EXCHANGE AGREEMENT BETWEEN XPLORE TECHNOLOGIES CORP., XPLORE TECHNOLOGIES CORPORATION OF AMERICA, SG PHOENIX LLC, AS AGENT, PHOENIX VENTURE FUND LLC, AS AGENT AND THE PARTIES SIGNATORY HERETO DATED AS OF NOVEMBER 3, 2010

Exhibit 10.1

EXECUTION COPY

EXCHANGE AGREEMENT

BETWEEN

XPLORE TECHNOLOGIES CORP.,

XPLORE TECHNOLOGIES CORPORATION OF AMERICA,

SG PHOENIX LLC, AS AGENT,

PHOENIX VENTURE FUND LLC, AS AGENT

AND

THE PARTIES SIGNATORY HERETO

DATED AS OF NOVEMBER 3, 2010

Table of Contents

i

Table of Contents

(Continued)

ii

Table of Contents

(Continued)

iii

Table of Contents

(Continued)

Exhibits and Schedules

iv

EXCHANGE AGREEMENT

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

W I T N E S S E T H

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

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

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

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

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

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

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

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

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

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

2

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

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

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

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

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

3

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

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

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

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

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

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

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

4

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

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

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

4.9           Restricted Securities.

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

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

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

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

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

5

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

5.1           Capitalization.

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

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

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

6

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

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

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

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

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

7

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

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

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

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

8

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

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

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

9

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

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

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

5.13         SEC Reports; Financial Statements.

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

10

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

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

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

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

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

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

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

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

11

5.17         Employee Matters.

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

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

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

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

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

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

12

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

5.20         Environmental Matters.

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

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

5.21         Intellectual Property Matters.

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

13

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

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

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

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

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

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

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

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

14

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

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

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

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

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

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

15

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

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

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

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

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

16

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

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

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

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

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

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

17

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

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

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

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

18

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

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

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

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

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

19

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

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

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

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

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

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

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

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

20

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

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

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

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

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

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

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

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

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

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

21

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

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

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

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

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

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

22

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

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

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

6.             Pre-Closing Covenants.

6.1           Conduct of Business.

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

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

23

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

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

7.             Conditions of Parties’ Obligations.

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

24

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

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

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

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

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

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

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

25

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

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

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

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

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

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

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

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

26

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

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

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

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

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

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

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

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

27

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

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

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

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

8.             Covenants; Termination.

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

28

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

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

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

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

29

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

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

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

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

8.8           Termination of Agreement.

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

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

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

30

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

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

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

9.             Transfer Restrictions; Restrictive Legend.

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

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

31

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

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

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

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

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

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

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

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

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

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

32

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

33

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

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

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

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

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

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

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

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

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

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

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

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

34

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

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

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

“PCAOB” means the Public Company Accounting Oversight Board.

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

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

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

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

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

“SEC” means the Securities and Exchange Commission.

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

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

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

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

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

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

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

35

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

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

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

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

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

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

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

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

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

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

12.           Enforcement.

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

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

36

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

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

14.           Miscellaneous.

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

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

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

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

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

37

Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇

If to either of the Borrowers:

Xplore Technologies Corp.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇

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

▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, PLLC

▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇

Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇

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

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

38

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

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

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

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

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

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

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

39

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

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

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

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

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

40

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

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

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

[Remainder of Page Intentionally Left Blank]

41

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

Signature Page to Exchange Agreement

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

Signature Page to Exchange Agreement