Document:

exv10w3

 

Exhibit 10.3

FARMOUT AGREEMENT

     This agreement is entered into this 24 day of March, 2006, by and between Razorback II, LP
(“Razorback”) and Parallel, L.P. (“Parallel”).

     1. Razorback agrees to sell and assign to Parallel and Parallel agrees to purchase from
Razorback an undivided one-half (1/2) of all of Razorback’s right, title and interest in and to
Dale Resources, LLC’s West Fork, West Gateway and Lone Star Prospects in Tarrant County, Texas (the
“Subject Prospects”), including, but not limited to, an undivided one-half (1/2) of all of
Razorback’s right, title and interest in, to, under, arising by virtue of and/or acquired by
Razorback by virtue of the agreements, contracts, assignments and other documents more particularly
described in Exhibit “A” hereto (the “Documents”), SAVE AND EXCEPT the interests in the foregoing
which were assigned by Razorback to Parallel by a separate Assignment of even date herewith (the
undivided one-half (1/2) interest in the Subject Prospects being assigned herein being hereinafter
referred to as the “Subject Interest”). The undivided one-half (1/2) of Razorback’s interest in
the Subject Prospects which Razorback is retaining is hereinafter referred to as “Razorback’s
Retained Interest.”

     2. To effectuate the assignment and sale contemplated herein, Razorback agrees to execute and
deliver to Parallel the assignment of the Subject Interest in the form of the assignment attached
as Exhibit “B” hereto (the “Assignment”).

     3. The effective date of the sale and assignment contemplated herein shall be March 1, 2006
(the “Effective Date”).

     4. In consideration of Razorback’s sale and assignment of the Subject Interest to Parallel,
Parallel shall pay, for the benefit of Razorback, up to Two Million One Hundred Fifteen Thousand
Eight Hundred Thirty-seven and 49/100 Dollars ($2,115,837.49) for the costs attributable to
Razorback’s Retained Interest for (i) drilling, testing, completing and equipping wells commenced
on lands encompassed by the Subject Prospects from and after the Effective Date, (ii) the total
costs of drilling, testing, completing and equipping the wells that were being drilled on the
Subject Prospects as of the Effective Date (which wells are described in Exhibit “C” hereto), and
(iii) the frac jobs to be performed on the wells described in Exhibit “D” hereto (the foregoing
costs described above in (i), (ii) and (iii) in this paragraph No. 4 hereinafter being referred to
as the “Carried Capital Costs”). From and after such time as either Parallel has paid such Carried
Capital Costs totaling $2,115,837.49, or Parallel elects not to pay any more of such costs,
Parallel shall have no further obligation to pay such Carried Capital Costs. The Carried Capital
Costs which Parallel elects to pay shall be paid by Parallel as such costs are incurred by
Razorback. If, and only if, Parallel elects not to pay the entire $2,115,837.49 in Carried Capital
Costs, Parallel shall reassign to Razorback all of the Subject Interests, except Parallel shall
retain the portion thereof for which Parallel has paid such Carried Capital Costs, including the
Wells for which Carried Capital Costs have been paid by Parallel, the oil and gas leases comprising
the spacing or proration unit for such Wells and all of the equipment and other personal property
used in connection therewith.

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     5. From and after the Effective Date, Parallel shall be liable for all costs, and shall be
entitled to all production, revenues and other benefits, attributable to the Subject Interests.
Razorback shall remain liable for all costs attributable to Razorback’s Retained Interest (except
the Carried Capital Costs which Parallel elects to pay) and shall retain all rights to the
production of oil and gas, the proceeds from the sale thereof and other revenues and benefits
attributable to Razorback’s Retained Interest.

     6. The parties hereto agree to execute such other assignments, agreements or other
instruments, and do and perform such other acts, which may be reasonably necessary in order to
effectuate the terms hereof.

     DATED: March 24, 2006.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PARALLEL, L.P.
	 	 	 	RAZORBACK II, L.P.
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Parallel Petroleum Corporation,	 	 	 	By:	 	/s/ Wallace L. Hall,	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	its general partner	 	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ John S. Rutherford
	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	John S. Rutherford, Vice President	 	 	 	 	 	Managing Member of Teason, LLC,	 	 
	 	 	 	 	 	 	 	 	General Partner of Razorback II, LP	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 

2

 

EXHIBIT “A”

	 	 	 	 	 
	 

	 	attached to and made a part of that
certain Agreement
	 	 
	 

	 	dated March 24, 2006, by and between	 	 
	 

	 	Razorback II, LP and Parallel, L.P.	 	 

WEST FORK PROSPECT

     1. That certain Amended and Restated Participation Agreement dated May 18, 2004, as amended,
between Dale Resources, L.L.C. and Parallel Petroleum Corporation, et al, as Participants,
pertaining to the lands comprising the Area of Mutual Interest, described in the Exhibit “A”
attached thereto, in Tarrant and Dallas Counties, Texas, which amends and restates that certain
Participation Agreement dated May 1, 2003, entered into by and among the same parties.

     2. That certain Amendatory Agreement (Dale B Four Sevens Cross-Assignment Transaction)
entered into by and among Dale Resources, L.L.C., Parallel Petroleum Corporation, et al, among
other things, amending the Amended and Restated Participation Agreement described in Paragraph 1,
above, and other agreements described herein.

     3. That certain Operating Agreement dated May 1, 2003, as amended, between Dale Operating
Company, as Operator, and Parallel Petroleum Corporation, et al, as Non-Operators, pertaining to
the same lands covered by the Amended and Restated Participation Agreement described in Paragraph
No. 1, above, a Memorandum of which is recorded as Document No. D203319737 in the Real Property
Records of Tarrant County, Texas, as amended.

     4. That certain Lease Agreement dated May 3, 2003, as amended, entered into by and among Dale
Resources, L.L.C. and West Fork Partners, L.P., Tiggator, Inc. and Squaretop Partners, L.P., a
Memorandum of which, dated May 16, 2003, is recorded in Volume 16858, page 0241 of the Real
Property Records of Tarrant County, Texas, as amended by that certain Amendatory Agreement dated
May 18, 2004, entered into by and among such parties (the “Amendatory Agreement”).

     5. That certain Settlement Agreement and Mutual Release effective as of May 1, 2003, entered
into by and among Dale Resources, L.L.C., Parallel Petroleum Corporation, Premium Resources II,
L.P., Endeavor Energy Resources, et al, among other things, settling the “West Fork Lawsuit,” the
“Squaretop Lawsuit” and the” PR II Lawsuit.”

     6. Agreement dated May 18, 2004, entered into by and among Dale Resources, L.L.C., Parallel
Petroleum Corporation, et al, wherein such parties agree to pay to Premium Resources II, L.P.,
their pro rata share of the sum of $743,740.00.

     7. Escrow Agreement dated May 18, 2004 (among other dates), entered into by and among Dale
Resources, L.L.C. and “the West Fork entities,” as described therein, pertaining to the settlement
of the lawsuits described in No. 5, above.

1

 

     8. Transportation and Acquisition Agreement, West Fork Prospect Area, Tarrant County, Texas,
dated May 18, 2004, entered into by and among Dale Resources, L.L.C., West Fork Pipeline Company,
L.P., Parallel Petroleum Corporation and Premium Resources II, L.P.

     9. That certain Well Operation and Subsurface Easement effective May 10, 2003, as amended,
entered into by and among West Fork Partners, L.P., Tiggator, Inc., Squaretop Partners, L.P., as
Grantors, and Dale Resources, L.L.C., as Grantee, a Memorandum of which, dated May 16, 2003, is
recorded in Volume 16858, page 0099 of the Real Property Records of Tarrant County, Texas, as
amended by the Amendatory Agreement.

     10. That certain Central Facilities Easement dated May 10, 2003, from West Fork Partners,
L.P., Tiggator, Inc., Squaretop Partners, L.P., as Grantors, to Dale Resources, L.L.C., as Grantee,
a Memorandum of which, dated May 16, 2003, is recorded in Volume 16858, page 0098 of the Real
Property Records of Tarrant County, Texas, as amended by Amendment to Central Facilities Agreement
dated May 18, 2004, entered into by and among such parties.

     11. Agreement dated November 18, 2004, by and between Four Sevens Oil Co., Ltd., Parrot
Gas Co., Ltd. and Dale Resources, L.L.C. and the Operating Agreement attached as Exhibit “A”
thereto, dated November 18, 2004, wherein Four Sevens Operating Co., Ltd. is Operator and Parrot
Gas Co., Ltd. and Dale Resources, L.L.C. are Non-Operators.

     12. That certain Partial Assignment and Bill of Sale (Carter “A” Well # 1H) effective August
1, 2005, recorded as Document No. D206044605 in the Real Property Records of Tarrant County, Texas,
from Dale Resources, L.L.C., as Assignor, to Parallel, L.P., et al, as Assignees, as amended by
Amendment thereto, effective August 1, 2005, to include in the matters included in “Permitted
Encumbrances” therein a .3% overriding royalty interest assigned by that certain Assignment of
Overriding Royalty Interest dated as of August 1, 2005, from Dale Resources, L.L.C. to Dale
Employee Royalty Pool, L.P.

     13. That certain Partial Assignment and Bill of Sale (Gateway Park Well # 1H) effective August
1, 2005, recorded as Document No. D206044608 in the Real Property Records of Tarrant County, Texas,
from Dale Resources, L.L.C., as Assignor, to Parallel, L.P., et al, as Assignees, as amended by
Amendment thereto, effective August 1, 2005, to include in the matters included in “Permitted
Encumbrances” therein a .3% overriding royalty interest assigned by that certain Assignment of
Overriding Royalty Interest dated as of August 1, 2005, from Dale Resources, L.L.C. to Dale
Employee Royalty Pool, L.P.

     14. That certain Partial Assignment and Bill of Sale (Gateway Park Well # 2H) effective
                     1, 2005, recorded as Document No. D206044607 in the Real Property Records of Tarrant
County, Texas, from Dale Resources, L.L.C., as Assignor, to Parallel, L.P., et al, as Assignees, as
amended by Amendment thereto, effective February 9, 2006, to include in the matters included in
“Permitted Encumbrances” therein a .3% overriding royalty interest assigned by that certain
Assignment of Overriding Royalty Interest dated as of August 1, 2005, from Dale Resources, L.L.C.
to Dale Employee Royalty Pool, L.P.

     15. That certain Partial Assignment and Bill of Sale (Brentwood Well A # 1H) effective July 1,
2005, recorded as Document No. D206044606 in the Real Property Records of

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Tarrant County, Texas, from Dale Resources, L.L.C., as Assignor, to Parallel, L.P., et al, as
Assignees, as amended by Amendment thereto, effective July 1, 2005, to include in the matters
included in “Permitted Encumbrances” therein a .3% overriding royalty interest assigned by that
certain Assignment of Overriding Royalty Interest dated as of August 1, 2005, from Dale Resources,
L.L.C. to Dale Employee Royalty Pool, L.P.

     16. That certain Partial Assignment and Bill of Sale (Parrot Well # 1H) effective July 1,
2005, recorded as Document No. D206044604 in the Real Property Records of Tarrant County, Texas,
from Dale Resources, L.L.C., as Lessor, to Parallel, L.P., et al, as Assignees.

WEST GATEWAY PROSPECT

     1. Participation Agreement, West Gateway Prospect, dated November 1, 2005, entered into by and
among Dale Resources, L.L.C., Parallel, L.P., et al.

     2. Operating Agreement dated November 1, 2005, for the West Gateway area, between Dale
Operating Company, as Operator, and Parallel, L.P., et al, as Non-Operators, and the Memorandum of
Operating Agreement effective November 1, 2005, currently unrecorded.

LONE STAR PROSPECT

     1. Area of Mutual Interest Agreement, Lone Star, effective March 1, 2005, entered into by and
among Matador Energy Company, Ltd. and Dale Resources, L.L.C., as ratified by all of the parties
ratifying such Agreement by Ratification Agreement entered into as of May 31, 2005, as acknowledged
by Acknowledgment of Ratification Agreement entered into as of May 31, 2005, by and between Dale
Resources, L.L.C., Dale Gas Partners, L.P., Dale Operating Company and Matador Energy Company, Ltd.

3

 

EXHIBIT “B”

	 	 	 	 	 
	 

	 	attached to and made a part of that
certain Agreement
	 	 
	 

	 	dated March 24, 2006, by and between	 	 
	 

	 	Razorback II, LP and Parallel, L.P.	 	 

ASSIGNMENT

     For valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Razorback II, LP (“Assignor”) hereby sells, assigns, transfers and conveys unto Parallel, L.P.
(“Assignee”), whose address is 1004 N. Big Spring, Suite 400, Midland, Texas 79701,

an undivided one-half (1/2) of all of Assignor’s right, title and interest in and to Dale
Resources, LLC’s West Fork, West Gateway and Lone Star Prospects in Tarrant County, Texas
(the “Subject Prospects”), including, but not limited to, an undivided one-half (1/2) of all
of Assignor’s right, title and interest in, to, under, arising by virtue of and/or acquired
by Assignor by virtue of the agreements, contracts, assignments and other documents more
particularly described in Exhibit “A” hereto (the “Documents”), SAVE AND EXCEPT the
interests in the foregoing which were assigned by Assignor to Parallel by a separate
Assignment of even date herewith (the undivided one-half (1/2) interest in the Subject
Prospects being assigned herein being hereinafter referred to as the “Subject Interest”).

     This Assignment is made subject to all the terms and provisions of that certain Agreement
dated March                    , 2006, entered into by and between Assignor and Assignee.

     Assignor hereby warrants that (i) Assignor has good and indefeasible title to the Subject
Interests, (ii) the Subject Interests are one-half (1/2) of the interest acquired by Assignor in,
under and by virtue of the Documents, (iii) the Subject Interests are free and clear of liens and
encumbrances, (iv) that no interests have been created by Assignor which would increase the
cost-bearing interests attributable to the Subject Interests to more than, or reduce the interest
in the oil and gas production or other revenue attributable to the Subject Interests to less than,
one-half (1/2) of the revenue attributable to the interest acquired by Assignor by virtue of the
Documents, and (v) there is no prohibition, consent or approval required for this Assignment.

     Executed this                     day of                    , 2006, but effective as of March 1, 2006.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ASSIGNOR:	 	 	 	ASSIGNEE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	RAZORBACK II, L.P.	 	 	 	PARALLEL, L.P.	 	 
	 
	By:	 	      /s/ Wallace L. Hall,	 	 	 	By:	 	Parallel Petroleum Corporation,	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	     its general partner	 	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:
	 	     /s/ John S. Rutherford	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	Managing Member of Teason, LLC,	 	 	 	 	 	John S. Rutherford, Vice President	 	 
	 	 	General Partner of Razorback II, LP	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 
	STATE OF TEXAS

	 	)	 	 
	 

	 	)	 	 
	COUNTY OF DALLAS

	 	)	 	 

     This instrument was acknowledged before me this 29th day of March, 2006, by Wallace L. Hall,
general partner, on behalf of Razorback II, LP, a Texas limited partnership.

	 	 	 	 	 
	 	 	 
	 	          /s/ Christina Gillilan
 	 
	 	Notary Public, State of Texas 	 
	 	 	 
	 

	 	 	 	 	 
	STATE OF TEXAS

	 	)	 	 
	 

	 	)	 	 
	COUNTY OF MIDLAND

	 	)	 	 

     This instrument was acknowledged before me this 24th day of March, 2006, by John S.
Rutherford, Vice President of Parallel Petroleum Corporation, general partner, on behalf of
Parallel, L.P., a Texas limited partnership.

	 	 	 	 	 
	 	 	 
	 	          /s/ Peggy Byron
 	 
	 	Notary Public, State of Texas 	 
	 	 	 

2

 

	 	 	 	 	 

EXHIBIT “C”

	 	 	 	 	 
	 

	 	attached to and made a part of that
certain Agreement
	 	 
	 

	 	dated March 24, 2006, by and between	 	 
	 

	 	Razorback II, LP and Parallel, L.P.	 	 

WELLS BEING DRILLED AS OF MARCH 1, 2006

Duck Head #2-H

Brentwood C #1-H

Parrot A #3-H

 

 

EXHIBIT “D”

	 	 	 	 	 
	 

	 	attached to and made a part of that
certain Agreement
	 	 
	 

	 	dated March 24, 2006, by and between	 	 
	 

	 	Razorback II, LP and Parallel, L.P.	 	 

FRAC JOBS TO BE PERFORMED ON EXISTING WELLS

Bell # 1

Riverbend A #1-H

Riverbend B #1-H

Brentwood B #1-H

Carter B #1-H

Bell # 2 Hexv10w37

 

Exhibit 10.37

XATA CORPORATION

RESTRICTED STOCK AWARD AGREEMENT

PURSUANT TO 2002 LONG-TERM INCENTIVE AND STOCK OPTION PLAN

     THIS RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is made effective as of April 10,
2006, by and between XATA Corporation, a Minnesota corporation (the “Company”) and Thomas Schlick
(“Employee”).

Recitals

     1. The Company desires to afford the Employee an opportunity to acquire shares of its common
stock, par value $.01 per share (the “Shares”), to carry out the purposes of its 2002 Long-Term
Incentive and Stock Option Plan, as amended (the “Plan”), a copy of which has been provided to
Employee and the terms of which are incorporated by reference herein and shall be considered a part
of this Agreement. For purposes of this Agreement and the Plan, employment by any subsidiary of
the Company is equivalent to employment by the Company.

     2. The Plan provides that each award is to be evidenced by an agreement, setting forth the
terms and conditions of such award.

     ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements
contained herein, the Company and the Employee hereby agree as follows:

     1. Restricted Stock Award. Subject to the terms and provisions of this Agreement and
the Plan, the Company hereby grants to Employee as of the date hereof a restricted stock award for
Twenty Thousand (20,000) Shares (the “Award Shares”). For purposes of Section 16 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, the grant
date for the Award Shares shall be the effective date hereof; provided, however, all of Employee’s
right, title and interest in and to the Award Shares shall be subject to Section 2 below.

     2. Vesting of Award Shares.

     (a) Subject to Sections 2(b), (c), (d) and (e) below, all of Employee’s right, title and
interest in and to the Award Shares is and shall be contingent upon and subject to the continued
full time employment of Employee by the Company during the vesting periods (the “Vesting Periods”).
At the end of each Vesting Period, and provided that Employee is then a full time employee of the
Company, Employee shall be deemed to be fully vested without restriction in all of the Award Shares
covered by that Vesting Period. Each Vesting Period begins on the effective date hereof.

 

 

	 	 	 	 	 
	No. of Award Shares	 	End of Vesting Period	 
	6667
	 	April 10, 2007
	6667
	 	April 10, 2008
	6666
	 	April 10, 2009

     (b) In the event that Employee voluntary resigns from Employee’s full time employment with the
Company or is terminated by the Company for cause during any Vesting Period, Employee shall forfeit
all right, title and interest in and to all unvested Award Shares.

     (c) In the event that Employee is terminated from employment by the Company without cause
during any Vesting Period, or in the event that Employee is terminated from employment prior to the
end of any Vesting Period because the Employee has died or become permanently disabled within the
meaning of Section 105(b) (4) of the Internal Revenue Code of 1986, Employee shall thereupon become
immediately vested without restriction in all of the Award Shares covered by that unexpired Vesting
Period. Employee shall forfeit all right, title and interest in and to all other unvested Award
Shares.

     3. Restriction on Transfer. No interest in unvested Award Shares shall be
transferable by any means (e.g. sale, assignment, pledge, gift).

     4. Issuance and Delivery of Certificates for Award Shares.

     (a) As soon as practicable after the execution hereof, the Company shall issue in Employee’s
name, and retain in the custody of the Company pursuant to Section 4(b) below, a certificate for
paid-up, non-assessable Shares for the full number of the Award Shares. The Company shall place a
stop transfer order on its stock records with respect to the Award Shares, and the certificate for
the Award Shares shall contain the following legend:

“The securities evidenced by this certificate were issued pursuant
to a Restricted Stock Award Agreement between the holder and the
issuer dated April 10, 2006 (the “Agreement”), and no sale, offer to
sell, transfer, pledge or other hypothecation of these securities
may be made so long as the securities remain subject to the
restrictions set forth in the Agreement.”

     (b) Employee acknowledges and agrees that the Company shall retain the custody of the
certificates for the Award Shares, and that the certificates will not be delivered to Employee
except as provided in Section 4(c) below. Upon execution of this Agreement, Employee has also
executed and delivered to the Company an Assignment Separate from Certificate, authorizing the
Company as attorney to transfer the certificate for the Award Shares to the Company upon forfeiture
pursuant to this Agreement.

 

 

     (c) As soon as reasonably practicable after termination of the transfer restrictions pursuant
to Section 3 above, the Company will deliver a certificate for the Award Shares, adjusted as
necessary for the actual number of Award Shares in which Employee has become vested, without the
restrictive legend set forth in Section 4(a). Delivery of the certificate under this Section 4(c)
shall be made at the principal office of the Company to the person or persons entitled thereto
during ordinary business hours of the Company not more than thirty (30) days after the vesting of
the Award Shares, or at such time, place and manner as may be agreed upon by the Company and the
person or persons entitled to the Award Shares.

     5. Rights and Restrictions as a Shareholder. During the Employee’s continued full
time employment with the Company or its subsidiaries Employee shall have full voting rights,
dividend rights and other rights as a shareholder with respect to all vested (but not unvested)
Award Shares. So long as the Company retains custody of the certificates for the Award Shares,
Employee shall not (i) sell, offer to sell, transfer, pledge or hypothecate any record or
beneficial interest in the Award Shares, other than to the Company as provided in this Agreement or
(ii) grant any proxies or voting rights with respect to the Award Shares, except to the Company.
The Employee hereby grants an irrevocable proxy to the chief executive officer and the chief
financial officer of the Company (the act of one of them being sufficient), which is coupled with
an interest as described in Minnesota Statutes § 302.449, to vote all unvested Award Shares, in the
sole discretion of such officer (subject to direction by the Board of Directors of the Company) on
any and all matters put to a vote of the shareholders of the Company. Upon vesting of the Award
Shares pursuant to Section 2 above, Employee (or the person or persons then entitled to the Award
Shares or any portion thereof pursuant to Section 2(d) above) shall have full voting rights,
dividend rights and other rights as a shareholder with respect to such Award Shares.

     6. Stock Dividends, Stock Splits and Other Adjustments. During the time that the
Award Shares are subject to the vesting restrictions set forth in Section 2 above, if a stock
dividend or stock split is declared on the outstanding Shares of the Company, or if outstanding
Shares of the Company are changed into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, stock split, reverse stock split, combination of
shares or dividends payable in capital stock, appropriate adjustment shall be made in the number
and kind of shares as to which the Award Shares relate (the “Adjusted Shares”), to the end that the
proportionate interest of Employee, as a shareholder of the Company with respect to the Award
Shares when and if vested, shall be maintained as before the occurrence of such event. As used
herein, the term Award Shares include any corresponding Adjusted Shares. The Company shall retain
the custody of each certificate for the Adjusted Shares pursuant to Section 4(b) above.

     7. Withholding. Employee shall pay on a timely basis all withholding and payroll
taxes and/or excise taxes required by law with respect to the Award Shares (collectively,
“Withholding Taxes”). The delivery of any Award Shares (or portion thereof, if any) to Employee
under this Agreement shall be subject to and conditioned upon Employee’s payment of all applicable
Withholding Taxes. Employee hereby authorizes the Company to withhold such Withholding Taxes from
his salary and/or commissions.

 

 

     8. Investment Representations. Unless a registration statement under the Securities
Act of 1933, as amended, is in effect with respect to the Award Shares on the date of issuance of
the Award Shares, Employee will be deemed to have made the following investment representation on
the date of issuance:

Employee intends to acquire the Award Shares for Employee’s own
account for investment purposes and not with a view to resale in
connection with any distribution thereof. Employee has no present
intention, and is not a party to any agreement or arrangement, to
resell or dispose of any of the Award Shares. Employee understands
and agrees that the Company has no obligation to register the Award
Shares and that the Award Shares will not be registered under the
Securities Act of 1933, as amended (the “Act”), or under applicable
state securities laws, on the grounds that the Award Shares are
being issued in a transaction not involving a public offering and
that, consequently, such transaction is exempt from registration
under the Act and the state securities laws. Employee further
understands and agrees that the Award Shares may not be sold,
transferred or otherwise disposed of except pursuant to an effective
registration statement or appropriate exemption from registration
under the foregoing securities acts. Accordingly, Employee
acknowledges that the Company is not required to recognize any
transfer of the Award Shares if such transfer would result in
violation of any federal or state law regarding the offering or sale
of securities. The Company may place a stop transfer order on its
stock records with respect to the Award Shares, and the
certificate(s) for the Award Shares may contain substantially the
following legend:

“The securities evidenced by this certificate have not been
registered either under any applicable federal law and rules or
applicable state law and rules. No sale, offer to sell, or transfer
of these securities may be made unless a registration statement
under the securities Act of 1933, as amended, and any applicable
state law with respect to such securities is then in effect or an
exemption from the registration requirements of such law is then, in
fact, applicable to such securities.”

     9. Legend on Shares if Registered. If Employee is deemed an affiliate of the Company,
the Company may place a stop transfer order on its stock records with respect to the Award Shares,
and the certificate(s) for the Award Shares (or a portion thereof) may contain substantially the
following legend:

“The securities evidenced by this certificate were issued to an
affiliate of the issuer, and the resale of such securities is
subject

 

 

to the restrictions of Rule 144 under the Securities Act of 1933, as
amended, pertaining to shares held by affiliates.”

     10. Expenses. Nothing contained in this Agreement shall be construed to impose any
liability on the Company in favor of the Employee for any cost, loss or expense the Employee may
incur in connection with, or arising out of any transaction under, this Agreement.

     11. No Employment Agreement. Nothing in this Agreement shall be construed to
constitute or be evidence of an agreement or understanding, express or implied, on the part of the
Company to employ the Employee on any terms or for any specific period of time.

     12. Nontransferability. The rights of the Employee under this Agreement shall not be
assigned, transferred, pledged or otherwise hypothecated by the Employee other than by will or the
laws of descent and distribution.

     13. Fractional Shares. No fraction of a share shall be deliverable pursuant to this
Agreement, but in the event any adjustment hereunder of the number of the Award Shares shall cause
such number to include a fraction of a share, such fraction shall be adjusted to the nearest
smaller whole number of shares.

     14. Complete Agreement, Amendment. This Agreement and the Plan, which by this
reference is hereby incorporated herein in its entirety, contain the entire agreement between the
Company and Employee with respect to the transactions contemplated hereby. Any modification of the
terms of this Agreement must be in writing and signed by each of the parties.

     15. Governing Law. Any issue related to the formation, execution, performance and
interpretation of this Agreement shall be governed by the laws of the State of Minnesota.

     16. Headings. The section and subsection headings used in this Agreement are for
convenient reference and are not a part of this Agreement.

	 	 	 	 
	XATA CORPORATION
	 	EMPLOYEE
	By	 
	 	 
 

	 
	Title

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