<PAGE>

EXHIBIT 10.27

                         EXECUTIVE EMPLOYMENT AGREEMENT

      THIS EXECUTIVE EMPLOYMENT AGREEMENT ("AGREEMENT") effective the 1st Day of
October, 2002, is by and between XATA Corporation, a Minnesota corporation
("Company"), and William P. Flies ("Executive).

                                    RECITALS:

WHEREAS, the Company desires to employ Executive

WHEREAS, Executive desires to be employed by the Company; and

            WHEREAS, Company and Executive desire to set forth in writing the
      terms and conditions of their agreements and understanding;

            NOW THEREFORE, in consideration of the mutual covenants and
      undertakings contained in this Agreement, the Company and the Executive
      agree as follows:

      A.    Executive is employed by the Company in the capacity of Chairman and
            Chief Technology Officer effective the date of this Agreement.

      B.    The Company is currently engaged in the development of onboard
            information technology products. (the "Products") and in marketing
            such Products to the transportation industry (hereafter the
            "Company's Business").

      C.    Executive has certain unique skills, talents, contacts, judgment,
            and knowledge, all to the benefit of the Company, and has knowledge
            of the Company's Business, strategies, and objectives.

1.    DEFINITIONS. Capitalized terms used in this Agreement shall have their
      defined meaning throughout the Agreement. The following terms shall have
      the meanings set forth below, unless the context clearly requires
      otherwise.

      1.1   "AGREEMENT" means this Executive Employment Agreement, as from time
            to time amended.

      1.2   "BASE SALARY" means the total annual cash compensation payable on a
            regular periodic basis, without regard to voluntary or mandatory
            deferrals, as set forth at Section 3.1 of this Agreement.


                                       1
<PAGE>
      1.3   "BENEFICIARY" means the person or persons designated in Exhibit "B"
            of this Agreement and signed by Executive to receive any benefits
            payable after Executive's death pursuant to this Agreement. In the
            absence of such designation or in the event that all of the persons
            so designated predecease Executive, Beneficiary means the executor,
            administrator or personal representative of Executive's estate.

      1.4   "BOARD" means the Board of Directors of the Company.

      1.5   "CAUSE" has the meaning set forth at Section 4.2 of this Agreement.

      1.6   "CHANGE OF CONTROL" means any of the following events:

                  1.6.1 A sale, consolidation, merger, acquisition or
                        affiliation which results in the Executive not remaining
                        as President and Chief Executive Officer with
                        essentially the same duties and responsibilities as
                        prior to the sale, consolidation, merger, acquisition or
                        affiliation; or

                  1.6.2 A sale, consolidation, merger, or acquisition in which
                        the Company becomes accountable to, or a part of, a
                        newly created company or controlling organization where
                        at least 50% of the members of the Board of the newly
                        created Company or controlling organization were not
                        members of the Company's Board immediately prior to such
                        sale, consolidation, merger, or acquisition.

      1.7   "COMPANY" means all of the following, jointly and severally:

                  (a)   XATA Corporation and

                  (b)   any Successor.

      1.8   CONFIDENTIAL INFORMATION" means information that is proprietary to
            the Company or proprietary to others and entrusted to the Company
            that has not been published and/or disclosed to the public, whether
            or not trade secrets, and including, but not limited to, the
            Company's business plans, advertising and/or marketing plans,
            financial performance, financial projections, customer lists,
            pricing information, personnel matters, or any other matter
            considered or reasonably expected to be considered by the Company
            regarding the Company's business and its employees.


                                       2
<PAGE>
      1.9   "DATE OF TERMINATION" has the meaning set forth at Section 4.7.2 of
            this Agreement.

      1.10  "DISABILITY" shall mean a physical or mental infirmity that impairs
            the Executive's ability to substantially perform his duties if it
            continues for a period of at least 180 consecutive days.
            Notwithstanding anything contained in this Agreement to the
            contrary, until the Date of Termination specified in a Notice of
            Termination relating to the Executive's Disability, the Executive
            shall be entitled to return to his position with the Company, in
            which event no Disability of the Executive will be deemed to have
            occurred.

      1.11  "GOOD REASON" has the meaning set forth at Section 4.4 of this
            Agreement.

      1.12  "INCENTIVE BONUS" means the actual cash bonus payable to the
            Executive as set forth in Section 3.1 of this Agreement.

      1.13  "NOTICE OF TERMINATION" has the meaning set forth at Section 4.7.1
            of this Agreement.

      1.14  "PLAN" means any bonus or incentive compensation agreement, plan,
            program, policy or arrangement sponsored, maintained or contributed
            to by the Company, to which the Company is a party or under which
            employees of the Company are covered, including, without limitation,
            any stock option, restricted stock or any other equity-based
            compensation plan, annual or long-term incentive (bonus) plan, and
            any employee benefit plan, such as a thrift, pension, profit
            sharing, deferred compensation, medical, dental, disability,
            accident, life insurance, automobile allowance, perquisite, fringe
            benefit, vacation, sick or parental leave, severance or relocation
            plan or policy or any other agreement, plan, program, policy, or any
            other agreement, plan, program, policy or arrangement intended to
            benefit employees or executive officers of the Company.

      1.15  "SUBSIDIARY" means any corporation at least a majority of whose
            securities having ordinary voting power for the election of the
            directors (other than securities having such power only by reason of
            the occurrence of a contingency) is at the time owned by the Parent
            Corporation, the Company and/or one or more Subsidiaries.

      1.16  "SUCCESSOR" has the meaning set forth at Section 9.1.1 of this
            Agreement.


                                       3
<PAGE>
      1.17  "INVENTIONS" means ideas, improvements and discoveries, whether or
            not such are patentable or copyrightable, and whether or not in
            writing or reduced to practice.

      1.18  "WORKS OF AUTHORSHIP" means writings, drawings, software, and any
            other works of authorship, whether or not such are copyrightable.

2.    EMPLOYMENT, DUTIES AND TERMS

      2.1   EMPLOYMENT. Upon the terms and conditions set forth in this
            Agreement, the Company hereby employs Executive, and Executive
            accepts such employment as Chairman and Chief Technical Officer of
            the Company. Except as expressly provided herein, termination of
            this Agreement by either party or by mutual agreement of the parties
            shall also terminate the Executive's employment by the Company.

      2.2   DUTIES. During the term of this Agreement, and excluding any periods
            of vacation, sick, disability or other leave to which Executive is
            entitled, Executive agrees to devote reasonable attention and time
            during normal business hours to the business and affairs of the
            Company and, to the extent necessary to discharge the
            responsibilities assigned to Executive hereunder and under the
            Company's bylaws, as amended from time to time, to use Executive's
            reasonable best efforts to perform faithfully and efficiently such
            responsibilities.

      2.3   CERTAIN PROPRIETARY INFORMATION. If Executive possesses any
            proprietary information of another person or entity as a result of
            prior employment or relationship, Executive shall honor any legal
            obligation that Executive has with that person or entity with
            respect to such proprietary information.

      2.4   TERM. This Agreement shall be effective as of the date set forth
            above, and shall be in effect until September 30, 2004, provided
            that, commencing on October 1, 2004, and on each October 1,
            thereafter, the term of this Agreement shall be renewed
            automatically for the subsequent one-year period unless either the
            Executive or the Company gives written notice to the other party of
            its intent not to so extend this Agreement at least 60 days prior to
            the end of the term of this Agreement or the applicable renewal
            period, as the case may be. At the time of renewal of this
            Agreement, the Executive's compensation plan, as shown on Exhibit
            "A", and Beneficiary Designation, as shown on Exhibit "B", will be
            reviewed and updated by the Company and the Executive,


                                       4
<PAGE>
            which updates will be dually noted by Signatures and dates by the
            Executive and the Board's designated compensation representative.

      2.5   RETURN OF PROPRIETARY PROPERTY. Executive agrees that all property
            in Executive's possession belonging to the Company, including
            without limitation, all documents, reports, manuals, memoranda,
            computer print-outs, customer lists, credit cards, keys,
            identification, products, access cards, automobiles, and all other
            property relating in any way to the business of the Company are the
            exclusive property of the Company, even if Executive authored,
            created or assisted in authoring or creating such property.
            Executive shall return to the Company all such documents and
            property immediately upon termination or at such earlier time as the
            Company may reasonably request.

      2.6   POSITION AND DUTIES.

            (a)   During the Employment Period, Executive shall serve as the
                  Chairman and Chief Technical Officer of the Company, and shall
                  have the normal duties, responsibilities and authority of an
                  executive serving in such position subject to supervision and
                  control by the Board of Directors of the Company (the
                  "Board"). During the Employment Period, Executive may also
                  serve as a director of the Company providing the Shareholders
                  elect the Executive to that position. During the Employment
                  Period, Executive may also serve as a director of any
                  affiliate of the Company designated by the Board for so long
                  as the Board or the affiliate's shareholders, whichever
                  applies, causes the Executive to be elected to or appointed to
                  such position, as the case may be.

            (b)   Executive shall report to the Board of Directors.

            (c)   During the Employment Period, Executive shall devote his best
                  efforts and his full business time and attention (except for
                  permitted vacation periods, reasonable periods of illness, or
                  other incapacity and provided such activities do not interfere
                  with the performance by Executive of his duties and
                  responsibilities hereunder, participation in charitable and
                  civic endeavors and management of Executive's personal
                  investments and business interests) to the business and
                  affairs of the Company, its subsidiaries and affiliates.
                  Executive shall perform his duties and responsibilities
                  hereunder to the best of his abilities in a diligent,
                  trustworthy, businesslike and efficient manner.


                                       5
<PAGE>
            (d)   Executive shall perform his duties and responsibilities
                  hereunder principally in the Minneapolis, Minnesota
                  metropolitan area.

3.    COMPENSATION, BENEFITS AND EXPENSES.

      3.1   BASE SALARY/INCENTIVE BONUS/STOCK OPTIONS. Subject to Section 4.8,
            during the term of Executive's employment under this Agreement and
            for as long thereafter as required pursuant to Section 4, the
            Company shall pay Executive a Base Salary at an annual rate that is
            not less than $200,000 or such higher annual rate as may from time
            to time be approved by the Board, such Base Salary to be paid in
            substantially equal regular periodic payments in accordance with the
            Company's regular payroll practices. If Executive's Base Salary is
            increased from time to time during the term of Executive's
            employment under this Agreement, the increased amount shall become
            the Base Salary for the remainder of the term and any extensions of
            Executive's term of employment under this Agreement and for as long
            thereafter as required pursuant to Section 4, subject to any
            subsequent increases. In addition, the Executive shall be entitled
            to an annual Incentive Bonus as described on Exhibit "A", which may
            be modified from year to year contingent upon and adjusted by the
            Company's achievement of goals defined by the Compensation Committee
            of the Board and approved by the Board. In addition, the Executive
            may be entitled to an annual grant of stock options.

      3.2   BUSINESS EXPENSES. During the term of the Executive's employment
            under this Agreement and as for as long thereafter as required
            pursuant to Section 4, the Company shall, in accordance with, and to
            the extent of its uniform policies in effect from time to time, bear
            all ordinary and necessary business expenses incurred by Executive
            in performing Executive's duties as an executive officer of the
            Company, including, without limitation, all travel and living
            expenses while away from home on business in the service of the
            Company, home telephone expenses incurred in service of the Company,
            social and civic club membership and participation expenses and
            entertainment expenses, provided that Executive accounts promptly
            for such expenses to the Company in the manner reasonably prescribed
            from time to time by the Company.

      3.3   FUTURE GRANT OF OPTIONS. The Company may grant to Executive options
            to acquire shares of the Company's common stock as described on
            Exhibit "A", which may be modified from year to year as approved by
            the Board.


                                       6
<PAGE>
      3.4   DISCRETIONARY BONUSES. Executive shall be eligible to receive
            bonuses from time to time as may be awarded to Executive by the
            Board or a compensation committee appointed by the Board which
            recommendations will be approved by the Board in the Board's sole
            discretion. The discretionary bonuses, if any, will be in addition
            to any bonuses described in Exhibit "A".

      3.5   TERM LIFE INSURANCE. During the term of this Agreement, the Company
            shall pay the premiums to purchase and maintain term life insurance
            on the life of the Executive in an amount equal to four times the
            Executive's Base Salary as in effect from time to time as recorded
            on Exhibit "A", the benefit to be payable to such Beneficiary as
            Executive shall advise the Company and the insurer from time to
            time.

      3.6   NONASSIGNABILITY OF BENEFITS. Executive shall not transfer, assign,
            encumber, or otherwise dispose of his right to receive payments
            hereunder and, in the event of any attempted transfer or assignment,
            the Company shall have no further liability to Executive under this
            Agreement.

4.    EARLY TERMINATION

      4.1   EARLY TERMINATION. Subject to the respective continuing obligations
            of the parties pursuant to Section 5, this Article 4 sets forth the
            terms for early termination of the Executive's employment under this
            Agreement.

      4.2   TERMINATION BY THE COMPANY FOR CAUSE. The company may terminate this
            Agreement for Cause. A termination of employment shall be for
            "Cause" if the Executive

            (i)   has been convicted of a felony

            (ii)  has engaged in an act or acts of personal dishonesty intended
                  to result in substantial personal enrichment of the Executive
                  at the expense of the Company, or

            (iii) has intentionally engaged in other conduct that is
                  demonstrably and materially injurious to the Company,
                  monetarily or otherwise;

            (iv)  the commission by Executive of a fraud;

            (v)   the commission by Executive of any act involving dishonesty or
                  disloyalty with respect to the Company or any of its
                  subsidiaries or affiliates;

            (vi)  conduct by Executive tending to bring the Company or any of
                  its subsidiaries or affiliates into substantial public
                  disgrace or disrespect;


                                       7
<PAGE>
            (vii) gross negligence or willful misconduct by Executive with
                  respect to the Company or any of its subsidiaries or
                  affiliates.

      4.3   TERMINATION BY COMPANY WITHOUT CAUSE. The Company may terminate
            Executive's employment under this Agreement or any renewal thereof
            at any time, provided that the Company shall pay Executive all
            compensation due to Executive under this Agreement for the remaining
            term of this Agreement or any renewal thereof, as the case may be
            plus any compensation as defined in Section 4.8.

      4.4   TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate
            Executive's employment under this Agreement for Good Reason.
            Termination by Executive for "Good Reason" shall mean termination of
            employment based on any one or more of the following:

            4.4.1 POSITION AND DUTIES. Assignment to Executive by the Company of
                  duties which are inconsistent with Executive's position,
                  duties, responsibilities, and status with the Company, or a
                  change in Executive's titles or offices, or any removal of
                  Executive from, or any failure to reelect or reappoint
                  Executive to any such positions, except in connection with the
                  termination of his employment for Disability or Cause or as a
                  result of Executive's death or by Executive other than for
                  Good Reason;

            4.4.2 COMPARABLE BENEFIT PLAN. Any failure to the Company to
                  continue in effect, or to provide a comparable substitute for,
                  any benefit plan or arrangement (including, without
                  limitation, any profit sharing plan, executive supplemental
                  medical plan, group life insurance plan, and medical, dental,
                  accident, and disability plans but excluding incentive plans
                  or arrangements, which are the subject of Section 4.4.4) in
                  which Executive is participating as in effect on the date
                  hereof, (or any other plans providing executive with
                  substantially similar benefits) (hereinafter referred to as
                  "BENEFIT PLANS"), or by the taking of any action by the
                  Company that would adversely affect Executive's participation
                  in or materially reduce Executive's benefits under any such
                  Benefit Plan or deprive Executive of any material fringe
                  benefit enjoyed by Executive as in effect on the date hereof.

            4.4.3 COMPARABLE INCENTIVE PLAN. Any failure by the Company to
                  continue in effect, or to provide a comparable substitute for
                  any incentive plan or arrangement (including, without


                                       8
<PAGE>
                  limitation, any incentive compensation plan, long-term
                  incentive plan, bonus or contingent bonus arrangements or
                  credits, the right to receive performance awards, or similar
                  incentive compensation benefits) in which Executive is
                  participating, or is eligible to participate, (hereinafter
                  referred to as "INCENTIVE PLANS") or the taking of any action
                  by the Company which would adversely affect Executive's
                  participation in any such Incentive Plan.

      4.5   TERMINATION IN THE EVENT OF DEATH OF DISABILITY. The term of
            Executive's employment under this Agreement shall terminate in the
            event of Executive's death or Disability, subject to the provisions
            of Section 4.8 hereof.

      4.6   TERMINATION BY MUTUAL AGREEMENT. The parties may terminate
            Executive's employment under this Agreement at any time by mutual
            written agreement.

      4.7   NOTICE OF TERMINATION; DATE OF TERMINATION; OFFER OF CONTINUED
            EMPLOYMENT. The provisions in this Section 4.7 shall apply in
            connection with any early termination of Executive's employment
            under this Agreement pursuant to this Section 4.

            4.7.1 For purposes of this Agreement, A "NOTICE OF TERMINATION"
                  shall mean a notice which shall indicate the specific
                  termination provisions in this Agreement relied upon and shall
                  set forth in reasonable detail the facts and circumstances
                  claimed to provide the basis for such termination. Any
                  purported termination by the Company or by the Executive
                  pursuant to this Section 4 (other than a termination by mutual
                  agreement pursuant to Section 4.6 or death) shall be
                  communicated by written Notice of Termination to the other
                  party hereto.

            4.7.2 For purposes of this Agreement, "DATE OF TERMINATION" shall
                  mean: (a) if Executive's employment is terminated due to
                  death, the last day of the month first following the month
                  during which Executive's death occurs; (b) if Executive's
                  employment is to be terminated for Disability, thirty (30)
                  calendar days after Notice of Termination is given; (c) if
                  Executive's employment is terminated by the Company for Cause
                  or by Executive for Good Reason, the date specified in the
                  Notice of Termination; (d) if Executive's employment is
                  terminated by mutual agreement of the parties, the date
                  specified in such agreement; or (e) if Executive's employment
                  is terminated for any other reason, the date


                                       9
<PAGE>
                        specified in the Notice of Termination, which in no
                        event shall be a date earlier than thirty (30) calendar
                        days after the date on which a Notice of Termination is
                        given, unless an earlier date has been expressly agreed
                        to by Executive in writing either in advance of, or
                        after, receiving such Notice of Termination.

            4.8   COMPENSATION UPON CHANGE OF CONTROL, TERMINATION, DEATH OR
                  DURING DISABILITY.

                  4.8.1 If the Executive shall become disabled or incapacitated
                        to the extent that he is unable to perform his duties
                        hereunder, by reason of medically determinable physical
                        or mental impairment, as determined by a doctor mutually
                        acceptable to the Company and the Executive and retained
                        by the Company, Executive shall nevertheless continue to
                        receive the compensation and benefits provided under the
                        terms of this Agreement as follows: 100% of such
                        compensation and benefits for a period of 12 months, but
                        not beyond the Date of Termination, and 65% thereafter
                        until the Date of Termination. Such benefits noted
                        herein shall be reduced by any benefits otherwise
                        provided to the Executive during such period under the
                        provisions of disability insurance coverage in effect
                        for the Company's employees. Thereafter, Executive shall
                        be eligible to receive benefits provided by the Company
                        under the provisions of disability insurance coverage in
                        effect for the Company's employees. Upon returning to
                        active full-time employment, the Executive's full
                        compensation as set forth in this Agreement shall be
                        reinstated as of the date of commencement of such
                        activities. In the event that the Executive returns to
                        active employment on other than a full-time basis, then
                        his compensation (as set forth in Section 3 of this
                        Agreement) shall be reduced in proportion to the time
                        spent in said employment, or as shall otherwise be
                        agreed to by the parties.

                  4.8.2 If the Executive's employment under this Agreement is
                        terminated on account of Disability or death, the
                        Company shall, within ten (10) fiscal days following the
                        Date of Termination, pay any amounts due to Executive
                        under this Agreement through the Date of Termination,
                        pay any amounts due to Executive under this Agreement
                        through the Date of Termination, including, without
                        limitation, amounts to which Executive is entitled under
                        any Plan in accordance with the terms of such Plan, and
                        further including, without


                                       10
<PAGE>
                        limitation, a pro rata portion (prorated through the
                        Date of Termination) of any Target Incentive Bonus or
                        other annual or long-term bonus or incentive payments
                        (for performance periods in effect at the Date of
                        Termination) to which Executive would have been entitled
                        had Executive remained continuously employed through the
                        end of such performance periods and continued to perform
                        Executive's duties in the same manner as performed
                        immediately prior to the Executive's death or
                        Disability.

                  4.8.3 If Executive's employment under this Agreement is
                        terminated by the Company for Cause, or by Executive for
                        other than Good Reason, the Company shall pay Executive
                        only the Base Salary through the Date of Termination and
                        any amounts to which the Executive is entitled under any
                        Plan in accordance with the terms of such Plan

                  4.8.4 If Executive's employment under this Agreement is
                        terminated by the mutual agreement of the parties under
                        Section 4.6, the Company shall provide Executive with
                        the payments and benefits specified in this Agreement.

                  4.8.5 If the Company terminates Executive's employment
                        hereunder without Cause other than in the event of death
                        or Disability (it being understood that a purported
                        termination for Disability or for Cause which is
                        disputed and finally determined not to have been proper
                        termination for Cause or Disability shall be a
                        termination by the Company without Cause) or if
                        Executive terminates his employment hereunder for Good
                        Reason in accordance with Section 4.4, the Company
                        shall:

                        4.8.5.1 continue to pay Executive's Base Salary in
                                accordance with Section 3.1 at the annual rate
                                in effect hereunder immediately prior to the
                                Date of Termination in the same manner as if
                                Executive had remained continuously employed for
                                one additional year of this Agreement (12
                                months);

                        4.8.5.2 cause Executive's continued participation in all
                                Plans in accordance with Section 3.2 of this
                                Agreement as if Executive remained continuously
                                employed with the Company for the unexpired term
                                of this Agreement for all purposes, including,
                                without limitation, grants, awards, accruals and
                                vesting thereunder; provided that, if such


                                       11
<PAGE>
                                continued participation is not permissible under
                                applicable law, the Company shall provide
                                Executive with benefits substantially similar to
                                those to which Executive would have been
                                entitled under those Plans in which Executive's
                                continued participation is not permissible, and

                        4.8.5.3 reimburse the Executive for outplacement
                                expenses up to $10,000, which amount shall be
                                payable for services provided within the first
                                twelve months following the Date of Termination
                                upon submission to the Company of appropriate
                                documentation evidencing Executive's payment for
                                such services.

                        4.8.5.4 Cause to immediately vest all unvested stock
                                options or rights under any stock option, stock
                                appreciation rights or other similar plan
                                maintained by Employer in which Employee is a
                                participant without regard to whether any
                                applicable performance criteria has been
                                satisified by Employee.

                  4.8.6 If a Change of Control Termination occurs, then the
                        Company shall provide to the Executive 12 months of
                        severance benefits identical to the severance benefits
                        available in Section 4.8.5.1, 4.8.5.2 and 4.8.5.3.

                  4.8.7 The payments determined pursuant to Section 4.8.5 shall
                        be mitigated to the extent of Executive's "earned
                        income" within the meaning of Section 911(d)(2)(A) of
                        the Internal Revenue Code of 1986, as amended (the
                        "Code") during the remainder of the period with respect
                        to which such payments pursuant to Section 4.8.5 are
                        required to be paid.

5.    RESTRICTIVE COVENANTS. Except as otherwise provided in this Agreement, the
      Executive will not, during the period of his employment with the Company,
      and for a period of one (1) year thereafter (except for Section 5.1, with
      the time therein set forth), directly or indirectly, for the Executive or
      on behalf of or in conjunction with any other person, company,
      partnership, corporation or business of whatever nature:

      5.1   CONFIDENTIAL INFORMATION. Reveal to any person or entity outside of
            the Company, except as may be explicitly necessary as part of the
            direct responsibilities of the Executive's position with the
            Company, any Confidential Information. Executive shall keep the


                                       12
<PAGE>
            Company's confidential documents secure and avoid the inadvertent or
            intentional disclosure of the Company's business matters inside
            and/or outside the Company. Disclosure of Confidential Information
            within the Company shall only be on a need-to-know basis, as is
            required or necessary to carry out the Executive's duties as an
            employee of the Company. Executive will use reasonable and prudent
            care to safeguard and protect and prevent the unauthorized use and
            disclosure of Confidential Information. The obligations contained in
            this Section 5.1 will survive for as long as the company, in its
            sole judgment, considers the information to be Confidential
            Information. The obligations under this Section 5.1 will not apply
            to any Confidential Information that is now or becomes generally
            available to the public through no fault of Executive or to
            Executive's disclosure of any Confidential Information required by
            law or judicial or administrative process.

      5.2   NON-COMPETITION. Directly or indirectly, own (except as a
            shareholder of up to 5% of the outstanding stock in a publicly
            traded corporation), manage, operate, participate in ownership,
            participate in management, participate in operation or control, or
            be employed by, or act as a consultant to, or become an independent
            contractor with, or become an adviser to, or be connected in any
            manner with, any individual or other entity which engages in or has
            an interest in a business that meaningfully competes with the
            Company's Business. Notwithstanding the foregoing, it is agreed that
            Executive shall not be in violation of his Section 5.2 if he is
            associated with (a) a company which develops or markets onboard
            information technology products which compete, directly or
            indirectly, with the Company's Business if such products accounted
            for less than 10% of the gross sales of such company in its last
            fiscal year and are reasonably expected to account for less than 10%
            of its gross sales in the current fiscal year, or (b) a division or
            department of any company (even if such company competes with the
            Company) that is not involved, directly or indirectly, in
            developing, manufacturing or selling products that compete with the
            Company's Business.

      5.3   NON-ENTICEMENT. Directly or indirectly interfere with the
            contractual or other relationships between the Company and any other
            employees, independent contractors, consultants, prospective
            employees, prospective consultants, prospective independent
            contractors to the Company, to be either employed by or retained by
            the Company; or induce the Company's other employees to leave the
            employ of the Company.


                                       13
<PAGE>
      5.4   NON-CUSTOMER INTERFERENCE. Call upon any person or entity which
            is/was a customer or prospective customer or vendor of the Company
            (including the Subsidiaries thereof) in direct competition with the
            current Business of the Company or known planned products or
            services of the Company, or its Subsidiaries. As used herein, the
            term "customer" means any entity to whom the Company, or its
            Subsidiaries, has provided services within the twelve (12) month
            period prior to the date of Executive's termination; the term
            "prospective customer" means any entity that has been subject to
            documented sales and marketing activity, other than mass mailings.
            by the Company, or its Subsidiaries, within the twelve (12) month
            period prior to the date of the Executive's termination; and
            "vendor" means any entity serving as a source for any products sold
            by the Company or entity producing products or services for the
            Company to enable it to provide products and services to the
            Company's customers.

      5.5   NON-MERGER INTERFERENCE. Call upon, for the purpose of acquiring or
            performing services for such entity, any prospective acquisition or
            merger candidate which was either called upon by the Company, or its
            Subsidiaries, or for which the Company, or its Subsidiaries, made an
            acquisition or merger analysis during the six (6) month period prior
            to the date of Executive termination.

      5.6   INTERPRETATION. It is agreed by the parties that the foregoing
            covenants in Section 5.1 through 5.5, inclusive, impose a reasonable
            restraint on Executive in light of the Company's Business and
            related activities on the date of the execution of this Agreement.

      5.7   REMEDIES. Executive agrees that any breach or threatened breach of
            the covenants set forth in this Section 5 will cause the Company
            irreparable harm for which there is no adequate remedy at law, and,
            without limiting other rights and remedies the Company may have at
            law or under and pursuant to this Agreement, Executive consents to
            remedies pursuant to this Section 5.7, including, but not limited
            to, the issuance of an injunction in favor of the Company enjoining
            the breach of any of the aforesaid covenants by any court of
            appropriate jurisdiction. Such injunction shall provide the Company
            with at least a one (1) year contractual protection agreed to by the
            parties, and in the event the Executive violates the terms of the
            injunction, Executive agrees that a court of appropriate
            jurisdiction shall have the power to extend the length or breadth of
            the injunction to provide the Company with the full measure of
            protection intended by this Agreement, including, but not limited
            to, the extension of such injunction for a reasonable period of time
            in


                                       14
<PAGE>
            order to eliminate any commercial advantage which may be derived
            from a misappropriation of Confidential Information or a breach or
            default of the covenants set forth in Sections 5.2 through 5.5,
            inclusive. If any or all of the aforesaid covenants are held not to
            be enforceable because of the scope or duration of such covenant, or
            if applicable, the area covered by such covenants, the parties agree
            that a court of appropriate jurisdiction shall make such
            determination, and the court shall have the power to reduce the
            scope, duration, and area of any covenant (or one or more of the
            foregoing) to the extent which allows maximum scope, duration and
            area as permitted by applicable law. The covenants in this Section 5
            protect not only the Company but also any operations controlled by
            the Company or controlling the Company, whether a Parent
            Corporation, Subsidiary, brother/sister corporation or affiliate.
            The Executive shall pay reasonable attorneys' fees, costs and
            expenses that may be incurred by the Company in enforcing one or
            more of the covenants set forth in this Section 5. Section 5 shall
            have independent legal significance and shall survive termination of
            this Agreement.

      6.    INVENTIONS

            6.1   DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND OTHER WORKS.
                  Executive shall promptly disclose to the Company in writing
                  all inventions and Works of Authorship which are conceived,
                  made, discovered, written or created by Executive alone or
                  jointly with another person, group or entity, whether during
                  the normal hours of his employment at the company or on
                  Executive's own time, during the term of this Agreement and
                  for one year after termination of this Agreement except as
                  exempted as described in 6.2 below. Executive shall assign all
                  rights to all such inventions and Works of Authorship to the
                  Company. Executive shall give the Company considers necessary
                  or desirable in order to transfer or record the transfer of
                  Executive's entire right, title and interest in such
                  inventions and Works of Authorship; and in order to enable the
                  Company to obtain exclusive patent, copyright, or other legal
                  protection for Inventions and Works of Authorship. The Company
                  shall bear any reasonable expenses in this regard.

            6.2   NOTICE: MINNESOTA LAW EXEMPTS FROM THIS AGREEMENT "AN
                  INVENTION FOR WHICH NO EQUIPMENT, SUPPLIES, FACILITY OR TRADE
                  SECRET INFORMATION OF THE COMPANY WAS USED AND WHICH WAS
                  DEVELOPED ENTIRELY ON THE EXECUTIVE'S OWN TIME, AND (1) WHICH
                  DOES NOT RELATE (A) TO THE BUSINESS OF THE COMPANY, OR (B) TO
                  THE COMPANY'S ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR


                                       15
<PAGE>
                  DEVELOPMENT, OR (2) WHICH DOES NOT RESULT FROM ANY WORK
                  PERFORMED BY EXECUTIVE FOR THE COMPANY."

            6.3   ADDITIONAL EXCLUSIONS. The inventions and Works of Authorship
                  set forth in Exhibit C (if no Exhibit C is attached, there is
                  nothing to disclose) to this Agreement which Executive owns or
                  controls shall also be excluded from operation of Section 6.1
                  of this Agreement, and Executive represents that such
                  inventions and Works of Authorship were conceived, made,
                  written, or created by the Executive prior to the employment
                  with the Company (although they may be useful to the Company),
                  its Subsidiaries or affiliates. Other than the Inventions and
                  Works of Authorship listed in Exhibit C, Executive does not
                  own or control rights in any inventions or Works of Authorship
                  and Executive shall not assert any such rights against the
                  Company.

      7.    EXCISE TAX PAYMENTS

      7.1   In the event that any payment or benefit (within the meaning of
            Section 280G(b)(2) of the Code), paid or payable to the Executive or
            for his benefit or distributed pursuant to the terms of this
            Agreement or otherwise in connection with, or arising out of, his
            employment with the Company (a "PAYMENT" or "PAYMENT") would be
            subject to the excise tax imposed by Section 4999 of the Code or any
            interest or penalties become payable by the Executive with respect
            to such excise tax (such excise tax, together with any such interest
            and penalties, are hereinafter collectively referred to as the
            "EXCISE TAX"), then the Executive will be entitled to receive an
            additional payment (a "GROSS-UP PAYMENT") in an amount such that
            after payment by the Executive of all taxes (including any interest
            or penalties imposed by reason of the Executive's failure to file
            timely a tax return or pay taxes shown as due on his return, imposed
            with respect to such taxes and the Excise Tax), including any Excise
            Tax imposed upon the Gross-Up Payment, the Executive retains an
            amount of the Gross-Up Payment equal to the Excise Tax imposed upon
            the Payments, provided however, that in no event shall the amount of
            the Gross-Up Payment exceed an amount equal to 100% of the
            Executive's Base Salary and Target Incentive Bonus in effect at the
            Date of Termination.

      7.2   An initial determination as to whether a Gross-Up Payment is
            required pursuant to this Agreement and the amount of such Gross-Up
            Payment shall be made at the Company's expense by an accounting firm
            selected by the Company and reasonably acceptable to the Executive
            which is designated as one of the largest accounting firms in the
            United States (the "ACCOUNTING


                                       16
<PAGE>
            FIRM"). The Accounting Firm shall provide its determination (the
            "DETERMINATION"), together with detailed supporting calculations and
            documentation, to the Company and the Executive within five days of
            the of the Date of Termination, if applicable, or such other time as
            requested by the company or by the Executive (provided the Executive
            reasonably believes that any of the Payments may be subject to the
            Excise Tax). If the Accounting Firm determines that no Excise Tax is
            payable by the Executive with an opinion reasonably acceptable to
            the Executive that no Excise Tax will be imposed with respect to any
            such Payment or Payments. Within ten days of the delivery of the
            Determination to the Executive, the Executive shall have the right
            to dispute the Determination (the "DISPUTE"). The Gross-Up Payment,
            if any, as determined pursuant to this Section 7.2 shall be paid by
            the Company to the Executive within five days of the receipt of the
            Determination. The existence of the Dispute shall not in any way
            affect the Executive's right to receive the Gross-Up Payment in
            accordance with the Determination. Upon the final resolution of a
            Dispute, the Company shall promptly pay to the Executive any
            additional amount required by such resolution, or if it is
            determined that the Excise Tax is lower than originally determined,
            the Executive shall repay to the Company the excess amount of the
            Gross-Up Payment, if there is no Dispute, the Determination shall be
            binding, final and conclusive upon the Company and the Executive
            subject to the application of Section 7.3 below.

      7.3   Notwithstanding anything contained in this Agreement to the
            contrary, in the event that, according to the Determination, an
            Excise Tax will be imposed on any Payment or Payments, the Company
            shall pay to the applicable government taxing authorities as Excise
            Tax withholding, the amount of the Excise Tax that the Company has
            actually withheld from the Payment or Payments.

8.    ARBITRATION

      Each party retains the right to bring an action in a court of law for the
      interpretation and/or enforcement of the terms of this Agreement. The
      Executive and the Company shall also have the right and option to mutually
      agree (in lieu of litigation) to have a dispute or controversy arising
      under or in connection with this Agreement settled by arbitration,
      conducted before one arbitrator mutually agreed upon by the Executive and
      the Company, sitting in a location selected by the Company within 25 miles
      from the location of the Company's principal place of business. To the
      extent not otherwise inconsistent with the express provisions of this
      Agreement, the rules of the American Arbitration Association then in
      effect shall apply unless the Executive and the Company otherwise agree.
      In the


                                       17
<PAGE>
      event the Company and the Employee cannot agree upon an arbitrator within
      60 days of the receipt of a written request for arbitration under this
      Agreement, the parties shall apply to the District Court for Hennepin
      County for the Court to appoint an arbitrator pursuant to Minnesota
      Statutes Section 572.10, as amended. Judgment may be entered on the award
      of the arbitrator in any court having jurisdiction. The arbitrator, in its
      discretion, may award attorneys fees and costs for the party in whose
      favor the arbitrator rules.

9.    GENERAL PROVISIONS

      9.1   SUCCESSORS AND ASSIGNS:

            9.1.1 This Agreement shall be binding upon and shall inure to the
                  benefit of the Company, its successors and assigns and the
                  Company shall require any successor or assign to expressly
                  assume and agree to perform this Agreement in the same manner
                  and to the same extent that the Company would be required to
                  perform it if no such succession or assignment had taken
                  place. The term "COMPANY" as used herein shall include such
                  successors (including a Surviving Corporation) and assigns.
                  The terms "SUCCESSORS" or "SUCCESSORS AND ASSIGNS" as used
                  herein each shall mean a corporation or other entity acquiring
                  all or substantially all the assets and business of the
                  Company (including this Agreement) whether by operation or law
                  or otherwise.

            9.1.2 Neither this Agreement nor any right or interest hereunder
                  shall be assignable or transferable by the Executive, his
                  beneficiaries or legal representatives, except by will or the
                  laws of descent and distribution. This Agreement shall inure
                  to the benefit of and be enforceable by the Executive's legal
                  personal representative.

      9.2   NO OFFSETS. In no event shall any amount payable to Executive
            pursuant to this Agreement be reduced for purposes of offsetting,
            either directly or indirectly, any indebtedness or liability of
            Executives to the Company.

      9.3   NOTICES. All notices, requests, and demands given to or made
            pursuant hereto shall except as otherwise specified herein, be in
            writing and be personally delivered or mailed postage prepaid,
            registered or certified US mail to any party at its address set
            forth on the last page of this Agreement. Either party may, by
            notice hereunder, designate a changed address. Any notice hereunder
            shall be deemed effectively given and received: (1) if personally


                                       18
<PAGE>
            delivered, upon delivery; or (2) if mailed, on the registered date
            or the date stamped on the certified mail receipt.

      9.4   WITHHOLDING. To the extent required by an applicable law, including,
            without limitation, any federal, state or local income tax or excise
            tax law or laws, the Federal Insurance Contributions Act, the
            Federal Unemployment Tax Act or any comparable federal, state or
            local laws, the Company retains the right to withhold such portion
            of any amount or amounts payable to Executive under this Agreement
            as the Company (on the written advice of outside counsel) deems
            necessary.

      9.5   CAPTIONS. The various headings or captions in this Agreement are for
            convenience only and shall not affect the meaning or interpretation
            of this Agreement.

      9.6   GOVERNING LAW. The validity, interpretation, construction,
            performance, enforcement and remedies of or relating to this
            Agreement, and the rights and obligations of the parties hereunder
            shall be governed by the substantive laws of the State of Minnesota
            (without regard to the conflict of laws, rules or statutes of any
            jurisdiction), and any and every legal proceeding arising out of or
            in connection with this Agreement shall be brought in the
            appropriate courts of the State of Minnesota, each of the parties
            hereby consenting to the exclusive jurisdiction of said courts for
            this purpose.

      9.7   CONSTRUCTION. Wherever possible, each provision of this Agreement
            shall be interpreted in such manner as to be effective and valid
            under applicable law, but if any provision of this Agreement shall
            be prohibited by or invalid under applicable law, such provision
            shall be ineffective only to the extent of such prohibition or
            invalidity without invalidating the remainder of such provision or
            the remaining provisions of this Agreement.

      9.8   WAIVERS. No failure on the part of either party to exercise, and no
            delay in exercising, any right or remedy hereunder shall operate as
            a waiver thereof; nor shall any single or partial exercise of any
            right or remedy hereunder preclude any other or further exercise
            thereof or the exercise of any other right or remedy granted hereby
            or by any related document or by law.

      9.9   MODIFICATION. This Agreement may not be modified or amended except
            by written instrument signed by the parties hereto.


                                       19
<PAGE>
      9.10  ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
            and understanding between the parties hereto in reference to all the
            matters herein agreed upon. This Agreement replaces in full all
            prior employment agreements or understandings of the parties hereto,
            except stock option agreements, and any and all such prior
            agreements or understandings, except stock option agreements, are
            hereby rescinded by mutual agreement.

      9.11  COUNTERPARTS. This Agreement may be executed in one or more
            counterparts, each of which shall be deemed to be an original but
            all of which together will constitute one and the same instrument.

      9.12  SURVIVAL. The parties expressly acknowledge and agree that the
            provisions of this Agreement which by their express or implied terms
            extend beyond the termination of Executive's employment hereunder,
            shall continue in full force and effect notwithstanding Executive's
            termination of employment hereunder or the termination of this
            Agreement, respectively.

      9.13  RIGHT TO COUNSEL. Executive acknowledges he is aware of his right to
            obtain independent legal counsel of his own choosing with respect to
            any matter or issue made or created by or under this Agreement.
            Execution of this Agreement by the Executive is an acknowledgement
            by the Executive that either he has had the opportunity to review
            this Agreement to his own satisfaction, has read and understood the
            terms and conditions of this Agreement, has consulted with an
            attorney and has had the terms and conditions of this Agreement
            satisfactorily explained to the Executive, or has waived the right
            to seek his own independent counsel, but nonetheless, acknowledges
            that he understands the terms of this Agreement, and this Agreement
            is executed and delivered freely and voluntarily by the Executive
            without any force or coercion from the Company or any other third
            party.


                                       20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Executive Employment
Agreement to be duly executed and delivered as of the day and year first above
written.

       COMPANY:

       XATA Corporation, a Minnesota Corporation


       By /s/ Roger Kleppe
         ---------------------------------------
       Name Roger Kleppe
            ------------------------------------
       Its Chair Compensation Committee
           -------------------------------------


EXECUTIVE: /s/ William P. Flies
           -------------------------------------
           William P. Flies


                                       21
<PAGE>
                                    EXHIBIT A

              BASE COMPENSATION, INCENTIVE PLAN, AND STOCK OPTIONS

             FOR PERIOD OF 1 OCTOBER 2002 THROUGH 30 SEPTEMBER 2003

BASE COMPENSATION: $200,000

INCENTIVE BONUS: To Be Paid Based on FY2003 Audited Financials Within 10 Days of
                      the Availability of Such Financials;

The Annual Incentive Opportunity is 45% of base salary at target performance
         levels, representing $90,000 in annual incentive opportunity.

<TABLE>
<CAPTION>
Objective                           Incentive Weight     Measurement                 Threshold          Target
---------                           ----------------     -----------                 ---------          ------
<S>                                 <C>                  <C>                         <C>                <C>
Revenue                             50%                  Fiscal 2002 Revenue         $21.0 Million      $23.1 Million
Profitability                       30%                  EBITA                       $1.6 Million       $1.76 Million
On Time Product Release             20%                  Release Date vs. Plan       50% of time        75% on time
</TABLE>

STOCK OPTIONS: The executive will be awarded an initial stock option grant of
70,707 shares and additional grants of stock options as set by the XATA Board of
Directors in the Executive Stock Option Plan that is in effect at the beginning
of each new fiscal year in which this Agreement is in effect for this Executive.

      Date: 12/7/02
            -------------------------


      Executive: /s/ William P. Flies
                ---------------------


                                       22
<PAGE>
EXHIBIT B   TERM LIFE INSURANCE BENEFICIARY DECLARATION

Executive:   William P. Flies

Address:     28822 Lake Avenue Way
             Frontenac, MN 55026

Beneficiary: Linda Berg Flies

Address:     28822 Lake Avenue Way
             Frontenac, MN 55026
             Phone: 651-345-2641

Death Benefit: $800,000

Carrier:     -------------------------------------

Address      -------------------------------------

             -------------------------------------

             -------------------------------------

             -------------------------------------

Contact:
             -------------------------------------

Phone:
             -------------------------------------


Date:        12/7/02
             -------------------------------------


Signed:      /s/ William P. Flies
             -------------------------------------
             (William P. Flies)


                                       23
<PAGE>
                                    EXHIBIT C

      PATENTS & TRADEMARKS GRANTED TO EXECUTIVE PRIOR TO DATE OF AGREEMENT

US Patent Office Patents & Trademarks Described in US Patent Documents:

            265049
            274126
            1255901
            1293547
            4297569
            4326125
            4379966
            4436993

EUROPEAN Community Patents & Trademarks Described in ECO Documents:

            277343

CANADIAN Patents & Trademarks Described in Canadian Documents:

            275691
            277343
            1141841
            1161559

STATE of Minnesota Trademarks Described in State of Minnesota Documents:

            7275
            7669
            7861

and Any Other Patents & Trademarks Granted to William Paul Flies, William P.
      Flies, or William Flies by United States, European, Japanese, and/or
      Minnesota Jurisdictions Prior to 1 January 1985


                                       24