Document:

Exhibit 10.2

 

EXHIBIT B

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is made and entered into as of [·], 2010, by and
among Xplore Technologies Corp., a Delaware corporation (the “Company”), and the
persons executing this Agreement as Majority Noteholders (as defined below),
for themselves and on behalf of the Noteholders under the Exchange Agreement
(as defined below) (collectively, the “Investors” and each individually, an “Investor”).

 

WHEREAS,
the Company and the other parties hereto wish to provide certain arrangements
with respect to the registration of shares of common stock, $0.001 par value,
of the Company (the “Common
Stock”) under the Securities Act (as defined below);

 

WHEREAS,
the Company and certain of the Investors who are signatories thereto (the “Majority
Noteholders”) have entered into an Exchange Agreement, dated November 3,
2010 (the “Exchange Agreement”),
pursuant to which, subject to the terms and conditions therein, such Investors
are converting and exchanging all of the outstanding indebtedness of the
Company under those certain Note Purchase Agreements, dated September 5,
2008, February 27, 2009 and November 5, 2009, each as amended, for,
and the Company is issuing, shares of the Company’s Series D Participating
Convertible Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”);

 

WHEREAS,
it is a condition to the obligations of the Investors under the Exchange
Agreement that this Agreement be executed by the parties hereto, and the
parties are willing to execute this Agreement and to be bound by the provisions
hereof.

 

NOW
THEREFORE, for good and valuable consideration; the receipt and sufficiency of
which is hereby acknowledged by the parties, the parties hereby agree as follows:

 

1.             Certain
Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:

 

“Commission” means the
United States Securities and Exchange Commission, or any other federal agency
at the time administering the Securities Act.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended, or any successor federal
statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

 

“Investor Permitted Transferee” means any affiliate of an Investor or
any entity or investment vehicle, including a partnership, in which an Investor
and/or its affiliates has a majority economic interest or which is managed by
an Investor or any of its affiliates or any transfer in accordance with the
provisions of Section 9.1 of the Exchange Agreement.

 

“Preferred Shares”
means shares of Series D Preferred Stock issued to the Investors pursuant
to the Exchange Agreement, or by way of a stock dividend, stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.

 

 

“Registration Expenses”
means the expenses so described in Section 5.

 

“Registrable Stock”
means (a) any shares of Common Stock issued or issuable upon conversion of
the Series D Preferred Stock owned by the Investors at any time, and (b) any
shares of Common Stock issued or issuable with respect to any shares described
in subsection (a) above by way of a stock dividend, stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, but excluding such shares of Common
Stock which have been (i) registered under the Securities Act pursuant to
an effective registration statement filed thereunder and disposed of in
accordance with the registration statement covering them or (ii) publicly
sold pursuant to Rule 144.

 

“Rule 144” means Rule 144
promulgated under the Securities Act or any successor rule thereto or any
complementary rule thereto (such as Rule 144A).

 

“Securities Act” means
the Securities Act of 1933, as amended, or any successor federal statute, and
the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.

 

“Selling Expenses”
means the expenses so described in Section 5.

 

2.             Demand
Registration Rights.  (a)      At any time following the
closing of the transactions contemplated by the Exchange Agreement, the holders
of Registrable Stock constituting at least twenty percent (20%) of the total
shares of Registrable Stock then outstanding may request the Company to
register under the Securities Act all or any portion of the shares of
Registrable Stock held by such requesting holder or holders for sale in the
manner specified in such notice, provided that the aggregate offering price, as
such amount is determined on the cover page of the registration statement,
shall not be less than $2,000,000.  Such
request shall specify the intended method of disposition thereof by such holder
or holders, including (i) the registration requested is for an
underwritten offering and (ii) if the Company is eligible for registration
on Form S-3, whether the registration statement covering such Registrable
Stock shall be a “shelf” and provide for the sale by the holder or holders thereof
of the Registrable Stock from time to time on a delayed or continuous basis
under Rule 415 under the Securities Act. For purposes of this Section 2
and Sections 5, 9(a) and 9(d), the term “Registrable
Stock” shall be deemed to include the number of shares of Registrable Stock
which have been issued to or would be issuable to a holder of Preferred Shares
upon conversion of all Preferred Shares held by such holder at such time, provided, however, that
the only securities which the Company shall be required to register pursuant
hereto shall be shares of Common Stock, and provided, further, however, that,
in any underwritten public offering contemplated by this Section 2
or Section 3, the holders of Preferred Shares shall be entitled to
sell such Preferred Shares to the underwriters for conversion and sale of the
shares of Common Stock issued upon conversion thereof.  In the event that any registration pursuant
to this Section 2 shall be, in whole or in part, an underwritten
public offering of Common Stock, the number of shares of Registrable Stock to
be included in such an underwriting may be reduced (pro rata among the
requesting holders based upon the number of shares of Registrable Stock
beneficially owned by such holders) if and to the extent that, in the good
faith opinion of the managing underwriter of such offering, inclusion would
adversely affect the marketing of the Registrable Stock to be sold; provided, however, that
such number of shares of Registrable Stock shall not be reduced if any shares are
to be included in 

 

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such
underwriting for the account of any person other than requesting holders of
Registrable Stock.

 

(b)           Following receipt of any notice under this Section 2,
the Company shall immediately notify all holders of Registrable Stock from whom
notice has not been received and shall use all reasonable commercial efforts to
register under the Securities Act, for public sale in accordance with the
method of disposition specified in such notice from requesting holders, the
number of shares of Registrable Stock specified in such notice (and in all
notices received by the Company from other holders within 30 days after
receiving of such notice by the Company). 
If such method of disposition shall be an underwritten public offering,
the holders of a majority of the shares of Registrable Stock to be sold in such
offering may designate the managing underwriter of such offering, subject to
the approval of the Company, which approval shall not be unreasonably withheld
or delayed.  The Investors shall have up
to three (3) demand registrations on Form S-1 or any successor
thereof and up to four (4) demand registrations on Form S-3 or any
successor thereof pursuant to this Section 2, provided,
however, that the Company shall not be
obligated to effect more than two such registrations in any 12-month period, provided, further, that
such obligation shall be deemed satisfied only when a registration statement
covering all shares of Registrable Stock specified in notices received as
aforesaid or such lesser amount required by the Commission pursuant to a
comment letter, for sale in accordance with the method of disposition specified
by the requesting holders, shall have become effective and the holders requesting
such registration are able to register and sell at least seventy-five percent
(75%) of the Registrable Stock allowed by the Commission to be registered in
such registration and, if such method of disposition is a firm commitment
underwritten public offering, all such shares shall have been sold pursuant
thereto.

 

(c)           The Company shall use its commercially reasonable
efforts to qualify under the provisions of the Securities Act for registration
on Form S-3 or any successor thereto. Promptly following the date on which
the Company becomes eligible for registration on Form S-3 or any successor
thereto, the Company shall notify the holders of the Registrable Stock.

 

(d)           The Company may postpone for a period of up to 45
days the filing of any registration requested pursuant to this Section 2
if the Board of Directors of the Company in good faith determines that such
registration would require the public disclosure of any plan, proposal or
agreement by the Company with respect to any financing, acquisition, recapitalization,
reorganization or other material transaction, the disclosure of which would be
materially adverse to the Company, and such determination is evidenced by the
affirmative vote of a majority of the entire Board of Directors and included in
the minutes of the meetings of the Company’s Board of Directors; provided, however, that
the Company may not exercise such right of postponement for an aggregate number
of days greater than 60 during any 12-month period and shall not register any
securities for its own account or that of any other stockholder during such
postponement period (except with respect to registration statements on
Forms S-4, S-8 (or any successor forms thereto) or another form not
available for registering the Registrable Stock for sale to the public).  In addition to the foregoing, if any
registration request under this Section 2 is received at such time
when the age of the Company’s audited financial statements would become
non-conforming under Rule 3-12 of Regulation S-X at the time the Company
is requested to file a registration statement pursuant to the terms hereof,
then the Company shall not be obligated to file any such registration statement
until the 10th day following the release of the 

 

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Company’s
audited financial statements for the most recently completed fiscal year.  Notwithstanding anything to the contrary
herein, the Company shall not be required to prepare audited financial
statements to be filed in connection with such registration statement for any
period year except for a fiscal year ending March 31.

 

(e)           The Company shall be entitled to include in any
registration statement referred to in this Section 2, for sale in
accordance with the method of disposition specified by the requesting holders,
shares of Common Stock to be sold by the Company for its own account (to the
extent that the inclusion of such shares by the Company shall not adversely
affect the offering), and shall not be entitled to include shares held by any
persons other than the holders of Registrable Stock.

 

3.             Piggyback
Registration Rights.  If the
Company at any time (other than pursuant to Section 2) proposes to
register any of its securities under the Securities Act for sale to the public,
whether for its own account or for the account of other security holders or
both (except with respect to registration statements on Forms S-4, S-8 (or
any successor forms thereto) or another form not available for registering the
Registrable Stock for sale to the public), each such time it will give prompt
written notice to all holders of outstanding Registrable Stock of its intention
to do so. Upon the written request of any such holder, received by the Company
within 30 days after the giving of any such notice by the Company, to
register any of its Registrable Stock, the Company will use its best efforts to
cause the Registrable Stock, as to which registration shall have been so
requested, to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition by the holder of such Registrable Stock so
registered. In the event that any registration pursuant to this Section 3
shall be, in whole or in part, an underwritten public offering of Common Stock,
the number of shares of Registrable Stock to be included in such an
underwriting may be reduced if and to the extent that, in the good faith
opinion of the managing underwriter of such offering, inclusion would adversely
affect the marketing of the securities to be sold by the Company therein. In
the event that the managing underwriter on behalf of all underwriters limits
the number of shares to be included in a registration pursuant to this Section 3,
or shall otherwise require a limitation of the number of shares to be included
in the registration, then the Company will include in such registration:

 

(i)            first, securities proposed by the Company to be sold
for its own account;

 

(ii)           second, shares of Registrable Stock requested to be
included by holders pursuant to this Section 3; and

 

(iii)          third, securities requested to be included by any
other holders,

 

provided, however, that such number of shares of Registrable Stock
shall not be reduced if any shares are to be included in such underwriting for
the account of any person other than the Company or requesting holders of
Registrable Stock and provided further, that in no event shall
the Registrable Stock requested to be included by holders pursuant to this Section 3
constitute less than twenty percent (20%) of all shares to be registered in
such registration (in such event, the Company agrees to reduce the shares of
Common Stock it proposes to register for its own 

 

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account in order to
assure that such Registrable Stock constitute at least twenty percent (20%) of
the shares to be registered).  The
securities to be included in any such registration pursuant to clause
(ii) above shall be allocated on a pro rata basis among the requesting
holders based upon the number of shares of Registrable Stock then held by such
holders. Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 3 without
thereby incurring any liability to the holders of Registrable Stock.

 

4.             Registration
Procedures.  If and
whenever the Company is required by the provisions of Sections 2 or 3
to use its reasonable best efforts to effect the registration of any shares of
Registrable Stock under the Securities Act, the Company will, as expeditiously
as possible:

 

(a)           prepare and promptly, and in any event within 45
days after the request for registration has been delivered to the Company, file
with the Commission a registration statement with respect to such securities
and use reasonable best efforts to cause such registration statement to become
and remain effective for the Period of Distribution contemplated thereby
(determined as hereinafter provided);

 

(b)           prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the Period of Distribution and comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Stock covered by such
registration statement in accordance with the sellers’ intended method of
disposition set forth in such registration statement for such Period of
Distribution;

 

(c)           furnish to each seller of Registrable Stock and to
each underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Stock covered by such registration statement;

 

(d)           use its reasonable best efforts to register or
qualify the Registrable Stock covered by such registration statement under the
securities or “blue sky” laws of such jurisdictions as the sellers of
Registrable Stock or, in the case of an underwritten public offering, the
managing underwriter reasonably shall request, provided, however,
that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;

 

(e)           use its reasonable best efforts to list the
Registrable Stock covered by such registration statement with any securities
exchange on which the Common Stock of the Company is then listed;

 

(f)            provide a transfer agent and registrar for all such
Registrable Stock not later than the effective date of such registration
statement;

 

(g)           immediately notify each seller of Registrable Stock
and each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the 

 

5

 

prospectus
contained in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and at the request of any such seller
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Stock, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;

 

(h)           if the offering is underwritten and at the request
of any seller of Registrable Stock, furnish on the date that Registrable Stock
is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such
seller, stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop
order suspending the effectiveness thereof has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Securities Act, (B) the registration statement, the related prospectus and
each amendment or supplement thereof comply as to form in all material respects
with the requirements of the Securities Act (except that such counsel need not
express any opinion as to financial statements or financial or statistical data
contained therein) and (C) to such other effects as reasonably may be
requested by counsel for the underwriters or by such seller or its counsel, and
(ii) a letter dated such date from the independent public accountants
retained by the Company, addressed to the underwriters and to such seller,
stating that they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters or sellers reasonably may request;

 

(i)            use its reasonable best efforts to cooperate with
the sellers in the disposition of the Registrable Stock covered by such
registration statement, including without limitation in the case of an
underwritten offering causing key executives of the Company and its
subsidiaries to participate under the direction of the managing underwriter in
a “road show” scheduled by such managing underwriter in such locations and of
such duration as in the judgment of such managing underwriter are appropriate
for such underwritten offering;

 

(j)            in connection with the preparation and filing of
each registration statement registering Registrable Stock under the Securities
Act, and before filing any such registration statement or any other document in
connection therewith, give the participating holders and their underwriters, if
any, and their respective counsel and accountants, the opportunity to review
and comment on such registration statement, each prospectus included therein or
filed with the Commission, each amendment thereof or supplement thereto and any
related underwriting agreement or other document to be filed, and give each of
the aforementioned persons such access to its books and records, including all
financial and other records, pertinent corporate 

 

6

 

documents
and properties of the Company, and such opportunities to discuss the business
of the Company with its officers, directors and employees and the independent
public accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders, underwriters, counsel or accountants, to
conduct a reasonable investigation within the meaning of the Securities Act;
and

 

(k)           otherwise comply with the Securities Act, the
Exchange Act and any other applicable rules and regulations of the
Commission, and make available to its securities holders, as soon as reasonably
practicable, an earning statement covering the period of at least 12 months
after the effective date of such registration statement, which earning statement
shall satisfy Section 11(a) of the Securities Act and any applicable
regulations thereunder, including Rule 158.

 

For
purposes of Sections 4(a) and 4(b), the “Period of Distribution” of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the Period of Distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and 240 days after the
effective date thereof or in the case of a registration requested to be a “shelf”,
for as long as requested to the extent permitted by applicable law.

 

In
connection with each registration hereunder, the sellers of Registrable Stock
will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.

 

In
connection with each registration pursuant to Sections 2 or 3
covering an underwritten public offering, the Company and each seller agree to
enter into a written underwriting agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company’s size and investment
stature; provided, however, that (i) the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of the underwriters shall also be made to and for the benefit of
such sellers of Registrable Stock, (ii) no seller shall be required to
make, and the Company shall ensure that no underwriter requires any seller to
make, any representations and warranties to or agreements with any underwriter
in a registration effected pursuant to Sections 2 or 3 other than
customary representations, warranties and agreements relating to such seller’s
title to Registrable Stock and authority to enter into the underwriting
agreement, (iii) the liability of each seller of Registrable Stock with
respect of any indemnification, contribution or other obligation of such seller
of Registrable Stock arising under such underwriting agreement (x) shall
be limited to losses arising out of or based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement, incorporated document or other
such disclosure document or other document or report, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such seller of Registrable Stock expressly for inclusion therein and
(y) shall not in any event exceed an amount equal to the net proceeds to
such seller of Registrable Stock (after 

 

7

 

deduction
of all underwriters’ discounts and commissions) from the disposition of the
Registrable Securities disposed of by such seller of Registrable Stock pursuant
to such registration.

 

5.             Expenses.  All expenses incurred by the Company in
performing or complying with Sections 2, 3, and 4,
including, without limitation, all Commission, stock exchange, Nasdaq or
Financial Industry Regulatory Authority, Inc. (“FINRA”)
registration and filing fees (including, without limitation, fees and expenses
incurred in connection with the listing of the Common Stock of the Company on
any securities exchange or exchanges or Nasdaq), printing, distribution and
related expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or “blue sky” laws
and the rules of FINRA or any securities exchange, transfer taxes, fees of
transfer agents and registrars, costs of insurance and all reasonable fees and
disbursements of one counsel for the sellers of Registrable Stock, but
excluding any Selling Expenses, are called “Registration Expenses.” All underwriting
discounts and selling commissions applicable to the sale of Registrable Stock
are called “Selling
Expenses.”

 

The
Company will pay all Registration Expenses in connection with each registration
statement under Sections 2 or 3. All Selling Expenses in
connection with each registration statement under Sections 2 or 3
shall be borne by the participating sellers in proportion to the number of
shares sold by each, or by such participating sellers as they may agree.

 

6.             Indemnification
and Contribution. 
(a)  In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to Sections 2 or 3, the
Company will indemnify and hold harmless each seller of Registrable Stock
thereunder, each underwriter of such Registrable Stock thereunder, the
managers, members, partners, officers, directors, agents, advisors and
employees of each of them (collectively, the “Representatives”)
and each other person, if any, who controls or is alleged to control such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, settlement amounts paid, fines, costs
(including, without limitation, attorneys’ fees) (individually a “Loss” and collectively, the “Losses”), joint or several, to which
such seller, underwriter, controlling person or their respective
Representatives may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Registrable Stock
were registered under the Securities Act pursuant to Sections 2 or 3,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arises
out of or are based upon any violation or alleged violation of any federal,
state or other law, rule or regulation relating to any action or inaction
in connection therewith, and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Loss or action, provided, however, that the Company will not be liable to any such
indemnitee if and to the extent that any such Loss arises solely out of or is
based solely upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information with respect to such
indemnitee furnished by 

 

8

 

such
indemnitee in writing specifically for use in such registration statement or
prospectus.  The indemnification and contribution
obligations of the Company contained in this Section 6 shall remain
in full force and effect regardless of any investigation made by or on behalf
of such indemnified person and shall survive any transfer of Registrable Stock.

 

(b)           In the event of a registration of any of the
Registrable Stock under the Securities Act pursuant to Sections 2 or 3,
each seller of such Registrable Stock thereunder, severally and not jointly,
will indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company,
each underwriter and each person who controls any underwriter within the
meaning of the Securities Act, against all Losses, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such Losses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Registrable Stock was registered under
the Securities Act pursuant to Sections 2 or 3, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss, provided, however, that such seller will be liable hereunder in any
such case if and only to the extent that any such Loss arises solely out of or
is based solely upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
information pertaining to such seller, as such, furnished in writing to the
Company by such seller specifically for use in such registration statement or
prospectus, and provided, further,
however, that the liability of each
seller hereunder shall be limited to the proportion of any such Loss which is
equal to the proportion that the public offering price of the shares sold by
such seller under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to
exceed the net proceeds received by such seller from the sale of Registrable
Stock covered by such registration statement (after deduction of all
underwriters’ discounts and commissions and all other expenses and damages paid
by such seller in connection with the registration in question). Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any such director, officer, underwriter or
controlling person and shall survive any transfer of Registrable Stock.

 

(c)           Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this Section 6
and shall only relieve it from any liability which it may have to such
indemnified party under this Section 6 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to 

 

9

 

such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 6 for any legal expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected, provided, however, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.  No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement unless
such judgment or settlement includes as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation, includes only money
damages (as opposed to equitable relief) and does not include any statement as
to the fault or culpability of such indemnified party.

 

(d)           In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any holder of Registrable Stock exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 6 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 6 provides for
indemnification in such case, or (ii) contribution under the Securities
Act may be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section 6;
then, and in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that such holder is
responsible for the portion represented by the percentage that the aggregate
public offering price of its Registrable Stock offered by the registration
statement bears to the aggregate public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) no such holder
will be required to contribute any amount in excess of the net proceeds
received by it from the sale of all such Registrable Stock offered by it
pursuant to such registration statement (after deduction of all underwriters’
discounts and commissions and all other damages and expenses paid by such
seller in connection with the registration in question); and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.

 

7.             Changes in
Common Stock or Series D Preferred Stock.  If, and as often as, there is any change in
the Common Stock or the Series D Preferred Stock by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made

 

10

 

 

in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock or the Series D Preferred Stock
as so changed.

 

8.             Rule 144
Reporting.  With a view
to making available the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the Registrable Stock to
the public without registration, the Company agrees to:

 

(a)           make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;

 

(b)           use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and

 

(c)           furnish to each holder of Registrable Stock
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation
of the Commission allowing such holder to sell any Registrable Stock without
registration.

 

9.             Holdback
Agreement.  During the
term of this Agreement, each Investor agrees not to effect any public sale or
distribution (including sales pursuant to Rule 144, short sales and other
derivative transactions) of equity securities of the Company, or any
securities, options or rights convertible into or exchangeable for such
securities, during the 90-day period beginning on the effective date of the
registration under the Securities Act of any underwritten public offering
(except as part of such registration), to the extent requested in writing by
the managing underwriter in the public offering made pursuant to such
registration.

 

10.           Miscellaneous.

 

(a)           Successors and Assigns.  All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of all of the parties hereto, the Noteholders (as such
term is defined in the Exchange Agreement) and their respective successors and
assigns (including without limitation transferees of any Preferred Shares or
Registrable Stock), whether so expressed or not, provided,
however, that the rights conferred
herein on the holders of Preferred Shares or Registrable Stock to require the
registration of shares of Registrable Stock shall only inure to the benefit of
a transferee of Preferred Shares or Registrable Stock if (i) there is
transferred to such transferee shares representing at least two percent
(2%) of the outstanding shares of Registrable Stock (assuming the
conversion of all Preferred Shares into Registrable Stock) or (ii) such
transferee is an Investor Permitted Transferee or a partner, shareholder or
affiliate of a party hereto.  Transfer of
registration rights to an Investor Permitted Transferee or to a partner, member
or shareholder of any Investor will be without restriction as to minimum
shareholding.  Any transferee to whom
rights under this Agreement are transferred shall (i) as a condition to
such transfer, deliver to the Company a written instrument by which such transferee
agrees to be bound by the obligations 

 

11

 

imposed
upon holders under this Agreement to the same extent as if such transferee were
a holder under this Agreement and (ii) be deemed to be a holder hereunder.

 

(b)           Notices.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered by
nationally recognized overnight courier, mailed by certified or registered
mail, return receipt requested, or sent by facsimile, addressed as follows:

 

(i)            if to the Company or any Investor, at the address of
such party set forth on the signature pages to the Exchange Agreement, as
the case may be;

 

with
copies (which shall not constitute notice) to:

 

Pillsbury
Winthrop Shaw Pittman LLP 

1540 Broadway

New York, New York 10036

Attention: Jonathan J. Russo, Esq. 

Facsimile No.: (212) 858-1500

 

and

 

Phillips &
Reiter, PLLC

6805
Capital of Texas Highway North, Suite 318

Austin,
Texas  78731

Attention:
J. William Wilson, Esq.

Facsimile No.: (512) 646-1106

 

(ii)           if to any subsequent holder of Preferred Shares, to
it at such address as may have been furnished to the Company in writing by such
holder;

 

or,
in any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a holder of Preferred Shares or
Registrable Stock) or to the holders of Preferred Shares or Registrable Stock
(in the case of the Company) in accordance with the provisions of this
paragraph.

 

(c)           Governing Law.  This Agreement and all disputes arising out
of or relating to this Agreement, its subject matter, the performance of the
parties of their respective obligations hereunder or the claimed breach hereof,
whether in tort, contract or otherwise, shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
conflict of law principles.

 

(d)           Amendments, Waivers and Consents.  This Agreement may not be amended or
modified, and no provision hereof may be waived, without the written consent of
the Company and the holders of at least a majority of the outstanding shares of
Registrable Stock (assuming the conversion of all Preferred Shares into
Registrable Stock).  The Company shall
deliver copies of such consent to any holders who did not execute the same.
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.

 

12

 

(e)           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.

 

(f)            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.

 

(g)           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any person who, after the
date hereof, acquires shares of Preferred Stock shall become a party to this
Agreement as a “Investor” and a holder of “Registrable Stock” for all purposes
hereunder, all upon execution by such person and the Company of a counterpart
of this Agreement.

 

(h)           Termination of Registration
Rights.  The obligations of the Company to register shares
of Registrable Stock under Sections 2 or 3 shall terminate as to
each holder of Registrable Stock that is an Affiliate (as defined in Rule 144),
and such shares will no longer be considered Registrable Stock, upon the
earlier of (a) the date such holder is not an Affiliate (as defined in Rule
144) of the Company and such holder owns less than one percent (1%) of the
Company’s outstanding Common Stock (on an converted basis) or (b) seven
years from the date hereof.  The
obligations of the Company to register shares of Registrable Stock under Sections
2 or 3 shall terminate as to all other holders of Registrable Stock,
and such shares will no longer be considered Registrable Stock, three years
from the date hereof.

 

(i)            Additional Registration Rights.  The Company shall not grant to any additional
registration rights after the date hereof without the consent of the Investors
holding at least the majority of the Registrable Stock unless such
registrations rights are subordinate in all respects to the Investors’ rights
contained herein.

 

(j)            Company Registration.  In the event that the registration
requirements under the Securities Act are amended or eliminated to accommodate
a “Company registration” or similar approach, this Agreement shall be deemed
amended to the extent necessary to reflect such changes and the intent of the
parties hereto with respect to the benefits and obligations of the parties, and
in such connection, the Company shall use its reasonable best efforts to
provide holders of Registrable Stock equivalent benefits to those provided
under this Agreement.

 

(k)           Cumulative Remedies.  None of the rights, powers or remedies
conferred upon the Investors on the one hand or the Company 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 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 by law,
including recovery of damages, each of the Investors and the Company will be
entitled to specific performance under this Agreement.  The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any 

 

13

 

breach
of obligations contained in this Agreement and hereby agrees 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.

 

(l)            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 County of New York 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 9(b) (other
than by facsimile transmission) shall be deemed effective service of process on
such party.

 

(m)          Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, THE INVESTORS AND THE COMPANY HEREBY WAIVE, AND
COVENANT THAT NEITHER THE COMPANY NOR THE INVESTORS 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 INVESTORS AND THE COMPANY HEREUNDER OR
THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER IN TORT OR CONTRACT OR OTHERWISE. The Company acknowledges that it has
been informed by the Investors that the provisions of this Section 9(m)
constitute a material inducement upon which the Investors are relying and
will rely in entering into this Agreement. Any Investor or the Company may file
an original counterpart or a copy of this Section 9(m) with
any court as written evidence of the consent of the Investors and the Company
to the waiver of the right to trial by jury.

 

(n)           Third Party Beneficiaries.  Nothing in this Agreement, express or
implied, is intended to or will confer upon any other person not a party hereto
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement, except that (i) any Noteholder (as defined in the Exchange
Agreement) who is not a signatory hereto and (ii) any transferee that is
an Investor Permitted Transferee in each case are express third party
beneficiaries of this Agreement and may rely on and enforce provisions of this
Agreement as if such person were a party hereto.

 

(o)           Severability.  If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other 

 

14

 

provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.

 

[Remainder of Page Intentionally Left Blank]

 

15

 

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

 

 

	
   

  	
  THE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  

 

 

Signature
Page to Registration Rights Agreement

 

 

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

 

 

	
   

  	
  INVESTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

Signature Page to Registration Rights AgreementExhibit 10.3

 

EXECUTION COPY

 

 

 

AMENDMENT NO. 2

TO NOTE PURCHASE AGREEMENT

DATED AS OF NOVEMBER 5, 2009

 

 

dated
as of November 3, 2010

 

 

by
and among

 

XPLORE
TECHNOLOGIES CORP.,

 

XPLORE
TECHNOLOGIES CORPORATION OF AMERICA,

 

and

 

SG PHOENIX LLC,

as Agent for the Purchasers

 

 

 

 

This AMENDMENT NO. 2 TO  NOTE PURCHASE AGREEMENT
DATED AS OF NOVEMBER 5, 2009
is entered into as of November 3, 2010 (this “Amendment Agreement”) by and among
XPLORE TECHNOLOGIES CORP., a Delaware corporation (the “Parent”), XPLORE
TECHNOLOGIES CORPORATION OF AMERICA, a Delaware corporation (the “Subsidiary”,
and together with the Parent, the “Borrowers”), SG PHOENIX LLC, a
Delaware limited liability company, as agent for the Purchasers (the “Agent”),
and PHOENIX VENTURE FUND LLC, a Delaware limited liability company (“Phoenix”).
Phoenix and such other affiliated entities designated by Phoenix to purchase a
Bridge Note (as defined below) from the Borrowers under this Amendment
Agreement are hereby referred to as the “Bridge Note Purchasers” and
each, a “Bridge Note Purchaser”.

 

W
I T N E S S E T H:

 

WHEREAS, the Borrowers
and certain Purchasers are parties to the Note Purchase Agreement, dated as of November 5,
2009, as amended by Amendment No. 1 to Note Purchase Agreement dated as of
November 5, 2009 (such Note Purchase Agreement, as so amended, the “Original
NPA”), pursuant to which the Borrowers (a) on the Initial Closing
Date, sold to the Initial Purchasers the Initial Closing Notes and issued to
the Initial Purchasers the Initial Closing Warrants, and such Initial
Purchasers purchased such Initial Closing Notes and such Initial Closing
Warrants from the Borrowers, (b) on the Subsequent Closing Date, sold to
the Additional Purchasers the Additional Notes and issued to the Additional Purchasers
the Additional Warrants, and such Additional Purchasers purchased such
Additional Notes and such Additional Warrants from the Borrowers, and (c) on
Bridge Closing Dates, sold to certain Bridge Note Purchasers Bridge Notes and
issued to certain Bridge Note Purchasers Bridge Note Warrants and such Bridge
Note Purchasers purchased such Bridge Notes and such Bridge Note Warrants from
the Borrowers;

 

WHEREAS, the Borrowers and
the Agent desire to amend the Original NPA to, among other things, (a) allow
the Borrowers to issue and sell in the sole and absolute discretion of the
Agent up to an additional $1,000,000 in Bridge Notes for an aggregate principal
amount of up to $3,000,000 in Bridge Notes and (b) reduce the exercise
price of the Bridge Note Warrants from $.07 per share to $.04 per share; and

 

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

 

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

 

 

SECTION 1.         DEFINITIONS IN THIS AMENDMENT
AGREEMENT

 

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

 

SECTION 2.         AMENDMENTS TO ORIGINAL NPA

 

2.1           Amendment to Recitals of the
Original NPA.  The third
Recital of the Original NPA is hereby amended and restated in its entirety to
read as follows:

 

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

 

2.2           Amendment to Section 1.3
of the Original NPA.  The last
sentence of Section 1.3 of the Original NPA is hereby amended and restated
in its entirety to read as follows:

 

“1.3         At any time and
from time to time, in the sole discretion of the Agent, one or more Bridge Note
Purchasers may purchase at one or more Bridge Closings, (i) Bridge Notes,
the aggregate purchase price of which shall not exceed $3,000,000 and (ii) Bridge
Note Warrants for the number of shares of Common Stock as determined by
dividing (x) 100% of the principal amount of such Bridge Notes purchased
by such Bridge Note Purchasers by the Warrant Exercise Price.  Schedule III attached hereto shall be
amended from time to time concurrent with each Bridge Closing to include the
names of the Bridge Note Purchasers purchasing the Bridge Notes and Bridge Note
Warrants at such Bridge Closing as well as the purchase price of the Bridge
Notes, and the number of shares of Common Stock that can be purchased on
exercise of the Bridge Note Warrants issued in connection with such Bridge
Closing.  The aggregate purchase price
for the Notes and Warrants shall not exceed $6,300,000.”

 

2

 

2.3           Amendment to Section 2.1
of the Original NPA.  Section 2.1
of the Original NPA is hereby amended and restated in its entirety to read as
follows:

 

“The Notes shall be issued in the aggregate principal amount of up to
$6,300,000 and shall bear interest, and otherwise be in the form attached
hereto as Exhibit A.  Payment
of all principal and accrued and unpaid interest on any Note shall be made in
full no later than the Maturity Date.”

 

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

 

““Warrant
Exercise Price” shall mean, with respect to the Initial Closing Warrants
and any Additional Warrants, $0.10 per share; and with respect to the Bridge
Note Warrants, $0.04 per share.”

 

SECTION 3.         [RESERVED].

 

SECTION 4.         REPRESENTATIONS AND WARRANTIES

 

The Borrowers represent and
warrant to the Bridge Note Purchasers and the Agent that, except as set forth
on the Bring-Down Disclosure Schedule attached hereto as Annex A (the “Bring-Down
Disclosure Schedule”), all representations and warranties contained in the
Agreement and in the Security Agreement are true and correct in all respects at
and as of the date hereof as if made on the date hereof and on any Bridge
Closing Date as if made on such date; provided,
however, that, for the purpose of the representations and warranties made by
the Borrowers under this Section 4, the references in the Agreement
to the schedules in the Disclosure Schedule attached to the Agreement shall be
deemed to be the references to the schedules in the Bring-Down Disclosure
Schedule.  The Borrowers further
represent and warrant to the Bridge Note Purchasers and the Agent that (a) no
Event of Default has occurred, or will occur, before and after giving effect to
the transactions contemplated by this Amendment Agreement, (b) the
Borrowers do not have outstanding, as of the date hereof, and will not have
after giving effect to the issuance of the Bridge Notes, any indebtedness for
borrowed money other than the Note Indebtedness and the indebtedness under the
Senior Credit Agreement, and (c) the Borrowers maintains the same
insurance coverage (including scope and amounts) with the same carriers as
Borrowers had on the Initial Closing Date.

 

In addition to the
foregoing, the Borrowers, jointly and severally, hereby represent and warrant
to each Bridge Note Purchaser as of the applicable Bridge Closing Date the
following:

 

4.1           Corporate Power and
Authority.  Each of the
Borrowers has all requisite corporate power and authority to execute and
deliver the Loan Documents and this Amendment Agreement to which it is a
party.  The Borrowers have all requisite
corporate power and authority to issue and sell the Bridge Notes and the Bridge
Warrants to the Bridge Note Purchasers hereunder.  

 

3

 

Each of the Borrowers has
all requisite corporate power and authority to carry out and perform its
obligations under the terms of this Amendment Agreement and the Loan Documents.

 

4.2           Authorization.  The execution, delivery and performance by
each Borrower of this Amendment Agreement and the related Loan Agreements, the
sale, issuance and delivery of the Bridge Notes and the Bridge Warrants and the
performance of all of the obligations of the Borrowers under this Amendment
Agreement and each of the related Loan Documents have been authorized by each
Borrower’s Board of Directors, no other corporate action on the part of any
Borrower and, except as set forth on Schedule 4.2, no other corporate or
other approval or authorization is required on the part of any Borrower or any
other Person, by Law or otherwise, in order to make this Amendment Agreement
and the related Loan Documents the valid, binding and enforceable obligations
(subject to (i) Laws of general application relating to bankruptcy,
insolvency, and the relief of debtors, and (ii) rules of Law
governing specific performance, injunctive relief, or other equitable remedies)
of the Borrowers, as the case may be. 
This Amendment Agreement and each of the related Loan Documents, when
executed and delivered by each of the Borrowers that is a party thereto, will
constitute a valid and legally binding obligation of such Borrower, enforceable
against such Borrower in accordance with its respective terms, subject to (i) Laws
of general application relating to bankruptcy, insolvency, and the relief of
debtors, and (ii) rules of Law governing specific performance,
injunctive relief, or other equitable remedies.

 

4.3           Permits.  No Permit will be suspended, cancelled or
adversely modified as a result of the execution and delivery of this Amendment
Agreement and the related Loan Documents.

 

4.4           Material Contracts.  There is no material breach, violation or
default by a Borrower under any Material Contract, and to each Borrower’s
Knowledge, no event (including, without limitation, the transactions
contemplated by this Amendment Agreement) has occurred which, with notice or
lapse of time or both, would (A) constitute a material breach, violation
or default by a Borrower under any such Material Contract, or (B) give
rise to any Lien (other than a Permitted Lien) or right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration against a Borrower under any such Material Contract, which
expiration, termination or event would cause a Material Adverse Effect.

 

4.5           Absence of Conflicts.  The execution, delivery, and performance of,
and compliance with this Amendment Agreement and the related Loan Documents, and
the consummation of the transactions contemplated hereby and thereby, have not
and will not:

 

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

 

4

 

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

 

4.6           Consents.  No consent, approval, waiver or
authorization, or designation, declaration, notification, or filing with any
person or entity (governmental or private), is required by any Borrower in
connection with the valid execution, delivery and performance of this Amendment
Agreement or the related Loan Documents, the offer, sale or issuance of the
Bridge Notes and Bridge Warrants other than notifications or filings as
provided on Schedule 4.6.

 

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

 

4.8           SEC Reports; Disclosure.  (a)  The Parent has made available to
the Bridge Note Purchasers, in the form filed with the SEC (including any
amendments thereto) its Annual Report on Form 10-K for the year ended March 31,
2010 and its Quarterly Report on Form 10-Q for the quarter ended June 30,
2010 (collectively, the “SEC Reports”).

 

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

 

4.9           Financial Statements.  Included in the SEC Reports are the audited
consolidated financial statements of the Parent as at and for the years ended March 31,
2010 and 2009 and the unaudited financial statements of the Parent as at and
for the periods ended June 30, 2010 and 2009 (collectively, the “Financial
Statements”).  The Financial
Statements have been prepared in accordance with GAAP and fairly present the
financial condition and operating results of the Borrowers on a Consolidated
basis as of the dates and for the periods, indicated therein.  Except as set forth in the Financial
Statements, the Borrowers have no liabilities, obligations or commitments of
any nature (whether accrued, absolute, contingent, unliquidated or otherwise,
due or to become due and regardless of when addressed), which are required to
be included in the Financial Statements in accordance with GAAP other than (a) liabilities
that have arisen in the ordinary course of business since June 30, 2010
that are not reasonably be expected to have a Material Adverse Effect and (b) obligations
to perform after the date hereof any contracts or agreements which have been
disclosed or which are not required to be disclosed in the SEC Reports because
such contracts and agreements are not material to the Borrowers.

 

5

 

 

SECTION 5.         ADDITIONAL CONDITIONS PRECEDENT

 

The effectiveness of this
Amendment Agreement and additional conditions to the Bridge Note Purchaser’s
obligations to purchase the Bridge Notes on the date of this Amendment
Agreement and from time to time thereafter, in its sole and absolute discretion
of the Agent, in all events is subject to satisfaction, in sole determination
by the Agent, of all of the following additional conditions.

 

5.1           Financial Reports.  Upon the request of the Agent at least five
business days prior to a Bridge Closing, delivery to the Agent of a financial
report as of the date three business days prior to such Bridge Closing setting
forth the following: the current amount of cash each of the Borrowers has in
all of its bank accounts, and detailed accounts receivable and accounts payable
ageing for the current period and for 1-30 days, 31-60 days, 61-90 days and
over 90 days past due periods in reasonable detail.

 

5.2           Executed Documents.  This Amendment Agreement and all other
documents and instruments contemplated hereby and thereby shall have been duly
authorized and executed by each of the parties thereto in form and substance
satisfactory to the Agent, and the Borrowers shall have delivered sufficient
original counterparts thereof to the Agent.

 

5.3           Lien Priority.  The security interests in favor of the Agent
and pursuant to the Security Agreement shall be valid and perfected Liens on
the Collateral, subject to no Liens other than Permitted Liens.

 

5.4           No Litigation.  No action, suit, proceeding, claim or dispute
shall have been brought or otherwise have arisen at law, in equity, in
arbitration or by or before any Governmental Authority or arbitrator against
the Borrowers or any of their respective assets that could reasonably be expected
to have a Material Adverse Effect.

 

5.5           Closing Certificates.

 

(a)           Officer’s Certificate.  On the date hereof and on each subsequent
Bridge Closing Date, the Agent shall have received a certificate from the chief
financial officer of each of the Borrowers in form and substance reasonably
satisfactory to the Agent, to the effect that, except as set forth in the
Bring-Down Disclosure Schedule and the other schedules to Section 4, all
representations and warranties of the Borrowers contained in this Amendment
Agreement and the Agreement are true, correct and complete; that neither
Borrower is in violation of any of the covenants contained in the Agreement;
that, before and after giving effect to the transactions contemplated by this
Amendment Agreement, no Event of Default has occurred and is continuing; and
that the Borrowers have satisfied each of the closing conditions to be
satisfied hereby; and that the Borrowers have filed all required tax returns
and have paid or made provision for payment of all taxes and other assessments
shown as due on such returns.

 

(b)           Certificate of Secretary of
Borrowers.  On the date
hereof, the Agent shall have received a certificate of the secretary or
assistant secretary of each Borrower certifying as to 

 

6

 

the incumbency and genuineness of the signature of
each officer of such Borrower executing any document in connection with the
transactions contemplated hereby and certifying that attached thereto is (i) a
true and complete copy of the certificate of incorporation of the Parent, and
all amendments thereto including the Certificate of Designation of the Series C
Preferred Stock, certified by the appropriate Governmental Authority in its
jurisdiction of incorporation, which is in full force and effect on the date
hereof; (ii) a true and complete copy of the certificate of incorporation
of the Subsidiary and all amendments thereto, certified by the appropriate
Governmental Authority in its jurisdiction of incorporation, which is in full
force and effect on the date hereof; (iii) a true and complete copy of the
bylaws of the Parent and the Subsidiary as in effect on the date hereof; (iv) a
true and complete copy of resolutions duly adopted by the Board of Directors of
each Borrower authorizing the issuance of the Bridge Notes, the execution,
delivery and performance of this Amendment Agreement, and the other documents
relating hereto or thereto; and (v) true, complete and correct copies of
certificates of insurance for each of the Borrower’s insurance policies each
showing the Agent as an additional insured and/or loss payee, other than its
directors and officers insurance policy. 
On each Bridge Closing Date, after the initial Bridge Closing Date, the
Agent shall have received a certificate of the secretary or assistant secretary
of each Borrower certifying that since the initial Bridge Closing Date (i) the
certificate of incorporation of the Parent, and all amendments thereto,
including the Certificate of Designation of the Series C Preferred Stock,
has not been amended, modified or cancelled and is in full force and effect; (ii) the
certificate of incorporation of the Subsidiary, and all amendments thereto,
have not been amended, modified or cancelled and are in full force and effect; (iii) the
bylaws of the Parent and the Subsidiary have not been amended, modified or
cancelled and are in full force and effect; (iv) the resolutions duly
adopted by the Board of Directors of each Borrower authorizing the issuance of
the Bridge Notes, the execution, delivery and performance of this Amendment
Agreement, and the other documents relating hereto or thereto have not been
amended or modified and remain in full force and effect; (v) the Borrower’s
insurance policies have not been amended, modified or cancelled and are in full
force and effect; and (vi) certificates of insurance for each of the
Borrower’s insurance policies each showing the Agent as an additional insured
and/or loss payee, other than its directors and officers insurance policy, have
not been amended, modified or cancelled and are in full force and effect.

 

(c)           Certificates of Good
Standing.  On or
before the date hereof, the Agent shall have received certificates as of a
recent date of the good standing of each Borrower under the laws of its
jurisdiction of incorporation and the State of Texas.

 

5.6           Consents.  The Borrowers shall have delivered to the
Agent all necessary approvals, authorizations and consents, if any, of all
Persons, Governmental Authorities, and courts having jurisdiction with respect
to the execution and delivery of this Amendment Agreement and the other
documents relating hereto or thereto and all such approvals shall be in form
and substance satisfactory to the Agent.

 

5.7           No Injunction, Etc.  No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority or arbitrator challenging or seeking to
enjoin, restrain or prohibit, or to obtain substantial 

 

7

 

damages in respect of, or
which is related to or arises out of this Amendment Agreement and the other
documents relating hereto or thereto, or the consummation of the transactions
contemplated hereby or thereby, or which, as determined by the Agent in its
sole discretion, would make it inadvisable to consummate such
transactions.  No order, decree,
temporary restraining order, preliminary or permanent injunction or other order
issued by any Governmental Authority or arbitrator preventing such transactions
shall be in effect.  The issuance of the
Bridge Notes on the date hereof or any subsequent Bridge Closing Date and the
consummation of such transactions shall not be prohibited by any applicable Law
or other legal requirement and shall not subject any Bridge Note Purchaser to
any penalty or, in the sole judgment of the Agent, any other liability or
onerous condition under any applicable Law.

 

5.8           Proceedings and Documents.  All opinions, certificates and other
instruments and all proceedings in connection with the transactions
contemplated by this Amendment Agreement and the other documents relating
hereto or thereto shall be reasonably satisfactory in form and substance to the
Agent.  The Agent shall have received
copies of all other instruments and other evidence as the Agent may reasonably
request, in form and substance reasonably satisfactory to the Agent, with
respect to the transactions contemplated by this Amendment Agreement and the
other documents relating hereto or thereto and the taking of all actions in
connection herewith or therewith.  The
Agent shall have received such other agreements, instruments, approvals,
opinions, certificates and other documents as the Agent may reasonably request
in connection with such transactions and actions, all in form and substance
satisfactory to the Agent, in its sole discretion.

 

5.9           Cancellation and Reissuance
of Outstanding Bridge Note Warrants.  On the date hereof, the Borrowers shall
cancel the outstanding Bridge Note Warrants issued to Phoenix under Amendment No. 1
to the Original NPA for the purchase of up to an aggregate of 12,142,857 shares
of Common Stock at an exercise price of $0.07 per share and issue and deliver
to Phoenix new Bridge Note Warrants for the purchase of up to an aggregate of
21,250,000 shares of Common Stock at an exercise price of $0.04 per share.  In addition, Schedule III attached
hereto has been amended to reflect the revised Bridge Note Warrants issued to
Phoenix.

 

SECTION 6.         EFFECTIVENESS OF AMENDMENTS

 

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

 

SECTION 7.         MISCELLANEOUS

 

7.1           Severability.  Whenever possible, each provision of this
Amendment Agreement will be interpreted in such manner as to be effective and
valid under applicable law, 

 

8

 

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

 

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

 

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

 

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

 

[Signatures follow.]

 

9

 

 

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

 

 

	
  BORROWERS:

  	
  XPLORE TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Michael J. Rapisand

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Michael J. Rapisand

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  XPLORE TECHNOLOGIES CORPORATION
  OF AMERICA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Michael J. Rapisand

  
	
   

  	
   

  	
  Name: Michael J. Rapisand

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGENT:

  	
  SG PHOENIX LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Andrea Goren

  
	
   

  	
   

  	
  Name: Andrea Goren

  
	
   

  	
   

  	
  Title:   Member

  

 

 

[Signature Page to Amendment No. 2 to
Note Purchase Agreement Dated November 5, 2009]

 

 

ACKNOWLEDGED AND AGREED TO:

 

 

	
  BRIDGE NOTE PURCHASER:

  	
  PHOENIX VENTURE FUND LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  SG Phoenix Ventures LLC,

  
	
   

  	
   

  	
  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/Andrea Goren

  
	
   

  	
   

  	
   

  	
  Name: Andrea Goren

  
	
   

  	
   

  	
   

  	
  Title:   Member

  

 

 

[Signature Page to Amendment No. 2 to
Note Purchase Agreement Dated November 5, 2009]

 

 

Schedule
III

 

	
  

  BRIDGE NOTE 

  CLOSING DATE

  	
   

  	
  NAME AND ADDRESS

  OF BRIDGE NOTE

  PURCHASERS

  	
   

  	
  BRIDGE NOTE

  PURCHASE PRICE

  	
   

  	
  NUMBER OF 

  BRIDGE NOTE

  WARRANT SHARES

  	
   

  
	
  August 18,
  2010

  	
   

  	
  Phoenix Venture Fund LLC 

  110 East 59th Street, Suite 1901 

  New York, NY 10022

  	
   

  	
  $

  	
  250,000

  	
   

  	
  6,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September 2,
  2010

  	
   

  	
  Phoenix Venture Fund LLC 

  110 East 59th Street, Suite 1901 

  New York, NY 10022

  	
   

  	
  $

  	
  600,000

  	
   

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
  $

  	
  850,000

  	
   

  	
  21,250,000

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