UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
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 [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
XATA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] 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 transaction 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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
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[_] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MN 55339
(952) 894-3680
October 30, 2000
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
to be held at 2:00 p.m., on November 30, 2000, at the offices of XATA
Corporation, 151 East Cliff Road, Suite 10, Burnsville, Minnesota.
Each of the matters to be voted upon at the Special Meeting is related
to the current and proposed investments in the Company by John Deere Special
Technologies Group, Inc. ("JDSTG").
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
that you hold. 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,
Stephen A. Lawrence
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MN 55339
(952) 894-3680
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 2000
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To the Shareholders of XATA Corporation:
A Special Meeting of Shareholders of XATA Corporation (the "Company")
will be held on November 30, 2000, at 2:00 p.m., at the office of XATA
Corporation, 151 East Cliff Road, Suite 10, Burnsville, Minnesota, for the
following purposes:
(1) To amend the Restated Articles of Incorporation of the Company
to increase the authorized common stock and to eliminate the
provision that reserves all voting rights to the common stock.
(2) To approve the purchase of up to 3.6 million shares of common
stock of the Company by John Deere Special Technologies Group,
Inc. (the "Investment").
The consummation of the second phase of the Investment (2,517,000
shares) is contingent upon the adoption of Proposal 1 and Proposal 2. The
Company will not implement Proposal 2 unless Proposal 1 is approved. The Company
intends to implement Proposal 1, if approved, even if the Investment (Proposal
2) is not approved.
The proposed amendment to the Restated Articles is set forth as
Appendix A to this Proxy Statement and will be filed with the Secretary of State
of Minnesota in substantially that form if Proposal 1 is approved by the
shareholders.
The ownership and business of John Deere Special Technologies Group,
Inc. ("JDSTG") and the business experience of persons added to the Board of
Directors at the request of JDSTG are described in Appendix B attached to this
proxy statement.
The Company does not anticipate that any other business will be brought
before the Special Meeting.
The Board of Directors has fixed the close of business on October 5,
2000 as the record date for the determination of shareholders entitled to vote
at the Special 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
October 30, 2000 William P. Flies, SECRETARY
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TABLE OF CONTENTS
GENERAL INFORMATION............................................................1
RECORD DATE AND VOTING.........................................................2
RECOMMENDATIONS OF THE BOARD OF DIRECTORS......................................2
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT.............................3
PROPOSAL 1.....................................................................4
PROPOSAL 2.....................................................................7
INDEPENDENT AUDITORS..........................................................11
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................11
AVAILABLE INFORMATION.........................................................12
PROPOSALS FOR FISCAL 2000 ANNUAL MEETING......................................13
Appendices:
A Amendment to Restated Articles
B Description of JDSTG and New XATA Directors
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XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MN 55339
(952) 894-3680
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 2000
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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 Special Meeting of Shareholders on November 30, 2000, to be held at
the office of XATA Corporation, 151 East Cliff Road, Suite 10, Burnsville,
Minnesota, at 2:00 p.m., and at all adjournments thereof for the purposes set
forth in the attached Notice of Special Meeting of Shareholders. The purposes of
the meeting and the matters to be acted upon are set forth in the accompanying
Notice of Special 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 Special Meeting. Unless a
shareholder gives contrary instructions on the proxy card, proxies will be voted
at the meeting (a) to amend the Restated Articles of Incorporation of the
Company to increase the authorized common stock and to eliminate the provision
that reserves all voting rights to the common stock; and (b) to approve the
investment in common stock of the Company by JDSTG (the "Investment"). This
proxy statement and the enclosed proxy are being mailed to the shareholders of
the Company on or about October 30, 2000.
A copy of the Company's report on Form 10-KSB (without exhibits) for
the fiscal year ended September 30, 1999 and a copy of the Company's quarterly
report on Form 10-QSB for the quarter ended June 30, 2000, are enclosed
herewith. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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 October 5, 2000, as the record date
for the determination of shareholders entitled to vote at the Special Meeting.
As of the close of business on the record date, there were outstanding 5,580,179
shares of common stock, par value $.01 per share, which is the only outstanding
class of stock of the Company entitled to vote at the Special Meeting. Each
share of common stock is entitled to one vote on each proposal to be presented
to the meeting.
The presence at the Special 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. Each
proposal will be approved if it receives the affirmative vote of a majority vote
of the shares present at the Special 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 26% 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 amendment of the Restated
Articles of Incorporation, and FOR approval of the Investment. All of the
current members of the Board of Directors and all executive officers of the
Company have advised the Company that they intend to vote as shareholders FOR
each proposal. It is intended that proxies solicited by the Board of Directors
will be voted FOR each such proposal unless otherwise directed by the
shareholder submitting the proxy.
The Board of Directors reserves the right to not proceed with any
amendment of the Restated Articles and to not consummate the Investment, in its
sole discretion, notwithstanding approval by the shareholders. Further, if both
proposals are approved by the shareholders at the Special Meeting, the Board
reserves the right to consummate all or any part of the Investment on terms
which are not identical to the terms discussed herein without resubmission to
vote of the shareholders, so long as the changed terms would not result in more
than 49% ownership of the Company's common stock by JDSTG (assuming investment
in common stock by JDSTG on the changed terms as of September 30, 2000).
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PRINCIPAL SHAREHOLDERS AND
OWNERSHIP OF MANAGEMENT
The following table sets forth as of October 5, 2000 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 executive officer; and (iv) all
executive officers and 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
includes the number of shares which such person has the right to acquire within
sixty (60) days after such date.
NAME AND ADDRESS NUMBER OF SHARES OWNED PERCENTAGE
---------------- ---------------------- ----------
William (1) and Linda Flies, JT 1,059,960 (2)(5) 19.0%
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Stephen A. Lawrence (1) 64,108 (2)(3) *
3154 North Service Drive
Red Wing, MN 55066
Roger W. Kleppe (1) 45,408 (2) *
2901 Mead Court
Burnsville, MN 55337
Carl M. Fredericks (1) 43,326 (2)(6) *
4275 Executive Square
Suite 350
La Jolla, CA 92037
Richard L. Bogen (1) 6,250 (2) *
12185 Wildwood Springs Drive
Roswell, GA 30075
John Deere Special Technologies 830,000 14.9%
Group, Inc.
300 Grimes Bridge Road
Roswell, GA 30075
Charles R. Stamp Jr. (1)(4) 0 0%
300 Grimes Bridge Road
Roswell, GA 30075
Barry M. Batcheller (1)(4) 0 0%
300 Grimes Bridge Road
Roswell, GA 30075
All executive officers and current 1,219,052 (2)(3) 21.6%
directors as a group (7 persons)
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* indicates ownership of less than 1%.
(1) Currently a director.
(2) Includes shares of common stock issuable upon exercise of currently
exercisable options and warrants as follows: William P. Flies - 0
shares; Stephen A. Lawrence - 36,993 shares; Roger W. Kleppe - 36,993
shares; Carl M. Fredericks - 28,326 shares; Richard L. Bogen - 6,250
shares; and all officers and directors as a group - 108,562 shares.
(3) Includes 10% of the 213,151 shares of common stock held of record by
XATA Investment Partners, LLC.
(4) Elected to the Board of Directors concurrently with the initial
purchase of common stock by JDSTG as representatives of JDSTG. JDSTG
has the right to appoint one additional representative to the Board
upon purchase of 2,517,000 additional shares.
(5) Includes 460,980 shares held in the William P. Flies Revocable Trust UA
11/14/96, 498,980 shares held in the Linda Berg Flies Revocable Trust
UA 11/14/96, and 100,000 shares held by William P. Flies and Linda Berg
Flies, JT.
(6) Includes 7,000 shares held in The Carl & Christina Fredericks
Foundation and 8,000 shares held by Carl M. Fredericks SEP IRA.
PROPOSAL 1
PROPOSAL TO AMEND THE
ARTICLES OF INCORPORATION
PROPOSED AMENDMENTS
Currently, the Company's Amended and Restated Articles of Incorporation
(the "Restated Articles") authorize the issuance of 8,333,333 shares of common
stock and 333,333 shares of preferred stock. In 1999, 50,000 shares of preferred
stock were designated as Series A 8% Convertible Preferred Stock. In 2000, in
connection with the initial JDSTG investment, all outstanding Series A 8%
Convertible Preferred Stock was converted to common stock, and pursuant to the
Certificate of Designation of such stock, the number of available shares of
authorized preferred stock was reduced to 283,333 shares. The Restated Articles
further provide that, except as required by law, the common stock shall be the
sole voting stock of the Company. As of October 5, 2000, 5,580,179 shares of
common stock were issued and outstanding and an aggregate of 875,000 shares were
reserved for issuance under the Company's 1991 Long-Term Incentive and Stock
Option Plan (the "Incentive Plan") and upon the exercise of outstanding
warrants.
PURPOSES OF PROPOSED AMENDMENTS
On August 28, 2000, the Board approved (a) an increase in the
authorized number of shares of common stock from 8,333,333 to 12,000,000 shares
and (b) elimination of the provision reserving all voting rights to the common
stock. Such amendments will not take effect unless approved by the shareholders.
If Proposal 2 is approved at the Special Meeting, 2,517,000 of such shares of
common stock will be issued and sold to JDSTG, up to 253,000 shares of common
stock may be issued to JDSTG if it elects to convert its note, and the remainder
will be available for future issuance. The Company has no current plans to issue
any additional shares of common stock or to create or issue any series of
preferred stock.
Approval of these amendments is necessary (but not in itself
sufficient) for the consummation of the Investment.
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The Board believes that it is necessary and desirable to increase the
number of shares of common stock and to allow the Board of Directors to
establish one or more series of voting preferred stock to give the Board
additional flexibility to raise equity capital, reserve additional shares of
common stock for issuance under the Company's Incentive Plan and/or other
employee benefit plans, and make acquisitions through the use of common stock
and/or preferred stock. The Board believes that the proposed amendments would
make it unnecessary to hold a special shareholders' meeting in the future for
the purpose of authorizing such changes if the Company decides to use its shares
for one or more of such previously mentioned purposes. No additional action or
authorization by the Company's shareholders would be necessary prior to the
issuance of such additional shares, unless required by applicable law or
regulation.
POSSIBLE EFFECTS OF PROPOSED ARTICLES AMENDMENT
Although the Board of Directors has no present plans to do so (except
in connection with the Investment), authorized and unissued common stock and
preferred stock could be issued in one or more transactions with terms,
provisions and rights which would make more difficult and, therefore, less
likely, a takeover of the Company. Any such issuance of additional shares could
have the effect of diluting the earnings per share and book value per share of
existing shares of common stock, and such additional shares could be used to
dilute the share ownership of persons seeking to obtain control of the Company.
As indicated above, the voting rights to be accorded to any shares of
preferred stock to be issued remain to be fixed by the Board of Directors.
Accordingly, if the Board of Directors so authorizes, the holders of preferred
stock may be entitled to vote separately as a class in connection with the
approval of certain extraordinary corporate transactions in circumstances where
Minnesota law does not require such class vote, or might be given a
disproportionately large number of votes. Potentially, preferred stock could be
used to create voting impediments or to frustrate persons seeking to effect a
merger or otherwise gain control of the Company. Also, preferred stock could be
privately placed with purchasers who might side with the management of the
Company in opposing a hostile tender offer or other attempt to obtain control.
Issuance of preferred stock as an anti-takeover device might preclude
shareholders from taking advantage of a situation which they may consider to be
favorable to their interests.
The overall effect of the adoption of Proposal 1, therefore, could be
to discourage unsolicited takeover attempts and to limit the possibility of
change of control of the Company. By potentially discouraging initiation of any
such unsolicited takeover attempt, the proposed amendments may limit the
opportunity for the Company's shareholders to dispose of their shares at the
higher price generally available in takeover attempts or that may be available
under a merger proposal. Adoption of Proposals 1 and/or 2 may also have the
effect of permitting the Company's current management, including the Board
representatives, to retain its position and place it in a better position to
resist changes that shareholders may wish to make if they are dissatisfied with
the conduct of the Company's business.
Neither Proposal 1 nor Proposal 2 arises from any current effort to
change the composition of the Board of Directors (except as contemplated by the
Investment), gain control
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of the Company, or organize a proxy contest, and neither proposal is being
presented as, nor is it part of, a plan to adopt a series of anti-takeover
measures.
The Board of Directors does not currently contemplate adopting, or
recommending to the shareholders for their adoption, any further amendments to
the Company's Restated Articles or Bylaws that would affect the ability of third
parties to take over or change control of the Company or which might be
considered anti-takeover devices. However, the Board and its financial and legal
advisers are aware that a number of corporations have adopted special
"shareholders' rights plans" or "poison pills" with a view toward creating
significant defensive mechanisms against the possibilities of hostile take-over
actions. Whether or not the proposed amendment to the Restated Articles is
adopted by shareholders, the Board could determine to implement a shareholders'
rights plan in the future.
Certain provisions of Minnesota Statutes, Chapter 302A (See Proposal 2
- Minnesota Law), could also have the effect of discouraging certain attempts to
acquire the Company, including a hostile takeover, or remove incumbent
management even if some or a majority of the Company's shareholders were to deem
such an attempt to be in their best interest, including an attempt that might
result in the payment of a premium over the market price for the shares of
common stock held by the Company's shareholders. None of these provisions will
be changed by the proposed amendment to the Restated Articles.
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PROPOSAL 2
OVERVIEW
The Investment consists of the purchase of up to 3,147,000 shares of
common stock from the Company for $11,974,000 ($3.805 per share, which equals
82% of the market value over a 30-day period preceding August 30, 2000),
purchase of 200,000 shares of common stock from XATA Investment Partners, LLC
("XIP"), an entity owned in part by Stephen A. Lawrence, Chairman of the Board
of Directors of the Company, for $761,000 ($3.805 per share), and optional
conversion of a 5-year promissory note in the original amount of $1 million at
$3.805 per share (up to 253,000 shares of common stock). The maximum number of
shares comprising the investment by JDSTG is 3,600,000 (3,400,000 from the
Company and 200,000 from XIP).
TERMS AND STRUCTURE OF THE INVESTMENT
1ST CLOSING. At the 1st Closing on August 30 and 31, 2000, JDSTG
purchased 630,000 shares of common stock from the Company and 200,000 shares of
common stock from XIP, each at $3.805 per share, resulting in total ownership by
JDSTG of 14.9% of the Company's common stock as of that date.
2ND CLOSING. At the 2nd Closing, which must occur, if at all, prior to
December 31, 2000 (unless extended by agreement of the Company and JDSTG),
assuming approval of Proposals 1 and 2 by the Company's shareholders, JDSTG will
purchase an additional 2,517,000 shares from the Company at the same price per
share paid at the 1st Closing. Consummation of the 2nd Closing will increase
JDSTG's ownership from 14.9% to 41.3%.
NOTE OPTION. At its option, JDSTG may convert its 5-year promissory
note with the Company to common stock at $3.805 per share during the period from
August 1, 2001 through August 1, 2002. If JDSTG exercises its option to convert
the note on August 1, 2001, it will own 42.8% of the Company's common stock,
assuming the purchase of 2,517,000 shares at the 2nd Closing, or 18.4% if there
is no 2nd Closing.
REGISTRATION RIGHTS AGREEMENT. JDSTG has the right to request
registration of all of the shares of common stock acquired at the 1st Closing,
2nd Closing and upon conversion of the note pursuant to the terms of a
registration rights agreement.
BOARD OF DIRECTORS REPRESENTATION. In connection with its initial
investment in the Company, the Board of Directors of the Company expanded the
membership of the Board from six to seven (the maximum number permitted by
XATA's Bylaws), Dennis R. Johnson resigned as a member of the Board, and Charles
R. Stamp, Jr. and Barry D. Batcheller were elected to the Board as
representatives of JDSTG. An additional director will be elected to the Board as
a representative of JDSTG, upon consummation of the second phase of the
Investment (i.e. purchase of 2,517,000 additional shares of common stock).
Information about the JDSTG directors is contained in Appendix B to this proxy
statement. All JDSTG representatives will stand for election at the next annual
meeting of shareholders.
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COVENANTS OF THE COMPANY. Under the terms of the Stock Purchase
Agreement with JDSTG, the Company has committed to take or refrain from taking
certain actions. These affirmative and negative covenants, include, without
limitation, the following:
* Prior to the earlier of December 31, 2000 or the 2nd Closing, the Company
shall not effect any merger or consolidation with or into, or a transfer of
all or substantially all of its assets to, another entity without the
prior written consent of JDSTG, and the resulting successor or acquiring
entity (if not the Company) must assume by written instrument the
obligation to deliver to JDSTG the shares of stock and/or securities to
which JDSTG is entitled under the Agreement.
* Prior to the earlier of December 31, 2000 or the 2nd Closing, the Company
shall not, except as expressly provided for in the Stock Purchase Agreement
or as consented to in writing by JDSTG:
(a) amend its Restated Articles of Incorporation or Bylaws;
(b) split, combine or reclassify any shares of the Company's
capital stock;
(c) declare or pay any dividend or distribution (whether in cash,
stock or property) in respect of its common stock; or
* While JDSTG owns 10% or more of the Company's Common stock, the Company
shall not, without JDSTG's prior written consent, do any of the following:
(a) merge, consolidate or exchange shares with another corporation
or entity or otherwise dispose of any of its assets other than
in the ordinary course of business;
(b) incur any debts, outside the ordinary course of business,
which would have a material adverse effect on the Company;
(c) pay or declare any dividends on its common stock (except for
stock dividends) or redeem, retire or otherwise acquire any of
its capital stock;
(d) during any calendar year (i) pay to any officer or senior
manager compensation (including salary, bonus and benefits)
which materially exceeds the compensation customarily paid to
management in companies of similar size, of similar maturity
and in similar businesses or (ii) change the compensation for
any officer or senior manager other than such changes as are
approved by a majority of the disinterested members of the
Board of Directors or any compensation committee thereof;
(e) enter into any transaction, including, without limitation, any
loans or extensions of credit, with any employee, consultant,
officer, director or holder of five percent (5%) of any class
of capital stock of the Company, or any member of their
respective immediate families or any corporation
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or other entity directly or indirectly controlled by one or
more of such employees, consultants, officers, directors or 5%
stockholders or members of their immediate families (i) on
terms less favorable to the Company than it would obtain in an
arms-length transaction between unrelated parties, or (ii)
except in the case of any transaction or series of
transactions entered into in the ordinary course of business
and involving less than $5,000 in the aggregate;
(f) except as provided for or approved in an annual budget
approved by the Board of Directors, (i) enter into any
agreement, commitment or plan involving an acquisition,
investment or expenditure in excess of $50,000, or (ii) incur,
assume, guarantee, endorse or otherwise become directly or
contingently liable for any obligation in excess of $50,000,
in a transaction or series of transactions;
(g) enter into any material transaction outside the ordinary
course of business; or
(h) without the approval of a majority of Board of Directors
(which approval shall include the affirmative vote of at least
one of the JDSTG's designees), authorize or issue, or obligate
itself to issue, any additional shares of any class or series
of capital stock of the Company or any obligation or security
exercisable for, convertible into or exchangeable for shares
of any class or series of capital stock of the Company, other
than as contemplated by the Stock Purchase Agreement
(provided, however, that this shall not apply to the issuance
of shares of common stock or stock options or other rights
exercisable for common stock issued on or after the date
hereof to directors, officers, employees or consultants of the
Company pursuant to any currently existing stock option plan
or agreement, employee stock ownership plan or employee
benefit plan.)
OTHER CONDITIONS TO JDSTG ADDITIONAL INVESTMENT. The consummation of
the 2nd Closing and the conversion of the JDSTG note are subject, at the option
of JDSTG, to fulfillment of certain other conditions, including among others,
satisfactory beta test results on the Company's JAVALAN product.
REGULATORY APPROVALS. The additional investment by JDSTG may not be
consummated until:
* Notifications have been given and certain information has been
furnished to the Federal Trade Commission and the Antitrust
Division of the Department of Justice under the Hart-Scott-
Rodino Act, and the rules promulgated thereunder by the
Federal Trade Commission; and
* Specified waiting period requirements have been satisfied.
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The Company and JDSTG have each filed their respective notification and
report forms required under the Hart-Scott-Rodino Act and the applicable waiting
period is expected to expire in early December 2000.
FAIRNESS OPINION. The Board of Directors of the Company has not sought
or obtained any independent third party opinion as to the fairness of the JDSTG
share acquisition, from a financial point of view, to the XATA shareholders.
NASDAQ REGULATIONS. The regulations of the Nasdaq Stock Market require
shareholder approval of any issuance of common stock (other than a public
offering) at a price less than the greater of book value or market value which,
together with sales by officers, directors and principal shareholders, equals
20% or more of the common stock or voting power outstanding before the
transaction. Issuance and/or sale without obtaining such approval could result
in delisting.
MINNESOTA LAW
Under the Minnesota Business Corporation Act, the Company is precluded
from entering into certain specified business combinations with, or proposed by,
or on behalf of, any "interested shareholder" or affiliated or associated
persons for at least four years after the shareholder acquires its 10% interest,
unless a committee of the Board consisting of all of its disinterested directors
(excluding present officers and employees of the Company and persons who were
officers or employees of the Company within the preceding five years) approves
the acquisition of the 10% interest or the business combination before the date
on which the shareholder acquires its 10% interest. "Interested shareholder"
means a beneficial holder of at least 10% of the outstanding voting shares,
including an affiliate or associate of the Company who, within the preceding
four years, was a 10% shareholder regardless of such person's present
shareholdings. The Board of Directors appointed a disinterested committee which
approved the Investment by JDSTG.
For purposes of the statute, business combinations include the
following transactions with an interested shareholder (or affiliated or
associated persons): (i) certain mergers of the Company or its subsidiaries,
statutory share exchanges or dispositions of substantial assets of the Company
or its subsidiaries; (ii) issuances or transfers by Company or its subsidiaries
of substantial shares of the Company or its subsidiaries; (iii) loans or other
financial assistance or tax advantages provided by the Company or its
subsidiaries; and (iv) recapitalizations that increase the proportionate voting
power of the interested shareholder or affiliated or associated persons. Plans
for a the liquidation, dissolution or reincorporation in another state of the
Company proposed by, or on behalf of, or pursuant to agreements, arrangements or
understandings with an interested shareholder (or affiliated or associated
persons) also constitute business combinations.
In addition, subject to certain exceptions, the Minnesota Business
Corporation Act requires the approval of the holders of a majority of the
Company's voting shares and a majority of the Company's voting shares held by
disinterested shareholders before a person purchasing 20% or more of the
Company's voting shares from a person other than the Company can vote the
10
<PAGE>
shares in excess of 20%. Similar shareholder approvals are required at the 33
1/3% and majority thresholds. These provisions are not applicable to the
Investment because JDSTG is purchasing its shares in excess of 20% directly from
the Company.
EFFECT OF THE TRANSACTION ON EXISTING SHAREHOLDERS
The Investment will not result in any change in the number or type of
shares owned by the existing holders of the Company's common stock. However,
following the 2nd Closing, and assuming conversion of the JDSTG note in August
2001, JDSTG will own slightly over 40% of the outstanding common stock and will
have three of seven Board seats. As a result, JDSTG will have the right to
influence the business and operations of the Company to a significant extent,
and will have the ability to significantly influence the outcome of any vote of
the shareholders, including votes concerning the election of directors and
changes in control. In addition, under the terms of the Stock Purchase Agreement
certain actions by the Company require prior consent of JDSTG (See "Covenants of
the Company").
USE OF PROCEEDS
The Company anticipates that the net proceeds of the entire Investment,
after payment of related transaction costs, will be approximately $12,700,000,
and that the net proceeds will be used to accelerate product development ($5.0
million), expand sales and marketing ($4.0 million), and provide working capital
($3.7 million). Pending application, the proceeds will be invested in
short-term, interest-bearing, investment-grade securities.
INDEPENDENT AUDITORS
The financial statements of the Company as of September 30, 1999 and
1998 and for the fiscal years then ended are incorporated herein by reference to
the Company's annual report on Form 10-KSB for the fiscal year ended September
30, 1999. Fiscal year ended September 30, 1999 has been audited by Grant
Thornton, LLP, independent auditors, and fiscal year ended September 30, 1998
has been audited by McGladrey & Pullen, LLP, independent auditors. A
representative of Grant Thornton, LLP is expected to be present at the Special
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.
The financial statements of the Company as of June 30, 2000 and for the
3-month and 9-month periods ended June 30, 2000 and 1999 which are incorporated
herein by reference to the quarterly report of the Company on Form 10-QSB for
the quarter ended June 30, 2000 have not been audited.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended
11
<PAGE>
(the "1934 Act"), are enclosed herewith and, to the extent indicated below,
incorporated herein by reference, as permitted by Schedule 14A under the 1934
Act:
Document Portions Incorporated By Reference
-------- ----------------------------------
Report on Form 10-KSB for the fiscal Financial Statements; Report of
year ended September 30, 1999 Independent Accountants; Changes in and
Disagreements with Accountants,
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Report on Form 10QSB for the quarter Financial Statements; Management's
ended June 30, 2000 Discussion and Analysis of Financial
Condition and Results of Operations
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, and, in accordance therewith, files reports and
other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company can be inspected and copies at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a Web site address, http:/www.sec.gov. The
Company's common stock is listed and traded on The Nasdaq Stock Market; reports,
proxy statements and other information concerning the Company may be inspected
at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C.
20006. Copies of the Stock Purchase Agreement, Registration Rights Agreement,
and Selling Stockholders Agreement are filed as exhibits to the Form 8-K Report
by the Company on September 7, 2000 and with the Schedule 13D filed by JDSTG on
September 11, 2000. If you do not have access to these filings, you may obtain a
copy of them without charge by contacting William P. Flies at XATA Corporation.
12
<PAGE>
PROPOSALS FOR FISCAL 2000 ANNUAL MEETING
It is currently anticipated that the 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
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
William P. Flies
SECRETARY
Dated: October 30, 2000
Burnsville, Minnesota
13
<PAGE>
APPENDIX A
Amendment to Restated Articles
STATE OF MINNESOTA
OFFICE OF THE SECRETARY OF STATE
AMENDMENT OF
ARTICLES OF INCORPORATION
OF
XATA CORPORATION
Pursuant to the provisions of Minnesota Statutes Section 302A.135, the
following Amendment to the Articles of Incorporation of XATA Corporation, a
Minnesota corporation, was approved and adopted pursuant to Minnesota Statutes
Chapter 302A.
Article 3 of the Restated Articles of Incorporation of the Corporation,
as amended and restated to date, is hereby amended in its entirety to read as
follows:
ARTICLE 3
3.1 This Corporation shall have the authority to issue an
aggregate of twelve million (12,000,000) shares of Common Stock, $.01
par value per share. Such shares shall be designated as this
Corporation's "Common Stock."
3.2 This Corporation shall have the authority to issue an
aggregate of two hundred eighty-three thousand three hundred
thirty-three (283,333) shares of Preferred Stock (which reflects
cancellation, pursuant to Section 302A.553 Subd. 3, Minnesota Statutes,
of fifty thousand (50,000) shares which were designated as Series A 8%
Convertible Preferred Stock), which may be issued in one or more series
as determined from time to time by the Board of Directors. The shares
of Preferred Stock of any series authorized for issuance by the Board
of Directors shall be senior to the Common Stock with respect to any
distribution (as such term is defined in Section 302A.011, Subd. 10,
Minnesota Statutes) if so designated by the Board of Directors upon
issuance of the shares of that series. The Board of Directors is hereby
granted the express authority to fix by resolution any other
designations, powers, preferences, rights (including, without
limitation, voting rights), qualifications, limitations or restrictions
with respect to any particular series of Preferred Stock prior to
issuance thereof.
<PAGE>
3.3 There shall be no cumulative voting by the holders of the
Common Stock.
3.4 The shareholders of this Corporation shall have no
preemptive rights to subscribe for or otherwise acquire (i) any new or
additional shares of stock of this Corporation of any class whether now
authorized or authorized hereafter, or (ii) any options or warrants to
purchase, subscribe for or otherwise acquire any such new or additional
shares of any class, or any shares, bonds, notes, debentures, or (iii)
other securities convertible into or carrying options or warrants to
purchase, subscribe for, or otherwise acquire any such new or
additional shares of any class.
I swear that the foregoing is true and accurate and that I have
authority to sign this document on behalf of the Corporation.
XATA CORPORATION
Dated: _______________, 2000 By _____________________________________
William P. Flies
Its Chief Executive Officer
2
<PAGE>
APPENDIX B
Description of JDSTG and New XATA Directors
Description of JDSTG
John Deere Special Technologies Group, Inc. ("JDSTG") was formed by Deere &
Company as a wholly owned subsidiary on March 15, 1999 to integrate the newest
technologies in electronics, software and navigation/communications into the
products and services of Deere & Company and to make these technologies
available to third party customers through a variety of business relationships
and ventures.
JDSTG may invest in or acquire companies that possess these technologies or
develop them internally through its wholly owned subsidiaries such as Phoenix
International (electronic controls and systems), Agris Corporation (software and
internet commerce applications), NavCom Technologies (precise positioning,
vehicle location and radio communications).
By focusing on these particular areas of expertise, JDSTG is able to help reduce
development costs and achieve faster time to market for its customers' products
and services. JDSTG's emphasis on third party sales requires it to remain
current in its areas of expertise and responsive to competitive market
conditions.
Description of New XATA Directors
Charles Ray Stamp, Jr., received a Bachelor of Arts Degree From Southeast
Missouri State University in 1971 and is a graduate of The University of
Missouri School of Law in Columbia, Missouri. He practiced law from 1974 until
1981 and then entered the agribusiness field. Mr. Stamp is an officer of Deere &
Company and serves as President of JDSTG. He is the immediate past President/CEO
and co-founder of InterAg Technologies, Inc., a privately held Atlanta-based
agricultural electronics manufacturing and computer software company which was
acquired by Deere & Company in 1999 to form the basis of JDSTG. Mr. Stamp
entered the agribusiness industry 1981 as President/CEO of Meyer Agri-Products,
Inc., a company that later became a division of Butler Manufacturing Company of
Kansas City, where he served as a division Vice-President.
Barry Batcheller is a graduate of North Dakota State University with a BS in
Electrical and Electronics Engineering. After graduating from NDSU, Barry
co-founded an electronics design and manufacturing company specializing in
communications devices. He left this company to join Steiger Tractor in Fargo,
North Dakota. While at Steiger he founded Integrated Technical Systems, a wholly
owned electronic design and manufacturing subsidiary. He served as its Vice
President and General Manager until
<PAGE>
Tenneco purchased the company, at which time he left to found Phoenix
International Corporation.
Barry Batcheller was President and CEO of Phoenix International Corporation, a
Fargo, North Dakota based electronic design and manufacturing company, from it's
founding until Deere and Company purchased it in 1999. He is currently President
of Phoenix International Corporation, a wholly owned subsidiary of Deere and
Company specializing in the design, development, and manufacture of electronic
components and systems for original equipment manufacturers (OEM's).
Barry was honored as the North Dakota Business Innovator of the Year in 1994,
and was selected as the Fargo Chamber of Commerce Small Business Person of the
Year in 1995. He holds numerous United States Patents on various mobile
electronic devices.
Barry serves as a director on a number of state and locally affiliated boards.
<PAGE>
XATA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Special Meeting of Shareholders
and Proxy Statement dated October 30, 2000, hereby appoints each of Stephen A.
Lawrence and William P. Flies 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 Special Meeting of Shareholders of XATA
Corporation to be held on Thursday, November 30, 2000 at 2:00 p.m. at the office
of XATA Corporation, 151 East Cliff Road, Suite 10, Burnsville, 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 GIVEN, THIS PROXY WILL BE VOTED
FOR ADOPTION OF PROPOSALS 1 AND 2 AND AT THE DISCRETION OF THE PROXY HOLDER ON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. To amend the Restated Articles of Incorporation of the Company to
increase the authorized common stock and to eliminate the provision
that reserves all voting rights to the common stock.
FOR AGAINST ABSTAIN
2. To approve the purchase of up to 3.6 million shares of common stock of
the Company by John Deere Special Technologies Group, Inc. (the
"Investment").
FOR AGAINST ABSTAIN
3. The authority to vote, in his discretion, on all other business that
may properly come before the meeting.
AUTHORITY AUTHORITY
GRANTED WITHHELD
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:__________________________, 20_____
-----------------------------------------
(Signature)
-----------------------------------------
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
XATA Corporation
We have audited the accompanying balance sheet of XATA
Corporation as of September 30, 1999, and the related statements of operations,
changes in shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of XATA
Corporation as of September 30, 1999, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/Grant Thornton LLP
Minneapolis, Minnesota
December 8, 1999
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
XATA Corporation
Burnsville, Minnesota
We have audited the accompanying balance sheet of XATA Corporation as of
September 30, 1998, and the related statements of operations, changes in
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of XATA Corporation as of
September 30, 1998, and the results of its operations and its cash flows for the
two years then ended, in conformity with generally accepted accounting
principles.
The September 30, 1998, financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
September 30, 1998, financial statements, the Company has incurred substantial
losses and reductions in cash and working capital during fiscal years 1998 and
1997. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2 to the September 30, 1998, financial statements. The
September 30, 1998, financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ McGLADREY & PULLEN, LLP
Minneapolis, Minnesota
December 8, 1998 (January 8, 1999, as to Note 8 to the September 30, 1998,
financial statements)
F-2
