Exhibit 10.2
PARTNERS FOR GROWTH, LLC
180 PACIFIC AVENUE
SAN FRANCISCO, CALIFORNIA 94111
(415) 912-5899
Facsimile: (415) 781-0510
ancirew@pfgrowth.com
December 19, 2007
XATA Corporation
151 E. Cliff Road, Suite 10
Burnsville, MN 55337
Attention: Mark Ties, Chief Financial Officer
Dear Mark:
     Subject to the terms and conditions set forth herein and in the attached
Term Sheet (the “Proposed Terms”), Partners for Growth II, L.P. (“PfG”) hereby
commits to make a term loan in the principal amount of $8,000,000 (the “Loan”)
to XATA Corporation (the “Borrower”).
     The commitment of PfG to make the Loan is subject at all times to: (a) the
truth, accuracy and completeness of all representations and warranties made and
information delivered to, PfG, (b) the negotiation, execution and delivery of
definitive documentation (including without limitation, a Loan and Security
Agreement) for the financing on or prior to the closing of the Company’s pending
acquisition (the “Funding Deadline”), consistent with the Proposed Terms and
otherwise satisfactory to PfG and its counsel, and (c) no change, occurrence or
development shall have occurred (prior to or after the date hereof) that has had
or could reasonably be expected to have a material adverse effect on the
operations, business, assets, properties, liabilities (actual or contingent),
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole, or result in a material impairment of the rights
and remedies of PfG under any loan documentation.
     The Loan and Security Agreement and related documents will incorporate
terms consistent with those outlined above and in the Proposed Terms, together
with such representations and warranties, events of default, and additional
conditions to closing as are customary or as may be reasonably required by PfG.
     If this letter is in accordance with your understanding of our agreement,
please indicate your acceptance by signing below and returning this letter and
the attached Proposed Terms to PfG, Attention to Andrew Kahn, by Friday,
December 21, 2007 (the “Acceptance Deadline”).
     This commitment shall terminate automatically if this letter is not
executed by the Borrower and returned to PfG on or prior to the Acceptance
Deadline.

 

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December 19, 2007
Page 2
     Any alterations or changes to this letter or the attached Proposed Terms
shall only be effective if acknowledged in writing by both the Borrower and PfG.
     This letter may be executed in two or more counterparts, and will become
effective when counterparts have been executed by PfG and the Borrower.

                      Very truly yours,    
 
                    Partners for Growth II, L.P.    
 
               
 
  /s/ Andrew Kahn
 
Andrew Kahn       /s/ Jason Georgatos
 
Jason Georgatos    
 
  Manager       Manager    

Accepted this 19 day of
December, 2007.

          XATA Corporation
      By   /s/ Mark E. Ties         Its Chief Financial Officer             

 

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PfG/XATA Term Sheet — December 19, 2007
PARTNERS FOR GROWTH, LLC
180 PACIFIC AVENUE
SAN FRANCISCO, CALIFORNIA 94111
(415) 912-5899
Facsimile: (415) 781-0510
ancirew@pfgrowth.com
Via Electronic Mail
December 19, 2007
Mr. Mark Ties
Chief Financial Officer
XATA Corporation
151 E. Cliff Road, Suite 10
Burnsville, MN 55337
Dear Mark:
It is our pleasure to express the interest of Partners for Growth II, L.P.
(“PfG”) in providing XATA Corporation (the “Borrower” or the “Company”) with an
$8,000,000 financing package to support the Company’s pending acquisition. The
proposed financing along with the senior bank facility provides for 100%
financing of the Company’s proposed $18 million acquisition. Our subordinated
debt would be structured as primarily an interest only financing to enable the
company time to generate cash flow and can be refinanced any time without
penalty when the Company pursues additional financing in the future. We
understand the Company needs to move quickly to close the proposed acquisition
and are willing to endeavor to close the deal within 20 days from the receipt of
a signed term sheet.
Subordinate Acquisition Term Loan:

     
Security:
  Term Loan
 
   
Commitment
Amount:
  $8,000,000, funded upon the close of the acquisition to purchase the target
company identified to PfG by the Borrower.
 
   
Maturity:
  48 months.
 
   
Repayment:
  Interest only monthly for the first 36 months; quarterly principal payments of
$1,000,000 in year four with the balance due at maturity.
 
   
Amortization Trigger:
  If Borrower falls below the Liquidity Ratio (defined below), PfG has the right
but not the obligation to amortize the loan as if it were a three year loan with
equal monthly principal payments of $222,222. For example, if the Company fell
below the Liquidity

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  Ratio 3 months after the close of the deal, and we chose to exercise the
amortization, then the Company would owe us $666,666 with the balance of the
loan due in equal monthly principal payments, plus interest, over the following
33 months. Any payments under the Amortization Trigger must either be paid to
PfG or to reduce the senior SVB debt (at the discretion of the senior lender).
 
   
 
  Liquidity Ratio: Borrower to maintain a minimum Adjusted Quick Ratio of 0.75 :
1.00, defined as (Cash at SVB + Eligibal A/R) divided by (SVB Debt + PfG Debt).
This ratio will increase to 1.00: 1.00 as of 6/30/09.
 
   
Interest Rate:
  14.5% fixed.
 
   
Interest Rate Reset:
  If Borrower achieves 105% of its revenue and EBITDA forecast (based on the new
forecast provided to SVB and PfG on November 9th) for the quarters ending
March 31, 2008, June 30, 2008 and September 30, 2008 then the interest rate
would be reduced from 14.5% to 11% fixed.
 
   
Commitment Fee:
  2.0% of the Commitment Amount payable upon the funding of the deal.
 
   
Warrants:
  See Warrant Term Sheet.
 
   
Prepayment Penalty:
  None.
 
   
Security:
  Blanket security interest in all the assets of the Company subject only to a
senior security interest by Silicon Valley Bank (“SVB”) in the amount of
$10,000,000. SVB and PfG have a standard, pre-negotiated subordination agreement
that would be entered into at closing.
 
   
Financial Reporting:
  Monthly financial statements and compliance certificates, within 30 days.
 
   
 
  Monthly A/R and A/P Agings, within 30 days
 
   
 
  Monthly deferred revenue schedules, within 30 days
 
   
 
  Audited financial statements, within 120 days
 
   
 
  Annual board approved plan, as soon as available
 
   
 
  Upon PfG’s request, copies of all reporting provided to SVB.
 
   
 
  For the first two quarters after closing, all monthly reporting would be due
within 15 days of month end.

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Financial Covenants:
   
 
   
 
  Tangible Net Worth Ratio (“TNW”), defined as net worth less intangible assets.
At all times, and measured monthly, starting with 3/31/08, the borrower’s
Tangible Net Worth must be higher than $1,000,000 below borrower’s TNW as of the
close of borrower’s acquisition of Geologic Solutions, Inc., with such minimum
TNW requirement increasing by $1,500,000 beginning with the month ending
9/30/08. In addition, beginning with the month ending 3/31/09, the minimum TNW
requirement shall increase by 50% of quarterly Net Income for the quarter ending
3/31/09 and for each quarter ending thereafter, with the minimum TNW requirement
being adjusted quarterly.
 
   
 
  Modified EBITDA: borrower’s EBITDA — Taxes — Distributions — Unfinanced Capex
(“MEBITDA”) for January 2008, January through February 2008, and January through
March 2008, must not be less than ($1,000,000).
 
   
 
  FCCR Covenant: defined as (MEBITDA / Interest + Mandatory Principal Pmts) of
not less than 1.25:1.00 on a trailing twelve month basis, starting 12/31/08,
monitored quarterly thereafter.
 
   
Documentation:
  PfG’s customary documentation.
 
   
Conditions of Funding:
  Borrower closes the acquisition of the identified target company within
60 days of closing of the PfG facility. If the acquisition is not consummated,
then our financing commitment will terminate and the warrant will be returned to
the Company. The Company will only be responsible for our out of pocket expenses
including primarily legal fees associated with the preparation and negotiation
of the documents.
 
   
Expenses:
  Borrower would pay all of PfG’s out-of-pocket fees, charges, costs and
expenses in connection with the loan.
 
   
Confidential:
  This letter is delivered to you with the understanding that neither it nor its
substance shall be disclosed publicly or privately to any third person.
Exceptions to this confidentiality agreement are those who are in a confidential
relationship to you, such as legal counsel, senior management and members of the
Borrower’s Board of Directors, or where disclosure is required by law and then
only on a basis that it not be further disclosed.

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If the terms and conditions described above are acceptable, please so indicate
by signing this letter and returning the same, together with a check for $25,000
which shall constitute a non refundable “Due Diligence Fee”, to the attention of
the undersigned by 5:00 p.m. Pacific Time, December 21, 2007. The Due Diligence
Fee will be applied to the Commitment Fee upon the funding of the loan. If the
loan is not funded then the Due Diligences Fee would be applied to PfG’s costs
and expenses with any balance being returned to the Company.
Very truly yours,
Partners for Growth II, L.P.

         
 
       
/s/ Andrew Kahn
 
  /s/ Jason Georgatos
 
    
Andrew Kahn
  Jason Georgatos    
Manager
  Manager    

Agreed to and accepted this 19 day of December, 2007.

          XATA Corporation
      By:   /s/ Mark E. Ties         Name:   Mark E. Ties               

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PfG/XATA Warrant Term Sheet
WARRANT TERM SHEET

          Type of Security and Consideration:   Partners for Growth II L.P.
(“PfG” or “Holder”) shall purchase for $8,382 a warrant (the “Warrant”) to
purchase 457,144 shares of Common Stock (the “Warrant Shares”) of XATA
Corporation (the “Company”). The Warrant may be exercised in whole or in part.
 
        Exercise Price:   The lower of $3.50 per share or the average closing
price in the 5 trading days prior to the close of the deal.
 
        Term of Warrant:   5 years from the close of the deal.
 
        Adjustment of Number and Kind
of Shares and Price Protection:
 
        (1)   Split, Subdivision,
Combination, or Stock
Dividend:   In the event of a split, subdivision, stock dividend or combination
with respect to Common Stock, the Exercise Price and the number of shares
issuable upon exercise of the Warrant shall be proportionately adjusted.
 
        (2)   Treatment of Warrant At Acquisition:   In the event of any
reclassification of capital stock, or any reorganization, consolidation or
merger of the company, as a condition to the completion of such transaction the
Company shall procure the issue of a new warrant to Holder for the number and
kind of securities receivable upon such reclassification, reorganization,
consolidation or merger by a holder of Company stock. The Company shall give
Holder sufficient notice to exercise rights under its Warrant. If the Company is
not able to procure a new Warrant then the Warrant may be purchased by the
Company for fair value, which shall be determined using a Black-Scholes
Option-Pricing Model.
 
        Assignment:   PfG may assign / transfer the Warrant subject to
compliance with applicable securities laws.
 
        Exchange of Warrant For Common Stock:   The Holder shall be entitled to
require the Company to accept an exchange of such Holder’s Warrant for that
number of shares of the Company’s Common Stock obtained by dividing (x) the
value of the Warrant (determined by subtracting the aggregate Exercise Price of
the Warrant from the aggregate highest fair market value of

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      the shares in the three months prior to the exchange of the number of
shares of Common Stock issuable upon exercise of the Warrant), by (y) the
highest fair market value of one share in the three months prior to the exchange
of Common Stock immediately prior to the exchange.
 
        Optional Exercise of Warrant for Cash:   Holder may, at its option,
exercise the Warrant by tendering cash to pay the Exercise Price.
 
        Automatic Exercise of the Warrant:   The Warrant shall be automatically
exchanged for common stock immediately before it expires, if not previously
exchanged or exercised, and if the fair market value of one share of the
Company’s Common Stock is greater than the Warrant Exercise Price. This would be
done through a cashless exchange as described in the Exchange of Warrant for
Common Stock section above.
 
        Protective Provision:   If the Company issues additional capital stock
(including preferred and common stock, warrants, other securities convertible
into such stock or any combinations of the foregoing) (“Additional Stock”) to
holders of preferred stock outstanding on the date the Warrant is issued in an
amount greater than 5% of the existing outstanding preferred shares (on an as if
converted basis) and upon terms providing a discount to fair market value of 30%
or greater (calculated on an as if converted to common basis), then PfG would
receive a Proportional Increase in the Warrant Shares, up to an increase of 100%
of Warrant Shares. The following will be excluded from this provision:
(i) existing preferred stock (but not cash) dividends, and (ii) structural anti
dilution events (for which an adjustment is in fact made under the Warrant).
“Proportional Increase” means an amount equal to the percentage increase of
shares held by such holders of preferred stock (calculated on an as if converted
to common basis) following the issuance of Additional Stock. Fair market value
shall be the lesser of (i) the closing price of the company’s common stock on
the Nasdaq stock market (or such other exchange or listing service on which the
company’s common stock is quoted), and (ii) any trailing average of the closing
price of the company’s common stock up to 20 trading days.
 
        Registration Rights:   None.

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          Warrant Purchase Agreement:   The Company and each Holder shall
execute, in PfG’s discretion, either a Warrant Purchase Agreement and Warrant,
or an all-inclusive Warrant. In either case, the Warrant documentation shall
contain, among other things, customary representations and warranties by the
Company, covenants of the Company (including without limitation, the giving of
notices and the duty to make fair adjustments) reflecting the provisions set
forth herein, securities compliance representations by PfG and appropriate
conditions to closing.
 
        Opinion of Counsel:   If the Warrant/Warrant Purchase Agreement are to
be governed other than by the laws of the State of California or Delaware, the
Warrant Purchase Agreement/Warrant shall provide for delivery to PfG of a legal
opinion of Company counsel dated as of the date of the Closing, in a form and
substance acceptable to PfG, concerning due authorization and execution of the
Warrant Purchase Agreement and the Warrant and valid reservation of the shares
of Common Stock issuable upon exercise of the Warrant.
 
        Costs:   The Company shall pay all costs and expenses incurred in
connection with the exercise, exchange, transfer or replacement of the Warrant,
including, without limitation, the costs of preparation, execution and delivery
of a new warrant and of stock certificates representing all Warrant stock.
 
        Fees and Expenses:   The Company will bear its own legal expenses with
respect to the issuance of the warrants, and will reimburse PfG for its
expenses.     ACKNOWLEDGED AND     AGREED TO:    

          XATA Corporation           BY:  /s/ Mark E. Ties         NAME:  Mark
E. Ties       TITLE: Chief Financial Officer
      DATE: December 19, 2007
   

Partners for Growth II, L.P.

         
/s/ Andrew Kahn
 
Andrew Kahn
  /s/ Jason Georgatos
 
Jason Georgatos     
Manager
  Manager    

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