SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
XATA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MN 55337
(612) 894-3680
January 19, 2000
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 23, 2000, at the Minneapolis
Marriott City Center.
This year you are presented with proposals to elect five directors and
ratify the appointment of auditors. 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, regardless of the number of shares
held. 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,
/s/ Stephen A. Lawrence
STEPHEN A. LAWRENCE
CHAIRMAN
<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 23, 2000
------------------------------------
To the Shareholders of XATA Corporation:
The Annual Meeting of Shareholders of XATA Corporation (the "Company")
will be held on February 23, 2000, 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
2001.
(2) To act upon a proposal to ratify the appointment of Grant
Thornton LLP, as independent auditors of the Company for the
fiscal year ending September 30, 2000.
(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 28,
1999 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 19, 2000 William P. Flies
SECRETARY
2
<PAGE>
TABLE OF CONTENTS
General Information
Record Date and Voting
Recommendations of the Board of Directors
Principal Shareholders and Ownership of Management
Management
Certain Transactions
Proposal 1: Election of Directors
Proposal 2: Ratification of Appointment of Auditors
Proposals for Fiscal 2000 Annual Meeting
<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 23, 2000
----------------------------------
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 23, 2000, 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 Grant Thornton
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 19, 2000.
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended September 30, 1999, 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, 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
that proxies be furnished. All expenses incurred in connection with this
solicitation will be borne by the Company.
<PAGE>
RECORD DATE AND VOTING
The Board of Directors has fixed December 28, 1999, 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 4,435,633
shares of Common Stock, par value $.01 per share and 46,667 shares of Series A
Convertible Preferred Stock, which are the only outstanding classes of stock of
the Company. Each share of Common Stock is entitled to one vote on each proposal
to be presented to the meeting. The Preferred Stock is not entitled to vote on
any proposal to be presented at the Annual 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 the affirmative vote of a
majority 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 GRANT
THORNTON 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 28, 1999 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 Named Executive Officer (as
defined in "MANAGEMENT - Executive Compensation"); and (iv) all executive
officers and directors of the Company as a group.
2
<PAGE>
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 28, 1999 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 1,116,152(4)(6) 24.0%
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Dennis R. Johnson(1)(2) 166,000(5)(6) 3.6%
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Stephen A. Lawrence(1)(2) 81,641(3)(6) 1.8%
3154 North Service Drive
Red Wing, MN 55066
Roger W. Kleppe(1)(2) 34,165(6) *
2901 Mead Court
Burnsville, MN 55337
Carl M. Fredericks(1)(2) 43,092(5)(6) *
4275 Executive Square
Suite 350
La Jolla, CA 92037
Gary C. Thomas 2,684(5) *
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Joel G. Jorgenson 10,386(5)(6) *
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Thomas N. Flies 5,413(5)(6) *
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Edward T. Michalek 61,084(5)(6) 1.4%
151 East Cliff Road, Suite 10
Burnsville, MN 55337
All executive officers and current 1,520,617 33.9%
directors as a group (9 persons)
3
<PAGE>
- ----------------------
* indicates ownership of less than 1%.
(1) Currently a director.
(2) Nominee for re-election as director.
(3) Includes 46,666 shares of common stock which may be deemed beneficially
owned by Mr. Lawrence as a result of his equity ownership in XATA
Investment Partners, LP, which holds an aggregate of 40,000 shares of
Series A Convertible Preferred Stock, convertible into a total of
400,000 shares of Common Stock. See "Certain Transactions".
(4) 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 - 516,980 shares.
(5) 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;
Edward T. Michalek, JT - 10,000 shares, Individual Retirement Account -
1,000 shares; Dennis R. Johnson - 16,000 shares; Gary C. Thomas - 2,684
shares; Joel G Jorgenson - 6,719 shares; Thomas N. Flies - 4,255
shares.
(6) 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 - 150,000 shares;
Stephen A. Lawrence - 34,165 shares; Roger W. Kleppe - 34,165 shares;
Carl M. Fredericks - 28,092 shares; Edward T. Michalek - 50,084 shares;
Thomas N. Flies - 1,158 shares: Joel G. Jorgenson - 3,667:
and all officers and directors as a group - 317,998 shares.
MANAGEMENT
DIRECTORS AND OFFICERS
The current directors and executive officers of the Company are as
follows:
Name Age Position
---- --- --------
Edward T. Michalek 67 Chief Executive Officer,
President and member
of the Chairman's
Council
William P. Flies 57 Chief Technical Officer,
Secretary, Director and
member of the Chairman's
Council
Thomas N. Flies 34 Vice President, Product
Development
Joel G. Jorgenson 31 Vice President, Sales
4
<PAGE>
Gary C. Thomas 54 Chief Financial Officer and
Treasurer
Stephen A. Lawrence 56 Chairman of the Board
of Directors and
member of the Chairman's
Council
Roger W. Kleppe 49 Director
Carl M. Fredericks 55 Director
Dennis R. Johnson 56 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.
The Company is currently managed by a Chairman's Council. The current
members of the Chairman's Council are: Stephen A. Lawrence, Chairman of the
Board of Directors, William P. Flies, Chief Technical Officer and Edward T.
Michalek, President and Chief Executive Officer.
Mr. Michalek is President and Chief Executive Officer of the Company
and has served in that capacity since February, 1999. From February 1992 to
August 1995, Mr. Michalek was Chairman of the Board, Chief Executive Officer,
and President of Advance Machine Company, a manufacturer and worldwide marketer
of commercial and residential floor cleaning equipment. He retired from Advanced
Machine Company in 1995. Mr. Michalek served as Chairman of the Board of XATA
Corporation from March 1992 until November 1997. From 1981 through February
1992, Mr. Michalek was with Norwesco, Inc., the last five years of which he
served as Chief Executive Officer, President and Chairman. Mr. Michalek has
extensive general management, operating and marketing experience with publicly
held companies, including Norwesco, Inc., Artic Enterprises, Inc., Emerson
Electric Company and Skil Corporation. He is a graduate of Northwestern
University.
Mr. William 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
5
<PAGE>
mainframe memory and peripheral subsystems. Mr. Flies joined Univac in 1964
after receiving a bachelors degree with majors in mathematics and physics and a
minor in business administration from Mankato State University. Mr. Flies is the
father of Thomas N. Flies, Vice President of Product Development.
Mr. Jorgenson joined the Company in 1991 as a Technical Support
Representative. Mr. Jorgrnson held various positions in sales and sales support
prior to being promoted to Director of Sales in 1997. Mr. Jorgenson has
extensive experience with trucking industry software and onboard technology as
it relates to private fleet operations in North America. Mr. Jorgenson has been
a presenter at many industry conferences, including NPTC, ATA and FDI. Mr.
Jorgenson holds a bachelors degree in business from Augsburg College.
Mr. Thomas Flies joined the company in 1990 and has held numerous
positions including Director of Sales and Marketing, Operations Manager and
Product Manager. Mr. Flies was appointed senior Vice President of Product
Development in September 1999. Mr. Flies holds a bachelors degree in business
and a minor in computer science from the University of Saint Thomas. Thomas N.
Flies is the son of William P. Flies, a Director and Chief Technical Officer of
the Company.
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
and a minor in accounting and business law from the University of Nebraska.
See "ELECTION OF DIRECTORS" for biographical information concerning
Messrs. Lawrence, Johnson, Kleppe, and Fredericks.
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 elected to receive quarterly, in
lieu of the cash fee, a five 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 are exercisable at a price
equal to 80% of the closing market price as of the date of issuance. Pursuant to
such election, on December 11, 1998, each non-employee director received a five
year warrant for 3,049 shares exercisable at $1.23, representing the first
quarter fee plus a five year warrant for 5,000 shares exercisable at $1.23 per
share in recognition of the extraordinary efforts and time expended by the Board
during the first quarter and on February 17, 1999, each non-employee director
received a five year warrant for 2,777 shares exercisable at $1.80 representing
the second quarter fee. The election to receive warrants in lieu of cash fees
was terminated after the second quarter.
6
<PAGE>
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 October 12, 1998, January 12, 1999, April 10, 1999
and July 10, 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.
Stephen A. Lawrence, Chairman of the Board of Directors of the Company,
receives additional compensation for his role as a member of the Chairman's
Council. See "Certain Transactions."
BOARD MEETINGS AND COMMITTEES
During the year ended September 30, 1999, the Board of Directors met
nine 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, 1999, 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 Dennis R. Johnson
Dennis R. Johnson Dennis R. Johnson Carl M. Fredericks
- -------------------
* 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.
7
<PAGE>
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 $100,000, the Chief Executive Officer and each member
of the Chairman's Council (the "Named Executive Officers") pursuant to a plan or
contract or otherwise during fiscal years ended September 30, 1999, 1998, and
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Restricted All Other
Other Annual Stock Compen-
Name & Principal Position Year Salary($) Bonus($) Compensation Awards($) Options(#) sation($)
------------------------- ---- --------- -------- ------------ --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen A. Lawrence 1999 -0- -0- -0- -0- 2,500
Member, Chairman's Council 10,826(3)
Dennis R. Johnson(2) 1999 51,923 -0- -0- -0- -0- -0-
Chief Executive Officer 1998 150,000 141,400(1) -0- -0- 50,000 -0-
1997 150,000 1,937(1) -0- -0- -0- -0-
Edward T. Michalek 1999 -0- -0- -0- 25,000(4) -0-
Chief Executive Officer
Member, Chairman's Council
William P. Flies 1999 141,993 -0- -0- -0- -0- -0-
Chief Technical Officer 1998 135,000 50,625(1) -0- -0- -0- -0-
Member, Chairman's Council 1997 125,000 1,030(1) -0- -0- -0- -0-
Joel G. Jorgenson 1999 95,000 61,736 -0- -0- 38,334 -0-
Vice President, Sales
William J. Callahan 1998 100,689 17,490(1) -0- -0- 25,000 -0-
Chief Operating Officer
</TABLE>
(1) Represents formula-based incentive compensation.
(2) Was not an employee at September 30, 1999. Compensation is only for the
period during which the executive was actually an employee.
8
<PAGE>
(3) Warrants expiring on December 10, 2003 and February 16, 2004,
exercisable at $1.23 and $1.80 per share respectively.
(4) Warrants expire on February 7, 2004, exercisable at $1.75 per share.
Prior to his resignation on February 8, 1999, Dennis R. Johnson served
as the Company's President and Chief Executive Officer. His employment agreement
provided for (i) base compensation for each of the fiscal years ended September
30, 1997, 1998 and 1999 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 1997, 1998 and 1999, (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." Mr. Johnson's severance agreement was
re-negotiated in connection with his resignation which allowed for the payment
of his $250,000 severance payment over 20 months rather than 12 months as
originally stated.
The Company's employment agreement with William P. Flies, its Chief
Technical Officer, provides for a base annual salary of $125,000 in fiscal 1997
and 1998, $135,000 in fiscal 1999 and $150,000 in fiscal 2000 and an incentive
bonus based on a pre-tax operating income in fiscal 1997 and 1998. Mr. Flies
incentive bonus for fiscal 1998 was based on several product development
objectives. No incentive bonus was fixed for fiscal 1999. 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.
The Board of Directors approved fiscal 2000 base salaries of $100,000
each for Thomas Flies and Gary Thomas and $125,000 for Joel Jorgenson. In
addition, each will receive a quarterly bonus based upon attainment of certain
gross profit and an annual bonus based upon attainment of certain operating
income objectives. Mr. Jorgenson will also receive additional quarterly
compensation related to reaching and sustaining certain revenue levels.
Other management personnel of the Company may also receive cash
incentive bonuses based on attainment of certain objectives set forth in the
fiscal 2000 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
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
9
<PAGE>
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 fiscal 1997 in the
amount of $25,000 in January 1998. The Company did not make a contribution for
fiscal 1998. The Company recorded an estimated expense for the 401(k) Plan, in
fiscal 1999 of $50,000.
SUMMARY OF OPTION GRANTS
The following table contains information concerning the grant of stock options,
to Named Executive Officers, during fiscal 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Percent of total
Securities options/SARs Exercise or Expiration
Name Underlying granted to base price date
Options/SARs employees in ($/Sh)
Granted(#) fiscal year
(a) (b) (c) (d) (e)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas N. Flies 31,667 14% $3.61(1) 09/04
Joel G. Jorgenson 38,334 17% $2.99 09/04
Gary C. Thomas 35,000 15% $3.06 09/04
Dennis R. Johnson -0- -0- -0- n/a
Edward T. Michalek -0- -0- -0- n/a
William P. Flies -0- -0- -0- n/a
Stephen A. Lawrence 5,000 1% $2.08 09/04
</TABLE>
(1) Stock option grant price equals 110% of market price on day of grant
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, 1999.
<TABLE>
<CAPTION>
Option Exercises Number of Securities Underlying Value of Unexercised In-the-
----------------------------- Unexercised Options at FY-End Money Options at FY-End(1)
------------------------------- -----------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------ --------------- -------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dennis R. Johnson -0- -0- 116,667 33,334 -0- -0-
William P. Flies -0- -0- 16,667 -0- -0- -0-
Thomas N. Flies -0- -0- 3,491 33,501 733 1,467
Joel G. Jorgenson -0- -0- 3,667 41,667 4,428 8,853
Gary C. Thomas -0- -0- -0- 35,000 -0- -0-
Edward T. Michalek -0- -0- 19,084 -0- -0- -0-
Stephen A. Lawrence -0- -0- 18,875 2,292 8,250 5,150
</TABLE>
10
<PAGE>
(1) The amounts set forth represent the difference between the closing
price of the Common Stock as quoted on the Nasdaq Small Cap Market on
September 30, 1999 and the exercise price of the options, multiplied by
the applicable number of shares underlying the options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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,
1999, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than ten percent beneficial owners were complied
with, with the exception of Gary C. Thomas, the Company's Chief Financial
Officer, who filed a Report on Form 4, one (1) day after the scheduled deadline.
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 that 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.
11
<PAGE>
CERTAIN TRANSACTIONS
In May 1999, the Company issued a total of 46,667 shares of Series A
Convertible Preferred Stock, 40,000 shares of which were purchased by XATA
Investment Partners, LP ("XIP"), a Minnesota limited partnership owned in part
by Stephen A. Lawrence. The Preferred Stock carries an 8% annual dividend which
is payable quarterly, and is convertible at any time to Common Stock at $1.50
per share. Mr. Lawrence does not participate in the management of this
investment by XIP.
Lawrence Transportation, Inc., of which Stephen A. Lawrence is a
principal shareholder, director and chief executive officer, currently receives
a consulting fee in the amount of $5,000 per month in consideration for Mr.
Lawrence's service as a member of the Chairman's Council. As of December 15,
1999, fees have accrued in the amount of $20,000, no portion of which has been
paid.
On August 13, 1999, the Board of Directors determined that it would be
in the best interests of the Company to terminate the Company's relationship
with its independent accounting and audit firm, McGladrey & Pullen, LLP
(McGladrey). McGladrey acted as independent accountant and auditors with respect
to the Company's financial statements for the previous two fiscal years ended
September 30, 1998 and 1997. The reports of McGladrey on the financial
statements of the Company for its fiscal years ended September 30, 1998 and
1997, did not contain any adverse opinion or disclaimer of opinion and were not
qualified as to uncertainty, audit scope or accounting principles. The report of
McGladrey on the financial statements for the fiscal year ended September 30,
1998, included an explanatory paragraph regarding the uncertainty of the
Company's ability to continue as a going concern. During the Company's two most
recent fiscal years and the subsequent interim period through August 13, 1999,
(i) there were no disagreements between the Company and McGladrey on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of
McGladrey, would have caused McGladrey to make reference to the subject matter
of the disagreement in connection with its reports and (ii) there were no
reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K of the
Securities and Exchange Commission. The decision to replace McGladrey was not
the result of any disagreement between the Company and McGladrey on any matter
of accounting principal or practice, financial statement disclosure or audit
procedure nor any dispute with respect to the Company's ability to continue as a
"going concern."
On August 13, 1999, Grant Thornton LLP was selected by the Company's
Board of Directors, upon the recommendation of its audit committee, as the
Company's new independent accountant and audit firm. During the last two fiscal
years, the Company did not consult with Grant Thornton LLP on any matters
related to accounting principles or practice, financial statement disclosures or
audit procedures.
12
<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.
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 warehousing 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 was the past
president of the Truck Renting and Leasing Association and is 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 and has served as a member of the Chairman's
Council since its inception on August 24, 1999.
13
<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.
DENNIS R. JOHNSON Director since December, 1993
Dennis R. Johnson is President and Chief Executive Officer of XioTech,
Inc. Mr. Johnson was President and Chief Executive Officer of the Company from
February 1994 to February 1999 and was President of National Business Systems,
Inc., a provider of data and information-processing services and data processing
supplies from March 1992 to February 1994. 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.
For information concerning compensation of directors, see "MANAGEMENT -
Director Compensation."
14
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
Grant Thornton audited the Company's financial statements included in
the Company's Form 10-KSB for the fiscal year ended September 30, 1999. The
Board of Directors has appointed Grant Thornton LLP, independent auditors, to
audit the financial statements of the Company for the fiscal year ending
September 30, 2000. 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 Grant Thornton 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.
15
<PAGE>
PROPOSALS FOR FISCAL 2000 ANNUAL MEETING
It is currently anticipated that the next annual meeting, for the
fiscal year ending September 30, 2000 (the "2000 Annual Meeting"), will be held
in mid-February, 2001. Shareholders who intend to submit proposals for inclusion
in the 2000 Proxy Statement and Proxy for shareholder action at the 2000 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, 2000.
In addition, shareholders are advised that pursuant to the rules of the
Securities and Exchange Commission, proxies solicited by management for the 2000
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 2000 Annual Meeting, unless the Company has
received notice of such proposal not later than December 5, 2000.
By Order of the Board of Directors
/s/ William P. Flies
William P. Flies
SECRETARY
Dated: January 19, 2000
BURNSVILLE, MINNESOTA
A COPY OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS 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.
16
<PAGE>
XATA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, FEBRUARY 23, 2000
4:00 P.M.
MINNEAPOLIS MARRIOTT CITY CENTER
30 SOUTH SEVENTH STREET
MINNEAPOLIS, MN 55402
- --------------------------------------------------------------------------------
[XATA LOGO] XATA CORPORATION
151 E. CLIFF ROAD, SUITE 10, BURNSVILLE, MN 55337 PROXY
- --------------------------------------------------------------------------------
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 19, 2000, hereby appoints each of Stephen A. Lawrence
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 the Annual Meeting of Shareholders of XATA Corporation to
be held on Wednesday, February 23, 2000 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.
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.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
\/ PLEASE DETACH HERE \/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors 01 William P. Flies 04 Roger W. Kleppe [ ] Vote FOR [ ] Vote WITHHELD
duly nominated: 02 Carl M. Fredericks 05 Stephen A. Lawrence all nominees from all nominees
03 Dennis R. Johnson (except as marked)
<CAPTION>
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, [ ]
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) [ ]
<S> <C> <C> <C>
2. Ratification of appointment of Grant Thornton LLP as the independent
auditors of the Company for the year ending September 30, 2000. [ ] 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
<CAPTION>
Address Change? Mark Box [ ]
Indicate changes below:
Date _________________________________
-------------------------------------------------
[ ]
[ ]
[ ]
-------------------------------------------------
Signature(s) in Box
PLEASE SIGN exactly as name appears on Proxy. 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.
</TABLE>
