Exhibit 10.14
XATA CORPORATION
2002 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN

 

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TABLE OF CONTENTS

                 
1.
  Purpose of Plan     1  
2.
  Stock Subject to Plan     1  
3.
  Administration of Plan     1  
4.
  Eligibility     2  
5.
  Price     3  
6.
  Term     3  
7.
  Exercise of Option or Award     3  
8.
  Additional Restrictions     4  
9.
  Alternative Stock Appreciation Rights     4  
10.
  Ten Percent Shareholder Rule     4  
11.
  Non-Transferability     4  
12.
  Restricted Stock Awards     5  
13.
  Performance Awards     5  
14.
  Dilution or Other Adjustments     6  
15.
  Amendment or Discontinuance of Plan     6  
16.
  Time of Granting     6  
17.
  Income Tax Withholding and Tax Bonuses     6  
18.
  Effective Date and Termination of Plan     7  
19.
  Automatic Grant of Non-Employee Director Options     7  

 

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2002 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN
1. Purpose of Plan.
This Plan shall be known as the “XATA 2002 LONG-TERM INCENTIVE AND STOCK OPTION
PLAN” and is hereinafter referred to as the “Plan”. The purpose of the Plan is
to aid in maintaining and developing personnel capable of assuring the future
success of XATA Corporation, a Minnesota corporation (the “Company”), to offer
such personnel additional incentives to put forth maximum efforts for the
success of the business, and to afford them an opportunity to acquire a
proprietary interest in the Company through stock options and other long-term
incentive awards as provided herein. Options granted under this Plan may be
either incentive stock options (“Incentive Stock Options”) within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the “Code”), or options which
do not qualify as Incentive Stock Options. Awards granted under this Plan shall
be stock appreciation rights (“SARs”), restricted stock or performance awards as
hereinafter described.
2. Stock Subject to Plan.
Subject to the provisions of Section 14 hereof, the stock to be subject to
options or other awards under the Plan shall be the Company’s authorized Common
Stock, par value $0.01 per share (the “Common Shares”). Such shares may be
either authorized but unissued shares, or issued shares which have been
reacquired by the Company. Subject to adjustment as provided in Section 14
hereof, the maximum number of shares on which options may be exercised or other
award issued under this Plan shall be 1,250,000 shares. If an option or award
under the Plan expires, or for any reason is terminated or unexercised with
respect to any shares, such shares shall again be available for options or
awards thereafter granted during the term of the Plan.
3. Administration of Plan.
     (a) Except as provided in Section 3(d) hereof, the Plan shall be
administered by the Board of Directors of the Company or a committee thereof.
The members of any such committee shall be appointed by and serve at the
pleasure of the Board of Directors. If no committee is appointed by the Board,
the committee shall be comprised of all of the members of the Board of
Directors. (The group administering the Plan shall hereinafter be referred to as
the “Committee”.)
     (b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered by each option or award, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each, (iii) to determine
the form of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Shares of the Company or a combination
thereof, (iv) to determine the terms of exercise of each option and award,
(v) to accelerate the time at which all or any part of an option or award may be
exercised, (vi) to amend or modify the terms of any option or award with the
consent of the optionee, (vii) to interpret the Plan, (viii) to prescribe, amend
and rescind rules and regulations relating to the Plan, (ix) to determine the
terms and provisions of each option and award agreement under the Plan (which
agreements need not be identical), including the designation of those options
intended to be Incentive Stock Options, and (x) to make all other determinations
necessary or advisable for the administration of the Plan, subject to the
exclusive authority of the Board of Directors under Section 15 herein to amend
or

 

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terminate the Plan. The Committee’s determinations on the foregoing matters,
unless otherwise disapproved by the Board of Directors of the Company, shall be
final and conclusive.
     (c) The Committee may select one of its members as its Chairman and shall
holds its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination reduces to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.
     (d) Section 19 of the Plan shall be administered by the President and the
Chief Financial Officer, whose construction and interpretation of the terms and
provisions of such Sections shall be final and conclusive; provided that the
numbers of Common Shares subject to options granted to Non-Employee Directors
(defined below) under Section 19, the timing of the grants of such options
(except as provided in Section 19), the eligibility for such options, and the
terms and conditions of such options, shall be automatic and non-discretionary
in accordance with the terms of such Section.
4. Eligibility.
     Incentive Stock options may only be granted under this Plan to any full or
part-time employee (which term as used herein includes, but is not limited to,
officers and directors who are also employees) of the Company and of its present
and future subsidiary corporations (herein called “subsidiaries”). Full or
part-time employees, non-employee members of the Board of Directors, and
non-employee consultants, agents or independent contractors to the Company or
one of its subsidiaries shall be eligible to receive options which do not
qualify as Incentive Stock Options and awards. For purposes of Section 19
hereof, “Non-Employee Director,” means any member of the Board of Directors who
is not at the time of option grant an employee of the Company. Non-Employee
Directors shall be eligible for discretionary grants and awards under the Plan
in addition to automatic option grants under Section 19. In determining the
persons to whom options and awards shall be granted and the number of shares
subject to each, the Committee may take into account the nature of services
rendered by the respective employees or consultants, their present and potential
contributions to the success of the Company and such other factors as the
Committee in its discretion shall deem relevant. A person who has been granted
an option or award under this Plan may be granted additional options or awards
under the Plan if the Committee shall so determine; provided, however, that for
Incentive Stock Options, to the extent the aggregate fair market value
(determined at the time the Incentive Stock Option is granted) of the Common
Shares with respect to which all Incentive Stock Options are exercisable for the
first time by an employee during any calendar year (under all plans described in
subsection (d) of Section 422 of the Code of his employer corporation and its
parent and subsidiary corporations) exceeds $100,000, such options shall be
treated as options which do not qualify as Incentive Stock Options. Nothing in
the Plan or in any agreement thereunder shall confer on any employee any right
to continue in the employ of the Company or any of its subsidiaries or affect,
in any way, the right of the Company or any of its subsidiaries to terminate his
or her employment at the time.
5. Price.
     The option price for all Incentive Stock Options, for options which do not
qualify as Incentive Stock Options, and if applicable, the price for all awards
granted under the Plan shall be determined by the Committee, but shall not be
less than 100% of the fair market value of the Common Shares at the date

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of grant of such option or award. For purposes of the preceding sentence and for
all other valuation purposes under the Plan, the fair market value of the Common
Shares shall be as reasonably determined by the Committee. If on the date of
grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.
6. Term.
     Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.
7. Exercise of Option or Award.
     (a) The Committee shall have full and complete authority to determine
whether an option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in such
installments, upon the occurrence of such events (such as termination of
employment for any reason) and at such times during the term of the option as
the Committee may determine and specify in the option or award agreement.
     (b) The exercise of any option or award granted hereunder shall only be
effective at such time that the sale of Common Shares pursuant to such exercise
will not violate any state or federal securities or other laws.
     (c) An optionee or grantee electing to exercise an option or award shall
give written notice to the Company of such election and of the number of shares
subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise. Payment shall be made to the Company in
cash (including bank check, certified check, personal check, or money order),
or, at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company’s Common Shares already owned by the
optionee or grantee having a fair market value as of the date of grant equal to
the full purchase price of the shares, (ii) by delivering a combination of cash
and such shares, or (iii) by delivering (including by fax) to the Company or its
designated agent an executed irrevocable option exercise form together with
irrevocable instructions to a broker-dealer to sell or margin the Common Shares
and deliver the sale or margin loan proceeds directly to the Company to the
extent required to pay the option exercise price.
     (d) The fair market value of the Common Shares which are tendered in
payment of the exercise price shall be determined as provided in Section 5
herein.
     (e) Until such person has been issued the shares subject to such exercise,
he or she shall possess no rights as a shareholder with respect to such shares.
8. Additional Restrictions.
     The Committee shall have full and complete authority to determine whether
all or any part of the Common Shares of the Company acquired upon exercise of
any of the options or awards granted under the Plan shall be subject to
restrictions on the transferability thereof or any other restrictions affecting
in

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any manner the optionee’s or grantee’s rights with respect thereto, but any such
restriction shall be contained in the agreement relating to such options or
awards.
9. Alternative Stock Appreciation Rights.
     (a) Grant. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right (“SAR”) evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.
     (b) Exercise. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares specified in the notice and which shall
further state what portion, if any, of the SAR exercise amount (hereinafter
defined) the holder thereof requests be paid to in cash and what portion, if
any, is to be paid in Common Shares of the Company. The Committee promptly shall
cause to be paid to such holder the SAR exercise amount either in cash, in
Common Shares of the Company, or any combination of cash and shares as the
Committee may determine. Such determination may be either in accordance with the
request made by the holder of the SAR or in the sole and absolute discretion of
the Committee. The SAR exercise amount is the excess of the fair market value of
one share of the Company’s Common Shares on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company’s shares shall be determined as provided in
Section 5 herein.
10. Ten Percent Shareholder Rule.
     Notwithstanding any other provision in the Plan, if at the time an option
is granted pursuant to the Plan the optionee owns directly or indirectly (within
the meaning of Section 425(d) of the Code) Common Shares of the Company
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or its parent or subsidiary corporations, if any
(within the meaning of Section 422(b)(6) of the Code), then any Incentive Stock
Option to be granted to such optionee pursuant to the Plan shall satisfy the
requirements of Section 422(c)(6) of the Code, and the option price shall be not
less than 110% of the fair market value of the Common Shares of the Company
determined as described herein, and such option by its terms shall not be
exercisable after the expiration of five (5) years from the date such option is
granted.
11. Non-Transferability.
     No Incentive Option granted under the Plan shall be transferable by an
optionee, otherwise than by will or the laws of descent or distribution. Except
as otherwise provided in an option or award agreement, during the lifetime of an
optionee or grantee, the option shall be exercisable only by such optionee or
grantee.
12. Restricted Stock Awards.
     Awards of Common Shares subject to forfeiture and transfer restrictions may
be granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the

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following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan:
     (a) Grant of Restricted Stock Awards. Each restricted stock award made
under the Plan shall be for such number of Common Share as shall be determined
by the Committee and set forth in the agreement containing the terms of such
restricted stock award. Such agreement shall set forth a period of time during
which the grantee must remain in the continuous employment of the Company in
order for the forfeiture and transfer restrictions to lapse. If the Committee so
determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Shares to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.
     (b) Delivery of Common Shares and Restrictions. At the time of a restricted
stock award, a certificate representing the number of Common Shares awarded
thereunder shall be registered in the name of the grantee. Such certificate
shall be held by the Company or any custodian appointed by the Company for the
account of the grantee subject to the terms and conditions of the Plan, and
shall bear such a legend setting forth the restrictions imposed thereon as the
Committee, in its discretion, may determine. The grantee shall have all rights
of a shareholder with respect to the Common Shares, including the right to
receive dividends and the right to vote such shares, subject to the following
restrictions: (i) the grantee shall not be entitled to delivery of the stock
certificate until the expiration of the restricted period and the fulfillment of
any other restrictive conditions set forth in the restricted stock agreement
with respect to such Common Shares; (ii) none of the Common Shares may be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of during such restricted period or until after the fulfillment of any such
other restrictive conditions; and (iii) except as otherwise determined by the
Committee, all of the Common Shares shall be forfeited and all rights of the
grantee to such Common Shares shall terminate, without further obligation on the
part of the Company, unless the grantee remains in the continuous employment of
the Company for the entire restricted period in relation to which such Common
Shares were granted and unless any other restrictive conditions relating to the
restricted stock award are met. Any Common Shares, any other securities of the
Company and any other property (except for cash dividends) distributed with
respect to the Common Shares subject to restricted stock awards shall be subject
to the same restrictions, terms and conditions as such restricted Common Shares.
     (c) Termination of Restrictions. At the end of the restricted period and
provided that any other restrictive conditions of the restricted stock award are
met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in the agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Shares subject thereto,
and a stock certificate for the appropriate number of Common Shares, free of the
restrictions and the restricted stock legend, shall be delivered to the grantee
or his beneficiary or estate, as the case may be.
13. Performance Awards.
     The Committee is further authorized to grant Performance awards. Subject to
the terms of this Plan and any applicable award agreement, a Performance award
granted under the Plan (i) may be denominated or payable in cash, Common Shares
(including, without limitation, restricted stock), other securities, other
awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee, in its discretion, and payable to, or
exercisable by, the holder of the Performance awards, in whole or in part, upon
the achievement of such performance goals during such performance periods as the
Committee, in its discretion, shall establish. Subject to the terms of this Plan

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and any applicable award agreement, the performance goals to be achieved during
any performance period, the length of any performance period, the amount of any
Performance award granted, and the amount of any payment or transfer to be made
by the granter and by the Company under any Performance award shall be
determined by the Committee.
14. Dilution or Other Adjustments.
     If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.
15. Amendment or Discontinuance of Plan.
      The Board of Directors may amend or discontinue at any time. Subject to
the provisions of Section 14 no amendment of the Plan, however, shall without
shareholder approval: (i) increase the maximum number of shares under the Plan
as provided in Section 2 herein, (ii) decrease the minimum price provided in
Section 5 herein, (iii) extend the maximum term under Section 6, or (iv) modify
the eligibility requirements for participation in the Plan. The Board of
Directors shall not alter or impair any option or award theretofore granted
under the Plan without the consent of the holder of the option or award.
16. Time of Granting.
     Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee or the Board of Directors (other than the execution and
delivery of an option or award agreement), shall constitute the granting of an
option or award hereunder.
17. Income Tax Withholding and Tax Bonuses.
     (a) In order to comply with all applicable federal or state income tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal or state payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of an optionee or
grantee under the Plan, are withheld or collected from such optionee or grantee.
In order to assist an optionee or grantee in paying all federal and state taxes
to be withheld or collected upon exercise of an option or award which does not
qualify as an Incentive Stock Option hereunder, the Committee, in its absolute
discretion and subject to such additional terms and conditions as it may adopt,
shall permit the optionee or grantee to satisfy such tax obligation by
(i) electing to have the Company withhold a portion of the shares otherwise to
be delivered upon exercise of such option or award with a fair market value,
determined in accordance with Section 5 herein, equal to such taxes or
(ii) delivering to the Company Common Shares other than the shares issuable upon
exercise of such option or award with a fair market value, determined in
accordance with Section 5, equal to such taxes.
     (b) The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionee or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payment shall be determined

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by the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.
18. Effective Date and Termination of Plan.
     (a) The Plan was approved by the Board of Directors effective December 7,
2001 and by the shareholders of the Company on February 26, 2002.
     (b) Unless the Plan shall have been discontinued as provided in Section 14
hereof, the Plan shall terminate February 26, 2012. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
19. Automatic Grant of Non-Employee Director Options.
     Pursuant to this Section 19, each Non-Employee Director elected or
re-elected to the Board on or after the date of the annual meeting of
shareholders held in 2002 shall be granted automatically an option to purchase
5,000 Common Shares on the next business day following the annual shareholder
meeting (as to each, a “Director Grant Date”) at which such director is elected
or re-elected. Notwithstanding the foregoing, if on the scheduled Director Grant
Date, the President determines, in his discretion, that the Company is in
possession of material, undisclosed information, then the grant of options will
be suspended until the third day after public dissemination of such information.
The President may only suspend the grant; the amount and other terms of the
grant will remain as set forth in the Plan, with the exercise price of the
option to be determined in accordance with the Plan on the date the option is
finally granted.
     Each option granted under this Section to a Non-Employee Director shall be
evidenced by an agreement, in a form approved by the President. Such agreement
shall contain the following terms and conditions:

  a.   Term. Each option granted under Section 19 to a Non-Employee Director
shall have a term of ten years and shall be immediately exercisable as to all
Common Shares; provided, however that no shares of Common stock issued upon the
exercise of an option may be sold or otherwise disposed of until six months
after the Director Grant Date of the option.     b.   Exercise Price. The
exercise price per share of options granted under Section 19 shall be 100% of
the fair market value of one Common Share on the Director Grant Date. For these
purposes, “fair market value” shall mean the average of the reported high and
low sale prices of the Common Shares, as reported on the Nasdaq National Market
or Nasdaq SmallCap Market on the Director Grant Date.     c.   Compliance with
SEC Regulations. It is the Company’s intent that the provisions of Sections 19
and 19A comply in all respects with Section 16 of the Securities Exchange Act of
1934 (the “1934 Act”) and any regulations promulgated thereunder, including
Rule 16b-3. If any provision of Section 19 is found not to be in compliance with
the Rule, the provision shall be deemed null and void. All grants and exercises
of options granted under Section 19 shall be executed in accordance with the
requirements of Section 16 of the 1934 Act, as amended, and any regulations
promulgated thereunder.

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  d.   Tax Status. All options granted pursuant to Section 19 shall be
nonqualified options which are not intended to be, and do not qualify as,
incentive stock options described in Section 422 of the Internal Revenue Code of
1986, as amended.

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