Document:

Exhibit 10.1

 

TURNKEY DESIGN AND MANUFACTURING AGREEMENT

 

THIS
TURNKEY DESIGN AND MANUFACTURING AGREEMENT (“Agreement”), effective this 1 day of July 2003 (the “Effective Date”),
is made and entered into by and between XPLORE
TECHNOLOGIES CORPORATION of AMERICA and its subsidiaries and
affiliates (“XPLORE”), a Delaware corporation
having its principal place of business at 14000 Summit Drive, Suite 900,
Austin, Texas 78728 U.S.A. and WISTRON
CORPORATION (“WISTRON”), and
its subsidiaries and affiliates, a Taiwan corporation having its principal
place of business at 21F, 88, Sec. 1, Hsin Tai Wu Rd., Hsichih, Taipei Hsien
221, Taiwan, R.O.C.

 

W I T N E S E T H :

 

WHEREAS,
XPLORE is proceeding to develop ruggedized mobile PC computer tablet(s) for its
next generation of Products (as defined herein); and

 

AND
WHEREAS WISTRON desires to provide to XPLORE design,
manufacturing and support services in respect of the Products and sell to
XPLORE the Products;

 

NOW,
THEREFORE, intending to be legally bound hereby, XPLORE and
WISTRON agree as follows.

 

1.                                      DEFINITIONS

 

Defined terms used in
this Agreement shall have the meaning set forth below:

 

1.1                               “Class Failure” shall mean the occurrence of (i) a
Material Defect, experienced in test or in the field, in greater than two and
one-half percent (2.5%) monthly of all Products purchased by XPLORE hereunder
over a rolling ninety (90) day period, or (ii) a defect in the Products
causing a safety hazard which threatens life, equipment or property.

 

1.2                               “Dead on Arrival” shall mean any Products that are discovered to contain a
Material Defect or non-conformance to Product Specification within thirty (30)
calendar days from the WISTRON invoice date.

 

1.3                               “Deliverable(s)” shall mean the design and/or work product, including
Material, resulting from performance of the Design Services as set forth on the
Statement of Work in Exhibit A.

 

1.4                               “Design Process” shall mean any Material created by WISTRON in executing to
this Agreement that relates to the implementation of the Design Services or any
Deliverable.

 

1.5                               “Design Services” shall mean the product design, development and redesign
services in respect of the Products, including but not limited to those
services facilitating fabrication, tooling, fixtures, documentation, assembly,
soldering production and delivery.

 

 

1.6                               “Data Package” shall mean all Documentation and/or Materials either
created or designed by either or both Parties under this Agreement, which are
fisted under Exhibit H.

 

1.7                               “Documentation” shall mean user manuals, training materials, product
descriptions, drawings and specifications, technical manuals, supporting
materials, import/export control documents and other information relating to
any Product, is shipped by WISTRON.

 

1.8                               “End-of-Life of XPLORE Product” shall mean any XPLORE Product
the production of which is discontinued by XPLORE, as the Parties mutually
agree as defined in Section 4.17.

 

1.9                               “End-User” shall mean any party that purchases Products from XPLORE,
directly or indirectly through Resellers and Distributors, for such party’s own
internal use and not for redistribution.

 

1.10                        “Equipment” shall mean tooling, tools, samples, consigned materials or
components, molds, and dyes required to produce Product.

 

1.11                        “Hardware” shall mean components and subassemblies that go into the
Products.

 

1.12                        “Intellectual Property Rights” shall mean all forms of
intellectual property rights and protections that may be obtained in
respect of the Products, and Documentation and includes, without limitation:

 

(i)                                     All right, title
and interest in and to all Letters Patent and all filed, pending or potential
applications for Letters Patent, including any reissue, reexamination,
division, continuation or continuation-in-part applications throughout the
world now or hereafter filed;

 

(ii)                                  All right, title and
interest in and to all trade secrets, and all trade secret rights and
equivalent rights arising under common law, state law, federal law and laws of
foreign countries;

 

(iii)                               All right, title and
interest in and to all mask works, copyrights, other literary property or
authors’ rights, whether or not protected by copyright or as a mask work, under
common law, state law, federal law and laws of foreign countries; and

 

(iv)                              AII right, title and
interest in and to all proprietary indicia, trademarks, trade names, symbols,
logos and/or brand names under common law, state law, federal law and laws of
foreign countries.

 

1.13                        “Lead Time” shall mean the time period between the acceptance by
WISTRON of a Purchase Order and the ship date of the Products ordered under
such Purchase Order.

 

1.14                        “Manufacturing Services” shall mean pre-production
manufacturing engineering, and prototype and first article manufacturing,
and finished product volume manufacturing of any Product.

 

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1.15                        “Marks” shall mean all proprietary indicia, trademarks, trade
names, logos and/or brand names either party may adopt from time to time
to identify themselves, the Products or any related parties or materials. XPLORE
will notify WISTRON in writing of all proprietary Marks as indicated above.

 

1.16                        “Material” shall mean: (a) any net list, schematic, diagram,
circuitry, technology, invention, idea, discovery, improvement, design,
concept, technique, algorithm, formula, method, process, configuration,
mechanism, model, system, network, data, plan, library, work of authorship,
file, media, record, report, copy, pictorial work, graphic work, audiovisual
work, hardware, firmware, computer interface (including for example but not
limited to programming interfaces), computer language, computer protocol,
computer software program or application (irrespective of whether source code
or object code), flow chart, blueprint, drawing. graph, information, material,
research or development, irrespective of whether patentable, or (b) any
portion, copy or extract of such Material, irrespective of whether in tangible
or intangible form, and irrespective of such Material’s media.

 

1.17                        “Material Defect” shall mean any malfunction, error or other defect in a
Product(s) that constitutes a nonconformity with the Specifications and where
such nonconformity causes such Product(s) to fail to meet form, fit and/or
function requirements for such Product(s) under conditions of normal use.

 

1.18                        “Normal and Customary Actions” shall mean all actions
associated with design technique or implementation and should be assumed as part of
WISTRON effort and agreed upon fee schedule, including without limitation value
engineering part reduction, fastening schemes or alternate material
selection.

 

1.19                        “Object Code” shall mean machine-readable program code that is expressed
in a form that is not generally suitable for modification by humans
without reverse engineering.

 

1.20                        “Parties” shall mean XPLORE and WISTRON.

 

1.21                        “Party” shall mean either XPLORE or WISTRON.

 

1.22                        “Plant Shutdowns” shall mean those incidents where WISTRON’s manufacturing
plant or WISTRON’s subcontractor’s plants has published down-time or holiday
schedules resulting in plant closures. WISTRON will notify XPLORE via Email or
FAX of holiday or plant shut downs at least forty-five (45) days before they
are planned to occur. The plant shutdowns are not to occur more than two times
per year, each period not to exceed 10 calendar days.

 

1.23                        “Product Requirements Document” or “PRD” shall mean the technical
requirements provided by XPLORE for the Deliverables, as set forth in Exhibit C.

 

1.24                        “Products” shall mean products jointly developed by XPLORE and
WISTRON under this Agreement, as further described in the PRO. As mutually
agreed, XPLORE may add Products to Exhibit C during the term of this
agreement.

 

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1.25                        “Purchase Order” shall mean a written or electronic purchase order that is
delivered to WISTRON in accordance with Section 4.5.

 

1.26                        “Purchase Price” shall mean the amount to be paid by XPLORE for the
Products as determined in accordance with Exhibit E.

 

1.27                        “Reseller” or “Distributor”
shall mean any party that purchases Products from XPLORE either directly or
indirectly for such parties’ own use or for resale to the End-User.

 

1.28                        “Safety Standard Change” shall mean changes made to the
Products required to conform the Products to all applicable governmental
and regulatory agency requirements.

 

1.29                        “Software” shall mean each software program in Object Code form included
as part of the Products.

 

1.30                        “Source Code” shall mean program code expressed in a form suitable
for modification by humans.

 

1.31                        “Specifications” shall mean the specifications applicable to the Products
as set forth in the PRD.

 

1.32                        “Statement of Work” or “SOW” - shall mean a documented
description of the work and services to be performed by WISTRON as set forth in
Exhibit A.

 

1.33                        “Term” shall mean the period beginning on the Effective Date and
terminating on the date this Agreement is terminated under the conditions
specified in Section 12.

 

2.                                      PURPOSE
OF THIS AGREEMENT

 

This Agreement sets forth
the terms and conditions for the design, development, pre-production manufacturing
engineering, prototype, first article manufacturing, and finished product
volume manufacturing and services related to Products.

 

3.                                      SERVICES
AND PAYMENTS FOR SERVICES

 

3.1                               Design Services

 

As set forth in Exhibit D,
XPLORE shall reimburse WISTRON as defined within the milestone schedule in
the SOW, WISTRON guarantees that the Product meets specifications and the
criteria set forth in the PRD.

 

A complete Data Package
as specified in Exhibit H must he delivered in its specified format to
XPLORE at production release.

 

3.1.1                     Failure to Deliver XPLORE
Specifications or Change in Scope After PRD Locked

 

In the event
XPLORE fails to deliver the Specifications for the Product in accordance with
the PRD in Exhibit C, or makes changes to the Specifications after the PRD
is

 

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locked as defined by the milestone schedule in the SOW, WISTRON may negotiate
with XPLORE a new delivery schedule and associated costs for delivery of
the Design Services.

 

The Parties agree
that Normal and Customary Actions apply.

 

3.1.2                     Acceptance of Design
Deliverables

 

Unless
otherwise agreed upon by the parties, within thirty (30) days from the receipt
by XPLORE or WISTRON of any Deliverable pursuant to Exhibit A or Exhibit C,
XPLORE and WISTRON shall provide written notice to each other of any failure of
any Deliverable which deviates from the Specifications. WISTRON and XPLORE
shall review the deviations and WISTRON will use commercially reasonable
efforts to correct any nonconformity with the Specifications and provide the
other Party with a revised deliverable within thirty (30) days. If after a
subsequent 30 days, the WISTRON deliverable does not conform to
specifications, then the Parties will mutually discuss and agree on a discount
plan for the associated milestone payment as specified in Exhibit D.

 

Notwithstanding
the above provisions, if WISTRON does not achieve Acceptance of Design
Deliverables as specified above, then a material breach would have occurred due
to WISTRON’S non-performance and the provisions of Section 12.4 apply.

 

3.2                               “Design Services” and “Manufacturing
Services” Payments

 

Payment for Design
Services and Manufacturing Services will be made as set forth in Exhibit D.
The Parties agree that the NRE and tooling payment schedules represent “not to exceed” prices. Purchase orders for the agreed upon
Design Services and Manufacturing Services shall be made by XPLORE to WISTRON
in US Dollars. WISTRON will invoice XPLORE for the Design Services and
Manufacturing Services milestones in Exhibit D. The payments will be made
via wire transfer to WISTRON specified bank account within five (5) business
days after XPLORE acceptance of the milestone and receipt of invoice(s).

 

XPLORE has the right to
review all tooling costs, evaluate and approve all tooling vendors, and review
and approve all tooling materials used as it relates to the Product. WISTRON
agrees to provide “open book pricing”
to XPLORE for all tooling elements as referenced in Exhibit D for the
Products, including all cost savings. Likewise, tooling costs greater than
items referenced in the tooling schedule in Exhibit D will require
approval in writing from XPLORE before WISTRON produces said tool. All tooling
associated with the production of Products either at WISTRON or its
subcontractor(s) will be the property of XPLORE’s.

 

4.                                      TERMS
OF PURCHASE OF PRODUCTION PRODUCTS BY XPLORE

 

4.1                               Terms and Conditions

 

All purchases of Products
by XPLORE from WISTRON during the Term shall be subject to the terms and
conditions of this Agreement unless agreed to in writing by both Parties.

 

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4.2                               Purchase Price

 

Throughout the Term, the
Purchase Price for any Product and Accessories purchased hereunder shall be as
set forth in Exhibit E attached hereto. For the first twelve (12) months
following Product release to volume production, the Purchase Price will remain
fixed for each product configuration but will be further reduced by volume
pricing incentives as specified in Exhibit E to establish the actual
Purchase Price for the next month of production. Production volumes are based
on the total number of Product units shipped not by specific product
configurations. Beginning with the second year and subsequent years of volume
production for the Product. The Purchase Price automatically includes
applicable cost reduction defined in Section 7.9 plus the application of
the volume incentives as specified in Exhibit E.

 

The parties agree to
review the volume incentive schedule at mutually agreeable intervals, but
at a minimum once per year, for the application to the Purchase Price. It is
further understood between the Parties that the formulation of volume incentive
discounts is an equitable combination of actual cost reduction plus economic
benefits of volume production quantities for the establishment of an updated
volume incentive schedule.

 

4.2.1                     Cost Reduction

 

WISTRON shall
make available to XPLORE a cost table listing which includes its major
components and assemblies for each Product so that XPLORE can assist in cost
reduction efforts defined in Section 7.9 for the Products. In addition,
WISTRON will share and help implement its detailed action plans for product
cost reduction efforts.

 

4.3                               Payment

 

Full payment of the
Purchase Price for each Product or Accessories (including any freight, taxes or
other applicable costs initially paid by WISTRON but to be borne by XPLORE)
shall be made by XPLORE to WISTRON in United States dollars, net thirty (30)
calendar days from XPLORE’s receipt of an invoice from WISTRON which follows
shipment. WISTRON will not invoice XPLORE unless shipment occurs pursuant to Section 4.8.
XPLORE agrees to pay one percent (1.0%) monthly interest on all late payments
as per Exhibit D. XPLORE will issue an irrevocable standby letter of
credit or Assignment of Receivable (AoR) in an amount equivalent to its product
requirement for the initial 60 days of production. In the event that XPLORE
fails to pay within the agreed 30 days other than amounts in dispute or subject
to credits, WISTRON shall have the right to draw on the letter of credit or AoR
to effect payment of its account. As XPLORE’s production requirement increases,
additional letters of credit shall be issued to maintain an amount equivalent
to the production requirement for the next 60 days. After six (6) months
following production release, WISTRON and XPLORE will review payment terms with
the objective of removing the requirement for letter of credit. The irrevocable
standby letter of credit will terminate after six (6) months following
production release provided that XPLORE is current on its payments.

 

4.3.1                     Payment for Unique or Long-Lead
Inventory

 

XPLORE will put
in place a Letter of Credit in the amount of $200,000 to cover unique inventory
for six (6) months to he set up thirty days prior to mass production and
to last for six (6) months into production. WISTRON shall have the right
to draw on the letter of

 

6

 

credit to effect payment in the event said unique material is deemed
obsolete. After six (6) months following production release, WISTRON and
XPLORE will review payment terms with the objective of removing the requirement
for letter of credit.

 

4.4                               Taxes

 

XPLORE’s Purchase Price
does not include any foreign, federal, state or local sales, use or other
similar taxes, however designated, levied against the sale, licensing, delivery
or use of the Products. XPLORE shall pay, or reimburse WISTRON for, all such
taxes imposed on XPLORE or WISTRON; provided, however, that XPLORE shall not be
liable for any taxes based on WISTRON’s net income or capital. When WISTRON has
the legal obligation to collect such taxes, the appropriate amount shall he
added to XPLORE’s invoice and paid by XPLORE unless XPLORE provides WISTRON
with a valid tax exemption certificate authorized by the appropriate taxing
authority. XPLORE shall promptly notify WISTRON of any amendment or revocation
of such certificate.

 

4.5                               Purchase Order Procedure

 

All orders for Products
submitted by XPLORE shall be initiated by a Purchase Order sent to WISTRON and
requesting a delivery date. These purchase orders shall include, at a minimum,
a) the WISTRON part number; b) a description of the product; c) the
product quantity; d) the Product price; e) the requested delivery date of the
Product (“Scheduled Delivery Date”); f) logistics
shipping preference; g) a reference to the Agreement and h) any other
instructions or requirements reasonably requested by XPLORE. If a purchase
order submitted by XPLORE (i) conforms to the requirements of this
Agreement, (ii) contains a Product order for the price or prices specified
in Exhibit E, (iii) does not purport to make a change to any of the
terms of this Agreement, and (iv) has a commercially reasonable delivery
date for the quantities specified, then WISTRON shall acknowledge and accept
the purchase order using reasonable best efforts within two (2) business
days but in any case not to exceed five (5) business days of receipt. If
XPLORE is not notified of WISTRON’s acceptance or proper rejection within two (2) business
days of receipt of the Purchase Order by WISTRON, the Purchase Order shall be
deemed accepted by WISTRON. Nothing contained in any Purchase Order shall in
any way modify this Agreement or add any additional terms or conditions
thereto, except as otherwise agreed in writing by the Parties. Notwithstanding
the foregoing, in the event Products are greater than thirty (30) days late
from the accepted delivery dates on accepted Purchase Orders by WISTRON, then
XPLORE will receive a 2% discount on the Product for every week that the
Product is late up to 8 weeks for a maximum discount of 16% on the next Product
delivery of an equivalent quantity of Products. After 8 weeks, XPLORE has the
right to declare Non-Performance as specified in Section 12.4 and
subsequently may cancel the Purchase Order and the associated liabilities
with no penalty.

 

4.6                               Forecast

 

XPLORE shall, on a
monthly basis, provide WISTRON with a six (6) month rolling projection of
orders by XPLORE of the Products (“Forecast”). The
initial Forecast shall be delivered to WISTRON within sixty (60) calendar days
prior to initial production. Notwithstanding any other provision contained
herein, the parties acknowledge and agree that

 

7

 

the Forecast can
in no way he construed as a commitment on XPLORE’s part to purchase any
Products. XPLORE shall also have the right to increase or decrease Forecast
quantity by the quantities listed in the chart set forth in Section 4.10
of this Agreement.

 

4.7                               Lead Time.

 

To facilitate WISTRON’s
production scheduling, XPLORE shall submit Purchase Orders to WISTRON
consistent with a Lead Time of forty five (45) calendar days for volumes within
the Forecast. In the event that the volume of Products ordered by XPLORE during
any calendar quarter exceeds the volume projected by XPLORE in the Forecast,
WISTRON shall ship such excess volume of Products consistent with a Lead Time
of forty five (45) calendar days; provided, however, WISTRON shall use
reasonable best efforts to reduce the Lead Time for such excess volume to
twenty (20) calendar days. WISTRON shall use reasonable best efforts to reduce
all Lead Times during the Term, including, without limitation, implementing such
demand-pull or direct ship programs as reasonably requested by XPLORE. The
Parties shall meet at mutually agreeable intervals during the Term to review,
in good faith, the Lead Times, including, without limitation, reviewing
material management procedures with WISTRON’s suppliers, including demand-pull
or direct ship programs. For long lead list of parts, the Parties will mutually
review these parts and determine which parts get ordered as a risk purchase.
XPLORE will give written authorization to WISTRON and approve the purchase and
specified quantity of these long lead parts. Long lead materials not consumed
within 6 months will be purchased by XPLORE provided that these parts could not
be consumed by other products manufactured by WISTRON.

 

4.8                               Shipping

 

All Purchase Prices are
FCA WISTRON’s manufacturing plant in Taiwan. All Products delivered pursuant to
the terms of this Agreement shall be packed pursuant to the packaging
requirements set forth in the SOW, marked for shipment to an address designated
by XPLORE, and delivered to a carrier designated by XPLORE, or if no carrier is
designated by XPLORE to a carrier chosen by WISTRON, F.O.B., WISTRON’s
manufacturing plant. XPLORE requires a shipment acknowledgment via FAX or Email
attachment which contains the Purchase Order number, the quantity and type of
product shipped, including serial numbers, the customer address and contact
information, and shipment carrier with tracking numbers. Upon delivery to the
carrier, risk of loss with respect to the Products (and title to the Hardware
included in such Products) shall pass to XPLORE. All freight, insurance and
other shipping expenses shall be paid by XPLORE. Items shipped after their
scheduled shipment date plus 2 business days will be shipped by WISTRON on an
expedited basis (primarily air freight) with the surcharge for such expedited
delivery being at WISTRON’s sole expense. Provided that XPLORE places orders
for Products for delivery within the applicable Lead Times as per Section 4.7,
WISTRON shall, in the aggregate during each calendar quarter, deliver at least
ninety-five percent (95%) of the Products so ordered by the XPLORE specified
delivery date. In the event WISTRON fails for two consecutive calendar year
quarters to deliver by the XPLORE specified delivery date at least ninety-five
percent (95%) of Product ordered, for any reason other than a Force Majeure
Event, then in addition to all other rights and remedies that XPLORE may have
at law or in equity, WISTRON shall (i) immediately allow XPLORE to audit
WISTRON’s order fulfillment process and discuss the reasons for such failure, (ii) evaluate
and consider any

 

8

 

recommendations
proposed by XPLORE to alleviate such problems, and (iii) at XPLORE’s request,
use reasonable best efforts to facilitate communication between XPLORE and any
WISTRON supplier(s) that is/are causing such failure. If the aforementioned
provisions do not remedy the situation, XPLORE has the right to invoke the
Non-performance provisions as stated in Section 12.4 of this Agreement.
XPLORE will notify WISTRON of the Non-performance in writing.

 

4.8.1                     Dock to Customer Shipments

 

XPLORE requires
WISTRON to implement a dock-to-customer shipping model as defined in the SOW.

 

4.8.2                     Palletized Volume Shipments:

 

XPLORE requires
WISTRON to implement palletized volume shipments for delivery to a
consolidation center or to specific customers who have purchased a large
quantity of XPLORE Products as defined in the SOW.

 

4.8.3                     Shipment of Field Replacement
Units

 

WISTRON agrees
to provide XPLORE with pricing for Product subassemblies as set forth in Exhibit G.
XPLORE requires WISTRON to accept purchase orders to ship components, boards,
and/or sub-assemblies to a XPLORE designated consolidation center. XPLORE shall
have a small inventory of spare parts and components for internal XPLORE field
and demo repairs.

 

4.9                               Cancellation

 

XPLORE may, in its sole
discretion, cancel all or any part of any Purchase Order by providing
written notice without incurring any cancellation charges according to the
chart set forth below in Section 4.10 of this Agreement. If XPLORE does
not have the right to cancel a purchase order without incurring any
cancellation charge, XPLORE may still cancel such order but shall pay
WISTRON a cancellation charge equal to WISTRON’s all incurred costs for raw
materials, work in process, handling and reworking costs incurred by WISTRON on
the Products under the cancelled Purchase Order, provided that there will be no
cancellation charge for any materials that within ninety (90) days of the
cancellation are subsequently used to fulfill a XPLORE purchase order or that
are capable of being used in other products sold by WISTRON. In no event shall
such costs exceed the Purchase Price for such cancelled Products. In the event
that XPLORE cancels all or any part of a Purchase Order for which it is
obligated to pay a cancellation charge, WISTRON shall use reasonable best
efforts to mitigate the costs associated with such cancellation. If XPLORE pays
a cancellation charge it shall own all materials subject to such charge, and
the price for any future Product that includes such materials shall be reduced
by the amount of the cancellation charge but shall add any incurred reworking
costs.

 

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4.10                        Rescheduling

 

XPLORE shall have the
right, by providing written notice to WISTRON prior to the scheduled shipment
date, to reschedule or change the shipment date only once per Purchase
Order without penalty, per the chart set forth below in this Section 4.10:

 

	
  Lead

  Time

  	
   

  	
  Allowable

  Quantity

  Increase

  	
   

  	
  Percent

  Cancelable

  	
   

  	
  Percent

  Reschedule

  	
   

  	
  Maximum

  Reschedule

  Date

  
	
  0-45 days

  	
   

  	
  25% over unit volume

  	
   

  	
  0%

  	
   

  	
  25%

  	
   

  	
  30 days

  
	
  46-60 days

  	
   

  	
  60% over unit volume

  	
   

  	
  25%

  	
   

  	
  40%

  	
   

  	
  60 days

  
	
  61-90 days

  	
   

  	
  80% over unit volume

  	
   

  	
  50%

  	
   

  	
  50%

  	
   

  	
  90 days

  
	
  over 90 days

  	
   

  	
  100% over unit volume

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  indefinite

  

 

WISTRON will use its
reasonable best efforts, including long lead time material management, to
produce any increased quantities in Product requested by XPLORE as set forth
above.

 

4.11                        Audit, Inspection and Acceptance

 

XPLORE has the right to
approve any change, production startup, sub-contractor, tooling acceptance
process or procedural acceptance relating to the Products. For the case where
it is not practical for Xplore to have access to a WISTRON sub–contractor, then
WISTRON will act on XPLORE’s behalf and report written results required by
XPLORE.

 

4.11.1              Audit & Inspection (Exhibit F,
Sec. 7)

 

XPLORE may, in
its sole discretion, perform, or cause its agents or representatives to
perform, audits and inspections of WISTRON’s, or its vendors, design, test, and
manufacturing processes during normal business hours and by giving two (2) business
days advance notice for any reason reasonably related to this Agreement,
including, without limitation, to confirm compliance with the quality
procedures and requirements set forth in Exhibit F. WISTRON shall provide
assistance to XPLORE in conducting such inspections as may be reasonably
requested by XPLORE.

 

4.11.2              First Article Acceptance
Testing (Exhibit F, Sec. 9)

 

XPLORE may conduct
first article acceptance testing on any Product (i) that XPLORE has
not previously accepted via first article testing, (ii) in which
WISTRON has introduced a modification or enhancement not previously tested by
XPLORE under a first article inspection, or (iii) in the event any
Product is manufactured at a site other than WISTRON’s location. WISTRON shall
provide assistance to XPLORE in conducting such first article acceptance
testing as may reasonably be requested by XPLORE. Within fifteen (15)
calendar

 

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days of XPLORE’s receipt of a first article Product, XPLORE will
provide WISTRON with a written notice of acceptance of such Product or a
written statement detailing the Specifications, which such Product has failed
to meet. If such Product fails to conform to the Specifications or
applicable first article testing and acceptance criteria, XPLORE shall
notify WISTRON in writing of such failure, detailing the nature of the failure,
and the Parties will immediately discuss means to resolve such failure; WISTRON
shall then deliver to XPLORE, pursuant to an agreed-upon schedule, a Product
that meets the applicable Specifications or applicable first article testing
and acceptance criteria. Upon re-delivery, XPLORE shall have an additional five
(5) business day period to first article acceptance test the Product
and provide either written acceptance of the Product or a written statement
detailing the Specifications or applicable first article testing and
acceptance criteria such Product failed to meet. If after two (2) such
cycles, XPLORE again reasonably rejects such Product, XPLORE may elect to
continue the process of modification and first article acceptance testing
or determine an alternate action plan without incurring any further liability
hereunder, provided that XPLORE shall remain liable to pay (or be entitled to a
refund if the Advance Payment has not been consumed) with regard to any
Purchase Orders that were filled with conforming Products. Notwithstanding the
above provisions, if WISTRON does not achieve Acceptance of First Articles as
specified above, then a material breach would have occurred due to WISTRON’s
Non-Performance and the provisions of Section 12.4 apply.

 

4.11.3              Product Acceptance

 

WISTRON shall
develop, qualify, test and release to production the Products set forth on Section 1.23
of this Agreement according to the timetable set forth in the SOW. The Parties
acknowledge and agree that XPLORE shall have no obligation to pay for any
Product until such Product has been accepted by XPLORE in accordance with this
Section. Product Acceptance shall mean that the Product shall meet all design
requirements per the PRD and all regulatory and certification testing on the
Product has been completed and test reports have been filed by WISTRON. The
Data Package shall transfer to XPLORE in full as per Exhibit H.

 

4.12                        Failure Analysis. (Exhibit F,
Sec. 6)

 

WISTRON shall, at WISTRON’s
sole expense, conduct a failure analysis on all defective Products to determine
the cause of failure in accordance with Exhibit E.

 

4.13                        Dead on Arrival

 

In the event that any
Product is found to be Dead-on-Arrival (DOA), WISTRON shall ship, at WISTRON’s
sole expense, a replacement Product to XPLORE in Austin, Texas within forty
eight (48) hours of receipt of notice by XPLORE in accordance with Exhibit G,
and XPLORE shall return the original product to WISTRON at WISTRON’s expense.
All Product not rejected by XPLORE within thirty (30) days of invoice shall be
deemed accepted. XPLORE’s acceptance of any Product is without prejudice to or
waiver of any of its rights and remedies under the Agreement. If the Product(s)
turned over by XPLORE to WISTRON as DOA but no defect is found in the Product
by WISTRON, then under the conditions set forth in

 

11

 

Exhibit G
hereto, XPLORE shall reimburse WISTRON for such shipment costs and pay the No
Fault Found (NFF) fee for testing and handling at the fixed price specified in Exhibit G.

 

4.14                        Field Performance

 

Products received from
WISTRON shall not exceed a 1% failure rate for the complete WISTRON assembled
unit within thirty (30) days of delivery to End-User. WISTRON shall establish a
mutually agreed to Quality Improvement Plan so as to meet the intent of Exhibit F
within 30 days.

 

4.15                        Quality Control

 

4.15.1              Sampling Procedures

 

The Product and
all associated assemblies and subassemblies shall be subject to sampling in
accordance with Sampling Procedures and
Tables for Inspection by Attributes (ANSI/ASQC Z1.4-1993). XPLORE
reserves the right to define the acceptable quality level (AQL) used for
sampling at any time. It is an objective to achieve an AQL of 2.

 

4.15.2              Lot Rejection

 

XPLORE reserves
the right of lot rejection in the event of failure to meet the AQL specified by
XPLORE. In the event of lot rejection, WISTRON shall be responsible for all
shipping and repair/replacement costs. Lot inspections shall be performed at
the discretion of XPLORE without prior notification.

 

4.16                        Safety Stock

 

WISTRON shall provide
XPLORE with inventory of finished Products in the amount equal to two percent
(2%) of the preceding quarter’s average monthly film orders, at the WISTRON’s
premises and at WISTRON’s expense (the “Safety Stock”).
XPLORE shall use this inventory as necessary to replace Products that arrive at
a customer Dead on Arrival or that are not accepted.

 

4.17                        Product Discontinuance

 

WISTRON may provide
XPLORE with at least nine (9) months prior written notice of any intention
to discontinue production of any Product if minimum volume requirements are not
achieved for two (2) consecutive quarters, then within 30 calendar days,
WISTRON will notify XPLORE in writing. During such nine month period, WISTRON
will work with XPLORE to transition manufacturing to an alternate manufacturer
including the full Data Package as specified in Exhibit H and any
Equipment owned by XPLORE. The transition period will be completed and formal
Product Discontinuance is achieved when the alternate manufacturer is able to
produce and ship the Product. During such nine (9) month period, in
addition to Purchase Orders issued pursuant to Section 4.5, XPLORE shall,
in its sole discretion, have the right to make a one-time purchase, and WISTRON
shall produce such quantities, of the End-of-Life Product. XPLORE shall have
the right to schedule shipment of such one-time buy over a period of
eighteen (18) months from the effective date of discontinuance of the End-of-

 

12

 

Life Product based
upon mutually acceptable terms and conditions to be negotiated based upon the
volume of one-time buy and like Products purchased by XPLORE. If the parties
cannot agree on mutually acceptable terms and conditions, then XPLORE may make
the End-of-Life one-time buy at the price set forth in this Agreement and shall
take delivery of such Products within six (6) months of the effective date
of the discontinuance of the End-of-Life Product. WISTRON shall provide the
support services described in Exhibit G for the End-of-Life Product for a
period of three (3) years after the later of the effective date of
discontinuance of the Product or shipment of the last discontinued Product.

 

4.18                        Future Development and Most
Favored Nations

 

WISTRON agrees that
throughout the term of this Agreement, each of the prices offered to XPLORE for
the purchase or other disposition of any Product and all other material terms
and conditions shall be at least as favorable as each of the price and other
material terms and conditions offered to any other entity for the purchase of
similar quantities of Products for comparable time periods. XPLORE may request
a written certificate attesting to the fact that WISTRON is in compliance with
this Section 4.18 for the previous calendar year based upon a WISTRON
internal review. Within 10 business days, WISTRON will comply with XPLORE’s
written request.

 

4.19                        Compliance With Law

 

The Products as supplied
by WISTRON shall comply with all applicable laws, rules and regulations.
If the Product or a Service covered by this Service and Support Addendum
relates to a prime contract with the United States Government, and/or is within
the jurisdiction of a Department or Agency of the United States, WISTRON agrees
to work with XPLORE in good faith to review the applicable provision of Federal
Acquisitions Regulations and to provide agreement or feedback to such terms in
a timely fashion. WISTRON agrees to indemnify and hold XPLORE harmless from any
loss, damage, liability, claim fine, penalty, or expense which results from
WISTRON’s failure to comply with any procurement law, rule, or regulation.

 

5.                                      LIMITED
WARRANTY

 

5.1                               Products

 

WISTRON warrants that (i) WISTRON
has all Intellectual Property Rights necessary to perform services set
forth herein, sell the Products to XPLORE, and to license the Software, to
XPLORE in accordance with the terms of this Agreement; (ii) each Product
(including all Software contained in or accompanying such Product) will be free
from Material Defects for a period of eighteen (18) months from the date of
shipment of the Product to XPLORE; (iii) the Products shipped under this
Agreement will be free from any Liens, encumbrances or defects in title; (iv) all
Products (and all components and subassemblies thereof) sold under this
Agreement are new and (v) the Product when delivered to XPLORE will comply
with all Specifications for such Product.

 

13

 

5.2                               Defective Product Procedures

 

For defective Products,
WISTRON will perform warranty service at WISTRON’s designated facilities,
provided XPLORE return the Product in accordance with the terms of this
Agreement. Subject to the statements above, WISTRON’s sole responsibility under
this warranty provisions shall be, at WISTRON’s option, to either repair or
replace the Product upon XPLORE’s return of the defective Product, unless the
Product cannot be repaired or replaced with a working Product meeting Specifications
within a reasonable time, in which case WISTRON shall promptly refund to XPLORE
the purchase price of the Product. XPLORE shall, at WISTRON’s sole expense,
return defective Products to WISTRON m accordance with the terms and conditions
of this Agreement, and WISTRON shall, at WISTRON’s sole expense, repair or
replace the defective Product and ship the repaired or replaced Product to
XPLORE in accordance with and at the time frames specified in Exhibit G.
WISTRON shall also assume responsibility for repairing or replacing Products or
components in inventory under Section 7.13. At all times while in transit
shipping to and from WISTRON, or in WISTRON’s facility, the risk of loss shall
remain with WISTRON, and all defective products or defective components thereof
returned under this warranty and subsequently replaced shall become WISTRON’s
property. All shipping costs for such defective Products will be borne by
WISTRON. If the defective Product(s) are not covered by the terms of the
warranty or the Products(s) are outside of the warranty term, XPLORE will
reimburse WISTRON for such shipment costs. In addition, if no defect is found
in the Product by WISTRON, then tinder the conditions set forth in Exhibit G
hereto, XPLORE shall reimburse WISTRON for such shipment costs and pay the No
Fault Found (NFF) fee for testing and handling at the fixed price specified in Exhibit G.
If XPLORE requests to assume warranty and repair services, the parties will
agree on a commercially reasonable schedule and terms to transfer these
responsibilities to XPLORE, under the procedures set forth in Section 7.1.

 

5.3                               Warranty Provisions

 

The procedures set forth
in Section 5.2 do not cover damage resulting from the following:

 

(i)                                     abuse, accident or
misuse;

 

(ii)                                  modifications and/or
alterations of the Product not approved by XPLORE and WISTRON through certified
service center repair training or not performed by XPLORE or WISTRON;

 

(iii)                               the use of parts not
produced or approved by XPLORE and WISTRON;

 

(iv)                              as a result of service
work undertaken by anyone other than XPLORE or WISTRON as an authorized service
center for International repairs as outlined above;

 

(v)                                 as a result of
improper installation, improper testing or operation and use or handling of the
Product,

 

(vi)                              normal wear and tear, and

 

14

 

(vii)                           loss of data.

 

5.4                               Disclaimer

 

EXCEPT FOR THE EXPRESS
WARRANTIES STATED HEREIN, EACH PARTY DISCLAIMS ALL EXPRESS OR IMPLIED
WARRANTIES, INCLUDING ON PRODUCTS FURNISHED HEREUNDER, INCLUDING, WITHOUT
LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

 

6.                                      UNIT
COST PRICING

 

XPLORE agrees to pay
WISTRON’s Prices (Prices) for Products as outlined in Exhibit E. Unless
otherwise agreed by the parties in writing, all Prices quoted by WISTRON shall
remain in effect for a period of three (3) months ah writing from the date
of quotation, with update Pricing provided to XPLORE on a quarterly basis. The
Parties agree to mutually review and approve all Product Prices prior to the
beginning of each calendar quarter. Such Prices shall he exclusive of all
applicable taxes. Provided that in the event that there is a change in market
conditions or pricing from suppliers in connection with any raw materials to be
purchased by WISTRON then either Party shall give written particulars of same
to the other Party following which either party may give notice to the
other requesting amendment to any quoted price, provided that such notice must
be given at a minimum of thirty (30) days prior to any effective price change.
The Parties shall then use their best efforts to attempt to negotiate, in good
faith, an amendment to any such initially quoted price(s) so as to fairly
reflect the change in market conditions and an appropriate adjustment shall be
made to the price for each unit of product incorporating any devices subject to
the price change from initial quoted prices.

 

7.                                      ADDITIONAL
OBLIGATIONS OF WISTRON

 

7.1                               Support Services

 

WISTRON shall provide,
during the Term and for a period of three (3) years following the later of
the date of shipment of the last Product to XPLORE or termination of this
Agreement, the support services for the Products as set forth in Exhibit G.
After the three (3) year term, the support services for the Products can
be renewed for 1 additional year up to 2 years. XPLORE reserves the right to
define and implement an alternate service strategy using WISTRON’s support
services during the Term. XPLORE will notify WISTRON in writing at least 45 days
in advance of establishing a revised support arrangement and the Parties will
mutually agree to an implementation plan and schedule. This specific action
would require an amendment to Exhibit G.

 

Should XPLORE desire to
change established warranty and service provisions the following practices and
notifications shall apply:

 

(a)                                  XPLORE
shall notify WISTRON with written advance notice, at least 45 days, prior to
planned modification or change of Support Services.

 

15

 

(b)                                 XPLORE
may elect in this change process to purchase warranty coverage for unique
assemblies for the PRODUCT and potentially leave other assemblies without
warranty coverage.

 

(c)                                  For
the Parties to determine who has warranty responsibility for the Product, post
Support Service change; this will be determined by the Wistron serial number
database referencing against the serial numbers shipped under the specific
Support Services at that time. Both Parties will need to have assess to this serial
number database. This data will be used to determine financial “warranty”
responsibility for Products covered under the warranty provisions.

 

(d)                                 Prior
to implementation of changes to the Support Services; both Parties agree to
meet to reconcile disposition of “spare” materials intended for warranty
support by either 1) purchasing said materials, 2) upgrading said materials, 3)
transferring said materials, 4) redistributing said materials to other areas of
acceptable use or directing said materials to other products, or 5) paying for
unususable spare materials.

 

7.2                               Class Failure

 

In the event of a Class Failure,
WISTRON will provide to XPLORE the following additional remedies:

 

(a)                                  WISTRON
will strive to provide to XPLORE, no later than five (5) business days
following the declaration of a Class Failure, a root cause analysis and
corrective action plan (Exhibit F, Sec. 6.4, 6.5). XPLORE will make
available such information and assistance reasonably required to allow WISTRON
to conduct its root cause analysis and to provide its corrective action plan.

 

(b)                                 If,
after review of the root cause analysis and corrective action plan, XPLORE
determines, in its reasonable opinion, that the Class Failure necessitates
a field stocking recall or customer-based recall or retrofit, XPLORE may then
elect to have the Products:

 

1)                                      returned
to WISTRON for repair or replacement; or

 

2)                                      repaired
or replaced by XPLORE in the field, including products in XPLORE and WISTRON’s
inventory, in XPLORE’s distributors’ inventory and in XPLORE’s installed base;
if XPLORE chooses to perform a field repair, WISTRON will provide the
appropriate Safety Stock of Products, parts or upgrades free of charge to
XPLORE; such Products, parts or upgrades will be shipped with the highest
shipping priority utilized by WISTRON.

 

(c)                                  WISTRON
will, within ninety (90) days after completion of the foregoing actions,
reimburse XPLORE for its reasonable and direct costs in

 

16

 

performing
such services, including, without limitation, all shipping charges. WISTRON
will reimburse for any labor charges provided that XPLORE notifies WISTRON in
writing of the estimated labor charges 15 days in advance of the labor
beginning and both Parties mutually agree to the total labor charges incurred.

 

7.3                               Inquiries

 

Each Party shall respond
to all inquiries from the other Party concerning matters pertaining to this
Agreement within the time periods set forth in this Agreement or, in the event
no time period is specified, within a commercially reasonable time period.

 

7.4                               Return Material Authorization

 

WISTRON requires a return
materials authorization (“RMA”) number in
order for XPLORE to return any Product to WISTRON. WISTRON shall immediately
assign an RMA number to XPLORE upon XPLORE’s request. XPLORE shall be the only
Party authorized to request an RMA number from WISTRON for Products purchased
under this Agreement. WISTRON shall pay the shipping expenses for the shipment
of repaired or replaced Products to XPLORE and XPLORE shall pay the shipping
expenses for returning defective Products to WISTRON, except for Products that
are Dead-on-Arrival (DOA). DOA shipment expenses are handled in accordance with
Section 4.13. If a Product is returned by XPLORE to WISTRON and no fault
is found, the Product(s) defect is not covered under the terms of the warranty,
or the warranty term has expired, then XPLORE shall reimburse WISTRON for the
shipping and insurance costs of returning said Product.

 

7.5                               Engineering Change Notification

 

In the event that WISTRON
makes any modifications or enhancements to the Products or Documentation during
the Term, WISTRON shall immediately notify XPLORE of such modifications or
enhancements in accordance with the change control procedures set forth in Section 2.1
of Appendix E of Exhibit G attached hereto. Notwithstanding any other
provision contained herein, in the event that such modification or enhancement
alters the form, fit or function of the Products, XPLORE shall have thirty (30)
days from receipt of such notification to approve or reject such modification
or enhancement. In the event that XPLORE, in its sole discretion, rejects such
modification or enhancement, WISTRON shall not implement such modification or
enhancement and shall continue to supply the unaltered Products to XPLORE
during the Term in accordance with the terms and conditions of this Agreement.

 

7.5.1                     Modification and Approval

 

In order to
ensure appropriate records are maintained by XPLORE for regulatory, service,
and document control procedure reasons, WISTRON shall provide XPLORE with all
proposed Engineering Change Orders (each, and “ECO”)
to Products and Subassemblies purchased hereunder at least thirty days prior to
their proposed implementation for review, and to the extent that such ECO
pertains to a modified standard product or custom product for approval by
XPLORE. Following review or approval by XPLORE, as the case may be,
WISTRON shall, within fifteen (15) business days after issue of the ECO by
WISTRON, provide XPLORE with a

 

17

 

final copy of each ECO or like documentation issued by WISTRON with
respect to operation or maintenance of the applicable Product. This cost shall
be borne by WISTRON if, due to the sole fault of WISTRON, the ECO is initiated
at WISTRON’s initiative.

 

7.6                               Safety Standard Changes

 

In the event that Safety
Standard Changes are required to be made to the Products, WISTRON shall
implement such Safety Standard Changes as soon as possible, but in no event
later than the date required by the regulating agency. WISTRON shall
immediately provide XPLORE with written notice of the requirement for such
Safety Standard Changes when WISTRON becomes aware of such requirement.
Notwithstanding any other provision contained herein, WISTRON shall be
responsible for any and all costs and expenses, including, without limitation,
materials, labor and XPLORE’S reasonable and direct costs, associated with
implementing the Safety Standard Changes for Products in XPLORE’s inventory, in
XPLORE’s Resellers’ and Distributors’ inventory and in XPLORE’s End-User
install base.

 

7.7                               Quality Program

 

WISTRON agrees to apply
and be bound by the quality procedures for all Products shipped pursuant to
this Agreement as set forth in Exhibit F attached hereto.

 

7.8                               Functional Specifications

 

WISTRON shall, at WISTRON’S
sole expense, provide to XPLORE during the Term those WISTRON Product
functional specifications, test plans and test procedures reasonably required
by XPLORE to (i) perform interoperability, compatibility, functional
and audit testing on the Products, (ii) perform system design work
incorporating the Products, per the Specification of each Product.

 

7.9                               Product Cost Reduction

 

It is understood between
the Parties that the formulation of volume incentive discounts is an equitable
combination of actual cost reduction plus economic benefits of volume
production quantities for the establishment of an updated volume incentive
schedule. The Price determination will be based in part on the cost
reduction activities at WISTRON who recognizes that it is XPLORE’s policy to
work with its suppliers on a cost reduction program, revised on a quarterly
basis, which targets a 10% annual cost reduction. WISTRON recognizes such
policy of XPLORE and will make its reasonable best efforts to implement such
policy and achieve such cost reduction. It is the Parties’ expectations, that
prior to each quarter or at any other time as agreed to by the parties, the
parties will work a revised pricing for the Product, including revised pricing
for direct materials, that will result from a cost reduction plan applicable to
the Products to be prepared by WISTRON within the bounds agreed upon in Exhibit E.
Cost reduction plan shall contemplate alternative suppliers and/or components,
design, process changes and cost saving procedures. Such new Product unit price
will apply to subsequent orders or shipments yet to be delivered as of date to
be agreed for implementation by the Parties.

 

18

 

7.10                        Certifications and Regulatory
Approvals

 

WISTRON will ensure that
the Product will have passed regulatory certifications as defined in the SOW by
the Product Release Date in the mutually agreed upon schedule, in the countries
listed in Exhibit I. WISTRON will be responsible to complete all Product
safety, EMC and other testing as required for the release of the Product by
Product Release as part of the NRE. For any additional countries requested
by XPLORE, the patties will negotiate the payment responsibility. WISTRON shall
record the XPLORE names for the Products in any filings for regulatory
certifications of the Products (i.e., dual
listings) and immediately provide XPLORE with copies of all such certifications
and test results upon issuance. WISTRON shall provide XPLORE with a copy of
WISTRON’s homologation schedule on or before the Effective Date and
immediately notify XPLORE in writing of any change or update to said
homologation schedule during the Term.

 

7.11                        Non-Compete

 

For a period of 12 months
from start of production and during each quarter thereafter the target volumes
are being met, WISTRON agrees not to directly or indirectly design, engineer,
produce, manufacture or sell any rugged mobile tablet that is competitive other
than those ordered by XPLORE from the start of volume production except as
expressly agreed to by XPLORE in writing. Beginning with the second full
quarter volume production, should the average monthly volume per quarter fall
below 2000 units, then this term may be removed, but all conditions
specified in Section 14 remain in full force.

 

7.12                        Transfer of Ownership

 

For any third party
relationships for parts, subcontracted services, or licenses that need to be
transferred, WISTRON will notify XPLORE by Email or FAX of this proposed change
and the reasons for the change. XPLORE has five (5) business days to
respond with its approval, rejection, or need for more information.

 

7.13                        Inventory Responsibility

 

The Inventory held by
WISTRON on behalf of XPLORE to meet the finished Product volumes contained in
the Purchase Orders and the six (6) month rolling forecast, that are
defined as customer specific or Non-Cancelable or Non-Returnable (NCNR), shall
be XPLORE’s responsibility in the event of any variation or termination of the
Agreement subject directly to Section 12.0 of this Agreement. XPLORE also
acknowledges and agrees that at the end of the life of a product or upon
cancellation of this Agreement that some quantity of Inventory would be deemed
excess and obsolete clue to Minimum Purchase Quantities (MPQ) set by various
component suppliers as well as requirements necessary for WISTRON’s automated
manufacturing processes and that XPLORE would have certain liability for this
inventory as outlined in this Section. A list detailing the NCNR, obsolete,
excess and/or customer specific material/Inventory will be provided to XPLORE
in written format on a monthly basis and is included as part of this
Agreement. Modifications to the NCNR report must be mutually agreed to on a
monthly basis by authorized personnel of each Party. WISTRON will at all times
try to minimize the level of Inventory to support the manufacture of XPLORE
Products. When extraordinary purchases must be made (i.e. long lead-time, allocation, supplier-imposed etc.)
WISTRON will seek written authorization from XPLORE prior to doing so as

 

19

 

defined in Section 4.7
(Lead-time). XPLORE will not be responsible for charges that are not
pre-approved by an authorized XPLORE manager, nor will XPLORE be responsible
for any charges listed in this Section that do not comply with the schedule of
delivery article outlined in the SOW.

 

7.14                        Notification

 

WISTRON agrees to notify
XPLORE and request written authorization prior to issuing purchase orders for
NCNR items that have lead times in excess of thirty (30) days.

 

7.15                        Equipment

 

WISTRON acknowledges and
agrees that the Equipment will at all times remain the property of XPLORE.
WISTRON will ensure that the Equipment is kept free and clear of any liens or
other encumbrances. WISTRON will keep the Equipment adequately insured, and
will be responsible for any loss or damage to it while on the WISTRON premises.
WISTRON will use the

 

Equipment only for
purposes required to perform this Agreement, and will not use it on behalf
of any third party without XPLORE’s prior written consent.

 

8.                                      APPOINTMENT
AND AUTHORITY

 

8.1                               Independent Contractors

 

The relationship of
XPLORE and WISTRON established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be construed to (i) give
either Party the power to direct and control the day-to-day activities of the
other, (ii) constitute the Parties as partners, joint venturers, co-owners
or otherwise as participants in a joint or common undertaking, or (iii) allow
either Party to create or assume any obligation on behalf of the other Party
for any purpose unless expressly provided herein.

 

8.2                               Representations and Warranties

 

WISTRON hereby represents
and warrants to XPLORE as follows:

 

WISTRON is not subject to
any agreement, contract, commitment, statute, judgment or decree which would
prohibit or be violated by WISTRON’s execution or delivery of this Agreement or
by WISTRON’s performance of its obligations hereunder.

 

WISTRON has the right,
power and authority to grant the rights and licenses granted by WISTRON
hereunder and to perform WISTRON’s obligations hereunder.

 

WISTRON shall provide its
services and meet its obligations hereunder in a timely and workmanlike manner,
and will exercise a standard of care equal to, or superior to, care used by
similar service providers on similar projects.

 

20

 

Neither WISTRON nor any
of its employees, representatives or agents shall cause or permit any of
WISTRON’s work product hereunder to include or incorporate any material in
which any third party shall have any registered or unregistered copyrights,
patent rights, trade secrets, trademarks or other proprietary rights or
interests, and XPLORE’s use of such work product as contemplated hereby will
not infringe upon any copyright, patent, trade secret, trademark or other
proprietary right, moral right or contract right of any third party.

 

Neither WISTRON nor any
of its employees, representatives or agents shall cause or permit any of
WISTRON’s work product hereunder to include or incorporate any time or date
bombs, viruses, or other intentionally disabling code of any type whatsoever.
Each Product incorporating WISTRON technology will conform to all of the
specifications and requirements set forth herein, including without limitation
those reflected in the SOW or hereafter established in accordance with the
procedures described herein.

 

9.                                      INDEMNIFICATION,
REMEDIES, PRODUCT LIABILITY INDEMNIFICATION

 

9.1                               Indemnification

 

XPLORE and WISTRON agree
to indemnify one another as follows:

 

9.2                               Indemnification

 

By
WISTRON. (a) WISTRON shall defend, indemnify and hold
XPLORE harmless against any claim, suit, action or proceeding threatened,
brought or asserted against XPLORE or any of XPLORE’s subsidiaries, affiliates,
parents, directors, officers and employees (hereinafter “Indemnitees”)
to the extent that any claim, suit, action or proceeding threatened, brought or
asserted against any Indemnitee is based on a claim that any of the Products
infringes any patents, copyrights, trademarks, trade secrets or other third
party intellectual property, contract or moral rights (a “Claim”),
and WISTRON shall indemnify the Indemnitees from any royalties, judgments,
costs and expenses (including attorney fees), damages, losses, liabilities, and
fees suffered by such Indemnitee which are attributable to such Claim. XPLORE
agrees to notify WISTRON promptly in writing of any Claim, to permit WISTRON
exclusively to defend, compromise or settle the Claim and to provide all
available information and reasonable assistance regarding such Claim, all at
WISTRON’s sole expense. In no event shall XPLORE consent to any judgment or
decree or settle the Claim without the prior written consent of WISTRON, in
WISTRON’s sole discretion. All settlements by WISTRON shall obtain a complete
release for XPLORE, at no expense to XPLORE. (b) Exclusions. Such
indemnification shall not apply to infringement to the extent that (a) the
infringement is required to comply with the specifications for the WISTRON
Product supplied by XPLORE, (b) the alleged infringement is based solely
on use by XPLORE, without WISTRON’s permission, of the WISTRON Product as sold
by XPLORE in combination with another item not sold by WISTRON, where the
alleged infringement arises solely from the combination or from the practice of
a method made possible by the combination, (c) the alleged infringement is
based on the Claim that the WISTRON Product has been used for a purpose other
than that for which is was intended, (d) the infringement arises from
XPLORE’s continued use of an WISTRON Product after WISTRON has: i) given notice
to XPLORE that such Product or the use thereof are alleged to be infringing,

 

21

 

and ii) provided
XPLORE with the remedy set forth in Section 9.4 of this Agreement, or (e) the
alleged infringement is based solely on a modification made by XPLORE to the
Product without WISTRON’s permission.

 

9.3                               Indemnification

 

By
XPLORE. XPLORE shall defend, indemnify and hold WISTRON
harmless against any claim, suit, action or proceeding threatened, brought or
asserted against WISTRON or any of WISTRON’s subsidiaries, affiliates, parents,
directors, officers and employees (hereinafter “WISTRON
Indemnitees”) to the extent that any claim, suit, action or
proceeding threatened, brought or asserted against any WISTRON Indemnitee is
based on a claim (a “Claim”) that (i) XPLORE
made any misrepresentation in the sales, marketing or other promotion and
distribution of the Product, unless such misrepresentation was based on
information provided by WISTRON to XPLORE. XPLORE shall indemnify the WISTRON
Indemnitees from any judgments, costs and expenses (including attorney fees),
damages, losses, liabilities, and fees finally awarded against any such WISTRON
Indemnitee which are attributable to such Claim. WISTRON agrees to notify
XPLORE promptly in writing of any Claim, to permit XPLORE to defend, compromise
or settle the Claim and to provide all available information and reasonable
assistance regarding such claim, all at XPLORE’s sole expense. If the claim is
based on information provided to XPLORE by WISTRON, then WISTRON shall provide
the foregoing indemnity to XPLORE. All settlements by XPLORE will obtain a
complete release for WISTRON, at no expense to WISTRON.

 

9.4                               Remedies

 

Each of the parties
hereto agrees that damages alone could not adequately compensate the other
party hereto in the event of such party’s breach of any of its obligations set
forth herein. Accordingly, each of the parties hereto agrees that in the event
of any such breach by such party, the other party hereto shall be entitled to
obtain injunctive relief against such breaching party, without bond but upon
due notice, in addition to such other relief as may appertain at law or in
equity. Obtainment of any such injunction shall not be deemed to be an election
of remedies or a waiver of any right to assert any other remedy which may be
available at law or in equity.

 

10.                               LIMITATION
OF LIABILITY

 

EXCEPT FOR THE INDEMNITY
OBLIGATIONS SET FORTH IN SECTION 9 AND THE OBLIGATIONS IN RESPECT OF
CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY SET FORTH IN SECTIONS
14.1.2, 14.1.3, 14.1.4, or14.1.5, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, INCLUDING WITHOUT
LIMITATION LOST PROFITS OR REVENUE, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY
AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.

 

22

 

11.                               EXPORT
CONTROL

 

WISTRON and XPLORE will
not use, distribute, transfer or transmit any Products, software or technical
information (even if incorporated into other products) provided under this
Agreement except in compliance with U.S. and Canadian export laws and
regulations (the “Export Laws”).
WISTRON and XPLORE will not, directly or indirectly, export or re-export the
following items to any country which is in the then current list of prohibited
countries specified in the applicable Export Laws: (a) software or
technical data disclosed or provided to XPLORE by WISTRON or XPLORE’s
subsidiaries or affiliates; or (b) the direct product of such software or
technical data. WISTRON and XPLORE mutually agree to promptly inform the
other Party in writing of any written authorization issued by the U.S.
Department of Commerce or Canadian office of export licensing to export or
re-export any such items referenced in (a) or (b). The obligations stated
above in this clause will survive the expiration or earlier termination of this
Agreement.

 

12.                               TERM
AND TERMINATION OF AGREEMENT

 

12.1                        Term

 

This Agreement shall
continue in force for an initial term of five (5) years from the Effective
Date (“Initial Term”) and shall automatically
renew for additional one (1) year terms (“Renewal
Terms”) unless either Party terminates this Agreement by providing
at least one-hundred twenty (120) calendar days written notice prior to the
expiration of any Renewal Term.

 

12.2                        Termination

 

In the event of any
material breach of this Agreement, the non-breaching Party may terminate
this Agreement by giving fifteen (15) calendar days prior written notice to the
other Party; provided, however, that this Agreement shall not terminate if the
other Party has cured the breach prior to the expiration of such fifteen (15)
calendar day period, or if such breach cannot be cured within such fifteen (15)
calendar day period, the other Party has taken reasonable steps within such
fifteen (15) calendar day period to cure the breach and thereafter cured such
breach as soon as practicable, but not to exceed 20 calendar days.

 

This Agreement may also
be terminated by either Party upon one hundred and twenty (120) days written
notice to the other but only after mass production of Product has begun. In the
event of such termination, the “Data Package”
shall be delivered by WISTRON to XPLORE in its current and most updated form as
defined in Exhibit H. WISTRON will work with XPLORE to transition
manufacturing to an alternate manufacturer under the provision of Section 4.17.

 

12.3                        Termination for Insolvency

 

This Agreement shall
terminate, upon notice by either Party, (i) if the other Party files
voluntary bankruptcy proceedings or the Canadian or Taiwanese equivalent
thereof, (ii) if involuntary insolvency, receivership or bankruptcy
proceedings, or the Canadian or Taiwanese equivalent thereof, are instituted
against the other Party are not dismissed within sixty (60)

 

23

 

calendar days of
such institution, (iii) upon the other Party’s making an assignment for
the benefit of creditors, or the Canadian or Taiwanese equivalent thereof, or (iv) upon
the other Party’s dissolution or ceasing to do business.

 

12.4                        Non Performance

 

As used in this
Agreement, “Non Performance” shall mean: (a) the
termination of this Agreement by XPLORE pursuant to Sections 12.3 or 12.4
hereof; (b) WISTRON is unable, for any reason other than a to fulfill its
product delivery or support obligations for a period of sixty (60) consecutive
days during the Term, or (c) WISTRON has failed to satisfy its obligations
under Section 4 of the Service and Warranty agreement as specified in Exhibit G
between the Parties. XPLORE Technologies shall not issue a notice of Non
Performance unless the provisions as specified in Termination have been
executed.

 

Should a material breach
occur and the requirements of Termination and Non Performance apply then
WISTRON shall within ten (10) business days (a) return all monies
paid by XPLORE for Products or services not yet accepted by XPLORE, (b) provide
a complete and current Data Package as specified in Exhibit H to XPLORE, (c) ship
at WISTRON’s expense, (including all freight, taxes, duties, and insurance) all
tools, all Products and all inventory of raw materials, work in progress or
finished goods relating to Products which has been paid for by XPLORE.

 

XPLORE shall within ten
(10)-business days pay WISTRON any and all monies incurred for Products or
services completed or accepted by XPLORE. Material breach by WISTRON shall not
effect any and all payment due by XPLORE to WISTRON.

 

13.                               EFFECT
OF TERMINATION:  

 

Upon termination of this Agreement:

 

(a)                                  WISTRON
shall fulfill its obligations as contained in paragraphs 13 (b), (c), (d), (e) and
XPLORE shall then immediately assume responsibility for the payment of all
XPLORE material, work in process, finished Product and all other outstanding
XPLORE inventory then being held by WISTRON, including the inventory being held
pursuant to Section 7.13 hereof together with all other monies due and
owing pursuant to this Agreement providing that such items meet the terms and
conditions of Section 7.13;

 

(b)                                 The
Parties shall facilitate the transfer of all of XPLORE property, Inventory,
Products, Equipment, and Data Package as defined in Exhibit H then being
held by WISTRON to XPLORE including all documentation relating thereto;

 

(c)                                  WISTRON
shall immediately return all original design drawings, copies of drawings,
specifications, written descriptions, and other recorded technical information
furnished to WISTRON by XPLORE pursuant to this Agreement;

 

(d)                                 Each
Party shall cease to use the documentation and information provided to it by
the other Party pursuant to the provisions of this Agreement;

 

24

 

(e)                                  WISTRON
agrees to fulfill all Purchase Orders received and accepted but not yet
fulfilled upon written request by XPLORE; and

 

(f)                                    Return
of Materials. Except as required under the SOW or for WISTRON to provide
support services to End-Users, upon termination of this Agreement for any
reason, each Party shall return to the other Party, or destroy and certify as
to such destruction, all Confidential information, and Documentation of the
other Party in their possession.

 

13.1                        Survival

 

Sections 1, 4.3, 4.8,
4.9, 4.10, 4.12, 4.13, 4.19, 5.0, 7.2, 7.4, 7.10, 7.11, 8.1, 10, 11, 13.1, 14,
15, Exhibit G shall survive the expiration or earlier termination of this
Agreement for any reason.

 

14.                               INTELLECTUAL
PROPERTY AND CONFIDENTIAL INFORMATION AND NON-DISCLOSURE

 

14.1                        Intellectual Property Rights and
Licenses

 

14.1.1              Pre-Existing Material

 

If either party
creates and/or owns Material prior to the date of this Agreement or
independently of its performance under this Agreement (“Pre-existing
Material”): (a) such party (“owning party”)
shall solely own such Pre-existing Material (subject to any right of any third
party), notwithstanding disclosure or delivery to the other party of such
Pre-existing Material; (b) the owning party shall have the right to obtain
and hold in its own name all Intellectual Property Rights that may be
available in (or result from) such Pre-existing Material; and (c) the
other party shall have no license, sub-license, right or immunity, either
directly or indirectly, or by implication, estoppel or otherwise, under such
Intellectual Property Rights, except as expressly provided elsewhere in this
Agreement or in a separate written agreement.

 

14.1.2              License to WISTRON Pre-existing
Material

 

WISTRON hereby
grants to XPLORE a perpetual, irrevocable, non-exclusive, transferable,
royalty-free license to use, modify and copy the WISTRON Pre-existing Materials
as may be required in the design, manufacture, use, support or
distribution of the Products. WISTRON does not have the right to Mark or brand
the Product as their own without obtaining licenses or rights from XPLORE in
writing.

 

14.1.3              New Developments

 

Except for
WISTRON’s existing intellectual property including, without limitation, WISTRON’
design tools, methodologies, software, algorithms, or other means that may be
used to design production means or the processes by which products are
manufactured, assembled, or tested, WISTRON agrees that all designs, plans,
reports, specifications, drawings, schematics, prototypes, models, inventions,
copyrights, and all other information and items made

 

25

 

or conceived by WISTRON or by its employees, contract personnel, or
agents during the course of this Agreement alone or in conjunction with others
and related to the Products and Services shall be and are assigned to XPLORE as
its sole and exclusive property immediately upon the creation thereof. Upon
XPLORE’s request WISTRON agrees to assist XPLORE, at XPLORE’s expense, to
obtain patents for any such inventions, including the disclosure of all
pertinent information and data with respect thereto, the execution of all
applications, specifications, oaths, and assignments, and all other instruments
and papers which XPLORE shall deem necessary to apply for and to assign or
convey to XPLORE, its successors and assigns or nominees, the sole and
exclusive right, title and interest in such inventions, copyrights,
applications and patents. WISTRON agrees to obtain or has obtained written
assurances from its employees and contract personnel of their agreement to
substantially the same terms as contained herein with regard to confidential
information and such new developments.

 

14.1.4              Confidential Information

 

The subject
matter of this Agreement, in its entirety, and all information relating to all
Products will remain confidential during Term and for five (5) years
thereafter, during which time each party will not disclose, without the
permission of the other party, such information or any of the other party’s
information which is conspicuously marked to indicate its confidential or
proprietary nature or which the other party has otherwise instructed in writing
to maintain as confidential. This paragraph shall not apply to any information
which is publicly available or which is available from a third party without
similar restrictions on disclosure. Upon written request of a party, the other
shall return all such confidential information of the requesting party and
shall destroy all copies thereof In the event the parties have executed an
agreement related to confidential information prior to this agreement the terms
and conditions of that agreement shall govern confidential information.

 

14.1.5              Non-Disclosure Agreement

 

Each party (the
“Receiving Party”) acknowledges and
agrees that any know-how, ideas, techniques, writings, information relating to
marketing strategies, pricing policies or characteristics, customers, suppliers
and customer and supplier information, customer and supplier lists, product or
product specifications, intellectual property, designs, manufacturing, testing
or assembly processes or costs, costs of materials, business or business
prospects, plans, proposals, codes, marketing studies, research, reports,
investigations and other proprietary information furnished to such Receiving
Party or any affiliate thereof by the other party or any affiliate thereof
prior to and during the negotiation and execution of this Agreement and during
the Term (“Confidential Information”),
regardless of the form or format of such Confidential Information and
regardless of whether such Confidential Information is labeled or marked as “secret,” “confidential”
or otherwise, is and will be the sole and exclusive property of the other party
and/or its affiliate(s), as applicable.

 

The Receiving
Party will (and will cause its employees, agents and affiliates, and the
employees and agents of such affiliates to) maintain the confidentiality of the
other party’s Confidential Information and not sell, license, publish, display,
distribute, disclose or otherwise make available such Confidential Information
to any third party, nor use such Confidential Information, except as expressly
authorized by this Agreement. The Receiving

 

26

 

Party will take at least such steps to protect the confidentiality of
such Confidential Information as the other party takes to protect its own
proprietary information and data. The Receiving Party will not disclose any
Confidential Information, including without limitation any flow charts, logic
diagrams, user manuals and screens, or otherwise, to persons other than
employees of the Receiving Party with a need to know such information without
the prior written consent of the other party. Receiving Party shall obtain
written approval from the other party before releasing any Confidential
Information to any third party in the performance of work to be executed as part of
this Agreement.

 

The foregoing
Sections 14.1.5, 14.1.4 and this Section 14.1.5 will not prohibit or limit
a Receiving Party’s use of information, including but not limited to ideas,
concepts, know how, techniques and methodologies, which: (i) is or becomes
pad of the public domain through no breach of these Sections 14.1.3, 14.1.4 or
14.1.5; (ii) is rightfully obtained by the Receiving Party from a third
party without restriction; (iii) is required to be disclosed in response
to a valid order by a court having proper jurisdiction over the parties; or (iv) the
Receiving Party already possesses without an obligation of confidentiality.

 

15.                               GENERAL
PROVISIONS

 

15.1                        Governing Law

 

This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
its conflicts of laws provisions. The parties agree to attorn to the
jurisdiction of the courts of Travis county and WISTRON agrees it will not
bring a claim against XPLORE except in the courts of Travis county.

 

15.2                        Entire Agreement.

 

This Agreement and any
Exhibits hereto sets forth the entire agreement and understanding of the
Parties relating to the subject matter herein and merges all prior discussions
between them. No modification of or amendment to this Agreement, nor any waiver
of any rights under this Agreement, shall be effective unless in writing signed
by the Party to be charged. Notwithstanding any other provision contained
herein, in the event that either Party assigns this Agreement to a legal
successor in interest in accordance with the terms and conditions of this Section 15.2
and the other Party determines, in its sole discretion, that such assignee is a
competitor of the other Party, then such other Party may, upon one hundred
twenty (120) calendar days prior written notice, terminate this Agreement
without incurring any further liability hereunder.

 

15.3                        Notices

 

Any and all notices and
other communications necessary or desirable to be served in connection with
this Agreement shall be in writing and shall be either sent by registered mail,
return receipt requested, postage prepaid, addressed to the intended recipient
at the address for such intended recipient set forth below, or sent to
facsimile telecopier to the intended recipient at the facsimile telecopier for
such intended recipient set forth below. The addresses and facsimile
telecopiers for the parties hereto are as follows:

 

27

 

For communications to
XPLORE:

 

XPLORE
Technologies Corporation of America

11675
Jollyville Road, #150

Austin,
Texas 78759

Attention:
Mr. Michael Ross

 

Facsimile
Telecopier: (512) 336-7791

 

with a
copy to:

 

XPLORE
Technologies Corp.

6535B
Mississauga Road

Mississauga,
Ontario L5N lA6 Canada

Attention:
Mr. David Belbeck

 

Facsimile
Telecopier: (905) 814-9124

 

For communications to
WISTRON:

 

WISTRON

with a
copy to:

 

 

 

Attention:

 

Facsimile
telecopier: 

 

or to such other
addresses or facsimile telecopier numbers as either party hereto may designate
for itself from time to time in a notice served upon the other party hereto in
accordance herewith. Any notice sent by facsimile telecopier as provided above
shall be deemed delivered on the next business day following confirmation of
successful transmission of such notice by the transmitting facsimile telecopier
system. Any notice sent by mail as provided above shall he deemed delivered on
the third (3rd) business day next
following the postmark date which it bears.

 

15.4                        Force Majeure

 

Except for the obligation
to make payments, non-performance of either Party shall be excused to the
extent the performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, component shortages or any other
reason where failure to perform is beyond the reasonable control of and is
not caused by the negligence of the nonperforming Party (each a “Force Majeure Event”)
provided, however, that the Party so affected shall take all reasonable steps
to avoid or remove such cause of non-performance and shall resume performance
hereunder with dispatch whenever such causes are removed. Failure of WISTRON’s
subcontractors to perform shall not be considered a Force Majeure Event,
unless they have a Force Majeure Event as defined above. Notwithstanding the
foregoing, if a Force

 

28

 

Majeure Event
continues for more than 30 consecutive days, the other party may terminate
this Agreement.

 

15.5                        Legal Expenses

 

The prevailing Party in
any legal action brought by one Party against the other and arising out of this
Agreement shall be entitled, in addition to ally other rights and remedies it may have,
to reimbursement for its expenses, including court costs and reasonable
attorneys’ fees.

 

15.6                        Counterparts

 

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

 

15.7                        Publicity

 

Upon execution of this
Agreement, XPLORE and/or WISTRON may issue one (1) or more joint
and/or individual press releases regarding this Agreement; provided, however,
such press releases must be approved by both Parties in writing prior to
release. Neither Party may make any subsequent press release or other
public statement concerning this Agreement without obtaining the prior written
consent of the other Party, except as may be required by law. In a
situation where one Party is required by law to make a press release or other
public statement concerning this Agreement, the disclosing Party shall provide
the other Party with reasonable notice and an opportunity to comment prior to
making such disclosure.

 

15.8                        Conflict

 

Notwithstanding any other
provision contained herein, in the event of any conflict between the terms and
conditions of this Agreement and any Exhibits and/or appendices attached hereto
or referenced herein, the terms and conditions of this Agreement shall control
and prevail.

 

15.9                        Severability

 

If any provision of this
Agreement is held by a court of competent jurisdiction to be contrary to law,
then the remaining provisions of this Agreement will remain in full force and
effect.

 

15.10                 Waiver

 

No delay or omission by
either Party to exercise any right or power it has under this Agreement shall
impair or be construed as a waiver of such right or power. A waiver by any
Party of any breach of any covenant or provision of this Agreement shall not be
construed to be a waiver of any succeeding breach of any other covenant or
provision. All waivers must be in writing and signed by the Party waiving its
rights.

 

29

 

15.11                 Benefit

 

This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither party hereto shall have
any right to assign or delegate its rights or obligations hereunder except that
a party hereto may assign or delegate its rights including any license
granted herein or obligations hereunder (a) to the extent that the other
party hereto shall have expressly consented to such assignment or delegation,
which consent may be granted or withheld at such other party’s discretion,
(b) to any entity which controls, is controlled by, or is under common
control with such party, and (c) to any person or entity acquiring all or
substantially all of such party’s assets as are associated with the business
that is the subject matter of this Agreement, whether by purchase, merger,
acquisition of shares, or other means.

 

30

 

IN
WITNESS WHEREOF, the Parties hereto have signed this Turnkey
Design and Manufacturing Agreement as of the Effective Date.

 

	
  XPLORE
  Technologies Corporation

  	
  WISTRON
  Corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brian Groh

  	
   

  	
  By:

  	
  /s/ Simon Lin

  	
   

  
	
   

  	
   

  
	
  Printed Name:

  	
  Brian Groh

  	
   

  	
  Printed Name:

  	
  Simon Lin

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  President and
  CEO

  	
   

  	
  Title:

  	
  Chairman &
  CEO

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  July 22,
  2003

  	
   

  	
  Date:

  	
  July 22, 2003

  	
   

  
															

 

31Exhibit 10.2

 

INTERCREDITOR, TRADE CREDIT
RESTRUCTURING

 

AND SECURITY AGREEMENT

 

This
Intercreditor, Trade Credit Restructuring and Security Agreement,
dated as of November 24, 2004 by and among Xplore
Technologies Corp., a corporation incorporated under the laws of
Canada (“Xplore”), Xplore
Technologies Corporation of America, a corporation incorporated
under the laws of Delaware and a wholly-owned subsidiary of Xplore (“Xplore America”), Phoenix
Enterprises LLC, a limited liability company organized under the
laws of the State of Delaware (“Phoenix”), Phoenix Venture Fund LLC,
a limited liability company organized under the laws of the State of Delaware (“Phoenix Fund”), The  Philip
S. Sassower 1996 Charitable Remainder Annuity Trust, a trust
organized under the laws of the State of New York (the “Trust”) and Wistron Corporation, a
corporation incorporated under the laws of Taiwan (“Wistron”).

 

WHEREAS,
the Parties agree that their mutual goal is to facilitate Xplore’s continuation
as a viable entity and future achievement of profitability, and in particular,
to ensure that new cash infusions to Xplore are used for the launch of the
Wildcat II (Centrino) product line;

 

WHEREAS
pursuant to that certain Debenture Purchase Agreement, dated November 5,
2002 (the “November 2002 Agreement”),
by and among Xplore, Phoenix, Phoenix
Enterprises Family Fund, LLC (the “Family Fund”), the Trust and each of the other
lenders listed on Schedule 1 thereto (Phoenix, the Family Fund, the Trust
and each such lender, collectively, the “November 2002
Lenders”), the November 2002 Lenders loaned an aggregate of
$5,000,000 to Xplore, and Xplore, among other things, issued debentures in the
aggregate principal amount of $5,000,000 to the November 2002 Lenders;

 

WHEREAS,
pursuant to that certain December 2002 Debenture Purchase Agreement, dated
December 6, 2002 (the “December 2002
Agreement”), by and among Xplore, Phoenix and each of the other
lenders listed on Schedule 1 thereto (Phoenix and each such lender,
collectively, the “December 2002 Lenders”),
the December 2002 Lenders loaned an aggregate of $1,000,000 to Xplore, and
Xplore, among other things, issued debentures in the aggregate principal amount
of $1,000,000 to the December 2002 Lenders;

 

WHEREAS,
pursuant to terms of the April 2003 Debenture Purchase Agreement dated as
of April 9, 2003 (the “April 2003 Agreement”),
by and among Xplore, Phoenix and each of the other lenders listed on Schedule 1
thereto (Phoenix and each such lender, collectively, the “April 2003 Lenders”), the April 2003
Lenders loaned an aggregate of $1,000,000 to Xplore, and Xplore, among other
things, issued debentures in the aggregate principal amount of $1,000,000 to
the April 2003 Lenders;

 

WHEREAS,
pursuant to terms of the Second April 2003 Debenture Purchase Agreement
dated as of April 28, 2003 (the “Second April 2003 Agreement”), by and among Xplore, Phoenix
and each of the other lenders listed on Schedule 1 thereto (Phoenix and
each such lender, collectively, the “Second April 2003
Lenders”), the April 2003 Lenders loaned an

 

 

aggregate of
$1,000,000 to Xplore, and Xplore, among other things, issued debentures in the
aggregate principal amount of $1,000,000 to the Second April 2003 Lenders;

 

WHEREAS,
pursuant to terms of the September 2004 Debenture Purchase Agreement dated
as of September 15, 2004 (the “September 2004 Agreement”), by and among Xplore and the Trust, the
Trust loaned an aggregate of $1,050,000 to Xplore, and Xplore, among other
things, issued a debenture in the aggregate principal amount of $1,050,000 to
the Trust;

 

WHEREAS,
pursuant to terms of that November 2004 Debenture Purchase Agreement dated
as of the date hereof (the “November 2004
Agreement”), by and among Xplore, Phoenix Fund and each of the other
lenders listed on Schedule 1 thereto (Phoenix Fund and each such lender,
collectively, the “November 2004 Lenders”),
the November 2004 Lenders have agreed to loan an aggregate of $5,000,000
to Xplore, and Xplore, among other things, has agreed to issue convertible
debentures in the aggregate principal amount of $5,000,000 to the November 2004
Lenders

 

WHEREAS,
it is in the best interests of the November 2002 Lenders, the December 2002
Lenders, the April 2003 Lenders, the Second April 2003 Lenders and
the Trust, as investors in Xplore, for Xplore to receive the proceeds from the November 2004
Loan;

 

WHEREAS,
it is in the best interests of Wistron, as a supplier to and creditor of
Xplore, for Xplore to receive the proceeds from the November 2004 Loan;
and

 

WHEREAS,
as a condition precedent to the November 2004 Lenders entering into the November 2004
Agreement and making the November 2004 Loan, Xplore and Wistron must
execute and deliver this Agreement, which, among other things, provides for (i) the
restructuring of Xplore’s trade credit debt with Wistron, (ii) an increase
in Xplore’s trade credit line with Wistron, and (iii) the restructuring of
Xplore NRE debt with Wistron, including the issuance of common shares of Xplore
in partial conversion thereof.

 

NOW,
THEREFORE, in consideration of the
premises herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

 

ARTICLE I

 

DEFINED TERMS

 

SECTION 1.1.                  Definitions

 

Terms used herein that
are defined in the UCC have the meanings defined for those terms in the UCC
unless otherwise expressly defined herein. References to sums of money herein
are to U.S. dollars, unless otherwise specified. The following additional
terms, as used herein, shall have the following respective meanings:

 

“April 2003
Collateral” means collectively, the Collateral, as that term is defined in Section 3(a) of
the April 2003 Security Agreement and (ii) the Secured Property, as
that term is defined in Section 3.1 of the April 2003 Agreement.

 

2

 

“April 2003
Security Agreement” means that certain Security Agreement, dated as of April 9,
2003, between Xplore America and Phoenix, for the benefit of the lenders listed
on Schedule 1 attached thereto.

 

“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.

 

“Claims” means all
present and future claims of the Creditors against Xplore (including the
Obligations) for the payment of money, including all claims for principal and
interest (including interest accruing after the commencement of a bankruptcy
proceeding by or against Xplore) or for reimbursement of fees, costs or
expenses, or otherwise, whether fixed or contingent, matured or unmatured,
liquidated or unliquidated, and whether arising under contract, in tort or
otherwise.

 

“Common Shares”
means common shares, no par value, of Xplore.

 

“Collateral” means
collectively, the Wistron Collateral and the Phoenix Collateral.

 

“Creditors” means
Wistron and the Phoenix Creditors and “Creditor” means each of them.

 

“Debtor” means
Xplore and Xplore America.

 

“December 2002
Collateral” means collectively, the Collateral, as that term is defined in Section 3(a) of
the December 2002 Security Agreement and (ii) the Secured Property,
as that term is defined in Section 3.1 of the December 2002
Agreement.

 

“December 2002
Security Agreement” means that certain Security Agreement, dated as of December 6,
2002, between Xplore America and Phoenix, for the benefit of the lenders listed
on Schedule 1 attached thereto.

 

“Existing Debenture
Agreements” means collectively, the November 2002 Agreement, the December 2002
Agreement, the April 2003 Agreement, the Second April 2003 Agreement,
the September 2004 Agreement and the November 2004 Agreement.

 

“Financing Documents”
means (i) the November 2002 Agreement and any other Transaction
Documents (as that term is defined in the November 2002 Agreement), (ii) the
December 2002 Agreement and any other Transaction Documents (as that term
is defined in the December 2002 Agreement), (iii) the April 2003
Agreement and any other Transaction Documents (as that term is defined in the April 2003
Agreement), (iv) the Second April 2003 Agreement and any other
Transaction Documents (as that term is defined in the Second April 2003
Agreement), (v) the September 2004 Agreement and any other
Transaction Documents (as that term is defined in the September 2004
Agreement), (vi) the November 2004 Agreement and any other
Transaction Documents (as that term is defined in the September 2004
Agreement), and (vii) this Agreement.

 

3

 

“November 2002
Collateral” means collectively, the Collateral, as that term is defined in Section 3(a) of
the November 2002 Security Agreement and (ii) the Secured Property,
as that term is defined in Section 3.1 of the November 2002
Agreement.

 

“November 2002
Security Agreement” means that certain Security Agreement, dated as of November 5,
2002, between Xplore America and Phoenix, for the benefit of the lenders listed
on Schedule 1 attached thereto.

 

“November 2004
Collateral” means collectively, the Collateral, as that term is defined in Section 3(a) of
the November 2004 Security Agreement and (ii) the Secured Property,
as that term is defined in Section 3.1 of the November 2004
Agreement.

 

“November 2004
Security Agreement” means that certain Security Agreement, dated as of November 23,
2004, between Xplore America and Phoenix Fund, for the benefit of the lenders
listed on Schedule 1 attached thereto.

 

“Parties” means
Xplore, Phoenix, Phoenix Fund, the Trust and Wistron and “Party” means
each of them.

 

“Phoenix Collateral”
means collectively, the November 2002 Collateral, the December 2002
Collateral, the April 2003 Collateral, the Second April 2003
Collateral, the September 2004 Collateral and the November 2004
Collateral.

 

“Phoenix Creditors”
means collectively, the November 2002 Lenders, the December 2002
Lenders, the April 2003 Lenders, the Second April 2003 Lenders, the
Trust and the November 2004 Lenders.

 

“Securities Act”
means the Securities Act (Ontario).

 

“September 2004
Collateral” means collectively, (i) the Collateral, as that term is
defined in Section 3(a) of the September 2004 Security Agreement
and (ii) the Secured Property, as that term is defined in Section 3.1
of the September 2004 Agreement.

 

“September 2004
Security Agreement” means that certain Security Agreement, dated as of September 15,
2004, between Xplore America and the Trust.

 

“Second April 2003
Collateral” means collectively, (i) the Collateral, as that term is
defined in Section 3(a) of the Second April 2003 Security
Agreement and (ii) the Secured Property, as that term is defined in Section 3.1
of the Second April 2003 Agreement.

 

“Second April 2003
Security Agreement” means that certain Security Agreement, dated as of April 28,
2003, between Xplore America and Phoenix, for the benefit of the lenders listed
on Schedule 1 attached thereto.

 

“UCC” means the
Uniform Commercial Code as in effect on the date hereof in the State of
New York, and as the same may be amended or revised from time to time;
provided that if by reason of mandatory provisions of law, the perfection or
the effect of perfection or non-perfection of a security interest in any
Collateral is governed by the Uniform Commercial Code

 

4

 

as in effect in a
jurisdiction other than the State of New York, “UCC” means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection.

 

ARTICLE II

TRADE CREDIT LINE

 

SECTION 2.1.                  Increase in
Xplore Trade Credit Line

 

(a)                                  Wistron
hereby increases Xplore’s trade credit line with Wistron (the “Credit Line”) from $2.0 million to $4.0
million, an aggregate increase of $2.0 million; provided, that,
Xplore shall, as soon as available and in any event within forty-five (45) days
after the end of each calendar month, deliver to Wistron (i) unaudited
summary financial statements with respect to such month, and (ii) a report
providing detailed accounts receivable aging information for such month.

 

(b)                                 Wistron
hereby extends the payment terms under the Credit Line for any and all product
purchases made by Xplore from Wistron from net 45 days to net 60 days (as
calculated from the date of shipment from Wistron’s manufacturing facility).

 

(c)                                  Wistron
and Xplore agree that, prior to April 30, 2005, they shall in good faith
review the Credit Line to determine, based on Xplore’s then current financial
status and sales prospects, whether the Credit Line should be further
increased, decreased or remain the same.

 

(d)                                 Notwithstanding
Section 2.1(c), after the aggregate proceeds received by Xplore in
connection with any future equity and/or debt financing (excluding the proceeds
from the November 2004 Loan and the increase of the Credit Line) exceed
$15.0 million, the Parties shall in good faith re-review the Credit Line to
determine, based on Xplore’s then current financial status and sales prospects,
the appropriate level of the Credit Line.

 

SECTION 2.2.                  Granting of
Security Interest

 

(a)                                  As security for the prompt payment and
performance of all debts, liabilities and obligations of Debtor to Wistron
which arise from the purchase by Debtor from Wistron of any item described in
clause (i) below, whether direct or indirect, absolute or contingent,
matured or unmatured, present or future (collectively, the “Obligations”), Debtor hereby grants to
Wistron a continuing purchase money security interest in all of the following
personal property, whether now owned or hereafter acquired and wherever located
(the “Wistron Collateral”):  (i) all of Debtor’s inventory and other
goods, manufactured, distributed, consigned, or sold by Wistron to or for
Debtor (A) from and after November 24, 2004, and (B) in excess
of $2 million (i.e. financed
under the increased Credit Line); and (ii) all proceeds thereof, including
without limitation, all accounts receivable, contract rights, general
intangibles, instruments, chattel paper, documents, deposit accounts,
investment property, letter of credit rights, supporting obligations, and
insurance refund claims and other insurance claims and proceeds relating directly
thereto.

 

5

 

(b)                                 Xplore represents and warrants to Wistron
that, subject to the terms and conditions hereof and to the enforceability
hereof against each Creditor, Section 2.2(a) creates a valid security
interest in the Wistron Collateral and, upon the filing of a properly completed
UCC-1 financing statement in the appropriate filing offices, Wistron shall have
a valid first priority perfected security interest in the Wistron Collateral,
securing payment of the Obligations.

 

(c)                                  Xplore
shall reimburse Wistron for all reasonable costs and expenses (including, but
not limited to, reasonable attorney’s fees) incurred by Wistron in enforcing
its security interest in the event Xplore defaults under the Obligations.

 

SECTION 2.3.                  Accounts
Receivable; Inventory

 

Xplore shall use
commercially reasonable efforts to reduce its accounts receivable aging cycle
and increase its inventory turn rate.

 

ARTICLE III

INTERCREDITOR AGREEMENT

 

SECTION 3.1.                  Security
Interest Priorities

 

(a)                                  Notwithstanding
(i) the time or order of attachment, the time, manner or order of
perfection of the security interests and liens granted in favor of the
Creditors, or the time or order of filing or recordation of any document or
instrument, or other method of perfecting any security interest or lien of any
Creditor, (ii) the provisions of the UCC or any other applicable law or
decisions, (iii) the provisions of any contract or Financing Document
(subject to the terms of this Agreement) in effect between either a Creditor,
on one hand, and Xplore or any affiliate thereof, on the other hand, and (iv) whether
either any Creditor or any agent or bailee of any Creditor holds possession of
any part or all of the Collateral, and to the extent the Wistron
Collateral overlaps with and is the same as the Phoenix Collateral, the
security interest of Wistron in the Wistron Collateral shall rank senior to and
have first priority over the security interest of the Phoenix Creditors in the
Wistron Collateral.

 

(b)                                 Wistron
hereby disclaims and waives any rights to or security interest in any of the
Phoenix Collateral which does not constitute part of the Wistron
Collateral, and acknowledges and agrees that the security interest of Phoenix
in such Phoenix Collateral is superior and first in priority to any security
interest which Wistron may have in such Phoenix Collateral.

 

(c)                                  For
the purpose of the priorities established hereunder, any claim of a right of
setoff shall be treated in all respects as a security interest, and no claimed
right of setoff shall be asserted to defeat or diminish the rights or
priorities provided for herein. The priorities set forth herein are solely for
the purpose of establishing the relative rights of the Creditors and there are
no other persons or entities who are intended to be benefited in any way by
this Agreement.

 

6

 

SECTION 3.2.                  Perfection;
Enforceability

 

Each Creditor shall be
solely responsible for perfecting and maintaining the perfection of its
security interest in and to each item constituting the Collateral in which such
Creditor has been granted a security interest. Wistron agrees that it will not
contest the validity, perfection, priority or enforceability of the Phoenix Creditors’
security interest in the Phoenix Collateral and the Phoenix Creditors each
agree that they will not contest the validity, perfection, priority or
enforceability of Wistron’s security interest in the Wistron Collateral,
including, but not limited to, in any judicial proceedings in connection with
or related to the bankruptcy and/or reorganization of Xplore.

 

SECTION 3.3.                  Independent
Credit Investigations

 

No Creditor nor any of
their respective directors, officers, agents or employees shall be responsible
to any other Creditor or to any other person or entity for Xplore’s solvency,
creditworthiness, financial condition, or ability to repay any of the Claims or
for the accuracy of any recitals, statements, representations or warranties of
Xplore, oral or written, or for the validity, sufficiency, enforceability or
perfection of the Claims or the Financing Documents, or any security interests
or liens granted by Xplore to any Creditor in connection therewith. Each
Creditor has entered into its respective financing agreements with Xplore based
upon its own independent investigation, and makes no warranty or representation
to the other Creditors nor does it rely upon any representation of the other
Creditors with respect to matters identified or referred to in this paragraph.
No Creditor shall have any liability to the other Creditors for monitoring or
assuring compliance by Xplore with any of Xplore’s covenants or representations
made to any other Creditor. Without limiting the generality of the foregoing,
any Creditor may perform or require performance by Xplore in
accordance with the terms of its respective Financing Documents (subject to
this Agreement) without regard to whether Xplore’s performance in accordance to
the terms thereof might or would constitute or result in a breach of the
covenants or representations under the other Creditors’ Financing Documents,
and under no circumstances shall any Creditor be liable to any other Creditor
for inducing a breach or violation of such Creditor’s Financing Documents by
virtue of performing or requiring performance by Xplore in accordance with the
terms of its own Financing Documents (subject to this Agreement).

 

ARTICLE IV

EXISTING PRODUCT PURCHASE OBLIGATIONS

 

SECTION 4.1.                  Payment by
Xplore

 

(a)                                  Xplore
shall pay to Wistron, by no later than the date of the consummation of the November 2004
Loan, $1.0 million (less any payments made by Xplore to Wistron from October 1,
2004 through the consummation of the November 2004 Loan) representing the
aggregate amount due Wistron for certain products shipped and billed to Xplore
by Wistron prior to the date hereof, but not yet paid for by Xplore, as listed
by each invoice number and set forth on Schedule 4.1 annexed
hereto.

 

(b)                                 To
the extent such $1.0 million payment does not satisfy in full the aggregate
amount due Wistron for such past product shipments, any such difference shall
be

 

7

 

applied against the Credit Line, such that the amount
then available to Xplore at that time under the Credit Line shall be reduced by
the aggregate amount of such difference.

 

ARTICLE V

FUTURE THIRD-PARTY FINANCING

 

SECTION 5.1.                  Working Capital
Credit Facility

 

(a)                                  Subject
to Section 5.1(b), Xplore will use commercially reasonable efforts to promptly
secure a working capital credit facility (a “Working
Capital Credit Line”) with a third-party lender (a “Working Capital Lender”), on terms and
conditions reasonably satisfactory to Xplore. The purpose of such facility will
be to, among other things, provide adequate cash flow to support Xplore’s
expected sales ramp-up.

 

(b)                                 In
the event Xplore consummates a Working Capital Credit Line with a Working
Capital Lender, each of the Creditors agree to subordinate their respective
security interests in the Collateral to those of such Working Capital Lender,
to the extent reasonably requested by such Working Capital Lender, and to enter
into an intercreditor agreement with such Working Capital Lender, taking into
account the terms and conditions of this Agreement and containing customary
terms and conditions reasonably satisfactory to the Working Capital Lender and
the Creditors.

 

ARTICLE VI

PARTIAL CONVERSION OF AND REPAYMENT OF DEBT

 

SECTION 6.1.                  Partial
Conversion of NRE/Tooling Debt

 

(a)                                  Effective
immediately, $1,349,005 (the “Conversion
Amount”) of the $2,248,341 owned by Xplore to Wistron in connection
with the iX104 and Xpad NRE/Tooling (the “NRE/Tooling
Debt”) shall be converted into 3,065,920 Common Shares of Xplore and
the Conversion Amount shall be deemed to be indefeasibly paid in-full upon
issuance of such Common Shares.

 

(b)                                 Xplore
represents and warrants to Wistron that such 3,065,920 Common Shares issued to
Wistron pursuant to Section 6.1(a) shall be (i) duly authorized,
validly issued, fully paid and nonassessable, and (ii) under Ontario
securities laws and regulations currently in effect, freely tradeable in the
Province of Ontario on the date that is four months and a day after the date
hereof, subject to restrictions on transfers by reason of Wistron becoming a “control
person” of Xplore or conditions provided for under Ontario securities laws
relating to ordinary course resale restrictions.

 

(c)                                  Wistron
acknowledges, agrees and confirms that (i) its election to convert
$1,349,005 of the NRE/Tooling Debt into 3,065,920 Common Shares of Xplore is
unconditional and irrevocable and (ii) such conversion constitutes payment
in-full of such amount.

 

8

 

SECTION 6.2.                  Repayment of
NRE/Tooling Debt

 

(a)                                  Xplore
shall pay to Wistron, in partial satisfaction of the remaining NRE/Tooling
Debt, (i) any and all net proceeds received by Xplore in the sale of its
Xpad technology to a third-party, and (ii) any and all royalties received
by Xplore from Wistron under that Marketing and Distribution Agreement by and
between Xplore and Wistron; provided,
that the aggregate amounts paid by Xplore under clauses (i) and (ii) hereof
shall not exceed the amount of the then remaining NRE/Tooling Debt.

 

(b)                                 On
or prior to April 30, 2005, Xplore shall pay $899,336 (less any amounts
paid to Wistron pursuant to Section 6.2(a)) to Wistron in full
satisfaction of the remaining NRE/Tooling Debt, if any.

 

(c)                                  Each
of (i) Phoenix, on behalf of itself and each of the November 2002
Lenders, the December 2002 Lenders, the April 2003 Lenders and the
Second April 2003 Lenders, (ii) the Trust, and (iii) Phoenix
Fund, on behalf of itself and the November 2004 Lenders, do hereby waive
any early debt repayment rights they may have pursuant to any of their
respective Financing Documents with respect to any Xplore funds utilized for
repayment of the NRE/Tooling Debt made by Xplore to Wistron pursuant to this Section 6.2.

 

ARTICLE VII

STANDSTILL AGREEMENT

 

SECTION 7.1.                  Restriction on
Certain Actions of Wistron

 

(a)                                  For
the period commencing on the date hereof and ending on October 31, 2006,
Wistron shall not, without the prior written consent of the Board of Directors
of Xplore:

 

(i)                                     acquire,
offer to acquire, or agree to acquire, directly or indirectly, including with
any person or company acting jointly or in concert (within the meaning of Section 91
of the Securities Act) with Wistron, by purchase or otherwise, beneficial
ownership of any securities or direct or indirect rights to acquire any securities
of Xplore;

 

(ii)                                  grant any proxies with respect to any voting
securities of Xplore, or securities convertible into or exchangeable for such
securities or deposit any such securities in a voting trust or enter into any
other arrangement or agreement with respect to the voting thereof; or

 

(iii)                               make, or in any way participate in, directly or
indirectly, any solicitation of proxies to vote, or seek to advise or influence
any person or entity with respect to the voting of any voting securities of
Xplore.

 

(b)                                 Notwithstanding Section 7.1(a),
Wistron shall be entitled to accept or participate in any unsolicited proposal
from any independent third-party made to all Xplore shareholders on the same
terms, and subject to the same conditions, as would apply to any other
shareholder of Xplore.

 

9

 

(c)                                  Nothing
in this Article VII shall preclude Wistron from exercising those rights of
a creditor of Xplore as allowed under applicable law.

 

(d)                                 Wistron
acknowledges and agrees that (i) the provisions of Section 7.1(a) are
reasonable and necessary to protect the proper and legitimate interests of
Xplore and (ii) Xplore would be irreparably harmed in the event that any
of the provisions of Section 7.1(a) were not performed in accordance
with their specific terms or were otherwise breached, making any remedy at law
inadequate. Accordingly, Wistron further acknowledges and agrees that (i) Xplore
shall be entitled to an injunction and/or injunctions to redress breaches or
threatened breaches thereof and to specific performance, in addition to any
other appropriate relief, all of the same being cumulative, and (ii) that
Xplore may apply to any court of competent jurisdiction for specific
performance, injunctive or other relief to enforce to provisions of Section 7.1(a) 
and/or to prevent any violation of it, and shall not be required to post any
bond as a condition of procuring such injunctive or other equitable relief.

 

ARTICLE VIII

CONFIDENTIALITY

 

SECTION 8.1.                  Confidentiality

 

Each Party hereby agrees
to treat all information concerning another Party furnished, or to be
furnished, by or on behalf of the other Party in accordance with the provisions
of this Section 8.1 (collectively, the “Information”),
and to take, or abstain from taking, other actions set forth herein. The
Information will be kept confidential by each Party hereto and its officers,
directors, employees, representatives, agents, and advisors; provided that (i) any of such
Information may be disclosed to a Party’s officers, directors, employees,
representatives, agents, and advisors who need to know such information for the
purposes of this Agreement, (ii) any disclosure of such Information may be
made if the Party from which such Information was obtained consents in writing,
(iii) such Information may be disclosed to the extent such
Information is in the public domain or otherwise available to a Party hereto
from a source other than the other Party, and (iv) such Information may be
disclosed if so required by law or regulation.

 

ARTICLE IX

REPRESENTATIONS AND WARRANTIES

 

SECTION 9.1.                  Representations
and Warranties of the Parties

 

Each Party, as to itself
only, represents and warrants to each other Party that:

 

(a)                                  The
execution, delivery and performance of this Agreement by such Party has been
duly authorized by all necessary corporate or other action and this Agreement
constitutes the valid, legal and binding obligation of such Party, enforceable
against such Party in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors’ rights.

 

10

 

(b)                                 The
execution, delivery and performance of this Agreement by such Party does not
and will not (i) conflict with, violate or breach the Certificate of
Incorporation, By Laws or similar organizational documents of such Party; (ii) conflict
with, or result in a breach of, any contract or agreement to which such Party
is a party to or by which such Party is bound, except, in the case of Xplore,
for breaches of the Existing Debenture Agreements, for which waivers have been
obtained; or (iii) violate any law, rule or regulation applicable to
or affecting such Party, or any judgment, order or decree of any government,
governmental body or court having jurisdiction over such Party.

 

SECTION 9.2.                  Representations
and Warranties of Xplore

 

Xplore represents and
warrants to each other Party that:

 

(a)                                  it
has obtained all consents required to consummate the transactions contemplated
by this Agreement, including the conditional approval of the Toronto Stock
Exchange.

 

ARTICLE X

 

GENERAL

 

SECTION 10.1.           Termination

 

This Agreement is a
continuing agreement and, unless each Party has specifically consented in
writing to its earlier termination, this Agreement shall remain in full force
and effect in all respects until such time as the Claims are paid or otherwise
satisfied in full and each Creditor has released or terminated its respective
security interests in its respective Collateral.

 

SECTION 10.2.           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., (New York 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., (New York time), on any date and earlier than 11:59 p.m.,
(New York time), on such date, (iii) the Business Day following the date
of mailing, if sent by nationally recognized overnight courier service or (iv) actual
receipt by the Party to whom such notice is required to be given. The addresses
for such communications shall be addressed:

 

(a)                                  to
Phoenix, Phoenix Fund or the Trust at:

 

135 East 57th Street, 12th Floor

New York, NY 10022

Attention: Philip S. Sassower

Facsimile: (212) 319-4970

 

11

 

with a copy to:

Brown Raysman Millstein Felder & Steiner LLP

900 Third Avenue

New York, NY 10022

Attention: David M. Warburg

Facsimile: (212) 895-2900

 

and
with a copy to Xplore and Xplore America as set forth below.

 

(b)                                 to
Xplore or Xplore America at:

 

Xplore Technologies Corp.

14000 Summit Drive, Suite 900

Austin, Texas 78728

Attention:
Michael J. Rapisand

Facsimile: (512) 336-7791

 

with a copy to:

McCarthy Tétrault LLP

Suite 4700

Toronto Dominion Bank Tower

Toronto, ON  M5K
1E6

Attention: Jonathan Grant

Facsimile: (416) 868-0673

 

and with a copy to Phoenix, Phoenix Fund and the Trust
as set forth above.

 

(c)                                  to
Wistron at:

 

 

Attention:

Facsimile:

 

and
with a copy to Xplore, Xplore America, Phoenix, Phoenix Fund and the Trust as
set forth above.

 

SECTION 10.3.           Expenses

 

Each Party shall be solely responsible for and bear all of its own
respective expenses, including, without limitation, expenses of its respective
legal counsel, accountants, and other advisors, incurred at any time in
connection with pursuing or consummating any of the transactions contemplated
by this Agreement.

 

12

 

SECTION 10.4.           Successors and Assigns

 

(a)                                  This
Agreement shall be binding on and shall inure for the benefit of each of the
Parties’ successors and permitted assigns.

 

(b)                                 Neither
Party shall assign or otherwise transfer all or part of its rights and
obligations under this Agreement without the prior written consent of the other
Parties. Each Creditor covenants that any transferee from it of any Claims
shall, prior to acquiring such Claims, execute and deliver a counterpart of
this Agreement to each of the Parties to this Agreement

 

SECTION 10.5.           Amendments and Waivers

 

(a)                                  No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties.

 

(b)                                 No
waiver by a Party of any default or breach hereunder, whether intentional or
not, shall be deemed to extend to any prior or subsequent default or breach
hereunder or affect in any way any of such Party’s rights arising by virtue of
any prior or subsequent such occurrence.

 

SECTION 10.6.           Severability

 

If
any term, provision or restriction contained in this Agreement is held invalid,
void, or unenforceable by a court of competent jurisdiction, the remaining
terms and provisions hereof shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

 

SECTION 10.7.           Governing Law; Consent
to Service of Process

 

(a)                                  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, excluding that body of law relating to conflicts of law. Any
suit, action, proceeding or litigation arising out of or relating to this
Agreement shall be brought and prosecuted in such federal or state court or
courts located within the State of New York as provided by law.

 

(b)                                 The
Parties hereby irrevocably and unconditionally consent to the jurisdiction of
each such court or courts located within the State of New York and to service
of process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding or
litigation so commenced has been commenced in an inconvenient forum.

 

SECTION 10.8.           Entire Agreement

 

This Agreement, and the
documents referred to herein constitute the entire agreement between the
Parties hereto pertaining to the subject matter hereof, and any and all other
written or oral agreements existing between the Parties hereto concerning such
subject matter are expressly superseded.

 

13

 

SECTION 10.9.           Construction

 

The Parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by all of the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement.

 

SECTION 10.10.       Counterparts

 

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

 

14

 

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

 

 

	
  WISTRON
  CORPORATION

  	
   

  	
  XPLORE
  TECHNOLOGIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Simon
  Lin

  	
   

  	
  By:

  	
   /s/ Brian
  Groh

  
	
   

  	
   Name: Simon
  Lin

  	
   

  	
   

  	
   Name: Brian
  Groh

  
	
   

  	
   Title:
  Chairman & CEO

  	
   

  	
   

  	
   Title:
  President and CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XPLORE
  TECHNOLOGIES

  CORPORATION OF AMERICA

  	
   

  	
  PHOENIX
  ENTERPRISES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Brian Groh

  	
   

  	
  By:

  	
   /s/ Philip S. Sassower

  
	
   

  	
   Name: Brian Groh

  	
   

  	
   

  	
   Name: Philip S. Sassower

  
	
   

  	
   Title: President and CEO

  	
   

  	
   

  	
   Title: CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE
  PHILIP S. SASSOWER 1996

  CHARITABLE REMAINDER

  ANNUNITY TRUST

  	
  PHOENIX
  VENTURE FUND LLC

  

  By: SG Phoenix Ventures
  LLC,

  
	
   

  	
   

  	
         its
  Managing Member

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Philip S.
  Sassower

  	
   

  	
  By:

  	
  /s/ Philip S.
  Sassower

  	
   

  
	
   

  	
  Name: Philip S.
  Sassower

  Title: Trustee

  	
   

  	
   

  	
  Name: Philip S.
  Sassower

  Title: Managing Member

  
							

 

15

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