Document:

Exhibit 10.14.5

 

Emergency Medical Services Corporation

 

Amended and
Restated 2007 Long-Term Incentive Plan

 

Restricted
Stock Agreement

 

This Restricted Stock Agreement (the
“Agreement”) is entered into effective as of
                    
(the “Date of Grant”) between Emergency Medical Services Corporation, a
Delaware corporation, (the “Company”) and
                      
(“Participant”).

 

1.     2007 Long-Term Incentive Plan.  This Agreement is
entered into pursuant to the terms of the Emergency Medical Services
Corporation Amended and Restated 2007 Long-Term Incentive Plan, as it may be
amended from time to time (the “Plan”), which is incorporated herein and made a
part hereof for all purposes. To the extent that any provision of this
Agreement conflicts with the express terms of the Plan, the terms of the Plan
shall control and, if necessary, the applicable provisions of this Agreement
shall be deemed amended so as to carry out the purpose and intent of the Plan.

 

2.     Definitions.
All capitalized terms used in this Agreement shall have the meanings ascribed
to them in the Plan unless otherwise defined in this Agreement. As used in this
Agreement, the following terms have the meanings set forth below:

 

“Liquidity
Event” means (i) the sale of all, or substantially all, of the
Company’s consolidated assets, including, without limitation, a sale of all or
substantially all of the assets of the Company or any of its subsidiaries whose
assets, constitute all or substantially all of the Company’s consolidated
assets, in any single transaction or series of related transactions or (ii) any
merger or consolidation of the Company with or into another entity unless,
after giving effect to such merger or consolidation, the holders of the Company’s
shares (on a fully-diluted basis) immediately prior to the merger or
consolidation, own shares or other equity interests (on a fully-diluted basis)
of the surviving or resulting corporation or other entity representing a
majority of the outstanding voting power to elect directors of the surviving or
resulting corporation (or the general partner of a surviving partnership) in
the same proportions that they held their shares prior to such merger or
consolidation.

 

“Onex”
means Onex Partners LP.

 

“Recap”
means a recapitalization of the Company.

 

3.     Restricted Stock. In order to encourage the Participant’s contribution to the
successful performance of the Company and its subsidiaries, and in
consideration of the covenants and promises of the Participant herein
contained, the Company hereby grants to the Participant as of the Date of
Grant,
                  
of Class A Common Stock, par value $0.01 per share, subject to the
conditions and restrictions set forth herein and in the Plan (the “Restricted
Stock”).

 

 

4.     Escrow of Certificates.  Escrow of Certificates.
Any certificates or book entries representing the shares of Restricted Stock
shall be registered in the name of the Participant and deposited, together with
a stock power endorsed by the Participant in blank (upon the request of the
Company), with the transfer agent of the Company (or any other authorized
designee of the Company, which the Company may choose in its sole discretion)
until such shares have vested in the Participant in accordance with Section 6
hereof. Any certificate shall bear a legend as provided by the Company,
conspicuously referring to the terms, conditions and restrictions described in
the Plan and in this Agreement; provided, however, that in the event the
Company, in its sole discretion, permits book entries to represent the shares
of Restricted Stock in lieu of certificates, the sole indicia of the
Participant’s ownership of the vested shares of Restricted Stock will be one or
more electronic entries in Participant’s brokerage account promptly following
one or more vesting events in accordance with this Agreement. The Participant,
by executing this Agreement in the space provided below, hereby acknowledges
(a) that, as a material inducement to the grant of this Award under the
Plan, the transfer agent of the Company (or any other authorized designee of
the Company, which the Company may choose in its sole discretion)is so
appointed as the escrow holder with the authority to hold said certificates and
stock powers in escrow, to make any book entries in accordance with this
Section, and to take all such actions and to effectuate all transfers of vested
Restricted Stock or releases as are in accordance with the terms of this
Agreement or the Plan and (b) that the appointment is coupled with an
interest, and that it accordingly will be irrevocable. The escrow holder will
not be liable to the Participant (or to any other party) for any actions or
omissions unless the escrow holder is grossly negligent. The escrow holder may
rely upon any letter, notice, or other document executed by any signature
purported to be genuine.  No certificates will be issued for a partial
share, and the Participant will receive the Fair Market Value of any partial
share in cash.

 

5.     Restrictions on Transfer Before Vesting.  The shares of Restricted
Stock granted hereunder to the Participant are subject to Section 8.1(b) of
the Plan during the period from the Date of Grant until they have become vested
in the Participant in accordance with the provisions of Section 6 hereof.

 

6.     Vesting of Restricted Stock. Unless the Committee, in its sole and absolute discretion,
elects to accelerate the vesting of some or all of the unvested shares of
Restricted Stock, all restrictions shall lapse and the Participant shall become
vested in the Restricted Stock as follows:

 

(a)       (i) 
Time Vesting.  One-third (1/3)
of the shares of Restricted Stock shall become vested on each of the first
three anniversaries of the Date of Grant.

 

The Participant shall not vest
pursuant to this Section 6(a) in shares of Restricted Stock if the
Participant has not been continuously employed by the Company or one of its
subsidiaries from the Date of Grant through the applicable vesting date.

 

(b)       Notwithstanding the provisions of
Sections 6(a):

 

2

 

(i)        Upon the occurrence of a Liquidity
Event, all shares of Restricted Stock shall, unless previously forfeited,
become fully vested on the date of the consummation of such Liquidity
Event.  The occurrence of a Recap shall
not affect the vesting of the Restricted Stock under this clause (b)(i).

 

7.     Forfeiture of
Unvested Restricted Stock.
The shares of Restricted Stock that have not previously vested in accordance
with Section 6 hereof shall be forfeited by the Participant to the Company
as follows:

 

(a) If the Participant
ceases to be an employee of the Company or one of its subsidiaries for any
reason, then the shares of Restricted Stock that have not previously vested in
accordance with Section 6 hereof as of the date of such termination, shall
be forfeited automatically by the Participant to the Company;

 

(b)       Upon the consummation of a Liquidity Event, the shares of
Restricted Stock that have not previously vested in accordance with Section 6
hereof as of the date of such Liquidity Event, shall be forfeited automatically
by the Participant to the Company on the consummation.

 

8.     Beneficiary Designations. The person designated by the Participant as his or her
beneficiary(ies) on the signature page hereof (each a “Beneficiary”) shall
receive any distribution of vested shares otherwise due the Participant in the
event of the death of the Participant prior to receipt of such shares. The
Participant shall have the right to change the Beneficiary or Beneficiaries
from time to time; provided, however, that any change shall not become
effective until received in writing by the Secretary of the Company. If any
designated Beneficiary survives the Participant but dies before receiving all
of his benefits hereunder, any remaining benefits due him shall be distributed
to the deceased Beneficiary’s estate. If there is no effective Beneficiary
designation on file at the time of the Participant’s death, or if the
designated Beneficiary or Beneficiaries have all predeceased such Participant,
the payment of any remaining benefits shall be made to the Participant’s
estate.

 

9.     Limitation of Rights.  Nothing in this
Agreement or the Plan shall be construed to:

 

(a)       give the Participant any right to be
awarded any further restricted stock other than in the sole discretion of the
Committee;

 

(b)       give the Participant or any other person
any interest in any fund or in any specified asset or assets of the Company or
any subsidiary; or

 

(c)       confer upon the Participant the right to
continue in the employment or service of the Company or any of its
subsidiaries, or affect the right of the Company or any of its subsidiaries to
terminate the employment or service of the Participant at any time or for any
reason.

 

10.  Successors and Assigns. This Agreement shall bind and inure to the benefit of and
be enforceable by the Participant, the Company and their respective permitted
successors and 

 

3

 

assigns
(including personal representatives, heirs and legatees), except that the Participant
may not assign any rights or obligations under this Agreement except to the
extent and in the manner expressly permitted herein.

 

11.  Securities Act. The Company will not be required to deliver any shares of
Common Stock pursuant to this Agreement if, in the opinion of counsel for the
Company, such issuance would violate the Securities Act of 1933 or any other
applicable federal or state securities laws or regulations. The Company may
require that the Participant, prior to the issuance of any such shares pursuant
to this Agreement deliver to the Company a written statement (“Investment
Letter”), in form and content acceptable to the Company, in its sole
discretion, stating (i) that the Participant is purchasing the shares for
investment and not with a view to the sale or distribution thereof, and
(ii) that the Participant will not sell any shares of the Company that the
Participant may then own or thereafter acquire except pursuant to a registered
offering or a valid exemption from registration. Any stock certificates issued
pursuant to this Agreement shall bear a restrictive legend as follows:

 

THIS STOCK MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ALL OTHER APPLICABLE SECURITIES LAWS.

 

12.  Withholding Taxes. The Participant hereby agrees that any shares that are
transferred to the Participant (or Beneficiary) hereunder may be subject to the
payment of or reduced by any amount or amounts that the Company is required to
withhold under the then applicable provisions of the Internal Revenue Code of
1986, as amended (the “Code”), or its successors, or any other federal, state
or local tax withholding requirement (the “Withholding Amount”). The
Participant may, in his or her discretion, make the election permitted by Section 83(b) of
the Code with respect to the grant of Restricted Stock pursuant to this
Agreement, and, if such election is made, Participant shall provide a copy
thereof to the Company on the date of filing. When the Company is required to
withhold the Withholding Amount under the applicable provisions of law, the Participant
hereby agrees to satisfy such requirement either by (a) paying to the
Company, in cash or by certified or cashier’s check, an amount equal to the
Withholding Amount, and/or (b) authorizing the Company to withhold the
Withholding Amount from any cash or other compensation otherwise payable to the
Participant, provided that, to the extent that the Participant does not remit
the entire Withholding Amount by one or a combination of such methods, the
Company may at its election withhold from the shares otherwise to be delivered
to the Participant that number of shares having a fair market value, as
determined by the Company,  equal to the
remaining Withholding Amount.

 

4

 

13.  Governing Law. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of Delaware.

 

[Signature page follows]

 

5

 

This Agreement is executed and
delivered, in duplicate, pursuant to the Plan, the provisions of which are
incorporated herein by reference.

 

	
  EMERGENCY MEDICAL
  SERVICES CORPORATION  

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  (signature)

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (print name)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Facsimile
  No.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social
  Security No.

  
					

 

 

BENEFICIARY
DESIGNATION

 

I HEREBY DESIGNATE
THE FOLLOWING PERSON(S) AS MY BENEFICIARY(IES) IN ACCORDANCE WITH SECTION 8
OF THE FOREGOING AGREEMENT:

 

 

	
   

  
	
   

  	
  (Print
  name(s), address(es) and Social Security No.(s)

  

 

 

	
   

  	
   

  
	
  (Participant’s
  signature)Exhibit
10.1

 

EXECUTION COPY

 

 

EXCHANGE AGREEMENT

 

BETWEEN

 

XPLORE TECHNOLOGIES CORP.,

 

XPLORE TECHNOLOGIES CORPORATION OF AMERICA,

 

SG PHOENIX LLC, AS AGENT,

 

PHOENIX VENTURE FUND LLC, AS AGENT

 

AND

 

THE PARTIES SIGNATORY HERETO

 

DATED AS OF NOVEMBER 3, 2010

 

 

 

Table of Contents

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Authorization of Securities

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Exchange of Indebtedness for Series D Preferred Stock;
  Termination of Note Purchase Agreements

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Closing

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties of the Majority Noteholders;
  Register of Securities; Restrictions on Transfer

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization; Authority

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Validity

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Brokers

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Investment Representations and Warranties

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Acquisition for Own Account

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Ability to Protect Its Own Interests and Bear Economic
  Risks

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Accredited Investor

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8

  	
  Access to Information

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.9

  	
  Restricted Securities

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10

  	
  Residence

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Representations and Warranties by the Borrowers

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Capitalization

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Due Issuance and Authorization of Capital Stock

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Organization

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Subsidiaries

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Consents

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Power and Authorization

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Enforcement

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.8

  	
  No Conflicts

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Material Contracts

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10

  	
  Right of First Refusal; Stockholders Agreement; Voting and
  Registration Rights

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.11

  	
  Previous Issuances

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12

  	
  No Integrated Offering

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.13

  	
  SEC Reports; Financial Statements

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14

  	
  No Undisclosed Material Liabilities

  	
   

  	
  11

  

 

i

 

Table of Contents

(Continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15

  	
  Litigation

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.16

  	
  Taxes

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.17

  	
  Employee Matters

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.18

  	
  Compliance with Laws

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.19

  	
  Brokers

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.20

  	
  Environmental Matters

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.21

  	
  Intellectual Property Matters

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.22

  	
  Related-Party Transactions

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.23

  	
  Title to Property and Assets

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.24

  	
  Absence of Changes

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.25

  	
  Illegal Payments

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.26

  	
  Suppliers and Customers

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.27

  	
  Regulatory Permits

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.28

  	
  Insurance

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.29

  	
  Investment Company

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.30

  	
  Listing and Maintenance Requirements

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.31

  	
  Accountants

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.32

  	
  Application of Takeover Protections

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.33

  	
  Stock Options

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.34

  	
  Disclosure

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Pre-Closing Covenants

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Conduct of Business

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Notice of Certain Events

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Conditions of Parties’ Obligations

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Conditions of the Majority Noteholders’ Obligations

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Conditions of the Borrowers’ Obligations

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Conditions of Each Party’s Obligations

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Covenants; Termination

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Preparation of Proxy Statement; Stockholders Meeting

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Reporting Requirements; Access to Records

  	
   

  	
  29

  

 

ii

 

Table of Contents

(Continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Integration

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Securities Laws Disclosure; Publicity

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Reservation of Common Stock

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Listing of Common Stock

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7

  	
  Filings

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8

  	
  Termination of Agreement

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.9

  	
  Procedure and Effect of No-Default Termination

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Transfer Restrictions; Restrictive Legend

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Transfer Restrictions

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Unlegended Certificates

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Registration, Transfer and Substitution of Certificates for
  Securities

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Stock Register; Ownership of Securities

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Replacement of Certificates

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Definitions

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Enforcement

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Cumulative Remedies

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  No Implied Waiver

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Confidentiality

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Miscellaneous

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Waivers and Amendments

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2

  	
  Notices

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3

  	
  Indemnification; Survival

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.4

  	
  No Waivers

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.5

  	
  Successors and Assigns

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.6

  	
  Headings

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.7

  	
  Governing Law

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.8

  	
  Fees and Expenses

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.9

  	
  Jurisdiction

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.10

  	
  Waiver of Jury Trial

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.11

  	
  Counterparts; Effectiveness

  	
   

  	
  40

  

 

iii

 

Table of Contents

(Continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.12

  	
  Entire Agreement

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.13

  	
  Severability

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.14

  	
  Independent Nature of Noteholders’ Obligations and Rights

  	
   

  	
  41

  

 

Exhibits and Schedules

 

	
  Schedule I

  	
  Schedule of Majority Noteholders

  
	
   

  	
   

  
	
  Schedule II

  	
  Schedule of Noteholders

  
	
   

  	
   

  
	
  Schedule III

  	
  Disclosure Schedule

  
	
   

  	
   

  
	
  Exhibit A

  	
  Charter Amendment

  
	
   

  	
   

  
	
  Exhibit B

  	
  Registration Rights Agreement

  

 

iv

 

EXCHANGE AGREEMENT

 

This
EXCHANGE AGREEMENT (this “Agreement”)
is made and entered into this 3rd day of November, 2010, by and between Xplore
Technologies Corp., a Delaware corporation (the “Company”), Xplore Technologies
Corporation of America, a Delaware corporation and wholly owned Subsidiary of
the Company (“Xplore America” and together
with the Company, the “Borrowers”),
Phoenix Venture Fund LLC, a Delaware limited liability company, as Agent (“Phoenix”), SG Phoenix
LLC, a Delaware limited liability company, as Agent (“SG Phoenix,” together
with Phoenix, the “Agents”),
Phoenix (individually and not as Agent), and the other entities and
individuals listed on Schedule I hereto (together with Phoenix (individually and
not as Agent), the “Majority Noteholders”
and each, a “Majority Noteholder”).
Certain terms used and not otherwise defined in the text of this Agreement are
defined in Section 11 hereof.

 

W I T N E S S E T H

 

WHEREAS, the Borrowers and certain
Noteholders are parties to that certain (i) Note Purchase Agreement dated September 5,
2008, as amended by that certain side letter dated October 21, 2008, that
certain side letter dated February 27, 2009, that certain Amendment No. 1
to Note Purchase Agreement dated as of September 5, 2008 and that certain
Amendment No. 2 to Note Purchase Agreement dated as of September 5,
2008 (the “Fall 2008 Note Purchase Agreement”);
(ii) Note Purchase Agreement, dated as of February 27, 2009, as
amended by that certain Amendment No. 1 to Note Purchase Agreement dated
as of February 27, 2009 and that certain Amendment No. 2 to Note
Purchase Agreement dated as of February 27, 2009 (the “Spring 2009 Note Purchase Agreement”);
and (iii) Note Purchase Agreement dated November 5, 2009, as amended
by that certain Amendment No. 1 to Note Purchase Agreement dated November 5,
2009 and that certain Amendment No. 2 to Note Purchase Agreement dated November 5,
2009 (the “Fall 2009 Note Purchase Agreement,”
and collectively with the Fall 2008 Note Purchase Agreement and the Spring 2009
Note Purchase Agreement, the “Note Purchase Agreements”
and each, a “Note Purchase Agreement”),
pursuant to which the Borrowers sold to the Noteholders senior secured
subordinated and secured subordinated promissory notes evidencing the
Indebtedness;

 

WHEREAS,
Phoenix is the Agent of the Noteholders under the Fall 2008 Note Purchase
Agreement and the Spring 2009 Note Purchase Agreement, and SG Phoenix is the
Agent of the Noteholders under the Fall 2009 Note Purchase Agreement;

 

WHEREAS,
the Majority Noteholders represent the holders of at least 51% of the aggregate
principal amount of the promissory notes currently outstanding under each of
the Note Purchase Agreements;

 

WHEREAS,
the Company, through its Board, has decided to authorize and issue a new series
of capital stock to be designated Series D Participating Convertible
Preferred Stock, par value $0.001 per share (“Series D Preferred Stock”); and

 

WHEREAS,
the Borrowers desire to convert and exchange each $1.00 of Indebtedness
outstanding on the Closing Date into one (1) share of Series D
Preferred Stock, and the Agents and the Majority Noteholders, on behalf of all
Noteholders, desire to convert and exchange such 

 

 

Indebtedness
into shares of Series D Preferred Stock, all in accordance with the terms
and provisions of this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties and covenants contained herein, the parties hereto, intending to be
bound, hereby agree as follows:

 

1.             Authorization of Securities.  The Company has authorized the issuance of up
to 15,000,000 shares of its Series D Preferred Stock, a portion of which
will be issued pursuant to the terms and subject to the conditions of this
Agreement to convert and exchange all of the Indebtedness outstanding on the
Closing Date (the “Exchange Shares”).  The Series D Preferred Stock will be
convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”),
and will have the rights, preferences and privileges set forth in the Charter
Amendment.  The shares of Common Stock
issuable upon conversion of the Series D Preferred Stock are sometimes
referred to herein as the “Conversion
Shares”, and the Exchange Shares and the Conversion Shares are
sometimes referred to herein collectively as the “Securities”.

 

2.             Exchange of Indebtedness for Series D Preferred
Stock; Termination of Note Purchase Agreements.

 

(a)           Upon the terms and subject to the conditions herein
contained, on the Closing Date, the Borrowers, the Agents and the Majority
Noteholders, on behalf of all Noteholders, shall consummate the conversion and
exchange of all of the outstanding Indebtedness held by the Noteholders as of
the Closing Date into the Exchange Shares without any further action by the
Noteholders as follows: for each $1.00 owed under such Indebtedness, including
accrued and unpaid interest through the Closing Date, one (1) whole share
of Series D Preferred Stock.  Each
Noteholder shall receive the number of shares of Series D Preferred Stock
determined by dividing the Indebtedness outstanding on the Closing Date held by
such Noteholder by an exchange price per share equal to $1.00 (the “Exchange Price”),
which shall be paid through the conversion and exchange of the
Indebtedness.  The principal amount of
Indebtedness outstanding on the date hereof held by each (i) Majority
Noteholder is set forth in the column “Indebtedness To Be Exchanged” opposite
such Majority Noteholder’s name on Schedule I, attached hereto and (ii) Noteholder
(other than a Majority Noteholder) is set forth in the column “Indebtedness To
Be Exchanged” opposite such Noteholder’s name on Schedule II, attached
hereto and the number of shares of Series D Preferred Stock issuable to
each (i) Majority Noteholder for such Indebtedness is set forth in the
column “Number of Exchange Shares” opposite such Majority Noteholder’s name on Schedule
I and (ii) Noteholder (other than a Majority Noteholder) for such
Indebtedness is set forth in the column “Number of Exchange Shares” opposite
such Noteholder’s name on Schedule II. 
Schedules I and II will be updated on the Closing Date to
add such additional Indebtedness incurred by the Borrowers from the date hereof
to the Closing Date and the number of Exchange Shares issuable therefor.  Fractional shares of the Series D
Preferred Stock will not be issued and as a result, the Company will round up
the number of Exchange Shares to the next whole share if the amount of
Indebtedness converted and exchanged by a Noteholder is not a whole
number.  The Borrowers and the Majority 

 

2

 

Noteholders are executing
and delivering this Agreement in accordance with and in reliance upon the
exemption from securities registration afforded by Section 4(2) of
the Securities Act and Rule 506 of Regulation D promulgated
thereunder.  The Borrowers, the Agents
and the Majority Noteholders, on behalf of all Noteholders, acknowledge and
agree that the Exchange Price represents the fair market value of the Series D
Preferred Stock.

 

(b)           Each of the Agents and the Majority Noteholders, on behalf
of all Noteholders, acknowledges and agrees that (i) upon the Closing (as
defined below) the Indebtedness converted and exchanged pursuant to the terms
and conditions this Agreement shall be cancelled as of the Closing Date and
that the Borrowers shall have no further obligation to the Noteholders to make
any payments of principal or interest under such Indebtedness and the Note
Purchase Agreements; (ii) upon the Closing of the transactions
contemplated hereby, such Majority Noteholder, on behalf of all Noteholders,
hereby consents to the termination by the Agents, on behalf of all Noteholders,
of each of the Note Purchase Agreements pursuant to Sections 11.8 and 11.18(d) thereof;
and (iii) upon the Closing of the transactions contemplated hereby, the
Agents will, at the Borrowers’ written request and expense, execute and deliver
to the Company such documents and instruments and take such other action as the
Borrowers may reasonably request, at the Borrowers’ expense, to evidence or
effect the release of any liens arising out of or made in connection with the
Indebtedness and the Note Purchase Agreements.

 

(c)           The Agents, and the Majority Noteholders, on behalf of all
Noteholders, and the Borrowers hereby terminate each of the Note Purchase
Agreements pursuant to Sections 11.8 and 11.18 thereof upon the Closing of the
transactions contemplated hereby and upon such termination the Note Purchase
Agreements (other than the indemnification provisions in Section 8 of each
of such agreements) shall be of no further force or effect.

 

3.             Closing. 
Upon the terms and subject to the satisfaction of the conditions
contained in Section 7 hereof, the closing (the “Closing”) with
respect to the transaction contemplated in Section 2 hereof shall
take place at the offices of Pillsbury Winthrop Shaw Pittman LLP, 1540
Broadway, New York, New York at 10:00 a.m. local time, or another mutually
acceptable time and location, on the date that is three (3) Business Days
after the date on which the last of the conditions precedent to Closing set
forth in Section 7 hereof have been either satisfied or waived by
the party for whose benefit such conditions precedent exist or at such other
date and time as the Company and the Agents may agree (the “Closing Date”).  Within four (4) Business Days after the
Closing Date, the Company shall deliver to each Noteholder certificates
representing the Series D Preferred Stock which such Noteholder is
entitled to receive pursuant to this Agreement, registered in the name of such
Noteholder, against exchange of the Indebtedness outstanding on the Closing
Date held by such Noteholder for the Exchange Price therefor.

 

4.             Representations and Warranties of the Majority
Noteholders; Register of Securities; Restrictions on Transfer. Each
Majority Noteholder, severally as to itself and not jointly, represents and
warrants to the Borrowers as follows:

 

3

 

 

4.1           Organization; Authority.  (a)  Each Majority Noteholder that is an
entity is duly formed or organized, validly existing and in good standing under
the laws of its jurisdiction of organization or formation, and has all
requisite corporate, limited liability company, partnership or trust (as the
case may be) power and authority to enter into and deliver this Agreement and
the other Transaction Documents and instruments referred to herein to which it
is a party and to consummate the transactions contemplated hereby and thereby.

 

(b)           Each Majority Noteholder that is an individual has full
legal right, power, authority and capacity to enter into and deliver this
Agreement and the other Transaction Documents and instruments referred to
herein to which such Majority Noteholder is a party and to consummate the
transactions contemplated hereby and thereby.

 

4.2           Validity. 
The execution, delivery and performance of this Agreement and the other
Transaction Documents and instruments referred to herein, in each case to which
such Majority Noteholder is a party, and the consummation by such Majority
Noteholder of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action on the part of such Majority Noteholder.  This Agreement and the other Transaction
Documents and instruments referred to herein to which such Majority Noteholder
is a party have been duly executed and delivered by such Majority Noteholder,
and each such agreement constitutes a valid and binding obligation of such
Majority Noteholder enforceable against it in accordance with its terms,
subject to general application from time to time of bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting creditors’ rights
generally and to general equitable principles.

 

4.3           Brokers. 
There is no broker, investment banker, financial advisor, finder or
other person which has been retained by such Majority Noteholder who might be
entitled to any fee or commission for which the Borrowers will be liable in
connection with the execution of this Agreement and the consummation of the
transactions contemplated hereby.

 

4.4           Investment Representations and Warranties.  Such Majority Noteholder understands that the
offering and sale of the Securities have not been registered under the
Securities Act and are being made in reliance upon federal and state exemptions
for transactions not involving a public offering which depend upon, among other
things, the bona fide nature of the investment intent and the accuracy of
Majority Noteholder’s representations as expressed herein.  Such Majority Noteholder acknowledges that,
except as set forth in the Registration Rights Agreement, the Company has no
obligation to register or qualify the Securities for resale.

 

4.5           Acquisition for Own Account.  Such Majority Noteholder is acquiring the
Securities for its own account for investment and not with a view toward
distribution in a manner which would violate the Securities Act.

 

4.6           Ability to Protect Its Own Interests and Bear Economic
Risks.  Such Majority Noteholder, by
reason of its own business and financial experience or that of its management,
has the capacity to protect its own interests in connection with the
transactions contemplated by this Agreement and the other Transaction Documents.
Such Majority Noteholder is able to bear the economic risk of an investment in
the Securities and is able to 

 

4

 

sustain a loss of all of its investment in the
Securities without economic hardship if such a loss should occur.

 

4.7           Accredited Investor.  Each Majority Noteholder is an “accredited
investor” as that term is defined in Regulation D promulgated under the
Securities Act.  Such Majority Noteholder
is not required to be registered as a broker-dealer under Section 15 of
the Exchange Act and such Majority Noteholder is not a
broker-dealer.  Each Majority Noteholder acknowledges that an
investment in the Securities is speculative and involves a high degree of risk.

 

4.8           Access to Information. Such Majority Noteholder has
been given access to the Borrowers’ documents, records and other information,
and has had adequate opportunity to ask questions of, and receive answers from,
the Borrowers’ officers, employees, accountants, and representatives concerning
the Borrowers’ business, operations, financial condition, assets, liabilities,
and all other matters relevant to its investment in the Securities. Such
Majority Noteholder understands that such discussions, as well as any
information provided by the Borrowers, were intended to describe certain
aspects of the Borrowers’ business and prospects.  The representations of the Majority
Noteholders contained in this Agreement shall not affect the ability of the
Noteholders to rely on the representations and warranties made by the Borrowers
pursuant to Section 5 of this Agreement.

 

4.9           Restricted Securities.

 

(a)           Such Majority Noteholder understands that the Securities
will be characterized as “restricted securities” under the federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Securities may be resold without registration under the Securities Act
only in certain limited circumstances.

 

(b)           Such Majority Noteholder acknowledges that the Securities
must be held indefinitely unless subsequently registered under the Securities
Act and under applicable state securities laws or an exemption from such
registration is available.

 

(c)           Such Majority Noteholder is aware of the provisions of Rule 144
under the Securities Act which permit limited resale of securities acquired in
a private placement.

 

4.10         Residence.  The
office or offices of such Majority Noteholder in which its investment decision
was made, and which is its principal place of business, in the case of a
corporation, limited liability company, partnership or other entity, or is its
residence, in the case of an individual, is located at the address or addresses
of such Majority Noteholder set forth on Schedule I hereto.

 

5.             Representations and Warranties by the Borrowers.
Except as set forth by the Borrowers in a written Disclosure Schedule provided
by the Borrowers to the Majority Noteholders dated the date hereof (the “Disclosure Schedule”),
each of the Borrowers represents and warrants to each Noteholder that the
statements contained in this Section 5 are complete and accurate as of the
date of this Agreement and as of the Closing Date.  The Disclosure Schedule 

 

5

 

shall be arranged in sections corresponding to the
numbered and lettered sections and subsections contained in this Section 5,
and the disclosures in any section or subsection of the Disclosure Schedule
shall qualify other sections and subsections in this Section 5 to
the extent it is readily apparent from a reasonable reading of the disclosure
that such disclosure is applicable to such other sections and subsections.

 

5.1           Capitalization.

 

(a)           As of the date hereof, the authorized capital stock of the
Company consists of 450,000,000 shares of Common Stock, par value $0.001 per
share, and 150,000,000 shares of preferred stock, par value $0.001 per share,
of which 64,000,000 shares are designated Series A Preferred Stock, 10,000,000
shares are designated Series B Preferred Stock and 20,000,000 shares are
designated Series C Preferred Stock. As of the date hereof, the Company
has 155,157,673 issued and outstanding shares of Common Stock, and no shares
are held by the Company as treasury shares; 62,873,781 shares of Series A
Preferred Stock are outstanding; 8,334,892 shares of Series B Preferred
Stock are outstanding; 17,074,000 shares of Series C Preferred Stock are
outstanding; 16,301,615 shares of Common Stock are authorized for issuance
under the Company’s Amended and Restated Share Option Plan, under which
14,005,645 shares are subject to outstanding options, 671,385 shares have been
issued upon exercise of options and no further grants will be made; 25,100,000
shares of Common Stock are authorized for issuance under the Company’s 2009
Stock Incentive Plan, under which 4,899,969 are subject to outstanding options,
1,270,934 have been issued pursuant to restricted stock grants and 18,929,097
shares are available for grant; 5,000,000 shares are authorized for issuance
under the Company’s Employee Stock Purchase Plan, under which 3,875,010 shares
are available for purchase by qualified employees, and 92,143,440 shares of
Common Stock are reserved for issuance upon the exercise of warrants and other
convertible securities outstanding on the date hereof. As of the date hereof
the Company has no other shares of capital stock authorized, issued,
outstanding or reserved.

 

(b)           After giving effect to the filing of the Charter Amendment
with the Secretary of State of the State of Delaware, the authorized capital
stock of the Company will consist of 1,350,000,000 shares of Common Stock, par
value $0.001 per share, and 150,000,000 shares of preferred stock, par value
$0.001 per share, of which 64,000,000 shares are designated Series A
Preferred Stock, 10,000,000 shares are designated Series B Preferred
Stock, 20,000,000 shares are designated Series C Preferred Stock and
15,000,000 shares are designated Series D Preferred Stock.

 

(c)           As of the date hereof, other than as set forth in Section 5.1(a),
except as set forth on Schedule 5.1(c), (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital
stock of the Company, or arrangements by which the Company is or may become
bound to issue additional shares of capital stock, nor are any such issuances
or arrangements contemplated; (ii) there are no agreements or arrangements
under which the Company is or may become obligated to register the sale of any
of its securities under the Securities Act; (iii) the Company has no
obligation (contingent or otherwise) to purchase, 

 

6

 

redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof; and (iv) the Company has not
reserved any shares of capital stock for issuance pursuant to any stock option
plan or similar arrangement.

 

(d)           Except as set forth on Schedule 5.1(d)(i), there
have been no adjustments to the exercise price or the conversion price of any
options, warrants or other securities convertible into or exchangeable for
shares of Common Stock including the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock.  Except as set forth on Schedule 5.1(d)(ii),
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby will not trigger any conversion or
exercise price adjustments or any other anti-dilution rights or provisions
relating to any shares of capital stock of the Company or any securities or
rights convertible into or exercisable or exchangeable for shares of capital
stock of the Company.

 

5.2           Due Issuance and Authorization of Capital Stock.  All of the shares of capital stock of the
Company outstanding on the date hereof have been validly issued and are fully
paid and non-assessable.  On the Closing
Date, the sale and delivery of the Exchange Shares, when issued, sold and
delivered in accordance with the terms hereof, and the issuance and/or delivery
of the Conversion Shares upon conversion of the Exchange Shares in accordance
with the terms of the Charter Amendment will be duly authorized, validly
issued, fully paid and non-assessable, and free from all taxes and will vest in
the holders thereof legal and valid title to such Exchange Shares or Conversion
Shares, as the case may be, free and clear of any lien, claim, judgment,
charge, mortgage, security interest, pledge, escrow, equity or other
encumbrance (collectively, “Encumbrances”), other than any Encumbrances created or
permitted by the Noteholders and restrictions on transfer under applicable U.S.
federal or state securities laws, and will not be subject to preemptive rights
or other similar rights of stockholders of the Company, and the issuance of
such Securities will not impose personal liability upon the holder
thereof.  After the filing of the Charter
Amendment, sufficient number of authorized shares of Common Stock will be
reserved for issuance upon conversion of the Exchange Shares.

 

5.3           Organization. 
Each of the Borrowers (a) is duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (b) is duly qualified to do business as a
foreign entity and is in good standing in each jurisdiction where the nature of
the property owned or leased by it or the nature of the business conducted by
it makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect, and (c) has all
requisite corporate power and authority to own or lease and operate its assets
and carry on its business as presently being conducted.  Each of the Borrowers has its principal place
of business and chief executive office in Austin, Texas.

 

5.4           Subsidiaries. 
Xplore America is the only Subsidiary of the Company.  The Company owns, directly or indirectly, all
of the capital stock or comparable equity interests of such Subsidiary free and
clear of any Encumbrances, and all of the issued and outstanding shares of
capital stock or comparable equity interests of such Subsidiary are validly
issued and 

 

7

 

are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.

 

5.5           Consents. 
Except as set forth on Schedule 5.5, neither the execution,
delivery or performance of this Agreement, the Charter Amendment or the other
Transaction Documents by the Company or its Subsidiary, as the case may be, nor
the consummation by them of the obligations and transactions contemplated hereby
or thereby (including, without limitation, the issuance, the reservation for
issuance and the delivery of the Series D Preferred Stock or the issuance
and delivery of the Conversion Shares) requires any consent of, authorization
by, exemption from, filing with or notice to any Governmental Entity or any
other Person, other than (a) approval by the Company’s stockholders of the
Charter Amendment and approval by the holders of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, each voting as
a separate class, of the Charter Amendment in accordance with Section 242
of the Delaware General Corporation Law, (b) the filing of the Charter
Amendment with the Secretary of State of the State of Delaware, (c) the
filings required to comply with the Company’s registration obligations under
the Registration Rights Agreement and (d) filings required under
applicable U.S. federal and state securities laws.

 

5.6           Power and Authorization.  Each of the Borrowers has all requisite
corporate power for the due authorization, execution, delivery and performance
by each of such Borrowers of this Agreement, or by the Company of the Charter
Amendment and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Series D Preferred Stock, the Conversion Shares and
the provision to the Noteholders of the rights contemplated by the Transaction
Documents) and no action on the part of the stockholders of the Borrowers is
required other than approval by the stockholders of the Company of the Charter
Amendment and approval by the holders of the Company’s Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, each
voting as a separate class, of the Charter Amendment in accordance with
Section 242 of the Delaware General Corporation Law.  The execution, delivery and performance by
each of the Borrowers of this Agreement and by the Company of each of the other
Transaction Documents, the execution and filing by the Company of the Charter
Amendment, and the consummation by each of the Borrowers of the transactions
contemplated hereby and thereby, as the case may be, have been duly authorized
by all necessary corporate action on the part of each of the Borrowers.

 

5.7           Enforcement. 
This Agreement has been duly executed and delivered by each of the
Borrowers and constitutes a valid and binding obligation of each of the
Borrowers enforceable against each party in accordance with its terms, subject
to general application from time to time of bankruptcy, insolvency, fraudulent
conveyance or other similar laws affecting creditors’ rights generally and to
general equitable principles.  The
Charter Amendment and the other Transaction Documents and instruments referred
to herein to which the Company is a party, when duly executed and delivered by
the Company, will constitute a valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to general
application from time to time of bankruptcy, insolvency, fraudulent conveyance
or other similar laws affecting creditors’ rights generally and to general
equitable principles, except to the extent the indemnification provisions of
the Registration Rights Agreement may further be limited by applicable law and
principles of public policy.

 

8

 

5.8           No Conflicts. 
The execution, delivery and performance of each of this Agreement, the
other Transaction Documents and the Charter Amendment, and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance, as applicable, of the
Exchange Shares, the Series D Preferred Stock and the Conversion Shares)
will not (a) result in a violation of the Certificate of Incorporation and
By-laws of the Company (the “Charter Documents”), or the certificate of incorporation
and by-laws of Xplore America, (b) conflict with or result in the breach
of the terms, conditions or provisions of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give rise to any right of termination, acceleration or cancellation under, any
Material Contract, (c) result in a material violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, U.S.
federal and state securities laws and regulations) applicable to either of the
Borrowers or by which any property or asset of either of the Borrowers is bound
or affected, (d) result in a violation of any rule or regulation of
FINRA or its Trading Markets, or (e) result in the creation of any
Encumbrance upon any of the Borrower’s assets. 
The Company is not in violation of the Charter Documents.  The business of each of the Borrowers is not
being conducted in violation in any material respect of any law, ordinance or
regulation of any Governmental Entity.

 

5.9           Material Contracts. 
Each Material Contract of the Company or any Subsidiary is listed on Schedule
5.9 hereof.  Each Material Contract
is the legal, valid and binding obligation of the Company or such Subsidiary,
as the case may be, enforceable against the Company or such Subsidiary, as the
case may be, in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance
or other similar laws affecting creditors’ rights generally and by general
equitable principles.  There has not
occurred any breach, violation or default or any event that, with the lapse of
time, the giving of notice or the election of any Person, or any combination
thereof, would constitute a breach, violation or default by the Company or any
Subsidiary under, or give others any rights of termination, amendment,
acceleration or cancellation of, any such Material Contract.  To the knowledge of the Company or any
Subsidiary, there has not occurred any breach, violation or default or any
event that, with the lapse of time, the giving of notice or any combination
thereof, would constitute a breach, violation or default by any other Person
under any such Material Contract. 
Neither the Company nor any Subsidiary has been notified that any party
to any Material Contract intends to cancel, terminate, not renew or exercise an
option under any Material Contract, whether in connection with the transactions
contemplated hereby or otherwise.

 

5.10         Right of First Refusal; Stockholders Agreement; Voting
and Registration Rights.  No party
has any right of first refusal, right of first offer, right of co-sale,
preemptive right or other similar right regarding the securities of the
Company.  There are no provisions in the
Charter Documents or any Material Contracts which (a) may affect or
restrict the voting rights of the Noteholders with respect to the Securities in
its capacity as a stockholder of the Company, (b) restrict the ability of
the Noteholders, or any successor thereto or assignee or transferee thereof, to
transfer the Securities, (c) would adversely affect either of the Borrower’s
or any Noteholder’s right or ability to consummate the transactions
contemplated by this Agreement or comply with the terms of the other
Transaction Documents or the Charter Amendment and the transactions
contemplated hereby or thereby, (d) require the vote of more than a
majority of the Company’s issued and outstanding Common Stock, voting together
as a 

 

9

 

single class, to take or prevent any corporate
action, other than those matters requiring a different vote under Delaware law
or under the terms of the Charter Documents, or (e) entitle any party to
nominate or elect any director of the Company or require any of the Company’s
stockholders to vote for any such nominee or other person as a director of the
Company, other than the right of the holders of the Series A Preferred
Stock to designate two directors of the Company pursuant to the Charter
Documents.

 

5.11         Previous Issuances. 
All shares of capital stock and other securities issued by the Company
prior to the Closing Date have been issued in transactions registered under or
exempt from the registration requirements under the Securities Act and all
applicable state securities or “blue sky” laws, and in compliance with all
applicable corporate laws.  The Company
has not violated the Securities Act or any applicable state securities or “blue
sky” laws in connection with the issuance of any shares of capital stock or
other securities prior to the Closing Date. 
No Person has any rescission rights with respect to any shares of
capital stock of the Company.

 

5.12         No Integrated Offering.  Assuming the accuracy of the Majority
Noteholders’ representations and warranties set forth in Section 4,
and assuming that such representations and warranties are also accurate for the
other Noteholders, neither the Borrowers, nor any of their Affiliates or any
other Person acting on the Borrowers’ behalf, has directly or indirectly
engaged in any form of general solicitation or general advertising with respect
to the Series D Preferred Stock, the Exchange Shares or the Conversion
Shares nor have any of such Persons made any offers or sales of any security of
either of the Borrower’s or their Affiliates or solicited any offers to buy any
security of either of the Borrower’s or their Affiliates under circumstances
that would require registration of the Series D Preferred Stock, the
Exchange Shares or the Conversion Shares under the Securities Act or cause this
offering of Exchange Shares to be integrated with any prior offering of securities
of the Company in a manner that would require the registration under the
Securities Act of the offer or the issuance of the Securities or trigger any
applicable shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or designated.

 

5.13         SEC Reports; Financial Statements.

 

(a)           The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, since June 22, 2007 (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports
complied as to form in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. 
All Material Contracts to which the Company or any Subsidiary is a party
or to which the property or assets of the Company or any Subsidiary are subject
that are required to be included as 

 

10

 

part of or specifically
identified in the SEC Reports are so included or specifically identified.

 

(b)           The financial statements of the Company and its
Subsidiaries included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
SEC and PCAOB with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with GAAP, except for unaudited financial statements that may not
contain all footnotes required by GAAP, are true and correct in all material
respects and fairly present the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

 

5.14         No Undisclosed Material Liabilities.  As of the date of this Agreement, except as
set forth on Schedule 5.14, there are no liabilities of the Company or
any Subsidiary, of any kind whatsoever, known or unknown, accrued, contingent,
absolute, determined, determinable or otherwise, other than liabilities:

 

(a)           reflected in the financial statements included in the
Company’s Annual Report on Form 10-K for the year ended March 31,
2010 and the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2010;

 

(b)           incurred since June 30, 2010 in the ordinary course
of business consistent with past practice, which are not in excess of $100,000
in the aggregate;

 

(c)           created under, or incurred in connection with, this
Agreement or the other Transaction Documents.

 

5.15         Litigation. 
Except as set forth on Schedule 5.15, there is no action, suit,
investigation or other proceeding pending against, or to the knowledge of the
Company, threatened against or affecting, the Company or any Subsidiary or any
of their properties or to the knowledge of the Company any of its or their
officers or directors before any court or arbitrator or any Governmental
Entity.  To the knowledge of the Company,
there are no facts that would cause a reasonable person to believe that such a
proceeding would likely result.

 

5.16         Taxes.  The
Company and each of its Subsidiaries have properly filed all federal, foreign,
state, local, and other tax returns and reports which are required to be filed,
which returns and reports were properly completed and are true and correct in
all respects, and all taxes, interest, and penalties due and owing have been
timely paid.  There are no outstanding
waivers or extensions of time with respect to the period for assessing or
auditing any tax or tax return of the Company or any Subsidiary, or claims now
pending or matters under discussion between the Company or any Subsidiary and
any taxing authority in respect of any tax of the Company or any Subsidiary.

 

11

 

 

5.17         Employee Matters.

 

(a)           The Company has listed any “employee benefit plan” subject
to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that it or
any Subsidiary maintains on Schedule 5.17(a).

 

(b)           No director or officer or other employee of the Company or
any Subsidiary will become entitled to any retirement, severance or similar
benefit or enhanced or accelerated benefit (including any acceleration of
vesting) or lapse of repurchase rights or obligations with respect to any employee
benefit plan subject to ERISA or other benefit under any compensation plan or
arrangement of the Company or any Subsidiary (each, an “Employee Benefit Plan”))
solely as a result of the transactions contemplated in this Agreement; and no
payment made or to be made to any current or former employee or director of the
Company or any of its Affiliates by reason of the transactions contemplated
hereby (whether alone or in connection with any other event, including, but not
limited to, a termination of employment) will constitute an “excess parachute
payment” within the meaning of Section 280G of the Code.

 

(c)           No employee is, or is now expected to be, in violation of
any term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
employee does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing.

 

(d)           The Company and each of its Subsidiaries are in
substantial compliance with all applicable federal, state, local and foreign
statutes, laws (including, without limitation, common law), judicial decisions,
regulations, ordinances, rules, judgments, orders and codes respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, and no work stoppage or labor strike against the Company
or any Subsidiary is pending or, to their knowledge, threatened, nor is the
Company or any Subsidiary involved in or, to their knowledge, threatened with
any labor dispute, grievance or litigation relating to labor matters involving
any employees of the Company or any Subsidiary. To the Company’s knowledge,
there are no suits, actions, disputes, claims (other than routine claims for
benefits), investigations or audits pending or, to the knowledge of the
Company, threatened in connection with any Employee Benefit Plan.

 

5.18         Compliance with Laws. 
The Company and each of its Subsidiaries have been and are in compliance
in all material respects with the terms of all franchises, permits, licenses
and other rights and privileges necessary to conduct the Company’s and each of
its Subsidiaries’ present and proposed business and is in compliance with and
have not violated, in any respect, any applicable provisions of any laws,
statutes, ordinances or regulations material to its respective business or the
terms of any judgments, orders, decrees, injunctions or writs.

 

5.19         Brokers.  Except
as set forth on Schedule 5.19, there is no investment banker, broker,
finder, financial advisor or other person which has been retained by or is 

 

12

 

authorized to act on behalf of either of the Borrowers
who is entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.

 

5.20         Environmental Matters.

 

(a)           (i) No written notice, notification, demand, request
for information, citation, summons, complaint or order has been received by,
and no investigation, action, claim, suit, proceeding or review is pending or,
to the knowledge of the Company, threatened by any Person against the Company
or any of its Subsidiaries and no penalty has been assessed against the Company
or any of its Subsidiaries, in each case, with respect to any matters relating
to or arising out of any Environmental Law; (ii) the Company and each of
its Subsidiaries are in substantial compliance with all applicable
Environmental Laws; and (iii) to the knowledge of the Company, there are
no liabilities of or relating to the Company or any of its Subsidiaries
relating to or arising out of any Environmental Law, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in a such a liability.

 

(b)           For purposes of this Agreement, the term “Environmental Laws”
means federal, state, local and foreign statutes, laws, binding judicial
decisions, regulations, ordinances, rules, binding judgments, binding orders,
codes, binding injunctions and permits relating to human health and the
environment, including, but not limited to, Hazardous Materials; and the term “Hazardous Material”
means all substances or materials regulated as hazardous, toxic, explosive,
dangerous, flammable or radioactive under any Environmental Law including, but
not limited to: (i) petroleum, asbestos, or polychlorinated biphenyls and
(ii) in the United States, all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan.

 

5.21         Intellectual Property Matters.

 

(a)           “Intellectual
Property” means any and all of the following arising under the
laws of the United States, any other jurisdiction or any treaty regime:
(i) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereon, and all patents, patent
applications and patent disclosures and all reissuances, continuations,
continuations-in-part, divisionals, revisions, extensions and reexaminations
thereof, (ii) all trademarks, service marks, trade dress, logos, trade
names and corporate names and all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith (collectively,
“Trademarks”), (iii) all
copyrightable works, mask works or moral rights, all copyrights and all
applications, registrations and renewals in connection therewith, (iv) all
trade secrets and confidential business information (including, without
limitation, ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (v) all
computer software, including, without limitation, all
software implementations of algorithms, models and methodologies, whether in
source code or object code, all databases and 

 

13

 

compilations,
including any and all data and collections of data, whether machine readable or
otherwise, all descriptions, schematics, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing, and all
documentation, including user manuals and training materials, relating to any
of the foregoing (“Software”), (vi) all
other proprietary rights, (vii) all copies and tangible embodiments of the
foregoing (in whatever form or medium) and (viii) all licenses or
agreements in connection with the foregoing. 
“Company
Intellectual Property” means all Intellectual Property which is
used or usable in the business of the Company or any of its Subsidiaries.

 

(b)           Without limiting the scope of the Company Intellectual
Property, Schedule 5.21(b)(i) sets forth each item of Company
Intellectual Property material to the business of the Company or any
Subsidiary.  Except as set forth on Schedule
5.21(b)(ii), with respect to each item of Company Intellectual Property:

 

(1)           the Company and each Subsidiary possesses all rights,
titles and interests in and to the item if owned by the Company or such
Subsidiary, free and clear of any Encumbrance, license or other restriction
(other than Encumbrances created under the ARPA and those certain Security
Agreements, dated September 5, 2008, as amended, February 27, 2009,
as amended, and November 5, 2009), and uses and contemplates using such
item, in the case of a licensed item, in the manner in which it is entitled to
use such item under the applicable license agreement, and the Company has taken
or caused to be taken commercially reasonable and prudent steps for a company
of like resources and business to protect its rights in and to the item;

 

(2)           the item, if owned by the Company or a Subsidiary, is not,
and if licensed, to the knowledge of the Company is not, subject to any
outstanding injunction, judgment, order, decree, ruling or charge;

 

(3)           no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the knowledge of the
Company, has been or is being threatened which challenges the validity,
enforceability, registrability, use or ownership of the item;

 

(4)           the Company and each Subsidiary has sufficient right,
title and interest to use or own the item without infringement upon or
misappropriation of any valid and enforceable Intellectual Property right or
other right of any third party;

 

(5)           other than customary contractual obligations to indemnify
customers in connection with an allegation of infringement made by a third
party, neither the Company nor any of its Subsidiaries has agreed to indemnify
any person for or against any interference, infringement or misappropriation;

 

(6)           to the knowledge of the Company, no third party has
interfered with, infringed upon, misappropriated or otherwise come into
conflict 

 

14

 

with the Company
Intellectual Property and no claim or litigation has been brought or threatened against any
third party by or on behalf of the Company or any Subsidiary asserting
interference with, infringement of, or misappropriation of Company
Intellectual Property or breach of any license or agreement involving the
Company Intellectual Property;

 

(7)           neither the Company nor any Subsidiary is party to any
option, license, sublicense or agreement covering the item that it is in breach
or default thereunder, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination, modification
or acceleration thereunder;

 

(8)           each option, license, sublicense or agreement covering the
item is valid, binding and enforceable against the Company or any Subsidiary,
as the case may be;

 

(9)           that is a registered or applied for patent, copyright,
trademark, or service mark in the United States or any other jurisdiction, such
item, to the knowledge of the Company, is valid, enforceable and subsisting and
is not subject to any claims, Encumbrances, taxes or other fees except for
periodic filing, annuity and maintenance fees; and

 

(10)         neither the Company nor any Subsidiary has entered into any agreement
granting any third party the right to bring infringement actions with respect
to, or otherwise to enforce rights with respect to, the item.

 

(c)           Except as set forth on Schedule 5.21(c), the
Company, each of its Subsidiaries, and their respective products and services
have not, to the knowledge of the Company, infringed upon, misappropriated or
otherwise come into conflict with any valid and enforceable Intellectual
Property rights of third parties or violated any license or agreement with
respect to Intellectual Property rights of a third party. There is no pending
or, to the knowledge of the Company, threatened claim or litigation against the
Company, any Subsidiary, or any of their respective products and services
contesting the right to use any third party’s Intellectual Property rights,
asserting the infringement, misuse, misappropriation, or other violation of any
third party’s Intellectual Property rights, asserting violation of any license
or agreement with respect to a third party’s Intellectual Property rights, or
asserting unfair competition or trade practices. The Company has not received written, or to the
knowledge of the Company, non-written notice from any third party (i) that
the Company, any Subsidiaries, or any of their respective
products and services infringes, misuses, misappropriates or otherwise violates the
Intellectual Property of any third party, (ii) that the Company or any
Subsidiary requires a license to any third party Intellectual Property rights
to conduct its business as currently conducted or as it is intended to be
conducted, or (iii) of an unsolicited offer to license any Intellectual
Property rights of a third party. To
the knowledge of the Company, there are no facts or circumstances that would
reasonably lead it to believe that the activities or the conduct of the business
or operations of the Company or any Subsidiary did prior to Closing, or will
when conducted in the same manner following the 

 

15

 

Closing,
infringe upon, violate or constitute the unauthorized use of the Intellectual
Property rights of any third party.

 

(d)           All domain names owned by the Company or its Subsidiaries
or used in the business of the Company or any of its Subsidiaries (the “Domain Names”) have
been and are duly registered with Network Solutions and GoDaddy.com (together,
the “Registrars”)
through the Registrars’ registration procedures, and are operating, accessible
domain names. The registration of each such Domain Name is free and clear of all
Encumbrances and is in full force and effect. The Company has paid all fees
required to maintain each Domain Name registration. The Company and each of its
Subsidiaries owns all, and has not waived, forfeited or granted to any third
parties any, rights, title or interest in or to the Domain Names including,
without limitation, any benefits, entitlements or rights of renewal with
respect to the Domain Names.  None of the
Domain Names have been placed on “hold” or are otherwise subject to a dispute
or potential dispute. Neither the Company nor any of its Subsidiaries has received written
notice of any claim asserted against the Company or any of its Subsidiaries
adverse to its rights to such Domain Names.

 

(e)           The Company and each of its Subsidiaries is the exclusive owner of all
Trademarks used in connection with the operation or conduct of the business of
the Company and its Subsidiaries. All Trademarks of the Company and its
Subsidiaries which are used in any way in connection with the conduct of the
business of the Company or any Subsidiary have been in continuous use by the
Company or such Subsidiary. There has been no prior use of any such Trademarks
or other action taken by any third party that would confer upon said third
party superior rights in such Trademarks, the Company has taken all necessary
steps to protect the Trademarks against infringement and the registered
Trademarks have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or identified in their respective pending applications.

 

(f)            None of the key employees of the Company or any
Subsidiary are obligated under any contract (including, without limitation,
licenses, covenants, or commitments of any nature) or other agreement, or
subject to any judgment, decree, or order of any court or administrative
agency, that would interfere with the use of his or her reasonable diligence to
promote the interests of the Company or any Subsidiary or that would conflict
with the Company’s or any Subsidiary’s businesses as presently conducted or as
proposed to be conducted. Neither the execution, delivery or performance of
this Agreement, nor the carrying on of the businesses of the Company or any
Subsidiary by the employees of the Company and its Subsidiaries, nor the
conduct of the Company’s businesses as presently conducted or as proposed to be
conducted, will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant, or
instrument under which any such key employee is obligated.

 

(g)           The Company has entered into confidentiality and
proprietary information and assignment of inventions and other Intellectual
Property agreements with each of the current and former employees, consultants,
and independent contractors of the 

 

16

 

Company and its
Subsidiaries, that, among other things, protect the confidentiality of all
Company Intellectual Property and ensure full and unencumbered ownership by the
Company and each Subsidiary of all Company Intellectual Property. The Company
is not aware of any violation by any such employees of such agreements.

 

(h)           No current or former stockholder, member, director,
officer or employee of the Company or any Subsidiary has any interest, right,
title or interest in any of the Company Intellectual Property.

 

(i)            The Company and each of its Subsidiaries have taken all necessary steps
to protect the respective rights in confidential information and trade secrets
used in connection with the conduct of the Company’s or any Subsidiary’s
business. Without limiting the foregoing, the Company and each of its
Subsidiaries have enforced a policy of requiring each employee, consultant,
contractor and third party to which they disclose confidential information or
trade secrets to execute agreements restricting disclosure and use of such
confidential information and trade secrets that are substantially consistent
with the Company’s standard forms thereof. Except under valid and binding confidentiality
obligations, there has been no disclosure of any confidential information or
trade secrets used in connection with the conduct of the Company’s or any
Subsidiary’s business.  Neither the
Company nor any Subsidiary has provided, nor is obligated in any circumstance
to provide, source code to any Company Intellectual Property to any third
party.

 

(j)            The Company Intellectual Property comprises all
Intellectual Property necessary to the business of the Company and each of its Subsidiaries as presently
conducted or proposed to be conducted. 
It is not necessary for the Company or any Subsidiary to utilize any
inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company or a Subsidiary, except for valid
and enforceable inventions, trade secrets or proprietary information that have
been assigned to the Company or a Subsidiary.

 

(k)           The Company and each of its Subsidiaries are not subject
to any “open source” or “copyleft” obligations and are not subject to any agreement or distribution
model that: (i) involves distribution, making generally available of, or
making any public disclosure of, any source code either used or developed by
the Company or any Subsidiary, (ii) prohibits or limits charging a fee or receiving
consideration in connection with licensing or distributing any Company product,
(iii) except as specifically permitted by law, grants any right to, or
otherwise allows, any third party to decompile, disassemble or otherwise reverse-engineer
any Company product, or (iv) requires the licensing of any Company product
for the purpose of making derivative works.

 

(l)            All Software, hardware, and technology used by the
Company and each of its Subsidiaries perform in substantial
compliance with all applicable specifications.

 

17

 

(m)          Any Software used by the Company or
any Subsidiary was either (i) developed by employees of the Company or a
Subsidiary within the scope of their employment; (ii) developed by
consultants or independent contractors who have assigned their rights to the
Company or a Subsidiary pursuant to written agreements; or (iii) otherwise
acquired by the Company or a Subsidiary from a third party pursuant to a valid
written agreement with the third party. The Software used by the Company or any
Subsidiary does not contain any programming code, documentation or other
materials or development environments that embody Intellectual Property rights
of any third party, except for such materials or development environments
obtained by the Company or a Subsidiary from third parties who make such
materials or development environments generally available on non-discriminatory
commercial terms.

 

(n)           Neither the Company
nor any Subsidiary is now or ever was a member or promoter of, or a
contributor to, or otherwise participated in any industry standards
bodies or similar organizations that could compel the Company or any Subsidiary
to grant or offer to any third party any license or right to Company
Intellectual Property, to disclose any Company Intellectual Property to any
third party, or to restrict Company’s enforcement of the Company Intellectual
Property, provided that the mere act of
implementing a standard shall not be deemed to cause the Company or any
Subsidiary to be considered a member, promoter, contributor or participant in a
standards body or similar organization.  To the extent the Company or any Subsidiary
is now or ever was a member, promoter, contributor, or participant in any industry standards body
or similar organization, the Company and such Subsidiary have complied at all
times with any policies of such industry standards body or similar
organization, including without limitation any policies regarding the
identification and disclosure of intellectual property. Schedule 5.21(n) sets
forth a complete and accurate list of any standards bodies or similar
organizations in which the Company or any Subsidiary has ever been a member,
promoter, contributor or participant.

 

(o)           No funding or facilities of a
government, university, college, or other educational institution or research
center was used in the creation or development of the Company Intellectual
Property. To the knowledge of the Company, no current or former employee, consultant
or independent contractor, who was involved in, or who contributed to, the
creation or development of any Company Intellectual Property, performed
services for any government, university, college, or other educational
institution or research center, during a period of time during which such
employee, consultant or independent contractor was also performing services
used in the creation or development of the Company Intellectual Property.
Neither the Company nor any of its Subsidiaries are party to any contract,
license or agreement with any government that grants to such government any
right or license with respect to the Company Intellectual Property, other than
as granted in the ordinary course of business pursuant to a non-exclusive
license to any Company product.

 

(p)           The Company and each of its Subsidiaries maintain rules,
policies and procedures regarding data security, privacy, collection and use of personal information and user information, and data use
that are commercially reasonable and, in any event, comply with the Company’s
or such Subsidiary’s obligations to its customers 

 

18

 

and applicable laws, rules and
regulations. To the knowledge of the Company, there have not been, and the
transaction contemplated under this Agreement will not result in, any security
breaches of any security policy, data use restriction or privacy breach under
any such policies or any applicable laws, rules or regulations. No claims have been asserted or, to the knowledge of the Company,
threatened against the Company or any Subsidiary by any person alleging a
violation of such person’s privacy, personal or confidentiality rights under
any applicable rules, policies or procedures.

 

(q)           No event has occurred, and no circumstance or condition
exists, that has resulted or would result in the delivery, license, or
disclosure of the source code for any Company Software to any other Person
pursuant to any source code escrow arrangement. 
The Company and each of its Subsidiaries have at all times been in
compliance with the obligations and conditions of any source code escrow
agreement.

 

5.22         Related-Party Transactions.  Except as set forth in the SEC Reports, no
stockholder who beneficially owns 5% or more (on a fully-diluted basis) of any
class of equity securities, officer or director of the Company or any
Subsidiary or member of his or her immediate family is currently indebted to
the Company or any Subsidiary, nor is the Company or any Subsidiary indebted
(or committed to make loans or extend or guarantee credit) to any of such
Person.  Except as set forth in the SEC
Reports, as of the date hereof, no stockholder who beneficially owns 5% or more
(on a fully-diluted basis) of any class of equity securities, officer or director
of the Company and no member of the immediate family of any stockholder who
beneficially owns 5% or more (on a fully-diluted basis) of any class of equity
securities, officer or director of the Company is directly or indirectly
interested in any contract with the Company or any of its Subsidiaries.

 

5.23         Title to Property and Assets.  Neither the Company nor any Subsidiary owns
any real property.  The Company and each of its Subsidiaries own or have
legally enforceable rights to use or hold for use their personal property and
assets free and clear of all Encumbrances (other than Encumbrances created
under the ARPA and those certain Security Agreements, dated September 5,
2008, as amended, February 27, 2009, as amended, and November 5,
2009) except liens for taxes not yet due and payable, purchase-money security
interests entered into in the ordinary course of business and such other
Encumbrances, if any, that individually or in the aggregate, do not and would
not detract from the value of any asset or property of the Company and its
Subsidiaries. With respect to any real property, neither the Company nor any
Subsidiary is in violation in any material respect of any of its leases. All
machinery, equipment, furniture, fixtures and other personal property and all
buildings, structures and other facilities, if any, including, without
limitation, office or other space used by the Company or any of its
Subsidiaries in the conduct of their business, are in good operating condition
and fit for operation in the ordinary course of businesses (subject to normal
wear and tear). The Company has delivered to the Agents true and complete
copies of any leases related to the real property used by the Company or any of
its Subsidiaries in the conduct of their businesses.

 

5.24         Absence of Changes. 
Since March 31, 2010 and except as set forth on Schedule 5.24
or as expressly provided by this Agreement, there has not been:

 

19

 

(1)           any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company or any Subsidiary or any repurchase, redemption or other acquisition by
the Company or any Subsidiary of any outstanding shares of its capital stock of
the Company or any Subsidiary, other than the issuance of additional shares of
Common Stock in connection with the payment of accrued dividends on shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock pursuant to the Certificate of Incorporation of the Company;

 

(2)           any amendment of any term of any outstanding security of
the Company or any Subsidiary;

 

(3)           any transaction or commitment made, or any contract,
agreement or settlement entered into, by (or judgment, order or decree affecting)
the Company or any Subsidiary relating to its assets or business (including the
acquisition or disposition of any material amount of assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
other than contracts that do not involve the payment of more than $100,000 in
the aggregate;

 

(4)           any (A) grant of any severance or termination pay to
(or amendment to any such existing arrangement with) any director, officer or
employee of the Company or any Subsidiary, (B) entering into of any
employment, deferred compensation, supplemental retirement or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary, (C) increase in, or
accelerated vesting and/or payment of, benefits under any existing severance or
termination pay policies or employment agreements or (D) increase in or
enhancement of any rights or features related to compensation, bonus or other
benefits payable to directors, officers or senior employees of the Company or
any Subsidiary; or

 

(5)           any tax election made or changed, any audit settled or any
amended tax returns filed;

 

(6)           any Material Adverse Effect or any event or events that
individually or in the aggregate would have a Material Adverse Effect;

 

(7)           any damage, destruction or loss (whether or not covered by
insurance) affecting the Company’s and any of its Subsidiaries’ properties or
assets;

 

(8)           any sale, assignment or transfer, or any agreement to
sell, assign or transfer, any asset, liability, property, obligation or right
of the Company or any Subsidiary to any Person, including, without limitation,
the Noteholder and its Affiliates, in each case, other than in the ordinary
course of business and consistent with past practice;

 

20

 

 

(9)           any liability in excess of $250,000 individually or
$500,000 in the aggregate incurred, or any loans or advances made, by the
Company or any Subsidiary, other than advances of travel and other business
expenses in the ordinary course involving not more than $5,000 individually or
$25,000 in the aggregate;

 

(10)         any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets;

 

(11)         any assignment, lease or other transfer or disposition, or
any other agreement or arrangement therefor by the Company or any Subsidiary of
any property or equipment having a value in excess of $50,000;

 

(12)         any expenditure by the Company or any Subsidiary (or series
of related expenditures) involving more than $250,000 individually or $500,000
in the aggregate;

 

(13)         any waiver of any rights or claims of the Company or any
Subsidiary;

 

(14)         any agreement or commitment by the Company or any Subsidiary
to do any of the foregoing or any transaction by the Company or any Subsidiary
outside the ordinary course of business of the Company; or

 

(15)         any lien upon, or adversely affecting, any property or other
assets of the Company or any Subsidiary.

 

5.25         Illegal Payments. 
Neither the Company nor any Subsidiary has, nor, to the knowledge of the
Company, has any director, officer, agent or employee of the Company or any
Subsidiary, paid, caused to be paid, or agreed to pay, directly or indirectly,
in connection with the business of the Company or any Subsidiary: (a) to
any government or agency thereof, any agent or any supplier or customer, any
bribe, kickback or other similar payment; (b) any contribution to any
political party or candidate (other than from personal funds of directors,
officers or employees not reimbursed by their respective employers or as
otherwise permitted by applicable law); or (c) intentionally established
or maintained any unrecorded fund or asset or made any false entries on any
books or records for any purpose.

 

5.26         Suppliers and Customers.  Since April 1, 2009, there has been no
termination, cancellation or threatened termination or cancellation of, or any
communication of dissatisfaction to the Borrowers that would reasonably be
likely to lead to a termination or cancellation of, the business relationship
between the Borrowers and any supplier, vendor, customer or client, including
any distributor and reseller (but not including any customer of such
distributor or reseller), where such business relationship involved payments of
more than $100,000 per annum during either of the last two fiscal years.

 

5.27         Regulatory Permits. 
The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure 

 

21

 

to possess such permits is not material to the
Company and its Subsidiaries taken as a whole (“Material Permits”), and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.

 

5.28         Insurance.  The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are customary in the businesses in which the Company and each of its
Subsidiaries are engaged.  The Company
maintains directors and officers’ insurance coverage in the amount set forth on
Schedule 5.28.  Neither the
Company nor any Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.

 

5.29         Investment Company. 
The Company is not, and is not an Affiliate of, and immediately after
receipt of payment for the shares of Series D Preferred Stock, will not be
or be an Affiliate of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

 

5.30         Listing and Maintenance Requirements.  The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the SEC is contemplating terminating
such registration.  The Common Stock is currently
quoted on the OTC Bulletin Board (the “OTCBB”) under
the symbol “XLRT.”  Except as set forth
on Schedule 5.30, the Company has not, in the 12 months preceding
the date hereof, received notice from the OTCBB to the effect that the Company
is not in compliance with the listing or maintenance requirements of the
OTCBB.  The Company is, and has no reason
to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements of the OTCBB.

 

5.31         Accountants. 
PMB Helin Donovan, LLP has delivered an unqualified audit report to
the Company with respect to its audited consolidated financial statements
included in the SEC Reports for the years ended March 31, 2009 and 2010,
and are independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder. During the last two fiscal years, there
have been no disagreements of any kind between the Company and PMB Helin
Donovan LLP with respect to accounting and financial disclosure and, based on
the facts and events in existence as of the date hereof, none are reasonably
anticipated by the Company to arise in connection with the Company’s audit for
the fiscal year ending March 31,2011. 
The Company is current with respect to any fees owed to such accounting
firm.

 

5.32         Application of Takeover Protections.  The Company and the Board have taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Charter Documents or the laws of the State of Delaware (including
Section 203 of the Delaware General Corporation Law) that is or could
become applicable as a result of this Agreement, the Charter Amendment and the
Transaction 

 

22

 

Documents, including without limitation the Company’s
issuance of the Series D Preferred Stock or the issuance and delivery of
the Conversion Shares and the ownership of the Series D Preferred Stock
and the Conversion Shares.

 

5.33         Stock Options. 
With respect to stock options issued pursuant to the Company’s Employee
Benefit Plans (i) each stock option designated by the Company at the time
of grant as an “incentive stock option” under Section 422 of the Code so
qualifies; (ii) except as set forth in the SEC Reports, including the
financial statements included therein, each grant of a stock option was duly
authorized no later than the date on which the grant of such stock option was
by its terms to be effective by all necessary corporate action, including, as
applicable, approval by the Board (or a duly constituted and authorized
committee thereof) and any required stockholder approval by the necessary
number of votes or written consents; and (iii) each such grant was made in
accordance with the terms of the Employee Benefit Plans, the Securities Act and
all other applicable laws and regulatory rules or requirements.

 

5.34         Disclosure. 
Each of the Company and Xplore America understands and confirms that the
Noteholders will rely on the foregoing representations in connection with the
transactions contemplated hereby. No representation or warranty by either of
the Company or Xplore America contained in this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. 
Each of the Company or Xplore America acknowledges and agrees that the
Majority Noteholders do not make and have not made any representations or
warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 4 hereof.

 

6.             Pre-Closing Covenants.

 

6.1           Conduct of Business.

 

(a)           From the date of this Agreement through the Closing Date,
except as the Agents may otherwise approve (which approval shall not be
unreasonably withheld) or as otherwise expressly provided by this Agreement,
the Company shall, and shall cause each of its Subsidiaries to,
(i) conduct their businesses in the ordinary course in accordance with
past practice, (ii)  use commercially reasonable efforts to preserve
intact their respective business organizations and goodwill and assets,
(iii) use commercially reasonable efforts to keep available the services
provided by their respective present officers and key employees, (iv) use
their commercially reasonable efforts to maintain satisfactory relationships
with others having business relationships with the Company and any of its
Subsidiaries, and (v) observe and perform all of its obligations and
comply with all terms and provisions of any and all leases, licenses and other
agreements to which it is a party.

 

(b)           Except as expressly provided
by this Agreement, or to the extent the Agents otherwise consent in writing,
during the period from the date of this Agreement to the Closing Date (which
consent shall not be unreasonably withheld), the Company shall not, and shall
not cause or permit any of its Subsidiaries, to directly or indirectly
(i) incur indebtedness for borrowed money or otherwise sell any of its
accounts 

 

23

 

receivable, other than under
the terms of the ARPA in effect on the date hereof, (ii) grant any
Encumbrances on its assets, (iii) enter into any Material Contract other
than in the ordinary course of business consistent with past practice or
terminate or amend any Material Contract to which any such Person becomes or is
a party or transfer or license any Company Intellectual Property,
(iv) dispose of any assets of any such Person, (v) other than
issuances of additional shares of Common Stock in connection with the payment
of accrued dividends on shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock outstanding as of the date
hereof, make any distribution in respect of the equity securities of or other
ownership interest in such Person, (vi) make or revoke any election under
the Code, (vii) other than (A) the issuance of secured promissory
notes under the terms of any amendment to the Fall 2009 Note Purchase
Agreement, (B) the issuance of additional shares of Common Stock in
connection with the payment of accrued dividends on shares of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
outstanding as of the date hereof, or (C) issuances of additional shares
of Common Stock in connection with the payment of accrued interest on promissory
notes outstanding as of the date hereof, authorize, issue, or agree or
otherwise commit to authorize or issue, any shares of stock of any class, or
any bonds, debentures or notes, or any securities convertible into,
exchangeable for or having option rights to purchase any shares of capital
stock of the Company securities other than pursuant to the exercise of options
or warrants or the conversion of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock, in each case, outstanding on
the date hereof pursuant to their terms, (viii) amend its Charter
Documents or comparable governance documents, (ix) make any capital
expenditure in excess of $250,000 in the aggregate, (x) decrease the
amount of any insurance coverage, (xi) make any alteration to its business
plan, (xii) increase the compensation of any of its employees, (xiii) waive,
compromise, or settle any claim, (xiv) except as otherwise provided on Schedule
6.1(b)(xiv), voluntarily incur any liability or obligation in excess of
$250,000 individually or $500,000 in the aggregate or (xv) amend, modify,
replace, terminate or otherwise refinance the ARPA in any manner.

 

6.2           Notice of Certain Events.  From the date of this Agreement through the
Closing Date, the Company will promptly give written notice to the Agents, on
behalf of the Noteholders, of (i) any facts, events or circumstance
changes which, individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect or cause the conditions to closing in Section 7
not to be satisfied and (ii) all claims or proceedings pending or
threatened against the Company or any of it Subsidiaries which may give rise to
a liability in excess of $50,000 or which may harm the reputation or operations
of the Company or any of its Subsidiaries. 
The Company will promptly supply the Agents, on behalf of the
Noteholders, with all information reasonably requested in respect of any such
facts, events, circumstances, claims or proceedings.

 

7.             Conditions of Parties’ Obligations.

 

7.1           Conditions of the Majority Noteholders’ Obligations.  The obligations of the Majority Noteholders
(on behalf of themselves and all the Noteholders) to consummate the
transactions contemplated by this Agreement and convert and exchange the
Indebtedness for the Exchange Shares as set forth on Schedules I and II
attached hereto at the Closing are subject to 

 

24

 

the fulfillment prior to the Closing Date of all of
the following conditions, any of which may be waived in whole or in part by the
Agents (on behalf of the Majority Noteholders) in their absolute discretion.

 

(a)           Representations and Warranties. The representations
and warranties of each of the Borrowers contained in this Agreement and in any
certificate, if any, or other writing, if any, delivered by either of the
Borrowers pursuant hereto shall be true and correct in all material respects on
and as of the Closing Date except those representations and warranties
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects, with the same effect as though such representations
and warranties had been made on and as of the Closing Date.

 

(b)           Performance. The Company and Xplore America shall
have performed and complied in all material respects with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with it on or before the Closing.

 

(c)           No Material Adverse Effect.  There shall have been no Material Adverse
Effect with respect to the Company or its Subsidiaries since March 31,
2010.

 

(d)           Consents and Waivers.  Each of the Company and Xplore America shall
have obtained all consents or waivers necessary to execute and perform its
obligations under this Agreement, the other Transaction Documents (including
the consents and waivers listed on Schedule 5.5), and the Charter
Amendment, to issue the Series D Preferred Stock and the Conversion
Shares, and to carry out the transactions contemplated hereby and thereby,
including the consent of the requisite holders of the shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock, in the form attached hereto as Schedule 7.1(d).  All corporate and other action and
governmental filings necessary to effectuate the terms of the Charter
Amendment, this Agreement, the other Transaction Documents, the Exchange Shares
and the Conversion Shares, and other agreements and instruments executed and
delivered by either of the Borrowers in connection herewith shall have been
made or taken.

 

(e)           Charter Amendment. Prior to the Closing, (i) the
Company shall have caused the Charter Amendment, to be filed with the Secretary
of State of Delaware to establish the rights, preferences and powers of the Series D
Preferred Stock and amend certain provisions relating to the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock and (ii) the Agents, on behalf of the Majority Noteholders, shall
have received confirmation from the Secretary of State of the State of Delaware
reasonably satisfactory to them that such filing has occurred.

 

(f)            Board Appointment. 
In accordance with the Charter Amendment, the Board shall have nominated
Philip Sassower and Andrea Goren (the “Series A Directors”)
and the Series A Directors shall have been duly elected to serve on the
Board by the stockholders of the Company at the Stockholders Meeting
contemplated by Section 8.1 hereof, duly called and held in
accordance with the Delaware General Corporation Law.

 

25

 

(g)           Stockholder Approval Obtained. The Company shall
have obtained all necessary stockholder approvals to have filed the Charter
Amendment, including the approval of the requisite holders of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock, each voting separately as a class.

 

(h)           No Change to Capitalization. Other than (i) the
issuance of additional shares of Common Stock in connection with the payment of
accrued dividends on shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock outstanding as of the date
hereof, (ii) the issuance of additional shares of Common Stock in
connection with the payment of accrued interest on secured promissory notes of
the Company issued pursuant to the Note Purchase Agreements, (iii) the
issuance of shares of Common Stock in connection with the exercise of options
or warrants or the conversion of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, in each case, outstanding on
the date hereof, (iv) the issuance of shares of Common Stock pursuant to
the current terms of an existing agreement with an outside consultant in
exchange for investor relations services, or (v) the issuance of warrants
to purchase Common Stock in connection with any issuance of secured promissory
notes pursuant to an amendment to the Fall 2009 Note Purchase Agreement, there
shall have been no change to the capitalization of the Company as described in Section 5.1(a) hereto
since the date hereof.

 

(i)            Compliance Certificate.  The Borrowers shall have delivered to the
Agents (on behalf of the Majority Noteholders) a Compliance Certificate,
executed by the Chief Financial Officer of the Company, dated as of the Closing
Date to the effect that the conditions specified in subsections (a), (b), (c),
(d), (e), (f), (g), (h), (j) and (m) of this Section 7.1
have been satisfied.

 

(j)            Qualification Under State Securities Laws. All
registrations, qualifications, permits and approvals, if any, required to be
obtained prior to the Closing under applicable state securities laws shall have
been obtained for the lawful execution, delivery and performance of this
Agreement and the other Transaction Documents, including, without limitation,
the offer and sale of the Exchange Shares.

 

(k)           Registration Rights Agreement. The Registration
Rights Agreement shall have been executed and delivered by (i) the Company
and (ii) the Persons listed on the signature pages thereto.

 

(l)            Supporting Documents.  The Agents (on behalf of the Majority
Noteholders) at the Closing shall have received the following:

 

(1)           A good standing certificate of the Company and each of its
Subsidiaries in their jurisdiction of incorporation and those jurisdictions in which
they are qualified to conduct business;

 

(2)           An opinion from Phillips & Reiter, PLLC, counsel
to the Company, dated as of the Closing Date, in a form satisfactory to the
Agents (on behalf of the Majority Noteholders);

 

26

 

(3)           Copies of resolutions of the Board of Directors of the
Company (the “Board”),
certified by the Secretary of the Company, authorizing and approving (A) the
filing of the Charter Amendment, (B) the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents and (C) the
execution, delivery and performance of this Agreement and the other Transaction
Documents and all other documents and instruments to be delivered by the
Company pursuant hereto and thereto;

 

(4)           Copies of resolutions of the board of directors of Xplore
America, certified by the Secretary of such Subsidiary, authorizing and
approving (A) the consummation of the transactions contemplated by this
Agreement and (B) the execution, delivery and performance of this
Agreement and all other documents and instruments to be delivered by such
Subsidiary pursuant hereto;

 

(5)           Copy of the Charter Amendment and the By-laws of the
Company, certified by the Secretary of the Company; and

 

(6)           A certificate of incumbency executed by the Secretary of
each of the Borrowers (A) certifying the names, titles and signatures of
the officers authorized to execute the documents referred to in subparagraphs
(3), (4) and (5) above and (B) further certifying that the
Charter Amendment delivered to the Agents (on behalf of the Majority
Noteholders) at the time of the execution of this Agreement has been validly
adopted and has not been amended or modified.

 

(m)          Fees of Noteholders’ Counsel and Consultants.  The Company shall have paid all of the fees,
expenses and disbursements of Phoenix and SG Phoenix and otherwise satisfied
its obligations under Section 14.8 hereof and the Fee Letter in
full.

 

7.2           Conditions of the Borrowers’ Obligations.  The obligations of the Borrowers under Section 2
hereof are subject to the fulfillment prior to or on the Closing Date of all of
the following conditions, any of which may be waived in whole or in part by the
Company.

 

(a)           Covenants; Representations and Warranties.
(i) Each of the Majority Noteholders at the Closing Date shall have
performed in all material respects all of its obligations and conditions
hereunder required under this Agreement to be performed or complied by it at or
prior to the Closing Date and (ii) the representations and warranties of
each Majority Noteholder at the Closing Date contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date as
if made at and as of the Closing Date (except to the extent expressly made as
of an earlier date, in which case as of such earlier date).

 

(b)           Securities Law Compliance.  All registrations, qualifications, permits
and approvals, if any, required to be obtained prior to the Closing under
applicable state securities laws shall have been obtained for the lawful
execution, 

 

27

 

delivery and performance of
this Agreement and the other Transaction Documents, including, without
limitation, the offer and sale of the Exchange Shares.

 

(c)           Registration Rights Agreement. Each Majority
Noteholder and the other Persons listed on the signature pages thereto
shall have executed and delivered the Registration Rights Agreement.

 

(d)           Consents and Waivers.  The Borrowers shall have obtained all consents
or waivers necessary to execute and perform its obligations under this
Agreement, the other Transaction Documents (including the consents and waivers
listed on Schedule 5.5), and the Charter Amendment to issue the Exchange
Shares and the Conversion Shares, and to carry out the transactions
contemplated hereby and thereby, including the consent of the requisite holders
of the shares of Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock in the form attached hereto as Schedule 7.1(d).  All corporate and other action and
governmental filings necessary to effectuate the terms of the Charter
Amendment, this Agreement, the other Transaction Documents, the Exchange Shares
and the Conversion Shares, and other agreements and instruments executed and
delivered by the Company or is Subsidiary in connection herewith shall have
been made or taken.

 

7.3           Conditions of Each Party’s Obligations.  The respective obligations of the Borrowers,
the Agents and the Majority Noteholders, on behalf of all Noteholders, to
consummate the transactions at the Closing contemplated hereunder are subject
to the absence of the following: (a) any litigation challenging or seeking
damages in connection with the transactions contemplated by this Agreement, any
of the other Transaction Documents or the Charter Amendment, in which there has
been issued any order or injunction delaying or preventing the consummation of
the transactions contemplated hereby, and (b) any statute, rule,
regulation, injunction, order or decree, enacted, enforced, promulgated,
entered, issued or deemed applicable to this Agreement or the transactions
contemplated hereby by any court, government or governmental authority or
agency or legislative body, domestic, foreign or supranational prohibiting or
enjoining the transactions contemplated by this Agreement.

 

8.             Covenants; Termination.

 

8.1           Preparation of Proxy Statement; Stockholders Meeting.  As promptly as reasonably practicable
following the date of this Agreement, but no later November 4, 2010, the
Company shall prepare and cause to be filed with the SEC a preliminary proxy
statement to be sent to the stockholders of the Company relating to the Company’s
2010 annual stockholders meeting (together with any amendments or supplements
thereto, the “Proxy Statement”). 
The Company shall use its reasonable best efforts to finalize the Proxy
Statement as promptly as possible after such filing.  The Company shall promptly notify the Agents
upon the receipt of any comments from the SEC or any request from the SEC for
amendments or supplements to the Proxy Statement and shall provide the Agents
with copies of all correspondence between it and its representatives, on the
one hand, and the SEC, on the other hand. 
The Agents shall have the opportunity to review and approve in their
reasonable discretion the Proxy Statement and all correspondence from the
Company and its representatives to the SEC related to the Company’s 2010 annual
stockholders meeting (the “Stockholders Meeting”)
prior to filing with the SEC.  

 

28

 

The Company shall, as soon as reasonably practicable
following the date the SEC completes review of the Proxy Statement or notifies
the Company that it will not review the Proxy Statement, duly call and give
notice to the Company’s stockholders by mailing the definitive Proxy Statement,
convene and hold the Stockholders Meeting for the purpose of seeking
stockholder approval and to solicit such approval from the stockholders. In
connection with the Stockholders Meeting, the Company shall, through the Board,
recommend to its stockholders that they (a) approve the Charter Amendment
and (b) elect six directors to the Board. 
The Company shall within two (2) Business Days of obtaining such
stockholder approvals in accordance with the terms of this Agreement, take all
requisite actions (including the filing of the Charter Amendment with the
Secretary of State of the State of Delaware) to effect approvals and consummate
the transactions contemplated by this Agreement and the other Transaction
Documents.

 

8.2           Reporting Requirements; Access to Records.  The Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act as long as the Company remains subject to the
reporting requirements of the Exchange Act. The Company further agrees to
promptly make available to the Agents (i) such information as the Company
is required to file or furnish to the SEC, within the time periods required by
applicable law and regulations for filing or furnishing such information with
the SEC, (ii) such information as it furnishes to its other stockholders
as a class, and (iii) reasonable access during normal business hours, upon
reasonable advance notice, to all of the books, records and properties of the
Company and each of its Subsidiaries and to all officers and employees of the
Company and such Subsidiaries (which access shall be given to the Agents’
respective officers, employees, advisors, counsel and other authorized
representatives).

 

8.3           Integration. 
The Company shall not sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Exchange Shares in a manner that would require the registration under the
Securities Act of the issuance of the Exchange Shares to the Noteholders.

 

8.4           Securities Laws Disclosure; Publicity.  The Company shall by 5:30 p.m. ET on the
fourth business day immediately following the date hereof, file with the SEC a
Current Report on Form 8-K, disclosing the material terms of the
transactions contemplated hereby and filing the Transaction Documents as
exhibits thereto. The Company and the Agents shall consult with each other in
issuing any press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Agents shall issue any such press
release or otherwise make any such public statement without the prior consent
of the Company, with respect to any press release of the Agents, or without the
prior consent of the Agents, with respect to any press release of the Company,
which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication.  Notwithstanding the foregoing,
the Company shall not include the name of any Noteholder in any filing with the
SEC or any regulatory agency or Trading Market, without the prior written
consent of the Agents, except (i) as required by federal securities law in
connection with (A) any registration statement contemplated by the
Registration Rights Agreement, (B) the Current Report on Form 8-K

 

29

 

 

required by this Section 8.4,
(C) any filing required by the SEC and (D) the filing of final
Transaction Documents (including signature pages thereto) with the SEC and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Agents with prior
notice of such disclosure permitted under this clause (ii); provided, however, that notwithstanding the foregoing, other
than such Noteholder’s name, the Company will not disclose any personal information
regarding the Noteholder, including without limitation, the Noteholder’s tax
identification number and address required or permitted to be disclosed under
the foregoing clauses (i) and (ii).

 

8.5           Reservation of Common Stock.  After the Closing, the Company will reserve
and continue to reserve and keep available at all times, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue shares for dividends with respect to, and issuing
shares in connection with conversion of, the Series D Preferred Stock.

 

8.6           Listing of Common Stock.  The Company hereby agrees to use best efforts
to maintain the listing of the Common Stock on the OTCBB.  The Company will take all action reasonably
necessary to continue the quotation and trading of its Common Stock on the
OTCBB and will comply in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the OTCBB.

 

8.7           Filings.  The
Company shall make all filings with the SEC as required by the transactions
contemplated hereby.

 

8.8           Termination of Agreement.

 

(a)           This Agreement may be terminated at any time prior to the
Closing Date by mutual written consent of the Borrowers and the Agents (on
behalf of the Majority Noteholders).

 

(b)           This Agreement may be terminated by the Borrowers or the
Agents if (i) any Federal or state court of competent jurisdiction shall
have issued an order, judgment or decree permanently restraining, enjoining or
otherwise prohibiting the Closing, and such order, judgment or decree shall
have become final and nonappealable or (ii) any statute, rule, order or
regulation shall have been enacted or issued by any Governmental Entity which,
directly or indirectly, prohibits the consummation of the Closing; or (iii) the
Closing contemplated hereby shall have not occurred on or before December 31,
2010 (the “Termination Date”), provided,
however, that the right to terminate this Agreement under this Section 8.8(b) shall
not be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date.

 

(c)           This Agreement may be terminated by the Agents if there
has been a material violation or breach by either of the Borrowers of any
covenant, representation or warranty contained in this Agreement and such
violation or breach is not cured by the earlier of the Closing Date or the date
ten (10) days after receipt by the Borrowers of 

 

30

 

notice specifying
particularly such violation or breach, and such violation or breach has not
been waived by the Agents.

 

(d)           This Agreement may be terminated by the Borrowers, if
there has been a material violation or breach by the Majority Noteholders of
any covenant, representation or warranty contained in this Agreement and such
violation or breach is not cured by the earlier of the Closing Date or the date
ten (10) days after receipt by the Agents of notice specifying
particularly such violation or breach, and such violation or breach has not
been waived by the Borrowers.

 

8.9           Procedure and Effect of No-Default Termination. 
In the event of termination of this Agreement pursuant to Section 8.8,
written notice thereof shall forthwith be given by the terminating party to the
other party, whereupon, if this Agreement is terminated pursuant to any of Sections
8.8(a) or (b), the liabilities of the parties hereunder will
terminate to each other, except as otherwise expressly provided in this
Agreement, and thereafter neither the Borrowers nor the Noteholders shall have
any recourse against the other by reason of this Agreement.

 

9.             Transfer Restrictions; Restrictive Legend.

 

9.1           Transfer Restrictions.  The Majority Noteholders, on behalf of all
Noteholders, understand that the Company may, as a condition to the transfer of
any of the Securities, require that the request for transfer be accompanied by
an opinion of counsel reasonably satisfactory to the Company, to the effect
that the proposed transfer does not result in a violation of the Securities
Act, unless such transfer is covered by an effective registration statement or
exempt under Rule 144 or Rule 144A under the Securities Act;
provided, however, that an opinion of counsel shall not be required for a
transfer by a Noteholder that is (A) a partnership transferring all of the
assets owned by it to its partners or former partners pro rata in accordance
with partnership interests, (B) a corporation transferring to a wholly
owned subsidiary or a parent corporation that owns all of the capital stock of
such Noteholder, (C) a limited liability company transferring all of the
assets owned by it to its members or former members pro rata in accordance with
their interest in the limited liability company, (D) an individual
transferring to such Noteholder’s family member or trust for the benefit of
such Noteholder, or (E) transferring its Securities to any Affiliate of
such Noteholder, in the case of an institutional investor, or other Person
under common management with such Noteholder; and provided, further, that the
transferee in each case agrees to be subject to the restrictions in this Section 9.
It is understood that the certificates evidencing the Securities may bear substantially
the following legends:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR, SUBJECT TO PERMITTED EXCEPTIONS, AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.”

 

31

 

9.2           Unlegended Certificates.  The Company shall be obligated to promptly
reissue unlegended certificates upon the request of any holder thereof at such
time as such holder provides the Company with evidence reasonably acceptable to
the Company that the holding period under Rule 144, or another applicable
exemption from the registration requirements of the Securities Act, allowing
such removal has been satisfied.

 

10.           Registration, Transfer and Substitution of Certificates
for Securities.

 

10.1         Stock Register; Ownership of Securities.  The Company will maintain with its transfer
agent a register in which the Company will provide for the registration or
transfers of the Series D Preferred Stock and the Conversion Shares. The
Company may treat the Person in whose name any of the Securities are registered
on such register as the owner thereof and the Company shall not be affected by
any notice to the contrary. All references in this Agreement to a “holder” of
any Securities shall mean the Person in whose name such Securities are at the
time registered on such register.

 

10.2         Replacement of Certificates.  Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any certificate, representing Securities, and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory to the Company or, in the case of any such mutilation, upon
surrender of such certificate for cancellation at the office of the Company maintained
pursuant to Section 10.1 hereof, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate representing Securities
of like tenor.

 

11.           Definitions. 
Unless the context otherwise requires, the terms defined in this Section 11
shall have the meanings specified for all purposes of this Agreement.

 

Except
as otherwise expressly provided, all accounting terms used in this Agreement,
whether or not defined in this Section 11, shall be construed in
accordance with GAAP. If and so long as the Company has one or more
Subsidiaries, such accounting terms shall be determined on a consolidated basis
for the Company and each of its Subsidiaries, and the financial statements and
other financial information to be furnished by the Company pursuant to this
Agreement shall be consolidated and presented with consolidating financial
statements of the Company and each of its Subsidiaries.

 

“Affiliate” shall have
the meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.

 

“Agents” means Phoenix, with respect
to the Fall 2008 Note Purchase Agreement and the Spring 2009 Note Purchase
Agreement, and SG Phoenix LLC, a Delaware limited liability company, with
respect to the Fall 2009 Note Purchase Agreement.

 

“Agreement” has the
meaning assigned to it in the introductory paragraph hereof.

 

“ARPA” means the Accounts Receivable
Purchasing Agreement, dated December 10, 2009 by and between the Company
and DSCH Capital Partners, LLC d/b/a Far West Capital, as amended through the
date hereof.

 

32

 

“By-laws” means the
By-laws of the Company in effect as of the date hereof, and as may be amended,
restated, modified or amended and restated, from time to time

 

“Board” has the
meaning assigned to it in Section 7.1(m)(3) hereof.

 

“Borrowers” has the meaning assigned
to it in the introductory paragraph hereof.

 

“Certificate of Incorporation”
means the Certificate of Incorporation of the Company in effect on the date hereof,
and as may be amended, restated, modified or amended and restated, from time to
time.

 

“Charter Amendment”
means the Amended and Restated Certificate of Incorporation, in the form
attached hereto as Exhibit A.

 

“Charter Documents”
has the meaning assigned to it in Section 5.8 hereof.

 

“Closing” has the
meaning assigned to it in Section 3.1 hereof.

 

“Closing Date” has the
meaning assigned to it in Section 3.1 hereof.

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Common Stock” has the
meaning assigned to it in Section 1 hereof.

 

“Company” has the
meaning assigned to it in the introductory paragraph hereof.

 

“Company Intellectual Property”
has the meaning assigned to it in Section 5.21(a) hereof.

 

“Conversion Shares”
has the meaning assigned to it in Section 1 hereof.

 

“Disclosure Schedule”
has the meaning assigned to it in Section 5 hereof.

 

“Domain Names” has the
meaning assigned to it in Section 5.21(c) hereof.

 

“Employee Benefit Plan”
has the meaning assigned to it in Section 5.17(b) hereof.

 

“Encumbrances” has the
meaning assigned to it in Section 5.2 hereof.

 

“Environmental Law”
has the meaning assigned to it in Section 5.20(b) hereof.

 

“ERISA” has the
meaning assigned to it in Section 5.17(a) hereof.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended.

 

“Exchange Price” has
the meaning assigned to it in Section 2(a) hereof.

 

“Exchange Shares” has
the meaning assigned to it in Section 1 hereof.

 

33

 

“Fall 2008 Note Purchase Agreement”
has the meaning assigned to it in the Recitals hereto.

 

“Fall 2009 Note Purchase Agreement”
has the meaning assigned to it in the Recitals hereto.

 

“Fee Letter” means the
Fee Letter, dated July 21, 2010, between the Company, Phoenix and SG Phoenix
LLC.

 

“GAAP” means U.S.
generally accepted accounting principles consistently applied.

 

“Governmental Entity”
means any national, federal, state, municipal, local, territorial, foreign or
other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial,
administrative or arbitral body or public or private tribunal.

 

“Hazardous Material”
has the meaning assigned to it in Section 5.20(b) hereof.

 

“Indebtedness” means all of the
senior secured subordinated and secured subordinated indebtedness and other
obligations of the Borrowers under those certain Note Purchase Agreements,
dated as of September 5, 2008, February 27, 2009 and November 5,
2009, each as amended, by and between the Borrowers and the Noteholders party
thereto.

 

“Intellectual Property”
has the meaning assigned to it in Section 5.21(a) hereof.

 

“knowledge” of the
Company or any similar phrase means, with respect to any fact, circumstance,
event or other matter in question, the knowledge of such fact, circumstance,
event or other matter after reasonable inquiry of Philip S. Sassower, Mark
Holleran, Michael J. Rapisand and Bryan J. Bell.  Any such individual will be deemed to have
knowledge of a particular fact, circumstance, event or other matter if
(a) such fact, circumstance, event or other matter is contained in one or
more documents (whether written or electronic, including electronic mails sent
to or by such individual) in the possession of such individual, including his
or her personal files, or (b) such knowledge would reasonably be expected
to be obtained from reasonable inquiry of the persons employed by the Company
charged with administrative or operational responsibility for such matters for
the Company.

 

“Majority Noteholders” has the meaning assigned to
it in the introductory paragraph of this Agreement.

 

“Material Adverse Effect”
means (i) any material adverse effect on the issuance or validity of the
Securities or the transactions contemplated hereby or the enforceability or
validity of the Charter Amendment or on the ability of either of the Borrowers
to perform its obligations under this Agreement and the other Transaction
Documents or (ii) any material adverse effect on the condition (financial
or otherwise), properties, assets, liabilities, business, operations or
prospects of the Company and its Subsidiaries, taken as a whole.

 

“Material Contract”
means all written and oral contracts, agreements, deeds, mortgages, leases,
subleases, licenses, instruments, notes, commitments, commissions,
undertakings, 

 

34

 

arrangements
and understandings (i) which by their terms involve, or would reasonably
be expected to involve, aggregate payments by or to the Company or any of its
Subsidiaries during any 12 month period in excess of $100,000, (ii) the
breach of which by the Company or any of its Subsidiaries would be material to
the Company or any of its Subsidiaries or (iii) which are required to be
filed as exhibits by the Company with the SEC pursuant to Items 601(b)(4) and
601(b)(10) of Regulation S-K promulgated by the SEC.

 

“Material Permits” has
the meaning assigned to it in Section 5.27 hereof.

 

“Noteholders” means
all of the holders of Indebtedness on the Closing Date and shall include any
Affiliates of the Noteholders.

 

“PCAOB” means the Public Company
Accounting Oversight Board.

 

“Person” means and
includes all natural persons, corporations, business trusts, associations,
companies, partnerships, joint ventures, limited liability companies and other
entities and governments and agencies and political subdivisions.

 

“Phoenix” has the meaning assigned to
it in the introductory paragraph hereof.

 

“Proxy Statement” has the meaning
assigned to it in Section 8.1 hereof.

 

“Registrars” has the meaning assigned
to it in Section 5.21(d) hereof.

 

“Registration Rights Agreement” means
the Registration Rights Agreement in the form attached hereto as Exhibit B.

 

“SEC” means the
Securities and Exchange Commission.

 

“SEC Reports” has the
meaning assigned to it in Section 5.13(a) hereof.

 

“Securities” has the
meaning assigned to it in Section 1 hereof.

 

“Securities Act” or “Act” means the
Securities Act of 1933, as amended.

 

“Series A Directors” has the
meaning assigned to it in Section 7.1(h) hereof.

 

“Series A Preferred Stock” means
the Series A Convertible Preferred Stock, par value $0.001 per share, of
the Company provided for pursuant to the Certificate of Incorporation, which
sets for the rights, preferences and privileges of the Series A Preferred
Stock.

 

“Series B Preferred Stock” means
the Series B Convertible Preferred Stock, par value $0.001 per share, of
the Company provided for pursuant to the Certificate of Incorporation, which
sets for the rights, preferences and privileges of the Series B Preferred
Stock.

 

“Series C Preferred Stock” means
the Series C Convertible Preferred Stock, par value $0.001 per share, of
the Company provided for pursuant to the Certificate of Designation of Series C
Preferred Stock filed with the Delaware Secretary of State, which sets for the
rights, preferences and privileges of the Series C Preferred Stock.

 

35

 

“Series D Preferred Stock”
has the meaning assigned to it in the Recitals hereto.

 

“Software” has the
meaning assigned to it in Section 5.21(a) hereof.

 

“Spring 2009 Note Purchase Agreement”
has the meaning assigned to it in the Recitals hereto.

 

“Stockholders Meeting” has the
meaning assigned to it in Section 8.1 hereof.

 

“Subsidiary” means any
corporation, association trust, limited liability company, partnership, joint
venture or other business association or entity (i) at least 50% of the
outstanding voting securities of which are at the time owned or controlled
directly or indirectly by the Company or (ii) with respect to which the
Company possesses, directly or indirectly, the power to direct or cause the
direction of the affairs or management of such Person.

 

“Termination Date” has
the meaning assigned to it in Section 8.10(b) hereof.

 

“Trademarks” has the
meaning assigned to it in Section 5.21(a) hereof.

 

“Trading Market” means the
following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTCBB.

 

“Transaction Documents”
means this Agreement and the Registration Rights Agreement.

 

“Xplore America” has
the meaning assigned to it in the introductory paragraph hereof.

 

12.           Enforcement.

 

12.1         Cumulative Remedies. 
None of the rights, powers or remedies conferred upon the Agents or the
Majority Noteholders on the one hand or the Borrowers on the other hand shall
be mutually exclusive, and each such right, power or remedy shall be cumulative
and in addition to every other right, power or remedy, whether conferred by
this Agreement, any of the other Transaction Documents, the Certificate of
Incorporation, the Charter Amendment, or now or hereafter available at law, in
equity, by statute or otherwise. In addition to being entitled to exercise all
rights provided herein or granted at law, including recovery of damages, the
Agents and the Majority Noteholders, on behalf of all Noteholders, and the
Borrowers will be entitled to specific performance under the Transaction
Documents, the Certificate of Incorporation and the Charter Amendment. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at
law would be adequate or the posting of a bond.

 

12.2         No Implied Waiver. 
Except as expressly provided in this Agreement, no course of dealing
between the Borrowers and the Noteholders or any other holder of shares of 

 

36

 

Series D Preferred Stock and no delay in exercising
any such right, power or remedy conferred hereby or by the Certificate of
Incorporation, the Charter Amendment, or by any of the other Transaction
Documents or now or hereafter existing at law in equity, by statute or
otherwise, shall operate as a waiver of, or otherwise prejudice, any such
right, power or remedy.

 

13.           Confidentiality. 
Except as otherwise agreed in writing by the Company, each Majority
Noteholder agrees that it will use reasonable care to keep confidential and not
disclose or divulge any confidential information obtained from the Company
pursuant to the terms of the Transaction Documents, unless such confidential
information (a) is known or becomes known to the public in general (other
than as a result of a breach of this Section 13 by such Majority
Noteholder), (b) is or has been independently developed or conceived by
such Majority Noteholder without use of the Company’s confidential information,
(c) is or has been made known or disclosed to such Majority Noteholder by
a third party without a breach of any obligation of confidentiality such third
party may have to the Company or (d) was known to such Majority Noteholder
prior to disclosure to the Majority Noteholder by the Company; provided,
however, that such Majority Noteholder may disclose confidential information
(i) to its attorneys, accountants, consultants, and other professionals;
(ii) to any prospective Noteholder of any Securities from the Majority
Noteholder, if such prospective Noteholder agrees to keep such information confidential;
(iii) to any Affiliate, partner, member, stockholder or advisor of such
Majority Noteholder in the ordinary course of business, provided that the
Majority Noteholder informs such person that such information is confidential;
or (iv) as may otherwise be required by law.

 

14.           Miscellaneous.

 

14.1         Waivers and Amendments.  Upon the approval of the Borrowers and the
written consent of the Agents on behalf of the Noteholders, the obligations of
the Borrowers and the rights of the Noteholders under this Agreement may be
waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely).
Neither this Agreement, nor any provision hereof, may be changed, waived,
discharged or terminated orally or by course of dealing, but only by an
instrument in writing.

 

The
foregoing notwithstanding, no such waiver or supplemental agreement shall
affect any of the rights of any holder of any Securities created by the Charter
Amendment or by the Delaware General Corporation Law without compliance with
all applicable provisions of the Charter Amendment and the Delaware General
Corporation Law.

 

14.2         Notices.  All
notices, requests, consents, and other communications under this Agreement shall
be in writing and shall be deemed delivered (a) three business days after
being sent by registered or certified mail, return receipt requested, postage
prepaid or (b) one business day after being sent via a reputable
nationwide overnight courier service guaranteeing next business day delivery,
in each case to the intended recipient as set forth below:

 

If
to a Noteholder at its address set forth on Schedule I or II
hereto.

 

with
a copy (which shall not constitute notice) to:

 

37

 

Pillsbury
Winthrop Shaw Pittman LLP 

1540 Broadway

New York, New York 10036

Attention: Jonathan J. Russo, Esq. 

Facsimile No.: (212) 858-1500

 

If
to either of the Borrowers:

 

Xplore
Technologies Corp.

14000 Summit Drive, Suite 900

Austin, TX 78728

Attention:
Michael J. Rapisand 

Facsimile No.: (512) 249-5630

 

with
a copy (which shall not constitute notice) to:

 

Phillips &
Reiter, PLLC

6805
Capital of Texas Highway North, Suite 318

Austin,
Texas 78731

Attention:
J. William Wilson, Esq.

Facsimile No.: (512) 646-1106

 

or
at such other address as either of the Borrowers or the Noteholders each may
specify by written notice to the other parties hereto. Any party may give any
notice, request, consent or other communication under this Agreement using any
other means (including, without limitation, personal delivery, messenger
service, telecopy, first class mail or electronic mail), but no such notice,
request, consent or other communication shall be deemed to have been duly given
unless and until it is actually received by the party for whom it is intended.
Any party may change the address to which notices, requests, consents or other
communications hereunder are to be delivered by giving the other parties notice
in the manner set forth in this Section 14.2.

 

14.3         Indemnification; Survival.  Each of the Borrowers shall indemnify, save
and hold harmless each Agent, each Noteholder, its respective directors,
officers, members, stockholders, employees, partners, representatives,
advisors, attorneys and agents (each, a “Noteholder Indemnified Party”) from and
against (and shall promptly reimburse such indemnified persons for) any and all
liability, loss, cost, damage, fine, penalty, amount paid in settlement,
reasonable attorneys’ and accountants’ fees and expenses, court costs and all
other out-of-pocket expenses incurred (collectively, “Losses”) in
connection with or arising from claims, actions, suits, proceedings,
investigations or similar claims by any person or entity (other than any
Noteholder Indemnified Party) associated, arising out of or relating to
(i) the execution, delivery and performance of this Agreement, any of the
other Transaction Documents or the Charter Amendment, (ii) the
transactions contemplated hereby or thereby, or (iii) the ownership by
such Noteholder of the Securities.  This
indemnification provision shall be in addition to the rights of the Noteholder
to bring an action against either of the Borrowers for breach of any term of
this Agreement, the other Transaction Documents or the Charter Amendment. All
representations and warranties of the Borrowers in this Agreement or the
Transaction Documents shall survive the Closing until the date that is two (2) years
after the Closing Date; provided,

 

38

 

 

however, that the representations and warranties of the
Borrowers contained in Sections 5.2 (Due Issuance and
Authorization of Capital Stock), 5.16 (Taxes),
5.17 (Employee Matters) and 5.21
(Intellectual Property Matters) shall
survive the Closing until the sixty (60) days after the expiration of the
applicable statute of limitations period (after giving effect to any waivers or
extensions thereof).  All covenants of
either of the Borrowers in this Agreement, except to the extent otherwise
expressly provided, shall survive the Closing indefinitely.

 

14.4        No Waivers.  No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.

 

14.5        Successors and Assigns.  All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective parties hereto, the successors and permitted assigns of each
Noteholder and the successors of the Borrowers, whether so expressed or not.  None of the parties hereto may assign its
rights or obligations under Section 2 hereof without the prior
written consent of the Borrowers, except that each Noteholder may, without the
prior consent of the Borrowers, assign its rights to receive the shares of Series D
Preferred Stock hereunder to any Affiliate.

 

14.6        Headings.  The
headings of the Sections and paragraphs of this Agreement have been inserted
for convenience of reference only and do not constitute a part of this
Agreement.

 

14.7        Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to its conflict of law
principles.

 

14.8        Fees and Expenses. 
The Company agrees to promptly pay, reimburse and hold the Phoenix, on
behalf of the Noteholders, and its Affiliates, including SG Phoenix, harmless
from liability for the payment of all out-of-pocket fees and expenses incurred
by it in connection with its diligence investigation of the Company, the
preparation and negotiation of this Agreement and the consummation of the
transactions contemplated hereby, regardless of whether the issuance of shares
of Series D Preferred Stock to the Noteholders pursuant to this Agreement
is consummated in accordance with the terms of this Agreement.  The fees and expenses of the Phoenix may
include, without limitation:

 

(a)           the fees and expenses of counsel, consultants and
accountants and out of pocket expenses, including diligence and travel
expenses, of Phoenix and its Affiliates, arising in connection with the
preparation, negotiation and execution of the Charter Amendment and the
Transaction Documents, the preparation, execution and filing of all forms,
schedules and reports and amendments thereto of the Noteholders required to be
filed with the SEC in connection with or arising out of the transactions
contemplated by the Transaction Documents and the consummation of the
transactions contemplated thereby (including Schedule 13D filings and
amendments and Form 4 filings),

 

39

 

(b)           all costs of the Company’s performance and compliance with
the Charter Amendment or the Transaction Documents, and

 

(c)           stamp and other taxes, excluding income taxes, which may
be payable with respect to the execution and delivery of the Charter Amendment
or the Transaction Documents, or the issuance, delivery or acquisition of the
Exchange Shares or the Conversion Shares.

 

14.9        Jurisdiction. 
Any suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any federal or state court
located in the State of New York, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which
is brought in any such court has been brought in an inconvenient forum. Process
in any such suit, action or proceeding may be served on any party anywhere in
the world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service of process on
such party as provided in Section 14.2 shall be deemed effective
service of process on such party.

 

14.10      Waiver of Jury Trial. 
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
THE AGENTS AND THE MAJORITY NOTEHOLDERS, ON BEHALF OF ALL NOTEHOLDERS, AND THE
BORROWERS HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE
NOTEHOLDERS OR THE AGENTS WILL ASSERT, ANY RIGHT TO TRIAL BY JURY ON ANY ISSUE
IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, ANY OTHER AGREEMENT OR THE SUBJECT MATTER HEREOF
OR THEREOF OR IN ANY WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS
OF THE AGENTS, THE NOTEHOLDERS AND THE COMPANY HEREUNDER OR THEREUNDER, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN TORT OR
CONTRACT OR OTHERWISE.  Either of the
Borrowers acknowledges that it has been informed by the Agents and the Majority
Noteholders, on behalf of all Noteholders, that the provisions of this Section 14.10
constitute a material inducement upon which the Agents and the Majority
Noteholders are relying and will rely in entering into this Agreement. The
Agents, Noteholders or the Borrowers may file an original counterpart or a copy
of this Section 14.10 with any court as written evidence of the
consent of the Agent and the Majority Noteholders, on behalf of all
Noteholders, and the Borrowers to the waiver of the right to trial by jury.

 

14.11      Counterparts; Effectiveness.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument. This Agreement shall become effective when
each party hereto shall have received counterparts hereof signed by all of the
other parties hereto.

 

40

 

14.12      Entire Agreement. 
This Agreement, the Charter Amendment and the Transaction Documents
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof and such agreements supersede and replace all
other prior agreements, written or oral, among the parties hereto with respect
to the subject matter hereof and thereof.

 

14.13      Severability.  If
any provision of this Agreement shall be found by any court of competent
jurisdiction to be invalid or unenforceable, the parties hereby waive such
provision to the extent that it is found to be invalid or unenforceable. Such
provision shall, to the maximum extent allowable by law, be modified by such
court so that it becomes enforceable, and, as modified, shall be enforced as
any other provision hereof, all the other provisions hereof continuing in full
force and effect.

 

14.14      Independent Nature of Noteholders’ Obligations and Rights.  The obligations of each Noteholder under this
Agreement and any other Transaction Document are several and not joint with the
obligations of any other Noteholder, and no Noteholder shall be responsible in
any way for the performance or non-performance of the obligations of any other
Noteholder under this Agreement and any other Transaction Document.  The decision of each Noteholder to receive
shares of Series D Preferred Stock pursuant to this Agreement and the
other Transaction Documents has been made by such Noteholder independently of
any other Noteholder.  Nothing contained
herein or in any other Transaction Document, and no action taken by any Noteholder
pursuant thereto, shall be deemed to constitute the Noteholders as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Noteholders are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated by
this Agreement and the other Transaction Documents.  Each Noteholder shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Noteholder to be joined as an
additional party in any proceeding for such purpose.

 

[Remainder of Page Intentionally Left Blank]

 

41

 

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

 

 

	
   

  	
  THE COMPANY

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Michael
  J. Rapisand

  
	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XPLORE
  AMERICA

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Michael
  J. Rapisand

  
	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AGENTS

  
	
   

  	
   

  
	
   

  	
  PHOENIX VENTURE FUND LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SG Phoenix Ventures LLC,

  
	
   

  	
   

  	
  its Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Andrea
  Goren

  
	
   

  	
  Name:

  	
  Andrea
  Goren

  
	
   

  	
  Title:

  	
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SG PHOENIX LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Andrea
  Goren

  
	
   

  	
  Name:

  	
  Andrea
  Goren

  
	
   

  	
  Title:

  	
  Member

  
				

 

Signature
Page to Exchange Agreement

 

 

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

 

 

	
   

  	
  MAJORITY
  NOTEHOLDER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  [Omitted]

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone No.:

  
	
   

  	
   

  
	
   

  	
  Facsimile No.:

  
	
   

  	
   

  
	
   

  	
  Email Address:

  
	
   

  	
   

  
	
   

  	
  Number of Exchange Shares:

  
	
   

  	
   

  
	
   

  	
  Amount of Indebtedness
  Exchanged:

  
	
   

  	
   

  
	
   

  	
  SSN/TIN:

  

 

Signature
Page to Exchange Agreement

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