Document:

Exhibit 10.2

 

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

 

THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED
HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT
CERTAIN SUBORDINATION AGREEMENT (THE “SUBORDINATION AGREEMENT”) BY AND AMONG
XPLORE TECHNOLOGIES CORP. (THE “PARENT”) AND XPLORE TECHNOLOGIES CORPORATION OF
AMERICA (THE “SUBSIDIARY, COLLECTIVELY WITH THE PARENT, THE “BORROWERS”), THE
HOLDER, AND SILICON VALLEY BANK (THE “SENIOR LENDER”), TO THE INDEBTEDNESS
(INCLUDING INTEREST) OWED BY THE BORROWERS PURSUANT TO THAT CERTAIN LOAN AND
SECURITY AGREEMENT DATED AS OF SEPTEMBER 15, 2005 (THE “LOAN AGREEMENT”), BY
AND AMONG THE SUBSIDIARY AND THE SENIOR LENDER, AS SUCH LOAN AGREEMENT HAS BEEN
AND HEREAFTER MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED
FROM TIME TO TIME.

 

SECURED SUBORDINATED
PROMISSORY NOTE

 

	
  $[                ]

  	
   

  	
  February 27,
  2009

  

 

FOR VALUE RECEIVED, the undersigned, Xplore
Technologies Corp., a Delaware corporation, (the “Parent”) and Xplore
Technologies Corporation of America, a Delaware corporation and a wholly-owned
subsidiary of the Parent (the “Subsidiary” and collectively with the
Parent, the “Borrowers”), promises to pay to [INSERT NAME OF HOLDER] (the
“Holder”), the principal sum of [                      ]
DOLLARS ($[                ])
with interest on the unpaid balance from the date hereof, at the rate of 10%
per annum on the unpaid principal amount, in lawful money of the United States
of America or as otherwise provided in Section 3 hereof, at [INSERT
ADDRESS OF HOLDER], or at such other place as the Holder may designate in
writing. This Note is one of the secured subordinated promissory notes (collectively,
the “Notes”) referred to in, and purchased pursuant to, the Note Purchase
Agreement dated February 27, 2009, as amended from time to time, among the
Borrowers and the Purchasers named therein (the “Note Purchase Agreement”)
and evidences a borrowing from the Holder by the Borrowers under the Note
Purchase Agreement.  The obligations of
the Borrowers under this Note are secured as provided in the Note Purchase
Agreement and the Loan Documents.

 

1.                                    Maturity
Date.  The principal of this Note,
together will all unpaid interest and any other fees or expenses otherwise due
and owed to the Holder under the Note Purchase Agreement, shall be due and
payable on December 31, 2010 (the 

 

 

“Maturity Date”). The Borrowers may prepay the Note in whole
or in part, at any time prior to the Maturity Date, without penalty.

 

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

 

3.                                    Payment
of Interest.

 

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

 

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

 

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

 

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

 

5.                                    Waiver
of Certain Rights.  Subject to any
applicable notice periods, all parties to this Note, including Borrowers and
any sureties, endorsers, or guarantors, hereby waive protest, presentment,
notice of dishonor, and notice of acceleration of maturity and agree to
continue to remain bound for the payment of principal, interest and all other
sums due under this Note notwithstanding any change or changes by way of
release, surrender, exchange, modification or substitution of any security for
this Note or by way of any extension or extensions of time for the payment of
principal and interest; and all such parties waive all and every kind of notice
of such change or changes and agree that the same may be without notice or
consent of any of them.

 

2

 

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

 

7.                                    Subordination.
 Repayment of this Note shall be
subordinated to the extent and in the manner set forth in the Subordination Agreement.

 

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

 

9.                                    Priority.  The right of repayment of principal and
interest on this Note shall rank pari passu with
the right of repayment of principal and interest on the Fall 2008 Notes.

 

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

 

11.                              Miscellaneous.  The following general provisions apply:

 

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

 

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

 

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

 

(d)                                 This
Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of New York.  Each of the parties hereto hereby irrevocably
consents to the (non-exclusive) jurisdiction of the courts of the State of New
York and of any Federal court located therein in connection with any suit,
action or other proceeding arising out of or relating to this Note and waives
any objection to venue in the State of New York.

 

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

 

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

 

3

 

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

 

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

 

Signature on the following page

 

4

 

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

 

 

	
   

  	
  XPLORE TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  XPLORE TECHNOLOGIES

  CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 10.3

 

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

 

WARRANT TO PURCHASE

SHARES OF

COMMON STOCK OF

XPLORE TECHNOLOGIES CORP.

 

	
  No.: [   ]

  	
   

  	
  Number of
  Warrant Shares: [          ]

  
	
   

  	
   

  	
   

  
	
  Date of Issuance:
  February 27, 2009

  	
   

  	
   

  

 

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

 

This Warrant is issued
pursuant to the terms of a Note Purchase Agreement dated February 27,
2009, among the Issuer, Xplore Technologies Corporation of America, a Delaware
corporation and a wholly-owned subsidiary of the Issuer, and the purchasers
listed on Schedule I and Schedule II thereto (the “Note Purchase Agreement”).

 

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

 

1.             Expiration Date.
This Warrant shall expire at 5:00 p.m. (Austin, Texas time) on February 27,
2012 (the “Expiration Date”).  On
the Expiration Date, all rights of the Holder to purchase Common Stock pursuant
to this Warrant shall immediately terminate.

 

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

 

(a)           Time
of Exercise.  The purchase rights
represented by this Warrant may be exercised by the Holder, in whole or in
part, at any time prior to the Expiration Date.

 

(b)           Method
of Exercise.  The Holder hereof may
exercise this Warrant, in whole or in part, by the surrender of this Warrant,
with the exercise form in the form attached hereto as Exhibit A,
duly executed, at the principal office of the Issuer, and by the payment to the
Issuer of an amount of consideration therefor equal to the Warrant Price in
effect on the date of 

 

 

such exercise multiplied
by the number of Warrant Shares with respect to which this Warrant is then
being exercised. Payment may be made by (i) certified check payable to the
Issuer’s order or (ii) wire transfer of funds to the Issuer.

 

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

 

X = Y (A-B)

     A

 

Where

 

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

 

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

 

A =         the
Per Share Market Value one share of Common Stock as at the time the net issue
election is made pursuant to this Section 2(c).

 

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

 

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

 

(e)           Transferability
of Warrant.  Subject to Section 2(f),
this Warrant may be transferred by a Holder without the consent of the Issuer,
subject to applicable law and the right of the Issuer to require that the
transferee be an “accredited investor” as defined in Rule 501(a) promulgated
under the Securities Act. If transferred pursuant to this paragraph and subject
to the provisions of subsection (f) of this Section 2, this Warrant
may be transferred on the books of the Issuer by the Holder hereof, upon
surrender of this Warrant at the principal office of the Issuer, properly
endorsed by the Holder executing an assignment in the form attached hereto.
This Warrant is exchangeable at the principal office of the Issuer for Warrants
for the purchase of the same aggregate number of Warrant Shares.

 

2

 

(f)            Compliance with Securities Laws.

 

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

 

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

 

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

 

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

 

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

 

(b)           Covenants.  The Issuer shall not by any action including,
without limitation, amending the Articles of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be reasonably necessary or appropriate to
protect the rights of the Holder hereof against dilution (but only to the
extent specifically provided in Section 4 hereof) or impairment. Without
limiting the generality of the foregoing, the Issuer will (i) take all
such action as may be reasonably necessary in order that the Issuer may validly
and legally issue fully paid and nonassessable shares of Common Stock, free and
clear of any liens, claims, encumbrances and restrictions 

 

3

 

(other than such
restrictions as are expressly set forth herein and subject to applicable
securities laws) upon the exercise of this Warrant; and (ii) use its
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.

 

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

 

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

 

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

 

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

 

(ii)           Notwithstanding
anything contained in this Warrant to the contrary, the Issuer will not, at any
time prior to the Expiration Date, effect any Triggering Event (other than a
merger involving the Issuer and one or more of its wholly-owned subsidiaries),
unless, prior to the consummation thereof, each Person (other than the Issuer)
which as a result of such Triggering Event may be required to deliver any
Securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and 

 

4

 

reasonably satisfactory
to, the Holder, (A) the obligations of the Issuer under this Warrant (and
if the Issuer shall survive the consummation of such Triggering Event, such
assumption shall be in addition to, and shall not release the Issuer from, any
continuing obligations of the Issuer under this Warrant) and (B) the
obligation to deliver to such Holder such Securities, cash or property as in
accordance with the foregoing provisions of this subsection (a).

 

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

 

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

 

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

 

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

 

(d)   Adjustment of
Warrant Price Upon Issuance of Additional Common Stock. If the Issuer, at
any time prior to the Expiration Date, shall issue Additional Common Stock at a
price per share, or with an exercise price or conversion price (as the case may
be), lower than the Warrant Price in effect at such time, then the Warrant
Price shall be reduced, concurrently with such issue, to a price (calculated to
the nearest one-hundredth of a cent) determined in accordance with the
following formula:

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.             Notice
of Adjustments.  Whenever the Warrant
Price shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, an “adjustment”), the Issuer shall deliver notice to the
Holder of such adjustment and shall cause its Chief Financial Officer to
prepare and execute a certificate setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated (including a description of the basis on
which the Board made any determination hereunder), the calculations made in
connection therewith and the Warrant Price after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any failure of the Chief
Financial Officer to deliver such certificate shall not prejudice the rights of
the Holder in connection with the applicable adjustment. Any dispute between
the Issuer and the Holder with respect to the matters set forth in such
certificate shall be 

 

6

 

determined by the Issuer’s
independent outside auditors or, if they are unable to act, by such firm of
independent chartered accountants as may be selected by the Board, and any such
determination shall be conclusive and binding on the Issuer, the Holder and the
transfer agent for the Common Stock. The firm selected by the Issuer as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. 
The fees and expenses of such accounting firm shall be borne equally by
such Holder and the Issuer.

 

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

 

7.             Rules Regarding
Calculation of Adjustment of Warrant Price.

 

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

 

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

 

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

 

“Additional Common Stock” means all shares of
Common Stock and Convertible Securities issued by the Issuer prior to the
Expiration Date, except (i) the Warrant Shares, (ii) Common Stock or
Convertible Securities issued in connection with a bona fide business
acquisition of or by the Issuer, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise; (iii) Common Stock
(including Common Stock issued upon the conversion or exercise of Convertible
Securities) or Convertible Securities issued 
to financial institutions, other financing sources, or lessors, vendors,
suppliers and other third party service providers in connection with commercial
credit arrangements, equipment financings, supply and materials purchases,
third party service procurement or similar transactions as approved by the
Board; (iv) Common Stock issued pursuant to the exercise of options and
warrants outstanding on the date of issuance of this Warrant; (v) Common
Stock issued in a bona fide firm commitment underwritten public offering, (vi) Common
Stock (including Common Stock issued upon the conversion or exercise of
Convertible Securities) or Convertible Securities issued to joint venture or
strategic partners pursuant to agreements authorized by the Board, (vii) Common
Stock (including Common Stock issued upon the conversion or exercise of
Convertible Securities) or Convertible Securities issued to employees,
consultants, officers or directors of the Issuer 

 

7

 

pursuant to compensatory
stock purchase or stock option plans, agreements or arrangements approved by
the Board, (viii) Common Stock (including Common Stock issued upon the
conversion or exercise of Convertible Securities) or Convertible Securities
issued to underwriters, brokers, dealers, finders or others in connection with
fundraising (debt or equity) activities, (ix) Common Stock issued upon
conversion or exercise of Convertible Securities outstanding on the date of
issuance of this Warrant, (x) Common Stock issued as dividends on any
series of the Issuer’s preferred stock, whether existing now or in the future,
and (xi) Common Stock issued in connection with a stock dividend or
distribution covered by Section 4(c)(i) or (ii).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

“Security”
means one of the Securities.

 

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

 

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

 

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

 

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

 

“Warrant Price” shall mean the lower of (i) $0.10
per share, or (ii) the volume weighted average trading price of the
Company’s Common Stock for the five trading days prior to the Initial Closing
Date under the Note Purchase Agreement.

 

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

 

9.             Other Notices.  In case at any time:

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

10.           Amendment and Waiver. 
Any term, covenant, agreement or condition in this Warrant may be
amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), by a written
instrument or written instruments executed by the Issuer and the Holder.

 

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

 

10

 

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

 

Xplore Technologies Corp.

14000 Summit Drive, Suite 900

Austin, Texas 78728

Attention: Michael J.
Rapisand

Facsimile: (512) 336-7791

 

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

 

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

 

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

 

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

 

11

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

12

 

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

 

	
   

  	
  XPLORE
  TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Michael J.
  Rapisand

  
	
   

  	
   

  	
  Chief Financial
  Officer

  

 

 

EXHIBIT A

 

Form of Exercise

 

(to be executed by the Holder)

 

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

 

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

 

$___________ wire
transfer of funds to the Issuer.

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature of Holder

  
	
   

  	
   

  	
   

  
	
  Instructions for
  registration of shares

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security or
  Employer Identification

  	
   

  	
   

  
	
  Number of Holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address of Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Street

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City, State and Zip
  Code

  	
   

  	
   

  
					

 

A-1

 

EXHIBIT B

 

NET ISSUE NOTICE OF EXERCISE

 

	
  TO:

  	
  Xplore Technologies
  Corp

  
	
   

  	
  14000 Summit Drive,
  Suite 900

  
	
   

  	
  Austin, Texas 78728

  
	
   

  	
  facsimile number (512)
  336-7791

  
	
   

  	
  Attention: Michael
  Rapisand

  

 

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

 

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

	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  
					

 

B-1

 

ASSIGNMENT

 

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

 

	
  Dated:

  	
  Signature: 

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  

 

PARTIAL ASSIGNMENT

 

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

 

	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

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