SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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XATA Corporation
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XATA CORPORATION
500 EAST TRAVELERS TRAIL
BURNSVILLE, MN 55339
(612) 894-3680
January 20, 1997
Dear Shareholder:
You are cordially invited to attend the Company's Annual Meeting of
Shareholders to be held at 4:00 p.m., on February 20, 1997, at the Minneapolis
Marriott City Center.
This year, in addition to the election of five directors and
ratification of the appointment of auditors, you are being asked to approve
amendments to the Company's 1991 Long-Term Incentive and Stock Option Plan
increasing the number of authorized shares of Common Stock and fixing the date
for automatic option grants to nonemployee directors. Following the formal
business of the meeting, I will report on the affairs of the Company and respond
to questions of general interest to shareholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you plan to attend, it is
important that your shares be represented. Accordingly, you are requested to
sign and date the enclosed proxy and mail it in the envelope provided at your
earliest convenience.
Very truly yours,
Dennis R. Johnson
PRESIDENT AND CHIEF EXECUTIVE OFFICER
XATA CORPORATION
500 EAST TRAVELERS TRAIL
BURNSVILLE, MN 55339
(612) 894-3680
-----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 20, 1997
-----------------------------------------
To the Shareholders of XATA Corporation:
The Annual Meeting of Shareholders of XATA Corporation (the "Company)
will be held on February 20, 1997, at 4:00 p.m., at the Minneapolis Marriott
City Center, 4th Floor, 30 South Seventh Street, Minneapolis, Minnesota, for the
following purposes:
(1) To fix the number of directors at five and to elect five
directors to serve for a one year term expiring when their
successors are elected and qualified at the annual meeting in
1998.
(2) To act upon a proposal to ratify an amendment to the 1991
Long-Term Incentive and Stock Option Plan (the "Incentive
Plan") which increases the number of shares of Common Stock
reserved for issuance under the Plan.
(3) To act upon a proposal to ratify an amendment to the Incentive
Plan to fix the date of automatic grant of options to
non-employee directors as the date of re-election.
(4) To act upon a proposal to ratify the appointment of McGladrey
& Pullen, LLP, as independent auditors of the Company for the
fiscal year ending September 30, 1997.
(5) To transact such other business as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on January 13,
1997 as the record date for the determination of shareholders entitled to vote
at the Annual Meeting and to receive notice thereof. The transfer books of the
Company will not be closed.
A PROXY STATEMENT AND FORM OF PROXY ARE ENCLOSED. SHAREHOLDERS
ARE REQUESTED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. IT IS IMPORTANT
THAT PROXIES BE RETURNED PROMPTLY WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
By Order of the Board of Directors
William P. Flies, Secretary
January 20, 1997
XATA CORPORATION
500 EAST TRAVELERS TRAIL
BURNSVILLE, MN 55339
(612) 894-3680
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 20, 1997
----------------------------------------
GENERAL INFORMATION
This proxy statement is furnished to shareholders by the Board of
Directors of XATA Corporation (the "Company") for solicitation of proxies for
use at the Annual Meeting of Shareholders on February 20, 1997, to be held at
the Minneapolis Marriott City Center, 4th Floor, 30 South Seventh Street,
Minneapolis, Minnesota, at 4:00 p.m., and at all adjournments thereof for the
purposes set forth in the attached Notice of Annual Meeting of Shareholders. The
purposes of the meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Shareholders. The Board of Directors is
not currently aware of any other matters which will come before the meeting.
Shareholders may revoke proxies before exercise by submitting a
subsequently dated proxy or by voting in person at the Annual Meeting. Unless a
shareholder gives contrary instructions on the proxy card, proxies will be voted
at the meeting (a) for the election of the nominees named herein and on the
proxy card to the Board of Directors; (b) for ratification of the amendments to
the Company's 1991 Long-Term Incentive and Stock Option Plan (the "Incentive
Plan"); (c) for the appointment of McGladrey & Pullen, LLP as independent
auditors of the Company; and (d) in the discretion of the proxy holder as to
other matters which may properly come before the meeting. This proxy statement
and the enclosed proxy are being mailed to the shareholders of the Company on or
about January 20, 1997.
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1996, is enclosed herewith but is not considered a part of the
proxy solicitation material. The Annual Report describes the financial condition
of the Company as of September 30, 1996.
The Company will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the shares and will reimburse them for their expenses in so
doing. To ensure adequate representation of shares at the meeting, officers,
agents and employees of the Company may communicate with shareholders, banks,
brokerage houses and others by telephone, facsimile, or in person to request
that proxies be furnished. All expenses incurred in connection with this
solicitation will be borne by the Company.
RECORD DATE AND VOTING
The Board of Directors has fixed January 13, 1997, as the record date
for the determination of shareholders entitled to vote at the Annual Meeting. As
of the close of business on the record date, there were outstanding 4,384,039
shares of Common Stock, par value $.01 per share, which is the only outstanding
class of stock of the Company. Each share is entitled to one vote on each
proposal to be presented to the meeting. As provided in the Articles of
Incorporation of the Company, there is no right of cumulative voting. All
matters being voted upon by the shareholders require a majority vote of the
shares represented at the Annual Meeting either in person or by proxy, except
for election of directors, which would be by plurality vote in the event of more
nominees than positions (i.e., the five nominees receiving the highest numbers
of vote would be elected).
The presence at the Annual Meeting in person or by proxy of the holders
of a majority of the outstanding shares of the Company's Common Stock entitled
to vote constitutes a quorum for the transaction of business. Shares voted as
abstentions and broker non-votes on any matter (or a "withhold authority" vote
as to directors) will be counted as present and entitled to vote for purposes of
determining a quorum and for purposes of calculating the vote with respect to
such matter, but will not be deemed to have been voted in favor of such matter.
"Broker non-votes" are shares held by brokers or nominees which are present in
person or represented by proxy, but which are not voted on a particular matter
because instructions have not been received from the beneficial owner. The
effect of broker non-votes on a particular matter depends on whether the matter
is one as to which the broker or nominee has discretionary voting authority. If
a broker submits a proxy that indicates the broker does not have discretionary
authority to vote certain shares on a particular matter, those shares will be
counted as present for purposes of determining a quorum, but will not be
considered present and entitled to vote for purpose of calculating the vote with
respect to such matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH NOMINEE
FOR DIRECTOR NAMED HEREIN, FOR RATIFICATION OF THE AMENDMENTS TO THE 1991
LONG-TERM INCENTIVE AND STOCK OPTION PLAN, AND FOR RATIFICATION OF THE
APPOINTMENT OF MCGLADREY & PULLEN, LLP AS INDEPENDENT AUDITORS. IT IS INTENDED
THAT PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR EACH NOMINEE
AND FOR SUCH OTHER PROPOSALS UNLESS OTHERWISE DIRECTED BY THE SHAREHOLDER
SUBMITTING THE PROXY.
PRINCIPAL SHAREHOLDERS AND
OWNERSHIP OF MANAGEMENT
The following table sets forth as of December 31, 1996 the record and
beneficial ownership of Common Stock held by (1) each person who is known to the
Company to be the beneficial owner of more than 5% of the Common Stock of the
Company; (ii) each current director; (iii) each nominee for election as
director; and (iv) all officers and current directors of the Company as a group.
Securities reported as "beneficially owned" include those for which the named
persons may exercise voting power or investment power, alone or with others.
Voting power and investment power are not shared with others unless so stated.
The number and percent of shares of Common Stock of the Company beneficially
owned by each such person as of December 31, 1996 includes the number of shares
which such person has the right to acquire within sixty (60) days after such
date.
NUMBER OF
NAME AND ADDRESS SHARES OWNED PERCENTAGE
---------------- ------------ ----------
William (1)(2) and Linda Flies, JT 1,267,516 28.9%
500 East Travelers Trail
Burnsville, MN 55337
Dennis R. Johnson (1)(2) 145,134(3) 3.2%
Edward T. Michalek (1)(2) 20,572(3) *
Stephen A. Lawrence (1)(2) 6,667(3) *
Roger W. Kleppe (1)(2) 6,667(3) *
Robert M. Featherstone 5,333(3) *
All officers and current directors as 1,451,889(3) 31.9%
a group (6 persons)
---------------------------------------
* indicates ownership of less than 1%.
(1) Currently a director.
(2) Nominee for election as director.
(3) Includes shares of Common Stock issuable upon exercise of
currently exercisable options as follows: William P. Flies -
5,556 shares; Dennis R. Johnson - 133,333 shares; Edward T.
Michalek - 13,334 shares; Stephen A. Lawrence - 6,667 shares;
Roger W. Kleppe - 6,667 shares; Robert M. Featherstone - 3,333
shares; and all officers and directors as a group - 168,891
shares.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be
as fixed from time to time by resolution of the shareholders subject to increase
by the Board of Directors. The current number of members of the Board of
Directors is five (5). The directors elected at this Annual Meeting, and at
annual meetings thereafter unless otherwise determined by the Board or the
shareholders, will serve a one-year term expiring upon the election of their
successors at the next annual meeting. The five persons designated by the Board
of Directors as nominees for election as directors at the Annual Meeting are
Dennis R. Johnson, William P. Flies, Edward T. Michalek, Stephen A. Lawrence,
and Roger W. Kleppe.
In the event any nominee should be unavailable to stand for election at
the time of the Annual Meeting, the proxies may be voted for a substitute
nominee selected by the Board of Directors.
See "MANAGEMENT" for biographical information concerning Messrs.
Johnson and Flies, who are employees of the Company. The following biographical
information is furnished with respect to each of the other nominees.
EDWARD T. MICHALEK Director since December, 1991
Chairman of the Board Chairman since June, 1993
Mr. Michalek is Chairman of the Board of Directors of the Company. From
February 1992 to August 1, 1995, when he retired, he was Chairman of the Board,
Chief Executive Officer, and President of Advance Machine Company, a
manufacturer and worldwide marketer of commercial and industrial floor cleaning
equipment. From 1981 through February 1992, Mr. Michalek was with Norwesco,
Inc., the last five years of which he served as its Chief Executive Officer,
President, and Chairman. Currently, he is a director of Norwesco, Inc., CMG,
Ltd. and Behavioral Dynamics, Inc. In addition, he is an equity partner in
Norcomp, Ltd. and NCM, Ltd. Mr. Michalek has extensive senior executive general
management, operating, and marketing experience with publicly held companies
that include Norwesco, Inc., Arctic Enterprises, Inc., Emerson Electric Company,
and Skil Corporation. Mr. Michalek is a graduate of Northwestern University.
DENNIS R. JOHNSON Director since December, 1993
President and Chief Executive Officer of the Company
See "MANAGEMENT" for biographical information.
WILLIAM P. FLIES Director since December, 1991
Chief Technical Officer and Secretary of the Company
See "MANAGEMENT" for biographical information.
STEPHEN A. LAWRENCE Director since September, 1995
Mr. Lawrence is currently the Chairman and Chief Executive Officer of
Carpenter Transfer, Inc., which operates Wilson Refrigerated Express (a
Minnesota-based full load refrigerated carrier), Wilson Dedicated Services (a
Wisconsin-based dedicated contract carrier), Lawrence NationaLease (a
Minnesota-based full service truck lessor), and Lawrence & Associates, Ltd. (a
Minnesota-based risk management and environmental compliance consulting
company). Prior to assuming his role as Chairman and CEO of Carpenter Transfer,
Inc. in 1991, he was the Executive Vice President and General Counsel for Lend
Lease Trucks, Inc. (1989-1991) and General Counsel and Chief Operating Officer
for Whiteford Systems, Inc. (1986-1989). Mr. Lawrence is currently a member of
the Board of Directors and a member of various committees of the Truck Renting
and Leasing Association, a member of the Board of Directors and of various
committees of Bank Windsor in Minneapolis, Minnesota, and a member of the
Minnesota Bar Association. Mr. Lawrence is a graduate of Augustana College.
ROGER W. KLEPPE Director since September, 1995
Mr. Kleppe is currently Vice President of Human Resources, Strategic
Development and Quality Management for Blue Cross and Blue Shield of Minnesota
("BCBSM"), a position which he assumed in March 1994, and he is also responsible
for its administrative services. He previously served on the BCBSM Board of
Trustees and on the corporate member board each for two years. Prior to March
1994, Mr. Kleppe was Vice President of Human Resources and Administrative
Resources for National Business Systems, Inc. Mr. Kleppe has extensive human
resources experience and has been involved with many business community
organizations, such as the Minnesota Chamber of Commerce. He also currently
serves on the Boards of Directors of the Pharmacy Gold, Inc. and Care Delivery
Management, Inc., both of which are wholly-owned, for-profit companies under
Aware Integrated, Inc., a nonprofit holding company.
For information concerning compensation of directors, see "MANAGEMENT -
Director Compensation" and "PROPOSALS 2 AND 3 - Amendment of 1991 Long-Term
Incentive and Stock Option Plan."
MANAGEMENT
DIRECTORS AND OFFICERS
The current directors and officers of the Company are as follows:
Name Age Position
---- --- --------
Dennis R. Johnson 52 Chief Executive Officer,
President and Director
William P. Flies 54 Chief Technical Officer,
Secretary and Director
Robert M. Featherstone 61 Chief Financial Officer and
Treasurer
Stephen A. Lawrence 53 Director
Roger W. Kleppe 46 Director
Edward T. Michalek 64 Chairman of the Board
of Directors
The Chairman of the Board of Directors and the officers of the Company
are elected annually by the Board of Directors and serve until their successors
are elected and qualified, subject to earlier removal by the Board.
Mr. Johnson is President and Chief Executive Officer of the Company.
From March 1992 to February 1994, Mr. Johnson was President of National Business
Systems, Inc., a provider of data and information-processing services and data
processing supplies. From August 1990 through March 1992, Mr. Johnson was an
employee of and business consultant to AmeriData and a consultant to TCF Bank.
From 1987 through August 1990, Mr. Johnson was President and Chief Executive
Officer of Currentech, Inc. Mr. Johnson has extensive senior general management
and marketing experience with DatagraphiX, Anacomp, and Sperry Univac. Mr.
Johnson is a graduate of Mankato State University.
Mr. Flies is the founder, Chief Technical Officer, Secretary, and a
principal shareholder of XATA. Mr. Flies served as Chief Executive Officer of
the Company from inception until December 13, 1993. Mr. Flies also founded
Datakey, Inc. and served as its Chief Executive Officer from 1978 to 1984 and as
its Chairman from 1978 to 1991. While at Datakey, Inc., he was granted numerous
U.S. and foreign patents in portable data electronics. From 1969 to 1978, he was
with Technalysis Corporation, a computer consulting firm, as Vice President of
Systems Products, and as President of KET, Inc. a subsidiary of Technalysis that
produced mainframe memory and peripheral subsystems. Mr. Flies joined Univac in
1964 after receiving a bachelor of arts degree with majors in mathematics and
physics and a minor in business administration from Mankato State University.
Mr. Featherstone joined the Company as Chief Financial Officer and
Treasurer in September 1995. Prior to joining the Company, Mr. Featherstone was
the Chief Financial Officer and Controller of Olympic Graphics, Inc., a
privately-owned commercial printer. Prior to joining Olympic Graphics, Inc. he
served from 1988 through 1992 as Manager of Administration and Controller of
Supervalu Stores, Inc./Plan Mark Division. Mr. Featherstone has extensive senior
management and financing experience with Control Data Corporation, Gabberts,
Inc., and National Computer Systems, Inc., among others. Mr. Featherstone is a
graduate of the Massachusetts Institute of Technology and Carleton College and
has a masters degree in business administration from the University of Michigan.
During the year ended September 30, 1996, the Board of Directors met
four times and otherwise conducted business by unanimous written action.
Committees of the Board generally meet immediately prior to or after meetings of
the Board of Directors. No director attended fewer than 75% of the meetings of
the Board of Directors or fewer than 75% of the meetings of the Board committees
on which he served.
DIRECTOR COMPENSATION
Non-employee directors receive $5,000 annually and the Chairman
receives an additional $3,000 annually, to serve on the Board of Directors. In
addition, each non-employee director, upon first election to the Board and
annually thereafter upon re-election, receives a five-year non-qualified option
to purchase 2,000 shares of Common Stock pursuant to a nondiscretionary grant
under the Company's 1991 Long-Term Incentive and Stock Option Plan (the
"Incentive Plan"). For a discussion of the terms of the Incentive Plan and of
these options, see "Amendment of Terms of Grants to Non-Employee Directors"
under PROPOSALS 2 AND 3, herein. Each director is reimbursed by the Company for
his actual out-of-pocket expenses for telephone, travel, and miscellaneous items
incurred on behalf of the Company.
BOARD COMMITTEES
The Board of Directors has established an Audit Committee, a
Compensation Committee, and a Stock Option Committee. During the fiscal year
ended September 30, 1996, each committee was comprised of all non-employee
members, as follows:
AUDIT COMMITTEE COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
--------------- ---------------------- ----------------------
Edward T. Michalek* Edward T. Michalek Roger W. Kleppe*
Roger W. Kleppe Roger W. Kleppe Stephen A. Lawrence
Stephen A. Lawrence Stephen A. Lawrence*
- -----------------------
* Chairman
The purpose of the Audit Committee is to (1) annually select a firm of
independent public accountants as auditors of the books, records and accounts of
the Company; (2) review the scope of audits made by the independent public
accountants; and (3) receive and review the audit reports submitted by the
independent public accountants and take such action in respect of such reports
as the Audit Committee may deem appropriate to assure that the interests of the
Company are adequately protected.
The purpose of the Compensation Committee is to annually review and
approve management's overall compensation plan for the Company's employees,
excluding officers. The Committee also approves all incentive plans and sets
officer annual salaries and incentives, including cash and noncash remuneration.
The Compensation Committee also makes recommendations to the Stock Option
Committee with respect to stock options and awards which may be included in the
compensation set for each individual.
The purpose of the Stock Option Committee is to administer and
interpret the 1991 Long-Term Incentive and Stock Option Plan, as amended.
EXECUTIVE COMPENSATION
The following table sets forth information about all compensation (cash
and noncash) awarded to, earned by, or paid to each executive officer with
compensation in excess of $100,000 (the "Named Executive Officers") pursuant to
a plan or contract or otherwise during fiscal years ended September 30, 1996,
1995, and 1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- ------------
Restricted All Other
Other Annual Stock Compen-
Name & Principal Position Year Salary ($) Bonus ($) Compensation Awards ($) Options (#) sation ($)
------------------------- ---- ---------- --------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis R. Johnson 1996 150,000 194,432(1) -0- -0- -0- -0-
Chief Executive Officer 1995 151,250 206,688(1) -0- -0- 100,000 -0-
1994 63,874 32,954(2) 32,954(3) 32,954(4) 100,000 -0-
William F. Flies 1996 125,000 75,000(1) -0- -0- -0- -0-
Chief Technical Officer 1995 125,211 70,214(1) -0- -0- 16,667 -0-
1994 70,123 -0- 24,877(3) 24,877(4) -0- -0-
</TABLE>
(1) Represents formula-based incentive compensation.
(2) Represents bonus award of restricted stock at $3.00 per share, which
was market value on date of issue.
(3) Represents deferred cash compensation related to reductions in payment
of salary from January 24, 1994 through May 1, 1994 which was paid
during the fiscal year ended September 30, 1996
(4) Represents restricted shares of Common Stock issued in lieu of salaries
at $3.00 per share, which was market value on date of issue. All of the
restricted shares vested and became freely transferable as of November
1, 1994.
The Company has a compensation agreement with Dennis R. Johnson, its
President and Chief Executive Officer, which provides, in summary, for (i) base
compensation for each of the fiscal years ended September 30, 1995 and 1996 of
$150,000, plus incentive bonuses based on revenue and pre-tax income achieved by
the Company for fiscal 1995 and on pre-tax income for fiscal 1996, (ii) grant of
options for purchase of 100,000 shares of Common Stock at fair market value
under the Incentive Plan (which options have been granted), and (iii) $250,000
in severance pay, over a period of 12 months, in the event of termination of his
employment for any reason other than "cause." In addition, the agreement
provides that the Company shall not materially alter his duties to duties other
than generally performed by a chief executive officer. This agreement has been
extended through 1997.
The Company's employment agreement with William P. Flies, its Chief
Technical Officer, provides, in summary, for (i) a base annual salary of
$125,000, plus incentive bonuses based on pre-tax income achieved by the
Company, and (ii) grant of options to purchase 16,667 shares of Common Stock at
110% of fair market value (which options have been granted). In addition, the
agreement contains provisions which prohibit the Company from materially
altering his duties and which allow him to terminate the agreement and receive
salary compensation if there is a change in control of the Company. The term of
Mr. Flies' agreement automatically renews annually on February 11 unless
terminated by the Company for cause or by Mr. Flies upon 60 days' prior notice.
The Company also has an agreement with its Chief Financial Officer,
Robert M. Featherstone, for payment of cash incentive bonuses in fiscal 1996 and
1997 based on the pre-tax earnings of the Company for that fiscal year. Except
for its agreements with Messrs. Johnson, Flies, and Featherstone, the Company
does not currently have any agreements or any plan for payment of bonus
compensation to executive officers. However, the Company has a plan for cash
incentive bonuses to other management personnel based on pre-tax income achieved
by the Company and the Board of Directors retains the authority to provide
discretionary bonuses. Executive officers, as well as all other employees and
non-employee directors, are also eligible for various stock based awards,
including options, under the Company's Incentive Plan, described below.
401(k) PROFIT SHARING PLAN
During 1993, the Company adopted a 401(k) Profit Sharing Plan (the
"401(k) Plan"). In general, employees who are at least age 20 are eligible to
contribute up to 15% of annual pay to the 401(k) Plan, subject to certain
limitations, and to direct the investment of those funds in up to four
professionally managed investment funds. Employees cannot invest in the
Company's securities through the 401(k) Plan. The 401(k) Plan allows for Company
contributions to the 401(k) Plan (at the discretion of the Board of Directors)
based upon profit. An employee's account balance is fully vested immediately.
The Company made no contributions to the 401(k) Plan for 1995. The Company
intends to make a contribution for 1996 in the amount of $70,000 which will be
allocated among employees based upon their respective gross salaries for the
calendar year, provided that salaries in excess of $80,000 shall not be
considered in the allocation formula.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Executive officers, directors and greater than ten
percent beneficial owners are required by the SEC to furnish the Company with
copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the
Company, the Company believes that during the current fiscal year, to date, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent beneficial owners were complied with. The
Company's executive officers, directors, and ten percent beneficial holders were
not subject to the requirements of Section 16(a) during the fiscal year ended
September 30, 1996.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 302A.521, Minnesota Statutes, the Company is required to
indemnify its directors, officers, employees, and agents against liability under
certain circumstances, including liability under the Securities Act of 1933, as
amended (the "Act"). Article V of the Company's Bylaws contain substantially
similar provisions and, in addition, specifically authorize adoption of
agreements for indemnification to the extent permitted by statute and purchase
of insurance to meet the Company's indemnification obligation. The Company
currently has no such insurance and has not adopted any agreements for
indemnification. The general effect of such provisions is to relieve the
directors and officers of the Company from personal liability which may be
imposed for certain acts performed in their capacity as directors or officers of
the Company, except where such persons have not acted in good faith.
As permitted under Minnesota Statutes, the Articles of Incorporation of
the Company provide that directors shall have no personal liability to the
Company or to its shareholders for monetary damages arising from breach of the
director's duty of care in the affairs of the Company. Minnesota Statutes do not
permit elimination of liability for breach of a director's duty of loyalty to
the Company or with respect to certain enumerated matters, including payment of
illegal dividends, acts not in good faith, and acts resulting in an improper
personal benefit to the director.
PROPOSALS 2 AND 3
AMENDMENT OF 1991 LONG-TERM
INCENTIVE AND STOCK OPTION PLAN
GENERAL INFORMATION AND AMENDMENT TO INCREASE AUTHORIZED SHARES
The Board of Directors believes that the Company's policy of
encouraging stock ownership by its employees through the granting of restricted
stock awards, stock options and other sorts of stock-based compensation has been
and will be a significant factor in its growth and success by enhancing the
Company's ability to retain and attract such employees. The Incentive Plan is
the primary vehicle for implementation of this policy. The Board has adopted,
and proposes that the shareholders approve, an amendment to the Incentive Plan
to increase the number of shares of Common Stock reserved under the Incentive
Plan from 650,000 to 875,000.
As a result of the prior grant of options and restricted stock awards
to employees of the Company, the number of shares currently available for grant
under the Plan has been reduced to 105,000. The number of option grants during
the last twelve months has been significant, principally due to the Company's
acquisition of two businesses (Payne & Associates and Key Logistics, Inc.).
Moreover, the Company believes that additional strategic acquisitions may be
completed in the future. In each case, new employees joining the Company have
been offered, and in the future may be offered, options under the Incentive
Plan. The Board of Directors believes that every employee should receive an
option to purchase Common Stock as a performance incentive and that maintaining
the Incentive Plan for this purpose is vital.
On June 4, 1991, the Board of Directors adopted, and on December 4,
1991, the shareholders ratified the Incentive Plan and reserved 266,666 shares
of Common Stock for issuance upon exercise of options and grant of awards. The
number of shares reserved was increased by 166,667 shares, to a total of
433,333, by resolution of the Board of Directors and by the shareholders of the
Company effective March 23, 1995. On October 20, 1995, the Board of Directors
increased the number of shares reserved for issuance to 650,000, and amended the
Incentive Plan to provide automatic pre-determined annual option grants to
non-employee directors, in each case subject to ratification by the
shareholders. These amendments were ratified by the shareholders of the Company
at the annual meeting on February 22, 1996. On November 19, 1996, the Board
voted to increase the number of authorized shares from 650,000 to 875,000 and to
present this amendment to the shareholders for ratification at the annual
meeting on February 20, 1997.
Options granted under the Incentive Plan may be either "incentive"
options intended to qualify for favorable tax treatment under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or non-qualified options.
Awards granted under the Plan may be stock appreciation rights ("SARs"),
restricted stock or performance awards, as defined in the Incentive Plan.
Incentive stock options may be granted to any full or part-time employee of the
Company or any of its present and future subsidiary corporations. Options which
do not qualify as incentive stock options, as well as SARS, restricted stock or
performance awards under the Plan may be granted to both employees and
non-employees who provide services to the Company.
As of September 30, 1996, 82,522 shares had been issued pursuant to
option exercises or restricted stock awards under the Incentive Plan and options
to purchase an additional 447,183 shares were outstanding under the Incentive
Plan, all of which were granted at or above the market price of the Common Stock
at the time of grant. During the fiscal year ended September 30, 1996, Roger W.
Kleppe and Stephen A. Lawrence, the two non-employee directors added to the
Board in September 1995, each received non-qualified options to purchase an
aggregate of 6,667 shares (one 4,667 share option and one 2,000 share option),
all exercisable at market value at the date of grant. Edward T. Michalek, a
non-employee director and Chairman of the Board, also received a 2,000 share
option exercisable at market value. The 2,000 share options issued to Messrs.
Lawrence, Kleppe, and Michalek were automatic non-discretionary grants pursuant
to the Incentive Plan.
During the fiscal year ended September 30, 1995, Dennis R. Johnson was
granted a five-year incentive option to purchase an aggregate of 100,000 shares
of Common Stock exercisable at $8.43 per share, and William P. Flies was granted
a five-year incentive option to purchase 16,667 shares of Common Stock at $9.27
per share. The average per share exercise price of all options outstanding is
$5.95. In general, options are exercisable for a period of up to five years from
the date of grant and vest over a period of up to three years from the date of
grant.
Except as discussed below with respect to Non-Employee Directors, as
described below, the Incentive Plan is administered by a committee of the Board
consisting of Mr. Kleppe and Mr. Lawrence. The Committee has the authority: (i)
to establish rules for the administration of the Incentive Plan; (ii) to select
the participants in the Incentive Plan; (iii) to determine the types of grants
and awards and the number of shares covered; (iv) to set the terms and
conditions of such grants and awards; and (v) to determine under what
circumstances grants and awards may be canceled or suspended. Determination and
interpretations with respect to the Incentive Plan are in the sole discretion of
the Committee, whose determination and interpretations and binding on all
interested parties.
AMENDMENT TO TERMS OF GRANTS TO NON-EMPLOYEE DIRECTORS
Non-employee members of the Board of Directors receive an automatic
grant of options to purchase 2,000 shares upon initial election to the Board (an
"Initial Option") and annually thereafter, upon re-election to the Board (an
"Annual Option"). All such options granted are "non-qualified" options which do
not meet the requirements of Section 422 of the Code. This aspect of the
Incentive Plan is administered by the President and Chief Financial Officer, but
the administrators have no authority to select recipients, select the date of
grant of options, the number of option shares, or the exercise price, or to
otherwise prescribe the particular form or conditions of any option granted.
Each Initial Option and each Annual Option is exercisable at a price per share
equal to the fair market value of the Common Stock as of the date of grant.
Options become exercisable in cumulative installments of one-twelfth (1/12) of
the total number of shares subject to the option on the last day of each
calendar month, commencing with the month in which the option is granted, and
are exercisable for a period of 5 years from the date of grant. If a
non-employee director ceases to be a member of the Board by reason of death or
total disability and has served as a director for at least 12 continuous months
since the date of the grant, the option will become immediately exercisable in
full, and remains exercisable, by the optionee or the person or persons to whom
the non-employee director's right under the option pass by will or applicable
law, or if no such person has such right, by the executors or administrators of
the non-employee director, for the remaining term of the option. If the
non-employee director ceases to be a member of the Board for any other reason,
the option will remain exercisable, to the extent that it was exercisable on the
date such non-employee director ceased to be a member of the Board, for the
remaining term of the option, but no further vesting of the option shall occur.
Currently, the Incentive Plan provides that each non-employee director
elected to the Board shall receive, on the date of first election, an option to
purchase 2,000 shares of Common Stock and shall receive an additional option
grant for 2,000 shares on the first anniversary of the initial grant, assuming
that the director is still a member of the Board of Directors at that time. For
administrative simplicity, it is recommended that the Incentive Plan be amended
to provide that the automatic option grants for continuing directors shall be on
the date of re-election to the Board.
RESALES
All shares currently reserved for issuance and all shares which have
been issued upon exercise of options or awards granted under the Incentive Plan
have been registered under the Securities Act of 1933, as amended (the "Act")
and are freely tradable, subject to compliance with Rule 144 under the Act in
the case of holders who are officers, directors, or principal shareholders of
the Company.
SUMMARY OF OPTION GRANTS
OPTIONS GRANTS IN LAST FISCAL YEAR
There were no grants of stock options to any Named Executive Officers
during the fiscal year ended September 30, 1996.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table contains information concerning exercises of stock
options during the last fiscal year and the value of options previously granted
under the Incentive Plan which were held by the Named Executive Officers at the
end of the fiscal year ended September 30, 1996.
<TABLE>
<CAPTION>
Value of Unexercised
Option Exercises Number of Securities Underlying In-the-Money Options at
----------------------------- Unexercised Options at FY-End(#) FY-End(1)
Shares -------------------------------- ---------------------------
Acquired on
Name Exercise(#) Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis R. Johnson -0- N/A 133,334 66,667 $647,006 $63,000
William P. Flies -0- N/A 5,556 11,111 $583 $1,167
</TABLE>
(1) The amounts set forth represent the difference between the closing
price of the Common Stock as quoted on the NASD's National Market on
September 30, 1996 and the exercise price of the options, multiplied by
the applicable number of shares underlying the options.
PROPOSAL 4
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed McGladrey & Pullen, LLP,
independent auditors, to audit the financial statements of the Company for the
fiscal year ending September 30, 1997. If the shareholders fail to ratify such
appointment, the Board of Directors will select another firm to perform the
required audit function. A representative of McGladrey & Pullen, LLP is expected
to be present at the shareholders meeting with the opportunity to make a
statement if such representative desires to do so and is expected to be
available to respond to appropriate questions.
PROPOSALS FOR FISCAL 1997 ANNUAL MEETING
It is currently anticipated that the next annual meeting, for the
fiscal year ending September 30, 1997 (the " 1997 Annual Meeting"), will be held
in mid-February, 1998. Shareholders who intend to submit proposals for inclusion
in the 1997 Proxy Statement and Proxy for shareholder action at the 1997 Annual
Meeting must do so by sending the proposal and supporting statements, if any, to
the Company at its corporate offices no later than October 1, 1997.
By Order of the Board of Directors
William P. Flies
Secretary
Dated: January 20, 1997
Burnsville, Minnesota
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB WILL BE SENT
WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: XATA
CORPORATION, ATTENTION: ROBERT M. FEATHERSTONE, CHIEF FINANCIAL OFFICER, 500
EAST TRAVELERS TRAIL, BURNSVILLE, MN 55337.
February 20, 1997
XATA CORPORATION
1991 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN, AS AMENDED
1991 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN, AS AMENDED
Table of Contents
-----------------
1. Purpose of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Stock Subject to Plan . . . . . . . . . . . . . . . . . . . . . . . 1
3. Administration of Plan. . . . . . . . . . . . . . . . . . . . . . . 1
4. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Exercise of Option or Award . . . . . . . . . . . . . . . . . . . . 4
8. Additional Restrictions . . . . . . . . . . . . . . . . . . . . . . 5
9. Alternative Stock Appreciation Rights . . . . . . . . . . . . . . . 5
10. Ten Percent Shareholder Rule. . . . . . . . . . . . . . . . . . . . 5
11. Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . 6
12. Restricted Stock Awards . . . . . . . . . . . . . . . . . . . . . . 6
13. Performance Awards. . . . . . . . . . . . . . . . . . . . . . . . . 7
14. Dilution or Other Adjustments . . . . . . . . . . . . . . . . . . . 7
15. Amendment or Discontinuance of Plan . . . . . . . . . . . . . . . . 8
16. Time of Granting. . . . . . . . . . . . . . . . . . . . . . . . . . 8
17. Income Tax Withholding and Tax Bonuses. . . . . . . . . . . . . . . 8
18. Effective Date and Termination of Plan. . . . . . . . . . . . . . . 8
19. Grant of Non-Employee Director Options. . . . . . . . . . . . . . . 9
19A. Terms and Conditions of Non-Employee Director Options . . . . . . . 9
1991 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN, AS AMENDED
1. PURPOSE OF PLAN.
This Plan shall be known as the "XATA 1991 LONG-TERM INCENTIVE AND STOCK OPTION
PLAN" and is hereinafter referred to as the "Plan". The purpose of the Plan is
to aid in maintaining and developing personnel capable of assuring the future
success of XATA Corporation, a Minnesota corporation (the "Company"), to offer
such personnel additional incentives to put forth maximum efforts for the
success of the business, and to afford them an opportunity to acquire a
proprietary interest in the Company through stock options and other long-term
incentive awards as provided herein. Options granted under this Plan may be
either incentive stock options ("Incentive Stock Options") within the meaning of
Section 422A of the Internal Revenue Code of 1986 (the "Code"), or options which
do not qualify as Incentive Stock Options. Awards granted under this Plan shall
be stock appreciation rights ("SARs"), restricted stock or performance awards as
hereinafter described.
2. STOCK SUBJECT TO PLAN.
Subject to the provisions of Section 14 hereof, the stock to be subject to
options or other awards under the Plan shall be the Company's authorized Common
Stock, par value $0.01 per share (the "Common Shares"). Such shares may be
either authorized but unissued shares, or issued shares which have been
reacquired by the Company. Subject to adjustment as provided in Section 14
hereof, the maximum number of shares on which options may be exercised or other
award issued under this Plan shall be 650,000 shares. If an option or award
under the Plan expires, or for any reason is terminated or unexercised with
respect to any shares, such shares shall again be available for options or
awards thereafter granted during the term of the Plan.
3. ADMINISTRATION OF PLAN.
(a) Except as provided in Section 3(b) or Section 3(e) hereof, the Plan
shall be administered by the Board of Directors of the Company or a committee
thereof. The members of any such committee shall be appointed by and serve at
the pleasure of the Board of Directors. If no committee is appointed by the
Board, the committee shall be comprised of all of the members of the Board of
Directors. (The group administering the Plan shall hereinafter be referred to as
the "Committee".)
(b) Notwithstanding Section 3(a) hereof, all option grants and awards
under this Plan to officers, directors and others who are subject to Section 16
under the Securities Exchange Act of 1934, as amended, and the rules of the
Securities and Exchange Commission promulgated thereunder, shall be made
exclusively by a committee (the "Disinterested Committee"). The Disinterested
Committee may be a subcommittee of the Committee and shall be comprised of at
least two members of the Board of Directors who have not received any option or
award under the Plan during the preceding 12 months. Such persons shall not be
eligible for option grants or awards while serving on the Disinterested
Committee. All references hereinafter to the "Committee" shall mean the
"Disinterested Committee" if the action to be taken in administration of the
Plan must be taken by the Disinterested Committee.
(c) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered by each option or award, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each, (iii) to determine
the form of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Shares of the Company or a combination
thereof, (iv) to determine the terms of exercise of each option and award, (v)
to accelerate the time at which all or any part of an option or award may be
exercised, (vi) to amend or modify the terms of any option or award with the
consent of the optionee, (vii) to interpret the Plan, (viii) to prescribe, amend
and rescind rules and regulations relating to the Plan, (ix) to determine the
terms and provisions of each option and award agreement under the Plan (which
agreements need not be identical), including the designation of those options
intended to be Incentive Stock Options, and (x) to make all other determinations
necessary or advisable for the administration of the Plan, subject to the
exclusive authority of the Board of Directors under Section 15 herein to amend
or terminate the Plan. The Committee's determinations on the foregoing matters,
unless otherwise disapproved by the Board of Directors of the Company, shall be
final and conclusive.
(d) The Committee may select one of its members as its Chairman and
shall holds its meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum. All determinations of the
Committee shall be made by not less than a majority of its members. Any decision
or determination reduces to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.
(e) Sections 19 and 19A of the Plan shall be administered by the
President and the Chief Financial Officer, whose construction and interpretation
of the terms and provisions of such Sections shall be final and conclusive;
provided that the numbers of Common Shares subject to options granted to
Non-Employee Directors (defined below) under Sections 19 and 19A, the timing of
the grants of such options (except as provided in Section 19), the eligibility
for such options, and the terms and conditions of such options, shall be
automatic and non-discretionary in accordance with the terms of such Sections.
4. ELIGIBILITY.
Incentive Stock options may only be granted under this Plan to any full
or part-time employee (which term as used herein includes, but is not limited
to, officers and directors who are also employees) of the Company and of its
present and future subsidiary corporations (herein called "subsidiaries"). Full
or part-time employees, non-employee members of the Board of Directors, and
non-employee consultants, agents or independent contractors to the Company or
one of its subsidiaries shall be eligible to receive options which do not
qualify as Incentive Stock Options and awards. For purposes of Sections 19 and
19A hereof, "Non-Employee Director," means any member of the Board of Directors
who is not at the time of option grant an employee of the Company. Members of
the Disinterested Committee shall not be eligible for any option grant or award
under the Plan while serving on said Disinterested Committee. In determining the
persons to whom options and awards shall be granted and the number of shares
subject to each, the Committee may take into account the nature of services
rendered by the respective employees or consultants, their present and potential
contributions to the success of the Company and such other factors as the
Committee in its discretion shall deem relevant. A person who has been granted
an option or award under this Plan may be granted additional options or awards
under the Plan if the Committee shall so determine; provided, however, that for
Incentive Stock Options, to the extent the aggregate fair market value
(determined at the time the Incentive Stock Option is granted) of the Common
Shares with respect to which all Incentive Stock Options are exercisable for the
first time by an employee during any calendar year (under all plans described in
subsection (d) of Section 422A of the Code of his employer corporation and its
parent and subsidiary corporations) exceeds $100,000, such options shall be
treated as options which do not qualify as Incentive Stock Options. Nothing in
the Plan or in any agreement thereunder shall confer on any employee any right
to continue in the employ of the Company or any of its subsidiaries or affect,
in any way, the right of the Company or any of its subsidiaries to terminate his
or her employment at the time.
5. PRICE.
The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Shares at the date of grant of such option. The
option price for options granted under the Plan which do not qualify as
Incentive Stock Options and, if applicable, the price for all awards shall also
be determined by the Committee and may be other than 100% of the fair market
value of the Common Shares. For purposes of the preceding sentence and for all
other valuation purposes under the Plan, the fair market value of the Common
Shares shall be as reasonably determined by the Committee. If on the date of
grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.
6. TERM.
Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.
7. EXERCISE OF OPTION OR AWARD.
(a) The Committee shall have full and complete authority to determine
whether an option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in such
installments, upon the occurrence of such events (such as termination of
employment for any reason) and at such times during the term of the option as
the Committee may determine and specify in the option or award agreement.
(b) The exercise of any option or award granted hereunder shall only be
effective at such time that the sale of Common Shares pursuant to such exercise
will not violate any state or federal securities or other laws.
(c) An optionee or grantee electing to exercise an option or award
shall give written notice to the Company of such election and of the number of
shares subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise. Payment shall be made to the Company in
cash (including bank check, certified check, personal check, or money order),
or, at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company's Common Shares already owned by the
optionee or grantee having a fair market value as of the date of grant equal to
the full purchase price of the shares, (ii) by delivering a combination of cash
and such shares, or (iii) by delivering (including by fax) to the Company or its
designated agent an executed irrevocable option exercise form together with
irrevocable instructions to a broker-dealer to sell or margin the Common Shares
and deliver the sale or margin loan proceeds directly to the Company to the
extent required to pay the option exercise price.
(d) The fair market value of the Common Shares which are tendered in
payment of the exercise price shall be determined as provided in Section 5
herein.
(e) Until such person has been issued the shares subject to such
exercise, he or she shall possess no rights as a shareholder with respect to
such shares.
8. ADDITIONAL RESTRICTIONS.
The Committee shall have full and complete authority to determine
whether all or any part of the Common Shares of the Company acquired upon
exercise of any of the options or awards granted under the Plan shall be subject
to restrictions on the transferability thereof or any other restrictions
affecting in any manner the optionee's or grantee's rights with respect thereto,
but any such restriction shall be contained in the agreement relating to such
options or awards.
9. ALTERNATIVE STOCK APPRECIATION RIGHTS.
(a) Grant. At the time of grant of an option or award under the Plan
(or at any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.
(b) Exercise. An SAR shall be exercised by the delivery to the Company
of a written notice which shall state that the holder thereof elects to exercise
his or her SAR as to the number of shares specified in the notice and which
shall further state what portion, if any, of the SAR exercise amount
(hereinafter defined) the holder thereof requests be paid to in cash and what
portion, if any, is to be paid in Common Shares of the Company. The Committee
promptly shall cause to be paid to such holder the SAR exercise amount either in
cash, in Common Shares of the Company, or any combination of cash and shares as
the Committee may determine. Such determination may be either in accordance with
the request made by the holder of the SAR or in the sole and absolute discretion
of the Committee. The SAR exercise amount is the excess of the fair market value
of one share of the Company's Common Shares on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company's shares shall be determined as provided in
Section 5 herein.
10. TEN PERCENT SHAREHOLDER RULE.
Notwithstanding any other provision in the Plan, if at the time an
option is granted pursuant to the Plan the optionee owns directly or indirectly
(within the meaning of Section 425(d) of the Code) Common Shares of the Company
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or its parent or subsidiary corporations, if any
(within the meaning of Section 422A(b)(6) of the Code), then any Incentive Stock
Option to be granted to such optionee pursuant to the Plan shall satisfy the
requirements of Section 422A(c)(6) of the Code, and the option price shall be
not less than 1 10% of the fair market value of the Common Shares of the Company
determined as described herein, and such option by its terms shall not be
exercisable after the expiration of five (5) years from the date such option is
granted.
11. NON-TRANSFERABILITY.
No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option shall be exercisable
only by such optionee or grantee.
12. RESTRICTED STOCK AWARDS.
Awards of Common Shares subject to forfeiture and transfer restrictions may be
granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:
(a) Grant of Restricted Stock Awards. Each restricted stock award made
under the Plan shall be for such number of Common Share as shall be determined
by the Committee and set forth in the agreement containing the terms of such
restricted stock award. Such agreement shall set forth a period of time during
which the grantee must remain in the continuous employment of the Company in
order for the forfeiture and transfer restrictions to lapse. If the Committee so
determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Shares to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.
(b) Delivery of Common Shares and Restrictions. At the time of a
restricted stock award, a certificate representing the number of Common Shares
awarded thereunder shall be registered in the name of the grantee. Such
certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of
the Plan, and shall bear such a legend setting forth the restrictions imposed
thereon as the Committee, in its discretion, may determine. The grantee shall
have all rights of a shareholder with respect to the Common Shares, including
the right to receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to delivery of the
stock certificate until the expiration of the restricted period and the
fulfillment of any other restrictive conditions set forth in the restricted
stock agreement with respect to such Common Shares; (ii) none of the Common
Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of during such restricted period or until after the
fulfillment of any such other restrictive conditions; and (iii) except as
otherwise determined by the Committee, all of the Common Shares shall be
forfeited and all rights of the grantee to such Common Shares shall terminate,
without further obligation on the part of the Company, unless the grantee
remains in the continuous employment of the Company for the entire restricted
period in relation to which such Common Shares were granted and unless any other
restrictive conditions relating to the restricted stock award are met. Any
Common Shares, any other securities of the Company and any other property
(except for cash dividends) distributed with respect to the Common Shares
subject to restricted stock awards shall be subject to the same restrictions,
terms and conditions as such restricted Common Shares.
(c) Termination of Restrictions. At the end of the restricted period
and provided that any other restrictive conditions of the restricted stock award
are met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in the agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Shares subject thereto,
and a stock certificate for the appropriate number of Common Shares, free of the
restrictions and the restricted stock legend, shall be delivered to the grantee
or his beneficiary or estate, as the case may be.
13. PERFORMANCE AWARDS.
The Committee is further authorized to grant Performance awards.
Subject to the terms of this Plan and any applicable award agreement, a
Performance award granted under the Plan (i) may be denominated or payable in
cash, Common Shares (including, without limitation, restricted stock), other
securities, other awards, or other property and (ii) shall confer on the holder
thereof rights valued as determined by the Committee, in its discretion, and
payable to, or exercisable by, the holder of the Performance awards, in whole or
in part, upon the achievement of such performance goals during such performance
periods as the Committee, in its discretion, shall establish. Subject to the
terms of this Plan and any applicable award agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance award granted, and the amount of any payment or
transfer to be made by the granter and by the Company under any Performance
award shall be determined by the Committee.
14. DILUTION OR OTHER ADJUSTMENTS.
If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.
15. AMENDMENT OR DISCONTINUANCE OF PLAN.
The Board of Directors may amend or discontinue at any time. Subject to
the provisions of Section 14 no amendment of the Plan, however, shall without
shareholder approval: (i) increase the maximum number of shares under the Plan
as provided in Section 2 herein,(ii) decrease the minimum price provided in
Section 5 herein, (iii) extend the maximum term under Section 6, or (iv) modify
the eligibility requirements for participation in the Plan. The Board of
Directors shall not alter or impair any option or award theretofore granted
under the Plan without the consent of the holder of the option or award.
16. TIME OF GRANTING.
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board of Directors or by the shareholders of the Company, and no
action taken by the Committee or the Board of Directors (other than the
execution and delivery of an option or award agreement), shall constitute the
granting of an option or award hereunder.
17. INCOME TAX WITHHOLDING AND TAX BONUSES.
(a) In order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal or state payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of an optionee or
grantee under the Plan, are withheld or collected from such optionee or grantee.
In order to assist an optionee or grantee in paying all federal and state taxes
to be withheld or collected upon exercise of an option or award which does not
qualify as an Incentive Stock Option hereunder, the Committee, in its absolute
discretion and subject to such additional terms and conditions as it may adopt,
shall permit the optionee or grantee to satisfy such tax obligation by (i)
electing to have the Company withhold a portion of the shares otherwise to be
delivered upon exercise of such option or award with a fair market value,
determined in accordance with Section 5 herein, equal to such taxes or (ii)
delivering to the Company Common Shares other than the shares issuable upon
exercise of such option or award with a fair market value, determined in
accordance with Section 5, equal to such taxes.
(b) The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionee or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payment shall be determined by
the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.
18. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) The Plan was approved by the Board of Directors on June 4, 1991 and
by the shareholders of the Company on December 4, 1991.
(b) Unless the Plan shall have been discontinued as provided in Section
14 hereof, the Plan shall terminate June 3, 2001. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
19. GRANT OF NON-EMPLOYEE DIRECTOR OPTIONS.
This Section 19 and Section 19A shall govern all option grants to
Non-Employee Directors of the Company; provided, however, that the other terms
and conditions of the Plan shall apply to the extent that they do not conflict
with the express terms of Sections 19 and 19A. Subject to shareholder
ratification of the amendment of the Plan adding Sections 3(e), 19, and 19A,
each Non-Employee Director elected to the Board on or after the date of the
annual meeting of shareholders held in 1996 shall, on the date of such election,
automatically be granted an option to purchase 2,000 Common Shares. On each date
of re-election to the Board by the shareholders at an annual meeting, a
Non-Employee Director shall automatically be granted an additional Option to
purchase 2,000 Common Shares. Notwithstanding the foregoing, if on the scheduled
grant date, the President determines, in his discretion, that the Company is in
possession of material, undisclosed information, then the grant of options will
be suspended until the third day after public dissemination of such information.
The President may only suspend the grant; the amount and other terms of the
grant will remain as set forth in the Plan, with the exercise price of the
option to be determined in accordance with the Plan on the date the option is
finally granted.
19A. TERMS AND CONDITIONS OF NON-EMPLOYEE DIRECTOR OPTIONS.
Each option granted under Section 19 of this Plan to a Non-Employee
Director shall be evidenced by an agreement, in a form approved by the
President. Such agreement shall contain the following terms and conditions:
(a) Term. Each option granted under Section 19 to a Non-Employee
Director shall have a term of five years and shall be restricted from sale,
assignment or other transfer for a period of six months from the date of grant.
No shares of Common Stock issued upon the exercise of an option may be sold or
otherwise disposed of until six months after the later of the date of grant of
the option or the approval of the provisions of Sections 19 and 19A of the Plan
by the shareholders.
(b) Exercise Price. The exercise price per share of options granted
under Section 19 shall be 100% of the fair market value of one Share on the date
of grant. For these purposes, "fair market value" shall mean the average of the
reported high and low sale prices of the Common Shares, as reported on the
Nasdaq National Market on the date of grant.
(c) Vesting and Termination of Options. Options granted under Section
19 shall become exercisable in cumulative installments of one-twelfth (1/12) of
the total number of shares subject to the option on the last day of each
calendar month, commencing with the month in which the option is granted. If a
Non-Employee Director ceases to be a member of the Board by reason of death or
total disability and has served as a director for at least 12 continuous months
since the date of the grant, the option will become immediately exercisable in
full, and shall remain exercisable, by the optionee or the person or persons to
whom the Non-Employee Director's right under the option shall pass by will or
applicable law, or if no such person has such right, by the executors or
administrators of the Non-Employee Director, for the remaining term of the
option. If the Non-Employee Director ceases to be a member of the Board for any
other reason, the option will remain exercisable, to the extent that it was
exercisable on the date such Non-Employee Director ceased to be a member of the
Board, for the remaining term of the option, but no further vesting of the
option shall occur.
(d) Compliance with SEC Regulations. It is the Company's intent that
the provisions of Sections 19 and 19A comply in all respects with Section 16 of
the Securities Exchange Act of 1934 (the "1934 Act") and any regulations
promulgated thereunder, including Rule 16b-3. If any provision of Section 19 or
19A is found not to be in compliance with the Rule, the provision shall be
deemed null and void. All grants and exercises of options granted under Section
19 shall be executed in accordance with the requirements of Section 16 of the
1934 Act, as amended, and any regulations promulgated thereunder.
(e) Non-qualified Options. All options granted pursuant to this Section
19A shall be non-qualified options which are not intended to be, and do not
qualify as, incentive stock options described in Section 422 of the Internal
Revenue Code of 1986, as amended.
(f) Miscellaneous. Except as provided in the Plan, no Non-Employee
Director shall have any claim or right to be granted an option under the Plan.
Neither the Plan or any action hereunder shall be construed as giving any
director any right to be retained in the service of the Company.
XATA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated January 20, 1997, hereby appoints each of Dennis R. Johnson and
Robert M. Featherstone as proxy, with full power of substitution, to vote all of
the shares of Common Stock which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of XATA Corporation to
be held on Thursday, February 20, 1997 at 4:00 p.m. at the Minneapolis Marriott
City Center, 30 South Seventh Street, Minneapolis, Minnesota, or at any
adjournment thereof, upon any and all matters which may properly be brought
before the meeting or adjournment thereof, hereby revoking all former proxies.
1. Election of Directors duly nominated:
DENNIS R. JOHNSON, WILLIAM P. FLIES, EDWARD T. MICHALEK,
STEPHEN A. LAWRENCE, AND ROGER W. KLEPPE
[ ] FOR [ ] WITHHELD FOR ALL [ ] WITHHOLD FOR THE FOLLOWING ONLY
(Write the nominee's name in space
below):
________________________________________________________________________________
2. Ratification of amendment to 1991 Long-Term Incentive and Stock Option Plan
to increase the number of shares of Common Stock reserved for issuance
under the Plan from 650,000 to 875,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of amendment to 1991 Long-Term Incentive and Stock Option Plan
to amend the date of automatic grant of options to non-employee Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(MUST BE SIGNED ON OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
4. Ratification of appointment of McGladrey & Pullen, LLP as the independent
auditors of the Company for the year ending September 30, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. The authority to vote, in his discretion, on all other business that may
properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH NOMINEE, FOR THE ADOPTION OF PROPOSALS 2, 3 AND 4, AND IN THE
DISCRETION OF THE PROXY HOLDER ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE SIGN exactly as name appears below. When shares are held by joint
tenants, both should sign. If signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
Dated: ___________________________, 19___
_________________________________________
(Signature)
_________________________________________
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
