exv4w3



 






	 	 	 
	 

	 	Amended effective February 8,
	 

	 	2006 to increase shares reserved
	 

	 	to 1,250,000 (§2) to require all
	 

	 	options and awards to be at or
	 

	 	above fair market value (§5)
	 

	 	and to extend the term for non-
	 

	 	employee director options from
	 

	 	five to ten years (§19)






XATA CORPORATION




2002 LONG-TERM INCENTIVE

AND

STOCK OPTION PLAN




 









 








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	 







 










 






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 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.



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	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 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.



3









 






	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 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.



4









 






	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
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.



5









 







	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 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,



6









 




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 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 15 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.




7









 












	 	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.
	 
	 	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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