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OMB APPROVAL
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OMB Number:
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3235-0059
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Expires:
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January 31, 2008
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Estimated average burden
hours per
response
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14
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
þ
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Filed by a Party other than the Registrant
o
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Check the appropriate box:
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þ
Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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XATA Corporation
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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o
No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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SEC 1913 (02-02)
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Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.
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Xata Corporation
965 Prairie Center Drive
Eden Prairie, MN 55344
(952) 707-5600
March
, 2009
Dear Shareholder:
You are cordially invited to attend the Companys Special Meeting of Shareholders to be held
on Wednesday, April 8, 2009, at our corporate office, 965 Prairie Center Drive, Eden Prairie,
Minnesota, at 10:00 a.m.
For this Special Meeting you are presented with a proposal to amend our Articles of
Incorporation.
We look forward to greeting personally those of you who are able to be present at the meeting.
However, whether or not you plan to attend, it is important that your shares be represented,
regardless of the number of shares which you hold. Accordingly, you are requested to sign and date
the enclosed proxy and mail it in the envelope provided at your earliest convenience.
Very truly yours,
John J. Coughlan
Chairman and Chief Executive Officer
XATA CORPORATION
965 Prairie Center Drive
Eden Prairie, MN 55344
(952) 707-5600
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 8, 2009
To the Shareholders of XATA Corporation:
A Special Meeting of Shareholders of XATA Corporation will be held on Wednesday, April 8,
2009, at our corporate office, 965 Prairie Center Drive, Eden Prairie, Minnesota, at 10:00 a.m.,
for the following purpose:
To approve an Amendment of our Articles of Incorporation (particularly the
Certificate of Designation of Preferences of Series B Preferred Stock, Certificate
of Designation of Preferences of Series C Preferred Stock and Certificate of
Designation of Preferences of Series D Preferred Stock) that will enable our Board
of Directors to create one or more series of preferred stock with dividend or
liquidation preference over shares of classes or series of our capital stock as
described in this proxy statement.
We have fixed the close of business on February 16, 2009 as the record date for the
determination of shareholders entitled to receive notice of and to vote at the Special Meeting. Our
transfer books will not be closed.
Whether or not you expect to be present personally at the Special Meeting, please complete,
date, sign, and return the accompanying Proxy in the enclosed, self-addressed envelope at your
earliest convenience. This will insure your participation in the decisions to be made by the
shareholders. We sincerely hope that all shareholders who can attend the Special Meeting will do
so.
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By Order of the Board of Directors
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March
, 2009
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Wesley C. Fredenburg
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Secretary
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XATA CORPORATION
965 Prairie Center Drive
Eden Prairie, MN 55344
(952) 707-5600
PROXY STATEMENT FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 8, 2009
GENERAL INFORMATION
This proxy statement is furnished to shareholders by the Board of Directors of XATA
Corporation (the Company) for solicitation of proxies for use at the Special Meeting of
Shareholders (the Special Meeting) to be held on Wednesday, April 8, 2009, at our corporate
office, 965 Prairie Center Drive, Eden Prairie, Minnesota, at 10:00 a.m., and at all adjournments
thereof. The purposes of the meeting and the matter to be acted upon are set forth in the preceding
Notice of Special Meeting of Shareholders.
This proxy statement is being mailed to shareholders beginning on or about March 18, 2009.
We have asked brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy material to the beneficial owners of our Common Stock and we will reimburse them for
their expenses in so doing. To ensure adequate representation at the meeting, our officers, agents
and employees may communicate with shareholders, banks, brokerage houses and others by telephone,
facsimile, or in person to request that proxies be furnished. We will bear all expenses incurred in
connection with this solicitation.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be
Held on April 8, 2009. The Proxy Statement is
available at ______________________.
The following proxy materials and related information are available for you to review online at ______________________:
the Companys Notice of Special Meeting of Shareholders and Proxy Statement;
the form of Proxy Card;
the Letter to Shareholders; and
directions to the Special Meeting of Shareholders.
RECORD DATE AND VOTING
We have fixed February 16, 2009 as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Special Meeting. As of the close of business on
the record date, we had issued and outstanding 8,775,769 shares of our Common Stock, par value $.01
per share, 1,964,429 shares of our Series B Preferred Stock (Series B Stock), 1,269,036 shares of
our Series C Preferred Stock (Series C Stock), 1,566,580 shares of our Series D Preferred Stock
(Series D Stock) and 1,355,857 shares of our Series E Preferred Stock (Series E Stock). The
Series B Stock, Series C Stock, Series D Stock and Series E Stock are referred to collectively as
the Preferred Stock. Each share of Common Stock and Preferred Stock is entitled to one vote on
each proposal to be presented to the meeting.
The presence at the Special Meeting in person or by proxy of the holders of a majority of the
outstanding shares entitled to vote constitutes a quorum for the transaction of business. Proposal
1 Amendment of Articles of Incorporation (the Proposal) will be approved if (i) a majority of
the shares present and entitled to vote at the Special Meeting vote in favor thereof and (ii)
pursuant to Sections 302A.137 and 302A.437 of the Minnesota Business Corporation Act (the MBCA),
a majority of the shares of Series B Stock, Series C Stock and Series D Stock, each as a separate
class, vote in favor thereof.
1
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HOW TO VOTE
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By signing and returning the
enclosed proxy card, you will be
giving your proxy to our Chairman
and Chief Executive Officer (CEO)
and our Chief Financial Officer
(CFO) and authorizing either of
them to vote your shares.
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HOW YOUR PROXY WILL BE VOTED
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Unless revoked, all properly
executed proxies will be voted as
specified. Proxies that are signed
but that lack any specification
will, subject to the following, be
voted in favor of the Proposal. If
any other matters properly come
before the Special Meeting, then the
persons named in the proxy will vote
in accordance with their discretion.
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HOW TO REVOKE YOUR PROXY
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You have the power to revoke your
proxy at any time before the
convening of the Special Meeting.
Revocations of proxy will be honored
if received by us, at the Company,
addressed to the attention of Mark
E. Ties, Chief Financial Officer, on
or before April 7, 2009. In
addition, on the day of the meeting,
prior to the convening thereof,
revocations may be delivered to the
tellers who will be seated at the
door of the meeting room. Note that
any proxy received by the Company
prior to the Special Meeting will
revoke any prior proxy given by the
shareholder.
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ABSTENTIONS
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If you abstain from voting as to any
matter, your shares shall be deemed
present at the meeting for purposes
of determining a quorum and for
purposes of calculating the vote
with respect to such matter, but
shall not be deemed to have been
voted in favor of such matter.
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BROKER NON-VOTES
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If a broker turns in a non-vote
proxy, indicating a lack of voting
instruction by the beneficial holder
of the shares and a lack of
discretionary authority on the part
of the broker to vote on a
particular matter, then the shares
covered by such non-vote proxy will
be considered present at the meeting
for purposes of determining a quorum
but will not be considered to be
represented at the meeting for
purposes of calculating the vote
required for approval of such
matter.
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2
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DISSENTERS RIGHTS
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If the proposed Amendment is
approved and becomes effective,
holders of Series B Stock, Series C
Stock and Series D Stock who do not
vote their shares in favor of the
proposed Amendment discussed below
will be entitled to statutory
dissenters rights if they strictly
comply with Sections 302A.471 and
302A.473 of the MBCA. For a
description of the rights of such
holders and of the procedures to be
followed in order to assert such
rights and obtain payment of the
fair value of their shares of stock,
see Sections 302A.471 and 302A.473
of the MBCA, copies of which are
attached as Exhibit A, as well as
the information set forth below.
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IN ORDER TO PERFECT DISSENTERS
RIGHTS, A HOLDER OF SERIES B STOCK,
SERIES C STOCK OR SERIES D STOCK
MUST SEND A NOTICE TO THE COMPANY
BEFORE THE DATE OF THE SPECIAL
MEETING AND MUST NOT VOTE IN FAVOR
OF THE PROPOSED AMENDMENT BELOW BY
PROXY OR OTHERWISE.
No other shareholders are entitled
to any dissenters rights with
respect to any other matters to be
acted upon at the Special Meeting.
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RECOMMENDATIONS OF THE BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
3
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT
The following table sets forth as of February 15, 2009 the record and beneficial ownership of
Common Stock held by (i) each person who is known by us to be the beneficial owner of more than 5%
of our Common Stock; (ii) each of the current directors and nominees; (iii) the Companys CEO and
the two other executive officers who had the highest total compensation for the fiscal year ended
September 30, 2008, (these three executive officers are collectively referred to as the Named
Executive Officers or NEOs); and (iv) all of our executive officers and directors as a group.
Securities reported as beneficially owned include (a) securities over which the named person
may exercise voting power or investment power, alone or with others, and (b) the number of shares
which the named person has the right to acquire within sixty (60) days after February 15, 2009.
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Number of
Shares
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Owned (1)(2)
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Percentage
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John J. Coughlan (3)(4)
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779,944
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(5)
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8.6
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%
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Carl M. Fredericks (3)
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91,326
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1.0
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%
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Thomas G. Hudson (3)
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42,725
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*
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Roger W. Kleppe (3)
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82,991
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*
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Chad M. Linbloom (3)
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15,000
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*
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Christopher P. Marshall (3)(6)(7)
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7,020,187
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(8)
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44.5
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%
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Michael J. Paxton (3)
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17,499
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*
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Bharat S. Vedak (3)
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Mark E. Ties (4)
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203,098
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(9)
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2.3
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%
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David A Gagne (4)
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195,707
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(10)
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2.2
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%
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All executive officers, current directors as a
group (12 persons)
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1,573,052
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(11)
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16.6
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%
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William and Linda Flies, JT (7)
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587,550
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6.7
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%
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28822 Lake Avenue Way
Frontenac MN 55026
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John Deere Special Technologies Group, Inc.(7)
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2,144,060
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24.4
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%
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300 Grimes Bridge Road
Roswell GA 30075
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Trident Capital Management-V, L.L.C. (7)
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6,962,587
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(12)
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44.2
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%
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505 Hamilton Avenue, Suite 200
Palo Alto CA 94301
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Ashford Capital Management
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1,417,157
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16.1
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%
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P.O. Box 4172
Wilmington DE 19807
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Weber Capital Management, LLC
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787,422
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(13)
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8.5
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%
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340 Pine St., Suite 300
San Francisco, CA 94104
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*
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Indicates ownership of less than 1%
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4
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(1)
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Includes shares of Common Stock issuable upon exercise of options exercisable within
60 days of February 15, 2009 as follows: John J. Coughlan 265,567 shares; Carl M.
Fredericks 30,000 shares; Thomas G. Hudson 11,250 shares; Roger W. Kleppe 30,000
shares; Christopher P. Marshall 30,000 shares; Chad M. Linbloom 10,000 shares; Michael
J. Paxton 10,000 shares; Mark E. Ties 133,775 shares; David A. Gagne 141,111 shares;
all executive officers, directors and director nominees as a group 553,786 shares.
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(2)
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Includes unvested shares of restricted Common Stock that are subject to forfeiture:
John J. Coughlan 125,288 shares; Mark E. Ties 9,000 shares; David A. Gagne 7,779 shares;
and all executive officers, directors and director nominees as a group 188,733 shares.
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(3)
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Currently a director.
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(4)
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Executive officer.
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(5)
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Includes 4,505 shares of Common Stock issuable upon conversion of Series E Stock and
1,352 shares of Common Stock issuable upon exercise of related warrants.
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(6)
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Nominee of entities (collectively, Trident) affiliated with Trident Capital
Management V, L.L.C. (TCM-V), who are the holders of our Series B Stock, Series C Stock
and Series D Stock, and are among the holders of our Series E Stock. As holders of Series B
Stock, the Trident entities are entitled to vote for up to two directors as a class so long as
they hold at least 325,000 shares of Series B Stock.
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(7)
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Trident has entered into a Voting Agreement with John Deere Special Technologies
Group, Inc. (JDSTG) and William P. Flies and certain of his affiliates whereby JDSTG and Mr.
Flies and his affiliates (a) agree to vote for Tridents nominee(s) for director, at such time
as Trident no longer holds sufficient Preferred Stock to elect two directors as a separate
class, but only for so long as Trident owns at least 800,000 shares of Common Stock (directly
or by ownership of Preferred Stock), and (b) grant Trident a right of first refusal to acquire
their shares.
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(8)
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Consists of 57,600 award shares and shares issuable upon exercise of stock options,
5,813,559 shares issuable upon conversion of Series B Stock, Series C Stock, Series D Stock,
and Series E Stock and 1,149,028 shares issuable upon exercise of related warrants.
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(9)
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Includes 4,505 shares of Common Stock issuable upon conversion of Series E Stock and
1,352 shares of Common Stock issuable upon exercise of related warrants.
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(10)
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Includes 2,252 shares of Common Stock issuable upon conversion of Series E Stock and
676 shares of Common Stock issuable upon exercise of related warrants.
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(11)
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Includes 27,028 shares of Common Stock issuable upon conversion of Series E Stock and
8,110 shares of Common Stock issuable upon exercise of related warrants.
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(12)
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Consists of 5,813,559 shares issuable upon conversion of Series B Stock, Series C
Stock, Series D Stock and Series E Stock and 1,149,028 shares issuable upon exercise of
related warrants. The shares underlying Preferred Stock and warrants are held of record as set
forth in the following table. TCM-V is authorized to act as of the general partner or
investment general partner of each of the record holders. TCM-V and Christopher P. Marshall
(its current director) disclaim beneficial ownership of these shares, except to the extent of
their respective economic interests in the Trident entities.
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Series B
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Series C
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Series D
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Series E
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Preferred
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Preferred
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Preferred
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Preferred
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Stock
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Warrants
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Stock
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Warrants
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Stock
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Warrants
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Stock
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Warrants
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Trident Capital Fund-V, L.P.
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1,759,807
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1,136,849
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335,939
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1,403,400
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421,020
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907,942
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272,382
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Trident Capital Fund-V
Affiliates Fund, L.P.
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10,228
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6,607
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1,953
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8,156
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2,447
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5,277
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1,583
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Trident Capital Fund-V
Affiliates Fund (Q), L.P.
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9,758
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6,305
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1,863
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7,783
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2,335
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5,036
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1,511
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Trident Capital Fund-V
Principals Fund, L.P.
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50,936
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32,905
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9,723
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40,620
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12,186
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26,279
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7,884
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Trident Capital Parallel
Fund-V, C.V.
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133,700
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86,370
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25,522
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106,621
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31,986
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68,980
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20,694
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5
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(13)
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Consists of 225,225 and 90,090 shares issuable upon conversion of Series E Stock held
by Weber Capital Partners II, L.P. and GW 2001 Fund, L.P., respectively and 67,568 and 27,027
shares issuable upon exercise of related warrants. Weber Capital Management LLC (WCM) is
authorized to act as the general partner or investment general partner of each of both record
holders. WCM disclaims beneficial ownership of these shares, except to the extent of its
respective economic interest in Weber Capital Partners II, L.P. and GW 2001 Fund, L.P.
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6
PROPOSAL 1
APPROVAL OF ARTICLES OF AMENDMENT OF
SECOND RESTATED ARTICLES OF INCORPORATION
On February 12, 2009, the Company entered into a Common Stock Warrant and Series E Preferred
Stock Purchase Agreement (the Purchase Agreement) with the Purchasers listed on the signature
page thereto (the Purchasers), providing for the sale, in a private placement, of 1,355,857
shares of Series E Stock and warrants to purchase 406,759 shares of Common Stock of the Company
(the Warrants), resulting in gross proceeds to the Company of approximately $3.1 million (the
Equity Financing). The Purchasers are (1) Trident, (2) funds affiliated with Weber Capital
Management LLC, and (3) certain members of the Companys management.
In connection with the execution and closing of the Purchase Agreement, the Company and the
Purchasers also entered into an Exchange Agreement under which the Company is obligated to exchange
(the Exchange) all shares of the Series E Stock for an equal number of shares of a new series of
preferred stock of the Company (the Series F Stock), to be created in the future. The Series F
Stock will be identical to the Series E Stock in all respects, except that its liquidation
preference will be senior to the Companys existing series of Preferred Stock, whereas the Series E
Stocks liquidation preference is junior to the Series B Stock, Series C Stock and Series D Stock.
The Series F Stock will be created, and the exchange will occur, only if our shareholders approve
the amendments to our Articles of Incorporation to allow for the Series F Stock to have a
liquidation preference senior to the Companys existing series of Preferred Stock. Under the
Exchange Agreement, the Company is obligated to call and hold a meeting of its shareholders for
this purpose.
Summary of Amendment
The Proposal, if approved by the shareholders, would implement the changes described below to
our Second Restated Articles of Incorporation, particularly the Certificate of Designation of
Preferences of Series B Preferred Stock (the Series B Certificate), Certificate of Designation of
Preferences of Series C Preferred Stock (the Series C Certificate) and Certificate of Designation
of Preferences of Series D Preferred Stock (the Series D Certificate, and, together with the
Series B Certificate and Series C Certificate, the Existing Certificates). The following
description is a summary of the changes contained in the proposed Articles of Amendment (the
Amendment) and does not purport to be complete. This summary is qualified in its entirety by
reference to the actual text of the Articles of Amendment attached as Exhibit B, which shareholders
should carefully review prior to taking action with respect to the Proposal.
The Board of Directors believes that the proposed Amendment is in the best interests of the
Company because it will allow flexibility in future financings for the Board of Directors to create
series of preferred stock with senior dividend or liquidation preferences and the consummation of
the Exchange Agreement. If the Proposal is approved by the shareholders, then we plan to file the
Articles of Amendment with the Office of the Minnesota Secretary of State as soon as possible on or
after the date of the Special Meeting.
Dividend Preference
Section 3 of the Series B Certificate presently provides that the Series B Stock accrues a
Preferred Dividend (the B Preferred Dividend) and that we cannot pay dividends to the holders of
any other capital stock unless and until we have paid all accrued B Preferred Dividends. The
Existing Certificates presently provide for dividend parity among each series of Preferred Stock
for dividends (other than the B Preferred Dividend) paid on any series of Preferred Stock (an
Other Dividend). In the event dividends
7
are paid on any capital stock of the Company (other than the B Preferred Dividend), the
Company must pay an additional dividend on all outstanding shares of Preferred Stock in an amount
per share equal to the maximum amount paid or set aside for each such other share of capital stock.
Approval of the proposed Amendment will not affect directly the order of dividend preference
for any shares of the Companys capital stock. The order of dividend preference before and after
the approval of the proposed Amendment and the Exchange is as follows:
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Pre-Amendment and Exchange
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Post-Amendment and Exchange
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B Preferred Dividend
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B Preferred Dividend
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ê
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ê
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Other Dividends declared on:
|
|
Other Dividends declared on:
|
Series B Stock
|
|
Series B Stock
|
Series C Stock,
|
|
Series C Stock,
|
Series D Stock &
|
|
Series D Stock,
|
Series E Stock
|
|
Series E Stock
*
&
|
ê
|
|
Series F Stock
|
Dividends declared on:
|
|
ê
|
Common Stock
|
|
Dividends declared on:
|
|
|
Common Stock
|
|
|
|
*
|
|
No shares of Series E Stock are expected to be outstanding after the Exchange.
|
If the proposed Amendment is approved by shareholders, our Board of Directors will be able to
establish series of preferred stock with senior dividend preferences to our existing Preferred
Stock without needing to further amend the Existing Certificates or our Articles of Incorporation.
Liquidation Preference
Section 4 of the Series B Certificate provides for a liquidation preference in an amount equal
to the original issue price thereof, plus accrued unpaid dividends, that is senior to all other
capital stock of the Company. Section 4 of the Series C Certificate provides for a liquidation
preference in an amount equal to the original issue price thereof, plus accrued unpaid dividends,
that is senior to all other capital stock of the Company except the Series B Stock. Section 4 of
the Series D Certificate provides for a liquidation preference in an amount equal to the original
issue price thereof, plus accrued unpaid dividends, that is senior to all other capital stock of
the Company except the Series B and Series C Stock. Section 4 of the Series E Certificate provides
for a liquidation preference in an amount equal to the original issue price thereof, plus accrued
unpaid dividends, that is senior to all other capital stock of the Company except the Series B,
Series C, and Series D Stock and any future class or series of stock of the Company that has
priority or preference over the Series E Stock. The Existing Certificates do not permit the
creation of a class or series of capital stock with a liquidation preference senior to an existing
series of Preferred Stock.
8
In order to facilitate the liquidation preference which was required to induce the Purchasers
to participate in the Equity Financing, the proposed Amendment will modify the Existing
Certificates to allow our Board of Directors to establish the desired order of liquidation
preference among our series of Preferred Stock and any series of preferred stock established in the
future. The proposed change in liquidation preferences as a result of the Amendment and the
Exchange is as follows:
|
|
|
Pre-Amendment and Exchange
|
|
Post-Amendment and Exchange
|
Series B Stock
|
|
Series F Stock
|
ê
|
|
ê
|
Series C Stock
|
|
Series B Stock
|
ê
|
|
ê
|
Series D Stock
|
|
Series C Stock
|
ê
|
|
ê
|
Series E Stock
|
|
Series D Stock
|
ê
|
|
ê
|
Common Stock
|
|
Series E Stock
*
|
ê
|
|
ê
|
|
|
Common Stock
|
|
|
|
*
|
|
No shares of Series E Stock are expected to be outstanding after the Exchange.
|
If the proposed Amendment is approved by shareholders, our Board of Directors will be able to
establish series of preferred stock with senior liquidation preferences to our existing Preferred
Stock without needing to further amend the Existing Certificates or our Articles of Incorporation.
Necessity for Shareholder Approval
Under Minnesota law, a company is required to submit amendments of its articles of
incorporation to its shareholders for approval and an amendment of the Existing Certificates is an
amendment of our Articles of Incorporation. The proposed Amendment will be approved if (i) a
majority of the shares present and entitled to vote at the Special Meeting vote in favor thereof
and (ii) pursuant to Sections 302A.137 and 302A.437 of the MBCA, a majority of the shares of Series
B Stock, Series C Stock and Series D Stock, each as a separate class, vote in favor thereof.
Consequences of Approval of Amendment
The completion of the Exchange pursuant to the Exchange Agreement is contingent upon the
creation of the Series F Stock. If the proposed Amendment receives shareholder approval, our Board
of Directors will create the Series F Stock by approving and filing with the Office of the
Minnesota Secretary of State a Certificate of Designation of Preferences of Series F Preferred
Stock (the Series F Certificate). The following description of the terms of the Series F Stock
is a summary of provisions contained in the Series F Certificate and does not purport to be
complete.
With the exception of the senior liquidation preference discussed above under Liquidation
Preference, the Series F Stock will have the same rights and preferences as the Series E Stock for
which it will be exchanged. There will not be an established public trading market for the Series F
Stock.
Redemption Rights
Both the Company and the holders of at least 60% of a series of the Preferred Stock currently
have the right to redeem all (but not less than all) of the outstanding stock of that series of
Preferred Stock, for a sum equal to the original issue price (as adjusted for certain changes in
the Companys capital
9
structure) plus accrued and unpaid dividends with respect to such shares, at any time five
years after the first issuance of shares of that series, subject to certain conditions. The rights
of a holder of a series will cease and terminate with respect to such shares after a date set forth
in the Companys notice of redemption or the date set forth in the notice of election by the
holders of at least 60% of that series of Preferred Stock. The redemption rights of the Preferred
Stock will not change if the proposed Amendment is approved by the shareholders. The Company and
holders of Series F Stock will have the same rights of redemption with respect to the Series F
Stock.
Conversion Rights
Each share of a series of the Preferred Stock is currently convertible into one share of
Common Stock, based on a conversion price, which is subject to adjustment for stock dividends,
combinations or subdivisions of Common Stock, or a reclassification or reorganization of the
Company. These conversion rights will not change if the proposed Amendment is approved by the
shareholders. Each share of the Series F Stock will be convertible into shares of Common Stock
based on a conversion price equal to the conversion price of Series E Stock on the date it is
exchanged for Series F Stock, which will be subject to adjustment for the same events set forth in
the description of the Preferred Stock above.
Outstanding Dividends on Series E Stock
There are no outstanding or accrued dividends payable on the Series E Stock.
Change-of-Control Provisions
Unless waived in writing by holders of 60% of the outstanding shares of Series B Stock, a
change of control is deemed to be a liquidation event that entitles the holders of each series of
Preferred Stock to receive proceeds from the liquidation event in cash, securities or other
property in order of priority as set forth in our Articles of Incorporation (a Deemed Liquidation
Event). Change of control is currently defined in the Series B Certificate as any of the
following:
|
|
|
an acquisition of the Company by means of merger or other form of corporate
reorganization in which outstanding shares of the Company are exchanged for securities
or other consideration by an acquiring entity in which greater than 40% of the voting
power of the Common Stock is transferred;
|
|
|
|
|
a sale of substantially all of the assets of the Company; or
|
|
|
|
|
the beneficial acquisition from the Company by any person or group in a transaction
or series of related transactions in which such person or group holds greater than 40%
of the voting power of the Common Stock following such transaction.
|
The preceding definition of change of control in the Series B Certificate is incorporated by
reference into the Series C Certificate, Series D Certificate and Series E Certificate. A change of
control is not a Deemed Liquidation Event for holders of any series of Preferred Stock if waived by
holders of 60% of the Series B Preferred. Neither the definition of a Deemed Liquidation Event nor
the definition of a change of control will change if the proposed Amendment is approved by the
shareholders. The holders of Series F Stock will also be subject to the Deemed Liquidation Event,
which may be waived by holders of Series B Stock.
10
Outstanding Shares of Capital Stock
Giving effect to the Amendment and the Exchange, our outstanding capital stock would be
affected as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares Outstanding
|
|
|
Pre-Amendment and
|
|
Post-Amendment and
|
|
|
Exchange
|
|
Exchange
|
Common Stock
|
|
|
8,775,769
|
|
|
|
8,775,769
|
|
Series B Stock
|
|
|
1,964,429
|
|
|
|
1,964,429
|
|
Series C Stock
|
|
|
1,269,036
|
|
|
|
1,269,036
|
|
Series D Stock
|
|
|
1,566,580
|
|
|
|
1,566,580
|
|
Series E Stock
|
|
|
1,355,857
|
|
|
|
|
|
Series F Stock
|
|
|
N/A
|
|
|
|
1,355,857
|
|
Dissenters Rights
By fully complying with Sections 302A.471 and 302A.473 of the MBCA, each holder of Series B
Stock, Series C Stock or Series D Stock has the right to dissent from the Proposal and any such
dissenting holder may obtain payment of the fair value of such holders shares in the event that
the Proposal is approved and the Amendment becomes effective.
An explanation of dissenters rights and the related procedures for compliance, together with
the full text of Sections 302A.471 and 302A.473, are attached as Exhibit A. These Sections should
be reviewed carefully by any holder of Series B Stock, Series C Stock or Series D Stock who wishes
to exercise dissenters rights or who wishes to preserve the right to do so, since failure to
comply with these procedures will result in the loss of dissenters rights.
Background of the Equity Financing
The Company entered into the Purchase Agreement only after our Board of Directors and
management evaluated all relevant matters, including the Companys capital needs, availability of
funding sources and the best interests of the Companys shareholders. Review of these factors
occurred at regular meetings of the Board of Directors on August 8, 2008, November 5, 2008 and
February 4, 2009 and included discussion of the appropriate timing, pricing and terms of the
potential sale of the Companys securities and alternative financing structures.
In order to assure that all relevant issues were properly fairly considered, on January 13,
2009 the Board of Directors appointed a Special Committee consisting of Thomas Hudson and Michael
Paxton, two independent members of the Board of Directors with significant experience in the areas
of equity and debt financings, shareholder relations and capital markets. The Special Committee was
authorized to consult and retain outside consultants, bankers and other experts to assist them in
evaluating the Companys capital needs. Additionally, the Special Committee was directed to
thoroughly analyze the alternative sources, the impact of current shareholders obtaining additional
ownership and control, the terms and pricing of financing available to the Company and to recommend
to the Board of Directors the structure that would best serve the needs of the Company and its
shareholders.
The Special Committee met formally and informally and had numerous discussions with the
Companys management regarding the terms and conditions of the Equity Financing and related
transactions. Additionally, the Special Committee received market information and funding source
data from an outside financial advisor. The Special Committee evaluated, amongst other factors, the
historical funding sources, the ownership percentages of Trident and other investors, the current
conditions in the
11
capital markets and the Companys near term capital requirements. The Special Committee also
reviewed the Companys long term capital needs, the terms and expiration dates of its banking
arrangements and the impact of any current capital raises upon renewals of those facilities.
After considering all relevant matters and finding the terms of the Purchase Agreement to be
in the best interests of the Company and its shareholders, the Special Committee, on February 11,
2009, approved, and recommended to the Board of Directors that it approve, the Equity Financing and
transactions. Based upon that recommendation, the Board of Directors, after full discussion of all
material matters, unanimously approved terms of the Purchase Agreement on February 11, 2009. The
Board of Directors directed the Companys management to take all steps necessary to carry out its
resolutions.
Total proceeds from the Equity Financing was $3,060,847.34. On February 17, 2009 the Company
used $1,965,630.14 of these proceeds to retire all obligations under certain promissory notes
previously issued by the Company on January 31, 2008 in connection with the Companys acquisition
of Geologic Solutions, Inc. The remaining proceeds will be used to strengthen the Companys balance
sheet and for operating capital.
OTHER INFORMATION
Certain Relationships and Related Person Transactions
We are soliciting proxies from our shareholders in favor of approval of the proposed
Amendment. Directors and officers of the Company may be deemed participants in the Companys
solicitation of proxies. Certain directors and officers have interests in the Equity Financing and
the Exchange Agreement, some of which may differ from, or may be in addition to, those of our
stockholders generally. These interests include:
Trident currently holds all of our outstanding Series B Stock, Series C Stock and
Series D Stock and a portion of our Series E Stock. Christopher P. Marshall, one of our
directors, is a former Managing Director of Trident Capital and is Tridents current
director designee on our Board of Directors. As a holder of our Series E Stock (See Note 12
of the table under PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT), Trident and Mr.
Marshall each have an interest in the Proposal. If the Proposal is approved, Trident will be
able to exchange its shares of Series E Stock for shares of Series F Stock, which have a
superior liquidation preference as described under Liquidation Preference in the Proposal.
In addition, Trident has a right of first refusal on certain new stock issuances by the
Company which is intended to permit Trident to maintain its current percentage ownership.
John J. Coughlan, Mark E. Ties, David A. Gagne, Robert Maeser and Wesley C. Fredenburg,
(collectively the Participating Executive Officers), each have an interest in the proposed
action. As holders of our Series E Stock (See Notes 5, 9, 10 and 11 of the table under
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT), the Participating Executive Officers
will be able to exchange their shares of Series E Stock for shares of Series F Stock, which
have a superior liquidation preference as described under Liquidation Preference in the
Proposal.
12
PROPOSALS FOR FISCAL 2009 ANNUAL MEETING
We currently anticipate that the next annual meeting, for the fiscal year ending September 30,
2009 (the 2010 Annual Meeting) will be held on or around February 15, 2010. If you wish to
submit a proposal for inclusion in our proxy statement and proxy for shareholder action or wish to
bring any business at the 2010 Annual Meeting, you must do so by sending the proposal, notice and
supporting statements, if any, to us no later than November 6, 2009.
In addition, pursuant to the rules of the Securities and Exchange Commission, proxies
solicited by our management for the 2010 Annual Meeting may grant management the authority to vote
in its discretion on any proposal to be submitted by a shareholder otherwise than through inclusion
in the proxy statement for the 2010 Annual Meeting, unless we have received notice of the
shareholder proposal on or before December 1, 2009.
By Order of the Board of Directors
Wesley C. Fredenburg
Secretary
Dated: March ___, 2009
Eden Prairie, Minnesota
13
EXHIBIT A
EXPLANATION OF DISSENTERS RIGHTS
1. Section 302A.471 of the Minnesota Business Corporation Act entitles any shareholder of a
corporation who is entitled to vote and who objects to an amendment to a corporations articles of
incorporation if such amendment materially and adversely affects the rights or preferences of the
shares of such shareholder to dissent from such action and obtain payment for the fair value of
his or her shares of stock. Any shareholder of XATA Corporation (the Corporation) contemplating
an attempt to assert and exercise dissenters rights in connection with the proposed amendments
described in the Notice of Special Meeting of Shareholders to which this is attached should review
carefully the provisions of Sections 302A.471 and 302A.473 of the Minnesota Business Corporation
Act (copies of which are attached hereto), particularly the specific procedural steps required to
perfect such rights.
DISSENTERS RIGHTS ARE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTION
302A.473 ARE NOT FULLY AND PRECISELY SATISFIED.
2. Set forth below (to be read in conjunction with the full text of Section 302A.473 appearing
at the end of this
Exhibit A
) is a brief description of the procedures relating to the
exercise of dissenters rights applicable in a proposed amendment to the articles of incorporation
of the Corporation that materially and adversely affects the rights or preferences of the shares.
The following description does not purport to be a complete statement of the provisions of Section
302A.473 and is qualified in its entirety by reference thereto.
3. Under Section 302A.473, Subd. 3, a shareholder who wishes to exercise dissenters rights (a
Dissenter) must file with the corporation, before the vote on the proposed amendment, a written
notice of intent to demand the fair value of the corporations shares owned by the shareholder.
Under Section 302A.471, Subd. 2, beneficial owners of shares who desire to exercise statutory
dissenters rights must obtain and submit the registered owners written consent at or before the
time the notice of intent to demand fair value is due.
IN ADDITION, THE SHAREHOLDER MUST NOT VOTE
HIS OR HER SHARES IN FAVOR OF SUCH PROPOSED AMENDMENT. A VOTE AGAINST THE PROPOSED AMENDMENT DOES
NOT IN ITSELF CONSTITUTE SUCH A WRITTEN NOTICE AND A FAILURE TO VOTE DOES NOT AFFECT THE VALIDITY
OF A TIMELY WRITTEN NOTICE.
4. If the proposed amendment is approved by the shareholders of such corporation, the
corporation must send to all Dissenters who filed the necessary notice of intent to demand the fair
value of their shares (and who did not vote their shares in favor of such proposal) a notice
containing certain information required by Section 302A.473, Subd. 4, including without limitation
the address to which a Dissenter must send a demand for payment and certificates representing
shares in order to obtain payment for such shares and the date by which they must be received. In
order to receive the fair value of the shares under Section 302A.473, a Dissenter must demand
payment and deposit certificates representing shares within 30 days after such notice from the
corporation is given. Under Minnesota law, notice by mail is given by a corporation when deposited
in the United States mail.
A SHAREHOLDER WHO FAILS TO MAKE DEMAND FOR PAYMENT AND TO DEPOSIT
CERTIFICATES AS REQUIRED BY SECTION 302A.473, SUBD. 4, LOSES THE RIGHT TO RECEIVE THE FAIR VALUE OF
HIS OR HER SHARES UNDER SUCH SECTION NOTWITHSTANDING THE TIMELY FILING OF NOTICE OF INTENT TO
DEMAND PAYMENT UNDER SECTION 302A.473, SUBD. 3.
5. Except as provided below, if demand for payment and deposit of stock certificates is duly
made by a Dissenter with the corporation as required by the notice, then after the corporations
receipt of such demand or the effective date of the amendment, whichever is later, the corporation
must pay the Dissenter an amount which the corporation estimates to be the fair value of the
Dissenters shares of stock, with interest, if any. For the purpose of a Dissenters appraisal
rights under Sections 302A.471 and 302A.473, fair value means the value of the shares of stock
immediately before the effective
date of
such amendment and interest means interest commencing
five days after the effective date of such amendment until the date of payment, calculated at the
rate provided in Minnesota Statutes Section 549.09. If a Dissenter believes the payment received
from the corporation is less than the fair value of the shares of stock, with interest, if any,
such Dissenter must give written notice to the corporation of his or her own estimate of the fair
value of the shares of stock, with interest, if any, within 30 days after the date of the
corporations remittance, and must demand payment of the difference between his or her estimate and
the corporations remittance. If such Dissenter fails to give written notice of such estimate to
the corporation within the 30-day time period, such Dissenter is entitled only to the amount
remitted by the corporation.
6. A corporation may withhold such remittance with respect to shares of stock for which a
Dissenter demanding payment (or persons on whose behalf such Dissenter acts) was not the beneficial
owner as of the first public announcement date of the amendment (the Public Announcement Date).
As to each such Dissenter who has validly demanded payment, following the effective date of such
amendment or the receipt of demand, whichever is later, the corporation must mail its estimate of
the fair value of such Dissenters shares of stock and offer to pay this amount with interest, if
any, to the Dissenter upon receipt of such Dissenters agreement to accept this amount in full
satisfaction. If such Dissenter believes that the corporations offer is for less than the fair
value of the shares of stock, with interest, if any, such Dissenter must give written notice to the
corporation of his or her own estimate of the fair value of the shares of stock, with interest, if
any, and demand payment of this amount. This demand must be mailed to the corporation within 30
days after the mailing of the corporations offer. If the Dissenter fails to make this demand
within the 30-day time period, such Dissenter is entitled only to the amount offered by the
corporation.
7. If a corporation and a Dissenter (including both a Dissenter who purchased shares of stock
on or prior to the Public Announcement Date and a Dissenter who purchased shares of stock after the
Public Announcement Date who have complied with their respective demand requirements) do not settle
the Dissenters demand within 60 days after the corporation receives the Dissenters estimate of
the fair value of his or her shares of stock, then the corporation must file a petition in a court
of competent jurisdiction in the county in which the registered office of such corporation is
located, requesting that the court determine the statutory fair value of stock with interest, if
any. All Dissenters whose demands are not settled within the applicable 60-day settlement period
must be made parties to this proceeding.
8. The court will then determine whether each Dissenter in question has fully complied with
the provisions of Section 302A.473, and for all Dissenters who have fully complied and not
forfeited statutory dissenters rights, will determine the fair value of the shares, taking into
account any and all factors the court finds relevant (including, without limitation, the
recommendation of any appraisers which may have been appointed by the court), computed by any
method that the court, in its discretion, sees fit to use, whether or not used by the corporation
or a Dissenter. The fair value of the shares as determined by the court is binding on all
shareholders. However, under the statute, Dissenters are not liable to a corporation for the
amount, if any, by which payments remitted to the Dissenters exceed the fair value of such shares
determined by a court, with interest. The costs and expenses of such a court proceeding are
assessed against the corporation, except that the court may assess part or all of those costs and
expenses against a Dissenter whose action in demanding payment is found to be arbitrary, vexatious
or not in good faith.
9. Under Section 302A.471, Subd. 2, a shareholder of a corporation may not assert dissenters
rights with respect to less than all of the shares of stock registered in such shareholders name,
unless the shareholder dissents with respect to all shares beneficially owned by another person and
discloses the name and address of such other person.
10. Under Section 302A.471, Subd. 4, a shareholder of a corporation has no right at law or
equity to set aside the approval of an amendment, except if such approval or consummation is
fraudulent with respect to such shareholder or the corporation.
302A.471 RIGHTS OF DISSENTING SHAREHOLDERS
Subdivision 1. Actions creating rights.
A shareholder of a corporation may dissent from, and
obtain payment for the fair value of the shareholders shares in the event of, any of the following
corporate actions:
(a) unless otherwise provided in the articles, an amendment of the articles that materially
and adversely affects the rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of the shares, including a provision respecting a sinking fund for the redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to acquire shares, securities other than shares, or rights to purchase shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate
votes, except as the right may be excluded or limited through the authorization or issuance
of securities of an existing or new class or series with similar or different voting rights;
except that an amendment to the articles of an issuing public corporation that provides that
section 302A.671 does not apply to a control share acquisition does not give rise to the
right to obtain payment under this section; or
(5) eliminates the right to obtain payment under this subdivision;
(b) a sale, lease, transfer, or other disposition of property and assets of the corporation
that requires shareholder approval under section 302A.661, subdivision 2, but not including a
disposition in dissolution described in section 302A.725, subdivision 2, or a disposition pursuant
to an order of a court, or a disposition for cash on terms requiring that all or substantially all
of the net proceeds of disposition be distributed to the shareholders in accordance with their
respective interests within one year after the date of disposition;
(c) a plan of merger, whether under this chapter or under chapter 322B, to which the
corporation is a constituent organization, except as provided in subdivision 3, and except for a
plan of merger adopted under section 302A.626;
(d) a plan of exchange, whether under this chapter or under chapter 322B, to which the
corporation is a party as the corporation whose shares will be acquired by the acquiring
organization, except as provided in subdivision 3;
(e) a plan of conversion adopted by the corporation; or
(f) any other corporate action taken pursuant to a shareholder vote with respect to which the
articles, the bylaws, or a resolution approved by the board directs that dissenting shareholders
may obtain payment for their shares.
Subd. 2. Beneficial owners.
(a) A shareholder shall not assert dissenters rights as to less
than all of the shares registered in the name of the shareholder, unless the shareholder dissents
with respect to all the shares that are beneficially owned by another person but registered in the
name of the shareholder and discloses the name and address of each beneficial owner on whose behalf
the shareholder dissents. In that event, the rights of the dissenter shall be determined as if the
shares as to which the shareholder has dissented and the other shares were registered in the names
of different shareholders.
(b) A beneficial owner of shares who is not the shareholder may assert dissenters rights with
respect to shares held on behalf of the beneficial owner, and shall be treated as a dissenting
shareholder under the terms of this section and section 302A.473, if the beneficial owner submits
to the corporation at the time of or before the assertion of the rights a written consent of the
shareholder.
Subd. 3. Rights not to apply.
(a) Unless the articles, the bylaws, or a resolution approved
by the board otherwise provide, the right to obtain payment under this section does not apply to a
shareholder of (1) the surviving corporation in a merger with respect to shares of the shareholder
that are not entitled to be voted on the merger and are not canceled or
exchanged in the merger or
(2) the corporation whose shares will be acquired by the acquiring organization in a plan of
exchange with respect to shares of the shareholder that are not entitled to be voted on the plan of
exchange and are not exchanged in the plan of exchange.
(b) If a date is fixed according to section 302A.445, subdivision 1, for the determination of
shareholders entitled to receive notice of and to vote on an action described in subdivision 1,
only shareholders as of the date fixed, and beneficial owners as of the date fixed who hold through
shareholders, as provided in subdivision 2, may exercise dissenters rights.
(c) Notwithstanding subdivision 1, the right to obtain payment under this section, other than
in connection with a plan of merger adopted under section 302A.621, is limited in accordance with
the following provisions:
(1) The right to obtain payment under this section is not available for the holders of shares of any class or series of shares that is listed on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market.
(2) The applicability of clause (1) is determined as of:
(i) the record date fixed to determine the shareholders entitled to receive
notice of, and to vote at, the meeting of shareholders to act upon the corporate
action described in subdivision 1; or
(ii) the day before the effective date of corporate action described in
subdivision 1 if there is no meeting of shareholders.
(3) Clause (1) is not applicable, and the right to obtain payment under this section is
available pursuant to subdivision 1, for the holders of any class or series of shares who are
required by the terms of the corporate action described in subdivision 1 to accept for such
shares anything other than shares, or cash in lieu of fractional shares, of any class or any
series of shares of a domestic or foreign corporation, or any other ownership interest of any
other organization, that satisfies the standards set forth in clause (1) at the time the
corporate action becomes effective.
Subd. 4. Other rights.
The shareholders of a corporation who have a right under this section
to obtain payment for their shares, or who would have the right to obtain payment for their shares
absent the exception set forth in paragraph (c) of subdivision 3, do not have a right at law or in
equity to have a corporate action described in subdivision 1 set aside or rescinded, except when
the corporate action is fraudulent with regard to the complaining shareholder or the corporation.
302A.473 PROCEDURES FOR ASSERTING DISSENTERS RIGHTS.
Subdivision
1. Definitions.
(a) For purposes of this section, the terms defined in this
subdivision have the meanings given them.
(b) Corporation means the issuer of the shares held by a dissenter before the corporate
action referred to in section 302A.471, subdivision 1 or the successor by merger of that issuer.
(c) Fair value of the shares means the value of the shares of a corporation immediately
before the effective date of the corporate action referred to in section 302A.471, subdivision 1.
(d) Interest means interest commencing five days after the effective date of the corporate
action referred to in section 302A.471, subdivision 1, up to and including the date of payment,
calculated at the rate provided in section 549.09 for interest on verdicts and judgments.
Subd. 2. Notice of action.
If a corporation calls a shareholder meeting at which any action
described in section 302A.471, subdivision 1 is to be voted upon, the notice of the meeting shall
inform each shareholder of the right to dissent and shall include a copy of section 302A.471 and
this section and a brief description of the procedure to be followed under these sections.
Subd. 3. Notice of dissent.
If the proposed action must be approved by the shareholders and
the corporation holds a shareholder meeting, a shareholder who is entitled to dissent under section
302A.471 and who wishes to exercise dissenters rights must file with the corporation before the
vote on the proposed action a written notice of intent to demand the fair value of the shares owned
by the shareholder and must not vote the shares in favor of the proposed action.
Subd. 4. Notice of procedure; deposit of shares.
(a) After the proposed action has been
approved by the board and, if necessary, the shareholders, the corporation shall send to (i) all
shareholders who have complied with subdivision 3, (ii) all shareholders who did not sign or
consent to a written action that gave effect to the action creating the right to obtain payment
under section 302A.471, and (iii) all shareholders entitled to dissent if no shareholder vote was
required, a notice that contains:
(1) the address to which a demand for payment and certificates of certificated shares
must be sent in order to obtain payment and the date by which they must be received;
(2) any restrictions on transfer of uncertificated shares that will apply after the
demand for payment is received;
(3) a form to be used to certify the date on which the shareholder, or the beneficial
owner on whose behalf the shareholder dissents, acquired the shares or an interest in them
and to demand payment; and
(4) a copy of section 302A.471 and this section and a brief description of the
procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting shareholder must demand
payment and deposit certificated shares or comply with any restrictions on transfer of
uncertificated shares within 30 days after the notice required by paragraph (a) was given, but the
dissenter retains all other rights of a shareholder until the proposed action takes effect.
Subd. 5. Payment; return of shares.
(a) After the corporate action takes effect, or after the
corporation receives a valid demand for payment, whichever is later, the corporation shall remit to
each dissenting shareholder who has complied with subdivisions 3 and 4 the amount the corporation
estimates to be the fair value of the shares, plus interest, accompanied by:
(1) the corporations closing balance sheet and statement of income for a fiscal year
ending not more than 16 months before the effective date of the corporate action, together
with the latest available interim financial statements;
(2) an estimate by the corporation of the fair value of the shares and a brief
description of the method used to reach the estimate; and
(3) a copy of section 302A.471 and this section, and a brief description of the
procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a) from a person who
was not a shareholder on the date the action dissented from was first announced to the public or
who is dissenting on behalf of a person who was not a beneficial owner on that date. If the
dissenter has complied with subdivisions 3 and 4, the corporation shall forward to the dissenter
the materials described in paragraph (a), a statement of the reason for withholding the remittance,
and an offer to pay to the dissenter the amount listed in the materials if the dissenter agrees to
accept that amount in full satisfaction. The dissenter may decline the offer and demand payment
under subdivision 6. Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit of certificates or
the imposition of transfer restrictions on uncertificated shares, it shall return all deposited
certificates and cancel all transfer restrictions. However, the corporation may again give notice
under subdivision 4 and require deposit or restrict transfer at a later time.
Subd. 6. Supplemental payment; demand.
If a dissenter believes that the amount remitted under
subdivision 5 is less than the fair value of the shares plus interest, the dissenter may give
written notice to the corporation of the dissenters own estimate of the fair value of the shares,
plus interest, within 30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the amount remitted by
the corporation.
Subd. 7. Petition; determination.
If the corporation receives a demand under subdivision 6,
it shall, within 60 days after receiving the demand, either pay to the dissenter the amount
demanded or agreed to by the dissenter after discussion with the corporation or file in court a
petition requesting that the court determine the fair value of the shares, plus interest. The
petition shall be filed in the county in which the registered office of the corporation is located,
except that a surviving foreign corporation that receives a demand relating to the shares of a
constituent domestic corporation shall file the petition in the county in this state in which the
last registered office of the constituent corporation was located. The petition shall name as
parties all dissenters who have demanded payment under subdivision 6 and who have not reached
agreement with the corporation. The corporation shall, after filing the petition, serve all parties
with a summons and copy of the petition under the Rules of Civil Procedure. Nonresidents of this
state may be served by registered or certified mail or by publication as provided by law. Except as
otherwise provided, the Rules of Civil Procedure apply to this proceeding. The jurisdiction of the
court is plenary and exclusive. The court may appoint appraisers, with powers and authorities the
court deems proper, to receive evidence on and recommend the amount of the fair value of the
shares. The court shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair value of the shares,
taking into account any and all factors the court finds relevant, computed by any method or
combination of methods that the court, in its discretion, sees fit to use, whether or not used by
the corporation or by a dissenter. The fair value of the shares as determined by the court is
binding on all shareholders, wherever located. A dissenter is entitled to judgment in cash for the
amount by which the fair value of the shares as determined by the court, plus interest, exceeds the
amount, if any, remitted under subdivision 5, but shall not be liable to the corporation for the
amount, if any, by which the amount, if any, remitted to the dissenter under subdivision 5 exceeds
the fair value of the shares as determined by the court, plus interest.
Subd. 8. Costs; fees; expenses.
(a) The court shall determine the costs and expenses of a
proceeding under subdivision 7, including the reasonable expenses and compensation of any
appraisers appointed by the court, and shall assess those costs and expenses against the
corporation, except that the court may assess part or all of those costs and expenses against a
dissenter whose action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply substantially with this
section, the court may assess all fees and expenses of any experts or attorneys as the court deems
equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily,
vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured
by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney for the
dissenters out of the amount awarded to the dissenters, if any.
EXHIBIT B
XATA CORPORATION
ARTICLES OF AMENDMENT
OF
SECOND RESTATED ARTICLES OF INCORPORATION
The undersigned, Mark E. Ties, Secretary of XATA Corporation, a Minnesota corporation (the
Corporation
), hereby certifies that:
1. The name of the Corporation is XATA Corporation.
2. The Corporations Second Restated Articles of Incorporation are amended as follows:
(a) Section 3 of the Certificate of Designation of Preferences of Series B Preferred Stock is
amended and restated in its entirety to read as follows:
3.
Dividend Rights
. The holders of the Series B Preferred Stock shall be
entitled to receive, out of any assets of the Corporation legally available therefor,
cumulative dividends at the rate of four percent (4%) of the Original Issue Price (as
defined below) per annum on each outstanding share of Series B Preferred Stock (the
Preferred Dividend). Such Preferred Dividend shall be paid semi-annually on the last
business day of May and November of each year in cash or, at the election of holders of at
least sixty percent (60%) of the Series B Preferred Stock then outstanding as of twenty (20)
business days prior to the date of payment, in shares of Series B Preferred Stock. The
aggregate number of shares of Series B Preferred Stock so payable to any holder upon such
election to receive dividends in kind shall be equal to the aggregate amount of such
Preferred Dividend payable to such holder divided by the Conversion Price (as defined
below), with any fractions of a share to be issued rounded to the nearest whole share. The
Board of Directors shall not pay any dividend to the holders of any other capital stock of
the Corporation, other than a Senior Preferred Dividend, unless and until it has paid the
Preferred Dividend on the shares of Series B Preferred Stock to the holders of the Series B
Preferred Stock. Senior Preferred Dividend as used in this Certificate of Designation
means any dividend paid on any class or series of stock of the Corporation hereafter
authorized that has priority or preference over the Preferred Dividend. In addition, in the
event dividends are paid on any other capital stock of the Corporation other than Dividend
Senior Stock, the Corporation shall pay an additional dividend on all outstanding shares of
Series B Preferred Stock (on an as-if-converted to Common Stock basis) in an amount per
share equal to the maximum amount paid or set aside for any such other share of capital
stock (on an as-if-converted to Common Stock basis). Dividend Senior Stock as used in
this Certificate of Designation means any class or series of stock of the Corporation
hereafter authorized that has priority or preference over the Series B Preferred Stock with
respect to the payment of dividends (other than the Preferred Dividend).
(b) Paragraphs (A) and (B) of Section 4 (Liquidation Preference) of the Certificate of
Designation of Preferences of Series B Preferred Stock are each amended and restated in their
entirety to read as follows:
(A) In the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a Liquidation Event), the holders of the Series B
Preferred Stock shall be entitled to receive, after the satisfaction in full of the
liquidation preference of
holders of any Liquidation Senior Stock, prior and in preference
to any distribution of any of the assets or surplus funds of the Corporation to the holders
of any Liquidation Junior Stock, and
pari passu
with the satisfaction of the liquidation
preference of holders of any Liquidation Parity Stock, an amount per share equal to the
Original Issue Price of the Series B Preferred Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all accrued or declared but unpaid
dividends on each share of Series B Preferred Stock then held by such holder. If upon the
occurrence of such Liquidation Event, the remaining assets and funds of the Corporation
available for distribution among the holders of Series B Preferred Stock and the holders of
any Liquidation Parity Stock shall be insufficient to permit the payment to such holders of
the full preferential amounts to which they are entitled, then the entire remaining assets
and funds of the Corporation legally available for distribution to such holders shall be
distributed among such holders in proportion to the full preferential amount each such
holder is otherwise entitled to receive.
(B) As used in this Certificate of Designation:
(i) Liquidation Senior Stock means any class or series of stock of the
Corporation hereafter authorized that has priority or preference over the Series B
Preferred Stock in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation;
(ii) Liquidation Junior Stock means the Common Stock, the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock, and any other
class or series of stock of the Corporation hereafter authorized with respect to
which the Series B Preferred Stock has priority or preference in the distribution of
assets on any liquidation, dissolution or winding up of the Corporation; and
(iii) Liquidation Parity Stock means any class or series of stock of the
Corporation hereafter authorized that ranks equally with the Series B Preferred
Stock in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation.
(c) Section 3 of the Certificate of Designation of Preferences of Series C Preferred Stock is
amended and restated in its entirety to read as follows:
3.
Dividend Rights
. In the event dividends (other than the Preferred
Dividend as defined in Section 3 of the Companys Certificate of Designation of Preferences
of Series B Preferred Stock) are paid on any other capital stock of the Corporation other
than Dividend Senior Stock, the Corporation shall pay a dividend on all outstanding shares
of Series C Preferred Stock (on an as-if-converted to Common Stock basis) in an amount per
share equal to the maximum amount paid or set aside for any such other share of capital
stock (on an as-if-converted to Common Stock basis). Dividend Senior Stock as used in
this Certificate of Designation means any class or series of stock of the Corporation
hereafter authorized that has priority or preference over the Series C Preferred Stock with
respect to the payment of dividends.
(d) Paragraphs (A) and (B) of Section 4 (Liquidation Preference) of the Certificate of
Designation of Preferences of Series C Preferred Stock are amended and restated in their entirety
to read as follows:
(A) In the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a Liquidation Event), the holders of the Series C
Preferred Stock shall be entitled to receive, after the satisfaction in full of the
liquidation preference of holders of any Liquidation Senior Stock, prior and in preference
to any distribution of any of the assets or surplus funds of the Corporation to the holders
of any Liquidation Junior Stock, and
pari passu
with the satisfaction of the liquidation
preference of holders of any Liquidation Parity Stock, an amount per share equal to the
Original Issue Price of the Series C Preferred Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all accrued or declared but unpaid
dividends on each share of Series C Preferred Stock then held by such holder. If upon the
occurrence of such Liquidation Event, the remaining assets and funds of the Corporation
available for distribution among the holders of Series C Preferred Stock and the holders of
any Liquidation Parity Stock shall be insufficient to permit the payment to such holders of
the full preferential amounts to which they are entitled, then the entire remaining assets
and funds of the Corporation legally available for distribution to such holders shall be
distributed among such holders in proportion to the full preferential amount each such
holder is otherwise entitled to receive.
(B) As used in this Certificate of Designation:
(i) Liquidation Senior Stock means the Series B Preferred Stock and any other
class or series of stock of the Corporation hereafter authorized that has priority
or preference over the Series C Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation;
(ii) Liquidation Junior Stock means the Common Stock, the Series D Preferred
Stock, the Series E Preferred Stock, and any other class or series of stock of the
Corporation hereafter authorized with respect to which the Series C Preferred Stock
has priority or preference in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation; and
(iii) Liquidation Parity Stock means any class or series of stock of the
Corporation hereafter authorized that ranks equally with the Series C Preferred
Stock in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation.
(e) Paragraph 5(A)(ii)(B) of the Certificate of Designation of Preferences of Series C
Preferred Stock is amended and restated in its entirety to read as follows:
(B) Notwithstanding the foregoing, the Corporation may decline to redeem any or all of
the Series C Preferred Stock (provided that any redemption in part shall be pro rata across
holders) and in such case, the Series C Preferred Stock shall bear cumulative dividends at
the rate of four percent (4%) of the Original Issue Price per annum on each outstanding
share of Series C Preferred Stock (the Preferred Dividend) from the date of the Election
Notice. Such Preferred Dividend shall be paid semi-annually on the last business day of May
and November of each year in cash. The Board of Directors shall not pay any dividend to the
holders of any other capital stock of the Corporation except Dividend Senior Stock, unless
and until it has paid the Preferred
Dividend on the shares of Series C Preferred Stock to the holders of the Series C
Preferred Stock.
(f) Section 3 of the Certificate of Designation of Preferences of Series D Preferred Stock is
amended and restated in its entirety to read as follows:
3.
Dividend Rights
. In the event dividends (other than the Preferred
Dividend as defined in Section 3 of the Companys Certificate of Designation of Preferences
of Series B Preferred Stock) are paid on any other capital stock of the Corporation other
than Dividend Senior Stock, the Corporation shall pay a dividend on all outstanding shares
of Series D Preferred Stock (on an as-if-converted to Common Stock basis) in an amount per
share equal to the maximum amount paid or set aside for any such other share of capital
stock (on an as-if-converted to Common Stock basis). Dividend Senior Stock as used in
this Certificate of Designation means any class or series of stock of the Corporation
hereafter authorized that has priority or preference over the Series D Preferred Stock with
respect to the payment of dividends.
(g) Paragraphs (A) and (B) of Section 4 (Liquidation Preference) of the Certificate of
Designation of Preferences of Series D Preferred Stock are amended and restated in their entirety
to read as follows:
(A) In the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a Liquidation Event), the holders of the Series D
Preferred Stock shall be entitled to receive, after the satisfaction in full of the
liquidation preference of holders of any Liquidation Senior Stock, prior and in preference
to any distribution of any of the assets or surplus funds of the Corporation to the holders
of any Liquidation Junior Stock, and
pari passu
with the satisfaction of the liquidation
preference of holders of any Liquidation Parity Stock, an amount per share equal to the
Original Issue Price of the Series D Preferred Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all accrued or declared but unpaid
dividends on each share of Series D Preferred Stock then held by such holder. If upon the
occurrence of such Liquidation Event, the remaining assets and funds of the Corporation
available for distribution among the holders of Series D Preferred Stock and the holders of
any Liquidation Parity Stock shall be insufficient to permit the payment to such holders of
the full preferential amounts to which they are entitled, then the entire remaining assets
and funds of the Corporation legally available for distribution to such holders shall be
distributed among such holders in proportion to the full preferential amount each such
holder is otherwise entitled to receive.
(B) As used in this Certificate of Designation:
(i) Liquidation Senior Stock means the Series B Preferred Stock, Series C
Preferred Stock and any other class or series of stock of the Corporation hereafter
authorized that has priority or preference over the Series D Preferred Stock in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation;
(ii) Liquidation Junior Stock means the Common Stock, the Series E Preferred
Stock and any other class or series of stock of the Corporation hereafter authorized
with respect to which the Series D Preferred Stock has priority or preference in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation; and
(iii) Liquidation Parity Stock means any class or series of stock of the
Corporation hereafter authorized that ranks equally with the Series D Preferred
Stock in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation.
(h) Paragraph 5(A)(ii)(B) of the Certificate of Designation of Preferences of Series D
Preferred Stock is amended and restated in its entirety to read as follows:
(B) Notwithstanding the foregoing, the Corporation may decline to redeem any or all of
the Series D Preferred Stock (provided that any redemption in part shall be pro rata across
holders) and in such case, the Series C Preferred Stock shall bear cumulative dividends at
the rate of four percent (4%) of the Original Issue Price per annum on each outstanding
share of Series D Preferred Stock (the Preferred Dividend) from the date of the Election
Notice. Such Preferred Dividend shall be paid semi-annually on the last business day of May
and November of each year in cash. The Board of Directors shall not pay any dividend to the
holders of any other capital stock of the Corporation except Dividend Senior Stock, unless
and until it has paid the Preferred Dividend on the shares of Series D Preferred Stock to
the holders of the Series D Preferred Stock.
3. This amendment was adopted pursuant to Chapter 302A of the Minnesota Statutes.
IN WITNESS WHEREOF, I have subscribed my name this ___day of
, 2009.
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Wesley C. Fredenburg
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Secretary
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XATA CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 8, 2009
10:00 A.M.
965 PRAIRIE CENTER DRIVE, EDEN PRAIRIE, MINNESOTA
XATA CORPORATION
965 Prairie Center Drive
Eden Prairie MN 55344
PROXY
This proxy is solicited on behalf of the Board of Directors.
The undersigned, having received the Notice of Special Meeting and Proxy Statement dated April
8, 2009, hereby appoints each of John J. Coughlan and Mark E. Ties as proxy, with full power of
substitution, to vote all of the shares of Common Stock which the undersigned would be entitled to
vote if personally present at the Special Meeting of Shareholders of XATA Corporation on Wednesday,
April 8, 2009, at our corporate office, 965 Prairie Center Drive, Eden Prairie, Minnesota, at 10:00
a.m., or at any adjournment thereof, upon any and all matters which may properly be brought before
the meeting or adjournment thereof, hereby revoking all former proxies.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL AND IN
THE DISCRETION OF THE PROXY HOLDER ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
See reverse for voting instructions
Please detach here
1.
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Proposal 1 Approval of Articles of Amendment of Second Restated of Articles of Incorporation.
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FOR
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AGAINST
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ABSTAIN
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The authority to vote, in his discretion, on all other business that may properly come before the
meeting.
Address change? Mark Box
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Attending Meeting? Mark Box
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Indicate changes below:
Dated:
, 2009
Signature(s) in Box
PLEASE SIGN exactly as name appears below.
When shares are held by joint tenants, both
should sign. If signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by president or authorized officer. If
partnership, please sign in partnership name
by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
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