Document:

exv10w3

 

Exhibit 10.3

Partners for Growth II

Loan and Security Agreement

	 	 	 
	Borrower:

	 	XATA Corporation, a Minnesota corporation
	Address:

	 	965 Prairie Center Drive, Eden Prairie, MN 55344
	 
	 	 
	Borrower:

	 	Geologic Solutions, Inc., a Delaware corporation
	Address:

	 	13625-B Dulles Technology Drive, Herndon, Virginia 20171
	 
	 	 
	Date:

	 	January 31, 2008

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between PARTNERS FOR GROWTH II,
L.P. (“PFG”), whose address is 180 Pacific Avenue, San Francisco, CA 94111 and the borrowers named
above (jointly and severally, “Borrower”), whose respective chief executive office is located at
the above address (“Borrower’s Address”). The Schedule to this Agreement (the “Schedule”) being
signed by the parties concurrently, is an integral part of this Agreement. (Definitions of certain
terms used in this Agreement are set forth in Section 7 below.)

1. LOANS.

     1.1 Loans. Subject to satisfaction of the conditions set forth in Section 9 of the Schedule
or the waiver thereof in PFG’s discretion, PFG will make a loan to Borrower (the “Loan”) in the
amount shown on the Schedule, provided no Default or Event of Default has occurred and is
continuing.

     1.2 Interest. All Loans and all other monetary Obligations shall bear interest at the rate
shown on the Schedule, except where expressly set forth to the contrary in this Agreement.
Interest shall be payable monthly on the first day of each month for interest accrued during the
prior month.

     1.3 Fees. Borrower shall pay PFG the fees shown on the Schedule, which are in addition to
all interest and other sums payable to PFG and are not refundable.

     1.4 [INTENTIONALLY LEFT BLANK]

     1.5 Late Fee. If any payment of accrued interest for any month is not made within three
Business Days after the date due (other than by reason of acceleration), or if any payment of
principal or any other payment is not made within three Business Days after the date due, Borrower
shall pay PFG a late payment fee equal to 5% of the amount of such late payment. The provisions of
this paragraph shall not be construed as PFG’s consent to Borrower’s failure to pay any amounts
when due, and PFG’s acceptance of any such late payments shall not restrict PFG’s exercise of any
remedies arising out of any such failure.

2. SECURITY INTEREST.

     2.1 Grant of Security Interest. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to PFG a security interest in all of the following
(collectively, the “Collateral”): all right, title and interest of Borrower in and to all of the
following, whether now owned or hereafter arising or acquired and wherever located: all Accounts;
all Inventory; all Equipment; all Deposit Accounts; all General Intangibles (including without
limitation all Intellectual Property); all Investment Property; all Other Property; and any and all
claims, rights and interests in any of the above, and all guaranties and security for any of the
above, and all substitutions and replacements for, additions, accessions, attachments, accessories,
and improvements to, and proceeds (including proceeds of any insurance policies, proceeds of
proceeds and claims against third parties) of, any and all of the above, and all Borrower’s books
relating to any and all of the above; provided, however, the Collateral shall not include licenses
and permits issued by the Federal Communications Commission to the extent it is unlawful to grant a
security interest in such licenses and permits.

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     2.2 Specified Contracts Excluded. The security interest granted under this Section 2 shall
not attach to any of the following (“Specified Contracts”): any lease, license, contract, property
rights or agreement to which Borrower is a party or any of its rights or interests thereunder if
and for so long as the grant of such security interest shall constitute or result in any of the
following (other than to the extent that any such term would be ineffective under the Code or any
other applicable law or principles of equity): (i) the abandonment, invalidation or
unenforceability of any right, title or interest of Borrower therein, or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease, license, contract
property rights or agreement; provided however that such security interest shall attach immediately
at such time as the condition causing such abandonment, invalidation or unenforceability shall be
remedied and to the extent severable, shall attach immediately to any portion of such lease,
license, contract, property rights or agreement that does not result in any of the consequences
specified in (i) or (ii) above. Notwithstanding anything herein to the contrary, the foregoing
shall not be construed so as to apply to Accounts or payment intangibles. Except as disclosed on
Exhibit A hereto, Borrower represents and warrants to PFG that there are no Specified Contracts
which are material to Borrower’s business or grant Borrower rights in Intellectual Property which
is licensed by the Borrower to its customers or incorporated in products licensed or sold by the
Borrower to its customers. Borrower shall not, hereafter, without PFG’s prior written consent,
enter into any Specified Contract which is material to Borrower’s business or grants Borrower
rights in Intellectual Property which is licensed by the Borrower to its customers or incorporated
in products licensed or sold by the Borrower to its customers.

     2.3 Lease Receivables. PFG agrees, from time to time at Borrowers’ request, to release its
security interest against Lease Receivables to the extent that Borrower is financing such Lease
Receivables with a finance company other than the Senior Lender, provided that (i) Borrower is not
then financing such Lease Receivables with the Senior Lender, (ii) such other finance company is
identified in advance to PFG, and (iii) no Default or Event of Default then exits under the Loan
Documents or the Senior Loan Documents or would result from the finance of Lease Receivables by
such other finance company.

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

     In order to induce PFG to enter into this Agreement and to make Loans, Borrower represents and
warrants to PFG as follows, and Borrower covenants that the following representations will continue
to be true, and that Borrower will at all times comply with all of the following covenants,
throughout the term of this Agreement and until all Obligations have been paid and performed in
full:

     3.1 Corporate Existence and Authority. Borrower is and will continue to be, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation.
Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would result in a Material Adverse Change. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated hereby (i) have
been duly and validly authorized, (ii) are enforceable against Borrower in accordance with their
terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to creditors’ rights generally), and (iii) do
not violate Borrower’s articles or certificate of incorporation, or Borrower’s by-laws, or any law
or any material agreement or instrument which is binding upon Borrower or its property, and (iv)
do not constitute grounds for acceleration of any material indebtedness or obligation under any
agreement or instrument which is binding upon Borrower or its property.

     3.2 Name; Trade Names and Styles. As of the date hereof, the name of Borrower set forth in
the heading to this Agreement is its correct name, as set forth in its Articles or Certificate of
Incorporation. Listed in the Representations are all prior names of Borrower and all of Borrower’s
present and prior trade names as of the date hereof. Borrower shall give PFG 30 days’ prior
written notice before changing its name or doing business under any other name. Borrower has
complied, and will in the future comply, in all material respects, with all laws relating to the
conduct of business under a fictitious business name, if applicable to Borrower.

     3.3 Place of Business; Location of Collateral. As of the date hereof, the address set forth
in the heading to this Agreement is Borrower’s chief executive office. In addition, as of the date
hereof, Borrower has places of business and Collateral is located only at the locations set forth
in the Representations. Borrower will give PFG at least 30 days prior written notice before
opening any additional place of business, changing its chief executive office, or moving any of the
Collateral to a location other than Borrower’s Address or one of the locations set forth in the
Representations, except that Borrower may maintain sales offices in the ordinary course of business
at which not more than a total of $10,000 fair market value of Equipment is located.

     3.4 Title to Collateral; Perfection; Permitted Liens.

          (a) Borrower is now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of Equipment which are leased to Borrower. The Collateral now is and
will remain free and clear of any and all liens, charges,

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security interests, encumbrances and adverse claims, except for Permitted Liens. PFG now has,
and will continue to have, a First-Priority perfected and enforceable security interest in all of
the Collateral, subject only to the Permitted Liens, and Borrower will at all times defend PFG and
the Collateral against all claims of others.

          (b) Borrower has set forth in the Representations all of Borrower’s Deposit Accounts, and
Borrower will give PFG five Business Days advance written notice before establishing any new
Deposit Accounts and will cause the institution where any such new Deposit Account is maintained to
execute and deliver to PFG a control agreement in form sufficient to perfect PFG’s security
interest in the Deposit Account and otherwise satisfactory to PFG in its good faith business
judgment.

          (c) In the event that Borrower shall at any time after the date hereof have any commercial
tort claims against others, which it is asserting, and in which the potential recovery exceeds
$100,000, Borrower shall promptly notify PFG thereof in writing and provide PFG with such
information regarding the same as PFG shall request (unless providing such information would waive
the Borrower’s attorney-client privilege). Such notification to PFG shall constitute a grant of a
security interest in the commercial tort claim and all proceeds thereof to PFG, and Borrower shall
execute and deliver all such documents and take all such actions as PFG shall request in connection
therewith.

          (d) None of the Collateral now is or will be affixed to any real property in such a manner, or
with such intent, as to become a fixture. Borrower is not and will not become a lessee under any
real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and
no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair Borrower’s
right to remove any Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest, Borrower shall, whenever requested by PFG, use
commercially reasonable efforts to cause such third party to execute and deliver to PFG, in form
acceptable to PFG, such waivers and subordinations as PFG shall specify in its good faith business
judgment. Borrower will keep in full force and effect, and will comply with all material terms of,
any lease of real property where any of the Collateral now or in the future may be located.

     3.5 Maintenance of Collateral. Borrower will maintain the Collateral in good working
condition (ordinary wear and tear excepted), and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise PFG in writing of any material loss or damage
to the Collateral.

     3.6 Books and Records. Borrower has maintained and will maintain at Borrower’s Address
complete and accurate books and records, comprising an accounting system in accordance with GAAP.

     3.7 Financial Condition, Statements and Reports. All financial statements now or in the
future delivered to PFG have been, and will be, prepared in conformity with GAAP and now and in the
future will fairly present the results of operations and financial condition of Borrower in all
material respects, in accordance with GAAP, at the times and for the periods therein stated,
except, in the case of unaudited financial statements for (i) lack of footnote disclosure required
by GAAP, and (ii) normal year end audit adjustments. Between the last date covered by any such
statement provided to PFG and the date hereof, there has been no Material Adverse Change.

     3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed, and will
timely file, all required tax returns and reports, and Borrower has timely paid, and will timely
pay, all foreign, federal, state and local taxes, assessments, deposits and contributions now or in
the future owed by Borrower. Borrower may, however, defer payment of any of the foregoing which
are contested by Borrower in good faith, provided that Borrower (i) contests the same by
appropriate proceedings promptly and diligently instituted and conducted, (ii) notifies PFG in
writing of the commencement of, and any material development in, the proceedings, and (iii) posts
bonds or takes any other steps required to keep the same from becoming a lien upon any of the
Collateral. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior
tax years which could result in additional taxes becoming due and payable by Borrower. Borrower
has paid, and shall continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not
and will not withdraw from participation in, permit partial or complete termination of, or permit
the occurrence of any other event with respect to, any such plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.

     3.9 Compliance with Law. Borrower has, to the best of its knowledge, complied, and will
comply, in all material respects, with all provisions of all foreign, federal, state and local laws
and regulations applicable to Borrower, including, but not limited to, those relating to Borrower’s
ownership of real or personal property, the conduct and licensing of Borrower’s business, and all
environmental matters.

     3.10 Litigation. There is no claim, suit, litigation, proceeding or investigation pending or
(to best of Borrower’s knowledge) threatened against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which could reasonably be
expected to result, either separately or in the aggregate, in any Material

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Adverse Change. Borrower will promptly inform PFG in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted against Borrower involving any
single claim of $50,000 or more, or involving $100,000 or more in the aggregate.

     3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for lawful business
purposes and as otherwise specified in the Schedule. Borrower is not purchasing or carrying any
“margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry any “margin stock” or to
extend credit to others for the purpose of purchasing or carrying any “margin stock.”

     3.12 No Default. At the date hereof, no Default or Event of Default has occurred, and no
Default or Event of Default will have occurred after giving effect to any Loans being made
concurrently herewith.

     3.13 Protection and Registration of Intellectual Property Rights. Borrower shall: (a)
protect, defend and maintain the validity and enforceability of its intellectual property; (b)
promptly advise PFG in writing of material infringements of its intellectual property; and (c) not
allow any intellectual property material to Borrower’s business to be abandoned, forfeited or
dedicated to the public without PFG’s written consent. If Borrower decides to register any
copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide PFG
with at least fifteen (15) days prior written notice of its intent to register such copyrights or
mask works together with a copy of the application it intends to file with the United States
Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security
agreement or such other documents as PFG may reasonably request to maintain the perfection and
priority of PFG’s security interest in the copyrights or mask works intended to be registered with
the United States Copyright Office; and (z) record such intellectual property security agreement
with the United States Copyright Office contemporaneously with filing the copyright or mask work
application(s) with the United States Copyright Office. Borrower shall promptly provide to PFG a
copy of the application(s) filed with the United States Copyright Office together with evidence of
the recording of the intellectual property security agreement necessary for PFG to maintain the
perfection and priority of its security interest in such copyrights or mask works. Borrower shall
provide written notice to PFG of any application filed by Borrower in the United States Patent and
Trademark Office for a patent or to register a trademark or service mark within 30 days after any
such filing.

     3.14 Domain Rights and Related Matters. Borrower (a) is the sole record, legal and
beneficial owner of all domain names and domain name rights used in connection with its business
and that of its Subsidiaries, free and clear of any rights or claims of any third party; (b)
represents and warrants that the information provided in the Representations with respect to domain
names and ownership thereof, domain registry, domain servers, location and administrative contact
information, web hosting and related services and facilities (collectively, “Domain Rights”) is
true, accurate and complete and Borrower shall promptly notify PFG of any changes to such
information; (c) shall maintain all Domain Rights in full force and effect so long as any
Obligations remain outstanding; (d) shall, upon request of PFG, notify such third parties
(including domain registrars, hosting companies and internet service providers) of PFG’s security
interest in Borrower’s Domain Rights; and (e) promptly advise PFG in writing of any disputes or
infringements of its Domain Rights.

4. ADDITIONAL DUTIES OF BORROWER.

     4.1 Financial and Other Covenants. Borrower shall at all times comply with the financial and
other covenants set forth in the Schedule.

     4.2. Remittance of Proceeds. Subject to the rights of the Senior Lender, all proceeds arising
from the disposition of any Collateral shall be delivered, in kind, by Borrower to PFG in the
original form in which received by Borrower not later than the following Business Day after receipt
by Borrower, to be applied to the Obligations in such order as PFG shall determine; provided that,
if no Default or Event of Default has occurred and is continuing, Borrower shall not be obligated
to remit to PFG (i) the proceeds of Accounts and Inventory arising in the ordinary course of
business, or (ii) the proceeds of the sale of worn out or obsolete Equipment disposed of by
Borrower in good faith in an arm’s length transaction for an aggregate purchase price of $25,000 or
less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle
proceeds of Collateral (other than those described in subclauses (i) and (ii) above) with any of
Borrower’s other funds or property, but will hold such proceeds separate and apart from such other
funds and property and in an express trust for PFG, except as set forth above, and subject to the
rights of the Senior Lender. Nothing in this Section limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.

     4.3 Insurance. Borrower shall at all times insure all of the tangible personal property
Collateral and carry such other business insurance, with insurers reasonably acceptable to PFG, in
such form and amounts as PFG may reasonably require and as are customary and in accordance with
standard practices for Borrower’s industry and locations, and Borrower shall provide evidence of
such insurance to PFG. All casualty insurance policies shall name PFG as an additional loss payee,
and shall contain a lenders loss payee endorsement in form reasonably acceptable to PFG. Upon
receipt of the proceeds of any such insurance, subject to the rights of the Senior Lender, PFG
shall apply such proceeds in reduction of the Obligations as

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PFG shall determine in its good faith business judgment, except that, provided no Default or
Event of Default has occurred and is continuing, PFG shall release to Borrower insurance proceeds
with respect to Equipment totaling less than $100,000, which shall be utilized by Borrower for the
replacement of the Equipment with respect to which the insurance proceeds were paid. PFG may
require reasonable assurance that the insurance proceeds so released will be so used. If Borrower
fails to provide or pay for any insurance, PFG may, but is not obligated to, obtain the same at
Borrower’s expense. Borrower shall promptly deliver to PFG copies of all material reports made to
insurance companies.

     4.4 Reports. Borrower, at its expense, shall provide PFG with the written reports set forth
in the Schedule, and such other written reports with respect to Borrower (including budgets,
projections, operating plans and other financial documentation), as PFG shall from time to time
specify in its good faith business judgment.

     4.5 Access to Collateral, Books and Records. At reasonable times, and on one Business Day’s
notice, PFG, or its agents, shall have the right to inspect the Collateral, and the right to audit
and copy Borrower’s books and records. The foregoing inspections and audits shall be at Borrower’s
expense and the charge therefor shall be $750 per person per day (or such higher amount as shall
represent PFG’s then current standard charge for the same), plus reasonable out-of-pocket expenses.
If no Default has occurred and is continuing and no PFG audit or inspection conducted within the
prior 12 month period has revealed any material inconsistencies or discrepancies in Borrower’s
books and records (as determined in PFG’s good faith business judgment), PFG shall be entitled to
conduct no more than one audit per calendar year at Borrower’s expense. Borrower shall not be
required to disclose to PFG any document or information (i) where disclosure is prohibited by
applicable law, stock exchange regulation or any agreement binding on Borrower, or (ii) is subject
to attorney-client or similar privilege or constitutes attorney work product. If Borrower is
withholding any information under the preceding sentence (whether or not a Default or Event of
Default has occurred), it shall so advise PFG in writing, giving PFG a general description of the
nature of the information and the basis upon which such information is being withheld. If the only
basis for withholding such information is the consent of Borrower or a third party, Borrower shall
give such consent and shall use reasonable commercial efforts to secure any third party consent
required.

     4.6 Negative Covenants. Except as may be permitted in the Schedule, Borrower shall not,
without PFG’s prior written consent (which shall be a matter of its good faith business judgment
and shall be conditioned on Borrower then being in compliance with the terms of this Agreement), do
any of the following:

          (i) permit or suffer any Change in Control;

          (ii) acquire any assets, except in the ordinary course of business, or make any Investments
other than Permitted Investments;

          (iii) enter into any other transaction outside the ordinary course of business;

          (iv) sell or transfer any Collateral (including without limitation and sale or transfer of
Collateral which is then leased back by Borrower), except for (A) the sale of finished Inventory in
the ordinary course of Borrower’s business, and except for the sale of obsolete or unneeded
Equipment in the ordinary course of business, (B) the making of Permitted Investments, (C) the
granting of Permitted Liens, and (D) the non-exclusive licensing of Intellectual Property in the
ordinary course of business;

          (v) store any Inventory or other Collateral with any warehouseman or other third party, unless
there is in place a bailee agreement in such form as PFG shall specify in its good faith business
judgment;

          (vi) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent
basis; provided however, sales on a contingent basis in the ordinary course of Borrower’s business
and not constituting in excess of 10% of annual sales in the aggregate may be made without PFG’s
prior written consent;

          (vii) make any loans of any money or other assets, other than Permitted Investments;

          (viii) incur any Indebtedness, other than Permitted Indebtedness;

          (ix) guarantee or otherwise become liable with respect to the obligations of another party or
entity, other than a Borrower or a Subsidiary existing on the date hereof;

          (x) pay or declare any dividends on Borrower’s stock (except for dividends payable by Geologic
Solutions, Inc. to XATA Corporation and dividends payable solely in stock of Borrower);

          (xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Borrower’s
stock, except as required in the ordinary course of business and consistent with past practice in
connection with redeeming or purchasing stock of departing employees, up to a maximum aggregate of
$50,000 in any fiscal year;

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          (xii) engage, directly or indirectly, in any business other than the businesses currently
engaged in by Borrower or reasonably related thereto;

          (xiii) directly or indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s
business, upon fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person;

          (xiv) without at least thirty (30) days prior written notice to PFG: (1) add any new offices
or business locations, including warehouses (unless such new offices or business locations contain
less than $10,000 in Borrower’s assets or property, (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its legal name, or (5) change any
organizational number (if any) assigned by its jurisdiction of organization; or

          (xv) liquidate or dissolve or elect to liquidate or dissolve.

Transactions permitted by the foregoing provisions of this Section are only permitted if no Default
or Event of Default would occur as a result of such transaction.

     4.7 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or
against PFG with respect to any Collateral or relating to Borrower, Borrower shall, without expense
to PFG, make available Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that PFG may deem them reasonably necessary in order to prosecute or defend
any such suit or proceeding.

     4.8 Changes. Borrower agrees to promptly notify PFG in writing of any changes in the
information set forth in the Representations.

     4.9 Further Assurances. Borrower agrees, at its expense, on request by PFG, to execute all
documents and take all actions, as PFG, may, in its good faith business judgment, deem necessary or
useful in order to perfect and maintain PFG’s perfected first-priority security interest in the
Collateral (subject to Permitted Liens), and in order to fully consummate the transactions
contemplated by this Agreement.

5. TERM.

     5.1 Maturity Date. This Agreement shall continue in effect until the maturity date set forth
on the Schedule (the “Maturity Date”), subject to Sections 5.2 and 5.3 below.

     5.2 Early Termination. This Agreement may be terminated prior to the Maturity Date as
follows: (i) if specifically permitted in the Schedule, by Borrower, effective three Business Days
after written notice of termination is given to PFG; or (ii) by PFG at any time after the
occurrence and during the continuance of an Event of Default, effective immediately upon notice
from PFG. If this Agreement is terminated by Borrower (if permitted in the Schedule) or by PFG
under this Section 5.2, Borrower shall pay to PFG a prepayment fee in the amount set forth in the
Schedule. Any prepayment fee shall be due and payable on the effective date of termination and
thereafter shall bear interest at a rate equal to the highest rate applicable to any of the
Obligations.

     5.3 Payment of Obligations. On the Maturity Date or on any earlier effective date of
termination, Borrower shall pay and perform in full all Obligations, whether evidenced by
installment notes or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable. Notwithstanding any termination of this Agreement, all of PFG’s
security interests in all of the Collateral and all of the terms and provisions of this Agreement
shall continue in full force and effect until all Obligations have been paid and performed in full;
provided that PFG may, in its sole discretion, refuse to make any further Loans after termination.
No termination shall in any way affect or impair any right or remedy of PFG, nor shall any such
termination relieve Borrower of any Obligation to PFG, until all of the Obligations have been paid
and performed in full. Upon payment and performance in full of all the Obligations and termination
of this Agreement, PFG shall promptly terminate its financing statements with respect to the
Borrower and deliver to Borrower such other documents as may be required to fully terminate PFG’s
security interests.

6. EVENTS OF DEFAULT AND REMEDIES.

     6.1 Events of Default. The occurrence of any of the following events shall constitute an
“Event of Default” under this Agreement, and Borrower shall give PFG immediate written notice
thereof:

          (a) Any warranty, representation, statement, report or certificate made or delivered to PFG by
Borrower or any of Borrower’s officers, employees or agents, now or in the future, shall be untrue
or misleading in a material respect when made or deemed to be made; or

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          (b) Borrower shall fail to pay any Loan or any interest thereon or any other monetary
Obligation within three Business Days after the date due; or

          (c) Borrower shall fail to comply with any of the financial covenants set forth in the
Schedule, or shall breach any of the provisions of Section 4.6 hereof, or shall fail to perform any
other non-monetary Obligation which by its nature cannot be cured, or shall fail to permit PFG to
conduct an inspection or audit as provided in Section 4.5 hereof or shall fail to provide PFG with
a report under Section 6 of the Schedule within one Business Day after the date due; or

          (d) Borrower shall fail to perform any other non-monetary Obligation, which failure is not
cured within 10 Business Days after the date due; or

          (e) any levy, assessment, attachment, seizure, lien or encumbrance (other than a Permitted
Lien) is made on all or any part of the Collateral which is not cured within 10 Business Days after
the occurrence of the same; or

          (f) any default or event of default occurs under any obligation secured by a Permitted Lien,
which is not cured within any applicable cure period or waived in writing by the holder of the
Permitted Lien; or

          (g) Borrower breaches any material contract or obligation, which has resulted or may
reasonably be expected to result in a Material Adverse Change; or

          (h) Dissolution, termination of existence, insolvency or business failure of Borrower; or
appointment of a receiver, trustee or custodian, for all or any part of the property of, assignment
for the benefit of creditors by, or the commencement of any proceeding by Borrower under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect, or Borrower shall
generally not pay its debts as they become due, or Borrower shall conceal, remove or transfer any
part of its property, with intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or

          (i) the commencement of any proceeding against Borrower or any guarantor of any of the
Obligations under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect,
which is not cured by the dismissal thereof within 45 days after the date commenced; or

          (j) revocation or termination of, or limitation or denial of liability upon, any guaranty of
the Obligations or any attempt to do any of the foregoing, or commencement of proceedings by any
guarantor of any of the Obligations under any bankruptcy or insolvency law; or

          (k) revocation or termination of, or limitation or denial of liability upon, any pledge of any
certificate of deposit, securities or other property or asset of any kind pledged by any third
party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or
commencement of proceedings by or against any such third party under any bankruptcy or insolvency
law; or

          (l) Borrower makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations (other than as permitted in the applicable subordination
agreement), or if any Person who has subordinated such indebtedness or obligations terminates or in
any way limits his subordination agreement; or

          (m) a Material Adverse Change shall occur.

PFG may cease making any Loans hereunder during any of the cure periods provided above, and
thereafter if an Event of Default has occurred and is continuing.

     6.2 Remedies. Upon the occurrence and during the continuance of any Event of Default, and at
any time thereafter, PFG, at its option, and without notice or demand of any kind (all of which are
hereby expressly waived by Borrower), may do any one or more of the following: (a) Cease making
Loans or otherwise extending credit to Borrower under this Agreement or any other Loan Document;
(b) Accelerate and declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Borrower hereby authorizes PFG without judicial
process to enter onto any of Borrower’s premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a
custodian to remain on the premises in exclusive control thereof, without charge for so long as PFG
deems it necessary, in its good faith business judgment, in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that should PFG seek to
take possession of any of the Collateral by court process, Borrower hereby irrevocably waives: (i)
any bond and any surety or security relating thereto required by any statute, court rule or
otherwise as an incident to such

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possession; (ii) any demand for possession prior to the commencement of any suit or action to
recover possession thereof; and (iii) any requirement that PFG retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require Borrower to
assemble any or all of the Collateral and make it available to PFG at places designated by PFG
which are reasonably convenient to PFG and Borrower, and to remove the Collateral to such locations
as PFG may deem advisable; (e) Complete the processing, manufacturing or repair of any Collateral
prior to a disposition thereof and, for such purpose and for the purpose of removal, PFG shall have
the right to use Borrower’s premises, vehicles, hoists, lifts, cranes, and other Equipment and all
other property without charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in
its condition at the time PFG obtains possession of it or after further manufacturing, processing
or repair, at one or more public and/or private sales, in lots or in bulk, for cash, exchange or
other property, or on credit, and to adjourn any such sale from time to time without notice other
than oral announcement at the time scheduled for sale. PFG shall have the right to conduct such
disposition on Borrower’s premises without charge, for such time or times as PFG deems reasonable,
or on PFG’s premises, or elsewhere and the Collateral need not be located at the place of
disposition. PFG may directly or through any affiliated company purchase or lease any Collateral
at any such public disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve Borrower of any
liability Borrower may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts and General
Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes PFG
to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents,
to take possession of and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in PFG’s good faith business
judgment, to grant extensions of time to pay, compromise claims and settle Accounts and the like
for less than face value; (h) Exercise any and all rights under any present or future control
agreements relating to Deposit Accounts or Investment Property; and (i) Demand and receive
possession of any of Borrower’s federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto. All reasonable attorneys’ fees,
expenses, costs, liabilities and obligations incurred by PFG with respect to the foregoing shall be
added to and become part of the Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations. Without limiting any
of PFG’s rights and remedies, from and after the occurrence and during the continuance of any Event
of Default, the interest rate applicable to the Obligations shall be increased by an additional
four percent per annum (the “Default Rate”).

     6.3 Standards for Determining Commercial Reasonableness. Borrower and PFG agree that a sale
or other disposition (collectively, “sale”) of any Collateral which complies with the following
standards will conclusively be deemed to be commercially reasonable: (i) Notice of the sale is
given to Borrower at least ten days prior to the sale, and, in the case of a public sale, notice of
the sale is published at least five days before the sale in a newspaper of general circulation in
the county where the sale is to be conducted; (ii) Notice of the sale describes the collateral in
general, non-specific terms; (iii) The sale is conducted at a place designated by PFG, with or
without the Collateral being present; (iv) The sale commences at any time between 8:00 a.m. and
6:00 p.m.; (v) Payment of the purchase price in cash or by cashier’s check or wire transfer is
required; (vi) With respect to any sale of any of the Collateral, PFG may (but is not obligated to)
direct any prospective purchaser to ascertain directly from Borrower any and all information
concerning the same. PFG shall be free to employ other methods of noticing and selling the
Collateral, in its discretion, if they are commercially reasonable.

     6.4 Power of Attorney. Upon the occurrence and during the continuance of any Event of
Default, without limiting PFG’s other rights and remedies, Borrower grants to PFG an irrevocable
power of attorney coupled with an interest, authorizing and permitting PFG (acting through any of
its employees, attorneys or agents) at any time, at its option, but without obligation, with or
without notice to Borrower, and at Borrower’s expense, to do any or all of the following, in
Borrower’s name or otherwise, but PFG agrees that if it exercises any right hereunder, it will do
so in good faith and in a commercially reasonable manner: (a) Execute on behalf of Borrower any
documents that PFG may, in its good faith business judgment, deem advisable in order to perfect and
maintain PFG’s security interest in the Collateral, or in order to exercise a right of Borrower or
PFG, or in order to fully consummate all the transactions contemplated under this Agreement, and
all other Loan Documents; (b) Execute on behalf of Borrower, any invoices relating to any Account,
any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in
bankruptcy, any Notice of Lien, claim of mechanic’s, materialman’s or other lien, or assignment or
satisfaction of mechanic’s, materialman’s or other lien; (c) Take control in any manner of any cash
or non-cash items of payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into PFG’s possession;
(d) Endorse all checks and other forms of remittances received by PFG; (e) Pay, contest or settle
any lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral,
or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (f)
Grant extensions of time to pay, compromise claims and settle Accounts and General Intangibles for
less than face value and execute all releases and other documents in connection therewith; (g) Pay
any sums required on account of Borrower’s taxes or to secure the release of any liens therefor, or
both; (h) Settle and adjust, and give releases of, any insurance claim that relates to any of the
Collateral and obtain payment therefor; (i) Instruct any third party having custody or control of
any books

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or records belonging to, or relating to, Borrower to give PFG the same rights of access and
other rights with respect thereto as PFG has under this Agreement; (j) Execute on behalf of
Borrower and file in Borrower’s name such documents and instruments as may be necessary or
appropriate to effect the transfer of Domain Rights, domain names, domain registry administrative
contacts and domain and website hosting services into the name of PFG or its designees, and (k)
Take any action or pay any sum required of Borrower pursuant to this Agreement and any other Loan
Documents. Any and all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys’ fees incurred by PFG with respect to the foregoing shall be
added to and become part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations. In no event shall
PFG’s rights under the foregoing power of attorney or any of PFG’s other rights under this
Agreement be deemed to indicate that PFG is in control of the business, management or properties of
Borrower.

     6.5 Application of Proceeds. All proceeds realized as the result of any sale of the
Collateral shall be applied by PFG first to the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by PFG in the exercise of its rights under this Agreement,
second to the interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as PFG shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to PFG for
any deficiency. If, PFG, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of Collateral, PFG
shall have the option, exercisable at any time, in its good faith business judgment, of either
reducing the Obligations by the principal amount of purchase price or deferring the reduction of
the Obligations until the actual receipt by PFG of the cash therefor.

     6.6 Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement,
PFG shall have all the other rights and remedies accorded a secured party under the Code and under
all other applicable laws, and under any other instrument or agreement now or in the future entered
into between PFG and Borrower, and all of such rights and remedies are cumulative and none is
exclusive. Exercise or partial exercise by PFG of one or more of its rights or remedies shall not
be deemed an election, nor bar PFG from subsequent exercise or partial exercise of any other rights
or remedies. The failure or delay of PFG to exercise any rights or remedies shall not operate as a
waiver thereof, but all rights and remedies shall continue in full force and effect until all of
the Obligations have been fully paid and performed.

7. DEFINITIONS. As used in this Agreement, the following terms have the following meanings:

     “Account Debtor” means the obligor on an Account.

     “Accounts” means all present and future “accounts” as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all accounts receivable and other sums owing to
Borrower.

     “Acquisition” has the meaning set forth in Section 8(d) of the Schedule.

     “Affiliate” means, with respect to any Person, a relative, partner, shareholder,
director, officer, or employee of such Person, or any parent or Subsidiary of such Person, or any
Person controlling, controlled by or under common control with such Person.

     “Business Day” means a day on which PFG is open for business.

     “Change in Control” means (a) any event, transaction, or occurrence as a result of
which any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary
holding securities under an employee benefit plan of XATA Corporation, (i) who on the date hereof
does not own 20% or more of the voting securities of XATA Corporation, becomes a beneficial owner
(within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of XATA Corporation representing twenty percent (20%) or more of the combined voting
power of XATA Corporation’s then outstanding securities, or (ii) who on the date hereof owns 20% or
more of the voting securities of XATA Corporation, becomes a beneficial owner (within the meaning
Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of XATA
Corporation representing forty-nine percent (49%) or more of the combined voting power of XATA
Corporation’s then outstanding securities, or (b) Geologic Solutions, Inc. ceases to be a
wholly-owned subsidiary of XATA Corporation, other than by a merger of Geologic Solutions, Inc.
into XATA Corporation.

     “Code” means the Uniform Commercial Code as adopted and in effect in the State of
California from time to time.

     “Collateral” has the meaning set forth in Section 2 above.

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     “continuing” and “during the continuance of” when used with reference to a
Default or Event of Default means that the Default or Event of Default has occurred and has not
been either waived in writing by PFG or cured within any applicable cure period.

     “Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

     “Default Rate” has the meaning set forth in Section 6.2 above.

     “Deposit Accounts” means all present and future “deposit accounts” as defined in the
California Uniform Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation all general and special bank accounts,
demand accounts, checking accounts, savings accounts and certificates of deposit.

     “Equipment” means all present and future “equipment” as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.

     “Event of Default” means any of the events set forth in Section 6.1 of this Agreement.

     “First-Priority” means a security interest and lien enjoying priority over all
security interests and liens other than the security interest and lien of the Senior Lender, to the
extent of PFG’s subordination to such Senior Lender security interest and lien, and statutory liens
to the extent the same have priority over liens of secured parties.

     “GAAP” means generally accepted accounting principles consistently applied.

     “General Intangibles” means all present and future “general intangibles” as defined in
the California Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all Intellectual Property, payment
intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income tax refunds, security and other
deposits, options to purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance policies (including
without limitation key man, property damage, and business interruption insurance), payments of
insurance and rights to payment of any kind.

     “good faith business judgment” means honesty in fact and good faith (as defined in
Section 1201 of the Code) in the exercise of PFG’s business judgment.

     “including” means including (but not limited to).

     “Indebtedness” means (a) indebtedness for borrowed money or the deferred purchase
price of property or services (other than trade payables arising in the ordinary course of
business), (b) obligations evidenced by bonds, notes, debentures or other similar instruments, (c)
reimbursement obligations in connection with letters of credit, and (d) capital lease obligations.

     “Intellectual Property” means all present and future: (a) copyrights, copyright
rights, copyright applications, copyright registrations and like protections in each work of
authorship and derivative work thereof, whether published or unpublished, (b) trade secret rights,
including all rights to unpatented inventions and know-how, and confidential information; (c) mask
work or similar rights available for the protection of semiconductor chips; (d) patents, patent
applications and like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the same; (e)
trademarks, servicemarks, trade styles, and trade names, whether or not any of the foregoing are
registered, and all applications to register and registrations of the same and like protections,
and the entire goodwill of the business of Borrower connected with and symbolized by any such
trademarks; (f) Domain Rights as described in Section 3.14 hereof, (g) computer software and
computer software products; (h) designs and design rights; (i) technology; (j) all claims for
damages by way of past, present and future infringement of any of the rights included above; and
(k) all licenses or other rights to use any property or rights of a type described above.

     “Interest Expense” means for any fiscal period, interest expense (whether cash or
non-cash) determined in accordance with GAAP for the relevant period ending on such date,
including, in any event, interest expense with respect to the Loan and any other Indebtedness of
Borrower and its Subsidiaries, including, without limitation or duplication, all commissions,
discounts, or related amortization and other fees and charges with respect to letters of credit and
bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and
similar arrangements, and the interest portion of any deferred payment obligation (including
leases of all types).

     “Inventory” means all present and future “inventory” as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including without

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limitation such inventory as is temporarily out of Borrower’s custody or possession or in
transit and including any returned goods and any documents of title representing any of the above.

     “Investment” means any beneficial ownership interest in any Person (including any
stock, partnership interest or other equity or debt securities issued by any Person), and any loan,
advance or capital contribution to any Person.

     “Investment Property” means all present and future investment property, securities,
stocks, bonds, debentures, debt securities, partnership interests, limited liability company
interests, options, security entitlements, securities accounts, commodity contracts, commodity
accounts, and all financial assets held in any securities account or otherwise, and all options and
warrants to purchase any of the foregoing, wherever located, and all other securities of every
kind, whether certificated or uncertificated.

     “Lease Receivables” means Accounts owing for leases of hardware.

     “Loan Documents” means, collectively, this Agreement, the Representations, and all
other present and future documents, instruments and agreements between PFG and Borrower, including,
but not limited to those relating to this Agreement, and all amendments and modifications thereto
and replacements therefor.

     “Material Adverse Change” means any of the following: (i) a material adverse change in
the business, operations, or financial or other condition of the Borrower, or (ii) a material
impairment of the prospect of repayment of any portion of the Obligations; or (iii) a material
impairment of the value or priority of PFG’s security interests in the Collateral.

     “Non-Past-Due Senior Monetary Obligations” means in respect of monetary obligations
arising under the Senior Debt Documents, the amount of (i) interest accrued and owing but not yet
due, and (ii) any other monetary obligations owing but not yet due.

     “Obligations” means all present and future Loans, advances, debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to PFG,
whether evidenced by this Agreement or any note or other instrument or document, or otherwise,
whether arising from an extension of credit, opening of a letter of credit, banker’s acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by PFG in Borrower’s debts owing to
others), absolute or contingent, due or to become due, including, without limitation, all interest,
charges, expenses, fees, attorney’s fees, expert witness fees, audit fees, collateral monitoring
fees, closing fees, facility fees, termination fees, minimum interest charges and any other sums
chargeable to Borrower under this Agreement or under any other Loan Documents.

     “Other Property” means the following as defined in the California Uniform Commercial
Code in effect on the date hereof with such additions to such terms as may hereafter be made, and
all rights relating thereto: all present and future “commercial tort claims” (including without
limitation any commercial tort claims identified in the Representations), “documents”,
“instruments”, “promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”,
“fixtures”, “farm products” and “money”; and all other goods and personal property of every kind,
tangible and intangible, whether or not governed by the California Uniform Commercial Code.

     “Payment” means all checks, wire transfers and other items of payment received by PFG
for credit to Borrower’s outstanding Obligations.

     “Permitted Indebtedness” means:

          (i) the Loans and other Obligations; and

          (ii) Indebtedness existing on the date hereof and shown on Exhibit A hereto;

          (iii) Subordinated Debt;

          (iv) Indebtedness owing to Senior Lender not to exceed the Senior Debt Limit specified in the
Schedule;

          (v) other Indebtedness secured by Permitted Liens;

          (vi) Indebtedness arising from the terms of the Acquisition; and

          (vii) reimbursement obligations in respect of (i) letters of credit in an aggregate face
amount outstanding not to exceed $300,000 at any time outstanding which have been reported to PFG
in writing, and (ii) in the case of reimbursement obligations to the Senior Lender, letters of
credit which do not exceed the Senior Debt Limit (taking into account all other Indebtedness to
Senior Lender).

     “Permitted Investments” are:

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          (i) Investments (if any) shown on Exhibit A and existing on the date hereof;

          (ii) marketable direct obligations issued or unconditionally guaranteed by the United States
or its agency or any State maturing within 1 year from its acquisition;

          (iii) commercial paper maturing no more than 1 year after its creation and having the highest
rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc;

          (iv) bank certificates of deposit issued maturing no more than 1 year after issue;

          (v) Investments (i) by Subsidiaries in or to other Subsidiaries or a Borrower, (ii) by a
Borrower in or to the other Borrower, and (iii) Investments by a Borrower in Subsidiaries not to
exceed $250,000 in the aggregate in any fiscal year;

          (vi) Investments consisting of (i) travel advances and employee relocation loans and other
employee loans and advances in the ordinary course of business, and (ii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries
pursuant to employee stock purchase plans or similar agreements approved by Borrower’s Board of
Directors;

          (vii) Investments (including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of business; and

          (viii) Investments consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business;
provided that this paragraph shall not apply to Investments of Borrower in any Subsidiary.

     “Permitted Liens” means the following:

          (i) purchase money security interests in specific items of Equipment;

          (ii) leases of specific items of Equipment;

          (iii) liens for taxes not yet payable;

          (iv) additional security interests and liens consented to in writing by PFG, which consent may
be withheld in its good faith business judgment. PFG will have the right to require, as a condition
to its consent under this subparagraph (iv), that the holder of the additional security interest or
lien sign an intercreditor agreement on PFG’s then standard form, acknowledge that the security
interest is subordinate to the security interest in favor of PFG, and agree not to take any action
to enforce its subordinate security interest so long as any Obligations remain outstanding, and
that Borrower agrees that any uncured default in any obligation secured by the subordinate security
interest shall also constitute an Event of Default under this Agreement;

          (v) security interests being terminated substantially concurrently with this Agreement;

          (vi) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising
in the ordinary course of business and securing obligations which are not delinquent;

          (vii) liens incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by liens of the type described above in clauses (i) or (ii) above, provided
that any extension, renewal or replacement lien is limited to the property encumbered by the
existing lien and the principal amount of the indebtedness being extended, renewed or refinanced
does not increase;

          (viii) liens in favor of customs and revenue authorities which secure payment of customs
duties in connection with the importation of goods;

          (ix) statutory, common law or contractual liens of depository institutions or institutions
holding securities accounts (including rights of set-off) securing only customary charges and fees
in connection with such accounts;

          (x) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions,
social security and other like obligations incurred in the ordinary course of business (other than
Liens imposed by ERISA), provided such liens have no priority over any of PFG’s Liens;

          (xi) Liens against Lease Receivables with respect to which the Senior Lender has provided a
release in accordance with Section 4.3 of the Senior Lender’s Loan & Security Agreement with
Borrowers, securing no more than $2,500,000 in the aggregate amount outstanding for all Borrowers;
and

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          (xii) liens in favor of Senior Lender securing an amount not in excess of the Senior Debt
Limit.

     “Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, government, or any agency or political
division thereof, or any other entity.

     “Representations” means the written Representations and Warranties provided by
Borrower to PFG referred to in the Schedule.

     “Senior Lender” has the meaning set forth in Section 8 of the Schedule.

     “Subordinated Debt”, except as set forth in Section 5 of the Schedule in the
definition of “Total Liabilities” therein, means debt incurred by Borrower subordinated to
Borrower’s debt to PFG (pursuant to a subordination agreement entered into between PFG, Borrower
and the subordinated creditor), on terms acceptable to PFG in its absolute discretion and, for the
avoidance of doubt, does not include Indebtedness due from Borrower to PFG hereunder.

     “Subsidiary” means, with respect to any Person, any Person of which more than 50% of
the voting stock or other equity interests is owned or controlled, directly or indirectly, by such
Person or one or more Affiliates of such Person.

     Other Terms. All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP, consistently applied. All
other terms contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.

8. GENERAL PROVISIONS.

     8.1 Confidentiality. PFG agrees to use the same degree of care that it exercises with
respect to its own proprietary information, to maintain the confidentiality of any and all
proprietary, trade secret or confidential information provided to or received by PFG from the
Borrower, which indicates that it is confidential, including business plans and forecasts,
non-public financial information, confidential or secret processes, formulae, devices and
contractual information, customer lists, and employee relation matters, provided that PFG may
disclose such information (i) to its officers, directors, employees, attorneys, accountants,
affiliates, participants, prospective participants, assignees and prospective assignees, in each
case after having advised such persons of the confidentiality of such information, and such other
Persons to whom PFG shall at any time be required to make such disclosure in accordance with
applicable law or legal process, and (ii) in its good faith business judgment in connection with
the enforcement of its rights or remedies after an Event of Default, or in connection with any
dispute with Borrower or any other Person relating to Borrower. The confidentiality agreement in
this Section supersedes any prior confidentiality agreement of PFG relating to Borrower.

     8.2 Interest Computation. In computing interest on the Obligations, all Payments received
after 12:00 Noon, Pacific Time, on any day shall be deemed received on the next Business Day.

     8.3 Payments. All Payments may be applied, and in PFG’s good faith business judgment reversed
and re-applied, to the Obligations, in such order and manner as PFG shall determine in its good
faith business judgment.

     8.4 Monthly Accountings. PFG shall provide Borrower monthly with an account of advances,
charges, expenses and payments made pursuant to this Agreement. Such account shall be deemed
correct, accurate and binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by PFG), unless Borrower
notifies PFG in writing to the contrary within 60 days after such account is rendered, describing
the nature of any alleged errors or omissions.

     8.5 Notices. All notices to be given under this Agreement shall be in writing and shall be
given either personally, or by reputable private delivery service, or by regular first-class mail,
or certified mail return receipt requested, or by fax to the most recent fax number a party has for
the other party (and if by fax, sent concurrently by one of the other methods provided herein), or
by electronic mail to the most recent electronic mail address for Borrower provided for the chief
financial officer or financial controller executing the Representations (and if by electronic mail,
with an electronic delivery and/or read receipt), addressed to PFG or Borrower at the addresses
shown in the heading to this Agreement, in the Representations or at any other address designated
in writing by one party to the other party. All notices shall be deemed to have been given upon
delivery in the case of notices personally delivered, or at the expiration of one Business Day
following delivery to the private delivery service, or two Business Days following the deposit
thereof in the United States mail, with postage prepaid, or on the first business day of receipt
during business hours in the case of notices sent by fax or electronic mail, as provided herein.

     8.6 Severability. Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this
Agreement, which shall continue in full force and effect.

-12-

 

			
	Partners for Growth II, L.P.
	 	Loan and Security Agreement

     8.7 Integration. This Agreement and such other written agreements, documents and instruments as
may be executed in connection herewith are the final, entire and complete agreement between
Borrower and PFG and supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this
Agreement. There are no oral understandings, representations or agreements between the parties
which are not set forth in this Agreement or in other written agreements signed by the parties in
connection herewith.

     8.8 Waivers; Indemnity. The failure of PFG at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other Loan Document shall not
waive or diminish any right of PFG later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether prior or subsequent, and
whether or not similar. None of the provisions of this Agreement or any other Loan Document shall
be deemed to have been waived by any act or knowledge of PFG or its agents or employees, but only
by a specific written waiver signed by an authorized officer of PFG and delivered to Borrower.
Borrower waives the benefit of all statutes of limitations relating to any of the Obligations or
this Agreement or any other Loan Document, and Borrower waives demand, protest, notice of protest
and notice of default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account, General Intangible,
document or guaranty at any time held by PFG on which Borrower is or may in any way be liable, and
notice of any action taken by PFG, unless expressly required by this Agreement. Borrower hereby
agrees to indemnify PFG and its affiliates, subsidiaries, parent, directors, officers, employees,
agents, and attorneys, and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses
(including reasonable attorneys’ fees), of every kind, which they may sustain or incur based upon
or arising out of any of the Obligations, or any relationship or agreement between PFG and
Borrower, or any other matter, relating to Borrower or the Obligations; provided that this
indemnity shall not extend to damages proximately caused by the indemnitee’s own gross negligence
or willful misconduct. Notwithstanding any provision in this Agreement to the contrary, the
indemnity agreement set forth in this Section shall survive any termination of this Agreement and
shall for all purposes continue in full force and effect.

     8.9 No Liability for Ordinary Negligence. Neither PFG, nor any of its directors, officers,
employees, agents, attorneys or any other Person affiliated with or representing PFG shall be
liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred
or suffered by Borrower or any other party through the ordinary negligence of PFG, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated with or
representing PFG, but nothing herein shall relieve PFG from liability for its own gross negligence
or willful misconduct.

     8.10 Amendment. The terms and provisions of this Agreement may not be waived or amended,
except in a writing executed by Borrower and a duly authorized officer of PFG.

     8.11 Time of Essence. Time is of the essence in the performance by Borrower of each and
every obligation under this Agreement.

     8.12 Attorneys’ Fees and Costs. Borrower shall reimburse PFG for all reasonable attorneys’
fees and all filing, recording, search, title insurance, appraisal, audit, and other reasonable
costs incurred by PFG, pursuant to, or in connection with, or relating to this Agreement (whether
or not a lawsuit is filed), including, but not limited to, any reasonable attorneys’ fees and costs
PFG incurs in order to do the following: prepare and negotiate this Agreement and all present and
future documents relating to this Agreement; obtain legal advice in connection with this Agreement
or Borrower; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend
actions by, Account Debtors; commence, intervene in, or defend any action or proceeding; initiate
any complaint to be relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of the Collateral or any of Borrower’s books and records; protect, obtain possession of, lease,
dispose of, or otherwise enforce PFG’s security interest in, the Collateral; and otherwise
represent PFG in any litigation relating to Borrower. If either PFG or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and attorneys’ fees, including (but not limited
to) reasonable attorneys’ fees and costs incurred in the enforcement of, execution upon or defense
of any order, decree, award or judgment. All attorneys’ fees and costs to which PFG may be
entitled pursuant to this Paragraph shall immediately become part of Borrower’s Obligations, shall
be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable
to any of the Obligations.

     8.13 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of
Borrower and PFG; provided, however, that Borrower may not assign or transfer any of its rights
under this Agreement without the prior written consent of PFG, and any prohibited assignment shall
be void. No consent by PFG to any assignment shall release Borrower from its liability for the
Obligations.

-13-

 

			
	Partners for Growth II, L.P.
	 	Loan and Security Agreement

     8.14 Joint and Several Liability. If Borrower consists of more than one Person, their
liability shall be joint and several, and the compromise of any claim with, or the release of, any
Borrower shall not constitute a compromise with, or a release of, any other Borrower.

     8.15 Limitation of Actions. Any claim or cause of action by Borrower against PFG, its
directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or relating to this Loan
Agreement, or any other Loan Document, or any other transaction contemplated hereby or thereby or
relating hereto or thereto, or any other matter, cause or thing whatsoever, incurred, done, omitted
or suffered to be done by PFG, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by (a) the filing of a complaint within one year
after the earlier to occur of (i) the first act, occurrence or omission upon which such claim or
cause of action, or any part thereof, is based, or (ii) the date this Agreement is terminated, and
(b) the service of a summons and complaint on an officer of PFG, or on any other person authorized
to accept service on behalf of PFG, within thirty (30) days thereafter. Borrower agrees that such
one-year period is a reasonable and sufficient time for Borrower to investigate and act upon any
such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or
extended except by the written consent of PFG in its sole discretion. This provision shall survive
any termination of this Loan Agreement or any other Loan Document.

     8.16 Paragraph Headings; Construction. Paragraph headings are only used in this Agreement
for convenience. Borrower and PFG acknowledge that the headings may not describe completely the
subject matter of the applicable paragraph, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this Agreement. This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term
or provision of this Agreement shall be construed strictly against PFG or Borrower under any rule
of construction or otherwise.

     8.17 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions
hereunder and all rights and obligations of PFG and Borrower shall be governed by the laws of the
State of California. As a material part of the consideration to PFG to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or indirectly to this
Agreement shall, at PFG’s option, be litigated in courts located within California, and that the
exclusive venue therefor shall be San Francisco County; (ii) consents to the jurisdiction and venue
of any such court and consents to service of process in any such action or proceeding by personal
delivery or any other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.

     8.18 Mutual Waiver of Jury Trial. BORROWER AND PFG EACH HEREBY WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN PFG AND BORROWER, OR ANY
CONDUCT, ACTS OR OMISSIONS OF PFG OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH PFG OR BORROWER, IN ALL OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. WITHOUT INTENDING IN ANY WAY TO LIMIT
THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of
the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided by a reference to
a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge
of the San Francisco County, California Superior Court) appointed in accordance with California
Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the
dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in
San Francisco County, California; and the parties hereby submit to the jurisdiction of such court.
The reference proceedings shall be conducted pursuant to and in accordance with the provisions of
California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have
the power, among others, to grant provisional relief, including without limitation, entering
temporary restraining orders, issuing preliminary and permanent injunctions and appointing
receivers. All such proceedings shall be closed to the public and confidential and all records
relating thereto shall be permanently sealed. If during the course of any dispute, a party desires
to seek provisional relief, but a judge has not been appointed at that point pursuant to the
judicial reference procedures, then such party may apply to the San Francisco County, California
Superior Court for such relief. The proceeding before the private judge shall be conducted in the
same manner as it would be before a court under the rules of evidence applicable to judicial
proceedings. The parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to judicial
proceedings. The private judge shall oversee discovery and may enforce all discovery rules and
order applicable to judicial proceedings in the same manner as a trial court judge. The parties
agree that the selected or appointed private judge shall have the power to decide all issues in the
action or proceeding, whether of fact or of law, and shall report a statement of decision thereon

-14-

 

			
	Partners for Growth II, L.P.
	 	Loan and Security Agreement

pursuant to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit
the right of any party at any time to exercise self-help remedies, foreclose against collateral, or
obtain provisional remedies. The private judge shall also determine all issues relating to the
applicability, interpretation, and enforceability of this paragraph.

[Signature Page Follows]

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	PFG:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	XATA CORPORATION	 	PARTNERS FOR GROWTH II, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By
	 	/s/ John J. Coughlan	 	 	 	 	 	 	 	 
	 

	 	 	 	 

President or Vice President
	 	 	 	By
	 	/s/ Lorraine Nield
	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 

	 	By
	 	/s/ Mark E. Ties
	 	 	 	Name:
	 	Lorraine Nield	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Secretary or Ass’t Secretary
	 	 	 	Title:
	 	Manager, Partners for Growth II, LLC

Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Borrower:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	GEOLOGIC SOLUTIONS, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By
	 	/s/ John J. Coughlan	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	President or Vice President	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By
	 	/s/ Mark E. Ties	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Secretary or Ass’t Secretary	 	 	 	 	 	 	 	 

-15-

 

Partners For Growth II

Schedule to

Loan and Security Agreement

	 	 	 
	Borrower:

	 	XATA Corporation, a Minnesota corporation
	Address:

	 	965 Prairie Center Drive, Eden Prairie, MN 55344
	 
	 	 
	Borrower:

	 	Geologic Solutions, Inc., a Delaware corporation
	Address:

	 	13625-B Dulles Technology Drive, Herndon, Virginia 20171
	Date:

	 	January 31, 2008

This Schedule forms an integral part of the Loan and Security Agreement between PARTNERS FOR GROWTH
II, L.P. and the above-borrower of even date.

	 	 	 
	1. LOAN (Section 1.1):
	 	 
	 

	 	The Loan shall consist of a term loan in the amount of $8,000,000,
which shall be disbursed to XATA Corporation (or directly to the
sellers in the Acquisition, as PFG and XATA Corporation may agree)
in full upon satisfaction of the conditions set forth in Section 9
of this Schedule and, for the avoidance of doubt, not earlier than
the closing of the Acquisition.
	 
	 	 
	Repayment:

	 	Subject to the “Amortization Right” set forth,
below, Borrower shall be required to make payments
of interest only until March 31, 2011. Borrower
shall make principal payments of $1,000,000 on each
of March 31, 2011, June 30, 2011, September 30,
2011, and December 31, 2011, with the entire unpaid
principal balance of the Loan plus any and all
accrued and unpaid interest due on the Maturity
Date.
	 
	 	 
	Prepayment:

	 	The principal of the Loan may be prepaid at any
time, in whole or in part, without fee or penalty.
	 
	 	 
	Amortization Right:

	 	If Borrower fails to meet the minimum Adjusted Quick
Ratio (defined below), PFG shall have the absolute
right, but not the obligation, to amortize the Loan
as if it were a three-year loan with equal monthly
principal payments of $222,222 (the “Amortization
Right”). PFG may exercise the Amortization Right
upon notice at any time Borrower is not in
compliance with the minimum Adjusted Quick Ratio
(but for
the avoidance of doubt, Borrower’s failure to meet the minimum
	 
	 	 

 

 

			
	Partners for Growth II,
	 	Schedule to Loan and Security Agreement

	 	 	 
	 

	 	
Adjusted Quick Ratio shall not, by itself, constitute a Default).
For example, if Borrower fell below the Adjusted Quick Ratio three
(3) months after the date hereof and PFG exercised the
Amortization Right, then Borrower would be required to immediately
pay PFG $666,666, with the balance of the Loan due in equal
monthly principal payments, plus interest, over the following
thirty-three (33) months, commencing the first day of the month
immediately following exercise of the Amortization Right and
continuing on the same day of each month thereafter.
	 
	 	 
	 

	 	Adjusted Quick Ratio: Borrower shall maintain a minimum
Adjusted Quick Ratio of 0.75 : 1.00. “Adjusted Quick Ratio” means
a ratio of (a) Borrower’s unrestricted cash maintained at
or through the Senior Lender, plus Eligible Accounts (as defined
in the Senior Loan Documents), to (b) the aggregate Credit
Extensions by the Senior Lender (as “Credit Extensions” is defined
in the Senior Loan Documents), plus outstanding monetary
Obligations owing from Borrower to PFG. This ratio will increase
to 1.00 : 1.00 as of 6/30/09.
	 
	 	 
	2. INTEREST.
	 	 
	 
	 	 
	Interest Rate
(Section 1.2):
	 	 
	 
	 	 
	 

	 	The Loan shall bear interest at a rate equal to Fourteen and
One-Half percent (14.5%) per annum.
	 
	 	 
	 

	 	Interest shall be calculated on the basis of a 360-day year and a
year of twelve months of 30 days each for the actual number of
days elapsed. Accrued interest for each month shall be payable
monthly in arrears, on the first day of each month for interest
accrued during the prior month.
	 
	 	 
	Interest Reset:

	 	Borrower has delivered (i) financial projections to PFG dated November 9,
2007 (the “Projections”), for Revenue and Modified EBITDA for the quarterly periods
ending March 31, 2008, June 30, 2008 and September 30, 2008, and (ii) a Reconciliation
of the Projections to Borrower’s current forecast, as delivered to PFG on January 30,
2008 (the “Reconciliation”) resulting in the following Revenue and Modified EBITDA
targets, respectively (the “Financial Targets”):

	 	 	 	 	 	 	 	 	 
	Period	 	Revenue	 	Modified EBITDA
	March 31, 2008
	 	$	11,578,673	 	 	$	222,370	 
	June 30, 2008
	 	$	15,156,585	 	 	$	1,069,219	 
	September 30, 2008
	 	$	16,497,926	 	 	$	2,089,327	 

 

 

	 	 	 
	Partners for Growth II, L.P.

	 	Schedule to Loan and Security Agreement

Should Borrower achieve 105% of each of the Financial Targets, the
Interest Rate on the Loan shall be reduced prospectively for
periods after September 30, 2008 to eleven percent (11%) per
annum.

	 	 	 	 	 
	3. FEES (Section 1.3):	 	 
	 
	 	 	 	 
	 

	 	Commitment Fee:
	 	$160,000, payable concurrently herewith.
	 
	 	 	 	 
	4. MATURITY DATE	 	 
	     (Section 5.1):	 	January 31, 2012.
	 
	 	 	 	 
	5.	 	FINANCIAL COVENANTS
	 
	 	 	 	 
	     (Section 4.1):	 	Borrower shall comply with each of the following covenants.
Compliance shall be determined as and when set forth below:
	 
	 	 	 	 
	 

	 	Minimum Tangible	 	 
	 

	 	Net Worth:
	 	A Tangible Net Worth of greater than the following (“Minimum Tangible Net Worth"): (i)
from March 31, 2008 through and including August 31, 2008, an amount equal to the Tangible
Net Worth of Borrowers as of the date of the closing of the Geologic Solutions Acquisition
less $1,000,000, and (ii) from September 1, 2008 and thereafter, the Minimum Tangible Net Worth
as calculated for “(i)” above plus $1,500,000, plus 50% of the Borrowers’ Net Income (but not net
loss) in each fiscal quarter ending after December 31, 2008. Increases in the Minimum Tangible Net
Worth based on Net Income shall be effective on the last day of the fiscal quarter in which said Net
Income is realized, and shall continue effective thereafter. In no event shall the Minimum Tangible
Net Worth be decreased.
	 
	 	 	 	 
	 

	 	Adjusted EBITDA:
	 	An Adjusted EBITDA of not less than ($1,000,000)
for the two month period ending February 29, 2008, and for the three
month period ending March 31, 2008. (For purposes of the foregoing, it
is noted that parentheses enclosing an amount denotes a negative amount.)
	 
	 	 	 	 
	 

	 	FCCR Covenant:
	 	Borrower shall maintain a Fixed Charge Coverage Ratio of
not less than 1.25:1.00 on a trailing twelve month basis, starting
12/31/08, monitored quarterly thereafter.
	 
	 	 	 	 
	 

	 	Definitions.
	 	For purposes of the foregoing financial covenants, the
following terms shall have the following meanings:

 

 

	 	 	 
	Partners for Growth II, L.P.

	 	Schedule to Loan and Security Agreement

	 	 	 	 	 
	 	 	“Adjusted EBITDA” means Modified EBITDA, minus cash income taxes paid,
minus dividends (other than dividends paid in common stock of the
Borrower paying such dividend), distributions and other payments to
shareholders, including, without limitation, for any redemption,
retirement or purchase of any capital stock, and minus unfinanced
capital expenditures.
	 
	 	 	 	 
	 	 	“Fixed Charge Coverage Ratio” means the ratio of (a) Adjusted EBITDA to
(b) cash expended (or required to be expended in order to be in
compliance with the terms hereof) to make interest payments, plus
scheduled principal payments on Borrower’s Indebtedness in accordance
with the terms thereof.
	 
	 	 	 	 
	 	 	“Modified EBITDA” means (a) Net Income, plus (b) Interest Expense,
plus (c) depreciation expense and amortization expense, plus (d) income
tax expense, plus (e) stock based compensation.
	 
	 	 	 	 
	 	 	“Net Income” means, as calculated on a consolidated basis for Borrower
and its Subsidiaries for any period as at any date of determination,
the net profit (or loss), after provision for taxes, of Borrower and
its Subsidiaries for such period taken as a single accounting period.
	 
	 	 	 	 
	 	 	“Tangible Net Worth” shall mean, on any date, the consolidated total
assets of Borrower minus (a) any amounts attributable to (i) goodwill,
(ii) intangible items under GAAP, including unamortized debt discount
and expense, patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, (iii) notes,
accounts receivable and other obligations owing to Borrower from its
officers or other Affiliates, and (iv) reserves not already deducted
from assets, minus (b) Total Liabilities.
	 
	 	 	 	 
	 	 	“Total Liabilities” is on any day, the consolidated total obligations
of Borrowers that should, under GAAP, be classified as liabilities on
Borrower’s consolidated balance sheets, including all Indebtedness, but
excluding all “Subordinated Debt” as defined in the Senior Loan
Documents in effect on the date hereof.
	6. REPORTING.
	 	 	 	 
	     (Section 4.4):
	 	 	 	 
	 
	 	 	 	 
	 	 	Borrower shall provide PFG with the following:
	 
	 	 	 	 
	 

	 	(a)
	 	Monthly accounts receivable agings, aged by invoice date, within 30
days after the end of each month.

 

 

	 	 	 
	Partners for Growth II, L.P.

	 	Schedule to Loan and Security Agreement

	 	 	 	 	 
	 

	 	(b)
	 	Monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, within 30 days after the
end of each month.
	 
	 	 	 	 
	 

	 	(c)
	 	Monthly reconciliations of accounts receivable agings (aged by
invoice date), and general ledger, within 30 days after the end of each
month.
	 
	 	 	 	 
	 

	 	(d)
	 	Monthly unaudited financial statements, as soon as available, and
in any event within 30 days after the end of each month.
	 
	 	 	 	 
	 

	 	(e)
	 	Monthly Compliance Certificates, within 30 days after the end of
each month, in such form as PFG shall reasonably specify, signed by the
Chief Financial Officer of Borrower, certifying that as of the end of
such month Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing
compliance with the financial covenants set forth in this Agreement and
such other information as PFG shall reasonably request.
	 
	 	 	 	 
	 

	 	(f)
	 	At all times Borrower is subject to the reporting requirements
under the Securities Exchange Act of 1934, as amended, within five (5)
days after filing, all reports on Form 10-K, 10-Q and 8-K filed with
the Securities and Exchange Commission or a link thereto on Borrower’s
or another website on the Internet.
	 
	 	 	 	 
	 

	 	(g)
	 	If Borrower should fail to file the public reports required under
clause (f), for which Borrower has not received a waiver from the
relevant regulatory and exchange authorities, quarterly unaudited
financial statements, as soon as available, and in any event within
forty-five days after the end of each fiscal quarter of Borrower.
	 
	 	 	 	 
	 

	 	(h)
	 	A quarterly information update certificate, on PFG’s standard form,
within 30 days after the end of each fiscal quarter of Borrower.
	 
	 	 	 	 
	 

	 	(i)
	 	Annual operating plan as approved by Borrower’s Board of Directors,
as soon as available.
	 
	 	 	 	 
	 

	 	(j)
	 	Annual financial statements, as soon as available, and in any
event within 120 days following the end of Borrower’s fiscal year,
certified by, and with an unqualified opinion of, Borrower’s
independent certified public accountants.
	 
	 	 	 	 
	 

	 	(k)
	 	Copies of all reports and statements provided by Borrower to the
Senior Lender, upon PFG’s request.
	 
	 	 	 	 
	 

	 	(l)
	 	For the first two calendar quarters after the date hereof, Borrower shall provide the reports specified under clauses (a)

 

 

					
	Partners For Growth II L.P.
	 	 	 	Schedule to Loan and Security Agreement
	 

through (e) (inclusive) within 15 days of the end of each
month.

 

7. BORROWER INFORMATION:

Borrower represents and warrants that the information set forth in
the Representations and Warranties of the Borrower dated January
10, 2008, previously submitted to PFG (the “Representations”) is
true and correct as of the date hereof.

 

8. ADDITIONAL PROVISIONS

(a) Senior Lender.

	 	(1)	 	Senior
Lender. As used herein, “Senior Lender” means
Silicon Valley Bank, and “Senior Loan Documents” means
all present and future documents instruments and
agreements entered into between Borrower and Senior
Lender or by third parties relating to Borrower and
Senior Lender.
	 
	 	(2)	 	Senior
Debt Limit. Borrower shall not permit the total
Indebtedness of Borrower to Senior Lender to exceed
$10,000,000 at any time outstanding (the “Senior Debt
Limit”), including, but not limited to, monies
borrowed by Borrower, interest on loans due from
Borrower, fees and expenses for which Borrower is
obligated, sums due from Borrower in connection with
issuance of commercial letters of credit, issuance of
forward contracts for foreign exchange reserve, and
any other direct or indirect financial accommodation
Senior Lender may provide to Borrower, but excluding
the amount of any Non-Past-Due Senior Monetary
Obligations.
	 
	 	(3)	 	Senior
Loan Documents. Borrower represents and warrants
that it has provided PFG with true and complete copies
of all existing Senior Loan Documents, and Borrower
covenants that it will, in the future, provide PFG
with true and complete copies of any future Senior
Loan Documents, including without limitation any
amendments to any existing Senior Loan Documents.

 

 

					
	Partners For Growth II L.P.
	 	 	 	Schedule to Loan and Security Agreement
	 

	 	(4)	 	PFG and the
Senior Lender have entered into a subordination
agreement (the “PFG — SVB Subordination”) by which
PFG’s security interest and repayment is subordinated,
to the extent specified therein, to the security
interest and prior payment of obligations owing from
Borrower to the Senior Lender. PFG shall not take any
action under this Agreement that would contravene the
terms of the PFG-SVB Subordination.

	 	(b)	 	Deposit Accounts. As soon
as is practicable and in no event later than 30 calendar days
from the date hereof, each Borrower shall cause the banks and
other institutions where its Deposit Accounts are maintained
to enter into control agreements with PFG, in form and
substance satisfactory to PFG in its good faith business
judgment and sufficient to perfect PFG’s security interest in
said Deposit Accounts, subject to the security interest of
the Senior Lender. Said control agreements shall permit PFG,
in its discretion, to withdraw from said Deposit Accounts
accrued interest on the Obligations monthly (subject to the
rights of the Senior Lender).
	 
	 	(c)	 	Subordination of Inside
Debt. All present and future indebtedness of Borrower to its
officers, directors and shareholders (“Inside Debt”) shall,
at all times, be subordinated to the Obligations pursuant to
a subordination agreement on PFG’s standard form. Borrower
represents and warrants that there is no Inside Debt
presently outstanding, except as set forth in Exhibit A with
particularity. Prior to incurring any Inside Debt in the
future, Borrower shall cause the person to whom such Inside
Debt will be owed to execute and deliver to PFG a
subordination agreement on PFG’s standard form.
	 
	 	(d)	 	Use of Proceeds. Borrower
shall use the proceeds of the Loan exclusively to acquire the
outstanding capital stock of Geologic Solutions, Inc., a
Delaware corporation based in Virginia, upon the terms set
forth in that certain Stock Purchase Agreement between
Borrower, Geologic Solutions, Inc. and the Stockholders of
Geologic Solutions, Inc. dated December 19, 2007 (the
“Acquisition Agreement” and such transaction, the
“Acquisition”).

 

 

			
	Partners for Growth II, L.P.
	 	Schedule to Loan and Security Agreement

9. CONDITIONS

	 	 	 	In addition to any other conditions to the Loan set out in this
Agreement, PFG will not make the initial Loan until PFG shall have
received, in form and substance satisfactory to PFG, such
documents, and completion of such other matters, as PFG may
reasonably deem necessary or appropriate, including that there
shall be no discovery of any facts or circumstances which would,
as determined by PFG in its sole discretion, negatively affect or
be reasonably expected to negatively affect the collectability of
the Obligations, PFG’s security interest in Borrowers’ Collateral
or the value thereof, including, without limitation:

	 	(a)	 	duly executed original
signatures of each Borrower to the Loan Documents to which
each Borrower is a party;
	 
	 	(b)	 	Borrowers’ respective
constitutional documents and a good standing certificate of
Borrower certified by the Secretary of State of the State of
Minnesota as of a date no earlier than thirty (30) days prior
to the date hereof in respect of XATA Corporation and, in
respect of Geologic Solutions, Inc., a good standing
certificate certified by the Secretary of State of the State
of Delaware as of a date no earlier than thirty (30) days
prior to the date hereof, together with a foreign
qualification certificate from the State of Virginia;
	 
	 	(c)	 	duly executed original
signatures to borrowing resolutions for each Borrower;
	 
	 	(d)	 	account control agreements
as required by Section 8(b) of this Schedule, duly executed
by Borrower and each relevant depositary institution in favor
of PFG;
	 
	 	(e)	 	certified copies, dated as
of a recent date, of financing statement searches, as PFG
shall request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any
such financing statements either constitute Permitted Liens
or have been or, in connection with the Loan, will be
terminated or released;
	 
	 	(f)	 	the Representations, duly
executed by Borrower, reflecting on a pro forma basis the
information relevant to the Acquisition on an “as if
acquired” basis;
	 
	 	(g)	 	one or more landlords’
consents executed by the lessors of any premises identified
by PFG in favor of PFG; provided, however, so long as
Borrower’s occupancy of its Burnsville,

 

 

			
	Partners for Growth II, L.P.
	 	Schedule to Loan and Security Agreement

	 	 	 	MN location
terminates within 90 days from the date hereof, so such
consent shall be required for such location; and
provided, further, that no such consent shall be
required for the Geologic Solutions, Inc. location in
Herndon, VA;
	 
	 	(h)	 	an opinion of counsel to
Borrower in favor of PFG as to customary matters, including
the validity and enforceability of Borrower’s obligations
under the Loan Documents, the PFG Warrant and the SVB
Warrant;
	 
	 	(i)	 	a duly executed warrant
purchase agreement and warrant in favor of PFG to purchase
342,858 shares of Borrower’s common stock in agreed form (the
“PFG Warrant”);
	 
	 	(j)	 	a duly executed warrant
purchase agreement and warrant in favor of the Senior Lender
to purchase 114,286 shares of Borrower’s common stock in
agreed form (the “SVB Warrant”);
	 
	 	(k)	 	the insurance policies
and/or endorsements required pursuant to Section 4.3;
	 
	 	(l)	 	within 30 days of the date
hereof, a bailee or similar waiver in favor of PFG in respect
of the facility in which Borrower houses and operates servers
used in its business, in such form as PFG shall reasonably
specify;
	 
	 	(m)	 	payment of the Fee specified
in Section 3 of this Schedule and PFG’s expenses incurred in
connection with the Loan;
	 
	 	(n)	 	a duly executed Stock Pledge
Agreement in form and substance satisfactory to PFG by which
Borrower, XATA Corporation, pledges the stock it owns in
Borrower, Geologic Solutions, Inc., as security for
Obligations;
	 
	 	(o)	 	a duly executed Compliance
Certificate dated the date hereof;
	 
	 	(p)	 	a Pay-Off Letter from Wells
Fargo/Foothill in respect of secured monetary obligations
owing from Geologic Solutions, Inc. to Wells Fargo/Foothill,
together with an immediate obligation to discharge any and
all associated liens (or authority to PFG and/or the Senior
Lender and/or Borrower to terminate such liens);
	 
	 	(q)	 	a duly-executed
subordination agreement in favor of PFG from Platinum (as
defined in Exhibit A) in connection with the Acquisition;

 

 

			
	Partners for Growth II, L.P.
	 	Schedule to Loan and Security Agreement

	 	(r)	 	the closing of the loan of
the Senior Lender under the Senior Loan Documents and the use
of the proceeds thereof to finance the Acquisition; and
	 
	 	(s)	 	the completion of the
Acquisition by February 15, 2008. If the Acquisition has not
closed by such date (or it is abandoned by XATA Corporation
or Geologic Solutions, Inc.), then PFG’s commitment to make
the Loan shall terminate. XATA Corporation’s obligations to
PFG shall be limited to reimbursement of PFG’s fees, costs
and expenses in connection with the Loan and PFG shall be
entitled to retain any diligence fees or the like already
then paid to PFG.

	 	 	 	[Signature Page Follows]

 

 

	 	 	 	 	 	 	 	 	 
	Borrower:

	 	 	 	 	 	PFG:	 	 
	 
	XATA CORPORATION	 	 	 	PARTNERS FOR GROWTH II, L.P.
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ John J. Coughlan	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	President or Vice President
	 	 	 	By
	 	/s/ Lorraine Nield
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Mark E. Ties
	 	 	 	Name:
	 	Lorraine Nield
	 

	 	 	 	 	 	 	 	 
	 

	 	Secretary or Ass’t Secretary	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 	Manager, Partners for Growth II, LLC
	 

	 	 	 	 	 	 	 	Its General Partner
	 
	 	 	 	 	 	 	 	 
	Borrower:	 	 	 	 	 	 
	 
	GEOLOGIC SOLUTIONS, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ John J. Coughlan	 	 	 	 	 	 
	 

	 	 

President or Vice President
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Mark E. Ties	 	 	 	 	 	 
	 

	 	 

Secretary or Ass’t Secretary
	 	 	 	 	 	 

Signature Page to Schedule to Loan and Security AgreementEX-10.1 MASTER CONFIRMATION AND SUPPLEMENTAL CONF.

 

EXHIBIT 10.1

Master Confirmation of OTC ASAP Minus (VWAP Pricing)

	 	 	 	 	 	 	 
	Date:

	 	February 4, 2008
	 	ML Ref:
	 	 
	 
	 	 	 	 	 	 
	To:

	 	Aflac Incorporated (“Counterparty”)	 	 	 	 
	 
	 	 	 	 	 	 
	Attention:

	 	Ralph Rogers	 	 	 	 
	 
	 	 	 	 	 	 
	From:

	 	Merrill Lynch International (“MLI”)	 	 	 	 
	 

	 	Merrill Lynch Financial Centre	 	 	 	 
	 

	 	2 King Edward Street	 	 	 	 
	 

	 	London EC1A 1HQ	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 

Dear Sir / Madam:

     The purpose of this letter agreement (the “Master Confirmation”) and each supplemental
confirmation substantially in the form attached hereto as Exhibit A (each, a “Supplemental
Confirmation” and the Supplemental Confirmations, together with the Master Confirmation, this
“Confirmation”) is to confirm the terms and conditions of each of the above-referenced
transactions entered into between Counterparty and MLI through its agent Merrill Lynch, Pierce,
Fenner & Smith Incorporated (“MLPF&S” or “Agent”) on the respective Trade Dates
specified in the Supplemental Confirmations (each, a “Transaction” and collectively, the
“Transactions”). This Confirmation constitutes a “Confirmation” both on behalf of MLI, as
referred to in the ISDA Master Agreement specified below, and on behalf of MLPF&S, as agent of MLI.

     The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap
Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions” and, together with the Swap Definitions, the “Definitions”), in each case
as published by the International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity
Definitions, the Equity Definitions will govern, in the event of any inconsistency between the
Definitions and the Master Confirmation, the Master Confirmation will govern, and in the event of
any inconsistency between the Master Confirmation and any Supplemental Confirmation, the
Supplemental Confirmation will govern. References herein to any “Transaction” shall be deemed to
be references to a “Share Forward Transaction” for purposes of the Equity Definitions and a “Swap
Transaction” for the purposes of the Swap Definitions.

     This Confirmation evidences a complete binding agreement between you and us as to the terms of
the Transactions to which this Confirmation relates. This Confirmation (notwithstanding anything
to the contrary herein), shall be subject to an agreement in the 1992 form of the ISDA Master
Agreement (Multicurrency Cross Border) (the “Master Agreement” or “Agreement”) as
if we had executed an agreement in such form (but without any Schedule and with elections specified
in the “ISDA Master Agreement” Section of the Master Confirmation) on the Trade Date of the first
such Transaction between us. In the event of any inconsistency between the provisions of that
agreement and this Confirmation, this Confirmation will prevail for the purpose of each
Transaction.

     The terms of each Transaction to which the Master Confirmation relates are as follows:

 

 

	 	 	 
	General Terms:
	 	 
	 
	 	 
	Trade:

	 	With respect to each Transaction, Counterparty, subject to the terms and conditions and in reliance
upon the representations and warranties set forth herein, will purchase from MLI Shares in an amount
equal to the Number of Shares (such Shares, the
“Repurchase Shares”). On the Initial Settlement
Date, (A) Counterparty will make an initial payment for the Repurchase Shares by delivering an
amount equal to the Initial Settlement Amount by wire transfer of immediately available funds to an
account designated by MLI and (B) MLI will deliver the Repurchase Shares to Counterparty. The
parties understand and agree that the delivery of the Repurchase Shares by or on behalf of MLI upon
the payment of the Initial Settlement Amount by Counterparty is irrevocable and that as of the
Initial Settlement Date Counterparty shall be the sole beneficial owner of the Repurchase Shares for
all purposes. The parties further understand and agree that the terms and conditions of each
Transaction will have the effect of increasing or decreasing the purchase price for the Repurchase
Shares to an amount greater than or less than the Initial Settlement
Amount.

	 
	 	 
	Trade Date:

	 	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
	 
	 	 
	Buyer:

	 	Counterparty
	 
	 	 
	Seller:

	 	MLI
	 
	 	 
	Shares:

	 	Shares of common stock of Counterparty (Symbol: AFL)
	 
	 	 
	Number of Shares:

	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 
	Initial Share Price:

	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 
	Initial Settlement Amount:

	 	The product of the Number of Shares and the Initial Share Price.
	 
	 	 
	Initial Settlement Date:

	 	The Exchange Business Day immediately following the Trade Date.
	 
	 	 
	Forward Price:

	 	Initial Share Price
	 
	 	 
	Exchange:

	 	New York
	 
	 	 
	Related Exchange(s):

	 	All Exchanges
	 
	 	 
	Market Disruption Event:

	 	The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby
amended by replacing the words “at any time during the one-hour period that ends at the relevant
Valuation Time” in the third line thereof with the words “at any time on any Scheduled Trading Day
during the Valuation Period or” after the word
“material”.

	 
	 	 
	Valuation:
	 	 
	 
	 	 
	Valuation Period:

	 	For each Transaction, each Scheduled Trading Day from and including the Initial Settlement Date up
to and including the Valuation Date; provided, that with respect to each Suspension Event (if any)
affecting such Scheduled Trading Days, MLI may, by written notice to Counterparty (which notice
shall not specify the reason for MLI’s election to suspend the
Valuation Period),

2

 

	 	 	 
	 

	 	exclude the
Scheduled Trading Day(s) on which such Suspension Event has occurred
(such days, “Suspension Event Days”) and extend the
last possible Valuation Date by the total number of such Suspension
Event Days; provided, further, that notwithstanding anything to
the contrary in the Equity Definitions, to the extent that any Scheduled Trading Days in the Valuation Period are Disrupted Days,
the Calculation Agent may exclude such Disrupted Days and extend the last possible Valuation Date by the number of such Disrupted
Days (in addition to any Suspension Event Days, without
duplication).

	 
	 	 
	Suspension Event:

	 	Each and every one of the following events: (i) MLI concludes, in its sole discretion, that
Counterparty will be engaged in a distribution of the Shares for purposes of Regulation M or
that the “restricted period” in respect of such distribution has not yet been completed; (ii)
MLI concludes, in its sole discretion, that it is appropriate with respect to any legal,
regulatory or self-regulatory requirements or related policies and procedures (whether or not
such requirements, policies or procedures are imposed by law or have been voluntarily adopted
by MLI), for it to refrain from purchasing Shares during any part of the Valuation Period; or
(iii) Counterparty is subject to a third-party tender
offer.

	 
	 	 
	Exclusion Mechanics:

	 	With respect
to each Suspension Event Day and Disrupted Day (each, an
“Exclusion Day”), the
Calculation Agent must determine whether (i) such Exclusion Day should be excluded in full, in
which case such Exclusion Day shall not be included for purposes of determining the Settlement
Price, or (ii) such Exclusion Day should only be partially excluded, in which case the VWAP
Price for such Exclusion Day shall be determined by the Calculation Agent based on Rule 10b-18
eligible transactions in the Shares on such Exclusion Day effected during the portion of the
Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices
for the relevant Scheduled Trading Days during the Valuation Period shall be adjusted by the
Calculation Agent for purposes of determining the Settlement Price. If a Disrupted Day occurs
during the Valuation Period, and each of the nine immediately following Scheduled Trading Days
is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine
the VWAP Price for such ninth Scheduled Trading Day and adjust the weighting of the VWAP
Prices for the relevant Scheduled Trading Days during the Valuation Period as it deems
appropriate for purposes of determining the Settlement Price based on, among other factors,
the duration of any Market Disruption Event and the volume, historical trading patterns and
price of the Shares or (ii) disregard such day for purposes of determining the Settlement
Price and further postpone the Valuation Date, in either case, as it deems appropriate to
determine the VWAP Price.

	 
	 	 
	Valuation Date

	 	For each Transaction, the earlier to occur of the date as set forth in the Supplemental
Confirmation (as the same may be postponed in accordance with the provisions hereof) (the
“Scheduled Valuation Date”) and any Accelerated
Valuation Date.

	 
	 	 
	Accelerated Valuation Date:

	 	For each Transaction, any date, occurring on or after the First Acceleration Date but prior
to the Scheduled Valuation Date, designated by MLI to be the Valuation Date; MLI shall notify
Counterparty of such designation prior to 8 p.m. New York City time on the Scheduled Trading
Day immediately following such Accelerated Valuation Date.

	 
	 	 
	First Acceleration Date:

	 	For each
Transaction, as set forth in the Supplemental Confirmation.

3

 

	 	 	 
	Settlement Terms:
	 	 
	 
	 	 
	Settlement Currency:

	 	USD
	 
	 	 
	Settlement Method Election:

	 	Applicable; provided that Section 7.1 of the Equity Definitions is hereby amended by deleting
the word “Physical” in the sixth line thereof and replacing it with the words “Net Share” and
deleting the word “Physical” in the last line thereof and
replacing it with the word “Cash”.

	 
	 	 
	Electing Party

	 	Counterparty
	 
	 	 
	Settlement Method Election Date:

	 	The 5th
Scheduled Trading Day immediately preceding the relevant First
Acceleration Date.

	 
	 	 
	Default Settlement Method:

	 	Cash Settlement
	 
	 	 
	Forward Cash Settlement Amount:

	 	Notwithstanding Section 8.5 of the Equity Definitions, an amount in the Settlement Currency equal to
the sum of (a) the Number of Shares multiplied by an amount equal to (i) the Settlement Price minus (ii) the Forward Price plus (b)
the Aggregate Adjustment Amount.

	 
	 	 
	Settlement Price:

	 	The arithmetic mean of the VWAP Prices of the Shares for each Scheduled Trading Day in the
Valuation Period minus the Settlement Price Adjustment Amount.

	 
	 	 
	Settlement Price Adjustment 

Amount:

	 	For each
Transaction, as set forth in the Supplemental Confirmation.

	 
	 	 
	VWAP Price:

	 	The daily volume weighted average price per Share. For the purpose of calculating the VWAP
Price, the Calculation Agent will include only those trades which are reported during the
period of time during which Counterparty could purchase its own shares under Rule 10b-18(b)(2)
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and pursuant to
the conditions of Rule 10b-18(b)(3) and (b)(4) under the Exchange Act. Counterparty
acknowledges that MLI may refer to the Bloomberg Page “AFL.N <Equity> AQR SEC” (or any
successor thereto), in its discretion, to determine the VWAP
Price.

	 
	 	 
	Net Share Settlement:
	 	 
	 
	 	 
	Net Share Settlement:

	 	In the event that Counterparty elects Net Share Settlement in accordance with the procedures
described above, the Net Share Settlement Shares shall be deliverable (i) by the Counterparty,
in the event that the Forward Cash Settlement Amount is positive or (ii) by MLI, in the event
that the Forward Cash Settlement Amount is negative.

	 
	 	 
	Net Share Settlement Shares:

	 	(i) Where Counterparty is to deliver Shares:
	 
	 	 
	 

	 	In the event that Counterparty elects to deliver Shares registered under the Securities Act
and an accompanying prospectus and prospectuses for MLI or one of its affiliates to use in
connection with its sales of such Shares, such number of Shares specified by MLI by written
notice to Counterparty (“Registered Net Share Settlement
Notice”). It is understood and
agreed that such number of Net Settlement Shares shall be exactly the number of Shares sold by
or on behalf of MLI to receive (net of costs and expenses
attributable to

4

 

	 	 	 
	 

	 	such sales) an amount in cash equal to the Forward Cash Settlement Amount,
subject to a maximum number of Shares equal to the number of Reserved Shares.
Such Net Settlement Shares shall additionally be subject to the section titled
“Registration” below.

	 
	 	 
	 

	 	In the event that Counterparty is not able to
deliver Shares registered under the Securities
Act, such number of Shares as determined by
MLI to equal in value the Forward Cash
Settlement Amount, subject to a maximum number
of Shares equal to the number of Reserved
Shares. It is understood and agreed that MLI
shall determine the value of such Shares by
applying a commercially reasonable discount
(including a commission of up to 3%, which
commission shall not reflect changes in
interest rates, stock borrow costs or expected
or actual dividends). Such Net Settlement
Shares shall additionally be subject to the
section titled “Private Placement” below.

	 
	 	 
	 

	 	(ii) Where MLI is to deliver Shares:
	 
	 	 
	 

	 	Such number of Shares specified by MLI by
written notice to Counterparty (“MLI Net Share
Settlement Notice”). It is understood and
agreed that such number of Net Share
Settlement Shares shall be exactly the number
of Shares purchased by or on behalf of MLI
with an amount in cash equal to the Forward
Cash Settlement Amount (taking into account
costs and expenses attributable to such
purchases), subject to a maximum number of
Shares equal to the number of Reserved Shares.

	 
	 	 
	Net Share Settlement Date:

	 	(i) Where Counterparty is to deliver Shares:
	 
	 	 
	 

	 	With respect to Net Share Settlement Shares
that are registered under the Securities Act
as contemplated under the first paragraph
under “Net Share Settlement Shares” above, the
later of (a) the Exchange Business Day
immediately following the date of the
Registered Net Share Settlement Notice and (b)
the third Exchange Business Day immediately
following the Valuation Date.

	 
	 	 
	 

	 	Otherwise, the third Exchange Business Day
immediately following the Valuation Date.

	 
	 	 
	 

	 	(ii) Where MLI is to deliver Shares:
	 
	 	 
	 

	 	The later of (a) the Exchange Business Day
immediately following the date of the MLI Net
Share Settlement Notice and (b) the third
Exchange Business Day immediately following
the Valuation Date.

	 
	 	 
	 

	 	(iii) In the event that MLI determines that
for legal, regulatory or trade execution
purposes that there should be more than one
Net Share Settlement Date, MLI shall so notify
Counterparty no later than the Exchange
Business Day immediately preceding the day
that would otherwise be the sole Net Share
Settlement Date (the “First Net Share
Settlement Date”). It is understood and
agreed that while such notice need not specify
the exact dates in addition to the First
Exchange Business Day that shall be additional
Net Share Settlement Dates (the “Additional
Net Share Settlement Dates”) or the number of
Net Share Settlement Shares to be delivered on
any date other than the First Net Share
Settlement Date, each Additional Net Share
Settlement Date and the number of Shares to be
delivered on such date shall be notified to
Counterparty

5

 

	 	 	 
	 

	 	no later than
the Exchange Business Day immediately preceding such Additional Net
Share Settlement Date.

	 
	 	 
	Reserved Shares:

	 	Initially, 12,500,000 Shares; the Reserved Shares may be increased or
decreased in a Supplemental Confirmation. For the avoidance of doubt,
following delivery by MLI of the Number of Shares on the Initial
Settlement Date, in no event shall Counterparty or MLI be required to
deliver Shares in excess of the number of Reserved Shares.

	 
	 	 
	Share Adjustments:
	 	 
	 
	 	 
	Method of Adjustment:

	 	Calculation Agent Adjustment; provided, however, that an Extraordinary
Dividend Event occurring with respect to a Transaction shall be an
Additional Termination Event under the Agreement with respect to such
Transaction, with such Transaction being an Affected Transaction and
Counterparty being the sole Affected Party. For the avoidance of doubt, no
adjustment shall be made as a result of an Extraordinary
Dividend.

	 
	 	 
	Extraordinary Dividends:

	 	Each dividend or distribution payment (other than any dividend or
distribution of the type described in Section 11.2(e)(i) or Section
11.2(e)(ii)(A) or (B) of the Equity Definitions) having an ex-dividend
date during the Valuation Period, other than each dividend that is of an
amount equal to the Ordinary Dividend Amount and that has an ex-dividend
date on a Scheduled Ex-dividend Date. For the avoidance of doubt, the
rescheduling of a Scheduled Ex-dividend Date to an earlier date shall
result in an Ordinary Dividend Amount becoming an Extraordinary
Dividend.

	 
	 	 
	Ordinary Dividend Amount:

	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 
	Scheduled Ex-dividend Dates:

	 	For each
Transaction, as set forth in the Supplemental Confirmation.

	 
	 	 
	Extraordinary Events:
	 	 
	 
	 	 
	Adjusted Settlement Price:

	 	For payments hereunder “based on Adjusted Settlement Price”, the
Calculation Agent shall calculate the amount payable in accordance with
the methodology employed for regular settlement, except that in lieu of
“Settlement Price”, the following “Adjusted Settlement Price” shall be
employed:

	 
	 	 
	 

	 	(1) where the Post-event Price is greater than or equal to the
Pre-event Price,

	 
	 	 
	 

	 	(Pre-event Price — Settlement Price Adjustment Amount) * Adjustment
Factor + Post-event Price * (1 — Adjustment Factor)

	 
	 	 
	 

	 	(2) otherwise,
	 
	 	 
	 

	 	Pre-event
Price — (Settlement Price Adjustment Amount * Adjustment
Factor)

	 
	 	 
	Adjustment Factor:

	 	The quotient obtained by dividing the number of Scheduled Trading Days (that were not
Exclusion Days) in the Valuation Period prior to the occurrence of the relevant Extraordinary
Event (the “Pre-event Period”) by the total number of Scheduled Trading Days in the Valuation
Period (that were not Exclusion Days), as adjusted by the Calculation Agent to take into
account partial Exclusion Days.

6

 

	 	 	 
	Pre-event Price:

	 	The arithmetic mean of the VWAP Prices for each Scheduled Trading Day in the Pre-event
Period, as adjusted by the Calculation Agent to take into account
partial Exclusion Days.

	 
	 	 
	Post-event Price:

	 	The price per Share (or any securities or other property received in respect of a Share), as
determined by the Calculation Agent, in respect of a reasonable unwind period established by
MLI in connection with the close-out of any open stock borrow position established in respect
of the Transaction, which price shall be based on the arithmetic average of the VWAP Prices,
if available, and otherwise on an appropriate valuation method under the circumstances, which
may be cash payable per Share in the context of a Merger, Tender Offer or Nationalization,
private market prices, third party bids or independent valuations. For the avoidance of
doubt, such price shall not be adjusted for changes in interest rates, stock borrow costs or
expected or actual dividends.

	 
	 	 
	Consequences of Merger Events:
	 	 
	 
	 	 
	Share-for-Share:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Share-for-Other:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Share-for-Combined:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Determining Party:

	 	MLI
	 
	 	 
	Consequences of Tender Offers:
	 	 
	 
	 	 
	Share-for-Share:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Share-for-Other:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Share-for-Combined:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Determining Party:

	 	MLI
	 
	 	 
	New Share:

	 	The definition of “New Shares” in Section 12.1 of the Equity Definitions shall be amended by
inserting at the beginning of subsection (i) the following: “(i) where the Exchange is
located in the United States, publicly quoted, traded or listed on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ Stock Market LLC (or their respective
successors) or otherwise,”.

	 
	 	 
	Announcement Event:

	 	If an Announcement Event occurs, MLI may treat such Announcement Event as an Extraordinary
Event having the same consequences as “Change in Law” or “Insolvency Filing” pursuant to
Section 12.9(b)(i) of the Equity Definitions, with the Cancellation Amount to be based on
Adjusted Settlement Price. “Announcement Event” shall mean the occurrence of the
Announcement Date of a Merger Event or Tender Offer.

	 
	 	 
	Nationalization, Insolvency or 

Delisting:

	 	Cancellation and Payment, based on Adjusted Settlement Price.
	 
	 	 
	Determining Party:

	 	MLI
	 
	 	 
	Additional Disruption Events:
	 	 

7

 

	 	 	 
	Change in Law:

	 	Applicable; Cancellation Amount to be based on Adjusted Settlement Price.
	 
	 	 
	Insolvency Filing:

	 	Applicable; Cancellation Amount to be based on Adjusted Settlement Price.
	 
	 	 
	Increased Cost of Stock Borrow:

	 	Not Applicable.
	 
	 	 
	Hedging Party:

	 	MLI
	 
	 	 
	Determining Party;

	 	MLI
	 
	Non-Reliance/Agreements and
	 	 
	Acknowledgements Regarding
	 	 
	Hedging Activities/Additional
	 	 
	Acknowledgements:

	 	Applicable

Other Share Deliveries in Lieu of Cash Payment:

If Counterparty would be obligated to pay cash to MLI or receive cash from MLI pursuant to the
terms of this Agreement for any reason without having had the right (other than pursuant to this
paragraph) to elect to deliver Shares or receive Shares, as the case may be, in satisfaction of
such payment obligation or right, then Counterparty may elect that Counterparty deliver to MLI or
receive from MLI, as the case may be, a number of Shares having an equivalent value (such number of
Shares to be delivered to be determined by the Calculation Agent acting in a commercially
reasonable manner and taking into account relevant factors, including whether or not the Shares are
subject to legal or other restrictions on transfer or acquisition and the costs and expenses
associated with disposing of or acquiring such Shares). Settlement relating to any delivery of
Shares pursuant to this paragraph shall occur within a reasonable period of time.

Registration:

Counterparty hereby agrees that if, in the good faith reasonable judgment of MLI, any Shares (x)
acquired by MLI from Counterparty or (y) for the purpose of hedging its obligations pursuant to any
Transaction cannot be sold in the public market by MLI without registration under the Securities
Act (other than Net Share Settlement Shares delivered pursuant to the second paragraph under (i) of
“Net Share Settlement Shares” above), Counterparty shall, in order to allow MLI to sell such Shares
in a registered offering, make available to MLI an effective registration statement under the
Securities Act and enter into an agreement, in form and substance satisfactory to MLI,
substantially in the form of an underwriting agreement for a registered secondary offering;
provided, however, that if MLI, in its sole reasonable discretion, is not satisfied with access to
due diligence materials, the results of its due diligence investigation, or the procedures and
documentation for the registered offering referred to above, then the section “Private Placement”
below shall apply at the election of Counterparty with respect to the Shares to be sold (such
Shares, as well as the Shares described in the second paragraph under (i) of “Net Share Settlement
Shares” above, the “Private Shares”).

Private Placement:

In order to allow MLI to sell Private Shares in a private placement, Counterparty agrees to enter
into a private placement agreement substantially similar to private placement purchase agreements
customary for private placements of equity securities, in form and substance satisfactory to MLI
(in which case, the Calculation Agent shall, to the extent such adjustments have not yet already
been made, make any adjustments to the terms of such Transaction that are necessary, in its
reasonable judgment, to compensate MLI for any commercially reasonable discount from the public
market price of the Shares incurred on the sale of Shares in a private placement), or purchase such
Shares from MLI at the closing price on such Exchange Business Days, and in the amounts, requested
by MLI.

8

 

Additional Agreements, Representations and Covenants of Counterparty, Etc.:

	 	 	 
	Compliance with 

Securities Laws:

	 	Each party represents and agrees that it has
complied, and will comply, in connection with
each Transaction and all related or
contemporaneous sales and purchases of Shares,
with the applicable provisions of the
Securities Act, and the Exchange Act, and the
rules and regulations each thereunder,
including, without limitation, Rules 10b-5 and
Regulation M under the Exchange Act; provided
that each party shall be entitled to rely
conclusively on any information communicated by
the other party concerning such other party’s
market activities.

	 
	 	 
	 

	 	Each party further represents and warrants that
if such party (“X”) purchases any Shares from
the other party pursuant to any Transaction,
such purchase(s) will comply in all material
respects with (i) all laws and regulations
applicable to X and (ii) all contractual
obligations of X.

	 
	 	 
	 

	 	Each party acknowledges that the offer and sale
of each Transaction to it is intended to be
exempt from registration under the Securities
Act by virtue of Section 4(2) thereof and the
provisions of Regulation D thereunder
(“Regulation D”). Accordingly, each party
represents and warrants to the other that (i)
it has the financial ability to bear the
economic risk of its investment in each
Transaction and is able to bear a total loss of
its investment, (ii) it is an “accredited
investor” as that term is defined under
Regulation D, (iii) it will purchase each
Transaction for investment and not with a view
to the distribution or resale thereof, and (iv)
the disposition of each Transaction is
restricted under this Confirmation, the
Securities Act and state securities laws.

	 
	 	 
	 

	 	Counterparty represents and warrants as of the
date hereof and each Trade Date that:
	 
	 	 
	 

	 	(a) each of its filings under the Exchange Act
that are required to be filed from and
including the ending date of Counterparty’s
most recent prior fiscal year have been filed,
and that, as of the respective dates thereof
and hereof, there is no misstatement of
material fact contained therein or omission of
a material fact required to be stated therein
or necessary to make the statements therein in
light of the circumstances in which they were
made not misleading;

	 
	 	 
	 

	 	(b) Counterparty is not in possession of
material non-public information regarding the
Shares or the Counterparty; Counterparty
additionally makes this representation as of
any Settlement Method Election Date;

	 
	 	 
	 

	 	(c) Counterparty is not entering into any
Transaction to facilitate a distribution of the
common stock or in connection with a future
distribution of securities;

	 
	 	 
	 

	 	(d) Counterparty is not entering into any
Transaction to create actual or apparent
trading activity in the Shares (or any security
convertible into or exchangeable for Shares) or
to manipulate the price of the Shares (or any
security convertible into or exchangeable for
Shares);

	 
	 	 
	 

	 	(e) Counterparty is entering into each
Transaction in good faith and not as part of a
plan or scheme to evade the prohibitions of
Rule 10b5-1 under the

9

 

	 	 	 
	 

	 	Exchange Act (“Rule
10b5-1”); it is the intent of the parties that
each Transaction comply with the requirements
of Rule l0b5-l(c)(1)(i)(A) and (B) and each
Transaction shall be interpreted to comply with
the requirements of Rule 10b5-l(c) (the
“Plan”); Counterparty will not seek to control
or influence MLI or MLPF&S to make “purchases
or sales” (within the meaning of Rule
10b5-1(c)(l)(i)(B)(3)) under any Transaction,
including, without limitation, any decision to
enter into any hedging transactions;
Counterparty represents and warrants that it
has consulted with its own advisors as to the
legal aspects of its adoption and
implementation of each Transaction under Rule
10b5-1;

	 
	 	 
	 

	 	(f) Neither it nor any “affiliated purchaser”
(as defined in Rule 10b-18 under the Exchange
Act) has made any purchases of blocks pursuant
to the proviso in Rule 10b-18(b)(4) under the
Exchange Act during the four full calendar
weeks immediately preceding the applicable
Trade Date;

	 
	 	 
	 

	 	(g) The purchase or writing of each
Transaction will not violate Rule 13e-1 or Rule
13e-4 under the Exchange Act, and Counterparty
is not entering into any Transaction in
anticipation of, or in connection with, or to
facilitate a self-tender offer or a third-party
tender offer;

	 
	 	 
	 

	 	(h) Each Transaction is consistent with the
publicly announced program of Counterparty to
repurchase, from time to time, Shares (the
“Repurchase Program”); and

	 
	 	 
	 

	 	(i) Counterparty has full power and authority
to undertake the Repurchase Program, and the
Repurchase Program has been duly authorized and
remains valid.

	 
	 	 
	 

	 	Counterparty
covenants and agrees that:

	 
	 	 
	 

	 	(a) during the term of each Transaction to
promptly notify MLI telephonically (which oral
communication shall be promptly confirmed by
telecopy to MLI) if Counterparty determines
that as a result of an acquisition or other
business transaction or for any other reason
Counterparty will be engaged in a distribution
of Shares or other securities for which the
Shares are a reference security for purposes of
Rule 102 of Regulation M under the Exchange Act
and to promptly notify MLI by telecopy of the
period commencing on the date that is one (1)
business day before the commencement of such
distribution and ending on the day on which
Counterparty completes the distribution (the
“Distribution Period”); for the purposes of
this Confirmation, the “term” of a Transaction
shall not be considered to have been completed
until all Shares required to be transferred to
a party hereto have been duly transferred and
all cash amounts required to be paid to a party
hereto have been duly paid;

	 
	 	 
	 

	 	(b) without the prior written consent of MLI,
neither Counterparty nor any “affiliated
purchaser” (as such term is defined in Rule
10b-18 under the Exchange Act) will acquire
Shares (or equivalent interests or securities
exchangeable, convertible or exercisable into
Shares) or be a party to any repurchase or
similar agreements pursuant to which a
valuation, averaging or hedging period or
similar such period overlaps or potentially
overlaps with the term of any Transaction,
other than in those transactions already
disclosed in writing to MLI; in connection with
such disclosed transactions

10

 

	 	 	 
	 

	 	and otherwise,
although Counterparty acknowledges that Rule
10b-18 under the Exchange Act cannot be applied
to MLI’s or MLPF&S’s purchases of Shares in
connection with any Transaction, Counterparty
will not take any action that would or could
cause MLI’s or MLPF&S’s purchases of Shares
during any Transaction term not to comply with
Rule 10b-18 under the Exchange Act, as if such
rule could be applied to such Transaction; and

	 
	 	 
	 

	 	(c) Counterparty shall report each Transaction
as required in any applicable report filed by
the Counterparty pursuant to the Exchange Act
in compliance with Regulation S-K and/or
Regulation S-B under the Exchange Act, as
applicable.

	 
	 	 
	 

	 	Counterparty acknowledges and agrees that:
	 
	 	 
	 

	 	(a) In connection with each Transaction, MLI
will engage in customary hedging activities in
its sole discretion and for its own account and
that such activities may involve sales or
purchases at an average price that may be
greater than, or less than, the price paid by
Counterparty under the terms of such
Transaction; and

	 
	 	 
	 

	 	(b) Notwithstanding the generality of Section
13.1 of the Equity Definitions, MLI is not
making any representations or warranties with
respect to the treatment of any Transaction
under FASB Statements 133 as amended or 150,
EITF 00-19 (or any successor issue statements)
or under FASB’s Liabilities & Equity Project.

	 	 	 	 	 
	Account Details:	 	 
	 
	 	 	 	 
	 

	 	Account for payments to Counterparty:
	 	With respect to each Transaction, as set forth in the
Supplemental Confirmation
	 
	 	 	 	 
	 

	 	Account for payment to MLI:
	 	With respect to each Transaction, as set forth in the
Supplemental Confirmation

	 	 	 
	Bankruptcy Rights:

	 	In the event of Counterparty’s bankruptcy, MLI’s rights
in connection with any Transaction shall not exceed
those rights held by common shareholders. For the
avoidance of doubt, the parties acknowledge and agree
that MLI’s rights with respect to any other claim
arising from any Transaction prior to Counterparty’s
bankruptcy shall remain in full force and effect and
shall not be otherwise abridged or modified in
connection herewith.

	 
	 	 
	Set-Off:

	 	None.
	 
	 	 
	Collateral:

	 	None.
	 
	 	 
	Transfer:

	 	Counterparty may transfer any of its rights or delegate
its obligations under any Transaction with the prior
written consent of MLI. MLI may assign and delegate
its rights and obligations under any Transaction (the
“Transferred Obligations”) to any subsidiary of ML &
Co. (the “Assignee”) by notice specifying the effective
date of such transfer (“Effective Date”) and including
an executed acceptance and assumption by the Assignee
of the Transferred Obligations; provided that (i)
Counterparty will not, as a

11

 

	 	 	 
	 

	 	result of such transfer, be required to pay to the Assignee an amount in
respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement
(except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) greater
than the amount in respect of which Counterparty would have been required to
pay to MLI in the absence of such transfer; and (ii) the Assignee will not, as
a result of such transfer, be required to withhold or deduct on account of a
Tax under Section 2(d)(i) of the Agreement (except in respect of interest under
Section 2(e), 6(d)(ii), or 6(e)) an amount in excess of that which MLI would
have been required to withhold or deduct in the absence of such transfer,
unless the Assignee would be required to make additional payments pursuant to
Section 2(d)(i)(4) of the Agreement corresponding to such excess. On the
Effective Date, (a) MLI shall be released from all obligations and liabilities
arising under the Transferred Obligations; and (b) if MLI has not assigned and
delegated its rights and obligations under the Agreement and all Transactions
thereunder, the Transferred Obligations shall cease to be a Transaction under
the Agreement and shall be deemed to be a Transaction under the master
agreement, if any, between Assignee and Counterparty, provided that, if at such
time Assignee and Counterparty have not entered into a master agreement,
Assignee and Counterparty shall be deemed to have entered into an ISDA form of
Master Agreement (Multicurrency-Cross Border) and Schedule substantially in the
form of the Agreement but amended to reflect the name of the Assignee and the
address for notices and any amended representations under Part 2 of the
Agreement as may be specified in the notice of transfer.

	 
	 	 
	Regulation:

	 	MLI is regulated by The Securities and Futures
Authority Limited and has entered into each
Transaction as principal.

	 
	 	 
	Indemnity:

	 	Counterparty agrees to indemnify MLI, its Affiliates
and their respective directors, officers, agents and
controlling parties (MLI and each such person being
an “Indemnified Party”) from and against any and all
losses, claims, damages and liabilities, joint and
several, to which such Indemnified Party may become
subject because of the untruth of any representation
by Counterparty or a breach by Counterparty of any
agreement or covenant under this Confirmation, in the
Agreement, the Plan or any other agreement relating
to the Agreement or any Transaction and will
reimburse any Indemnified Party for all reasonable
expenses (including reasonable legal fees and
expenses) as they are incurred in connection with the
investigation of, preparation for, or defense of, any
pending or threatened claim or any action or
proceeding arising therefrom, whether or not such
Indemnified Party is a party thereto.

ISDA Master Agreement

With respect to the Agreement, MLI and Counterparty each agree as follows:

Specified Entities:

(i) in relation to MLI, for the purposes of:

Section 5(a)(v): not applicable

Section 5(a)(vi): not applicable

Section 5(a)(vii): not applicable

Section 5(b)(iv): not applicable

and (ii) in relation to Counterparty, for the purposes of:

Section 5(a)(v): not applicable

Section 5(a)(vi): not applicable

Section 5(a)(vii): not applicable

Section 5(b)(iv): not applicable

12

 

“Specified Transaction” will have the meaning specified in Section 14 of the Agreement.

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement will not
apply to MLI and Counterparty.

The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply
to MLI or to Counterparty.

Payments on Early Termination for the purpose of Section 6(e) of the Agreement: (i) Loss
shall apply; and (ii) the Second Method shall apply. With respect to any calculation or
determination of the fair value of this Transaction to Seller or an amount payable by or to Seller
hereunder, any combination of one or more of the following variables may be employed: (i) stock
borrow cost of 30 bps, (ii) interest rates of 3.10% per annum, (iii) no changes in expected or
actual dividends since the Trade Date, (iv) volatility or volatilities (which, for the avoidance of
doubt, shall include the entire volatility surface) at the time of such calculation or
determination, (v) changes to all outstanding shares of Common Stock, such as in the case of stock
splits, stock dividends and mergers, (vi) stock price experience prior to, and at the time of, such
calculation or determination (including experience as to liquidity of the Common Stock, and whether
based on available market price information, or estimates of trading prices for blocks of shares,
or other relevant information as to prevailing market prices) and (vii) any and all variables
related to time.

“Termination Currency” means USD.

Tax Representations:

	 	(I)	 	For the purpose of Section 3(e) of the Agreement, each party represents
to the other party that it is not required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of any Tax from
any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the
Agreement) to be made by it to the other party under the Agreement. In making this
representation, each party may rely on (i) the accuracy of any representations made
by the other party pursuant to Section 3(f) of the Agreement, (ii) the satisfaction
of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and
the accuracy and effectiveness of any document provided by the other party pursuant
to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the Agreement; provided
that it will not be a breach of this representation where reliance is placed on
clause (ii) above and the other party does not deliver a form or document under
Section 4(a)(iii) of the Agreement by reason of material prejudice to its legal or
commercial position.

	 
	 	(II)	 	For the purpose of Section 3(f) of the Agreement, each party makes the
following representations to the other party:

	 	(i)	 	MLI represents that it is a company organized under the
laws of England and Wales.

	 
	 	(ii)	 	Counterparty represents that it is a corporation
incorporated under the laws of Georgia.

Delivery Requirements: For the purpose of Sections 3(d), 4(a)(i) and (ii)
of the Agreement, each party agrees to deliver the following documents:

     Tax forms, documents or certificates to be delivered are:

Each party agrees to complete (accurately and in a manner reasonably
satisfactory to the other party), execute, and deliver to the other party,
United States Internal Revenue Service Form W-9 or W-8 BEN, or any successor
of such form(s): (i) before the first payment date under this agreement;
(ii) promptly upon reasonable demand by the other

13

 

party; and (iii) promptly upon learning that any such form(s) previously
provided by the other party has become obsolete or incorrect.

     Other documents to be delivered:

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Party Required to	 	 	Document Required to be Delivered	 	 	When Required	 	 	Covered by	 
	 	Deliver Document	 	 	 	 	 	 	 	 	Section 3(d)	 
	 	 	 	 	 	 	 	 	 	 	Representation	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Counterparty
	 	 	Evidence of the authority and
true signatures of each official
or representative signing this
Confirmation

	 	 	Upon or before
execution and
delivery of this
Confirmation
	 	 	Yes	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Counterparty
	 	 	Certified copy of the resolution
of the Board of Directors or
equivalent document authorizing
the execution and delivery of
this Confirmation

	 	 	Upon or before
execution and
delivery of this
Confirmation
	 	 	Yes	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Each party
	 	 	Executed Supplemental
Confirmation, substantially in
the form of Exhibit A hereto, in
respect of each Transaction

	 	 	On or before the

corresponding Trade

Date
	 	 	Yes	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	MLI
	 	 	Guarantee of its Credit Support
Provider, substantially in the
form of Exhibit B attached
hereto, together with evidence
of the authority and true
signatures of the signatories,
if applicable

	 	 	Upon or before
execution and
delivery of this
Confirmation
	 	 	Yes	 
	 	 	 	 	 	 	 	 	 	 	 	 

Addresses for Notices: For the purpose of Section 12(a) of the Agreement:

Address for notices or communications to MLI:

	 	 	 
	Address:

	 	Merrill Lynch International
	 

	 	Merrill Lynch Financial Centre
	 

	 	2 King Edward Street, London EC1A 1HQ
	 

	 	Attention: Gary Rosenblum
	 

	 	Facsimile No.: 212 449-2355   Telephone No.: 212 449-6309

(For all purposes)

Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as any changes to
Counterparty’s address, telephone number or facsimile number should be sent to:

	 	 	 
	 

	 	Address: GMI Counsel
	 

	 	Merrill Lynch World Headquarters
	 

	 	4 World Financial Center, 5th Floor
	 

	 	New York, New York 10080
	 

	 	Attention: Global Equity Derivatives
	 

	 	Facsimile No.: 212 449-6576   Telephone No.: 212 449-6309

Address for notices or communications to Counterparty for all purposes:

	 	 	 
	 

	 	With respect to each Transaction, as set forth in the Supplemental Confirmation

14

 

Process Agent: For the purpose of Section 13(c) of the Agreement, MLI appoints as its process
agent:

	 	 	 
	 

	 	Merrill Lynch, Pierce, Fenner & Smith Incorporated
	 

	 	222 Broadway, 16th Floor
	 

	 	New York, NY 10038
	 

	 	Attention: Litigation Department
	 
	 	 
	 

	 	Counterparty does not appoint a Process Agent.

Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither MLI nor
Counterparty is a Multibranch Party.

Calculation Agent. The Calculation Agent is MLI, whose judgments, determinations and calculations
in each Transaction and any related hedging transaction between the parties shall be made in good
faith and in a commercially reasonable manner.

Credit Support Document.

MLI: Guarantee of ML&Co in the form attached hereto as Exhibit B.

Counterparty: Not Applicable

Credit Support Provider.

With respect to MLI: Merrill Lynch and Co. and with respect to Counterparty, Not Applicable.

Governing Law. This Confirmation will be governed by, and construed in accordance with, the laws
of the State of New York.

Netting of Payments. The provisions of Section 2(c) of the Agreement shall not be applicable to
each Transaction; provided, however, that with respect to this Agreement or any other ISDA Master
Agreement between the parties, any Share delivery obligations on any day of Counterparty, on the
one hand, and MLI, on the other hand, shall be netted. The resulting Share delivery obligation of
a party upon such netting shall be rounded down to the nearest number of whole Shares, such that
neither party shall be required to deliver any fractional Shares.

Accuracy of Specified Information. Section 3(d) of the Agreement is hereby amended by
adding in the third line thereof after the word “respect” and before the period the words “or, in
the case of audited or unaudited financial statements or balance sheets, a fair presentation of the
financial condition of the relevant person.”

Basic Representations. Section 3(a) of the Agreement is hereby amended by the deletion of
“and” at the end of Section 3(a)(iv); the substitution of a semicolon for the period at the
end of Section 3(a)(v) and the addition of Sections 3(a)(vi), as follows:

Eligible Contract Participant; Line of Business. It is an “eligible contract
participant” as defined in the Commodity Futures Modernization Act of 2000, and it
has entered into this Confirmation and each Transaction in connection with its
business or a line of business (including financial intermediation), or the
financing of its business.

Amendment of Section 3(a)(iii). Section 3(a)(iii) of the Agreement is modified to read as follows:

No Violation or Conflict. Such execution, delivery and performance do not
materially violate or conflict with any law known by it to be applicable to it, any
provision of its constitutional documents, any order or judgment of any court or
agency of government applicable to it or any of

15

 

its assets or any material contractual restriction relating to Specified
Indebtedness binding on or affecting it or any of its assets.

Amendment of Section 3(a)(iv). Section 3(a)(iv) of the Agreement is modified by inserting
the following at the beginning thereof:

“To such party’s best knowledge,”

Additional Representations:

Counterparty Representations. As of the date hereof and each Trade Date, Counterparty represents
and warrants that it: (i) has such knowledge and experience in financial and business affairs as to
be capable of evaluating the merits and risks of entering into each Transaction; (ii) has consulted
with its own legal, financial, accounting and tax advisors in connection with each Transaction; and
(iii) is entering into each Transaction for a bona fide business purpose to hedge or repurchase
Shares.

As of the date hereof and each Trade Date, Counterparty represents and warrants that it is not and
has not been the subject of any civil proceeding of a judicial or administrative body of competent
jurisdiction that could reasonably be expected to impair materially Counterparty’s ability to
perform its obligations hereunder.

As of the date hereof and each Trade Date, Counterparty is not insolvent.

Acknowledgements:

(1) The parties acknowledge and agree that there are no other representations, agreements or other
undertakings of the parties in relation to any Transaction, except as set forth in this
Confirmation.

(2) The parties hereto intend for:

(a) each Transaction to be a “securities contract” as defined in Section 741(7) of Title 11
of the United States Code (the “Bankruptcy Code”), qualifying for the protections
under Section 555 of the Bankruptcy Code;

(b) a party’s right to liquidate each Transaction and to exercise any other remedies upon
the occurrence of any Event of Default under the Agreement with respect to the other party
to constitute a “contractual right” as defined in the Bankruptcy Code;

(c) all payments for, under or in connection with each Transaction, all payments for the
Shares and the transfer of such Shares to constitute “settlement payments” as defined in the
Bankruptcy Code.

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by deleting
the words “on the day” in the second line thereof and substituting therefor “on the day that is
three Local Business Days after the day”. Section 6(d)(ii) is further modified by deleting
the words “two Local Business Days” in the fourth line thereof and substituting therefor “three
Local Business Days.”

Amendment of Definition of Reference Market-Makers. The definition of “Reference Market-Makers” in
Section 14 is hereby amended by adding in clause (a) after the word “credit” and before the
word “and” the words “or to enter into transactions similar in nature to Transactions”.

Consent to Recording. Each party consents to the recording of the telephone conversations of
trading and marketing personnel of the parties and their Affiliates in connection with this
Confirmation. To the extent that one party records telephone conversations (the “Recording
Party”) and the other party does not (the “Non-Recording Party”), the Recording Party
shall in the event of any dispute, make a complete and unedited copy of such party’s tape of the
entire day’s conversations with the Non-Recording Party’s personnel available to the Non-Recording
Party. The Recording Party’s tapes may be used by either party in any forum in which a dispute is
sought to be

16

 

resolved and the Recording Party will retain tapes for a consistent period of time in accordance
with the Recording Party’s policy unless one party notifies the other that a particular transaction
is under review and warrants further retention.

Disclosure. Each party hereby acknowledges and agrees that MLI has authorized Counterparty to
disclose each Transaction and any related hedging transaction between the parties if and to the
extent that Counterparty reasonably determines (after consultation with MLI) that such disclosure
is required by law or by the rules of any securities exchange or similar trading platform.

Severability. If any term, provision, covenant or condition of this Confirmation, or the
application thereof to any party or circumstance, shall be held to be invalid or unenforceable in
whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Confirmation had been executed with the invalid
or unenforceable provision eliminated, so long as this Confirmation as so modified continues to
express, without material change, the original intentions of the parties as to the subject matter
of this Confirmation and the deletion of such portion of this Confirmation will not substantially
impair the respective benefits or expectations of parties to this Agreement; provided,
however, that this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or
provision in Section 14 to the extent that it relates to, or is used in or in connection
with any such Section) shall be so held to be invalid or unenforceable.

Affected Parties. For purposes of Section 6(e) of the Agreement, each party shall be
deemed to be an Affected Party in connection with Illegality and any Tax Event.

17

 

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the
copy of this Master Confirmation enclosed for that purpose and returning it to us.

	 	 	 	 	 
	Very truly yours,

MERRILL LYNCH INTERNATIONAL

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

Confirmed as of the date first above written:

	 	 	 	 	 
	AFLAC INCORPORATED

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

Acknowledged and agreed as to matters relating to the Agent:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

solely in its capacity as Agent hereunder

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

18

 

EXHIBIT A

FORM OF SUPPLEMENTAL CONFIRMATION

Supplemental Confirmation of ASAP Minus (VWAP Pricing)

Date:
                                         
                             
   
                           ML Ref:

To:
                                         
    (“Counterparty”)

Attention:

From:                     Merrill Lynch International
(“MLI”)

                               Merrill Lynch Financial Centre

                               2 King Edward Street

                               London EC1A 1HQ

 

Dear Sir / Madam:

     Capitalized terms used herein, unless defined herein, have the meanings set forth in the
Master Confirmation of OTC ASAP Minus between Counterparty and MLI, dated as of February 4, 2008.

     The purpose of this Supplemental Confirmation is to confirm the terms and conditions of a
Transaction under the Master Confirmation.

     The terms of the Transaction to which the Supplemental Confirmation relates are as follows:

Trade Date:

Initial Share Price:
                              $

Scheduled Valuation Date:

First Acceleration Date:

Number of Shares:

Aggregate Adjustment Amount:

Ordinary Dividend Amount:

Scheduled Ex-dividend Date:

Settlement Price Adjustment

Amount:

Account Details:

     Account for payments to Counterparty:

19

 

      Account for payment to MLI:

Address for notices or communications to Counterparty for all purposes:

20

 

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the
copy of this Supplemental Confirmation enclosed for that purpose and returning it to us.

	 	 	 	 	 
	Very truly yours,

MERRILL LYNCH INTERNATIONAL

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	Confirmed as of the date first above written:

AFLAC INCORPORATED

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

Acknowledged and agreed as to matters relating to the Agent:

	 	 	 	 	 
	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

solely in its capacity as Agent hereunder

 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 

21

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