Exhibit 10.1
SEPARATION AGREEMENT
     THIS SEPARATION AGREEMENT (this “Agreement”) is made and entered into by
and between Thomas Schlick (“Employee”) and XATA Corporation (the “Company”).
BACKGROUND
     A. Employee has been employed by the Company since March 23, 2006, and is
currently employed by the Company as its Executive Vice President of Services.
     B. The Company and Employee entered into a Confidentiality, Invention and
Non-Compete Agreement, dated March 23, 2006 (the “Confidentiality Agreement”).
     C. The Company and Employee entered into a Restricted Stock Award Agreement
dated April 10, 2006 (the “2002 Restricted Stock Agreement”), pursuant to which
the Company granted Employee an award under the Company’s 2002 Long-Term
Incentive and Stock Option Plan (the “2002 Plan”) in the form of shares of
restricted stock (the “2002 Restricted Shares”).
     D. The Company and Employee entered into a Restricted Stock Award Agreement
dated January 5, 2007 (the “2007 Restricted Stock Agreement”), pursuant to which
the Company granted Employee an award under the 2002 Plan in the form of shares
of restricted stock (the “2007 Restricted Shares”).
     E. The Company has decided to terminate Employee’s employment without cause
effective January 31, 2008.
     F. The Company and Employee are concluding their employment relationship
amicably, but mutually recognize that such a relationship may give rise to
potential claims or liabilities.
     G. The parties desire to resolve all issues now in dispute between them and
have agreed to a full settlement of such issues.

 

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     NOW THEREFORE, in consideration of the mutual promises and provisions
contained in this Agreement and the Release referred to below, the parties,
intending to be legally bound, agree as follows:
AGREEMENT
     1. Termination of Employment. Employee’s employment with the Company will
terminate effective January 31, 2008 (the “Termination Date”).
     2. Employee Release. At the same time that Employee executes this
Agreement, he shall execute a Release in the form attached to this Agreement as
Exhibit A (the “Release”), in favor of the Company and its affiliates,
divisions, committees, directors, officers, employees, agents, predecessors,
successors and assigns. This Agreement will not be interpreted or construed to
limit the Release in any manner. The existence of any dispute respecting the
interpretation of this Agreement or the alleged breach of this Agreement will
not nullify or otherwise affect the validity or enforceability of the Release.
     3. Severance Benefits. Provided Employee signs this Agreement and the
Release, does not rescind this Agreement or the Release within the rescission
period set forth in paragraph 11 below (the “Rescission Period”), and does not
breach his obligations pursuant to this Agreement, the Release, or the
Confidentiality Agreement, Employee shall receive the following benefits
(collectively, the “Severance Benefits”):

  (a)   Severance Pay. The Company will pay Employee total severance pay in the
amount of $200,000.00, which is equivalent to one year of Employee’s base
salary, less applicable deductions and withholdings, to be paid to Employee
biweekly in twenty-six (26) substantially equal payments, beginning on or about
the first regularly scheduled payday after the

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      expiration of the Rescission Period and in no event later than March 15,
2009.     (b)   Continued Benefits. If Employee is eligible for and properly
elects to continue Employee’s health benefits, as in place immediately prior to
the Termination Date, the Company shall continue to pay the Company’s portion of
any such premiums or costs of coverage as if Employee were still employed by the
Company (on a benefit by benefit basis) for twelve (12) months after the
Termination Date, or until Employee is eligible for such coverage through
another employer, whichever is earlier. All such Company-provided health
benefits premiums shall be paid directly to the insurance carrier(s) by the
Company and Employee shall make arrangements with the Company to pay the
Employee’s portion of such coverage.     (c)   Outplacement Services.
Outplacement services up to $10,000.00 in value will be made available to
Employee through a provider of the Company’s choice. These outplacement services
must be used by Employee within the first six (6) months following the
Termination Date. The Company shall pay the outplacement services provider
directly for any services utilized by Employee pursuant to this paragraph 3(c).
    (d)   Computer. Executive shall be allowed to keep his Company-issued
personal computer provided the Company first inspects the computer and
determines that all confidential and proprietary Company information has

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      been deleted and Employee has not otherwise retained such information
after the Termination Date.

The Company shall deduct from any payments made to Employee hereunder any
withholding or other taxes which the Company is required or authorized to
deduct, if any, under applicable law.
     4. Restricted Shares. All vesting or exercise rights, limitations,
restrictions or other terms or conditions related to Employee’s 2002 Restricted
Shares or 2007 Restricted Shares shall remain subject to and governed by the
2002 Restricted Share Agreement, the 2007 Restricted Share Agreement and the
2002 Plan, as applicable.
     5. Other Benefits. Whether or not Employee signs this Agreement and the
Release, he will be paid all accrued paid time off that he has not used as of
the Termination Date. Such payment will be included in Employee’s final
paycheck. Employee will retain any and all rights that he may have to his
retirement benefits from the Company’s retirement benefits plans according to
the terms and conditions of said retirement benefit plans.
     6. Mutual Non-disparagement. Employee will not disparage the reputation,
character, image, products, or services of the Company, or the reputation or
character of the Company’s employees, directors or officers. The Company will
not authorize or encourage any employee of the Company to disparage Employee’s
reputation or character. Nothing in this paragraph 6 shall be construed to limit
or restrict either party from taking any action that either party in good faith
reasonably believes is necessary to fulfill his or its fiduciary obligations to
the Company, or from providing truthful information in connection with any legal
proceeding, investigation or other legal matter.
     7. Future References. It is Employee’s responsibility to direct or cause to
be directed all future official requests for references concerning him to Diane
Hendricks, who will

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respond to such requests by confirming the dates of Employee’s employment with
the Company, identifying the positions he held, and at his request, confirming
Employee’s base salary as of the Termination Date.
     8. Records, Documents, and Property. Employee acknowledges and represents
that he has delivered or will deliver to the Company on or before the
Termination Date any and all Company records and any and all Company property in
his possession or under his control, including without limitation, manuals,
books, blank forms, documents, letters, memoranda, notes, notebooks, reports,
printouts, computer disks, computer tapes, data, tables, or calculations and all
copies thereof, documents that in whole or in part contain any trade secrets or
confidential, proprietary, or other secret information of the Company and all
copies thereof, and keys, access cards, access codes, source codes, passwords,
credit cards, personal computers, telephones, and other electronic equipment
belonging to the Company.
     9. No Other Remuneration. Employee agrees that he is not entitled to any
remuneration from the Company except as provided in this Agreement. This
includes back pay, sick pay, vacation pay, bonuses, separation pay or any other
compensation.
     10. Time to Consider Agreement. Employee understands that he may take
twenty-one (21) calendar days to decide whether to sign this Agreement and the
Release, which 21-day period will start on the day after the date on which
Employee first received copies of this Agreement and the Release for review.
Employee represents that if he signs this Agreement and the Release before the
expiration of the 21-day period, it is because he has decided that he does not
need any additional time to decide whether to sign this Agreement and the
Release. Employee also acknowledges that any changes made to this Agreement or
the Release before he

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executes either of them, whether such changes are material or immaterial, will
not cause the 21-day period to commence again.
     11. Rescission Notice. Within fifteen (15) calendar days after signing this
Agreement and the Release, Employee has the right to rescind this Agreement and
the Release. To be effective, the rescission must be in writing and delivered to
the Company at the following address:
XATA Corporation
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Attention: Diane Hendricks
     If delivered by mail, the rescission must be:

  (a)   Postmarked within the 15-day period;     (b)   Properly addressed to the
Company at the address stated above; and     (c)   Sent by certified mail,
return receipt requested.

Employee understands that this Agreement will not become effective or
enforceable unless and until he has signed and not rescinded this Agreement or
the Release and the rescission period has expired.
     12. No Admission of Liability by The Company. Employee acknowledges that
the Company’s payment of consideration for this Agreement is not to be construed
as an admission of any liability on the part of the Company or any officer,
director, shareholder or employee of the Company. Such liability is expressly
denied by the Company, on behalf of itself and its officers, directors,
shareholders and employees.
     13. Confidentiality. The terms of this Agreement and the Release will be
treated as forever confidential by Employee and will not be disclosed by him to
anyone except his spouse,

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attorney, accountant, or tax advisor, or except as may be required by law or to
enforce this Agreement or Release or as agreed to in writing by the Company.
     14. Voluntary Agreement. Employee is entering into this Agreement and
Release voluntarily. Employee acknowledges that he has been advised by the
Company to consult with his own attorney before executing this Agreement and the
Release, that he has had a full opportunity to consider this Agreement and the
Release, that he has had a full opportunity to ask any questions that he may
have concerning this Agreement, the Release, or the settlement of his potential
claims against the Company, and that he has not relied upon any statements or
representations made by the Company or its attorneys, written or oral, other
than the statements and representations that are explicitly set forth in this
Agreement, the Release, the Confidentiality Agreement, the 2002 Restricted Stock
Agreement, the 2007 Restricted Stock Agreement and any qualified employee
benefit plans sponsored by the Company in which Employee is a participant.
     15. Other Agreements. Employee acknowledges and agrees that nothing in this
Agreement affects his obligations or rights under the Confidentiality Agreement,
the 2002 Restricted Stock Agreement or the 2007 Restricted Stock Agreement.
Employee acknowledges and affirms his continuing obligation to comply with the
terms and conditions of the Confidentiality Agreement. The Confidentiality
Agreement, the 2002 Restricted Stock Agreement, the 2007 Restricted Stock
Agreement and this Agreement make up all of the agreements between Employee and
the Company. There are no oral agreements between them, and Employee has not
relied upon anything other than those written agreements in deciding to sign
this Agreement.

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     16. Assignment. This Agreement is binding on Employee and on the Company
and its successors and assigns. The rights and obligations of the Company under
this Agreement may be assigned to a successor, including, but not limited to a
purchaser of substantially all the business or assets of the Company. No rights
or obligations of Employee hereunder may be assigned by Employee to any other
person on entity.
     17. Invalidity. In the event that any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such a determination will not affect the validity,
legality, or enforceability of the remaining provisions of this Agreement and
the remaining provisions of this Agreement will continue to be valid and
enforceable, and any court of competent jurisdiction may modify the
objectionable provision so as to make it valid and enforceable.
     18. Headings. The descriptive headings of the paragraphs and subparagraphs
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
     19. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
     20. Governing Law; Jurisdiction and Venue. This Agreement shall be
construed and enforced in accordance with the laws of the State of Minnesota.
Employee and the Company consent to jurisdiction of the courts of the State of
Minnesota and/or the federal district courts in Minnesota, for the purpose of
resolving all issues of law, equity, or fact, arising out of or in connection
with this Agreement. Any action involving claims of a breach of this Agreement
shall be brought in such courts. Each party consents to personal jurisdiction
over

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such party in the state and/or federal courts of Minnesota and hereby waives any
defense of lack of personal jurisdiction.
     21. Interpretation. This Agreement is intended to provide for Severance
Benefits that are not deferred compensation subject to the requirements of
Section 409A(a)(2), (3), or (4) of the Code. To the extent any Severance
Benefits under this Agreement are made in accordance with this Agreement and are
subject to the requirements of Section 409A(a)(2), (3), or (4) of the Code, this
Agreement is intended to satisfy such requirements, including current and future
guidance and regulations interpreting such provisions, and should be interpreted
accordingly.
     22. Authority. The parties to this Agreement, by their signature below,
warrant that they have signed this agreement of their own free will, and that
the person executing the Agreement has been expressly authorized to enter into
this Agreement.

              Dated: January 16, 2008   /s/ Thomas Schlick                  
Thomas Schlick    
 
            Dated: January 16, 2008   /s/ Jay Coughlan                   XATA
Corporation    
 
           
 
  By:   Jay Coughlan
 
   
 
           
 
  Its:   CEO    

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EXHIBIT A
EMPLOYEE RELEASE
Definitions. I intend all words used in this Release to have their plain
meanings in ordinary English. Specific terms that I use in this Release have the
following meanings:

  A.   I, me, and my include both me and anyone who has or obtains any legal
rights or claims through me.     B.   XATA means XATA Corporation, any company
related to XATA Corporation in the present or past (including without
limitation, its predecessors, parents, subsidiaries, affiliates, joint venture
partners, and divisions), and any successors of XATA Corporation.     C.  
Company means XATA; the present and past officers, directors, committees,
shareholders, and employees of XATA; any company providing insurance to XATA in
the present or past; the present and past fiduciaries of any employee benefit
plan sponsored or maintained by XATA (other than multiemployer plans); the
attorneys for XATA; and anyone who acted on behalf of XATA or on instructions
from XATA.     D.   Agreement means the Separation Agreement between XATA and me
that I am executing on the same date on which I execute this Release, including
all of the documents attached to the Agreement.     E.   My Claims mean all of
my rights that I now have to any relief of any kind from the Company, including
without limitation:

  1.   all claims arising out of or relating to my employment with XATA or the
termination of that employment;     2.   all claims arising out of or relating
to the statements, actions, or omissions of the Company;     3.   all claims for
any alleged unlawful discrimination, harassment, retaliation or reprisal, or
other alleged unlawful practices arising under any federal, state, or local
statute, ordinance, or regulation, including without limitation, claims under
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Americans with Disabilities Act, 42 U.S.C. § 1981, the Employee
Retirement Income Security Act, the Equal Pay Act, the Minnesota Human Rights
Act, the Fair Credit Reporting Act, and workers’ compensation non-interference
or non-retaliation statutes (such as Minn. Stat. § 176.82);     4.   all claims
for alleged wrongful discharge; breach of contract; breach of implied contract;
failure to keep any promise; breach of a covenant of

 

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      good faith and fair dealing; breach of fiduciary duty; estoppel; my
activities, if any, as a “whistleblower”; defamation; infliction of emotional
distress; fraud; misrepresentation; negligence; harassment; retaliation or
reprisal; constructive discharge; assault; battery; false imprisonment; invasion
of privacy; interference with contractual or business relationships; any other
wrongful employment practices; and violation of any other principle of common
law;     5.   all claims for compensation of any kind, including without
limitation, bonuses, commissions, stock-based compensation or stock options,
vacation pay, perquisites, and expense reimbursements;     6.   all claims for
back pay, front pay, reinstatement, other equitable relief, compensatory
damages, damages for alleged personal injury, liquidated damages, and punitive
damages; and     7.   all claims for attorneys’ fees, costs, and interest.

However, My Claims do not include any claims that the law does not allow to be
waived; any claims that may arise after the date on which I sign this Release;
or any claims for breach of the Agreement.
Agreement to Release My Claims. I will receive consideration from XATA as set
forth in the Agreement if I sign and do not rescind this Release as provided
below. I understand and acknowledge that that consideration is in addition to
anything of value that I would be entitled to receive from XATA if I did not
sign this Release or if I rescinded this Release. In exchange for that
consideration I give up and release all of My Claims. I will not make any
demands or claims against the Company for compensation or damages relating to My
Claims. The consideration that I am receiving is a fair compromise for the
release of My Claims.
Additional Agreements and Understandings. Even though XATA will provide
consideration for me to settle and release My Claims, the Company does not admit
that it is responsible or legally obligated to me. In fact, the Company denies
that it is responsible or legally obligated to me for My Claims, denies that it
engaged in any unlawful or improper conduct toward me, and denies that it
treated me unfairly.
Confidentiality. I understand that the terms of this Release are confidential
and that I may not disclose those terms to any person except under the
circumstances described in the Agreement.
Advice to Consult with an Attorney. I understand and acknowledge that I am
hereby being advised by the Company to consult with an attorney prior to signing
this Release. My decision whether to sign this Release is my own voluntary
decision made with full knowledge that the Company has advised me to consult
with an attorney.
Period to Consider the Release. I understand that I have 21 days from the day
that I receive this Release, not counting the day upon which I receive it, to
consider whether I wish to sign this Release. If I sign this Release before the
end of the 21-day period, it will be my voluntary

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decision to do so because I have decided that I do not need any additional time
to decide whether to sign this Release. I also agree that any changes made to
this Release or to the Agreement before I sign it, whether material or
immaterial, will not restart the 21-day period.
My Right to Rescind this Release. I understand that I may rescind this Release
at any time within 15 days after I sign it, not counting the day upon which I
sign it. This Release will not become effective or enforceable unless and until
the 15-day rescission period has expired without my rescinding it.
Procedure for Accepting or Rescinding the Release. To accept the terms of this
Release, I must deliver the Release, after I have signed and dated it, to XATA
by hand or by mail within the 21-day period that I have to consider this
Release. To rescind my acceptance, I must deliver a written, signed statement
that I rescind my acceptance to XATA by hand or by mail within the 15-day
rescission period. All deliveries must be made to XATA at the following address:
XATA Corporation
151 East Cliff Road, Suite 10
Burnsville, MN 55337
Attention: Diane Hendricks
If I choose to deliver my acceptance or the rescission by mail, it must be:
(a) Postmarked within the 15-day period;
(b) Properly addressed to XATA at the address stated above; and
(c) Sent by certified mail, return receipt requested.
Interpretation of the Release. This Release should be interpreted as broadly as
possible to achieve my intention to resolve all of My Claims against the
Company. If this Release is held by a court to be inadequate to release a
particular claim encompassed within My Claims, this Release will remain in full
force and effect with respect to all the rest of My Claims.
My Representations. I am legally able and entitled to receive the consideration
being provided to me in settlement of My Claims. I have not been involved in any
personal bankruptcy or other insolvency proceedings at any time since I began my
employment with XATA. No child support orders, garnishment orders, or other
orders requiring that money owed to me by XATA be paid to any other person are
now in effect.
I have read this Release carefully. I understand all of its terms. In signing
this Release, I have not relied on any statements or explanations made by the
Company except as specifically set forth in the Agreement. I am voluntarily
releasing My Claims against the Company. I intend this Release and the Agreement
to be legally binding.

          Dated: 1/16/08   /s/ Thomas Schlick
 
Thomas Schlick    

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