Document:

Exhibit 10.2

 

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

 

THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED
HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT
CERTAIN SUBORDINATION AGREEMENT DATED AS OF SEPTEMBER 5, 2008, AS AMENDED (THE “SUBORDINATION
AGREEMENT”) BY AND AMONG XPLORE TECHNOLOGIES CORP. (THE “PARENT”) AND XPLORE
TECHNOLOGIES CORPORATION OF AMERICA (THE “SUBSIDIARY, COLLECTIVELY WITH THE
PARENT, THE “BORROWERS”), PHOENIX VENTURE FUND LLC, AS AGENT, AND SILICON
VALLEY BANK (THE “SENIOR LENDER”), TO THE INDEBTEDNESS (INCLUDING INTEREST)
OWED BY THE BORROWERS PURSUANT TO THAT CERTAIN LOAN AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 15, 2005 (THE “LOAN AGREEMENT”), BY AND AMONG THE
SUBSIDIARY AND THE SENIOR LENDER, AS SUCH LOAN AGREEMENT HAS BEEN AND HEREAFTER
MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO
TIME.

 

SECURED SUBORDINATED
PROMISSORY NOTE

 

	
  $[     ]

  	
   

  	
   

  	
   

  	
  September [  ],
  2008

  

 

FOR VALUE RECEIVED, the
undersigned, Xplore Technologies Corp., a Delaware corporation, (the “Parent”)
and Xplore Technologies Corporation of America, a Delaware corporation and a
wholly-owned subsidiary of the Parent (the “Subsidiary” and collectively
with the Parent, the “Borrowers”), promises to pay to [    ] (the “Holder”), the principal sum
of [    ] ($[   ]) with interest on the unpaid balance from
the date hereof, at the rate of 10% per annum on the unpaid principal amount,
in lawful money of the United States of America or as otherwise provided in Section 3
hereof, at c/o [   ], or at such other
place as the Holder may designate in writing. This Note is one of the secured
subordinated promissory notes (collectively, the “Notes”) referred to
in, and purchased pursuant to, the Note Purchase Agreement dated September 5,
2008, among the Borrowers and the Purchasers named therein (the “Note
Purchase Agreement”) and evidences a borrowing from the Holder by the
Borrowers under the Note Purchase Agreement.  The obligations of the Borrowers under this
Note are secured as provided in the Note Purchase Agreement and the Loan
Documents.

 

1.          Maturity Date.  The principal of this Note, together will all
unpaid interest and any other fees or expenses otherwise due and owed to the
Holder under the Note Purchase Agreement, shall be due and payable on August 5,
2009 (the 

 

 

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

 

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

 

3.             Payment
of Interest.

 

(a)             Interest on the
unpaid principal amount of this Note shall be due and payable quarterly on December 31,
March 31, June 30 and September 30 of each calendar year the
Note is outstanding commencing on December 31, 2008 and ending with a
final partial quarterly interest payment on the Maturity Date in cash or, at
the option of the Parent, in shares of the Parent’s Common Stock at 75% of the
then current market price of such Common Stock on the interest payment date.
For purposes hereof, the term then current market price means the volume
weighted average trading price, as traded on the OTC Bulletin Board, for the
five (5) trading days prior to the applicable interest payment date.

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

10.           Miscellaneous.  The following general provisions apply:

 

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

 

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

 

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

 

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

 

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

 

(f)          No provision in this
Note, or in any instrument or any other document evidencing the obligations
hereunder, executed by the Borrowers or any guarantor, endorser or other party
now or hereafter becoming liable for payment of this Note, shall require the
payment or permit the collection of interest in excess of the Maximum
Rate.  If any excess of interest in such
respect is provided for herein or in any such instrument, or other document,
the provisions of this paragraph shall govern, and neither of the Borrowers nor
any guarantor, endorser or other party shall be obligated to pay the amount of
such interest to the extent that it is in excess of the Maximum Rate.

 

3

 

The intention of the Borrowers and the Holder being to
conform strictly to any applicable federal or state usury laws now in force,
all promissory notes, instruments and other documents executed by the Borrowers
or any guarantor, endorser or other party evidencing the obligations under this
Note shall be held subject to reduction to the amount allowed under said usury
laws as now or hereafter construed by the courts having jurisdiction.

 

Signature on the following page

 

4

 

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

 

 

	
   

  	
  XPLORE TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Michael J.
  Rapisand

  
	
   

  	
   

  	
  Name:

  	
  Michael J. Rapisand

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  XPLORE TECHNOLOGIES

  CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit
10.3

 

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

 

WARRANT TO PURCHASE

SHARES OF

COMMON STOCK OF

XPLORE TECHNOLOGIES CORP.

 

	
  No.: [    ]

  	
   

  	
  Number of
  Warrant Shares: [   ]

  
	
   

  	
   

  	
   

  
	
  Date of Issuance: [     ],
  2008

  	
   

  	
   

  

 

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

 

This Warrant is issued
pursuant to the terms of a Note Purchase Agreement dated September 5,
2008, among the Issuer, Xplore Technologies Corporation of America, a Delaware
corporation and a wholly-owned Subsidiary of Issuer, and the purchasers listed
on Schedule I and Schedule II thereto (the “NPA”).

 

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 September 5,
2011 (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
prior to the Expiration Date, as follows:

 

(i)            Twenty-five percent
(25%) of the Warrant Shares shall vest as of the date hereof; and

 

 

(ii)           Seventy-five percent
(75%) of the Warrant Shares shall vest in equal monthly periods with the first
period beginning October 5, 2008 and the last period ending on the
Maturity Date, provided, however, that if all obligations due under the secured
subordinated promissory note purchased by the holder of this Warrant pursuant
to the NPA are satisfied in full prior to the Maturity Date, the Warrant Shares
will cease vesting as of the date that such obligations were satisfied in full.

 

(b)           Method
of Exercise.  The Holder hereof may
exercise this Warrant, in whole or in part, at any time with respect to the
Warrant Shares then vested, 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 three
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 

 

2

 

respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder
hereof at the Issuer’s expense within such time.

 

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

 

(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

 

(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 to the number of Warrant Shares under this
Warrant, and without payment of any additional 

 

5

 

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 after the First Closing Date the Issuer 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, at least ten (10) Business
Days prior to the date of such adjustment, 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 after the First
Closing 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 First
Closing Date; (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 First Closing Date, (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 First Closing
Date, 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.

 

“First Closing Date” means September 5,
2008.

 

“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.

 

“Maturity Date” means August 5, 2009.

 

“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.

 

9

 

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

 

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

 

                           “Warrant Price” shall
mean $0.27.

 

“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 

 

10

 

action in question and not less than twenty days prior
to the record date or the date on which the Issuer’s transfer books are closed
in respect thereto.

 

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

 

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

 

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.

 

11

 

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

 

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

 

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

 

[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:

  	
  /s/ Michael J.
  Rapisand

  
	
   

  	
   

  	
  Michael J.
  Rapisand

  
	
   

  	
   

  	
  Chief Financial
  Officer

  

 

 

EXHIBIT A

 

Form of Exercise

 

(to be executed by the Holder)

 

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

 

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

 

$                    
wire transfer of funds to the Issuer.

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature of Holder

  
	
   

  	
   

  	
   

  
	
  Instructions for
  registration of shares

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security or
  Employer Identification

  	
   

  	
   

  
	
  Number of Holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address of Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Street

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City, State and
  Zip Code

  	
   

  	
   

  
					

 

A-1

 

EXHIBIT B

 

NET ISSUE NOTICE OF
EXERCISE

 

	
  TO:

  	
   

  	
  Xplore Technologies Corp

  
	
   

  	
   

  	
  14000 Summit Drive,
  Suite 900

  
	
   

  	
   

  	
  Austin, Texas 78728

  
	
   

  	
   

  	
  facsimile number (512)
  336-7791

  
	
   

  	
   

  	
  Attention: Michael
  Rapisand

  

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  
	
   

  	
   

  
						

 

B-1

 

ASSIGNMENT

 

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

 

	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
				

 

 

PARTIAL ASSIGNMENT

 

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

 

	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

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