Document:

Exhibit 10.1

 

TWELFTH
AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS TWELFTH AMENDMENT to Loan and Security Agreement (this “Amendment”)
is entered into as of this 29th day of May, 2009, by and between SILICON VALLEY
BANK (“Bank”) and XPLORE TECHNOLOGIES CORPORATION OF AMERICA, a Delaware
corporation (“Borrower”) whose address is 14000 Summit Drive, Suite 900,
Austin, Texas 78728.

 

RECITALS

 

A.            Bank
and Borrower have entered into that certain Loan and Security Agreement dated
as of September 15, 2005, as amended by that certain First Amendment to
Loan and Security Agreement by and between Bank and Borrower dated as of November 28,
2005, that certain Letter amending Loan and Security Agreement by and between
Bank and Borrower dated as of March 30, 2006, that certain Second
Amendment to Loan and Security Agreement by and between Bank and Borrower dated
as of May 15, 2006, that certain Third Amendment to Loan and Security
Agreement by and between Bank and Borrower dated as of February 28, 2007,
that certain Fourth Amendment to Loan and Security Agreement by and between
Bank and Borrower dated as of March 28, 2008, that certain Fifth Amendment
to Loan and Security Agreement by and between Bank and Borrower dated as of May 27,
2008, that certain Sixth Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of August 6, 2008, that certain Seventh
Amendment to Loan and Security Agreement by and between Bank and Borrower dated
as of August 29, 2008, that certain Eighth Amendment to Loan and Security
Agreement by and between Bank and Borrower dated as of September 30, 2008,
that certain Ninth Amendment to Loan and Security Agreement by and between Bank
and Borrower dated as of March 30, 2009, that certain Tenth Amendment to
Loan and Security Agreement by and between Bank and Borrower dated as of April 10,
2009 and that certain Eleventh Amendment to Loan and Security Agreement between
Bank and Borrower dated as of April 24, 2009 (as the same may from time to
time be further amended, modified, supplemented or restated, the “Loan
Agreement”).

 

B.            Bank
has extended credit to Borrower for the purposes permitted in the Loan
Agreement.

 

C.            Borrower
has requested that Bank amend the Loan Agreement to extend the maturity date
and make certain other changes.

 

D.            Bank
has agreed to so amend certain provisions of the Loan Agreement, but only to
the extent, in accordance with the terms, subject to the conditions and in
reliance upon the representations and warranties set forth below.

 

AGREEMENT

 

NOW,
THEREFORE, in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:

 

1.             Definitions. 
Capitalized terms used but not defined in this Amendment shall have the
meanings given to them in the Loan Agreement.

 

2.             Amendments to Loan Agreement.

 

2.1          Section 5.2 (Insurance) The following is hereby added to the end of Section 5.2
of the Loan Agreement:

 

“Not later than June 30, 2009 and all times
thereafter, Borrower shall obtain and maintain foreign credit insurance
acceptable to Bank with respect to all foreign Accounts.”

 

 

2.2          Section 8 (Definitions).  The following
defined terms in Section 8 of the Loan Agreement are either added or
amended and restated in their entirety to read as follows:

 

“Deferred Revenue”
is all amounts received or invoiced in advance of performance under contracts
and not yet recognized as revenue.

 

“Formula Loans”
means any Loans made with regards to the Borrowing Base.

 

“Non-Formula Amount” means an amount equal to the lesser of (i) $1,500,000
and (ii) the face amount of the Supporting Letter of Credit.

 

“Non-Formula Loans” means Loans in excess of the Borrowing Base up to
the Non-Formula Amount made without regard to the Borrowing Base.

 

“Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

 

“Supporting Letter of
Credit” means that certain irrevocable standby letter of credit
issued by the Bank of America on May 29, 2009, or a letter of credit
issued by another bank rated A2 or better by Moody’s Investors Service, Inc.,
for account of the Supporting Letter of Credit Applicants and naming Bank as
beneficiary, in the face amount of $1,000,000 (as amended, supplemented,
modified or extended from time to time).

 

“Supporting Letter of
Credit Applicants” means, collectively, Philip Sassower and Susan
Sassower, individuals, as applicants under the Supporting Letter of Credit.

 

2.3          Schedule Section 1 (CREDIT LIMIT (Section 1.1)). 
The first three paragraphs and the definitions of Section 1 of the
Schedule to the Loan Agreement (up until the definition of “Letter of Credit
Sublimit”) are hereby amended and restated to read as follows:

 

“An amount not to exceed (a) the lesser of (i) $5,000,000
or (ii) the
amount available under the Borrowing Base
plus the Non-Formula Amount, minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), minus (c) any amounts used under the Cash Management Services
Sublimit, and minus (d) the outstanding principal balance of any Loans.”

 

“Borrowing Base”
is (a) 80% of Eligible Domestic Accounts plus (b) 80% of Eligible
Foreign Accounts (not to exceed 35% of all Eligible Accounts) all as determined
by Bank from Borrower’s most recent Transaction Report; provided, however, that
Bank may decrease the foregoing amounts or percentages in its good faith
business judgment based on events, conditions, contingencies, or risks which,
as determined by Bank, may adversely affect Collateral.”

 

“Eligible Accounts”
means Eligible Domestic Accounts and Eligible Foreign Accounts

 

“Eligible Domestic Accounts”
means Accounts which (i) arise in the ordinary course of Borrower’s
business, (ii) that meet all Borrower’s representations and warranties in Section 4.1,
(iii) that are billed and payable inside of the United States and (d) with
respect to which, the Account Debtor has its principal place of business in the
United States or Canada.  Bank reserves
the right upon prior written notice to Borrower at any time after May 29,
2009 to adjust any of the criteria set forth below and to establish new
criteria in its good faith business judgment. 
Unless Bank otherwise agrees in writing using its good faith business
judgment, Eligible Domestic Accounts shall not include:

 

(a)           Accounts that the
Account Debtor has not paid within 90 days of invoice date regardless of
invoice payment period terms;

 

2

 

(b)           Accounts owing from an Account Debtor, 50% or more of
whose Accounts have not been paid within 90 days of invoice date;

 

(c)           Accounts owing from an
Account Debtor which does not have its principal place of business in the
United States or Canada;

 

(d)           Accounts billed and/or
payable outside of the United States;

 

(e)           Accounts owing from an
Account Debtor to the extent that Borrower is indebted or obligated to the
Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra”
accounts, accounts payable, customer deposits or credit accounts), with the
exception of customary credits, adjustments and/or discounts given to an
Account Debtor by Borrower in the ordinary course of its business;

 

(f)            Accounts for which the
Account Debtor is Borrower’s Affiliate, officer, employee, or agent;

 

(g)           Accounts with credit
balances over 90 days from invoice date;

 

(h)           Accounts owing from an
Account Debtor, including Affiliates, whose total obligations to Borrower
exceed 25% of all Accounts, for the amounts that exceed that percentage, unless
Bank approves in writing;

 

(i)            Accounts owing from an
Account Debtor which is a United States government entity or any department,
agency, or instrumentality thereof unless Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended;

 

(j)            Accounts for
demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;

 

(k)           Accounts owing from an
Account Debtor that has not been invoiced or where goods or services have not
yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings);

 

(l)            Accounts subject to
contractual arrangements between Borrower and an Account Debtor where payments
shall be scheduled or due according to completion or fulfillment requirements
where the Account Debtor has a right of offset for damages suffered as a result
of Borrower’s failure to perform in accordance with the contract (sometimes
called contracts accounts receivable, progress billings, milestone billings, or
fulfillment contracts);

 

(m)          Accounts owing from an
Account Debtor the amount of which may be subject to withholding based on the
Account Debtor’s satisfaction of Borrower’s complete performance (but only to
the extent of the amount withheld; sometimes called retainage billings);

 

(n)           Accounts subject to
trust provisions, subrogation rights of a bonding company, or a statutory
trust;

 

(o)           Accounts owing from an
Account Debtor that has been invoiced for goods that have not been shipped to
the Account Debtor unless Bank, Borrower, and the Account Debtor have entered
into an agreement acceptable to Bank in its sole discretion wherein the Account
Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred,
and (iii) it owes payment for such goods in accordance with invoices from
Borrower (sometimes called “bill and hold” accounts);

 

3

 

(p)           Accounts owing from an
Account Debtor with respect to which Borrower has received Deferred Revenue
(but only to the extent of such Deferred Revenue);

 

(q)           Accounts for which the
Account Debtor has not been invoiced;

 

(r)            Accounts that
represent non-trade receivables or that are derived by means other than in the
ordinary course of Borrower’s business;

 

(s)           Accounts for which
Borrower has permitted Account Debtor’s payment to extend beyond 90 days;

 

(t)            Accounts subject to
chargebacks or others payment deductions taken by an Account Debtor (but only
to the extent the chargeback is determined invalid and subsequently collected
by Borrower);

 

(u)           Accounts in which the
Account Debtor disputes liability or makes any claim (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business; and

 

(v)           Accounts for which Bank
in its good faith business judgment determines collection to be doubtful..

 

“Eligible Foreign Accounts”
means Accounts which (i) arise in the ordinary course of Borrower’s
business, (ii) that meet all Borrower’s representations and warranties in Section 4.1,
(iii) that are billed and payable outside of the United States, (d) with
respect to which, the Account Debtor has its principal place of business
outside of the United States or Canada and (e) and that are (i) covered
in full by credit insurance satisfactory to Bank, less any deductible, (ii) supported
by letter(s) of credit acceptable to Bank, (iii) supported by a
guaranty from the Export-Import Bank of the United States, or (iv) that
Bank otherwise approves of in writing. 
Bank reserves the right upon prior written notice to Borrower at any
time after May 29, 2009 to adjust any of the criteria set forth below and
to establish new criteria in its good faith business judgment.  Unless Bank otherwise agrees in writing using
its good faith business judgment, Eligible Foreign Accounts shall not include:

 

(a)           Accounts that the
Account Debtor has not paid within 90 days of invoice date regardless of
invoice payment period terms;

 

(b)           Accounts owing from an Account Debtor, 25% or more of
whose Accounts have not been paid within ninety (90) days of invoice date;

 

(c)           Accounts owing from an
Account Debtor to the extent that Borrower is indebted or obligated to the
Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra”
accounts, accounts payable, customer deposits or credit accounts), with the
exception of customary credits, adjustments and/or discounts given to an
Account Debtor by Borrower in the ordinary course of its business;

 

(d)           Accounts for which the
Account Debtor is Borrower’s Affiliate, officer, employee, or agent;

 

(e)           Accounts with credit
balances over 90 days from invoice date;

 

(f)            Accounts owing from an
Account Debtor, including Affiliates, whose total obligations to Borrower exceed
25% of all Accounts, for the amounts that exceed that percentage, unless Bank
approves in writing;

 

4

 

(g)           Accounts owing from an
Account Debtor which is a United States government entity or any department,
agency, or instrumentality thereof unless Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended;

 

(h)           Accounts for
demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;

 

(i)            Accounts owing from an
Account Debtor that has not been invoiced or where goods or services have not
yet been rendered to the Account Debtor (sometimes called memo billings or
pre-billings);

 

(j)            Accounts subject to
contractual arrangements between Borrower and an Account Debtor where payments
shall be scheduled or due according to completion or fulfillment requirements
where the Account Debtor has a right of offset for damages suffered as a result
of Borrower’s failure to perform in accordance with the contract (sometimes
called contracts accounts receivable, progress billings, milestone billings, or
fulfillment contracts);

 

(k)           Accounts owing from an
Account Debtor the amount of which may be subject to withholding based on the
Account Debtor’s satisfaction of Borrower’s complete performance (but only to
the extent of the amount withheld; sometimes called retainage billings);

 

(l)            Accounts subject to
trust provisions, subrogation rights of a bonding company, or a statutory
trust;

 

(m)          Accounts owing from an
Account Debtor that has been invoiced for goods that have not been shipped to
the Account Debtor unless Bank, Borrower, and the Account Debtor have entered
into an agreement acceptable to Bank in its sole discretion wherein the Account
Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred,
and (iii) it owes payment for such goods in accordance with invoices from
Borrower (sometimes called “bill and hold” accounts);

 

(n)           Accounts owing from an
Account Debtor with respect to which Borrower has received Deferred Revenue (but
only to the extent of such Deferred Revenue);

 

(o)           Accounts for which the
Account Debtor has not been invoiced;

 

(p)           Accounts that represent
non-trade receivables or that are derived by means other than in the ordinary
course of Borrower’s business;

 

(q)           Accounts for which
Borrower has permitted Account Debtor’s payment to extend beyond 90 days;

 

(r)            Accounts subject to
chargebacks or others payment deductions taken by an Account Debtor (but only
to the extent the chargeback is determined invalid and subsequently collected
by Borrower);

 

(s)           Accounts in which the
Account Debtor disputes liability or makes any claim (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business; and

 

(t)            Accounts for which
Bank in its good faith business judgment determines collection to be doubtful.

 

5

 

2.4          Schedule Section 2 (INTEREST
RATE (Section 1.2)).  Section 2
of the Schedule is amended and restated in its entirety to read as follows:

 

“(a)         Interest Rates.

 

(i)            Formula Loans. 
Subject to paragraph (b) below, the principal amount of Formula
Loans outstanding shall accrue interest at a floating per annum rate equal to
the greater of (i) 6.25% or (ii) 2.25% above the Prime Rate.

 

(ii)           Non-Formula Loans. 
Subject to paragraph (b) below, the principal amount of Non-Formula
Loans outstanding shall accrue interest at a floating per annum rate equal to
the greater of (i) 6.25% or (ii) the Prime Rate.

 

(b)           Default Rate. 
Immediately upon the occurrence and during the continuance of an Event
of Default, Obligations shall bear interest at a rate per annum which is 5.00%
above the rate that is otherwise applicable thereto (the “Default Rate”)
unless Bank otherwise elects from time to time in its sole discretion to impose
a smaller increase.  Fees and expenses
which are required to be paid by Borrower pursuant to the Loan Documents
(including, without limitation, Bank Expenses) but are not paid when due shall
bear interest until paid at a rate equal to the highest rate applicable to the
Obligations.  Payment or acceptance of
the increased interest rate provided in this Section (b) is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Bank.”

 

2.5          Schedule Section 5 (FINANCIAL
COVENANTS (Section 5.1)).  Section 5
of the Schedule to the Loan Agreement is hereby amended and restated to read as
follows:

 

“Minimum Tangible Net Worth.  Borrower shall at all times maintain a
Tangible Net Worth of at least One Million Five Hundred Seventy Five Thousand
Dollars ($1,575,000) increasing
quarterly by fifty percent (50%) of Net Income and fifty percent (50%)
of issuances of equity or Subordinated Debt after May 29, 2009.

 

For purposes of the
foregoing financial covenant, the following terms shall have the following
meaning

 

“Net Income”
means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its subsidiaries for such period taken as
a single accounting period, as determined in accordance with GAAP.

 

“Tangible Net Worth”
is, on any date, the consolidated total assets of Borrower and its subsidiaries
minus (a) General Intangibles, minus (b) Total
Liabilities, plus (c) Subordinated Debt.

 

“Total Liabilities”
is on any day, obligations that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all
Indebtedness.”

 

2.6          Schedule Section 9 (MATURITY
DATE (Section 6.1)). 
The Maturity Date in Section 9 of the Schedule to the Loan
Agreement is amended in its entirety and replaced with the following:

 

6

 

“June 30, 2009”

 

3.             Supporting Letter of Credit. 
Bank and Borrower hereby agree that Bank shall not be entitled to draw
on the Supporting Letter of Credit until the earliest of (i) the Maturity
Date, (ii) the date upon which the Formula Loans have been repaid in full
and the commitment to make any additional Loans under the Loan Agreement has
been terminated, and (iii) the occurrence and continuance of an Event of
Default. Bank and Borrower hereby further agree that Bank shall only be
entitled to draw on the Supporting Letter of Credit to the extent of any outstanding
principal amount of, interest on and fees and expenses incurred solely in
connection with the Non-Formula Loans as of the date Bank draws on the
Supporting Letter of Credit and any such amounts shall be used to repay the
outstanding Non-Formula Loans.

 

4.             Subordinated Debt. 
Bank hereby agrees that for so long as that certain Subordination
Agreement between Bank and the Supporting Letter of Credit Applicants dated as
of May 29, 2009 remains in full force and effect (a) (i) the
reimbursement of the Supporting Letter of Credit Applicants by Borrower for all
amounts drawn under the Supporting Letter of Credit and all costs and expenses
relating to the issuance and maintenance of the Supporting Letter of Credit and
(ii) the payment of all compensation by Borrower to the Supporting Letter
of Credit Applicants relating to the issuance of the Supporting Letter of
Credit shall constitute “Subordinated Debt” under the Loan Agreement, and (b) the
liens granted to the Supporting Letter of Credit Applicants in connection with
such Subordinated Debt to the Supporting Letter of Credit Applicants shall
constitute “Permitted Liens” under the Loan Agreement.

 

5.             Limitation of Amendments.

 

5.1          The amendments set forth in Section 2
and the provisions of Sections 3 and 4
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment,
waiver or modification of any other term or condition of any Loan Document, or (b) otherwise
prejudice any right or remedy which Bank may now have or may have in the future
under or in connection with any Loan Document.

 

5.2          This Amendment shall be construed in connection with
and as part of the Loan Documents and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan Documents, except as
herein amended, are hereby ratified and confirmed and shall remain in full
force and effect.

 

6.             Representations and Warranties. 
To induce Bank to enter into this Amendment, Borrower hereby represents
and warrants to Bank as follows:

 

6.1          Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of
Default has occurred and is continuing;

 

6.2          Borrower has the power and authority to execute and
deliver this Amendment and to perform its obligations under the Loan Agreement,
as amended by this Amendment;

 

6.3          The organizational documents of Borrower delivered to
Bank with the Sixth Amendment to Loan and Security Agreement remain true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect;

 

6.4          The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, have been duly authorized;

 

6.5          The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do 

 

7

 

not and will not
contravene (a) any law or regulation binding on or affecting Borrower, (b) any
contractual restriction with a Person binding on Borrower, (c) any order,
judgment or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on Borrower, or (d) the
organizational documents of Borrower;

 

6.6          The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not require any order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or
authority, or subdivision thereof, binding on either Borrower, except as
already has been obtained or made; and

 

6.7          This Amendment has been duly executed and delivered by
Borrower and is the binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights.

 

7.             Counterparts. 
This Amendment may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.

 

8.             Effectiveness. 
This Amendment shall be deemed effective upon (i) the due execution
and delivery to Bank of this Amendment by each party hereto (ii) the due
execution and delivery to Bank of a Subordination Agreement by the Supporting
Letter of Credit Applicants and (iii) the payment by Borrower of an
extension fee equal to $6,250.

 

[Signature page follows.]

 

8

 

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

 

	
  BANK

  	
   

  	
  BORROWER

  
	
   

  	
   

  	
   

  
	
  Silicon Valley Bank

  	
   

  	
  XPLORE TECHNOLOGIES CORPORATION
  OF AMERICA

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Tom Makowski

  	
   

  	
  By:

  	
  /s/ Michael J. Rapisand

  
	
  Name: 

  	
  Tom Makowski

  	
   

  	
  Name: 

  	
  Michael J. Rapisand

  
	
  Title:

  	
  Relationship Manager

  	
   

  	
  Title:

  	
  Chief Financial OfficerExhibit 10.2

 

EXECUTION VERSION

 

LETTER OF CREDIT REIMBURSEMENT,

COMPENSATION AND SECURITY AGREEMENT

 

This LETTER OF CREDIT REIMBURSEMENT, COMPENSATION
AND SECURITY AGREEMENT, dated as of May 29, 2009 (as amended, supplemented
or modified from time to time, this “Agreement”), is made by and among
PHILIP SASSOWER and SUSAN SASSOWER, individuals (each individually, a “Secured
Party” and, collectively, the “Secured Parties”), XPLORE
TECHNOLOGIES CORPORATION OF AMERICA, a Delaware corporation (with its successors
and permitted assigns, the “Borrower”), and XPLORE TECHNOLOGIES CORP., a
Delaware corporation (with its successors and permitted assigns, the “Parent”;
the Borrower and the Parent are herein collectively referred to as the “Grantors”
and, each individually, a “Grantor”).

 

Recitals

 

WHEREAS, the Borrower and Silicon Valley Bank, a
California-chartered bank (“Silicon”), are parties to that certain Loan
and Security Agreement, dated as of September 15, 2005 (as amended,
supplemented and modified prior to the date hereof, the “Original Loan
Agreement”), pursuant to which Silicon has extended certain credit
accommodations to the Borrower;

 

WHEREAS, Silicon has agreed to enter into the
Twelfth Amendment, dated as of the date hereof (the “Twelfth Amendment”),
to the Original Loan Agreement (the Original Loan Agreement, as amended by the
Twelfth Amendment, and as may be further amended, amended and restated,
supplemented or modified from time to time, the “Loan Agreement”), to
provide for additional availability to the Borrower in the form of Non-Formula
Loans (as defined in the Loan Agreement) (the “Non-Formula Loans”), on a
condition that the Secured Parties, as Supporting Letter of Credit Applicants
(as defined in the Twelfth Amendment), cause an irrevocable standby letter of
credit to be issued by Bank of America, N.A., on or about the date hereof, for
the account of the Secured Parties in favor of Silicon, in the amount of
$1,000,000 (the “Initial Letter of Credit”), a copy of which Initial
Letter of Credit is attached hereto as Exhibit A (as such Initial
Letter of Credit, or a letter of credit issued in replacement of such Initial
Letter of Credit by another bank rated A2 or better by Moody’s Investors
Service, Inc. (such replacement bank, together with Bank of America, N.A.,
the “Issuing Bank”) for the account of the Secured Parties in favor of
Silicon, may be amended, supplemented, modified or extended from time to time,
the “Supporting Letter of Credit”);

 

WHEREAS, in order to induce the Secured Parties to
cause the Issuing Bank to issue the Supporting Letter of Credit, (a) the
Borrower has agreed to (i) reimburse the Secured Parties for all costs and
expenses incurred by the Secured Parties in connection with the issuance of the
Initial Letter of Credit and the entry into this Agreement and the Twelfth
Amendment, and (ii) reimburse the Secured Parties for all payments made by
the Secured Parties to the Issuing Bank in connection with any drawings made by
Silicon under the Supporting Letter of Credit; and (b)

 

 

the Grantors have agreed to
provide certain compensation to the Secured Parties in connection with the
issuance of the Supporting Letter of Credit; and

 

WHEREAS, to secure the Grantors’ obligations to the
Secured Parties, each of the Grantors have agreed to grant to the Secured
Parties a security interest in the Collateral.

 

NOW, THEREFORE, in consideration of the mutual promises
contained herein and in order to induce the Secured Parties to cause the
Issuing Bank to issue the Supporting Letter of Credit, the parties hereto agree
as follows:

 

SECTION 1.   Definitions.  All terms defined in Article 1, 2A, 5, 8
or 9 of the UCC, as in effect on the date of this Agreement, are used herein
with the meanings therein ascribed to them; such terms include “account”, “account
debtor”, “chattel paper”, “commercial tort claim”, “control”, “deposit account”,
“document”, “equipment”, “financial asset”, “fixtures”, “general intangibles”, “goods”,
“instrument”, “inventory”, “investment property”, “letter of credit”, “letter-of-credit
right”, “money”, “payment intangible”, “proceeds”, “promissory note”, “securities
account”, “security”, “security interest” and “supporting obligation”. In
addition, the term “deposit account” includes an account evidenced by a
certificate of deposit. The words and expressions defined in the preamble, the
recitals and the other Sections hereof shall have the meanings given to such
words and expressions in such preamble, recitals and Sections, and the
following words and expressions shall have the following meanings, in each case
unless the context otherwise requires:

 

“Account Receivable” means an “account” to the
extent it represents a right to payment of a monetary obligation, whether or
not earned by performance (a) for property that has been, or is to be,
sold, leased, licensed, assigned, or otherwise disposed of, or (b) for
services rendered, or to be rendered, including all accounts arising from sales
or rendition of services made under each of the Grantors’ names, trade names or
styles or through any of such Grantor’s properties or divisions, regardless of
how such right is evidenced, whether secured or unsecured (and whether or not
specifically listed on schedules furnished to the Secured Parties).

 

“Bank
Account” means (a) a deposit, custody, or other account (whether, in
any case, time or demand or interest or non-interest bearing and whether
maintained at a branch or office located within or outside the United States of
America) of each of the Grantors, (b) all amounts from time to time credited
to such account, (c) all cash, financial assets and other investment
property, instruments, documents, chattel paper, general intangibles, accounts
and other property from time to time credited to such account or representing
investments and reinvestments of amounts from time to time credited to such
account, and (d) all interest, principal payments, dividends and other
distributions payable on or with respect to, and all proceeds of, (i) all
property so credited or representing such investments and reinvestments and (ii) such
account.

 

“Contract”
means (a) any agreement (whether bi-lateral or unilateral or executory or
non-executory and whether a person entitled to rights thereunder is so entitled
directly or as a third-party beneficiary), including an indenture, lease or
license, (b) any deed or other instrument of conveyance, and (c) any
certificate of incorporation, charter, bylaw, operating agreement or any other
organizational document.

 

2

 

“Drawing
Materials” means all bills of lading, dock warrants, dock receipts,
warehouse receipts and other documents (including those which are “documents”
under Section 7-201(2), or “documents of title” under Section 1-201(15),
of the UCC), drafts, certificates, agreements, and other records, required to
make a drawing under a letter of credit.

 

“Equity Interests” means, with respect to any
person, shares of capital stock of, or other ownership or profit interests in,
such person, warrants, options or other rights for the purchase or other
acquisition from such person of such shares of capital stock of, or other
ownership or profit interests in, such person, securities convertible into or
exchangeable for such shares of capital stock of, or other ownership or profit
interests in, such person, or warrants, rights or options for the purchase or
other acquisition from such person of such shares of capital stock of, or other
ownership or profit interests in, such person, whether voting or nonvoting, and
whether or not such shares, warrants, options, rights or other interests are
authorized or otherwise existing on any date of determination.

 

“Event
of Default” means a breach by either of the Grantors of any representation
or warranty contained in this Agreement or a failure by either of the Grantors
to perform or comply with any covenant or agreement contained in this
Agreement.

 

“Intellectual
Property” means (a) copyrights, rights in or licenses of copyrights
and marks subject to copyright protection, in whole or in part, including,
without limitation, those listed on Schedule II hereto, and all renewals
or extensions of any of the foregoing; (b) trade names, trademarks,
service marks, trade styles, designs, logos, indicia, corporate names and
fictitious business names, in each case, together with all associated goodwill,
including, without limitation, the trademark applications set forth on Schedule
II hereto; (c) (i) patents now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States of America, any State thereof or any
other country or any political subdivision thereof, including, without
limitation, those listed on Schedule II hereto, together with all the
rights, benefits and privileges derived therefrom, (ii) all design and
utility patents, utility models and registered designs (including all reissues,
divisions, continuations, continuations-in-part, reexaminations and extensions
thereof), and (iii) all proceeds of the foregoing; (d) designs,
schemes, computer programs and all intellectual property rights associated thereto
(other than such programs and rights in which, by their terms enforceable under
applicable law, no security interest may be granted); (e) all mask works
or similar rights available for the protection of semiconductor chips; and (f) other
proprietary information.

 

“Lien” means any mortgage, deed of trust,
pledge, security interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), preference or other security agreement
or preferential arrangement, charge or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the UCC or comparable law of any jurisdiction to evidence any of the
foregoing), except for reasonable security interests in purchase-money
collateral (as such term is defined in Section 9-103 of the UCC) to the
extent such security

 

3

 

interests secure purchase-money obligations to finance acquisitions of
such purchase money collateral.

 

“Other Goods” means all goods other than
inventory and equipment.

 

“Permitted Liens”
shall mean the following:

 

(a)           mechanics’,
materialmen’s or similar inchoate Liens arising or incurred in the ordinary
course of business relating to liabilities not yet due and payable;

 

(b)           Liens for
current taxes not yet delinquent, or the validity of which is being contested
in good faith by appropriate proceedings, which proceedings have the effect of
preventing foreclosure or enforcement of such Liens and where adequate reserves
are established and maintained in accordance with generally accepted accounting
principles;

 

(c)           Liens or
pledges in connection with workmen’s compensation, unemployment insurance or
other social security obligations;

 

(d)           deposits to
secure the performance of bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of alike
nature incurred in the ordinary course of business;

 

(e)           Liens in favor
of Silicon under (i) the Loan Agreement, (ii) that certain
Intellectual Property Security Agreement, dated as of September 15, 2005
(as amended, amended and restated, supplemented or modified from time to time),
between the Borrower and Silicon, (iii) that certain Security Agreement,
dated as of September 5, 2008 (as amended, amended and restated,
supplemented or modified from time to time), between the Parent and Silicon,
and (iv) that certain Intellectual Property Security Agreement, dated as
of September 5, 2008 (as amended, amended and restated, supplemented or
modified from time to time), between the Parent and Silicon;

 

(f)            Liens in favor
of Phoenix Venture Fund LLC, as collateral agent (“Phoenix”), under the
Security Agreement, dated as of September 5, 2008 (as amended, amended and
restated, supplemented or modified from time to time), among the Parent, the
Borrower and Phoenix;

 

(g)           Liens in favor
of Wistron Corporation under the Turnkey Design and Manufacturing Agreement,
dated July 1, 2003, by and between the Borrower and Wistron Corporation;

 

(h)           Liens consented
to by the Secured Parties in writing; and

 

(i)            the following
Liens evidenced by UCC filings on record with the Secretary of State of the
State of Delaware: (i) Lien in favor of CIT Bank regarding all computer
equipment and peripherals referenced in the Loan Agreement #007139097-005 dated
August 24, 2005, (ii) Lien in favor of Susquehanna Patriot Commercial
Leasing Corp. regarding all personal property and/or equipment, and fixtures,
which is the subject of the Equipment Lease Agreement number

 

4

 

22453001, and (iii) Lien
in favor of Coactiv Capital Partners LLC regarding all personal property and/or
equipment, and fixtures, which is the subject of the Equipment Lease Agreement
number 22453002.

 

“Secured
Obligations” means all obligations, liabilities and indebtedness (whether
actual or contingent, whether now existing or hereafter arising, whether or not
for the payment of money, and including, without limitation, any obligation or
liability to pay damages) which are due, owing, payable or incurred or
expressed to be due, owing, payable or incurred from or by the Grantors to the
Secured Parties hereunder (including, without limitation, the Grantors’
indemnification obligations under Section 16 hereof and the interest
payable under Section 31 hereof), whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including reasonable attorneys’ fees) or otherwise and WHETHER OR NOT AN
ALLOWABLE CLAIM AGAINST EITHER OR BOTH OF THE GRANTORS UNDER THE UNITED STATES
BANKRUPTCY CODE OR UNDER ANY OTHER UNITED STATES OR OTHER BANKRUPTCY OR
INSOLVENCY LAW EXISTS OR IS OTHERWISE ENFORCEABLE AGAINST EITHER OR BOTH OF THE
GRANTORS, AND INCLUDING, IN ANY EVENT, INTEREST AND ALL OTHER LIABILITIES
ACCRUING OR ARISING AFTER THE COMMENCEMENT BY OR AGAINST EITHER OR BOTH OF THE
GRANTORS OF A PROCEEDING UNDER ANY BANKRUPTCY OR INSOLVENCY LAW OR THAT WOULD
HAVE SO ACCRUED OR ARISEN BUT FOR THE COMMENCEMENT OF SUCH A PROCEEDING.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York or in
any other relevant jurisdiction from time to time.

 

SECTION 2.   Interpretation.  With respect to any term that is defined by
reference to any document that terminates, expires or is modified, for purposes
hereof, such term shall continue to have the original definition
notwithstanding any termination, expiration or modification of such document
except to the extent the parties may otherwise agree in accordance with the
terms of such document. The words “hereof”, “herein” and “hereunder”, and words
of similar import, when used herein, shall refer to such document as a whole
and not to any particular provision of such document, and Section, subsection,
schedule and exhibit references are to those contained in or attached to such
document, unless otherwise specified. The meanings given to terms defined
herein shall apply to both the singular and plural forms of such terms. Except
as otherwise specified herein, each reference herein to any agreement or other
document shall be deemed (a) to include all exhibits, annexes, schedules
or other attachments thereto and (b) to refer to such agreement or
document as the same has been or may be amended, amended and restated,
supplemented or otherwise modified from time to time, in accordance with the
terms of such agreement or document (to the extent such terms are applicable to
any amendment, amendment and restatement, supplement or modification of such
agreement or document).

 

SECTION 3.   Covenant to Pay.  (a)  On the date hereof, as a
condition precedent to the execution by the Secured Parties of the Initial
Letter of Credit and this Agreement, the Borrower shall pay to the Secured
Parties (a) the amount of letter of credit fee referred to in Section 1(b) of
the Initial Letter of Credit, calculated on the basis of the total amount of the
Initial Letter of Credit, and (b) all fees and expenses of the Secured
Parties, including all legal fees, incurred

 

5

 

prior to and including the
date hereof in connection with the transactions relating to the issuance of the
Initial Letter of Credit and the entry into this Agreement and the Twelfth
Amendment.

 

(b)           The Borrower
shall reimburse the Secured Parties, promptly on demand (but in no event later
than three (3) business days following such demand), for all payments made
by the Secured Parties in connection with any drawings made by Silicon under
the Supporting Letter of Credit, including, without limitation, the payments
referred to in Section 1(a) of the Initial Letter of Credit.

 

(c)           The Borrower
shall reimburse the Secured Parties, promptly on demand (but in no event later
than three (3) business days following such demand), for all costs,
expenses, commissions, fees, losses, interest, deposits, charges and
indemnification payments paid or made by the Secured Parties to the Issuing
Bank in connection with the Supporting Letter of Credit, including, without
limitation, those referred to in Section 1 (other than to the extent set
forth in Sections 1 and 2 hereof), Section 2, Section 3 and Section 4
of the Initial Letter of Credit.

 

(d)           As compensation
to the Secured Parties in connection with the issuance of the Supporting Letter
of Credit, the Borrower shall pay to the Secured Parties, in cash, monthly, on
the last business day of each month, a fee of five percent (5%) per annum on
any outstanding Non-Formula Loans.

 

(e)           As further
compensation to the Secured Parties in connection with the issuance of the
Supporting Letter of Credit, the Borrower shall pay to the Secured Parties, in
cash, monthly, on the last business day of each month, interest on the amount
of any drawing made by Silicon under the Supporting Letter of Credit (from the
date of such drawing until the date the Borrower’s obligation under Section 3(b) hereof
to reimburse the Secured Parties for all payments made by the Secured Parties
in connection with such drawing have been indefeasibly satisfied in full) at
the rate per annum equal to the sum of (i) five percent (5%) and (ii) the
interest that applies to the Non-Formula Loans under the terms of the Loan
Agreement at the time of such drawing.

 

SECTION 4.   Issuance of
Warrants.  On the date hereof, as a
condition precedent to the execution by the Secured Parties of the Initial
Letter of Credit and this Agreement, the Parent shall issue to the Secured
Parties three-year warrants to purchase Five Million (5,000,000) shares of
common stock of the Parent, at the exercise price of Ten Cents ($0.10) per
share, pursuant to the Warrant in the form attached hereto as Exhibit B.

 

SECTION 5.   Grant
of Security.  As security for the
payment of the Secured Obligations, each of the Grantors hereby pledges,
grants, assigns, mortgages, hypothecates, transfers and delivers to the Secured
Parties a continuing security interest in all its right, title and interest in,
to and under the following property of such Grantor, whether now owned or
hereafter acquired by such Grantor (collectively, the “Collateral”):

 

(a)           all accounts
(including Accounts Receivable);

 

(b)           all general
intangibles (including the Intellectual Property);

 

6

 

(c)           all inventory;

 

(d)           all equipment;

 

(e)           all Other
Goods;

 

(f)            all
instruments;

 

(g)           all investment
property (including the Equity Interests);

 

(h)           all chattel
paper;

 

(i)            all documents;

 

(j)            all letters of
credit, letter-of-credit rights and Drawing Materials;

 

(k)           all commercial
tort claims (including the commercial claims described in Schedule III
hereto);

 

(l)            all Bank
Accounts;

 

(m)          all fixtures;

 

(n)           all money;

 

(o)           all rights (contractual
and otherwise and whether constituting accounts, general intangibles or
investment property or financial assets) constituting, arising under, connected
with, or in any way related to, any or all Collateral;

 

(p)           all books,
records, ledgercards, files, correspondence, computer programs, tapes, disks
and related data processing software (owned by such Grantor or in which it has
an interest) that at any time evidence or contain information relating to any
Collateral or are otherwise necessary or helpful in the collection thereof or
realization thereupon;

 

(q)           all goods and
other property, whether or not delivered, (i) the sale, lease or
furnishing of which gives or purports to give rise to any account, including
all merchandise returned or rejected by or repossessed from customers, or (ii) securing
any accounts, including all of such Grantor’s rights as an unpaid vendor or
lienor, including stoppage in transit, replevin and reclamation with
respect to such goods and other properties;

 

(r)            all documents
of title, policies and certificates of insurance, securities, chattel paper and
other documents or instruments evidencing or pertaining to any Collateral;

 

(s)           all supporting
obligations and other liens on real or personal property, leases and other agreements
and property that in any way secure or relate to any Collateral, or are
acquired for the purpose of securing and enforcing any item thereof;

 

(t)            all claims
(including the right to sue or otherwise recover on such claims) (i) to
items referred to in the definition of Collateral, (ii) under warranties
relating to any Collateral and (iii) against third parties for (A)(1) loss,
destruction, requisition, confiscation, condemnation, seizure, forfeiture or
infringement of, or damage to, any Collateral, (2) payments due or to
become due under leases, rentals and hires of any Collateral, (3) proceeds

 

7

 

payable
under or unearned premiums with respect to policies of insurance relating to
any Collateral and (B) breach of any Contract constituting Collateral; and

 

(u)           all products
and proceeds of all of the foregoing in whatever form.

 

Each
of the Grantors agrees that the Secured Parties’ security interest in the
Collateral shall at all times be a valid and enforceable against such Grantor
and all third parties, in accordance with the terms hereof, as security for the
Secured Obligations. Each of the Grantors hereby irrevocably authorizes the
Secured Parties at any time and from time to time to file in any filing office
in any UCC jurisdiction any initial financing statements and amendments thereto
that describe the Collateral and provide any other information required by Part 5
of Article 9 of the UCC for the sufficiency or filing office acceptance of
any financing statement or amendment thereto.

 

SECTION 6.   Security
Interest and Obligations Absolute. 
This Agreement shall be construed as a continuing, absolute,
unconditional and irrevocable grant of a security interest and shall remain in
full force and effect until indefeasible payment in full of all of the Secured
Obligations to the Secured Parties. The obligations, including the payment
obligations, of the Grantors under this Agreement shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances. The liability of the Grantors under this
Agreement shall be absolute and unconditional irrespective of:

 

(a)           any lack of
validity or enforceability of this Agreement, the Supporting Letter of Credit
or any documents relating hereto or thereto (this Agreement, the Supporting
Letter of Credit and such documents, collectively, the “Transaction
Documents”);

 

(b)           to the extent
permitted by applicable law, any occurrence or condition whatsoever, including
without limitation, (i) any compromise, settlement, release, waiver,
renewal, extension, indulgence or modification of, or any change in, any of the
obligations of the Grantors contained herein, (ii) the assertion or
exercise by the Secured Parties of any rights or remedies hereunder, (iii) the
extension of the time for payment by the Borrower of any payments or other sums
or any part thereof owing or payable under any of the terms and provisions of
this Agreement or of the time for performance by the Grantors of any other
obligations under or arising out of any terms or provisions or the extension of
the renewal of any thereof, (iv) the modification or amendment (whether
material or otherwise) of any duty, agreement or obligation of the Grantors set
forth herein, (v) the release or discharge of the Grantors from the
performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law; (vi) the
existence of any claim, set-off, defense or other right that the Grantors may
have at any time against the Secured Parties, the Issuing Bank or any other
person or entity, whether in connection with this Agreement, the transactions
contemplated herein or in any other Transaction Document, or any unrelated transaction,
(vii) any statement or any other document presented under the Supporting
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect,
(viii) payment by the Issuing Bank under the Supporting Letter of Credit
against presentation of a draft or certificate which does not comply with the
terms of the Supporting Letter of Credit, or (ix) any other circumstances
or happening whatsoever, whether or not similar to any of the foregoing; or

 

8

 

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

 

SECTION 7.   Grantor
Remains Liable.  Anything herein to
the contrary notwithstanding, (a) each of the Grantors shall remain liable
under the contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise
by the Secured Parties of any of
the rights hereunder shall not release either of the Grantors from any of its
duties under the contracts and agreements included in the Collateral, and (c) the
Secured Parties shall not have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement, nor
shall the Secured Parties be obligated to perform any of the duties of the
Grantors thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

 

SECTION 8.   Representations
and Warranties.  Each of the Grantors
represents and warrants to the Secured Parties as follows:

 

(a)        It is a
corporation duly formed, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified to transact business in the
jurisdictions in which such qualification is necessary. Its exact name is set
forth in the introductory paragraph of this Agreement.

 

(b)        It has full
power, right and authority to execute and deliver, and perform its obligations,
under this Agreement. The grant of the security interest in the Collateral and
this Agreement have been duly executed and delivered by such Grantor, and this
Agreement constitutes its legal, valid and binding obligations enforceable
against it in accordance with the terms hereof.

 

(c)        The execution,
delivery and performance of this Agreement do not violate the terms of the
organizational documents or any other agreement by which such Grantor is bound,
or the provisions of any law, regulation or order of any governmental authority
applicable to such Grantor.

 

(d)        No consent of
any other party and no approval of any governmental authority is required which
has not been obtained either (i) for the execution, delivery and
performance by such Grantor of this Agreement, (ii) for the pledge by such
Grantor of the Collateral pursuant to this Agreement, or (iii) for the
exercise by the Secured Parties of the rights provided for in this Agreement or
the remedies in respect of the Collateral pursuant to this Agreement.

 

(e)        There are no
proceedings and there is no action, suit or proceeding at law or in equity or
by or before any governmental authority, arbitral tribunal or other body now
pending against such Grantor or, to the best knowledge of such Grantor,
threatened against it which questions the validity or legality of or seeks
damages in connection with this Agreement.

 

(f)         Such Grantor
owns its Collateral free and clear of any Lien, except for the security
interest created by this Agreement and Permitted Liens existing on the date
hereof. No effective financing statement or other instrument similar in effect
covering all or any part of the

 

9

 

Collateral is on file in any
recording office, except (i) for financing statements filed in favor of
the Secured Parties relating to this Agreement and (ii) in connection with
Permitted Liens.

 

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

 

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

 

(i)         Such Grantor
has exclusive possession and control of its equipment and inventory.

 

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

 

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

 

SECTION 9.   Certain
Covenants; Further Assurances. Each of the Grantors hereby covenants and
agrees as follows:

 

(a)        It shall not
change its name or jurisdiction of incorporation or its corporate structure, or
merge or consolidate with or into any other person, or dissolve or elect to
dissolve, or become domesticated under the laws of any other jurisdiction, or
acquire any assets or enter into any transaction outside of the ordinary course
of business, without the prior written consent of the Secured Parties.

 

(b)        It shall duly
and promptly observe, perform and comply with all covenants and undertakings on
the part of such Grantor contained herein.

 

(c)        It shall not
pledge, assign or transfer any of the Collateral, or create or permit to exist
any Lien upon or with respect to any of the Collateral, or convey or otherwise
dispose any of the Collateral, or attempt or agree so to do, except for (i) the
sale of finished Inventory in the ordinary course of such Grantor’s business
(other than the sale of any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis), (ii) the grant of non-exclusive
licenses and similar arrangements for the use of property of such Grantor in
the ordinary course of business, (iii) the sale of obsolete or

 

10

 

unneeded equipment in the ordinary course of
such Grantor’s business, (iv) Permitted Liens, (v) as expressly
provided herein, or (vi) as consented to by the Secured Parties in writing.

 

(d)            It shall furnish to the
Secured Parties from time to time statements and schedules further identifying
and describing such Grantor’s Collateral and such other reports in connection
with such Collateral as the Secured Parties may reasonably request, all in
reasonable detail. Without limiting the generality of the foregoing, (i) such
Grantor shall, from time to time, execute and deliver to the Secured Parties,
in such form and manner as the Secured Parties may reasonably require, solely
for the Secured Parties’ convenience in maintaining records of such Grantor’s
Collateral, such confirmatory schedules of such Grantor’s Accounts Receivable,
and such other appropriate reports, designating, identifying and describing
such Grantor’s Accounts Receivable, as the Secured Parties may reasonably
request; and (ii) if any material commercial tort claim should hereafter
arise (an “Additional Tort Claim”), such Grantor shall promptly advise
the Secured Parties of such Additional Tort Claim in writing, supplementing Schedule
III hereto, which supplement shall constitute a grant by such Grantor to
the Secured Parties of a security interest in such Additional Tort Claim, on
the terms, and subject to the conditions, set forth in this Agreement, and such
Grantor’s authorization to file, or to amend, such financing statements as the
Secured Parties may deem necessary or advisable to perfect its security
interest in such Additional Tort Claim. In addition, upon the Secured Parties’
request, such Grantor shall provide the Secured Parties with copies of
agreements with, or purchase orders from, such Grantor’s customers, of invoices
to customers and proof of shipment or delivery and such other documentation and
information relating to its Accounts Receivable and its other Collateral as the
Secured Parties may from time to time reasonably request, to the extent such
Grantor maintains such documentation in the ordinary course of its business.
Failure to provide the Secured Parties with any of the foregoing shall in no
way affect, diminish, modify or otherwise limit the Lien granted herein. Such
Grantor hereby authorizes the Secured Parties to regard its printed name or
rubber stamp signature on assignment schedules or invoices as the equivalent of
a manual signature by an authorized officer or agent of such Grantor.

 

(e)             It shall file all tax
returns and pay or make adequate provision for the payment of all taxes,
assessments and other charges on or prior to the date when due.

 

(f)             It shall promptly notify the
Secured Parties, in writing, of any litigation, suit or administrative
proceeding which may materially and adversely affect the Collateral or any of
its business, assets, operations, prospects or condition, financial or
otherwise, whether or not the claim is covered by insurance.

 

(g)            It shall notify the Secured
Parties, in writing, 45 days prior to any change in the location of its chief
executive office or the location of any Collateral, or such Grantor’s opening
or closing of any other place of business.

 

(h)            It shall maintain its
corporate existence and its qualification to do business and good standing in
all states necessary for the conduct of its business and the ownership of its
property and maintain adequate assets, trademarks, copyrights, licenses and
patents, for the conduct of its business.

 

(i)              It shall promptly notify the
Secured Parties, in writing, of any violation of any law applicable to it which
may materially and adversely affect the Collateral or such Grantor’s business,
assets, prospects, operations or condition, financial or otherwise.

 

11

 

(j)              It shall notify the Secured
Parties, in writing, within five (5) business days of the occurrence of
such Grantor’s default under any note, indenture, loan agreement, mortgage,
lease or other agreement to which such Grantor is a party or by which such
Grantor is bound that is material to its business, assets, prospects,
operations or condition, financial or otherwise, or any other default under any
indebtedness.

 

(k)             It shall promptly notify the
Secured Parties, in writing, of any capital expenditure materially affecting
such Grantor’s business, assets, prospects, operations or condition, financial
or otherwise.

 

(l)              It shall keep adequate
records and books of account with respect to such Grantor’s business activities
in which proper entries are made in accordance with generally accepted
accounting principles for financial reporting in the United States, applied on
a consistent basis, reflecting all of such Grantor’s financial transactions.

 

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

 

SECTION 10.   Covenants as to
Equipment, Inventory and Intellectual Property. Each of the Grantors shall:

 

(a)           Keep its equipment and inventory (other than its
inventory sold in the ordinary course of business) at the places therefor
specified in Schedule I hereto or, upon 30 days’ prior written notice to
the Secured Parties, at such other places in jurisdictions where all action
required by Section 9 hereof shall have been taken with respect to its
equipment and inventory;

 

(b)           Permit the Secured Parties or any agent thereof to
have access to its inventory and equipment for purposes of inspection during
normal business hours and upon reasonable notice to such Grantor;

 

(c)           Promptly notify the Secured Parties in writing of
any material loss or damage to its inventory or equipment;

 

12

 

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

 

(e)           Protect, defend and maintain the validity and
enforceability of the Intellectual Property, use its reasonable best efforts to
detect infringements of the Intellectual Property, promptly advise the Secured
Parties in writing of material infringements detected, and not allow any
Intellectual Property to be abandoned, forfeited or dedicated to the public
without the written consent of the Secured Parties, which shall not be
unreasonably withheld, unless such Grantor determines that reasonable business
practices suggest that abandonment is appropriate; and

 

(f)            Advise the Secured Parties of all its trademarks,
patents and copyrights, or applications for or registration of the same,
created or obtained by such Grantor on or after the date of this Agreement.

 

SECTION 11.   Covenants as to
Accounts Receivable. (a)  Each of the
Grantors shall keep its principal place of business and chief executive office
and the office where it keeps its records concerning its Accounts Receivable,
at the location therefor specified in Schedule I hereto or, upon 30 days’
prior written notice to the Secured Parties, at such other locations in a
jurisdiction where all action required by Section 9 shall have been taken
with respect to its Accounts Receivable. Such Grantor shall hold and preserve
such records and will permit representatives of the Secured Parties to inspect
and make abstracts from such records upon reasonable notice to such Grantor and
during normal business hours.

 

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

 

13

 

SECTION 12.   Covenants as to
Insurance.  (a)   Each policy for liability and property damage
insurance shall provide for all losses to be paid on behalf of the Secured
Parties, Silicon, Phoenix and the Grantors, as their respective interests may
appear. Each such policy shall, in addition: (i) name the Secured Parties
as insured party thereunder (without any representation or warranty by or
obligation upon the Secured Parties) as their interests may appear; and (ii) provide
that at least 30 days’ prior written notice of amendment to or lapse and at
least 30 days’ prior written notice of cancellation shall be given to the
Secured Parties by the insurer. Each Grantor shall use commercially reasonable
efforts to cause each policy to contain the agreement by the insurer that any
loss thereunder shall be payable to the Secured Parties whose rights with
respect to any loss thereunder shall be unaffected by any action, inaction or
breach of representation and warranty by such Grantor. Each Grantor shall, if
so requested by the Secured Parties, deliver to the Secured Parties original or
duplicate policies of such insurance and, as often as the Secured Parties may
request, a report of a reputable insurance broker with respect to such
insurance. Further, each Grantor shall, at the request of the Secured Parties,
duly execute and deliver instruments of assignment of such insurance policies
to comply with the requirements of Section 8 and cause the respective
insurers to acknowledge notice of such assignment.

 

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

 

(c)           Subject to the rights of
Silicon, upon the occurrence and during the continuation of any Event of
Default, all insurance payments in respect of such equipment or inventory shall
be paid to the Secured Parties and applied to payment of the amounts due under
the Secured Obligations.

 

SECTION 13.   Attorney-in-Fact.  Each of the Grantors hereby irrevocably
appoints the Secured Parties as such Grantor’s attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such
Grantor, the Secured Parties or otherwise, to, after the occurrence and during
the continuance of an Event of Default, take any action and to execute any
instrument which the Secured Parties may deem necessary or advisable to
accomplish the purposes of this Agreement, subject to the rights of Silicon,
including, without limitation:

 

(a)           to obtain and adjust insurance required to be paid
to the Secured Parties pursuant to Section 12 hereof;

 

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

 

(c)           to receive, endorse, assign, and collect any and all
checks, notes, drafts and other negotiable and non-negotiable instruments,
documents and chattel paper, in connection with

 

14

 

clause (a) or (b) above, and each Grantor waives notice of
presentment, protest and non-payment of any instrument, document or chattel
paper so endorsed or assigned;

 

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

 

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

 

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

 

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

 

(h)           to transmit to customers indebted on accounts notice
of the Secured Parties’ interest therein and to notify customers indebted on
accounts to make payment directly to the Secured Parties for the Grantors’
account.

 

Each
of the Grantors hereby ratifies and approves all acts (other than those which
result from the Secured Parties’ gross negligence or willful misconduct) of the
Secured Parties, as its attorney in-fact, pursuant to this Section, and the
Secured Parties, as its attorney in-fact, shall not be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law
(other than those which result from the Secured Parties’ gross negligence or
willful misconduct). This power, being coupled with an interest, is irrevocable
so long as this Agreement remains in effect. Each of the Grantors also
authorizes the Secured Parties, at any time after the occurrence and during the
continuance of an Event of Default, to communicate in its own name with any
party to any contract, agreement or instrument included in the Collateral with
regard to the assignment of such contract, agreement or instrument and other
matters relating thereto.

 

SECTION 14.   Secured Parties’ Duties.   The powers conferred on the Secured Parties
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in their possession and the accounting for moneys
actually received by them hereunder, the Secured Parties shall not have any
duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.

 

SECTION 15.   Remedies.   Subject to the rights of Silicon, if any
Event of Default shall have occurred and not have been waived by the Secured
Parties or cured to the satisfaction of the Secured Parties:

 

(a)           The Secured Parties have the right to take the
actions described in the proviso of Section 11(b) and in Section 13
hereof.

 

(b)           The Secured Parties may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of

 

15

 

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

 

(c)           All cash proceeds received by the Secured Parties in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, to the extent required by applicable law, be held
by the Secured Parties as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent
hereunder) to the payment in full of the Secured Obligations. Any surplus of
such cash or cash proceeds held by the Secured Parties and remaining after
payment in full of all the Secured Obligations to the Secured Parties shall be
paid over to the Grantors. If the proceeds of the sale of the Collateral are
insufficient to pay all of the Secured Obligations, each of the Grantors agrees
to pay upon demand any deficiency to the Secured Parties.

 

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

 

(e)           Each of the Grantors recognize that the Secured
Parties may be unable to effect a public sale of all or part of the Collateral
consisting of the investment property by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, or in applicable Delaware
or other states’ securities laws as now or hereafter in effect, unless
registration or qualification, as the case may be, is accomplished. To the
extent permitted by law, each of the Grantors acknowledges that the Secured
Parties may resort to one or more private sales to a single purchaser or a
restricted group of purchasers who will be obliged to agree, among other
things, to acquire such investment property for their own account, for
investment and not with a view to the distribution or resale thereof. To the
extent permitted by law, each of the Grantors agrees that private sales may be
at prices and other terms less favorable to the Grantors than if such
investment property were sold at a public sale and that the Secured Parties
shall have no obligation to delay the sale of any such portion of the
Collateral for the period of time necessary

 

16

 

to permit the issuer of such
investment property to register or qualify such investment property, even if
such issuer would, or should, proceed to register or qualify such investment
property for public sale. Each of the Grantors agrees that private sales made
under the foregoing circumstances shall be deemed to have been made in a “commercially
reasonable” manner.

 

SECTION 16.   Indemnification
and Expenses.  (a)  Without limiting any of the Grantors’
obligations under Section 3 hereof, each of the Grantors hereby agrees to
indemnify and defend the Secured Parties (including, for the purposes of this
Section, their agents, consultants and advisors (each, an “Indemnified Party”)),
from and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities that are finally
determined to result from an Indemnified Party’s gross negligence or willful
misconduct.

 

(b)           Each of the Grantors shall, upon demand, pay to the
Secured Parties the amount of any and all reasonable expenses, including the
fees and out-of-pocket expenses or disbursements of their counsel and of any experts
and agents, which the Secured Parties may incur in connection with (i) the
negotiation or preparation of, or any closing under, and the perfection of
(including any filing or recording fees) any and all Liens contemplated by,
this Agreement, any amendments and modifications thereto, and terminations
thereof, and any other related documents, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization
upon, any of the Collateral, and (iii) the interpretation, performance or
enforcement of any of the rights of the Secured Parties. Without limiting in
any manner the generality of the foregoing, each of the Grantors shall pay all
reasonable out-of-pocket costs and expenses of the Secured Parties upon failure
by the Grantors to perform or observe any of the provisions of this Agreement
or upon demand in connection with the bankruptcy or other insolvency proceeding
involving a Grantor, in each case, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Secured Parties
and of any consultants or expert witnesses retained by the Secured Parties,
with respect to any aspect of the Secured Obligations or otherwise relating to
the transactions contemplated hereby. The Secured Parties shall not be liable
to the Grantors for damages as a result of delays, temporary withdrawals of the
equipment from service or other causes other than those caused by the Secured
Parties’ gross negligence or willful misconduct.

 

(c)           This provisions of this Section shall survive
satisfaction of the Secured Obligations and termination of this Agreement.

 

SECTION 17.   Certain Waivers.   Each of the Grantors hereby waives, to the
extent the same may be waived under applicable laws: (a) notice of
acceptance of this Agreement; (b) all claims, causes of action and rights of
such Grantor against the Secured Parties on account of actions taken or not
taken by the Secured Parties in the exercise of the Secured Parties’ rights or
remedies hereunder or under applicable laws (unless such claims, causes of
action and/or rights arose from the gross negligence, fraud or willful default
on the part of the Secured Parties); (c) all claims of such Grantor for
failure of the Secured Parties to comply with any requirement of applicable
laws relating to enforcement of the Secured Parties’ rights or remedies
hereunder, the Transaction Documents, the agreements and documents relating
hereto and thereto, or under applicable laws; (d) all rights of redemption
of such Grantor with respect to the Collateral; (e) in the event the
Secured Parties seek to repossess any or all

 

17

 

of the Collateral by
judicial proceedings, any bond(s) or demand(s) for possession which
otherwise may be necessary or required; (f) presentment, demand for
payment, protest and notice of non payment and all exemptions; (g) any and
all other notices or demands which by applicable laws must be given to or made
upon such Grantor by the Secured Parties; (h) settlement, compromise or
release of the obligations of any person primarily or secondarily liable upon
any of the Secured Obligations; and (i) substitution, impairment, exchange
or release of any Collateral for any of the Secured Obligations.

 

SECTION 18.   Waivers
and Amendments.  (a)  The
provisions of this Agreement, and the rights of the Secured Parties in relation
to the Collateral and the recovery of the Secured Obligations (whether arising
under this Agreement or under the general law), shall not be capable of being
waived, amended or varied otherwise than by an express waiver or amendment by
the Secured Parties in writing, and then such waiver, amendment or variation
shall be effective only in the specific instance and for the specific purpose
for which given. Any failure by the Secured Parties to exercise, or any delay
in exercising, any of their rights hereunder shall not operate as a waiver,
amendment or variation of that or any other right. Any defective or partial
exercise of any of such rights shall not preclude any other or further exercise
of that or any other such right; and no act or course of conduct or negotiation
on the part of the Secured Parties or on their behalf shall in any way preclude
them from exercising any such right or constitute a suspension or any variation
or amendment of any such right.

 

SECTION 19.   Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be (a) mailed by
registered or certified mail, postage prepaid, (b) sent by facsimile, (c) delivered
by nationally recognized overnight courier service, or (d) otherwise
delivered by hand or by messenger, addressed, if to the Secured Parties, to:

 

Philip
S. Sassower

c/o
Phoenix Venture Fund LLC

110
East 59th Street, Suite 1901

New
York, NY 10022

Facsimile:
212-319-4970,

 

or
at such other address as the Secured Parties shall have furnished to the
Grantors in writing, or, if to the Grantors, to:

 

Xplore
Technologies Corp

14000
Summit Drive, Suite 900

Austin,
Texas 78728

Facsimile:
512-336-7791

Attention:
Michael J. Rapisand

 

All
notices shall be effective upon receipt.

 

SECTION 20.   Continuing
Security Interest.   The security
interest created under this Agreement shall (a) remain in full force and
effect until the payment in full of the Secured Obligations, (b) be
binding upon the Grantors, their successors and permitted assigns, and (c) inure
to the benefit of the Secured Parties and their heirs and assigns. Upon the
indefeasible

 

18

 

payment in full of the Secured Obligations,
the security interest granted hereby shall automatically terminate and all
rights to the Collateral shall revert to the Grantors (and, upon such
termination, the Secured Parties will, at the Grantors’ expense, execute and
deliver to the Grantors such documents as the Grantors may reasonably request
to evidence such termination); provided,
however, that the parties hereto agree that, if at any time all or any part of
any payment theretofore applied by any party to this Agreement is, or must be,
rescinded or returned for any reason whatsoever, including, without limitation,
the insolvency, bankruptcy or reorganization of a Grantor, this Agreement
shall, to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence notwithstanding such application, and
this Agreement shall continue to be effective or be reinstated, as the case may
be, as though such application had not been made.

 

SECTION 21.   Governing
Law; Jurisdiction; Waiver of Immunity, Etc. 
(a)  This Agreement shall be governed by, and construed in
accordance with, the internal laws (and not the law of conflicts) of the State
of New York, except to the extent that the perfection of the security interest
hereunder or remedies hereunder, in respect of any particular Collateral, are
governed by the laws of a jurisdiction other than the State of New York.

 

(b)           Each of the Grantors hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement, or for recognition
or enforcement of any judgment, and such Grantor irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the Grantors agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Secured Parties may otherwise have to bring any action or proceeding relating
to this Agreement against such Grantor or its properties in the courts of any
jurisdiction.

 

(c)           Each of the Grantors hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in paragraph (b) of this Section.
Each of the Grantors hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.

 

(d)           Each of the Grantors hereby
irrevocably waives and agrees not to claim immunity from suit, from the
jurisdiction of any court, from attachment prior to, or in aid of execution of,
a judgment, or from execution of a judgment.

 

SECTION 22.   Jury
Trial Waiver.  EACH OF THE GRANTORS
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE COLLATERAL OR THE

 

19

 

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

 

SECTION 23.   Joint
and Several Obligations.   The obligations
of the Grantors hereunder shall be joint and several, and the Secured Parties,
at their option, may demand and exercise its rights hereunder against one of
the Grantors or both or any of them together.

 

SECTION 24.   Other
Security.  This security is in
addition to, and shall neither be merged in, nor in any way exclude or
prejudice, any other security interest, right of recourse or other right
whatsoever which the Secured Parties may now or at any time hereafter hold or
have (or would apart from this security hold or have) as regards either Grantor
or any other person in respect of the Secured Obligations.

 

SECTION 25.   Rights
Cumulative.  No right or remedy
herein conferred upon the Secured Parties is intended to be exclusive of any
other right or remedy, and every right or remedy, to the extent permitted by
law, shall be cumulative and in addition to every other right or remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
powers which this Agreement confers on the Secured Parties may be exercised as
often as the Secured Parties think appropriate; the Secured Parties may, in
connection with the exercise of their powers, join or concur with any person in
any transaction, scheme or arrangement whatsoever; and each of the Grantors
acknowledges that the powers of the Secured Parties shall in no circumstances
whatsoever be suspended, waived or otherwise prejudiced by anything other than
an express waiver or variation in writing.

 

SECTION 26.   Severability.  Should any one or more of the provisions of
this Agreement be held to be invalid, illegal or unenforceable in any
jurisdiction, the same shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof; and
the invalidity, illegality or unenforceability of a particular provision in a
particular jurisdiction shall not render such provision invalid, illegal or
unenforceable in any other jurisdiction.

 

20

 

SECTION 27.  Successors and Assigns; Assignment.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective personal representatives, heirs, executors,
administrators, successors and permitted assigns. Neither Grantor shall be
entitled to assign or transfer any of its rights, benefits or obligations
hereunder without the prior written consent of the Secured Parties, and any
attempted assignment or transfer by such Grantor without such consent shall be
null and void.

 

SECTION 28.  Survival of Agreements.  All agreements, representations and
warranties made herein shall survive the delivery of this Agreement.

 

SECTION 29.  Captions.  The captions of the various sections of this
Agreement have been inserted only for the purposes of convenience; such
captions are not a part of this Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of this
Agreement.

 

SECTION 30.  Counterparts.  This Agreement may be executed by the parties
hereto individually or in any combination, in one or more counterparts, each of
which shall be an original and all of which together constitute one and the
same agreement.

 

SECTION 31.  Interest; Default Interest.  The interest payable hereunder shall be
calculated on the basis of a year of 365 or 366 days, as applicable, and for
the actual number of days elapsed. If any of the amounts payable by the
Grantors hereunder, including the amounts payable under Section 16 hereof,
are not paid when due, such amounts shall accrue interest, from the date such
amounts became due until they are paid in full, at the rate of five percent
(5%) per annum. Any interest hereunder shall be calculated on the basis of a
year of 365 or 366 days, as applicable, and for the actual number of days
elapsed. Any rate of interest hereunder shall not exceed the maximum rate of
interest permitted under applicable law.

 

SECTION 32.  Discharge of Obligations.  Each of the Secured Parties acknowledges and
agrees that any payment made by either of the Grantors hereunder to one of the
Secured Parties shall discharge, to the extent of such payment, such Grantor’s
obligation to make such payment to the Secured Parties hereunder.

 

[SIGNATURES ON FOLLOWING PAGE.]

 

21

 

IN WITNESS
WHEREOF, the undersigned have executed this Letter of Credit Reimbursement,
Compensation and Security Agreement as of the date first written above.

 

 

“Secured
Parties”:

 

 

	
  /s/ Philip Sassower

  	
   

  
	
  PHILIP SASSOWER

  	
   

  

 

 

	
  /s/ Susan Sassower

  	
   

  
	
  SUSAN SASSOWER

  	
   

  

 

 

“Borrower”:

 

XPLORE TECHNOLOGIES CORPORATION
OF AMERICA

 

	
  By:

  	
  /s/ Michael
  J. Rapisand

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Financial Officer

  	
   

  

 

 

“Parent”:

 

XPLORE TECHNOLOGIES CORP.

 

	
  By:

  	
  /s/ Michael
  J. Rapisand

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Financial Officer

  	
   

  

 

 

SCHEDULE I

 

Place of Business and Locations of Collateral

 

Principal Place of Business and Chief Executive Office of the Parent:

 

Xplore Technologies Corp.

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

Principal Place of Business and Chief Executive Office of the Borrower:

 

Xplore Technologies Corporation of America

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

Locations of the Parent’s Equipment:

 

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

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

 

Locations of the Borrower’s Equipment:

 

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

Locations of the Parent’s Inventory:

 

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

Locations of the Borrower’s Inventory:

 

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

 

Location of Records Evidencing the Parent’s Accounts Receivable and
other Collateral:

 

14000 Summit Drive, Suite 900

Austin, Texas 78728

 

Location of Records Evidencing the Borrower’s Accounts Receivable and
other Collateral:

 

14000 Summit Drive, Suite 900

Austin, Texas
78728

 

 

SCHEDULE II

 

Intellectual Property

 

Patents

 

	
  Patent
  No.

  	
   

  	
  Type

  	
   

  	
  Description

  
	
  6,028,765

  	
   

  	
  US

  	
   

  	
  Removable Hand Grips For A Portable Pen Based Computer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,101,087

  	
   

  	
  US

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,426,872 B1

  	
   

  	
  US

  	
   

  	
  Portable Pen Based Computer With A Vehicular Docking Station

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,504,710 B2

  	
   

  	
  US

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patent Application 11/065,903

  	
   

  	
  US

  	
   

  	
  Apparatus providing multi-mode digital input

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patent Application 12/134,627

  	
   

  	
  US

  	
   

  	
  Electronic Enclosure Having Elastomeric Circuit Board Standoffs

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patent Application 12/134,558

  	
   

  	
  US

  	
   

  	
  Electronic Enclosure Fastening Belt

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patent Application 12/134,603

  	
   

  	
  US

  	
   

  	
  Configurable Computer System and Methods for use

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  525,452

  	
   

  	
  CDN

  	
   

  	
  Registered Trademark –Xplore

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  525,417

  	
   

  	
  CDN

  	
   

  	
  Registered Trademark – GeneSys

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2,367,773

  	
   

  	
  CDN

  	
   

  	
  Removable hand grips for a portable pen-based computer.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Published CA Application 2,239,846

  	
   

  	
  CDN

  	
   

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

  

 

 

Copyrights

 

None

 

Trademarks

 

	
  Description

  	
   

  	
  Serial/Registration No.

  	
   

  	
  File Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WORKBOOK

  	
   

  	
  77440530

  	
   

  	
  4/4/08

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XPLORE TECHNOLOGIES

  	
   

  	
  77440522

  	
   

  	
  4/4/08

  	
   

  

 

 

SCHEDULE III

 

Existing Commercial Tort Claims

 

Parent

 

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

 

Borrower

 

In March 2008, Typhoon Touch Technologies, Inc. (“Typhoon”)
and Nova Mobility Systems, Inc. (“Nova”) (collectively, the “Plaintiffs”)
filed Plaintiffs’ First Amended Complaint for Patent Infringement (the “Complaint”)
against the Borrower and several other defendants including Dell, Inc., in
the United States District Court for the Eastern District of Texas (the “Court”).
The Complaint alleges that the defendants manufacture, sell, offer for sale
and/or import products that infringe on two U.S. patents owned by Typhoon and
exclusively licensed to Nova. In April 2008, the Borrower filed its
Answer, Defenses and Counterclaim in response to the Complaint, denying the
allegations of infringement and requesting the Court to dismiss the Complaint
and award judgment in favor of the Borrower, including recovery of the Borrower’s
attorneys’ fees and costs. In May 2008, Plaintiffs filed Plaintiffs’ Reply
to the Borrower’s Counterclaims in which Plaintiffs deny any allegation that
any claim relating to the patents is invalid. The Court has not issued a
scheduling order.

 

 

EXHIBIT A

 

Copy of Initial Irrevocable Standby Letter of Credit

 

[See attached]

 

 

EXHIBIT
B

 

Form of
Warrant

 

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

 

WARRANT
TO PURCHASE

SHARES OF

COMMON
STOCK OF

XPLORE TECHNOLOGIES CORP.

 

	
  No.:
  W    

  	
   

  	
  Number of Warrant Shares: 5,000,000

  
	
   

  	
   

  	
   

  
	
  Date
  of Issuance: May 29, 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 Philip Sassower and Susan Sassower or their registered assigns
are entitled to subscribe for and purchase, during the period specified in this
Warrant, up to 5,000,000 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 $0.10, subject, however, to the provisions
and upon the terms and conditions hereinafter set forth.

 

This Warrant is issued
pursuant to the terms of a Letter of Credit Reimbursement, Compensation and
Security Agreement, dated as of May 29, 2009, among the Issuer, Xplore
Technologies Corporation of America, a Delaware corporation and a wholly-owned
subsidiary of the Issuer, and Philip Sassower and Susan Sassower.

 

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 May 28, 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 

 

2

 

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.

 

(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 

 

3

 

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 (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 

 

4

 

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 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 

 

5

 

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)

 

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.

 

6

 

(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 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:

 

7

 

“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 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.

 

8

 

“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.

 

“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 

 

9

 

of a majority of the
members of the Board of Directors (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the
happening of a contingency.

 

“Warrant Price” means $0.10 per share.

 

“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

 

(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 

 

10

 

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.

 

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.

 

11

 

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.

 

 

[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)

  	
   

  
	
   

  	
  ARTICLE I

  	
   

  

 

 

	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  
				

 

B-1

 

ASSIGNMENT

 

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

 

	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
				

 

 

PARTIAL ASSIGNMENT

 

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

 

	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
				

 

B-2

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