’s liens as
provided hereunder. Such power of attorney being coupled with an interest shall
be irrevocable.


 


9.     All
necessary action on the part of each Creditor, its officers, directors,
partners, members and shareholders, as applicable, necessary for the
authorization of this Agreement and the performance of all obligations of such
Creditor hereunder has been taken. Additionally, the execution, delivery and
performance of and compliance with this Agreement will not result in any material
violation or default of any term of any of Creditors’ charter, formation or
other organizational documents (such as Articles or Certificate of
Incorporation, bylaws, partnership agreement, operating agreement, etc.), as
applicable.


 


10.   If, at
any time after payment in full of the Senior Debt, any payments of the Senior
Debt must be disgorged by the Fall 2009 Collateral Agent or the Fall 2009
Purchasers for any reason (including, without limitation, the bankruptcy of a
Borrower), this Agreement and the relative rights and priorities set forth
herein shall be reinstated as to all such disgorged payments as though such
payments had not been made, and each Creditor shall immediately pay over to the
Fall 2009 Collateral Agent, for payment to the Fall 2009 Purchasers, all
payments received with respect to the Subordinated Debt to the extent that such
payments would have been prohibited hereunder. At any time and from time to
time, without notice to any Creditor, the Fall 2009 Purchasers may take such
actions with respect to the Senior Debt as the Fall 2009 Purchasers, in their
sole discretion, may deem appropriate, including, without limitation,
increasing the amount due, extending the time of payment, increasing applicable
interest rates, renewing, compromising or otherwise amending the terms of any
documents affecting the Senior Debt and any collateral securing the Senior
Debt, and enforcing or failing to enforce any rights against a Borrower or any
other person. No such action or inaction shall impair or otherwise affect the
Fall 2009 Collateral Agent’s or the Fall 2009 Purchasers’ rights hereunder.


 


5

















 


11.   This
Agreement shall bind any successors, heirs and assignees of the Creditors and
shall benefit any heirs and assigns of the Fall 2009 Collateral Agent and the
Fall 2009 Purchasers. This Agreement shall remain effective until such time as
the Senior Debt is indefeasibly paid in full. None of the Creditors shall be
entitled to assign or transfer any of its rights, benefits or obligations
hereunder without the prior written consent of the Fall 2009 Collateral Agent,
and any attempted assignment or transfer by such Creditor without such consent
shall be null and void. This Agreement is solely for the benefit of the
Creditors, on the one hand, and the Fall 2009 Collateral Agent and the Fall
2009 Purchasers, on the other hand, and not for the benefit of the Borrowers or
any other party.


 


12.   Each
Creditor hereby agrees to execute such documents and/or take such further
action as the Fall 2009 Collateral Agent may at any time or times reasonably
request in order to carry out the provisions and intent of this Agreement,
including, without limitation, ratifications and confirmations of this
Agreement from time to time hereafter, as and when requested by the Fall 2009
Collateral Agent.


 


13.   This
Agreement may be executed in several counterparts, each of which shall be
deemed an original and all of which together shall constitute one instrument.


 


14.   This
Agreement shall be governed by, and construed in accordance with, the internal
laws (and not the law of conflicts) of the State of New York. Each of the
Creditors hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and such Creditor irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the Creditors agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the Fall
2009 Collateral Agent or the Fall 2009 Purchasers may otherwise have to bring
any action or proceeding relating to this Agreement against such Creditor or
its properties in the courts of any jurisdiction. Each of the Creditors hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in this Section. Each of the Creditors
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court. Each of the Creditors hereby irrevocably waives and agrees not to
claim immunity from suit, from the jurisdiction of any court, from attachment
prior to, or in aid of execution of, a judgment, or from execution of a
judgment.


 


15.   EACH OF
THE CREDITORS HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE COLLATERAL OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT 


 


6

















 


OR ANY OTHER THEORY). EACH OF THE CREDITORS ACKNOWLEDGES THAT THE FALL
2009 COLLATERAL AGENT HAS BEEN INDUCED TO ACCEPT THIS AGREEMENT BY, AMONG OTHER
THINGS, THE WAIVER OF RIGHT TO A JURY TRIAL BY SUCH CREDITOR. THIS WAIVER IS
SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH OF THE
CREDITORS, AND SUCH CREDITOR HEREBY ACKNOWLEDGES THAT NO REPRESENTATION OF FACT
OR OPINION HAS BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OR TO IN ANY
WAY MODIFY OR NULLIFY ITS EFFECT. THE FALL 2009 COLLATERAL AGENT AND THE FALL
2009 PURCHASERS ARE HEREBY AUTHORIZED TO SUBMIT THIS AGREEMENT TO ANY COURT
HAVING JURISDICTION OVER THE SUBJECT MATTER OF THIS AGREEMENT, THE COLLATERAL
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR OVER THE CREDITORS, SO
AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF RIGHT TO A TRIAL BY JURY.
EACH OF THE CREDITORS REPRESENTS AND WARRANTS TO THE FALL 2009 COLLATERAL AGENT
AND EACH OF THE FALL 2009 PURCHASERS THAT SUCH CREDITOR HAS BEEN REPRESENTED IN
THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH SUCH COUNSEL.


 


16.   This
Agreement represents the entire agreement with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and commitments. No
Creditor is relying on any representations by the Fall 2009 Collateral Agent,
the Fall 2009 Purchasers, or by either of the Borrowers in entering into this
Agreement, and each Creditor has kept, and will continue to keep, itself fully
apprised of the financial and other condition of the Borrowers. This Agreement
may be amended only by written instrument signed by the Creditors and the Fall
2009 Collateral Agent.


 


17.   Should
any one or more of the provisions of this Agreement be held to be invalid,
illegal or unenforceable in any jurisdiction, the same shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity, illegality or
unenforceability of a particular provision in a particular jurisdiction shall
not render such provision invalid, illegal or unenforceable in any other
jurisdiction.


 


18.   Capitalized
terms defined in the preamble, whereas clauses and sections hereof and used
herein shall have the meanings given to such terms in such preamble, whereas
clauses and sections.


 


[Signatures follow.]


 


7

















 


IN
WITNESS WHEREOF, the undersigned have executed this Subordination Agreement as
of the date first written above.


 


	
  “Fall 2009 Collateral Agent”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SG PHOENIX LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


Subordination Agreement


 

















 


	
  “Existing  Collateral
  Agent”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PHOENIX VENTURE FUND LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


Subordination Agreement


 

















 


	
  “Fall 2008 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PHOENIX
  VENTURE FUND LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  SG Phoenix Ventures LLC,

  	
   

  
	
  its
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PHOENIX
  ENTERPRISES FAMILY FUND LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JAG
  MULTI INVESTMENTS LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  



 


Subordination Agreement


 
















 


	
  “Spring 2009 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  IAN
  SCOTT

  	
   

  
	
   

  	
   

  
	
  Principal
  amount of Notes currently outstanding held: $100,000.

  	
   

  



 


Subordination
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  “Spring 2009 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DON
  YOUNG

  	
   

  
	
   

  	
   

  
	
  Principal
  amount of Notes currently outstanding held: $100,000.

  	
   

  



 


Subordination
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  “Spring
  2009 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BRADY
  STONER

  	
   

  
	
   

  	
   

  
	
  Principal
  amount of Notes currently outstanding held: $200,000.

  	
   

  



 


Subordination
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  “Spring 2009 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  JIM
  O’DONNELL

  	
   

  
	
   

  	
   

  
	
  Principal
  amount of Notes currently outstanding held: $100,000.

  	
   

  



 


Subordination
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  “Spring 2009 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  NANCY
  RABBACH

  	
   

  
	
   

  	
   

  
	
  Principal
  amount of Notes currently outstanding held: $50,000.

  	
   

  



 


Subordination
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  “Spring 2009 Majority Purchasers”:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  YZAR
  Ventures Ltd

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:
  Frederique Meyer Erdin for and on behalf of SWITCO GMBH being

  
	
  Title:
  Sole corporate director

  	
   

  
	
   

  	
   

  
	
  Principal
  amount of Notes currently outstanding held: $100,000.

  	
   

  
			



 


Subordination
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  The undersigned approve of the terms of this Subordination Agreement.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”:

  	
   

  
	
   

  	
   

  	
   

  
	
  XPLORE TECHNOLOGIES CORPORATION OF AMERICA

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
  “Parent”:

  	
   

  
	
   

  	
   

  	
   

  
	
  XPLORE TECHNOLOGIES CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


Subordination
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EXHIBIT F


 


Debt Covenants


 


1.             Affirmative Covenants.


 


1.1           Taxes.  The Borrowers shall file all tax returns and
pay or make adequate provision for the payment of all taxes, assessments and
other charges on or prior to the date when due.


 


1.2           Notice of Litigation.  The Parent shall promptly notify the Agent,
acting on behalf of the Purchasers, in writing of any litigation, suit or
administrative proceeding which may materially and adversely affect the
Collateral or any Borrower’s business, assets, operations, prospects or
condition, financial or otherwise, whether or not the claim is covered by
insurance.


 


1.3           Change In Location.  The Parent shall notify the Agent, acting on
behalf of the Purchasers, in writing 45 days prior to any change in the
location of either Borrower’s chief executive office or the location of any
Collateral, or a Borrower’s opening or closing of any other place of business.


 


1.4           Corporate Existence.  Each Borrower shall maintain its corporate
existence and its qualification to do business and good standing in all states
necessary for the conduct of its business and the ownership of its property and
maintain adequate assets, trademarks, copyrights, licenses and patents, for the
conduct of its business.


 


1.5           Labor Disputes.  The Parent shall promptly notify the Agent,
acting on behalf of the Purchasers, in writing of any material labor dispute to
which a Borrower is or may become subject and the expiration of any labor
contract to which a Borrower is a party or bound.


 


1.6           Violations of Law.  The Parent shall promptly notify the Agent,
acting on behalf of the Purchasers, in writing of any violation of any Law of
any Governmental Authority, or of any agency thereof, applicable to a Borrower
which may materially and adversely affect the Collateral or any Borrower’s
business, assets, prospects, operations or condition, financial or otherwise.


 


1.7           Defaults.  The Parent shall notify the Agent, acting on
behalf of the Purchasers, in writing within five Business Days of the
occurrence of a Borrower’s default under any note, indenture, loan agreement,
mortgage, lease or other agreement to which such Borrower is a party or by
which such Borrower is bound that is material to its business, assets,
prospects, operations or condition, financial or otherwise, or any other
default under any indebtedness.


 


1.8           Capital Expenditures.  The Parent shall promptly notify the Agent,
acting on behalf of the Purchasers, in writing of any Capital Expenditure
materially affecting a Borrower’s business, assets, prospects, operations or
condition, financial or otherwise.


 


Subordination
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1.9           Books and Records.  Each Borrower shall keep adequate records and
books of account with respect to such Borrower’s business activities in which
proper entries are made in accordance with GAAP, reflecting all of such
Borrower’s financial transactions.


 


1.10         Financial Statements.  The Parent shall furnish to the Agent, acting
on behalf of the Purchasers:


 


(a)       As soon as practicable, and in any event within two (2) days
of the date of filing thereof by the Parent with the SEC pursuant to the Parent’s
reporting requirements under the Exchange Act, the Parent shall furnish to the
Agent, acting on behalf of the Purchasers, Consolidated statements of income,
cash flows and changes in stockholders’ equity of the Borrowers for such fiscal
year and a Consolidated balance sheet of the Borrowers as of the close of such
fiscal year, and notes to each, all in reasonable detail, setting forth in
comparative form the corresponding figures for the preceding calendar year; and


 


(b)       As soon as practicable, and in any event within two (2) days
of the date of filing thereof by the Parent with the SEC pursuant to the Parent’s
reporting requirements under the Exchange Act, the Parent shall furnish to the
Agent, acting on behalf of the Purchasers, unaudited Consolidated statements of
income and cash flows of the Borrowers for such fiscal quarter and for the
period from the beginning of such fiscal year to the end of such fiscal quarter
and an unaudited Consolidated balance sheet of the Borrowers as of the close of
such fiscal quarter, all in reasonable detail, setting forth in comparative
form the corresponding figures for the same periods or as of the same date
during the preceding fiscal year.


 


1.11         Further Information; Further
Assurances.  The Parent
shall, with reasonable promptness, provide to the Agent, acting on behalf of
the Purchasers, such further assurances and additional information, reports and
statements respecting each Borrowers’ business, operations, properties and
financial condition as the Agent, acting on behalf of the Purchasers, may from
time to time reasonably request.


 


2.             Negative Covenants.


 


Each
Borrower covenants and agrees that until all Note Indebtedness has been paid in
full, it will not do any of the following without the consent of the Agent,
acting on behalf of the Purchasers:


 


(a)       merge or consolidate with another corporation or
entity;


 


(b)       acquire any assets, except
in the ordinary course of business;


 


(c)       enter into any other transaction outside the ordinary
course of business;


 


(d)       sell or transfer any Collateral, except for the sale
of finished Inventory in the ordinary course of such Borrower’s business, the
grant of non-exclusive 


 

















 


licenses and similar arrangements for the use of
property of such Borrower in the ordinary course of business, and the sale of
obsolete or unneeded Equipment in the ordinary course of such Borrower’s
business;


 


(e)       sell any Inventory on a sale-or-return, guaranteed
sale, consignment, or other contingent basis;


 


(f)        make any loans of any money or other assets to any
Person except for intercompany loans between the Borrowers;


 


(g)       incur any debts, other than as permitted by the Senior
Lenders and debts in the ordinary course of business which would not reasonably
be expected to have in a Material Adverse Effect;


 


(h)       guarantee or otherwise become liable with respect to
the obligations of another party or entity, other than Permitted Liens or as
permitted by the Senior Lenders;


 


(i)        redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of such Borrower’s stock;


 


(j)        engage, directly or indirectly, in any business other
than the businesses currently engaged in by such Borrower or reasonably related
thereto;


 


(k)       pay or declare any dividends on such Borrower’s stock
(except for dividends payable solely in stock of such Borrower); or


 


(l)        dissolve or elect to dissolve.


 

















 


EXHIBIT G


 


APPOINTMENT OF AGENT BY
INDIVIDUALS IN NEW YORK


 


Effective September 1,
2009, the New York General Obligations Law requires that a power of attorney
executed by an individual in the State of New York (regardless of where that
individual resides) must contain certain wording provided in Section 5-1513
of the General Obligations Law.  While
the Borrowers and the Agent do not think that the changes in the law were
intended to cover commercial transactions such as the one contemplated by the
Note Purchase Agreement, in order to fully comply with existing law, all
individuals (not entities) executing the Note Purchase Agreement in the State
of New York must also execute the following power of attorney.


 


Reference is made to that
certain Note Purchase Agreement, dated as of November 5, 2009 (the “Agreement”),
by and between by and among Xplore Technologies Corp., a Delaware corporation
(the “Parent”), Xplore Technologies Corporation of America, a Delaware
corporation and wholly-owned subsidiary of the Parent (the “Subsidiary”
and collectively with the Parent, the “Borrowers”), and the purchasers
listed on Schedule I hereto, each of which is herein referred to as an “Initial
Purchaser” and the purchasers listed from time to time on Schedule II
hereto, each of which is herein referred to as an “Additional Purchaser”,
and collectively, as the “Purchasers”. 
All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Note Purchase Agreement.


 


(a)  CAUTION TO THE PRINCIPAL: Your Power of Attorney is an
important document.  As the “principal,”
you give the person whom you choose (your “agent”) authority to spend your
money and sell or dispose of your property during your lifetime without telling
you.  You do not lose your authority to
act even though you have given your agent similar authority.


 


When your agent exercises this authority, he or she must act according
to any instructions you have provided or, where there are no specific
instructions, in your best interest.  “Important
Information for the Agent” at the end of this document describes your agent’s
responsibilities.


 


Your agent can act on your behalf only after signing the Power of
Attorney before a notary public.


 


You can request information from your agent at any time.  If you are revoking a prior Power of Attorney
by executing this Power of Attorney, you should provide written notice of the
revocation to your prior agent(s) and to the financial institutions where
your accounts are located.


 


You can revoke or terminate your Power of Attorney at any time for any
reason as long as you are of sound mind. 
If you are no longer of sound mind, a court can remove an agent for
acting improperly.


 

















 


Your agent cannot make health care decisions for you.  You may execute a “Health Care Proxy” to do
this.


 


The law governing Powers of Attorney is contained in the New York General
Obligations Law, Article 5, Title 15. 
This law is available at a law library, or online through the New York
State Senate or Assembly websites, www.senate.state.ny.us or
www.assembly.state.ny.us.


 


If there is anything about this document that
you do not understand, you should ask a lawyer of your own choosing to explain
it to you.


 


(b)  DESIGNATION OF AGENT:


 


I,
                                                                                    ,
hereby irrevocably appoint:


[name and address of principal]


 


SG Phoenix LLC, 110 East 59th Street, Suite 1901, New York,
NY 10022, as my agent


 


(c)  This POWER OF ATTORNEY shall not
be affected by my subsequent incapacity.


 


(d)  This POWER OF ATTORNEY DOES NOT
REVOKE any prior Powers of Attorney executed by me.


 


(e)  This POWER OF ATTORNEY SHALL NOT
BE REVOKED by any subsequent Powers of Attorney unless the revocation is
expressly provided for in such Powers of Attorney executed by me.


 


(f)  GRANT OF AUTHORITY:


 


I grant authority to my agent in my name and on my behalf to execute,
deliver, amend, waive, terminate or otherwise modify any Loan Document, subject
to Section 11.18(b) of the Agreement, and exercise all rights and
powers granted to me as a Purchaser, and/or the agent, acting on behalf of the
me or the other Purchasers, under the Agreement and the Loan Documents,
together with such powers as are reasonably incidental thereto (including
entering into any amendment, waiver or modification subject to Section 11.18(b)),
and (ii) to hold, dispose, or otherwise deal with the Collateral (as
defined in the Security Agreement) for its own benefit and the pro rata benefit
of the Purchasers, subject to the terms and conditions of the obligations of
the agent as provided in the Agreement and in the Loan Documents.


 


(g)  TERMINATION:  This Power of Attorney continues until I
revoke it or it is terminated by my death or other event described in section
5-1511 of the General Obligations Law.


 


Section 5-1511 of the General Obligations
Law describes the manner in which you may revoke your Power of Attorney, and
the events which terminate the Power of Attorney.


 

















 


(h)  SIGNATURE AND ACKNOWLEDGMENT:


 


In Witness Whereof, I have hereunto signed my
name on
                                        ,
20      .


 


	
  PRINCIPAL signs here: ==>

  	
   

  	
   

  



 


	
  STATE OF NEW YORK

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
   

  	
   

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On
the
              
day of
                        ,
in the year           ,
before me, the undersigned, a Notary Public in and for said state, personally
appeared
                                                    ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that
by his/her signature on the instrument, the person or the entity upon behalf of
which the person acted, executed the instrument.


 


 


	
   

  	
   

  
	
  Notary Public

  	
   

  



 

















 


(i)  IMPORTANT INFORMATION FOR THE
AGENT:


 


When you accept the authority granted under
this Power of Attorney, a special legal relationship is created between you and
the principal.  This relationship imposes
on you legal responsibilities that continue until you resign or the Power of
Attorney is terminated or revoked.  You
must:


 


(1)       act
according to any instructions from the principal, or, where there are no
instructions, in the principal’s best interest;


 


(2)       avoid
conflicts that would impair your ability to act in the principal’s best
interest;


 


(3)       keep the
principal’s property separate and distinct from any assets you own or control,
unless otherwise permitted by law;


 


(4)       keep a
record or all receipts, payments, and transactions conducted for the principal;
and


 


(5)       disclose
your identity as an agent whenever you act for the principal by writing or printing
the principal’s name and signing your own name as “agent” in either of the
following manner:  (Principal’s Name) by
(Your Signature) as Agent, or (your signature) as Agent for (Principal’s Name).


 


You may not use the principal’s assets to
benefit yourself or give major gifts to yourself or anyone else unless the
principal has specifically granted you that authority in this Power of Attorney
or in a Statutory Major Gifts Rider attached to this Power of Attorney.  If you have that authority, you must act
according to any instructions of the principal or, where there are no such
instructions, in the principal’s best interest. 
You may resign by giving written notice to the principal and to any
co-agent, successor agent, monitor if one has been named in this document, or
the principal’s guardian if one has been appointed.  If there is anything about this document or
your responsibilities that you do not understand, you should seek legal advice.


 


Liability of agent:


 


The meaning of the authority given to you is
defined in New York’s General Obligations Law, Article 5,
Title 15.  If it is found that you
have violated the law or acted outside the authority granted to you in the
Power of Attorney, you may be liable under the law for your violation.


 

















 


(j)  AGENT’S SIGNATURE AND
ACKNOWLEDGMENT OF APPOINTMENT:  It is not
required that the principal and the agent(s) sign at the same time, nor
that multiple agents sign at the same time.


 


SG Phoenix LLC has read the foregoing Power of
Attorney.  It is the person identified
therein as agent for the principal named therein.


 


It acknowledges its legal responsibilities.


 


	
  Agent signs here: ==>   SG
  Phoenix LLC

  	
   

  	
   

  



 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


	
  STATE OF NEW YORK

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
   

  	
   

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On the
           day of                         
in the year            before
me personally came                                                     
to me known, who, being by me duly sworn, did depose and say that he resides in
                                                                                    
(if the place of residence is in a city, include the street and street number,
if any, thereof); that he is the managing member of SG Phoenix LLC, the limited
liability company described in and which executed the above instrument; and
that he signed his name thereto by authority of the managing member of said
limited liability company.


 


 


	
   

  	
   

  
	
  Notary Public