Corporation INCENTIVE STOCK OPTION AGREEMENT
EXHIBIT 10.42
Corporation
THIS AGREEMENT, made this 1st day of October 2006, by and between XATA Corporation, a Minnesota
corporation (the “Company”), and Xxxx X. Xxxxxxxx (“Optionee”).
WITNESSETH, THAT:
WHEREAS, the Company has entered into an Executive Employment Agreement with the Optionee effective
as of October 1, 2006 (the “Employment Agreement”), and
WHEREAS, the Company pursuant to its 2002 Long Term Incentive and Stock Option Plan wishes to grant
this stock option to Optionee; and
WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings assigned
to them in the Employment Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the
parties hereto hereby agree as follows:
1. Grant of Option
The Company hereby grants to Optionee, on the date set forth above, the right and option
(hereinafter called “the option”) to purchase all or any part of an aggregate of 300,000 shares of
Common Stock, par value $0.01 per share (the “Common Shares”), at the price of $5.40 per share on
the terms and conditions set forth herein. This option is intended to be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),
except to the extent this option is disqualified from treatment as an incentive stock option under
the Code. To the extent that all or any portion of this option is not treated as an incentive
stock option, it shall be treated as a nonqualified stock option. For purposes of this option,
employment by any subsidiary of the Company is equivalent to employment by the Company.
2. Duration and Exercisability
| (a) | This option shall in all events terminate at 5 p.m. Minneapolis, Minnesota time on October 1, 2011, which is five (5) years after the date of grant. Subject to the other terms and conditions set forth herein, this option shall vest and be exercisable by Optionee in cumulative installments as follows on the specified date(s): |
| Cumulative number of | ||||||
| On or after each of | shares as to which | |||||
| the following dates | option is exercisable | |||||
| September 30, 2007 | 100,000 | |||||
| October 31, 2007 | 108,334 | |||||
| November 30, 2007 | 116,668 | |||||
| December 31, 2007 | 125,002 | |||||
| January 31, 2008 | 133,336 | |||||
| February 29, 2008 | 141,670 | |||||
| March 31, 2008 | 150,004 | |||||
| April 30, 2008 | 158,338 | |||||
| May 31, 2008 | 166,672 | |||||
| June 30, 2008 | 175,006 | |||||
| July 31, 2008 | 183,340 | |||||
| August 31, 2008 | 191,674 | |||||
| September 30, 2008 | 200,008 | |||||
| October 31, 2008 | 208,342 | |||||
| November 30, 2008 | 216,676 | |||||
| December 31, 2008 | 225,010 | |||||
| January 31, 2009 | 233,344 | |||||
| February 28, 2009 | 241,678 | |||||
| March 31, 2009 | 250,012 | |||||
| April 30, 2009 | 258,346 | |||||
| May 31, 2009 | 266,680 | |||||
| June 30, 2009 | 275,014 | |||||
| July 31, 2009 | 283,348 | |||||
| August 31, 2009 | 291,682 | |||||
| September 30, 2009 | 300,000 | |||||
(b) In the event that Optionee voluntarily resigns from Optionee’s full-time employment with
the Company for a reason other than Good Reason or is terminated by the Company for Cause, Optionee
shall forfeit all right, title and interest in and to the unvested portion of the option as of his
Date of Termination.
(c) In the event that Optionee is terminated from employment by the Company because Optionee has
died or become Disabled, Optionee shall thereupon become immediately vested without restriction in
that portion of the option that would have vested pursuant to Section 2(a) above over the next
three (3) months immediately following the Date of Termination had Optionee remained employed
through the end of such three (3) month period.
(d) In the event that Optionee is terminated from employment by the Company 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 a proper
termination for Cause or Disability shall be a termination by the Company without Cause) or if
Optionee terminates his employment for Good Reason (in each case, in the absence of a Change in
Control), Optionee shall thereupon become immediately vested without restriction in that portion of
the option that would have vested pursuant to Section 2(a) above over the then remaining term of
the Employment Agreement or,
if longer, the twelve (12) month period immediately following the Date of Termination had Optionee
remained employed through the end of such term or twelve (12) month period, respectively.
(e) Notwithstanding anything to the contrary in Section 2(a), (b), (c) or (d) above, in the event
that the Company consummates a Change of Control, Optionee shall thereupon become immediately
vested without restriction in one-half of the unvested portion of the option as of the date of the
Change of Control (comprising those Common Shares scheduled next to vest), and the remaining
unvested portion of the option shall continue to vest in accordance with the terms of this Section
2.
(f) Notwithstanding anything to the contrary in this Section 2, in the event that (i) upon or
within six months before a Change of Control or within two years following a Change of Control
either (x) the Company terminates Optionee’s employment 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 (y) Optionee terminates his
employment for Good Reason, or (ii) the Chairman of the Board of Directors of the Company
immediately prior to the consummation of a Change of Control ceases to be the Chairman of the Board
of Directors of the Company, or any successor thereto, immediately following the Change of Control
and Optionee terminates his employment, then Optionee shall thereupon become immediately vested
without restriction in the option.
(g) During the lifetime of Optionee, the option shall be exercisable only by Optionee and shall not
be assignable or transferable by Optionee, other than by will or the laws of descent and
distribution.
3. Effect of Termination of Employment
(a) Except as otherwise provided in Section 3(c) below, in the event that Optionee shall cease to
be employed by the Company for any reason other than Cause or Optionee’s death, Optionee shall have
the right to exercise the option at any time within twelve (12) months after such termination of
employment to the extent of the full number of shares Optionee was entitled to purchase under the
option on the Date of Termination, subject to the condition that no option shall be exercisable
after the expiration of the term of the option.
(b) In the event that Optionee shall cease to be employed by the Company by reason of Cause, the
option shall be terminated as of the Date of Termination.
(c) If Optionee shall die while in the employ of the Company, or within three (3) months after
termination of employment for any reason other than Cause, and Optionee shall not have fully
exercised the option, such option may be exercised at any time within twelve (12) months after
Optionee’s Date of Termination or, if later, death by Optionee, personal representatives or
administrators, as applicable, or by any person or persons to whom the option is transferred by
will or the applicable laws of descent and distribution, to the extent of the full number of shares
Optionee was
entitled to purchase under the option on the date of death or Date of Termination, if earlier, and
subject to the condition that no option shall be exercisable after the expiration of the term of
the option.
4. Manner of Exercise
(a) The option can be exercised only by Optionee or other proper party by delivering within the
option period written notice to the Company at its principal office. The notice shall state the
number of shares as to which the option is being exercised and be accompanied by payment in full of
the option price for all shares designated in the notice.
(b) Optionee may pay the option price in cash, by check (bank check, certified check or personal
check), by money order, or with the approval of the Company by delivering to the Company or its
designated agent an executed irrevocable option exercise form, together with irrevocable
instructions to a securities broker-dealer approved by the Company (which approval shall not be
unreasonably withheld) to sell a sufficient portion of the shares and deliver the sale proceeds
directly to the Company in payment of the exercise price in cash, by check, or by wire transfer, as
the Company may direct.
5. Miscellaneous
(a) This option is issued pursuant to the Company’s 2002 Long Term Incentive and Stock Option Plan
and is subject to its terms. The terms of the Plan are available for inspection during business
hours at the principal offices of the Company.
(b) This Agreement shall not confer on Optionee any right with respect to continuance of employment
by the Company, nor will it interfere in any way with the right of the Company to terminate such
employment at any time. Optionee shall have none of the rights of a shareholder with respect to
shares subject to this option until such shares shall have been issued to Optionee upon exercise of
this option.
(c) The exercise of all or any parts of this option shall only be effective at such time that the
sale of Common Shares pursuant to such exercise will not violate any state or federal securities or
other laws.
(d) If there shall be any change in the Common Shares of the Company through merger, consolidation,
reorganization, recapitalization, dividend in the form of stock (of whatever amount), stock split
or other change in the corporate structure of the Company, and all or any portion of the option
shall then be unexercised and not yet expired, then appropriate adjustments in the outstanding
option shall be made by the Company, in order to prevent dilution or enlargement of option rights.
Such adjustments shall include, where appropriate, changes in the number of shares of Common Shares
and the price per share subject to the outstanding option.
(e) The Company shall at all times during the term of the option reserve and keep available such
number of shares as will be sufficient to satisfy the requirements of this Agreement.
(f) If Optionee shall dispose of any of the Common Shares of the Company acquired by Optionee
pursuant to the exercise of the option within two (2) years from the date this option was granted
or within one (1) year after the transfer of any such shares to Optionee upon exercise of this
option, then, in order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it under the circumstances, Optionee shall promptly
notify the Company of the dates of acquisition and disposition of such shares, the number of shares
so disposed of, and the consideration, if any, received for such shares. In order to comply with
all applicable federal or state income tax laws or regulations, the Company may take such action as
it deems appropriate to insure (i) notice to the Company of any disposition of the Common Shares of
the Company within the time periods described above and (ii) that, if necessary, all applicable
federal or state payroll, withholding, income or other taxes are withheld or collected from
Optionee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and
year first above written.
| XATA Corporation | ||||
| By: | ||||
| Its: | ||||
| Optionee Signature | ||||
| Xxxx X. Xxxxxxxx | ||||
