XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MN 55337
(612) 894-3680
-----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 17, 1999
-----------------------------------------
To the Shareholders of XATA Corporation:
The Annual Meeting of Shareholders of XATA Corporation (the
"Company) will be held on February 17, 1999, at 4:00 p.m., at the Minneapolis
Marriott City Center, 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 2000.
(2) 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, 1999.
(3) 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 December
21, 1998 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
/s/ William P. Flies
January 13, 1999 William P. Flies
SECRETARY
2
<PAGE>
XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MN 55337
(612) 894-3680
-----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 17, 1999
----------------------------------
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 17, 1999, to be held at
the Minneapolis Marriott City Center, 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 the appointment of McGladrey &
Pullen, LLP as independent auditors of the Company; and (c) 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 18, 1999.
A copy of the Company's Report on Form 10-KSB for the fiscal year
ended September 30, 1998, is enclosed herewith but is not considered a part of
the proxy solicitation material. This Report describes the financial condition
of the Company as of September 30, 1998. The Company's customary Annual Report
to Shareholders will be mailed to shareholders in February, 1999.
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
<PAGE>
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 December 21, 1998, 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
4,418,133 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. There is no right of cumulative
voting. 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. All matters being
voted upon by the shareholders require a majority vote of the shares present at
the Annual Meeting either in person or by proxy, and entitled to vote on that
matter (but in no event less than a majority of a quorum, or 25.5% of the shares
issued and outstanding).
Shares voted as abstentions 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. 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. (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.) 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.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH
NOMINEE FOR DIRECTOR NAMED HEREIN 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 21, 1998 the record
and beneficial ownership of Common Stock held by (i) 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 executive officer; and (iv)
all executive officers and directors of the Company
<PAGE>
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 21, 1998 includes the
number of shares which such person has the right to acquire within sixty (60)
days after such date.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES OWNED PERCENTAGE
---------------- ------------ ----------
<S> <C> <C>
William (1)(2) and Linda Flies, JT
151 East Cliff Road, Suite 10
Burnsville, MN 55337 1,119,152(3)(5) 25.3%
Dennis R. Johnson (1)(2)
151 East Cliff Road, Suite 10
Burnsville, MN 55337 258,668(5) 5.9%
Stephen A. Lawrence (1)(2)
3154 North Service Drive
Red Wing, MN 55066 21,649(5) *
Roger W. Kleppe (1)(2)
2901 Mead Court
Burnsville, MN 55337 20,849(5) *
Carl M. Fredericks(1)(2)
4275 Executive Square
Suite 350
La Jolla, CA 92037 29,766(4)(5) *
William J. Callahan
151 East Cliff Road, Suite 10
Burnsville, MN 55337 18,807(5) *
Gary C. Thomas
151 East Cliff Road, Suite 10
Burnsville, MN 55337 2,684 *
All executive officers and current directors as a
group (7 persons) 1,471,575(5) 33.3%
<FN>
- -------------------
* indicates ownership of less than 1%.
(1) Currently a director.
(2) Nominee for re-election as director
(3) Shares held of record by: William and Linda Flies, JT - 100,000
shares; William P. Flies Revocable Trust - 482,505 shares; and Linda
Berg Flies Revocable Trust - 519,980 shares.
3
<PAGE>
(4) Shares held of record by: Carl M. Fredericks, Trustee, Revocable
Trust dated November 24, 1976, Carl M. Fredericks, Grantor - 7,000
shares; Carl M. Fredericks, Individual retirement Account - 8,000
shares.
(5) Includes shares of Common Stock issuable upon exercise of currently
exercisable options and warrants held by named person as follows:
William P. Flies - 16,667 shares; Dennis R. Johnson - 242,668
shares; Stephen A. Lawrence - 20,849 shares; Roger W. Kleppe -
20,849 shares; Carl M. Fredericks - 14,766 shares; William J.
Callahan - 16,667 shares; and all officers and directors as a group
- 332,466 shares.
</FN>
</TABLE>
MANAGEMENT
DIRECTORS AND OFFICERS
The current directors and executive officers of the Company are as
follows:
Name Age Position
---- --- --------
Dennis R. Johnson 54 Chief Executive Officer,
President and Director
William P. Flies 56 Chief Technical Officer,
Secretary and Director
William J. Callahan 43 Chief Operating Officer
Gary C. Thomas 53 Chief Financial Officer and
Treasurer
Stephen A. Lawrence 55 Chairman of the Board
of Directors
Roger W. Kleppe 48 Director
Carl M. Fredericks 54 Director
- --------------------
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
4
<PAGE>
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. Callahan joined the Company as Chief Operating Officer in
November 1997, and is principally responsible for managing the Company's product
development process, including the operational sectors that center around
hardware and software development, technical support and service, logistics,
quality assurance for XATA Enterprise Technologies. Immediately prior to joining
the Company, Mr. Callahan was the division director and general manager of the
Tripmaster Division ("Tripmaster") of Rockwell International, Inc. ("Rockwell")
where he was responsible for integration of onboard computers with Global
Positioning System technology. Before becoming director and general manager of
Tripmaster in 1995, Mr. Callahan served as director of Land Transportation
Electronics and Market Development for Rockwell, a business involving multi-mode
communications radios and dispatch integration systems, including Rockwell's
Mobile Communication Satellite System (MCSS). From 1992 to 1994, Mr. Callahan
was director of finance for Land Transportation Electronics at Rockwell. In
other management positions at Rockwell, which he joined in 1982, Mr. Callahan
served as a financial analyst and accounting manager, manager of finance and
administration for Avionics Systems and manager of financial planning and
control for Rockwell's Collins Avionics and Communications Division. Mr.
Callahan holds a bachelor's degree in political science from Regis University,
Denver, and a master's degree in business administration from American
University in Washington, D.C.
Mr. Thomas joined the Company in August 1996 to assist in the
transition of the Payne & Associates and Key Logistics acquisitions. He was
moved to Director of Sales Support in May 1997 and replaced Robert Featherstone
as Chief Financial Officer in August 1998. Prior to joining the Company, Mr.
Thomas was Vice President of Administration and Chief Financial Officer for
Computer Petroleum Corporation. Mr. Thomas holds a bachelor's degree in business
from the University of Nebraska.
See "ELECTION OF DIRECTORS" for biographical information concerning
Messrs. Lawrence, Kleppe, and Fredericks.
5
<PAGE>
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.
During fiscal 1999, each non-employee director has elected to receive quarterly,
in lieu of the cash fee, a five (5) year warrant to purchase Common Stock of the
Company, in an amount equal to the fee, valued at the then current market price
as quoted on the Nasdaq National Market. The warrants will be exercisable at a
price equal to 80% of the closing market price as of the date of issuance. On
December 11, 1998, each non-employee director received a five (5) year warrant
for 6,016 shares exercisable at $1.23, representing the fee, as described above
plus 5,000 shares for the first quarter of fiscal 1999 in recognition of the
extra ordinary efforts and time expended by the Board during the quarter.
In addition, pursuant to the Incentive Plan, each non-employee
director, following first election or re-election to the Board, receives on a
quarterly basis a five-year non-qualified option to purchase 1,250 shares of
Common Stock (i.e., 5,000 shares annually) pursuant to a non-discretionary grant
under the Company's 1991 Long-Term Incentive and Stock Option Plan (the
"Incentive Plan"). Each current non-employee director received a grant of
options for 1,250 shares on January 12, 1998, April 10, 1998, July 10, 1998,
October 12, 1998, and January 11, 1999 pursuant to the Incentive Plan.
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 MEETINGS AND COMMITTEES
During the year ended September 30, 1998, the Board of Directors met
8 times and otherwise conducted business by unanimous written action. Committees
of the Board generally meet immediately prior to and/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.
The Board of Directors has established an Audit Committee, a
Compensation Committee, and a Stock Option Committee. During the fiscal year
ended September 30, 1998, each committee was comprised of all non-employee
members, as follows:
AUDIT COMMITTEE COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
--------------- ---------------------- ----------------------
Carl M. Fredericks* Carl M. Fredericks Roger W. Kleppe*
Roger W. Kleppe Roger W. Kleppe * Stephen A. Lawrence
Stephen A. Lawrence Stephen A. Lawrence
- -------------------
* Chairman
6
<PAGE>
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 non-cash
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 Incentive Plan, except for the automatic option grant component of
the Incentive Plan.
EXECUTIVE COMPENSATION
The following table sets forth information about all compensation
(cash and non-cash) awarded to, earned by, or paid to each executive officer
with compensation in excess of $100,000 (the "Named Executive Officers")
pursuant to a plan or contract or otherwise during fiscal years ended September
30, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Restricted All Other
Other Annual Stock Compen-
Name & Principal Position Year Salary ($) Bonus ($) Compensation Awards ($) Options (#) sation ($)
------------------------- ---- ---------- --------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis R. Johnson 1998 150,000 141,400(1) -0- -0- 50,000 -0-
Chief Executive Officer 1997 150,000 1,937(1) -0- -0- -0- -0-
1996 150,000 194,432(1) -0- -0- -0- -0-
William P. Flies 1998 135,000 50,625(1) -0- -0- -0- -0-
Chief Technical Officer 1997 125,000 1,030(1) -0- -0- -0- -0-
1996 125,000 75,000(1) -0- -0- -0- -0-
William J. Callahan 1998 100,689 17,490(1) -0- -0- 25,000 -0-
Chief Operating Officer
<FN>
(1) Represents formula-based incentive compensation.
</FN>
</TABLE>
7
<PAGE>
The Company has an employment 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, 1996, 1997 and
1998 of $150,000, plus incentive bonuses based on pre-tax operating income and
the achievement of other specific non-financial objectives directed by the Board
of Directors for fiscal 1996, 1997 and 1998, (ii) a grant of options for
purchase of 50,000 shares of Common Stock at fair market value under the
Incentive Plan in fiscal 1998, 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 those generally
performed by a chief executive officer. As of January 18, 1999, the Board of
Directors had not completed Mr. Johnson's fiscal 1999 compensation plan.
The Company's employment agreement with William P. Flies, its Chief
Technical Officer, provides for a base annual salary of $125,000 in fiscal 1996,
1997 and 1998 and an incentive bonus based on a pre-tax operating income in
fiscal 1996 and 1997. Mr. Flies incentive bonus for fiscal 1998 was based on
several product development objectives. The agreement also contains provisions
which prohibit the Company from materially altering his duties and which allow
him to terminate the agreement and to continue to receive salary for a period of
one (1) year 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. As of
January 18, 1999, the Board of Directors had not completed Mr. Flies' fiscal
1999 compensation plan.
William J. Callahan was hired as the Company's Chief Operating
Officer in November 1997. His employment agreement provides for a base annual
salary of $120,000; a five-year incentive stock option for purchase of 25,000
shares of Common Stock at $6.00 per share, exercisable in three equal annual
installments commencing in 1997; and a $30,000 annual ($7,500 quarterly)
performance-based cash bonus. Performance objectives include attainment of
specified quarterly management team goals and annual Company goals for revenue,
gross profit percentage and operating income, as detailed in the Company's
fiscal 1998 Management Incentive Plan. Effective November 1, 1998, Mr.
Callahan's base compensation was reduced to $100,000 in annual salary, with an
increase in the performance-based cash bonus. Cash bonus targets were
established for sales and operating income levels for the Company's XET
operations, in Peoria, Illinois and sales of its Desktop Dispatch Pro product.
Other management personnel of the Company may also receive cash
incentive bonuses based on attainment of certain objectives set forth in the
fiscal 1999 Management Incentive Plan. In addition, 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
8
<PAGE>
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 made
a contribution for 1996 in the amount of $70,000 which was 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. The Company made a contribution for 1997 in the amount of
$25,000 in January 1998. The Company does not intend to make a contribution for
1998.
SUMMARY OF OPTION GRANTS
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Percent of total
Securities options/SARs Exercise or Expiration
Name Underlying granted to base price date
Options/SARs employees in ($/Sh)
Granted (#) fiscal year
(a) (b) (c) (d) (e)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dennis R. Johnson 50,000 26% $4.00 09/01/03
William J. Callahan 25,000 13% $6.00 11/09/03
</TABLE>
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, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Option Exercises Underlying Unexercised In-the-Money
---------------------------------- Options at FY-End Options at 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- -0- 226,000 16,668 -0- (2) -0- (2)
William P. Flies -0- -0- 16,667 -0- -0- (2) -0- (2)
William J. Callahan -0- -0- -0- 18,807 -0- (2) -0- (2)
<FN>
(1) The amounts set forth represent the difference between the closing
price of the Common Stock as quoted on the Nasdaq National Market on
September 30, 1998 and the exercise price of the options, multiplied
by the applicable number of shares underlying the options.
(2) None of the unexercised grants were in-the-money at September 30,
1998, since the Nasdaq National Market System closing price on that
date was less than the option exercise price.
</FN>
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
9
<PAGE>
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 fiscal year ended September 30,
1998, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than ten percent beneficial owners were complied
with.
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
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.
10
<PAGE>
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, Carl M. Fredericks, 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.
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 Lawrence Transportation Company, 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), Freight Plus, a Minnesota based
brokerage firm and RTL, a Minnesota based distribution and wholesaling company.
Prior to assuming his role as Chairman and CEO of Lawrence Transportation
Company 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
and the University of Tennessee Law School. Mr. Lawrence assumed the role of
Chairman of the Board of Directors effective with the resignation of Edward T.
Michalek on November 18, 1997.
11
<PAGE>
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.
CARL M. FREDERICKS Director since February, 1998
Carl M. Fredericks is currently the president of Fredericks &
Associates, a regional investment banking firm, founded in 1992 and located in
San Diego, California specializing in emerging market companies, both private
and public. The firm is active in advisory services, funding activities, and
mergers and acquisitions. From 1992 to 1998, Mr. Fredericks was the Managing
Member of Fredericks, Shields & Co., LLC, a firm which was engaged in the same
types of business conducted by Fredericks & Associates. From 1990 to 1991, he
served as Vice President and Investment Manager at Westinghouse Credit
Corporation, Newport Beach, California, where he was responsible for managing
its investments in sponsored leverage buyouts and recapitalizations of large and
middle market companies in the United States. Mr. Fredericks holds a Masters
degree in Business Administration and Finance from Columbia University, Graduate
School of Business Administration, New York City, and a Bachelor of Arts degree
in economics from Denison University in Granville, Ohio. He currently serves as
a member of the Board of Directors of Bio-Interfaces, Inc. and was an advisor to
the Boards of Directors of Triton Group Ltd., SpectraNet International,
Firstworld Communications, Inc.
For information concerning compensation of directors, see
"MANAGEMENT - Director Compensation."
12
<PAGE>
PROPOSAL 2
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, 1999. 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.
13
<PAGE>
PROPOSALS FOR FISCAL 1999 ANNUAL MEETING
It is currently anticipated that the next annual meeting, for the
fiscal year ending September 30, 1999 (the " 1999 Annual Meeting"), will be held
in mid-February, 2000. Shareholders who intend to submit proposals for inclusion
in the 1999 Proxy Statement and Proxy for shareholder action at the 1999 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, 1999.
In addition, shareholders are advised that pursuant to the rules of
the Securities and Exchange Commission, proxies solicited by management for the
1999 Annual Meeting may grant management the authority to vote in its discretion
on any proposal to be submitted by a shareholder otherwise than through
inclusion in the proxy statement for the 1999 Annual Meeting, unless the Company
has received notice of such proposal not later than December 5, 1999.
By Order of the Board of Directors
/s/ William P. Flies
William P. Flies
SECRETARY
Dated: January 13, 1999
BURNSVILLE, MINNESOTA
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB IS ENCLOSED
HEREWITH AND WILL ALSO BE SENT WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT
IN WRITING FROM: XATA CORPORATION, ATTENTION: GARY C. THOMAS, CHIEF FINANCIAL
OFFICER, 151 EAST CLIFF ROAD, SUITE 10, BURNSVILLE, MN 55337.
14
<PAGE>
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 13, 1999, hereby appoints each of Dennis R. Johnson and
Gary C. Thomas 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 he Annual meeting of Shareholders of XATA Corporation to
be held on Wednesday, February 17, 1999 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, CARL M. FREDERICKS, 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 appointment of McGladrey & Pullen, LLP as the independent
auditors of the Company for the year ending September 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The authority to vote, in his discretion, on all other business that may
properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(MUST BE SIGNED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
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 PROPOSAL 2 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 corporation 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.
