Document:

exv10w10

 

Exhibit 10.10

AMENDMENT NUMBER 9

TO AMENDED AND RESTATED LOAN AGREEMENT

          THIS AMENDMENT NUMBER 9, dated as of September 29, 2006 (this “Amendment”), to the Amended and
Restated Loan Agreement, dated as of March 7, 2003 (as amended, modified, restated or supplemented
from time to time as permitted thereby, the “Loan Agreement”), among CF LEASING LTD., a company
organized and existing under the laws of the Islands of Bermuda (together with its successors and
permitted assigns, the “Borrower”), FORTIS BANK (NEDERLAND) N.V., a Naamloze Vennootschap
(“Fortis”), as agent on behalf of the Lenders (in such capacity, the “Agent”), BTMU CAPITAL
CORPORATION (formerly BTM Capital Corporation) (“BTMCC”), a Delaware corporation, HSH NORDBANK AG,
NEW YORK BRANCH (“HSH”), a banking institution duly organized and validly existing under the laws
of Germany, WESTLB AG, a joint stock company duly organized and validly existing under the laws of
Germany, acting through its NEW YORK BRANCH (“WestLB”), NIBC BANK N.V. (f/k/a NIB Capital Bank
N.V.), a Naamloze Vennootschap (“NIBC”) and the other financial institutions from time to time
party hereto (each, including Fortis, BTMCC, HSH, WestLB and NIBC, a “Lender” or “Co-Purchaser” and
collectively, the “Lenders” or the “Co-Purchasers”) and West LB, as documentation agent (together
with its successors and assigns in such capacity, the “Documentation Agent”).

W I T N E S S E T H:

          WHEREAS, the Borrower, Fortis, HSH and BTMCC have previously entered into the Loan Agreement,
dated as of September 18, 2002 (the “Loan Agreement”), as amended and restated as of March 7, 2003,
and subsequently amended by Amendment Number 1 thereto, dated as of October 15, 2003, Amendment
Number 2 thereto, dated as of March 4, 2004, Amendment Number 3 thereto, dated as of April 30,
2004, Amendment Number 4 thereto, dated as of May 31, 2004, Amendment Number 5 thereto, dated as of
June 15, 2004, Amendment Number 6 thereto, dated as of June 15, 2005, Amendment Number 7 thereto,
dated as of January 17, 2006, and Amendment Number 8 thereto, dated as of June 14, 2006;

          WHEREAS, the parties desire to further amend the Loan Agreement in order to extend the
Conversion Date from September 30, 2006 to October 31, 2006, upon the terms, and subject to the
conditions, hereinafter set forth, and in reliance on the representations and warranties of
Borrower set forth herein;

          NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, the
parties hereto agree as follows:

          SECTION 1. Defined Terms. Capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings assigned in the Loan Agreement.

          SECTION 2. Full Force and Effect. Other than as specifically modified hereby, the Loan
Agreement shall remain in full force and effect in accordance with the terms and provisions thereof
and is hereby ratified and confirmed by the parties hereto.

 

 

Exhibit 10.10

          SECTION 3. Amendment to the Loan Agreement. Effective upon the date hereof, following
the execution and delivery hereof, Section 101 of the Loan Agreement is hereby amended by amending
and restating the following defined term in its entirety:

     “Conversion Date: With respect to the Commitment of any Lender, the earlier to occur of (i)
October 31, 2006 (as such date may be extended in accordance with Section 201(f)), and (ii) the
date on which an Early Amortization Event initially occurs.”

          SECTION 4. Representations, Warranties and Covenants.

          The Borrower hereby confirms that each of the representations, warranties and covenants set
forth in Articles V and VI of the Loan Agreement are true and correct as of the date first written
above with the same effect as though each had been made as of such date, except to the extent that
any of such representations and warranties expressly relate to earlier dates.

          SECTION 5. Effectiveness of Amendment; Terms of this Amendment.

          (a) This Amendment shall become effective as of the date first written above.

          (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.

          (c) On and after the execution and delivery hereof, (i) this Amendment shall be a part of the
Loan Agreement, and (ii) each reference in the Loan Agreement to “this Agreement” or “hereof”,
“hereunder” or words of like import, and each reference in any other document to the Loan Agreement
shall mean and be a reference to the Loan Agreement as amended or modified hereby.

          (d) Except as expressly amended or modified hereby, the Loan Agreement shall remain in full
force and effect and is hereby ratified and confirmed by the parties hereto.

          SECTION 6. Execution in Counterparts. This Amendment may be executed by the parties
hereto in separate counterparts (including by facsimile and/or email), each of which shall be
deemed to be an original and all of which shall constitute together but one and the same agreement.

          SECTION 7. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES; PROVIDED THAT
SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

          SECTION 8. Consent to Jurisdiction. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE
AGENT ARISING OUT OF OR RELATING TO THIS AMENDMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY, MAY BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY AND COUNTY OF

 

 

Exhibit 10.10

NEW YORK, STATE OF NEW YORK AND THE AGENT AND THE BORROWER EACH HEREBY WAIVE ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND, SOLELY FOR THE PURPOSES OF ENFORCING THIS AMENDMENT, THE AGENT, EACH LENDER AND THE BORROWER
EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING. THE AGENT AND THE BORROWER HEREBY EACH IRREVOCABLY APPOINTS AND DESIGNATES CT
CORPORATION SYSTEM, HAVING AN ADDRESS AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK, 10011, ITS TRUE AND
DULY AUTHORIZED AGENT FOR THE LIMITED PURPOSE OF RECEIVING AND FORWARDING LEGAL PROCESS IN ANY SUCH
SUIT, ACTION OR PROCEEDING, AND THE AGENT AND THE BORROWER EACH AGREE THAT SERVICE OF PROCESS UPON
SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS ON SUCH PERSON. PURSUANT TO NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1402, THE AGENT AND THE BORROWER SHALL EACH MAINTAIN THE
DESIGNATION AND APPOINTMENT OF SUCH AUTHORIZED AGENT UNTIL ALL AMOUNTS PAYABLE UNDER THE LOAN
AGREEMENT SHALL HAVE BEEN PAID IN FULL. IF SUCH AGENT SHALL CEASE TO SO ACT, THE AGENT OR THE
BORROWER, AS THE CASE MAY BE, SHALL IMMEDIATELY DESIGNATE AND APPOINT ANOTHER SUCH AGENT
SATISFACTORY TO THE AGENT AND SHALL PROMPTLY DELIVER TO THE AGENT EVIDENCE IN WRITING OF SUCH OTHER
AGENT’S ACCEPTANCE OF SUCH APPOINTMENT.

          SECTION 9. No Novation. Notwithstanding that the Loan Agreement is hereby amended by
this Amendment as of the date hereof, nothing contained herein shall be deemed to cause a novation
or discharge of any existing indebtedness of the Borrower under the Loan Agreement, or the security
interest in the Collateral created thereby.

[Signature pages follow]

 

 

Exhibit 10.10

          IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment on the date
first above written.

	 	 	 	 	 	 	 
	 	 	CF LEASING LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ DENNIS J. TIETZ	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Dennis J. Tietz	 	 
	 	 	Title: Director	 	 

Amendment No. 9 to A&R Loan Agt.

 

 

Exhibit 10.10

	 	 	 	 	 	 	 
	 	 	FORTIS BANK (NEDERLAND) N.V.,	 	 
	 	 	as Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ E. VAN LOOPIK	 	 
	 

	 	 	 	 	 	 
	 	 	Name: E. van Loopik	 	 
	 	 	Title: Senior Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. F. G. M. WOLFHAGEN	 	 
	 

	 	 	 	 	 	 
	 	 	Name: J. F. G. M. Wolfhagen	 	 
	 	 	Title: Director of Risk Management	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ MARTIJN P. NIJS	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Martijn P. Nijs	 	 
	 	 	Title: Senior Manager	 	 

Amendment No. 9 to A&R Loan Agt.

 

 

Exhibit 10.10

	 	 	 	 	 	 	 
	 	 	BTMU CAPITAL CORPORATION, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CHERYL A. BEHAN	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Cheryl A. Behan	 	 
	 	 	Title: Senior Vice President	 	 

Amendment No. 9 to A&R Loan Agt.

 

 

Exhibit 10.10

	 	 	 	 	 	 	 
	 	 	HSH NORDBANK AG, NEW YORK BRANCH,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ ANGELA BEHREND GORNEMANN	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Angela Behrend Gornemann	 	 
	 	 	Title: Deputy Global Head of Transportation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ LINH DUONG	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Linh Duong	 	 
	 	 	Title: Vice President	 	 

Amendment No. 9 to A&R Loan Agt.

 

 

Exhibit 10.10

	 	 	 	 	 	 	 
	 	 	WESTLB AG, NEW YORK BRANCH, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ SALVATORE BATTINELLI	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Salvatore Battinelli	 	 
	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ AMIR OREN	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Amir Oren	 	 
	 	 	Title: Manager	 	 

Amendment No. 9 to A&R Loan Agt.

 

 

Exhibit 10.10

	 	 	 	 	 	 	 
	 	 	NIBC BANK N.V., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ MAURICE L. WIJMANS	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Maurice L. Wijmans	 	 
	 	 	Title: Associate Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ AAT A. VAN RHIJN	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Aat A. van Rhijn	 	 
	 	 	Title: Managing Director	 	 

Amendment No. 9 to A&R Loan Agt.exv10w41

 

EXHIBIT 10.41

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of the
1st of October, 2006 by and between XATA Corporation, a Minnesota corporation (the
“Company”), and John J. Coughlan (“Executive”).

RECITALS

     WHEREAS, the Company and Executive desire that Executive be employed by the Company as its
President and Chief Executive Officer effective as of the date of this Agreement; and

     WHEREAS, the Company and Executive desire to set forth in writing the terms and conditions of
their agreements and understanding.

     NOW THEREFORE, in consideration of the mutual covenants and undertakings contained in this
Agreement, the Company and the Executive hereby agree as follows:

     1. DEFINITIONS. Capitalized terms used in this Agreement shall have the following defined
meanings throughout the Agreement, unless the context clearly requires otherwise.

          1.1 “Agreement” means this Executive Employment Agreement, as amended in writing from time to
time.

          1.2 “Base Salary” means the total annual cash compensation payable to Executive on a regular
periodic basis, without regard to voluntary or mandatory deferrals, as set forth at Section 3.1 of
this Agreement.

          1.3 “Beneficiary” means the person or persons designated in Exhibit “B” of this Agreement and
signed by Executive to receive any benefits payable after Executive’s death pursuant to this
Agreement. In the absence of such designation or in the event that all of the persons so designated
predecease Executive, Beneficiary means the executor, administrator or personal representative of
Executive’s estate.

          1.4 “Board” means the Board of Directors of the Company.

          1.5 “Cause” A termination of employment shall be for “Cause” if the Executive:

     (i) shall have been convicted of a felony;

     (ii) shall have engaged in an act or acts of personal dishonesty intended to result in
substantial personal enrichment of the Executive at the expense of the Company;

     (iii) shall have engaged in gross negligence or willful misconduct with respect to the
Company or its subsidiaries or affiliates, or has intentionally engaged in any other
conduct that is materially injurious (or would be reasonably likely to be materially
injurious if made public) to the Company, monetarily or otherwise, other than

1
 

 

 

any such conduct that the Executive reasonably believes to be in furtherance of and properly
consistent with the scope of his employment;

     (iv) shall have committed any act involving material dishonesty or material disloyalty
with respect to the Company or any of its subsidiaries or affiliates; or

     (v) shall have engaged in any other malfeasance or act of moral turpitude that
inflicts material harm (or would be reasonably likely to inflict material harm if made
public) upon the reputation of the Company or any of its subsidiaries or affiliates.

          1.6 “Change of Control” means any of the following events:

               (a) A sale, consolidation, merger, acquisition or affiliation which results in the
stockholders of the Company (determined immediately prior to the consummation of the transaction)
holding immediately after consummation of such transaction less than 45% of the total outstanding
capital stock of the surviving or successor corporation in the transaction (the “Surviving
Corporation”); or

               (b) A sale, consolidation, merger, or acquisition in which the Company becomes accountable
to, or a part of, a newly created company or controlling organization where at least 51% of the
members of the Board of the newly created Company or controlling organization were not members of
the Company’s Board immediately prior to such sale, consolidation, merger, or acquisition; or

               (c) A sale or other disposition by the Company of all or substantially all of the assets of
the Company.

          1.7 “Company” means, jointly and severally, XATA Corporation and any Successor.

          1.8 “Company’s Business” means the development of onboard information technology products
(“Products”) and the marketing and sale of such Products to the transportation industry.

          1.9 “Confidential Information” means information that is proprietary to the Company or
proprietary to others and entrusted to the Company that has not been published and/or disclosed to
the public, whether or not trade secrets, and including, but not limited to, the Company’s business
plans, advertising and/or marketing plans, financial performance, financial projections, customer
lists, pricing information, personnel matters, or any other matter considered or reasonably
expected to be considered by the Company regarding the Company’s business and its employees.

          1.10 “Date of Termination” shall mean: (a) if Executive’s employment is terminated due to
death, the last day of the month during which Executive’s death occurs; (b) if Executive’s
employment is to be terminated for Disability, thirty (30) calendar days after Notice of
Termination is given; (c) if Executive’s employment is terminated by the Company for Cause or by
Executive for Good Reason, the date specified in the Notice of Termination; (d) if Executive’s
employment is terminated by mutual written agreement of the parties, the date specified in such
agreement; or (e) if Executive’s employment is terminated for any other reason, the date specified
in the Notice of Termination, which in no event shall be a date earlier than thirty (30) calendar
days after the date on which a Notice of Termination is given, unless an earlier date has been
expressly agreed to by Executive in writing either in advance of, or after, receiving such Notice
of Termination.

					
	 	 	 	 	 
	 
	 	Page 2
	 	 

 

 

          1.11 “Disability” and “Disabled” shall refer to a physical or mental infirmity that impairs
the Executive’s ability to substantially perform his duties, as determined by a doctor mutually
acceptable to the Company and the Executive and retained by the Company, provided such impairment
results in Executive’s absence from work for 180 days or more within any 365 day period.

          1.12 “Good Reason” shall mean termination of employment based on any one or more of the
following:

               (a) Diminution of Position and Duties. Assignment to Executive by the Company of duties which
are inconsistent with Executive’s position, duties, responsibilities and status with the Company as
President and Chief Executive Officer; removal from Executive of duties which are consistent with
Executive’s position, duties, responsibilities and status with the Company as President and Chief
Executive Officer; relocation of Executive’s office (regular place of reporting) to a location
outside of the Minneapolis, Minnesota metropolitan area; or if Executive ceases to be Chief
Executive Officer, except in connection with the termination of his employment for Disability or
Cause or as a result of Executive’s death or by Executive other than for Good Reason. For clarity,
except as otherwise provided in Section 4.5(b), termination of Executive’s role as Chairman shall
not constitute Good Reason;

               (b) Diminution of Salary, Equity Awards or Overall Benefits. (i) Any reduction in or
cessation of payment of Executive’s Base Salary as in effect from time to time, (ii) any reduction
in or cessation of payment of Executive’s target Incentive Bonus for any fiscal year below the
target Incentive Bonus hereunder; (iii) any failure by the Company to make any of the stock option
and restricted stock grants described on Exhibit “A” or any material adverse change to any such
grants; or (iv) any failure by the Company to maintain a system of benefit plans and arrangements
(including, without limitation, profit sharing plan; executive supplemental medical plan; group
life insurance plan; medical, dental, accident and disability plans; and other plans providing
executive with substantially similar benefits, but not including any stock, option or other
equity-related plans or Equity Rights thereunder) (hereinafter referred to collectively as “Benefit
Plans”) that, when taken as a whole, provide reduced overall benefits to Executive as compared to
the Benefit Plans in effect on the date of this Agreement; or

               (c) Failure of Successor to Assume. The failure of any successor or assign of the Company to
expressly assume and agree to perform this Agreement in writing.

          1.13 “Incentive Bonus” means the actual cash bonus payable to the Executive as set forth in
Section 3.1 of this Agreement.

          1.14 “Inventions” means ideas, improvements and discoveries, whether or not such are
patentable or copyrightable, and whether or not in writing or reduced to practice.

          1.15 “Notice of Termination” shall mean a written notice which shall indicate the specific
termination provisions in this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide the basis for such termination. Any purported
termination by the Company or by the Executive (other than a termination by mutual agreement
pursuant to Section 4.6 or death) shall be communicated by Notice of Termination to the other party
hereto.

					
	 	 	 	 	 
	 
	 	Page 3
	 	 

 

 

          1.16 “Plan” means any bonus or incentive compensation agreement, plan, program, policy or
arrangement sponsored, maintained or contributed to by the Company, to which the Company is a party
or under which employees of the Company are covered, including, without limitation, any stock
option, restricted stock or any other equity-based compensation plan, annual or long-term incentive
(bonus) plan, and any employee benefit plan, such as a thrift, pension, profit sharing, deferred
compensation, medical, dental, disability, accident, life insurance, automobile allowance,
perquisite, fringe benefit, vacation, sick or parental leave, severance or relocation plan or
policy or any other agreement, plan, program, policy, or any other agreement, plan, program, policy
or arrangement intended to benefit employees or executive officers of the Company.

          1.17 “Subsidiary” means any corporation at least a majority of whose securities having
ordinary voting power for the election of the directors (other than securities having such power
only by reason of the occurrence of a contingency) is at the time owned by the Company and/or one
or more Subsidiaries.

          1.18 “Successor” has the meaning set forth at Section 9.1 of this Agreement.

          1.19 “Works of Authorship” means writings, drawings, software, and any other works of
authorship, whether or not such are copyrightable.

2. EMPLOYMENT, DUTIES AND TERMS

     2.1 Employment. Upon the terms and conditions set forth in this Agreement, the Company hereby
employs Executive, and Executive hereby accepts such employment, as President and Chief Executive
Officer of the Company. Except as expressly provided herein, termination of this Agreement by
either party or by mutual agreement of the parties shall also terminate the Executive’s employment
by the Company.

     2.2 Duties. During the term of this Agreement, and excluding any periods of vacation, sick,
disability or other leave to which Executive is entitled, Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to Executive hereunder and under
the Company’s bylaws, as amended from time to time, to use Executive’s reasonable best efforts to
perform such responsibilities.

     2.3 Board Seat. The Company will use all reasonable efforts to cause Executive to be elected
to the Board of Directors of the Company (the “Board”) promptly following commencement of
employment, and to be named Chairman of the Board. The Company will cause Executive to be included
as a nominee to the Board at each stockholder meeting at which Executive’s Board seat is up for
reelection, and the Company will use its best efforts to cause Executive, if elected to the Board,
to be named as Chairman, in each case for so long as Executive remains employed as Chief Executive
Officer of the Company. In the event that Executive shall cease to be Chief Executive Officer of
the Company at any time, regardless of the reason, Executive agrees to resign immediately from the
Board of Directors of the Company and any Subsidiary.

     2.4 Certain Proprietary Information. If Executive possesses any proprietary information of
another person or entity as a result of prior employment or relationship, Executive shall honor any
legal obligation that Executive has with that person or entity with respect to such proprietary
information.

					
	 	 	 	 	 
	 
	 	Page 4
	 	 

 

 

     2.5 Term of Agreement. This Agreement shall be effective as of the date set forth above, and
shall be in effect until October 1, 2008, provided that, commencing on October 1, 2008, and on each
October 1 thereafter, the term of this Agreement shall be renewed automatically for subsequent
two-year periods unless either the Executive or the Company gives written notice to the other party
of its intent not to so extend this Agreement at least 90 days prior to the end of the term of this
Agreement or the applicable renewal period, as the case may be. As of each October 1 during the
term of Executive’s employment under this Agreement, the Executive’s compensation plan, as shown on
Exhibit “A”, and Beneficiary Designation, as shown on Exhibit “B”, will be reviewed and updated by
the Company and the Executive, which updates will be noted by a revised Exhibit “A” and Exhibit “B”
executed and dated by the Executive and by the Board’s designated compensation representative.

     2.6 Return of Proprietary Property. Executive agrees that all property in Executive’s
possession belonging to the Company, including without limitation, all documents, reports, manuals,
memoranda, computer print-outs, customer lists, credit cards, keys, identification, products,
access cards, automobiles, and all other property relating in any way to the business of the
Company are the exclusive property of the Company, even if Executive authored, created or assisted
in authoring or creating such property. Executive shall return to the Company all such documents
and property immediately upon termination or at such earlier time as the Company may reasonably
request.

     2.7 Position and Duties.

     (a) During the term of Executive’s employment hereunder, Executive shall serve as the
President and Chief Executive Officer of the Company, and shall have the normal and customary
duties, responsibilities and authority of an executive serving in such position, subject to
supervision and control by the Board. During the Employment Period, Executive may also serve as a
director of any affiliate of the Company designated by the Board for so long as the Board or the
affiliate’s shareholders, whichever applies, causes the Executive to be elected to or appointed to
such position, as the case may be.

     (b) Executive shall be entitled to attend to (i) charitable, philanthropic and civic endeavors
(including serving on the Board of Directors or similar governing body of any charitable,
philanthropic or civic institution), (ii) speaking and lecturing engagements; and (iii) management
of Executive’s personal investments and other personal business interests, provided that such
activities do not interfere with the performance by Executive of his duties and responsibilities
hereunder. Executive shall be entitled to serve on the Board of Directors of Securian Financial
Group, Inc. In addition, Executive may serve on the board of directors of a limited number of
other corporations not competitive with the business of the Company,
after consultation with the Board and mutual determination that such service will not
interfere with the performance by Executive of his duties and responsibilities hereunder.

     (c) Executive’s office shall be at the Company’s headquarters in the Minneapolis,
Minnesota metropolitan area.

     3. COMPENSATION, BENEFITS AND EXPENSES.

     3.1 Base Salary/Incentive Bonus/Stock Options/Restricted Stock. During the term of
Executive’s employment under this Agreement and for as long thereafter as required pursuant to
Section 4, the Company shall pay Executive a Base Salary at an annual rate of

					
	 	 	 	 	 
	 
	 	Page 5
	 	 

 

 

$300,000 or such
higher annual rate as may from time to time be approved by the Board. Such Base Salary shall be
paid in substantially equal regular periodic payments in accordance with the Company’s regular
payroll practices. In addition, for each fiscal year during the term of Executive’s employment
under this Agreement and as provided in Section 4, Executive shall be entitled to an annual
incentive bonus (“Incentive Bonus”) equal to the annual incentive bonus described on Exhibit “A”,
as such description on Exhibit “A” may be modified from year to year contingent upon and adjusted
by the Company’s achievement of goals defined by the Compensation Committee of the Board and
approved by the Board; provided, however, Executive’s Incentive Bonus for the fiscal year ending
September 30, 2007 shall not be less than $150,000. The Executive shall also be entitled to
receive a grant of Stock Options and Restricted Stock as described on Exhibit “A”.

     3.2 Business Expenses. During the term of the Executive’s employment under this Agreement
and for as long thereafter as required pursuant to Section 4, the Company shall, in accordance
with, and to the extent of its uniform policies in effect from time to time, bear all ordinary and
necessary business expenses incurred by Executive in performing Executive’s duties as an executive
officer of the Company, including, without limitation, all travel and living expenses while away
from home on business in the service of the Company, home telephone expenses incurred in service of
the Company, social and civic club entertainment expenses, provided that Executive accounts
promptly for such expenses to the Company in the manner reasonably prescribed from time to time by
the Company.

     3.3 Future Grant of Restricted Stock and Options. The Company may from time to time elect to
grant to Executive additional options to acquire shares of the Company’s common stock or additional
shares of restricted stock, in each case in the sole discretion of the Board of Directors. Any
such grants shall be in addition to the grants described on Exhibit “A.”

     3.4 Discretionary Bonuses. Executive shall be eligible to receive bonuses from time to time as
may be awarded to Executive by the Board in its sole discretion or as may be recommended by a
compensation committee appointed by the Board, which recommendations shall be subject to approval
by the Board in its sole discretion. Any such discretionary bonus (“Discretionary Bonus”) will be
in addition to any Incentive Bonus described in Section 3.1.

     3.5 Term Life Insurance. During the term of this Agreement, the Company shall pay the premiums
to purchase and maintain term life insurance on the life of the Executive in an amount equal to
four times the Executive’s Base Salary as in effect from time to time, the benefit to be payable to
such Beneficiary as Executive shall advise the Company and the insurer from time to time.

     3.6 Other Benefits. At the time when the Company achieves annual GAAP revenues of at least
$75,000,000, the Company shall (for so long as Executive remains Chief Executive Officer and the
Company continues to meet such revenue target) pay for (a) Executive’s annual membership dues at
one golf club selected by Executive, in an amount not to exceed $10,000 per year and (b)
Executive’s personal Certified Financial Planner, in an amount not to exceed $25,000 per year.
Except for amounts earned, accrued or owing prior to Executive’s termination of employment, the
Company shall have no obligation to
provide the benefits described in this Section 3.6 to Executive after termination of his
employment with the Company notwithstanding anything to the contrary in Section 4.

     3.7 Nonassignability of Benefits. Executive shall not transfer, assign, encumber, or otherwise
dispose of his right to receive payments hereunder and, in the event of any attempted

					
	 	 	 	 	 
	 
	 	Page 6
	 	 

 

 

transfer or
assignment, the Company shall have no further liability to Executive under this Agreement.

     3.8 Vacation. Executive shall be entitled to four (4) weeks of paid vacation for the
twelve-month period commencing on October 1, 2006, and on each October 1 thereafter, during the
term of his employment hereunder.

     4. EARLY TERMINATION

     4.1 Early Termination. Subject to the respective continuing obligations of the parties
pursuant to Section 5, this Section 4 sets forth the terms upon which Executive’s employment
hereunder may be terminated under this Agreement prior to the end of any term hereunder.

     4.2 Termination by the Company for Cause, Termination by Executive without Good Reason, or
Termination in the Event of Death. The Company may terminate this Agreement at any time for Cause
and Executive may voluntarily terminate this Agreement at any time at Executive’s discretion, in
each case pursuant to a Notice of Termination; provided, however, before terminating Executive for
Cause, the Company shall give 30 days written notice and opportunity for Executive to cure the
Cause; provided further, the Company shall have the right to request Executive to leave the
premises on paid administrative leave during such 30-day notice period. In addition, this
Agreement will terminate automatically upon the death of Executive.

     Upon any such termination (other than a voluntary termination by Executive for Good Reason,
which is addressed below), Executive shall be entitled to receive the following compensation only:

(a) the Company shall continue to pay Executive’s Base Salary in accordance with Section
3.1 at the annual rate then in effect, through the Date of Termination only.

(b) Executive shall be entitled to receive at the Date of Termination any Incentive Bonus
or Discretionary Bonus that (i) shall have been previously earned, and (ii) shall not have
been previously paid by the Company.

(c) Executive shall be entitled to any other benefits payable upon such a termination
pursuant to the Company’s Plans.

     4.3 Termination by Company without Cause or Termination by Executive for Good Reason (other
than in Context of a Change of Control). The Company may terminate Executive’s employment under
this Agreement or any renewal thereof at any time, in the Company’s discretion, pursuant to a
Notice of Termination. In addition, Executive may terminate Executive’s employment under this
Agreement for Good Reason upon written notice to the Company specifying such Good Reason and the
intent to terminate, and the failure of the Company to cure the Good Reason within 30 days of such
notice.

     If the Company terminates Executive’s employment hereunder without Cause (other than in the
context of a Change of Control, as addressed below, and other than in the event of death or
Disability, it being understood that a purported termination for Disability or for Cause which is
disputed and finally determined not to have been proper termination for Cause or Disability shall
be a termination by the Company without Cause) or if Executive terminates his employment

					
	 	 	 	 	 
	 
	 	Page 7
	 	 

 

 

hereunder
for Good Reason (other than in the context of a Change of Control, as addressed below), then
Executive shall be entitled to receive the following compensation only:

(a) the Company shall continue to pay Executive’s Base Salary in accordance with Section
3.1 at the annual rate in effect as of immediately prior to the Date of Termination
(provided that any reduction in Executive’s Base Salary that results in Executive’s
termination for Good Reason, or that would entitle Executive to terminate for Good Reason,
shall be disregarded), in the same manner as if Executive had remained continuously
employed for one additional year (12 months) following the Date of Termination; provided
such payments shall not be paid any time sooner than the earlier of (i) Executive’s death
or (ii) six months and one day following the Date of Termination; and provided further any
payments not paid during the six months and one day following the Date of Termination shall
be accumulated and paid in a lump sum on the earliest day possible in accordance with the
preceding clause (i).

(b) Executive shall be entitled to receive at the Date of Termination any Incentive Bonus
or Discretionary Bonus that (i) shall have been previously earned, and (ii) shall not have
been previously paid by the Company. Executive shall also be entitled, for the fiscal
year, if any, that shall have commenced but not yet ended as of the Date of Termination, to
receive as his Incentive Bonus for such fiscal year an amount equal to 50 percent of the
annual Base Salary determined in accordance with clause (a) above; such amount shall be
paid at the earlier of (i) six months and one day following the Date of Termination and
(ii) Executive’s death.

(c) The Company shall cause Executive’s continued participation in all Benefit Plans as if
Executive remained continuously employed with the Company for the unexpired portion of the
then current term of this Agreement; provided that, if such continued participation is not
permissible under applicable law, the Company shall provide Executive with benefits
substantially similar to those to which Executive would have been entitled under those
Plans in which Executive’s continued participation is not permissible.

(d) The Company will reimburse Executive up to $10,000 for outplacement services procured
within the first twelve months following the Date of Termination, upon submission to the
Company of appropriate documentation evidencing Executive’s payment for such services.

(e) Executive will be immediately fully vested as of the Date of Termination in a portion
of all stock options, restricted stock, stock appreciation rights and other equity rights
then held by Executive under all stock option, restricted stock, stock appreciation rights
and other similar plans maintained by the Company in which Employee is a participant
(collectively, “Equity Rights”); Executive shall be immediately fully vested in such Equity
Rights to the extent that the Equity Rights would have vested over the then remaining term
of this Agreement or, if longer, the twelve (12) month period immediately following the
Date of Termination had Executive remained employed through the end of such term or twelve
(12) month period, respectively.

(f) Executive shall be entitled to any other benefits payable upon such a termination
pursuant to the Company’s Plans, provided that in the event Executive is entitled to any
benefit under any such Plan similar to a benefit given to Executive hereunder, then
Executive shall not be entitled to additive benefits but rather shall only be entitled to
the greater of the two benefits.

					
	 	 	 	 	 
	 
	 	Page 8
	 	 

 

 

     4.4 Termination upon Disability. If Executive is terminated for Disability, then Executive
shall continue to receive the following compensation only:

(a) the Company shall pay Executive’s Base Salary in accordance with Section 3.1 at the
annual rate then in effect through the Date of Termination.

(b) Executive shall be entitled to receive at the Date of Termination any Incentive Bonus
or Discretionary Bonus that (i) shall have been previously earned, and (ii) shall not have
been previously paid by the Company. Executive shall also be entitled, for the fiscal
year, if any, that shall have commenced but not yet ended as of the Date of Termination, to
receive a pro rata portion (prorated through the Date of Termination) of any Incentive
Bonus to which Executive would have been entitled had Executive remained continuously
employed through the end of such fiscal year, based on the metrics that shall actually be achieved through the end of the
fiscal year; such amount shall be determined after the end of the fiscal year as if
Executive had remained employed through the end of the fiscal year and shall be paid at the
regularly scheduled time for payment thereof provided that the amount shall not be
paid (x) at any time sooner than the earlier of (I) six months and one day following the
Date of Termination and (II) Executive’s death, nor (y) at any time later than the later of
(I) the end of the third month following completion of the fiscal year to which the bonus
relates and (II) six months and one day following the Date of Termination.

(c) Executive shall be entitled to any other benefits payable upon such a termination
pursuant to the Company’s Plans, provided that in the event Executive is entitled to any
benefit under any such Plan similar to a benefit given to Executive hereunder, then
Executive shall not be entitled to additive benefits but rather shall only be entitled to
the greater of the two benefits.

     4.5 Benefits Upon Change of Control and in Connection with Certain Terminations Following a
Change of Control.

     (a) Vesting of Equity Rights upon the Change of Control. In the event that the Company
consummates a Change of Control while Executive remains an employee of the Company pursuant to this
Agreement, Executive shall be immediately fully vested upon the date of the Change of Control with
respect to one-half of the number of Equity Rights then held by Executive that are not otherwise
vested as of the date of the Change of Control and the remaining unvested Equity Rights shall
continue to vest in accordance with the vesting schedule.

     (b) Additional Rights upon Termination. In addition to the rights provided in Section 4.5(a),
in the event that (i) upon or within six months before a Change of Control or within two years
following a Change of Control either (x) the Company terminates Executive’s employment hereunder
without Cause (other than in the event of death or Disability, it being understood that a purported
termination for Disability or for Cause which is disputed and finally determined not to have been
proper termination for Cause or Disability shall be a termination by the Company without Cause) or
(y) Executive terminates his employment hereunder for Good Reason, or (ii) the Chairman of the
Board of the Company immediately prior to the consummation of a Change of Control ceases to be the
Chairman of the Board of the Company, or any successor thereto, immediately following the Change of
Control and Executive terminates his employment hereunder, then Executive shall be entitled to
receive the following compensation (which is in

					
	 	 	 	 	 
	 
	 	Page 9
	 	 

 

 

substitution for and not in addition to any
compensation otherwise payable pursuant to Section 4.3):

(a) the Company shall continue to pay Executive’s Base Salary in accordance with Section
3.1 at the annual rate in effect as of immediately prior to the Date of Termination
(provided that any reduction in Executive’s Base Salary that results in Executive’s
termination for Good Reason, or that would entitle Executive to terminate for Good Reason,
shall be disregarded), in the same manner as if Executive had remained continuously
employed for one additional year (12 months) following the Date of Termination; provided
such payments shall not be paid any time sooner than the earlier of (i) Executive’s death
or (ii) six months and one day following the Date of Termination; and provided further any
payments not paid during the six months and one day following the Date of Termination shall
be accumulated and paid in a lump sum on the earliest day possible in accordance with the
preceding clause (i).

(b) Executive shall be entitled to receive at the Date of Termination any Incentive Bonus
or Discretionary Bonus that (i) shall have been previously earned, and (iii) shall not have
been previously paid by the Company. Executive shall also be entitled to receive at the
Date of Termination Executive’s target Incentive Bonus for the fiscal year, if any, that
shall have commenced but not yet ended as of the Date of Termination, provided that
such amount shall not be paid until the earlier of (x) six months and one day following the
Date of Termination and (y) Executive’s death.

(c) the Company shall cause Executive’s continued participation in all Benefit Plans as if
Executive remained continuously employed with the Company for a period of twelve (12)
months following the Date of Termination; provided that, if such continued participation is
not permissible under applicable law, the Company shall provide Executive with benefits
substantially similar to those to which Executive would have been entitled under those
Plans in which Executive’s continued participation is not permissible.

(d) The Company will reimburse Executive up to $10,000 for outplacement services procured
within the first twelve months following the Date of Termination, upon submission to the
Company of appropriate documentation evidencing Executive’s payment for such services.

(e) Executive shall be immediately fully vested with respect to all Equity Rights.

(f) Executive shall be entitled to any other benefits payable upon such a termination
pursuant to the Company’s Plans, provided that in the event Executive is entitled to any
benefit under any such Plan similar to a benefit given to Executive hereunder, then
Executive shall not be entitled to additive benefits but rather shall only be entitled to
the greater of the two benefits.

     4.6 Termination by Mutual Agreement. The parties may terminate Executive’s employment under
this Agreement at any time by mutual written agreement. In such event, Executive shall be entitled
to such compensation and benefits in connection with termination as the parties may mutually agree.

					
	 	 	 	 	 
	 
	 	Page 10
	 	 

 

 

     5. RESTRICTIVE COVENANTS. During the period of Executive’s employment with the Company and
for a period of one (1) year thereafter (and, with respect to the matters set forth in Section 5.1,
for the longer period of time set forth therein), Executive, acting individually or on behalf of or
in conjunction with any other person, company, partnership, corporation or business of whatever
nature, shall not, directly or indirectly, violate any of the covenants set forth below in Sections
5.1 through 5.4. Notwithstanding the foregoing, during any period after termination of this
Agreement, Executive shall only be bound by the covenants set forth in Sections 5.2 through 5.4 if
the Company is current in its payment of any compensation due to Executive post-termination.

     5.1 Confidential Information. Executive shall not reveal to any person or entity outside of
the Company and its Subsidiaries, except as may be explicitly necessary as part of the direct
responsibilities of the Executive’s position with the Company, any Confidential Information.
Executive shall keep the Company’s confidential documents secure and avoid the inadvertent or
intentional disclosure of the Company’s business matters outside the Company. Executive will use
reasonable and prudent care to safeguard and protect and prevent the unauthorized use and
disclosure of Confidential Information. The obligations contained in this Section 5.1 will survive
for as long as the Company, in its sole judgment, considers the information to be Confidential
Information. The obligations under this Section 5.1 will not apply to any Confidential Information
that is now or becomes generally available to the public through no fault of Executive or to
Executive’s disclosure of any Confidential Information required by law or judicial or
administrative process.

     5.2 Non-Competition. Executive shall not own (except as a shareholder of up to 1% of the
outstanding stock in a publicly traded corporation), manage, operate, participate in ownership,
participate in management, participate in operation or control, or be employed by, or act as a
consultant to, or become an independent contractor with, or become an adviser to, or be connected
in any manner with, any individual or other entity which engages in meaningful competition with or
has an interest in a business that meaningfully competes with the Company’s Business.

     5.3 Non-Enticement. Except in the performance of his duties for the Company and its
Subsidiaries during the term of his employment hereunder, Executive shall not interfere with the
contractual or other relationships between the Company and any other executive employees,
independent contractors, consultants, and shall not induce any of the Company’s other executive
employees to leave the employ of the Company.

     5.4 Non-Customer Interference. Except in the performance of his duties for the Company and
its Subsidiaries during the term of his employment hereunder, Executive shall not call upon any
person or entity which is/was a customer or vendor of the Company (including the Subsidiaries
thereof) in direct competition with the Business of the Company or known planned products or
services of the Company, or its Subsidiaries. As used herein, the term “customer” means any entity
to whom the Company, or its Subsidiaries, has provided services within the twelve (12) month period
prior to the date of Executive’s termination; the term “prospective customer” means any entity that
has been subject to documented sales and marketing activity, other than mass mailings. by the
Company, or its Subsidiaries, within the twelve (12) month period prior to the date of the
Executive’s termination; and “vendor” means any entity serving as a source for any products sold by
the Company or entity producing products or services for the Company to enable it to provide
products and services to the Company’s customers.

					
	 	 	 	 	 
	 
	 	Page 11
	 	 

 

 

     5.5 Interpretation. It is agreed by the parties that the foregoing covenants in Section 5.1
through 5.4, inclusive, impose a reasonable restraint on Executive in light of the Company’s
Business on the date of the execution of this Agreement.

     5.6 Remedies. Executive agrees that any breach or threatened breach of a covenant set forth in
this Section 5 will cause the Company irreparable harm for which there is no adequate remedy at
law, and, without limiting other rights and remedies the Company may have at law or under and
pursuant to this Agreement, Executive consents to remedies pursuant to this Section 5.6, including,
but not limited to, the issuance of an injunction in favor of the Company enjoining the breach of
any of the aforesaid covenants by any court of appropriate jurisdiction. Such injunction shall
provide the Company with at least a one (1) year contractual protection agreed to by the parties,
and in the event the Executive violates the terms of the injunction, Executive agrees that a court
of appropriate jurisdiction shall have the power to extend the length or breadth of the injunction
to provide the Company with the full measure of protection intended by this Agreement, including,
but not limited to, the extension of such injunction for a reasonable period of time in order to
eliminate any commercial advantage which may be derived from a misappropriation of Confidential
Information or a breach or default of the covenants set forth in Sections 5.2 through 5.4,
inclusive. If any or all of the aforesaid covenants are held not to be enforceable because of the
scope or duration of such covenant, or if applicable, the area covered by such covenants, the
parties agree that a court of appropriate jurisdiction shall make such determination, and the court
shall have the power to reduce the scope, duration, and area of any covenant (or one or more of the
foregoing) to the extent which allows maximum scope, duration and area as permitted by applicable
law. The prevailing party in any dispute regarding one or more of the covenants in this Section 5
shall pay reasonable attorneys’ fees, costs and expenses that may be incurred by the non-prevailing
party. Section 5 shall have independent legal significance and shall survive termination of this
Agreement.

6. INVENTIONS

     6.1 Disclosure and Assignment of Inventions and Other Works. Executive shall promptly disclose
to the Company in writing all Inventions and Works of Authorship which are conceived, made,
discovered, written or created by Executive alone or jointly with another person, group or entity,
whether during the normal hours of his employment at the Company or on Executive’s own time, during
the term of this Agreement except as exempted as described in 6.2 below. Executive shall assign all
rights to all such Inventions and Works of Authorship to the Company. Executive shall give the
Company any documents that it considers necessary or desirable in order to transfer or record the
transfer of Executive’s entire right, title and interest in such Inventions and Works of
Authorship; and in order to enable the Company to obtain exclusive patent, copyright, or other
legal protection for Inventions and Works of Authorship. The Company shall bear any reasonable
expenses in this regard.

     6.2 Notice: Minnesota law exempts from this Agreement “an invention for which no equipment,
supplies, facility or trade secret information of the Company was used and which was developed
entirely on the Executive’s own time, and (1) which does not relate (a) to the business of the
Company, or (b) to the Company’s actual or demonstrably anticipated research or development, or (2)
which does not result from any work performed by Executive for the Company.”

     6.3 Additional Exclusions. The Inventions and Works of Authorship set forth in Exhibit “C” (if
no Exhibit “C” is attached, there is nothing to disclose) to this Agreement which Executive owns or
controls shall also be excluded from operation of Section 6.1 of this

					
	 	 	 	 	 
	 
	 	Page 12
	 	 

 

 

Agreement, and Executive represents that such Inventions and Works of Authorship were conceived, made, written, or created
by the Executive prior to the employment with the Company (although they may be useful to the
Company), its Subsidiaries or affiliates. Other than the Inventions and Works of Authorship listed
in Exhibit C, Executive does not own or control rights in any Inventions or Works of Authorship and
Executive shall not assert any such rights against the Company.

7. EXCISE TAX PAYMENTS

     7.1 In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”)), paid or payable to the Executive or for
his benefit or distributed pursuant to the terms of this Agreement or otherwise in connection with,
or arising out of, his employment with the Company and whether paid or payable or distributed or
distributable during the term of his employment or otherwise (a “Payment” or “Payments”) would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties become
payable by the Executive with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the
Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or penalties imposed
by reason of the Executive’s failure to file timely a tax return or pay taxes shown as due on his
return, or imposed with respect to such taxes and the Excise Tax), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments; provided, in no event shall the amount of the Gross-Up
Payment exceed an amount equal to 100% of the Executive’s Base Salary and Target Incentive Bonus in
effect at the Date of Termination; provided further, for purposes of the immediately preceding
proviso, any reduction in Executive’s Base Salary or Target Incentive Bonus that results in
Executive’s termination for Good Reason, or that would entitle Executive to terminate for Good
Reason, shall be disregarded.

          7.2 All determinations as to whether a Gross-Up Payment is required pursuant to this Agreement
and the amount of such Gross-Up Payment shall be made at the Company’s expense by an accounting
firm selected by the Company and reasonably acceptable to the Executive which is designated as one
of the largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm
shall provide its determination (the “Determination”), together with detailed supporting
calculations and documentation, to the Company and the Executive within five days of the of the
Date of Termination, if applicable, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the Payments may be subject to
the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by the Executive,
the Accounting Firm shall provide the Executive with an opinion reasonably acceptable to the
Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within
ten days of the delivery of the Determination to the Executive, the Executive shall have the right
to dispute the Determination (the “Dispute”). The Gross-Up Payment, if any, as determined pursuant
to this Section 7.2 shall be paid by the Company to the Executive within five days of the receipt
of the Determination. The existence of the Dispute shall not in any way affect the Executive’s
right to receive the Gross-Up Payment in accordance with the Determination. Upon the final
resolution of a Dispute, the Company shall promptly pay to the Executive any additional amount
required by such resolution, or if it is determined that the Excise Tax is lower than originally
determined, the Executive shall repay to the Company the excess amount of the Gross-Up Payment. It
is possible that Gross-Up Payments will not have been made by the Company that should have been
made (“Underpayment”). In the event the Executive is required to make a payment of any Excise Tax,

					
	 	 	 	 	 
	 
	 	Page 13
	 	 

 

 

any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
The highest marginal effective tax rate (determined with regard to the inclusion in Executive’s
adjusted gross taxable income of the Gross-Up Payment) based upon the state and locality where the
Executive is resident at the time of payment of such amounts will be used for purposes of
determining federal and state income and other taxes with respect thereto.

          7.3 Notwithstanding anything contained in this Agreement to the contrary, in the event that,
according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the
Company shall pay to the applicable government taxing authorities as Excise Tax withholding, the
amount of the Excise Tax that the Company has actually withheld from the Payment or Payments.

     8. ARBITRATION

          Each party retains the right to bring an action in a court of law for the interpretation
and/or enforcement of the terms of this Agreement. The Executive and the Company shall also have
the right and option to mutually agree (in lieu of litigation) to have a dispute or controversy
arising under or in connection with this Agreement settled by arbitration, conducted before one
arbitrator mutually agreed upon by the Executive and the Company, sitting in a location selected by
the Company within 25 miles from the location of the Company’s principal place of business. To the
extent not otherwise inconsistent with the express provisions of this Agreement, the Employment
Arbitration Rules and Mediation Procedures of the American Arbitration Association then in effect
shall apply unless the Executive and the Company otherwise agree. In the event the Company and the
Executive cannot agree upon an arbitrator within 60 days of the receipt of a written request for
arbitration under this Agreement, the parties shall apply to the District Court for Hennepin County
for the Court to appoint an arbitrator pursuant to Minnesota Statutes Section 572.10, as amended.
Judgment may be entered on the award of the arbitrator in any court having jurisdiction. The
arbitrator, in its discretion, may award attorneys fees and costs for the party in whose favor the
arbitrator rules.

     9. GENERAL PROVISIONS

     9.1 Successors and Assigns:

               (a) Company’s Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and assigns and the Company shall require any successor
or assign to expressly assume and agree in writing to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such succession or
assignment had taken place. The term “Company” as used herein shall include such successors
(including a Surviving Corporation) and assigns. The terms “successors” or “successors and assigns”
as used herein each shall mean a corporation or other entity acquiring all or substantially all the
assets and business of the Company (including this Agreement) whether by operation of law or
otherwise.

               (b) No Assignment by Executive. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Executive except, in the event of his death, to his
Beneficiary.

               9.2 Notices. All notices, requests, and demands given to or made pursuant hereto shall be in
writing and shall be personally delivered, delivered by nationally recognized overnight courier or
mailed by registered or certified US mail. Each such notice to a party shall

					
	 	 	 	 	 
	 
	 	Page 14
	 	 

 

 

be sent to that party’s address set forth on the last page of this Agreement or such other address
as a party may subsequently designate by due notice hereunder. Any notice hereunder shall be deemed
effectively given and received upon the earlier of (a) actual receipt or (b) (1) if personally
delivered, upon delivery; (2) if delivered by overnight courier, the first business day following
the business day of deposit with the courier for next business day delivery, freight prepaid, or
(3) if mailed, three days following the registered date of deposit with US mail, postage prepaid.

          9.3 Withholding. To the extent required by applicable law, including, without limitation, any
federal, state or local income tax or excise tax law or laws, the Federal Insurance Contributions
Act, the Federal Unemployment Tax Act or any comparable federal, state or local laws, the Company
retains the right to withhold such portion of any amount or amounts payable to Executive under this
Agreement as the Company (on the written advice of outside counsel) deems necessary.

          9.4 Captions. The various headings or captions in this Agreement are for convenience only and
shall not affect the meaning or interpretation of this Agreement.

          9.5 Governing Law. The validity, interpretation, construction, performance, enforcement and
remedies of or relating to this Agreement, and the rights and obligations of the parties hereunder
shall be governed by the substantive laws of the State of Minnesota (without regard to the conflict
of laws, rules or statutes of any jurisdiction), and (subject to Section 8) any and every legal
proceeding arising out of or in connection with this Agreement shall be brought in the appropriate
courts of the State of Minnesota, each of the parties hereby consenting to the exclusive
jurisdiction of said courts for this purpose.

          9.6 Construction. Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Agreement.

          9.7 Waivers. No failure on the part of either party to exercise, and no delay in exercising,
any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy granted hereby or by any related document or by law.

          9.8 Modification. This Agreement may not be modified or amended except by written instrument
signed by the parties hereto.

          9.9 Entire Agreement. This Agreement and the Exhibits hereto, together with the instruments
comprising any Equity Rights granted to Executive and referred to herein, constitutes the entire
agreement and understanding between the parties hereto in reference to all the matters herein
agreed upon. This Agreement replaces in full all prior employment agreements or understandings of
the parties hereto and any and all such prior agreements or understandings are hereby rescinded by
mutual agreement. In the event that Executive is granted any benefit under this Agreement similar
to a benefit granted to Executive under any Plan or Equity Right, then Executive shall not be
entitled to additive benefits but rather shall be entitled to the greater of the two similar rights
and no more. For example, the provisions in this Agreement relating to Equity Rights (including
without limitation provisions regarding acceleration of vesting) are

					
	 	 	 	 	 
	 
	 	Page 15
	 	 

 

 

intended to be consistent with and not additive to the provisions in any instruments
comprising Equity Rights (including without limitation provisions regarding acceleration of
vesting).

          9.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same
instrument.

          9.11 Survival. The parties expressly acknowledge and agree that the provisions of this
Agreement which by their express or implied terms extend beyond the termination of Executive’s
employment hereunder, shall continue in full force and effect notwithstanding Executive’s
termination of employment hereunder or the termination of this Agreement, respectively.

          9.12 Right to Counsel. Executive acknowledges he is aware of his right to obtain independent
legal counsel of his own choosing with respect to any matter or issue made or created by or under
this Agreement. Execution of this Agreement by the Executive is an acknowledgement by the Executive
that either he has had the opportunity to review this Agreement to his own satisfaction, has read
and understood the terms and conditions of this Agreement, has consulted with an attorney and has
had the terms and conditions of this Agreement satisfactorily explained to the Executive, or has
waived the right to seek his own independent counsel, but nonetheless, acknowledges that he
understands the terms of this Agreement, and this Agreement is executed and delivered freely and
voluntarily by the Executive without any force or coercion from the Company or any other third
party.

          9.13 Code Section 409A. Notwithstanding any other provision of this Agreement, the parties
shall, in good faith, amend this Agreement to the limited extent necessary to comply with the
requirements under Section 409A of the Code in order to ensure that any amounts paid or payable
hereunder are not subject to the additional 20% income tax thereunder (including, without
limitation, any amendment instituting a 6-month waiting period before a distribution upon
separation from service, if required) while maintaining to the maximum extent practicable the
original intent of this Agreement.

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

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	XATA Corporation,	 	 
	 	 	a Minnesota Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 
	 	 	John J. Coughlan	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

Page 16

 

EXHIBIT A

Base Compensation, Incentive Plan, and Stock Options

For Period of 1 October 2006 through 1 October 2007

Base Compensation: $300,000

Incentive Bonus: To Be Paid Based on FY2007 Audited Financials Within 30 Days following
Availability of Such Financials.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Incentive	 	 	 	Level 1	 	Level 2	 	Level 3
	Objective	 	Weight	 	Measurement	 	Target	 	Target	 	Target
	Growth

	 	[TBD]
	 	Total Unit Additions
	 	[TBD]
	 	[TBD]
	 	[TBD]
	Growth

	 	[TBD]
	 	GAAP Revenue
	 	[TBD]
	 	[TBD]
	 	[TBD]
	Profitability

	 	[TBD]
	 	Overall Gross Margin
	 	[TBD]
	 	[TBD]
	 	[TBD]
	Profitability

	 	[TBD]
	 	Free cash flow (a)
	 	[TBD]
	 	[TBD]
	 	[TBD]

 

			
	a – Cash from operating & investing activities after payment of bonus available to pay debt and equity holders.

	 	 	 	 	 	 	 
	Stock Options:

	 	Grant Date
	 	Exercise Price
	 	Vesting Schedule
	Executive will be
awarded upon
commencement of
employment an
initial incentive
stock option grant
of 300,000 shares,
which will vest as
follows assuming
continuous services
to the Company.
This stock option
grant will be set
forth in a separate
Incentive Stock
Option Agreement
pursuant to and
subject to the
Company’s 2002
Long-Term Incentive
and Stock Option
Plan. Following
termination of
employment for any
reason, Executive
shall be entitled
to exercise his
option for a period
of at least 12
months following
his Date of
Termination.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	300,000

	 	October 1, 2006
	 	Market Price
	 	100,000 shares to
vest on September
30, 2007, and an
additional 8334
shares

Page 17

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	to vest on
October 31, 2007
and on the last day
of each month
thereafter (except
that the remaining
8318 shares will
vest on September
30, 2009) until
100% of the shares
have vested on
September 30, 2009.

Restricted Stock: Executive will be awarded upon commencement of employment an initial grant of
300,000 shares of restricted Common Stock, which will vest as follows assuming continuous services
to the Company. This restricted stock award will be set forth in a separate Restricted Stock
Agreement.

	 	 	 	 	 
	Shares	 	Grant Date	 	Vesting Schedule
	225,000

	 	October 1, 2006
	 	75,000 shares to vest on September 30, 2007,
and an additional 6250 shares to vest on
October 31, 2007 and on the last day of each
month thereafter until 100% of the shares
have vested on September 30, 2009.
	 
	 	 	 	 
	25,000

	 	October 1, 2006
	 	3 years starting in 12 months*
	 
	 	 	 	 
	25,000

	 	October 1, 2006
	 	3 years starting in 24 months*
	 
	 	 	 	 
	25,000

	 	October 1, 2006
	 	3 years starting in 36 months*

 

			
	*	 	To vest pro-rata monthly over each such 3 year period.

Additional Restricted Stock: In addition to the foregoing restricted stock award, the Company will
grant to Executive a number of shares of restricted Common Stock equal to the number of shares of
Common Stock that Executive elects to purchase (but not to exceed that number of shares of Common
Stock with a market value of $500,000) during the period of five business days commencing on the
second business day after the public announcement of his employment by the Company. The date of
purchase of the purchased shares shall be the date of grant of the “matched” shares. The purchased
shares shall be purchased from the Company at market value. The “matched” shares will vest in full
on September 30, 2007, assuming continuous services to the Company.

Date:                     

	 	 	 	 	 	 	 	 	 
	XATA Corporation	 	 	 	Executive
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	John J. Coughlan
	Name and Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Page 18

 

	 	 	 	 	 
	 

	 	John Jay Coughlan, Trustee of the John Jay Coughlan	 	 
	 

	 	Revocable Trust U/A/D January 24, 2002	 	 
	EXHIBIT B

	 	 

     Term Life Insurance Beneficiary
	 	 
	Declaration
	 	 	 	 

	 	 	 	 	 
	Executive:

	 	John J. Coughlan	 	 
	 
	 	 	 	 
	Address:

	 	17550 Belfast Cove	 	 
	 
	 	 	 	 
	 

	 	Eden Prairie, MN 55347	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Beneficiary:	 	John Jay Coughlan, Trustee of the John Jay Coughlan
Revocable Trust U/A/D January 24,
2002
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	Phone:                                                                                 	 	 
	 
	 	 	 	 
	Death Benefit:

	 	$1,200,000 (4 times annual base salary)	 	 
	 
	 	 	 	 
	Carrier:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Contact:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Phone:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date: ___________________	 	 
	 
	 	 	 	 
	Signed:
	 	 	 	 
	 

	 	 	 	 

         (Jay J. Coughlan)

					
	 	 	 	 	 
	 
	 	Page 19
	 	 

 

 

EXHIBIT C

Patents & Trademarks Granted to Executive Prior to Date of Agreement

					
	 	 	 	 	 
	 
	 	Page 20

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