UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section. 240.14a-12
SMITHWAY MOTOR XPRESS CORP.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
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[ ] Fee paid previously by written preliminary materials.
[ ] 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.
(1) Amount previously paid: N/A
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(4) Date Filed: N/A
SMITHWAY MOTOR XPRESS CORP.
2031 QUAIL AVENUE
FORT DODGE, IOWA 50501
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2005
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To Our Stockholders:
The 2005 annual meeting of stockholders of Smithway Motor Xpress Corp.,
a Nevada corporation, will be held at our headquarters located at 2031 Quail
Avenue, Fort Dodge, Iowa 50501, at 10:00 a.m. Central Time, on Friday, May 13,
2005, for the following purposes:
1. To consider and act upon a proposal to elect five directors;
2. To approve the Smithway Motor Xpress Corp. 2005 Omnibus Stock
Plan that authorizes the issuance under the plan of up to 500,000
shares of our Class A Common Stock;
3. To consider and act upon a proposal to ratify the selection of
KPMG LLP as our independent auditors for our fiscal year ending
December 31, 2005; and
4. To consider and act upon such other matters as may properly come
before the annual meeting and any adjournment thereof.
The foregoing matters are more fully described in the accompanying
proxy statement.
The board of directors has fixed the close of business on March 14,
2005, as the record date for the determination of stockholders entitled to
receive notice of and to vote at the annual meeting or any adjournment thereof.
Shares of Class A and Class B Common Stock may be voted at the annual meeting
only if the holder is present at the annual meeting in person or represented by
valid proxy. YOUR VOTE IS IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL
MEETING, YOU ARE REQUESTED TO PROMPTLY DATE, SIGN, AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE. Returning your proxy now will not interfere with
your right to attend the annual meeting or to vote your shares personally at the
annual meeting, if you wish to do so. The prompt return of your proxy may save
us additional expenses of solicitation.
All stockholders are cordially invited to attend the annual meeting.
By Order of the Board of Directors,
/s/ G. Larry Owens
G. Larry Owens
Chairman of the Board, Chief Executive
Officer, President, and Secretary
Fort Dodge, Iowa
April 15, 2005
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SMITHWAY MOTOR XPRESS CORP.
2031 QUAIL AVENUE
FORT DODGE, IOWA 50501
------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 2005
------------------------------------
This proxy statement is furnished in connection with the solicitation
of proxies by the board of directors of Smithway Motor Xpress Corp., a Nevada
corporation, to be used at the 2005 annual meeting of stockholders, which will
be held at our headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa 50501
on Friday, May 13, 2005, at 10:00 a.m. Central Time, and any adjournment
thereof. All costs of the solicitation will be borne by us. The approximate date
on which this proxy statement and the enclosed form of proxy are first being
mailed to stockholders is April 15, 2005.
GENERAL MATTERS
RECORD DATE, OUTSTANDING SHARES AND QUORUM
Only stockholders of record at the close of business on March 14, 2005,
are entitled to vote, either in person or by valid proxy, at the annual meeting.
Holders of Class A Common Stock are entitled to one vote for each share held.
Holders of Class B Common Stock are entitled to two votes for each share held.
On March 14, 2005, there were issued and outstanding 3,901,624 shares of our
Class A Common Stock, entitled to cast an aggregate of 3,901,624 votes on all
matters subject to a vote at the annual meeting, and 1,000,000 shares of our
Class B Common Stock, entitled to cast an aggregate 2,000,000 votes on all
matters subject to a vote at the annual meeting. Together, we have a total of
4,901,624 shares of common stock outstanding, entitled to cast an aggregate of
5,901,624 votes on all matters subject to a vote at the annual meeting.
Stockholders are not entitled to cumulative voting in the election of directors.
The holders of a majority of the shares outstanding on the record date, present
in person or represented by proxy, will constitute a quorum for the transaction
of business at the annual meeting.
VOTING OF PROXIES
All proxies that are properly executed and received by us prior to the
annual meeting will be voted in accordance with the choices indicated. Any
stockholder may be represented and may vote at the annual meeting by a proxy or
proxies appointed by an instrument in writing. Any stockholder giving a proxy
may revoke it at any time prior to its use at the annual meeting by filing with
our Secretary a revocation of the proxy, by delivering to us a duly executed
proxy bearing a later date, or by attending the meeting and voting in person. If
no instructions are indicated, properly executed proxies will be voted "FOR" the
nominees for director listed below and "FOR" the approval of the 2005 Omnibus
Stock Plan and the ratification of the appointment of our independent auditors.
As of the date of this proxy statement, we do not know of any matters, other
than those described in this proxy statement, that are to come before the annual
meeting. If any other matters are properly presented at the annual meeting for
action, the persons named in the enclosed form of proxy and acting thereunder
will have, to the extent permitted by law, the discretion to vote on such
matters in accordance with their best judgment.
EFFECT OF ABSTENTIONS AND "BROKER NON-VOTES"
If stockholders indicate on their proxy card that they wish to abstain
from voting, including brokers holding their customers' shares of record who
cause abstentions to be recorded, these shares are considered present and
entitled to vote at the annual meeting. These shares will count toward
determining whether or not a quorum is present. However, these shares will not
be considered cast with respect to the proposal for which they abstain from
voting and will not be taken into account in determining the outcome of any of
the proposals.
If a stockholder does not give the broker holding the stockholder's
shares instructions as to how to vote the shares, the broker has authority under
New York Stock Exchange rules to vote those shares for or against "routine"
matters, such as the election of directors and the ratification of KPMG LLP as
our independent auditors. Brokers
cannot vote on their customers' behalf on "non-routine" proposals such as the
approval of the 2005 Omnibus Stock Plan. These rules apply to us notwithstanding
the fact that shares of our Common Stock are traded on The Nasdaq SmallCap
Market. If a broker votes shares that are unvoted by its customers for or
against a "routine" proposal, these shares are counted for the purpose of
establishing a quorum and also will be counted for the purpose of determining
the outcome of "routine" proposals for which they are cast. If a broker chooses
to leave these shares unvoted, even on "routine" matters, they will be counted
for the purpose of establishing a quorum, but not for determining the outcome of
any of the proposals. Shares held by a broker on behalf of a stockholder will
not be considered cast with respect to any "non-routine" proposals and will not
be taken into account in determining the outcome of any of "non-routine"
proposals.
REQUIRED VOTE
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the stockholders requires the
affirmative vote of a majority of the votes cast at the annual meeting.
STOCKHOLDER PROPOSALS
We must receive stockholder proposals intended to be presented at the
annual meeting of stockholders in the year 2006 that are requested to be
included in the proxy statement for that meeting at our principal executive
office no later than November 15, 2005. We must receive any other stockholder
proposals intended to be presented at the annual meeting of stockholders in the
year 2006 at our principal executive office no later than February 1, 2006. The
inclusion of any stockholder proposals in such proxy materials will be subject
to the requirements of the proxy rules adopted under the Securities Exchange Act
of 1934, including Rule 14a-8. Written copies of all stockholder proposals
should be sent to our principal executive offices at Smithway Motor Xpress
Corp., c/o Corporate Secretary, 2031 Quail Avenue, Fort Dodge, Iowa 50501.
ADJOURNMENT OF MEETING
If a quorum is not present to transact business at the annual meeting
or if we do not receive sufficient votes in favor of the proposals by the date
of the annual meeting, the persons named as proxies may propose one or more
adjournments of the annual meeting to permit solicitation of proxies. Any
adjournment would require the affirmative vote of a majority of the shares
present in person or represented by proxy at the annual meeting.
EXPENSES OF SOLICITING PROXIES
We will pay the cost of soliciting proxies in the accompanying form. In
addition to solicitation by the use of mails, certain directors, officers and
regular employees may solicit proxies by telephone, telegram or personal
interview, and may request brokerage firms and custodians, nominees and other
record holders to forward soliciting materials to the beneficial owners of our
stock and will reimburse them for their reasonable out-of-pocket expenses in
forwarding these materials.
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PROPOSAL 1
ELECTION OF DIRECTORS
At the annual meeting, the stockholders will elect five directors to
serve as our board of directors. Each of the elected directors will serve until
the 2006 annual meeting of the stockholders or until his or her successor is
duly elected or until his or her earlier death or resignation or removal in
accordance with our bylaws.
Upon the unanimous recommendation of our independent directors, our
board of directors has nominated Terry G. Christenberry, Labh S. Hira, Herbert
D. Ihle, G. Larry Owens and Marlys L. Smith for election as directors.
In the absence of contrary instructions, each proxy will be voted for
the election of each of the above named nominees to constitute our entire board
of directors. Marlys L. Smith and G. Larry Owens, who together are entitled to
cast more than 50% of the votes entitled to be cast at the annual meeting, have
indicated that they will vote for the election of each of the nominees, and
assuming that they do, the nominees will be elected.
Each of the nominees has consented to serve a one-year term. If any of
them should become unavailable to serve as a director, the board of directors
may designate a substitute nominee. In that case, the person or persons
appointed as proxies will vote for the substitute nominee designated by the
board of directors.
INFORMATION CONCERNING CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
Information concerning the names, ages, positions with us, tenure as a
director, and business experience of our continuing directors and other
executive officers is set forth below. All references to experience with us
include positions with our operating subsidiary, Smithway Motor Xpress, Inc., an
Iowa corporation.
NAME AGE POSITION DIRECTOR SINCE
- ------------------------- --- ------------------------------------------------ --------------
G. Larry Owens 67 Chairman of the Board, Chief Executive 1996
Officer, President, Secretary and Director
Terry G. Christenberry 58 Director 1996
Labh S. Hira 56 Director 2004
Herbert D. Ihle 65 Director 1996
Marlys L. Smith 65 Director 2004
Thomas J. Witt 44 Senior Vice President of Sales and Operations --
Douglas C. Sandvig 40 Senior Vice President, Chief Financial --
Officer and Treasurer
Chad A. Johnson 39 Vice President of Vehicle Operations --
G. LARRY OWENS was appointed as Chief Executive Officer, President and
Secretary on March 5, 2004, and Chairman of the Board on April 2, 2004. Mr.
Owens had served prior to that time as Executive Vice President and Chief
Financial Officer from January 1993 and Chief Administrative Officer from August
2001. Mr. Owens also served as Chief Operating Officer from May 1998 to August
2001. Prior to joining us, Mr. Owens spent twenty-five years in the banking
industry, most recently from 1982 through 1992 as President of Boatmen's
Bancshares' regional banks in Spencer and Fort Dodge, Iowa.
TERRY G. CHRISTENBERRY has been the President and a director of
Christenberry, Collet & Company, Inc., an investment banking firm located in
Kansas City, Missouri, since its incorporation in June 1994. From September 1986
to June 1994, Mr. Christenberry was Executive Vice President and a director of
H.B. Oppenheimer & Company, Inc., also an investment banking firm located in
Kansas City, Missouri.
LABH S. HIRA has served as the dean of the College of Business at Iowa
State University since July 2001. Prior to serving as dean, Dr. Hira served the
College of Business at Iowa State University as Senior Associate Dean from 2000
through July 2001 and as Associate Dean from 1996 through 2000. Dr. Hira joined
the Iowa State faculty in 1982. Dr. Hira specializes in the taxation of
retirement and insurance products with financial accounting being his teaching
focus. Dr. Hira has a Ph.D. in Agricultural Economics from the University of
Missouri - Columbia.
HERBERT D. IHLE has been President and owner of Diversified Financial
Services, a Naples, Florida, management and financial services consulting firm,
since 1989. From 1990 to 1992, Mr. Ihle served as Senior Vice President -
Finance and Controller for Northwest Airlines, and from 1963 to 1989 served in
various positions,
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including Executive Vice President - Finance, for Pillsbury Co. Mr. Ihle also
served as past Chairman of the Board of Regents of Waldorf College in Forest
City, Iowa, and is a past director of Lutheran Brotherhood Insurance Company.
MARLYS L. SMITH served in various non-executive capacities for us
between March 1990 and March 1995, and has been one of our controlling
stockholders since 1995.
THOMAS J. WITT served as Vice President of Sales and Marketing upon
joining us in November 2001 and was appointed to serve as Senior Vice President
of Sales and Operations in February 2003. Prior to joining us, Mr. Witt worked
as an Account Manager in sales for i2 Technologies, a software company serving
motor carriers and third party logistics companies, from November 2000 through
November 2001. From 1998 through November 2000, Mr. Witt served as Vice
President-Sales for Roehl Transport, Inc., a truckload carrier. Mr. Witt has
over twenty years of experience in sales and marketing, primarily in the
transportation industry.
DOUGLAS C. SANDVIG was appointed Chief Financial Officer on March 5,
2004, and has held the title of Senior Vice President since February 2003 and
Treasurer since October 2003. Mr. Sandvig served as Controller from July 1997 to
March 2004 and Chief Accounting Officer from May 2000 to March 2004. Mr. Sandvig
also served as Vice President from September 2002 to February 2003. Prior to
joining us, Mr. Sandvig was employed as a Tax Manager with Schnurr and Company
LLP, a regional public accounting firm, from 1990 to 1997. Mr. Sandvig is a
certified public accountant.
CHAD A. JOHNSON has served as Vice President of Vehicle Operations
since joining us in August 2003. Prior to joining us, Mr. Johnson was employed
by Ruan Transportation Management Systems, a transportation management company.
Mr. Johnson was employed by Ruan for approximately 19 years during which time he
worked in many different capacities, including, most recently, from January 2001
until August 2003, as Vice President - Vehicle Maintenance, from July 2000
through December 2000 as Director of Operations - Vehicle Services, from June
1999 through June 2000 as Director of Vehicle Maintenance, and from January 1997
through May 1999 as Corporate Operations Manager.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
MEETINGS OF THE BOARD OF DIRECTORS. During 2004, our board of directors
met on nine occasions and acted by written consent in lieu of a meeting on one
occasion. Each of the directors attended 75% or more of the meetings of the
board of directors and the meetings held by all of the committees of the board
on which the director served. We encourage the members of our board to attend
our annual meetings of stockholders. All of our then-current directors attended
the 2004 annual meeting of stockholders.
DIRECTOR COMPENSATION. For the year commencing with our 2004 annual
meeting of stockholders, directors who were not employed by us received a $7,500
annual retainer, $1,000 for each meeting of the board of directors attended by
the director ($500 if attended telephonically), and $500 per committee meeting
attended by the director (whether in person or telephonically). In addition to
the compensation received by non-employee directors generally, the Chairman of
our audit committee received a $5,000 annual retainer paid in advance at the
2004 annual meeting. For the year commencing with our 2005 annual meeting of
stockholders, in addition to the other fees noted above, we anticipate that for
directors who were not employed by us, the annual retainer will be increased to
$10,000 and the Chairman of our compensation committee will receive a $1,500
annual retainer paid in advance at the annual meeting. Directors are also
reimbursed for their expenses incurred in attending the meetings. In 2004, Mr.
Christenberry and Ihle also received an option to purchase 1,000 shares of our
Class A Common Stock at the closing market price on the date of the annual
meeting. In 2005, non-employee directors who are elected at the annual meeting
will receive an option to purchase 3,000 shares of our Class A Common Stock at
the closing market price on the date of the annual meeting, assuming the 2005
Omnibus Stock Plan is approved by our stockholders. The options granted to
non-employee directors vest on the one-year anniversary of the date of grant,
and expire on the six-year anniversary of the date of grant.
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DIRECTOR INDEPENDENCE. Our Class A Common Stock is listed on the Nasdaq
SmallCap Market, and therefore it is subject to the listing standards, including
standards relating to corporate governance, embodied in applicable rules
promulgated by the National Association of Securities Dealers, Inc. ("NASD").
The board of directors has determined that Terry G. Christenberry, Labh S. Hira
and Herbert D. Ihle are "independent" under NASD Rule 4200(a)(15). In accordance
with NASD Rule 4350(c)(2), our independent directors hold regularly scheduled
meetings, referred to as "executive sessions," at which only the independent
directors are present. During 2004, the independent directors met in executive
session on five occasions.
STOCKHOLDER COMMUNICATIONS. Our board of directors provides a process
for stockholders to send written communications to the entire board or
individual directors. If you wish to send a communication to the entire board of
directors, your communication should be sent via certified mail, return receipt
requested, and addressed as follows: The board of directors, Smithway Motor
Xpress Corp., c/o Chief Executive Officer, 2031 Quail Avenue, Fort Dodge, Iowa
50501. Written communications addressed in this manner will be copied and
distributed to each director at or prior to the next board meeting. If you wish
to communicate with an individual director, your communication should be sent
via certified mail, return receipt requested, and addressed as follows: Name -
Director, Smithway Motor Xpress Corp., c/o Chief Executive Officer, 2031 Quail
Avenue, Fort Dodge, Iowa 50501. Written communications received in this manner
will not be opened, but rather delivered unopened to the director to whom they
are addressed at or prior to the next board meeting. Any communication addressed
to an individual director may be disclosed by that director, in his or her sole
discretion, to other members of the board or management, if that director
believes such disclosure is appropriate under the circumstances.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has standing audit and compensation committees.
Messrs. Christenberry, Hira and Ihle are the current members of both the audit
and compensation committees.
THE AUDIT COMMITTEE
PURPOSE, FUNCTIONS, COMPOSITION, AND MEETINGS OF THE AUDIT COMMITTEE.
The audit committee is responsible for the appointment, compensation, retention
and oversight of the work of any independent auditors engaged by us for the
purpose of preparing or issuing an audit report or performing other audit or
similar services for us. The audit committee meets with our independent auditors
to discuss our financial statements and matters relating to their independence,
as well as to ensure that the scope of their activities has not been restricted
and that adequate responses to their recommendations and inquiries have been
received. The audit committee also periodically meets with management to discuss
our financial statements and the adequacy of our internal financial controls. In
addition, the audit committee reviews and approves our transactions with related
parties, in the absence of the appointment of a special committee for that
purpose.
The audit committee currently is comprised of Terry G. Christenberry,
Labh S. Hira and Herbert D. Ihle. Mr. Christenberry serves as the Chairman of
the audit committee. Each member of the audit committee satisfies the
independence and audit committee membership criteria set forth in NASD Rule
4350(d)(2). Specifically, each member of the audit committee:
o is independent under NASD Rule 4200(a)(15);
o meets the criteria for independence set forth in Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, as amended;
o did not participate in the preparation of our financial statements
or the financial statements of any of our current subsidiaries at
any time during the past three years; and
o is able to read and understand fundamental financial statements,
including our balance sheet, statement of operations, statement of
stockholders' equity and statement of cash flows.
The audit committee met four times during 2004. Each member of the
audit committee attended at least 75% of the audit committee meetings held
during 2004.
AUDIT COMMITTEE FINANCIAL EXPERT. The board of directors has determined
that Herbert D. Ihle is an "audit committee financial expert," as defined under
Item 401(h) of Regulation S-K promulgated by the Securities and Exchange
Commission ("SEC"), based upon education and work experience.
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AUDIT COMMITTEE CHARTER. Since 1997, the audit committee has operated
pursuant to a written charter detailing its powers and duties. In 2003, the
audit committee amended and restated its charter to comply with certain
requirements of the Sarbanes-Oxley Act of 2002. In February 2004, the audit
committee again amended and restated its charter to comply with the requirements
of NASD Rule 4350(d)(1). This charter was included as an appendix to the proxy
statement for our 2004 annual meeting of stockholders.
AUDIT COMMITTEE REPORT FOR 2004
The primary purpose of the audit committee is to assist the board of
directors in fulfilling its oversight responsibilities relating to the quality
and integrity of our company's financial reports and financial reporting
processes and systems of internal controls. Our management has primary
responsibility for our financial statements and the overall reporting process,
including maintenance of our system of internal controls. We retain independent
auditors who are responsible for conducting an independent audit of our
financial statements, in accordance with generally accepted auditing standards,
and issuing a report thereon. In performing its duties, the audit committee has
discussed our financial statements with management and our independent auditors
and, in issuing this report, has relied upon the responses and information
provided to the audit committee by management and the independent auditors.
For the fiscal year ended December 31, 2004, the audit committee has
reviewed and discussed the audited financial statements with management and KPMG
LLP, our independent auditors. Specifically, the audit committee has discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61 (Codification of Statements on Auditing Standards,
AU Section 380), which include, among other things:
o methods used to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance
or consensus;
o the process used by management in formulating particularly
sensitive accounting estimates and the basis for the auditor's
conclusions regarding the reasonableness of those estimates; and
o disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and
the disclosures in the financial statements.
The audit committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and discussed with the
independent auditors the independent auditors' independence.
Based on the foregoing reviews and meetings, the audit committee
recommended to our board of directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2004,
for filing with the SEC. The audit committee also approved the appointment of
KPMG LLP as our independent auditors for the fiscal year ending December 31,
2005, subject to the ratification of our company's stockholders.
AUDIT COMMITTEE:
Terry G. Christenberry (Chairman)
Labh S. Hira
Herbert D. Ihle
The Audit Committee Report shall not be deemed to be incorporated by
reference into any filing made by us under the Securities Act of 1933 or the
Securities Exchange Act of 1934, notwithstanding any general statement contained
in any filings incorporating this proxy statement by reference, except to the
extent we incorporate such report by specific reference.
THE COMPENSATION COMMITTEE
The compensation committee of the board of directors met three times
during 2004. Terry G. Christenberry, Labh S. Hira and Herbert D. Ihle currently
serve on the compensation committee, with Mr. Ihle serving as Chairman. This
committee reviews all aspects of compensation of our executive officers and
makes
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recommendations on such matters to the full board of directors. Each member of
the compensation committee attended at least 75% of the compensation committee
meetings during 2004.
OTHER COMMITTEES
With the exception of the audit committee and the compensation
committee, the board does not maintain any other standing committees. However,
certain procedures have been adopted by the board of directors regarding
director nominees and candidates.
PROCESS FOR IDENTIFYING AND EVALUATING DIRECTOR NOMINEES. We believe
that it is appropriate for us not to have a standing nominating committee or a
committee performing similar functions because a majority of our independent
directors recommend director nominees for our board's selection in accordance
with NASD rules, and we believe such a process provides the protections of a
full committee at a reduced cost. Because we do not maintain a standing
nominating committee, we have no written nominating committee charter; however,
we have adopted the nomination procedure described in this section by board
resolution.
With regard to qualities and skills, our independent directors believe
it is necessary that: (i) at least a majority of the members of the board of
directors qualify as "independent" under NASD Rule 4200(a)(15); (ii) at least
three members of the board of directors satisfy the audit committee membership
criteria specified in NASD Rule 4350(d)(2); and (iii) at least one member of the
board of directors eligible to serve on the audit committee has sufficient
knowledge, experience, and training concerning accounting and financial matters
so as to qualify as an "audit committee financial expert" within the meaning of
Item 401(h) of Regulation S-K. In addition to these specific requirements, the
independent directors take into account all factors they consider appropriate,
which may include experience, accomplishments, education, understanding of our
business and the industry in which we operate, specific skills, general business
acumen and the highest personal and professional integrity. Generally, the
independent directors will first consider current board members because they
meet the criteria listed above and possess knowledge of our history, strengths,
weaknesses, goals and objectives. We do not pay a fee to any third party to
identify, evaluate or assist in identifying or evaluating potential nominees.
CONSIDERATION OF DIRECTOR CANDIDATES RECOMMENDED BY STOCKHOLDERS. Our
independent directors will consider director candidates recommended by
stockholders; provided, that the following procedural requirements are
satisfied. Candidate recommendations should be mailed via certified mail, return
receipt requested, and addressed to the "Independent Directors", Smithway Motor
Xpress Corp., c/o Chief Executive Officer, 2031 Quail Avenue, Fort Dodge, Iowa
50501. In order to be considered for inclusion in the proxy statement, a
stockholder recommendation must: (i) be received at least 120 days prior to the
first anniversary of the date of the proxy statement for the prior year's annual
meeting (by November 15, 2005, for director candidates to be considered for
nomination for election at the 2006 annual meeting of stockholders); (ii)
contain sufficient background information, such as a resume and references, to
enable the committee to make a proper judgment regarding his or her
qualifications; (iii) be accompanied by a signed consent of the proposed nominee
to serve as a director if elected, and a representation that such proposed
nominee qualifies as "independent" under NASD Rule 4200(a)(15) or, if the
proposed nominee does not qualify, a description of the reason(s) he or she is
not "independent"; (iv) state the name and address of the person submitting the
recommendation and the number of shares of our Class A or Class B Common Stock
owned of record or beneficially by such person; and (v) if submitted by a
beneficial stockholder, be accompanied by evidence that the person making the
recommendation beneficially owns shares of our Class A or Class B Common Stock.
CODE OF BUSINESS CONDUCT AND ETHICS
The board of directors has adopted a Code of Business Conduct and
Ethics that applies to all of our directors, officers, and employees. The Code
of Business Conduct and Ethics includes provisions applicable to our principal
executive officer, principal financial officer, principal accounting officer and
controller or persons performing similar functions, and constitutes a "code of
ethics" within the meaning of Item 406(b) of Regulation S-K.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors and persons who own more than 10% of a registered class
of our equity securities to file reports of ownership and changes in ownership
with the SEC. Officers, directors, and greater than 10% stockholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. In 2005, (a) our law firm inadvertently failed to file on a
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timely basis one report regarding the exercise of a stock option granted to Mr.
Owens and (b) each of Messrs. Christenberry and Ihle failed to file on a timely
basis one report regarding a grant of stock options to them due to
administrative error. You may view copies of Section 16(a) forms our directors
and executive officers file with the SEC through our website at www.sxmc.com.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation paid to our chief executive officer and our other named
executive officers for services in all capacities to us for the fiscal years
ended December 31, 2004, 2003, and 2002.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- -------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($) (1)
- --------------------------- ---- ---------- --------- ----------- --------------------
G. Larry Owens 2004 197,837 44,084(2) -- 4,100
Chairman, Chief Executive Officer 2003 157,500 -- -- 361
President and Secretary 2002 157,500 -- -- 2,160
Thomas J. Witt 2004 142,213 24,500 -- 3,055
Senior Vice President of 2003 135,000 -- 37,500 675
Sales and Operations 2002 126,000 -- -- 2,184
Douglas C. Sandvig 2004 136,154 27,000 -- 2,926
Senior Vice President, Chief 2003 102,068 -- -- 243
Financial Officer and Treasurer 2002 80,000 -- 2,350 1,094
Chad A. Johnson 2004 112,116 15,950 -- 2,408
Vice President of Vehicle 2003 42,548(3) -- 25,000 --
Operations 2002 -- -- -- --
- ------------
(1) Amounts in 2004 represent our contributions to our 401(k) Plan, including
forfeitures re-allocated to participants. In 2003 and 2002, we did not make
matching contributions to our 401(k) Plan. Amounts for 2003 and 2002 are
comprised solely of forfeitures re-allocated pursuant to the terms of the
401(k) Plan to the accounts of the named executive officers.
(2) Includes a bonus of $9,084 under our 1997 Profit Incentive Plan that was
paid by issuing Mr. Owens 695 shares of Class A Common Stock on March 15,
2005 (after payment of withholding taxes by Mr. Owens).
(3) Mr. Johnson joined us in August 2003.
OPTION GRANTS IN LAST FISCAL YEAR
We granted no stock options to the named executive officers during the
fiscal year ended December 31, 2004. We have not granted any stock appreciation
rights.
8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding the exercise of
options by the named executive officers during the fiscal year ended December
31, 2004, and information regarding options held by the named executive
officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END (#) FISCAL YEAR-END ($) (2)
ACQUIRED ON VALUE REALIZED ------------------------------ ---------------------------
NAME EXERCISE (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------------- ----------- ------------- ----------- -------------
G. Larry Owens 25,000 124,938 85,000 -- 260,690 --
Thomas J. Witt -- -- 24,000 28,500 146,526 177,422
Douglas C. Sandvig -- -- 37,350 -- 146,692 --
Chad A. Johnson -- -- 10,000 15,000 59,490 89,235
- -------------
(1) Market value of underlying securities on date of exercise minus the
exercise price.
(2) Market value of underlying securities at fiscal year-end minus the exercise
price.
1997 PROFIT INCENTIVE PLAN
On May 8, 1997, we adopted the 1997 Profit Incentive Plan to provide an
incentive for future service for selected employees. Under this plan, for each
full fiscal year we set aside for delivery to the plan participants in
accordance with their respective designated percentages, a number of shares of
Class A Common Stock having a fair market value on the distribution date equal
to a designated percentage of our consolidated net earnings for the applicable
fiscal year. Distributions for any fiscal year are made after the close of the
fiscal year. We may withhold sufficient shares from any distribution to cover
withholding obligations.
In 2004, Mr. Owens participated in the 1997 Profit Incentive Plan and
was entitled to receive a payout in shares of our Class A Common Stock equal to
0.6% of our 2004 consolidated net earnings. On March 15, 2005, we issued Mr.
Owens 695 shares of Class A Common Stock under this plan, which is equivalent to
a payout of $9,084 (1,477 shares of Class A Common Stock) under the plan
following the withholding of shares to cover Mr. Owens' withholding obligations.
Our board of directors recently terminated the 1997 Profit Incentive
Plan and no payments will be made pursuant to the plan in future years.
CHANGE-IN-CONTROL ARRANGEMENTS AND OTHER RIGHTS TRIGGERED UPON A
CHANGE-IN-CONTROL
We have entered into Change-In-Control Agreements with each of the
named executive officers other than Mr. Witt. The Change-In-Control Agreements
in general provide that if the named executive officer is involuntarily
terminated in connection with the occurrence of certain change-in-control
events, then the named executive officer will be entitled to a severance payment
in an amount intended to compensate him for any salary that he would have
otherwise been entitled to receive during the 24 month period following the
occurrence of the change-in-control event (this 24 month period being referred
to as the "Transition Period"). During the Transition Period, the named
executive officer also would be entitled to participate in any health,
disability and life insurance plans in which he participated prior to his
termination, and to be compensated for any legal fees he incurs in connection
with the enforcement of his rights under the Change-In-Control Agreement. The
change-in-control events giving rise to the named executive officer's rights
under the Change-In-Control Agreement include, in general terms, (i) the
acquisition by certain persons of beneficial ownership, whether directly or
indirectly, of securities representing 35% or more of the combined voting power
of our then outstanding securities, (ii) a failure of the continuing directors
to constitute a majority of the board of directors, (iii) our consummation of a
reorganization, merger or consolidation, or a statutory exchange of our
outstanding voting securities, and (iv) a complete liquidation or dissolution or
sale or other disposition of all or substantially all of our assets.
In addition, under certain circumstances in which there is a change of
control, holders of outstanding stock options granted under our Incentive Stock
Plan, New Employee Incentive Stock Plan and Outside Director Stock Option Plan
may be entitled to exercise such options notwithstanding that such options may
otherwise not have been fully exercisable. Similar rights could be extended to
holders of other awards under our equity compensation plans if any such awards
are granted.
9
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION AND
RELATED PARTY TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION. Messrs. Hira,
Ihle and Christenberry and Robert E. Rich (through May 2005) served as the
compensation committee in 2004. None of such individuals has been our officer or
employee.
RELATED PARTY TRANSACTIONS. We had no related party transactions in
2004 required to be disclosed in this proxy statement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors prepared the
following report on executive compensation for the fiscal year ended December
31, 2004.
Under the compensation committee's supervision, our company has adopted
compensation policies that seek to attract and retain excellent management
personnel and align the interests of executive officers with the interests of
stockholders. The three primary components of executive officer compensation are
base salary, bonus and stock-based compensation.
BASE SALARY. For 2004, our company did not increase the base salary of
Mr. Johnson. Messrs. Owens, Sandvig and Witt received modest increases in base
salary in 2004, primarily to reflect a cost-of-living increase.
In determining the base salaries of our company's executive officers
for 2004, the compensation committee reviewed individual performance and the
compensation of persons holding similar positions at other publicly traded
truckload carriers. The compensation committee took into account the relative
size of comparable companies, growth rates, geographic considerations and
operating performance. The compensation committee believes that the base
salaries of its executive officers, other than the base salary of the chief
executive officer that is discussed separately below, have been at or below the
average levels paid by comparable, publicly traded truckload carriers, primarily
due to operating performance and geographic considerations.
BONUS COMPENSATION. In 2004, the compensation committee awarded the
executive officers a discretionary bonus based upon the individuals' and our
company's consolidated performance during 2004. In 2004, Mr. Owens also
participated in our 1997 Profit Incentive Plan that paid him a bonus amount
equal to a percentage of our consolidated net earnings. All of the named
executive officers received a bonus for 2004. The compensation committee has
implemented a bonus program for 2005 pursuant to which the executive officers
are eligible to receive cash bonuses. An amount equal to 50% of each executive
officer's targeted bonus amount will be earned based on our company's
achievement of our quarterly net income goals. The other 50% of each executive
officer's targeted bonus amount will be earned based on the achievement by each
executive officer of highly-specific individual goals; provided, that our
company achieves annual net income equal to at least 75% of our annual net
income goal. The component of the bonus based on our company's net income will
be earned and paid quarterly while the component of the bonus based on
individual goals will be earned on an annual basis and paid following completion
of 2005.
STOCK-BASED COMPENSATION. The compensation committee believes that the
use of stock-based compensation as a component of potential compensation can
align the interests of executive officers and stockholders and encourage
executive officers to focus on long-term, profitable growth. From time-to-time
the compensation committee has made or recommended stock option grants and other
stock awards to executive officers. Mr. Owens received an award of 695 shares of
our Class A Common Stock in 2004.
BENEFITS. We believe that we must offer a competitive benefits program
to attract and retain our executive officers. During 2004, we provided medical
and other benefits to our executive officers that are generally available to our
other employees, as well as a car allowance.
CHIEF EXECUTIVE OFFICER. In 2004, we increased Mr. Owens' annual base
salary from $157,500 to $200,000. The compensation committee believes that Mr.
Owens' base salary was reasonable in relation to the base salaries of chief
executive officers of comparable companies. As noted above, in 2004 Mr. Owens
participated in our 1997 Profit Incentive Plan pursuant to which he was eligible
to earn a bonus equal to a percentage of our company's net earnings. Under this
plan, Mr. Owens received a bonus of $9,084, which was payable in shares of our
Class A Common Stock; he received 695 shares of Class A Common Stock following
the Company's withholding of shares to pay taxes on Mr. Owens' behalf. The board
of directors recently terminated the 1997 Profit Incentive Plan. Mr. Owens also
received a $35,000 discretionary bonus based upon his and our company's
10
consolidated performance during 2004. As one of our company's largest
stockholders, Mr. Owens' net worth is directly affected by our company's
performance and stock price.
COMPENSATION COMMITTEE:
Herbert D. Ihle (Chairman)
Terry G. Christenberry
Labh S. Hira
The Compensation Committee Report on Executive Compensation, and the
performance graph appearing later in this proxy statement shall not be deemed to
be incorporated by reference into any filing made by us under the Securities Act
of 1933 or the Securities Exchange Act of 1934, notwithstanding any general
statement contained in any filing incorporating this proxy statement by
reference, except to the extent we incorporate this report or the graph by
specific reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of March 14, 2005, the number and
percentage of outstanding shares of Class A and Class B Common Stock
beneficially owned by each person known by us to beneficially own more than 5%
of such stock, by each director, by each named executive officer, and by all of
our directors and executive officers as a group. We had outstanding 3,901,624
shares of Class A Common Stock (each entitled to one vote) and 1,000,000 shares
of Class B Common Stock (each entitled to two votes) as of March 14, 2005. The
business address for all persons indicated below is 2031 Quail Avenue, Fort
Dodge, Iowa 50501.
PERCENTAGE OF OUTSTANDING SHARES
--------------------------------
AMOUNT AND NATURE CLASS A CLASS B
NAME OF BENEFICIAL OWNER OF BENEFICIAL COMMON COMMON COMMON
OR IDENTITY OF GROUP TITLE OF CLASS OWNERSHIP (1) STOCK STOCK STOCK
- ------------------------ ------------------ ----------------- -------- ------- -------
DIRECTORS AND EXECUTIVE OFFICERS:
G. Larry Owens Class A Common Stock 285,237 (2) 7.2% -- 5.7%
Terry G. Christenberry Class A Common Stock 23,800 (3) * -- *
Labh S. Hira Class A Common Stock -- -- -- --
Herbert D. Ihle Class A Common Stock 12,000 (4) * -- *
Marlys L. Smith Class A Common Stock 1,093,856 (5) 28.0% -- 22.3%
Class B Common Stock 1,000,000 (5) -- 100.0% 20.4%
Thomas J. Witt Class A Common Stock 24,000 (6) * -- *
Douglas C. Sandvig Class A Common Stock 40,100 (7) 1.0% -- *
Chad A. Johnson Class A Common Stock 10,000 (8) * -- *
Executive officers and directors as a Class A Common Stock 1,488,993 (9) 36.5% -- 29.3%
group
(8 persons) Class B Common Stock 1,000,000 (9) -- 100.0% 20.4%
- ------------
* Less than 1%.
(1) In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares indicated as beneficially owned by a
person includes shares of Class A Common Stock underlying options that are
currently exercisable or will be exercisable within 60 days from March 14,
2005. Shares of Class A Common Stock underlying stock options that are
currently exercisable or will be exercisable within 60 days from March 14,
2005, are deemed to be outstanding for purposes of computing the percentage
ownership of the person holding such options and the percentage ownership
of any group of which the holder is a member, but are not deemed
outstanding for purposes of computing the percentage ownership of any other
person. Unless otherwise indicated all shares are owned directly.
(2) Consists of (a) 175,695 shares of Class A Common Stock, (b) 24,342 shares
of Class A Common Stock allocated to the account of Mr. Owens under our
401(k) plan, (c) 200 shares of Class A Common Stock held as custodian for
Mr. Owens' minor children under the Uniform Gifts to Minors Act, as to
which
11
beneficial ownership is disclaimed, and (d) options to purchase 85,000
shares of Class A Common Stock that are currently exercisable or will
become exercisable within 60 days from March 14, 2005.
(3) Consists of (a) 12,300 shares of Class A Common Stock, (b) 2,500 shares of
Class A Common Stock held under the Christenberry, Collett & Company, Inc.
401(k) Plan, a unitized plan that has allocated approximately 25% of the
Plan assets to Mr. Christenberry, as to which beneficial ownership of plan
assets not allocated to Mr. Christenberry is disclaimed, and (c) options to
purchase 9,000 shares of Class A Common Stock that are currently
exercisable or will become exercisable within 60 days from March 14, 2005.
(4) Consists of (a) 3,000 shares of Class A Common Stock and (b) options to
purchase 9,000 shares of Class A Common Stock that are currently
exercisable or will become exercisable within 60 days from March 14, 2005.
(5) The Class B Common Stock is entitled to two votes per share so long as it
is beneficially owned by Ms. Smith or certain members of her immediate
family. As a result of this two-class structure, Ms. Smith beneficially
owns shares of Class A and Class B Common Stock representing 52.4% of the
voting power of all outstanding voting shares. Consists of (a) 858,832
shares of Class A Common Stock, (b) 1,000,000 shares of Class B Common
Stock, (c) 190,000 shares of Class A Common Stock held in the name of
Melissa Turner as voting trustee for the benefit of the Smith Family
Limited Partnership, as to which beneficial ownership is disclaimed, and
(d) 45,024 shares of Class A Common Stock held a 401(k) Plan account.
Melissa Turner is the daughter of Ms. Smith.
(6) Consists of options to purchase 24,000 shares of Class A Common Stock that
are currently exercisable or will become exercisable within 60 days from
March 14, 2005.
(7) Consists of (a) 2,750 shares of Class A Common Stock and (b) options to
purchase 37,350 shares of Class A Common Stock that are currently
exercisable or will become exercisable within 60 days from March 14, 2005.
(8) Consists of options to purchase 10,000 shares of Class A Common Stock that
are currently exercisable or will become exercisable within 60 days from
March 14, 2005.
(9) Consists of (a) 1,314,643 shares of Class A Common Stock, (b) 1,000,000
shares of Class B Common Stock and (c) options to purchase 174,350 shares
of Class A Common Stock that are currently exercisable or will become
exercisable within 60 days from March 14, 2005.
12
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of
our Class A Common Stock with the cumulative total stockholder return of the
Nasdaq Stock Market (U.S. Companies) and the Nasdaq Trucking & Transportation
Stocks.
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Smithway Motor Xpress Corp.
Produced on 3/24/2005 including data to 12/31/2004
[PERFORMANCE GRAPH]
LEGEND
Symbol CRSP total Returns Index: 12/1999 12/2000 12/2001 12/2002 12/2008 12/2004
- -------- ------------------------ ------- ------- ------- ------- ------- -------
- ------- [ ] Smithway Motor Xpress Corp. 100.0 40.9 44.8 18.7 47.3 174.5
- --- --- * Nasdaq Stock Market (US Companies) 100.0 60.3 47.8 33.1 49.4 53.8
- - - - - /\ Nasdaq Trucking & Transportation Stocks 100.0 90.9 107.5 109.4 156.7 200.9
SIC 3700-3799, 4200-4299, 4400-4599, 4700-4799 US & Foreign
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1999.
13
There can be no assurance that our stock performance will continue into
the future with the same or similar trends depicted in the graph above. We will
not make or endorse any predictions as to future stock performance. The CRSP
Index for Nasdaq Trucking & Transportation Stocks includes all publicly held
truckload motor carriers traded on the Nasdaq Stock Market, as well as all
Nasdaq companies within the Standard Industrial Code Classifications 3700-3799,
4200-4299, 4400-4599, and 4700-4799 US & Foreign.
PROPOSAL 2
APPROVAL OF 2005 OMNIBUS STOCK PLAN
In February 2005, the board of directors unanimously adopted the
Smithway Motor Xpress Corp. 2005 Omnibus Stock Plan (the "2005 Plan") subject to
approval by our stockholders. The full, authoritative text of the 2005 Plan is
attached hereto as Annex A. A summary follows for convenience only. Subject to
stockholder approval, only the 2005 Plan document itself is binding on our
company or any participant in the 2005 Plan. The board of directors continues to
believe that stock-based compensation programs are a key element in achieving
the financial and operations objectives of our company. Our compensation
programs have been designed to motivate our management and employees to work
towards the common goal of maximizing stockholder return. The board of directors
believes approval of the 2005 Plan by the stockholders is necessary and
desirable to continue such stock-based incentive programs.
Our existing equity compensation plans only permit us to grant stock
options to new employees or non-statutory stock options to existing employees.
The board of directors believes that the administrative flexibility and various
forms of awards available under the 2005 Plan will enable them to provide
important incentives to directors, officers, employees and consultants to
achieve our strategic business plans. The board of directors also believes that
the tools provided under the 2005 Plan are required for our company to compete
for, motivate and retain high-quality directors, executives, employees and
consultants.
Under our Outside Director Stock Plan, options to purchase 12,000
shares of our Class A Common Stock remained outstanding as of December 31, 2004
and March 14, 2005. Pursuant to its terms, no additional awards may be granted
under the Outside Director Stock Plan. Under our Incentive Stock Plan, options
to purchase 193,850 shares of our Class A Common Stock remained outstanding as
of December 31, 2004 and March 14, 2005. We are permitted to grant options to
purchase 254,350 shares of our Class A Common Stock under the Incentive Stock
Plan as of March 14, 2005; however, these options must be non-statutory stock
options. Under our New Employee Incentive Plan, options to purchase 40,000
shares of our Class A Common Stock remained outstanding as of December 31, 2004
and March 14, 2005. We are permitted to grant options to purchase 360,000 shares
of our Class A Common Stock under the New Employee Incentive Plan as of March
14, 2005, but only to new employees. The board of directors has determined that
following approval of the 2005 Plan by stockholders, we will no longer be
authorized to grant any awards under the Outside Director Stock Plan or
Incentive Stock Plan; however, we will continue to be authorized to grant awards
to new employees under the New Employee Incentive Plan.
Marlys L. Smith and G. Larry Owens, who together are entitled to cast
more than 50% of the votes entitled to be cast at the annual meeting, have
indicated that they will vote for the approval of the 2005 Plan, and assuming
that they do, the 2005 Plan will be approved.
NEW PLAN BENEFITS
The future benefits or amounts that would be received under the 2005
Plan by executive officers, non-executive directors and non-executive officer
employees are discretionary and are therefore not determinable at this time,
except that non-employee directors who are elected at the annual meeting will
receive an option to purchase 3,000 shares of our Class A Common Stock at the
closing market price on the date of the annual meeting. These options granted to
non-employee directors will vest on the one-year anniversary of the date of
grant, and expire on the six-year anniversary of the date of grant. The benefits
or amounts that would have been received by or allocated to such persons for the
last completed fiscal year if the 2005 Plan had been in effect cannot be
determined.
MARKET PRICE OF CLASS A COMMON STOCK
The closing market price of our Class A Common Stock on March 14, 2005
was $6.00 per share.
14
SUMMARY DESCRIPTION OF THE 2005 OMNIBUS STOCK PLAN
PURPOSE OF THE 2005 PLAN
The purpose of the 2005 Plan is to motivate our key personnel to
produce a superior return for our stockholders by offering them an opportunity
to realize stock appreciation, by facilitating their ownership of our Class A
Common Stock and by rewarding them for achieving a high level of corporate
performance. The 2005 Plan is also intended to facilitate recruiting and
retaining key personnel, including outside directors, consultants and advisors,
of outstanding ability.
SHARES AVAILABLE UNDER THE PLAN
There are 500,000 shares of our Class A Common Stock available for
awards under the 2005 Plan. This number is subject to adjustment for future
stock splits, stock dividends and similar changes in the capitalization of our
company. The 2005 Plan will remain in effect until all stock subject to it has
been distributed or until all awards have expired or lapsed. In addition, our
board of directors may terminate the 2005 Plan at any time, subject to the
conditions stated in the 2005 Plan. The 2005 Plan is not subject to the Employee
Retirement Income Security Act of 1974 and is not a "qualified plan" under
Section 401(a) of the Internal Revenue Code of 1986.
PLAN ADMINISTRATION
The 2005 Plan is administered by a committee of two or more
non-employee members of the board of directors, or by action of the board of
directors as permitted in the 2005 Plan. In the event of a conflict between a
permitted action of the board of directors and an action of the committee, the
action of the board of directors controls. The committee has the authority to
interpret the 2005 Plan and any award or agreement made under the 2005 Plan. The
committee also has the authority, subject to the terms of the 2005 Plan, to
establish, amend, waive and rescind any rules relating to the 2005 Plan. The
committee is also responsible for determining when and to whom awards will be
granted, the form of each award, the amount of each award and any other terms of
an award, consistent with the 2005 Plan.
Members of the committee are designated by our board of directors and
serve on the committee for an indefinite term, at the discretion of our board of
directors. The committee may delegate all or any portion of its authority to
persons who are not non-employee directors solely for purposes of determining
and administering awards to persons who are not insiders of our company.
ELIGIBILITY
All of our employees and persons who provide services to us and our
affiliates, including directors, advisors and consultants, are eligible to
receive awards under the 2005 Plan. The selection of those to whom awards under
the 2005 Plan are made is within the sole discretion of the committee.
TYPES OF AWARDS UNDER THE PLAN
The types of awards that may be granted under the 2005 Plan include
incentive and non-statutory stock options, stock appreciation rights,
performance units, restricted stock and other stock-based awards. The following
is a brief description of the material characteristics of each type of award.
INCENTIVE AND NON-STATUTORY STOCK OPTIONS. Incentive stock options are
options designated by the committee as incentive stock options that comply with
the requirements of Section 422 of the Internal Revenue Code of 1986 or any
successor provision. Non-statutory stock options are all options other than
incentive stock options. Stock options may be granted and exercised at such
times as the committee may determine, but no more than 250,000 shares of Class A
Common Stock underlying stock options may be granted to any one person in any
year. The purchase price of each share subject to an option shall be determined
by the committee and set forth in an option agreement, and, except where
determined otherwise by the committee, shall not be less than 100% of the fair
market value of a share as of the date the option is granted. Each option shall
be exercisable in whole or in part on the terms provided in the agreement. In no
event shall any option be exercisable at any time after the expiration of its
term. When an option is no longer exercisable, it shall be deemed to have lapsed
or terminated.
The purchase price of the shares with respect to which an option is
exercised shall be payable in full at the time of exercise. The purchase price
may be payable in cash, by delivery or tender of shares having a fair market
value as of the date the option is exercised equal to the purchase price of the
shares being purchased pursuant to the option, or a combination thereof, as
determined by the committee, but no fractional shares will be issued or
accepted. A participant exercising a stock option shall not be permitted to pay
any portion of the purchase price
15
with shares if, in the opinion of the committee, payment in such manner could
have adverse financial accounting consequences for our company. The committee
may also provide for a reload option, in which a participant who exercises an
option and pays the option price in whole or in part with shares then owned by
the participant will be entitled to receive another option covering the same
number of shares tendered and with a price of no less than fair market value of
our Class A Common Stock on the date of grant of such additional option.
With respect to incentive stock options, the committee retains full
authority to impose other conditions, limitations or provisions where needed to
qualify the option as an incentive stock option. For example, the purchase price
of each share subject to an incentive stock option shall not be less than 100%
of the fair market value of a share as of the date the incentive stock option is
granted if this limitation is necessary to qualify as an incentive stock option.
The aggregate fair market value of the shares with respect to which incentive
stock options held by an individual first become exercisable in any calendar
year shall also not exceed $100,000 (or such other limit required by law) if
this limitation is necessary to qualify the option as an incentive stock option.
Any stock options exceeding this limit will be treated as non-statutory stock
options. An incentive stock option will also not be exercisable more than 10
years after the date of grant (or such other limit imposed by law) if this
limitation is necessary to qualify the option as an incentive stock option.
In addition, no participant may receive an incentive stock option under
the 2005 Plan if, at the time the award is granted, the participant owns shares
possessing more than 10% of the total combined voting power of all classes of
stock of our company or our subsidiaries, unless (1) the option price for that
incentive stock option is at least 110% of the fair market value of the shares
subject to that incentive stock option on the date of grant and (2) that option
is not exercisable after the date five years from the date of grant.
STOCK APPRECIATION RIGHTS AND PERFORMANCE UNITS. The recipient of a
stock appreciation right receives, upon exercise of the right and subject to the
terms and conditions specified by the committee, all or a portion of the excess
of the fair market value of a specified number of shares as of the date of
exercise of the right over a specified price that shall not be less than 100% of
the fair market value of such shares as of the date of grant of the right.
Payment shall be made upon exercise of a stock appreciation right, subject to
terms and conditions imposed by the committee in the agreement. No stock
appreciation right shall be exercisable at any time after the expiration of its
term, and when a stock appreciation right is no longer exercisable, it shall be
deemed to have lapsed or terminated. In no event may a participant be awarded
more than 250,000 shares in the form of stock appreciation rights in any year.
An award of performance units under the 2005 Plan entitles the
recipient to future payments of cash, shares or a combination of cash and
shares, as determined by the committee, based upon the achievement of
pre-established performance targets. The committee shall determine the extent to
which performance targets have been attained and the amount of payment due for
such satisfaction.
Note that an agreement may permit an acceleration of the performance
cycle, and an adjustment of performance targets and payments with respect to
some or all of the performance units awarded to a participant, upon the
occurrence of certain events, which may, but need not include, without
limitation, a fundamental change in our company as defined in the 2005 Plan, the
participant's death or retirement or other events affecting the capitalization
of our company.
RESTRICTED STOCK AND OTHER STOCK-BASED AWARDS. The committee may award
restricted stock under the 2005 Plan, which is stock subject to specified
restrictions on transfer and conditions of forfeiture. A holder of restricted
stock shall have all the other rights of a stockholder, including the right to
receive dividends and the right to vote. No more than 250,000 of the total
number of shares available as awards under the 2005 Plan shall be issued as
restricted stock.
The committee may also award stock or other awards, such as securities
convertible into stock and phantom securities. The granting of such awards is
within the discretion of the committee; however, no more than 250,000 of the
total number of shares available for awards under the 2005 Plan shall be issued
during the term of the 2005 Plan in the form of stock without restrictions.
ACCELERATION OF AWARDS, LAPSE OF RESTRICTIONS, FORFEITURE
The committee may provide in an award agreement for the lapse or waiver
of restrictions or conditions on restricted stock or other awards, or
acceleration of the vesting of stock options, stock appreciation rights and
other awards, or acceleration of the term with respect to which the achievement
of performance targets for performance units is determined in the event of a
fundamental change in the corporate structure of our company, upon a change of
control of our company or upon the participant's death, disability or
retirement.
16
If the participant's employment or other relationship with our company
or our affiliates is terminated for any reason, then any unexercised portion of
the award will generally be forfeited, except as provided in the award agreement
or by the committee.
ADJUSTMENTS, MODIFICATIONS, TERMINATION
The board of directors may at any time terminate, suspend or modify the
2005 Plan. And, except as where stated otherwise in the 2005 Plan, the committee
may at any time alter or amend any or all agreements under the 2005 Plan to the
extent permitted by law. No termination, suspension, or modification of the 2005
Plan will materially and adversely affect any right acquired by a participant
before the date of such termination, suspension, or modification. However, any
and all adjustments made in response to changes in the capitalization of our
company will be conclusively presumed to not adversely affect any rights of
award recipients. If we experience a change in capitalization, a fundamental
change, or any other relevant change as described in the 2005 Plan, the
committee may make appropriate adjustments to the awards in order to prevent
enlargement of rights or inappropriate dilution of rights.
FEDERAL TAX CONSIDERATIONS (United States Only)
This section summarizes the material federal income tax consequences
that may result from awards made under the 2005 Plan. Because this is only a
summary, issues that are material to a participant may not be discussed.
Furthermore, the tax laws are subject to legislative changes and new or revised
administrative or judicial interpretations. Participants may also incur foreign,
state or local tax consequences that are not discussed in this summary.
INCENTIVE STOCK OPTIONS. Participants will realize no taxable income,
and we will not be entitled to any related deduction, when participants are
granted an incentive stock option. If certain statutory employment and holding
period conditions are satisfied before a participant disposes of the shares
acquired pursuant to the exercise of such an option, then the participant will
not realize any taxable income upon the exercise of such an option and we will
not be entitled to any deduction in connection with such exercise. Upon
disposition of the shares after expiration of the statutory holding periods, any
gain or loss a participant realizes will be a capital gain or loss. We will not
be entitled to a deduction with respect to a disposition of the shares by a
recipient after the expiration of the statutory holding periods.
Except in the event of death, if a recipient disposes of the shares
acquired upon exercise of an incentive stock option before the expiration of the
statutory holding periods, the recipient will be considered to have realized as
compensation, taxable as ordinary income in the year of disposition in an
amount, not exceeding the gain realized on such disposition, equal to the
difference between the exercise price and the fair market value of the shares on
the date of exercise of the option. We will be entitled to a deduction at the
same time and in the same amount as the participant is deemed to have realized
ordinary income. Any gain realized on the disposition in excess of the amount
treated as compensation or any loss realized on the disposition will constitute
capital gain or loss, respectively. If a participant pays the option price with
shares that were originally acquired pursuant to the exercise of an incentive
stock option and the statutory holding periods for such shares have not been
met, the participant will be treated as having made a disqualifying disposition
of such shares, and the tax consequences of such disqualifying disposition will
be as described above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes, an incentive stock option will be treated as
if it were a non-statutory stock option, the tax consequences of which are
discussed below.
NON-STATUTORY STOCK OPTIONS. Participants will realize no taxable
income, and we will not be entitled to any related deduction, when any
nonqualified stock option is granted under the 2005 Plan. Upon exercise of a
nonqualified stock option, a participant will realize ordinary income, and we
will be entitled to a deduction, equal to the excess of the fair market value of
the shares on the date of exercise over the option price. Upon disposition of
the shares, any additional gain or loss realized by a participant will be taxed
as a capital gain or loss.
STOCK APPRECIATION RIGHTS AND PERFORMANCE UNITS. Generally,
participants will realize no income upon the award of a stock appreciation right
or performance units. Participants will realize ordinary income, and we will be
entitled to a corresponding deduction, when cash or shares are delivered to a
participant upon exercise of a stock appreciation right or in payment of the
performance unit award. The amount of ordinary income and deduction will be the
amount of cash, plus fair market value of the shares received on the date the
participant receives them. Upon a subsequent disposition of shares a participant
receives, any additional gain or loss a participant realizes will be taxed as
capital gain or loss.
17
RESTRICTED STOCK AND OTHER STOCK-BASED AWARDS. With respect to awards
of unrestricted stock, generally (a) participants will realize ordinary income
and we will be entitled to a corresponding deduction upon the grant of the
unrestricted stock and (b) the amount of such ordinary income and deduction will
be the fair market value of such unrestricted stock on the date of the grant.
Unless a participant files an election to be taxed under Section 83(b)
of the Internal Revenue Code of 1986, the following federal tax consequences
will generally apply to an award of restricted stock:
o a participant will not realize income upon the grant of the
restricted stock;
o a participant will realize ordinary income, and we will be entitled
to a corresponding deduction, when the restrictions on the
participant's stock have been removed or have expired; and
o the amount of a participant's ordinary income and our deduction
will be the fair market value of the stock on the date the
restrictions are removed or expire.
If a participant elects to be taxed under Section 83(b) or if a
participant is awarded unrestricted stock, then the tax consequences to the
participant and us will be determined as of the date of the grant of the stock,
rather than as of the date of the removal or expiration of the restrictions.
When a participant disposes of restricted or unrestricted stock, the
difference between the amount the participant receives upon the disposition and
the fair market value of the shares on the date the participant realized
ordinary income will be taxed as a capital gain or loss.
WITHHOLDING. The 2005 Plan permits us to withhold from cash awards, and
to require participants to pay us, cash sufficient to cover any required
withholding taxes. In lieu of cash, the committee may permit participants to
cover withholding obligations through a reduction in the number of shares
delivered to participants or through the surrender to us of shares of our Class
A Common Stock that a participant owns.
RESTRICTIONS ON TRANSFER OF AWARDS
Except as provided otherwise in the 2005 Plan, the only person who may
exercise an option, stock appreciation right, or receive payments pursuant to
performance units or any other award, is the participant who received such award
under the 2005 Plan.
No award of restricted stock (before the expiration of the
restrictions), options, stock appreciation rights, performance units or other
award, may be sold, assigned, transferred, exchanged or otherwise encumbered,
except under the following limited circumstances:
o transfers or grants to a successor in interest in the event of the
participant's death;
o pursuant to a qualified domestic relations order as defined in the
Internal Revenue Code of 1986 or Title 1 of the Employee Retirement
Income Security Act of 1974; or
o the committee specifically authorizes a transfer of the interest in
the award where no consideration accompanies the transfer.
Any attempted transfer not permitted by the 2005 Plan is ineffective.
And, where a transfer is authorized, the transferee continues to be subject to
the terms and conditions of the award as existed immediately before the
transfer.
RESALE CONSIDERATIONS
Shares of stock acquired under the 2005 Plan by persons other than our
affiliates, as defined in Rule 405 under the Securities Act of 1933, may be
resold without registration under the Securities Act of 1933. Generally, our
affiliates may resell the shares obtained under the 2005 Plan as follows:
o in compliance with Rule 144 under the Securities Act of 1933;
o under an applicable exemption to the registration requirements of
the Securities Act of 1933; or
o in connection with an effective registration statement under the
Securities Act of 1933.
18
Recipients who are our directors or executive officers or who are
directly or indirectly the beneficial owners of more than 10% of any class of
equity security that is registered pursuant to Section 12 of the Securities
Exchange Act of 1934 must also comply with the reporting and trading
requirements of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations of the SEC under that statute.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2004 for
our compensation plans under which securities may be issued:
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE NUMBER OF SECURITIES
ISSUED UPON EXERCISE OF EXERCISE PRICE OF REMAINING AVAILABLE FOR
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, FUTURE ISSUANCE UNDER
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS EQUITY COMPENSATION PLANS
- ------------- -------------------------- -------------------- -------------------------
Equity Compensation Plans 245,850 $3.90 614,350
Approved by Securityholders
Equity Compensation Plans
Not Approved by 8,000 $2.60 -
Securityholders
Total 253,850 $3.86 614,350
EQUITY COMPENSATION PLANS NOT APPROVED BY SECURITYHOLDERS
On July 27, 2000, we made a one-time grant to each of our three
non-employee directors of an option to purchase 4,000 shares of our Class A
Common Stock. The exercise price was set at 85% of the closing price on the date
of the grant ($2.60), and the options vested immediately. During 2004, one
director's option to purchase 4,000 shares was forfeited due to his retirement.
The remaining options expire on July 27, 2006. These grants were not subject to
stockholder approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL 2 TO APPROVE THE 2005 OMNIBUS STOCK PLAN.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table presents fees for professional audit services
rendered by KPMG LLP for the audit of the Company's annual financial statements
for 2003 and 2004, and fees for other services rendered by KPMG LLP relating to
such fiscal years. KPMG LLP has served as our independent auditors since
December 1994. Representatives of KPMG LLP are expected to be present at the
annual meeting and will have an opportunity to make a statement, if they desire
to do so, and to respond to appropriate questions.
DESCRIPTION OF FEES 2004 2003
------------------- --------- ---------
Audit Fees(1) $ 107,200 $ 94,000
Audit-Related Fees(2) 5,800 6,525
--------- ---------
Total Audit and Audit-Related Fees 113,000 100,525
Tax Fees:
Tax Compliance Fees(3) 15,850 9,530
Tax Consultation and Advice Fees -- --
--------- ---------
Total Tax Fees 15,850 9,530
All Other Fees -- --
--------- ---------
Total $ 128,850 $ 110,055
========= =========
- ----------
(1) Audit fees in 2003 and 2004 consisted of the annual audit and quarterly
reviews of the Company's consolidated financial statements, statutory audit
and assistance with and review of documents filed with the SEC.
(2) Audit-related fees in 2003 and 2004 consisted of employee benefit plan
audits.
(3) Tax compliance fees in 2003 and 2004 consisted of preparation of federal
and state income tax returns.
19
APPROVAL OF INDEPENDENT AUDITOR SERVICES AND FEES
Our audit committee maintains a policy pursuant to which it
pre-approves all audit, audit-related, tax, and other permissible non-audit
services provided by our principal independent auditors in order to assure that
the provision of such services is compatible with maintaining the auditors'
independence. Under this policy, the audit committee pre-approves, on an annual
basis, specific types or categories of engagements constituting audit,
audit-related, tax or other permissible non-audit services to be provided by the
principal independent auditors. Pre-approval of an engagement for a specific
type or category of services generally is provided for up to one year and
typically is subject to a budget comprised of a range of anticipated fee amounts
for the engagement. Management and the independent auditors are required to
periodically report to the audit committee regarding the extent of services
provided by the independent auditors in accordance with the annual pre-approval,
and the fees for the services performed to date. To the extent that management
believes that a new service or the expansion of a current service provided by
the principal independent auditors is necessary or desirable, such new or
expanded services are presented to the audit committee for its review and
approval prior to the engagement of the principal independent auditors to render
such services. No audit-related, tax, or other non-audit services were approved
by the audit committee pursuant to the de minimus exception to the pre-approval
requirement under Rule 2-01(c)(7)(i)(C) of Regulation S-X during 2004.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL 3 TO RATIFY THE SELECTION OF KPMG LLP AS OUR INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2005.
OTHER MATTERS
The board of directors does not intend to present at the annual meeting
any matters other than those described herein and does not presently know of any
matters that will be presented by other parties. If any other matters are
properly brought before the annual meeting or any adjournment thereof, the proxy
holders named in the accompanying form of proxy will have discretionary
authority to vote proxies in accordance with their judgment with respect to such
matters, unless the person executing any such proxy indicates that such
authority is withheld.
Our 2004 Annual Report to Stockholders, including financial statements,
is being mailed with this proxy statement.
STOCKHOLDERS WHO WISH TO OBTAIN A COPY OF OUR 2004 ANNUAL REPORT ON
FORM 10-K, AS FILED WITH THE SEC, MAY DO SO WITHOUT CHARGE BY WRITING TO
SMITHWAY MOTOR XPRESS CORP., C/O CHIEF EXECUTIVE OFFICER, 2031 QUAIL AVENUE,
FORT DODGE, IOWA 50501.
Smithway Motor Xpress Corp.
/s/ G. Larry Owens
G. Larry Owens
Chairman of the Board, Chief Executive Officer,
President, and Secretary
April 15, 2005
20
ANNEX A
SMITHWAY MOTOR XPRESS CORP.
2005 OMNIBUS STOCK PLAN
1. PURPOSE. The purpose of the Smithway Motor Xpress Corp. 2005 Omnibus
Stock Plan (the "Plan") is to promote the interests of the Company and its
stockholders by providing key personnel of the Company and its Affiliates with
an opportunity to acquire a proprietary interest in the Company and reward them
for achieving a high level of performance and thereby develop a stronger
incentive to put forth maximum effort for the continued success and growth of
the Company and its Affiliates. In addition, the opportunity to acquire a
proprietary interest in the Company will aid in attracting and retaining key
personnel of outstanding ability. The Plan is also intended to provide Outside
Directors with an opportunity to acquire a proprietary interest in the Company,
to compensate Outside Directors, consultants and advisors for their contribution
to the Company and to aid in attracting and retaining Outside Directors and
qualified consultants and advisors.
2. DEFINITIONS.
2.1 GENERAL. The capitalized terms used elsewhere in the Plan have
the meanings set forth below.
(a) "Affiliate" means any corporation that is a
"parent corporation" or "subsidiary corporation" of the
Company, as those terms are defined in Code Sections 424(e)
and (f), or any successor provisions.
(b) "Agreement" means a written contract (i)
consistent with the terms of the Plan entered into between the
Company or an Affiliate and a Participant and (ii) containing
the terms and conditions of an Award in such form and not
inconsistent with the Plan as the Committee shall approve from
time to time, together with all amendments thereto, which
amendments may be unilaterally made by the Company (with the
approval of the Committee) unless such amendments are deemed
by the Committee to be materially adverse to the Participant
and not required as a matter of law.
(c) "Award" or "Awards" means a grant made under the
Plan in the form of Restricted Stock, Options, Stock
Appreciation Rights, Performance Units, Stock or any other
stock-based award.
(d) "Board" means the Board of Directors of the
Company.
(e) "Code" means the Internal Revenue Code of 1986,
as amended and in effect from time to time or any successor
statute.
(f) "Committee" means two or more Non-Employee
Directors designated by the Board to administer the Plan under
Section 3.1 of the Plan and constituted so as to permit grants
thereby to comply with Exchange Act Rule 16b-3 and Code
Section 162(m).
(g) "Company" means Smithway Motor Xpress Corp., a
Nevada corporation, or any successor to all or substantially
all of its businesses by merger, consolidation, purchase of
assets or otherwise.
(h) "Effective Date" means the date specified in
Section 12.1 of the Plan.
(i) "Employee" means an employee (including an
officer or director who is also an employee) of the Company or
an Affiliate.
(j) "Exchange Act" means the Securities Exchange Act
of 1934, as amended and in effect from time to time or any
successor statute.
(k) "Exchange Act Rule 16b-3" means Rule 16b-3
promulgated by the Securities and Exchange Commission under
the Exchange Act, as now in force and in effect from time to
time or any successor regulation.
(l) "Fair Market Value" as of any date means, unless
otherwise expressly provided in the Plan:
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(i) the closing sale price of a Share on the
date of grant, or, if no sale of Shares shall have
occurred on that date, on the next preceding day on
which a sale of Shares occurred
(A) on the composite tape for New
York Stock Exchange listed shares, or
(B) if the Shares are not quoted on
the composite tape for New York Stock
Exchange listed shares, on the principal
United States Securities Exchange registered
under the Exchange Act on which the Shares
are listed, or
(C) if the Shares are not listed on
any such exchange, on the National
Association of Securities Dealers, Inc.
Automated Quotations National Market System
or any system then in use, or
(ii) if clause (i) is inapplicable, the mean
between the closing "bid" and the closing "asked"
quotation of a Share on the date immediately
preceding that date, or, if no closing bid or asked
quotation is made on that date, on the next preceding
day on which a closing bid and asked quotation is
made, on the National Association of Securities
Dealers, Inc. Automated Quotations System or any
system then in use, or
(iii) if clauses (i) and (ii) are
inapplicable, what the Committee determines in good
faith to be 100% of the fair market value of a Share
on that date, using such criteria as it shall
determine, in its sole discretion, to be appropriate
for valuation.
However, if the applicable securities exchange or
system has closed for the day at the time the event occurs
that triggers a determination of Fair Market Value, whether
the grant of an Award, the exercise of an Option or Stock
Appreciation Right or otherwise, all references in this
paragraph to the "date immediately preceding that date" shall
be deemed to be references to "that date." In the case of an
Incentive Stock Option, if this determination of Fair Market
Value is not consistent with the then current regulations of
the Secretary of the Treasury, Fair Market Value shall be
determined in accordance with those regulations. The
determination of Fair Market Value shall be subject to
adjustment as provided in Section 16 of the Plan.
(m) "Fundamental Change" means a dissolution or
liquidation of the Company, a sale of substantially all of the
assets of the Company, a merger or consolidation of the
Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, or a
statutory share exchange involving capital stock of the
Company.
(n) "Incentive Stock Option" means any Option
designated as such and granted in accordance with the
requirements of Code Section 422 or any successor provision.
(o) "Insider" as of a particular date means any
person who, as of that date is an officer of the Company as
defined under Exchange Act Rule 16a-1(f) or its successor
provision.
(p) "Non-Employee Director" means a member of the
Board who is considered a non-employee director within the
meaning of Exchange Act Rule 16b-3(b)(3) or its successor
provision and an outside director for purposes of Code Section
162(m).
(q) "Non-Statutory Stock Option" means an Option
other than an Incentive Stock Option.
(r) "Option" means a right to purchase Stock,
including both Non-Statutory Stock Options and Incentive Stock
Options.
(s) "Outside Director" means a director who is not an
Employee.
(t) "Participant" means a person or entity to whom an
Award is or has been made in accordance with the Plan.
(u) "Performance Cycle" means the period of time as
specified in an Agreement over which Performance Units are to
be earned.
(v) "Performance Units" means an Award made pursuant
to Section 11 of the Plan.
A-2
(w) "Plan" means this 2005 Omnibus Stock Plan, as may
be amended and in effect from time to time.
(x) "Restricted Stock" means Stock granted under
Section 7 of the Plan so long as such Stock remains subject to
one or more restrictions.
(y) "Section 16" or "Section 16(b)" means Section 16
or Section 16(b), respectively, of the Exchange Act or any
successor statute and the rules and regulations promulgated
thereunder as in effect and as amended from time to time.
(z) "Share" means a share of Stock.
(aa) "Stock" means the Class A Common Stock, par
value $.01 per share, of the Company.
(bb) "Stock Appreciation Right" means a right, the
value of which is determined in relation to the appreciation
in value of Shares pursuant to an Award granted under Section
10 of the Plan.
(cc) "Subsidiary" means a "subsidiary corporation,"
as that term is defined in Code Section 424(f) or any
successor provision.
(dd) "Successor" with respect to a Participant means
the legal representative of an incompetent Participant, and if
the Participant is deceased the estate of the Participant or
the person or persons who may, by bequest or inheritance, or
pursuant to the terms of an Award, acquire the right to
exercise an Option or Stock Appreciation Right or to receive
cash and/or Shares issuable in satisfaction of an Award in the
event of the Participant's death.
(ee) "Term" means the period during which an Option
or Stock Appreciation Right may be exercised or the period
during which the restrictions or terms and conditions placed
on Restricted Stock or any other Award are in effect.
(ff) "Transferee" means any member of the
Participant's immediate family (i.e., his or her children,
step-children, grandchildren and spouse) or one or more trusts
for the benefit of such family members or partnerships in
which such family members are the only partners.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the
context, reference to the masculine gender shall include, when used, the
feminine gender and any term used in the singular shall also include the plural.
3. ADMINISTRATION AND INDEMNIFICATION.
3.1 ADMINISTRATION.
(a) The Committee shall administer the Plan. The
Committee shall have exclusive power to (i) make Awards, (ii)
determine when and to whom Awards will be granted, the form of
each Award, the amount of each Award, and any other terms or
conditions of each Award consistent with the Plan, and (iii)
determine whether, to what extent and under what
circumstances, Awards may be settled, paid or exercised in
cash, Shares or other Awards, or other property or canceled,
forfeited or suspended. Each Award shall be subject to an
Agreement authorized by the Committee. A majority of the
members of the Committee shall constitute a quorum for any
meeting of the Committee, and acts of a majority of the
members present at any meeting at which a quorum is present or
the acts unanimously approved in writing by all members of the
Committee shall be the acts of the Committee. Notwithstanding
the foregoing, the Board shall have the sole and exclusive
power to administer the Plan with respect to Awards granted to
Outside Directors and, except to the extent that the grant or
exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under)
the short-swing profit recovery provisions of Section 16 of
the Exchange Act, the Board may, at any time and from time to
time, without any further action of the Committee, exercise
the powers and duties of the Committee under the Plan. To the
extent that any permitted action taken by the Board conflicts
with action taken by the Committee, the Board action will
control.
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(b) Solely for purposes of determining and
administering Awards to Participants who are not Insiders, the
Committee may delegate all or any portion of its authority
under the Plan to one or more persons who are not Non-Employee
Directors.
(c) To the extent within its discretion and subject
to Sections 15 and 16 of the Plan, other than price, the
Committee may amend the terms and conditions of any
outstanding Award.
(d) It is the intent that the Plan and all Awards
granted pursuant to it shall be administered by the Committee
so as to permit the Plan and Awards to comply with Exchange
Act Rule 16b-3, except in such instances as the Committee, in
its discretion, may so provide. If any provision of the Plan
or of any Award would otherwise frustrate or conflict with the
intent expressed in this Section 3.1(d), that provision to the
extent possible shall be interpreted and deemed amended in the
manner determined by the Committee so as to avoid the
conflict. To the extent of any remaining irreconcilable
conflict with this intent, the provision shall be deemed void
as applicable to Insiders to the extent permitted by law and
in the manner deemed advisable by the Committee.
(e) The Committee's interpretation of the Plan and of
any Award or Agreement made under the Plan and all related
decisions or resolutions of the Board or Committee shall be
final and binding on all parties with an interest therein.
Consistent with its terms, the Committee shall have the power
to establish, amend or waive regulations to administer the
Plan. In carrying out any of its responsibilities, the
Committee shall have discretionary authority to construe the
terms of the Plan and any Award or Agreement made under the
Plan.
3.2 INDEMNIFICATION. Each person who is or shall have been a
member of the Committee, or of the Board, and any other person to whom the
Committee delegates authority under the Plan, shall be indemnified and held
harmless by the Company, to the extent permitted by law, against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by such person in connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act, made in good faith,
under the Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company's approval, or paid by such person in
satisfaction of any judgment in any such action, suit or proceeding against such
person, provided such person shall give the Company an opportunity, at the
Company's expense, to handle and defend the same before such person undertakes
to handle and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such person or persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.
4. SHARES AVAILABLE UNDER THE PLAN.
(a) The number of Shares available for distribution
under the Plan shall not exceed 500,000 (subject to adjustment
pursuant to Section 16 of the Plan).
(b) Any Shares subject to the terms and conditions of
an Award under the Plan that are not used because the terms
and conditions of the Award are not met may again be used for
an Award under the Plan; provided however, that Shares with
respect to which a Stock Appreciation Right has been exercised
whether paid in cash and/or in Shares may not again be awarded
under the Plan.
(c) Any unexercised or undistributed portion of any
terminated, expired, exchanged, or forfeited Award, or any
Award settled in cash in lieu of Shares (except as provided in
Section 4(b) of the Plan) shall be available for further
Awards.
(d) For the purposes of computing the total number of
Shares granted under the Plan, the following rules shall apply
to Awards payable in Shares where appropriate:
(i) each Option shall be deemed to be the
equivalent of the maximum number of Shares that may
be issued upon exercise of the particular Option;
A-4
(ii) an Award (other than an Option) payable
in some other security shall be deemed to be equal to
the number of Shares to which it relates;
(iii) where the number of Shares available
under the Award is variable on the date it is
granted, the number of Shares shall be deemed to be
the maximum number of Shares that could be received
under that particular Award; and
(iv) where two or more types of Awards (all
of which are payable in Shares) are granted to a
Participant in tandem with each other, such that the
exercise of one type of Award with respect to a
number of Shares cancels at least an equal number of
Shares of the other, each such joint Award shall be
deemed to be the equivalent of the maximum number of
Shares available under the largest single Award.
Additional rules for determining the number of Shares
granted under the Plan may be made by the Committee as it
deems necessary or desirable.
(e) No fractional Shares may be issued under the
Plan; however, cash shall be paid in lieu of any fractional
Share in settlement of an Award.
(f) The maximum number of Shares that may be awarded
to a Participant in any calendar year in the form of Options
is 250,000 and the maximum number of Shares that may be
awarded to a Participant in any calendar year in the form of
Stock Appreciation Rights is 250,000.
5. ELIGIBILITY. Participation in the Plan shall be limited to Employees
and to individuals or entities who are not Employees but who provide services to
the Company or an Affiliate, including services provided in the capacity of a
consultant, advisor or director. The granting of Awards is solely at the
discretion of the Committee, except that Incentive Stock Options may only be
granted to Employees. References herein to "employed," "employment" or similar
terms (except "Employee") shall include the providing of services in any
capacity or as a director or director emeritus. Neither the transfer of
employment of a Participant between any of the Company or its Affiliates, nor a
leave of absence granted to such Participant and approved by the Committee,
shall be deemed a termination of employment for purposes of the Plan.
6. GENERAL TERMS OF AWARDS.
6.1 AMOUNT OF AWARD. Each Agreement shall set forth the number
of Shares of Restricted Stock, Stock or Performance Units subject to the
Agreement, or the number of Shares to which the Option subject to the Agreement
applies or with respect to which payment upon the exercise of the Stock
Appreciation Right subject to the Agreement is to be determined, as the case may
be, together with such other terms and conditions applicable to the Award as
determined by the Committee acting in its sole discretion.
6.2 Term. Each Agreement, other than those relating solely to
Awards of Shares without restrictions, shall set forth the Term of the Option,
Stock Appreciation Right, Restricted Stock or other Award or the Performance
Cycle for the Performance Units, as the case may be. Acceleration of the
expiration of the applicable Term is permitted, upon such terms and conditions
as shall be set forth in the Agreement, which may, but need not, include,
without limitation, acceleration in the event of the Participant's death or
retirement. Acceleration of the Performance Cycle of the Performance Units will
be subject to Section 11.2 of the Plan.
6.3 TRANSFERABILITY. Except as provided in this Section,
during the lifetime of a Participant to whom an Award is granted, only that
Participant (or that Participant's legal representative) may exercise an Option
or Stock Appreciation Right, or receive payment with respect to Performance
Units or any other Award. No Award of Restricted Stock (before the expiration of
the restrictions), Options, Stock Appreciation Rights, Performance Units or
other Award may be sold, assigned, transferred, exchanged or otherwise
encumbered other than to a Successor in the event of a Participant's death or
pursuant to a qualified domestic relations order as defined in the Code or Title
1 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or the rules thereunder; any attempted transfer in violation of this Section 6.3
shall be of no effect. Notwithstanding the immediately preceding sentence, the
Committee, in an Agreement or otherwise at its discretion, may provide that the
Award (other than Incentive Stock Options) may be transferable to a Transferee
if the Participant does not receive any consideration for the transfer. Any
Award held by a Transferee shall continue to be subject to the same terms and
conditions that were applicable to that Award immediately before the transfer
thereof to the Transferee. For purposes of any provision of the Plan relating to
notice to a Participant or to acceleration or termination of an Award upon the
death, disability or termination of employment of a Participant, the references
to "Participant" shall mean
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the original grantee of an Award and not any Transferee.
6.4 TERMINATION OF EMPLOYMENT. Except as otherwise determined
by the Committee or provided by the Committee in an Agreement, in case of a
Participant's termination of employment, the following provisions shall apply:
(a) OPTIONS AND STOCK APPRECIATION RIGHTS.
(i) If a Participant's employment or other
relationship with the Company and its Affiliates
terminates because of the Participant's death, then
any Option or Stock Appreciation Right that has not
expired or been terminated shall remain exercisable
for one year after Participant's death, but, unless
otherwise provided in the Agreement, only to the
extent that such Option or Stock Appreciation Right
was exercisable immediately prior to Participant's
death.
(ii) If a Participant's employment or other
relationship with the Company and its Affiliates
terminates because the Participant is disabled
(within the meaning of Section 22(e)(3) of the Code),
then any Option or Stock Appreciation Right that has
not expired or been terminated shall remain
exercisable for one year after Participant's
termination of employment or other relationship with
the Company resulting from Participant's disability,
but, unless otherwise provided in the Agreement, only
to the extent that such Option or Stock Appreciation
Right was exercisable immediately prior to such
Participant's termination of employment or other
relationship with the Company resulting from
Participant's disability.
(iii) If a Participant's employment
employment or other relationship with the Company and
its Affiliates terminates for any reason other than
death or disability, then any Option or Stock
Appreciation Right that has not expired or been
terminated shall remain exercisable for three months
after termination of the Participant's employment or
other relationship with the Company, whichever occurs
later, but, unless otherwise provided in the
Agreement, only to the extent that such Option or
Stock Appreciation Right was exercisable immediately
prior to such Participant's termination of employment
or other relationship with the Company.
(iv) Notwithstanding Sections 6.4(a)(i),
(ii) and (iii) of the Plan, in no event shall an
Option or a Stock Appreciation Right be exercisable
after the expiration of the Term of such Award. Any
Option or Stock Appreciation Right that is not
exercised within the periods set forth in Sections
6.4 (i), (ii) and (iii) of the Plan, except as
otherwise provided by the Committee in the Agreement,
shall terminate as of the end of the periods
described in such Sections.
(b) PERFORMANCE UNITS. If a Participant's employment
or other relationship with the Company and its Affiliates
terminates during a Performance Cycle because of death or
disability, or under other circumstances provided by the
Committee in its discretion in the Agreement or otherwise, the
Participant, unless the Committee shall otherwise provide in
the Agreement, shall be entitled to a payment with respect to
the Performance Units at the end of the Performance Cycle
based upon the extent to which achievement of performance
targets was satisfied at the end of such period (as determined
at the end of the Performance Cycle) and prorated for the
portion of the Performance Cycle during which the Participant
was employed by the Company or its Affiliates. Except as
provided in this Section 6.4(b) or in the Agreement, if a
Participant's employment or other relationship with the
Company and its Affiliates terminates during a Performance
Cycle, then such Participant shall not be entitled to any
payment with respect to that Performance Cycle.
(c) RESTRICTED STOCK AWARDS. Unless otherwise
provided in the Agreement, in case of a Participant's death or
disability, the Participant shall be entitled to receive a
number of Shares of Restricted Stock under outstanding Awards
that has been prorated for the portion of the Term of the
Awards during which the Participant was employed by the
Company and its Affiliates, and, with respect to such Shares,
all restrictions shall lapse. Any Shares of Restricted Stock
as to which restrictions do not lapse under the preceding
sentence shall terminate at the date of the Participant's
termination of employment and such Shares of Restricted Stock
shall be forfeited to the Company
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6.5 RIGHTS AS STOCKHOLDER. Each Agreement shall provide that a
Participant shall have no rights as a stockholder with respect to any securities
covered by an Award unless and until the date the Participant becomes the holder
of record of the Stock, if any, to which the Award relates.
7. RESTRICTED STOCK AWARDS.
(a) An Award of Restricted Stock under the Plan shall
consist of Shares subject to restrictions on transfer and
conditions of forfeiture, which restrictions and conditions
shall be included in the applicable Agreement. The Committee
may provide for the lapse or waiver of any such restriction or
condition based on such factors or criteria as the Committee,
in its sole discretion, may determine.
(b) Except as otherwise provided in the applicable
Agreement, each Stock certificate issued with respect to an
Award of Restricted Stock shall either be deposited with the
Company or its designee, together with an assignment separate
from the certificate, in blank, signed by the Participant, or
bear such legends with respect to the restricted nature of the
Restricted Stock evidenced thereby as shall be provided for in
the applicable Agreement.
(c) The Agreement shall describe the terms and
conditions by which the restrictions and conditions of
forfeiture upon awarded Restricted Stock shall lapse. Upon the
lapse of the restrictions and conditions, Shares free of
restrictive legends, if any, relating to such restrictions
shall be issued to the Participant or a Successor or
Transferee.
(d) A Participant or a Transferee with a Restricted
Stock Award shall have all the other rights of a stockholder
including, but not limited to, the right to receive dividends
and the right to vote the Shares of Restricted Stock.
(e) No more than 250,000 of the total number of
Shares available for Awards under the Plan shall be issued
during the term of the Plan as Restricted Stock. This
limitation shall be calculated pursuant to the applicable
provisions of Sections 4 and 16 of the Plan.
8. OTHER AWARDS. The Committee may from time to time grant Stock and
other Awards under the Plan including, without limitation, those Awards pursuant
to which Shares are or may in the future be acquired, Awards denominated in
Stock units, securities convertible into Stock and phantom securities. The
Committee, in its sole discretion, shall determine the terms and conditions of
such Awards provided that such Awards shall not be inconsistent with the terms
and purposes of the Plan. The Committee may, at its sole discretion, direct the
Company to issue Shares subject to restrictive legends and/or stop transfer
instructions that are consistent with the terms and conditions of the Award to
which the Shares relate. No more than 250,000 of the total number of Shares
available for Awards under the Plan shall be issued during the term of the Plan
in the form of Stock without restrictions.
9. STOCK OPTIONS.
9.1 TERMS OF ALL OPTIONS.
(a) An Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a
Non-Statutory Stock Option. The purchase price of each Share
subject to an Option shall be determined by the Committee and
set forth in the Agreement, but shall not be less than 100% of
the Fair Market Value of a Share as of the date the Option is
granted (except as provided in Sections 9.2 and 19 of the Plan
or as otherwise determined by the Committee in its
discretion).
(b) The purchase price of the Shares with respect to
which an Option is exercised shall be payable in full at the
time of exercise, provided that to the extent permitted by
law, the Agreement may permit some or all Participants to
simultaneously exercise Options and sell the Shares thereby
acquired pursuant to a brokerage or similar relationship and
use the proceeds from the sale as payment of the purchase
price of the Shares. The purchase price may be payable in
cash, by delivery or tender of Shares having a Fair Market
Value as of the date the Option is exercised equal to the
purchase price of the Shares being purchased pursuant to the
Option, or a combination thereof, as determined by the
Committee, but no fractional Shares will be issued or
accepted. Provided, however, that a Participant exercising an
Option shall not be permitted to pay
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any portion of the purchase price with Shares if, in the
opinion of the Committee, payment in such manner could have
adverse financial accounting consequences for the Company.
(c) The Committee may provide, in an Agreement or
otherwise, that a Participant who exercises an Option and pays
the Option price in whole or in part with Shares then owned by
the Participant will be entitled to receive another Option
covering the same number of shares tendered and with a price
of no less than Fair Market Value on the date of grant of such
additional Option ("Reload Option"). Unless otherwise provided
in the Agreement, a Participant, in order to be entitled to a
Reload Option, must pay with Shares that have been owned by
the Participant for at least the preceding 180 days.
(d) Each Option shall be exercisable in whole or in
part on the terms provided in the Agreement. In no event shall
any Option be exercisable at any time after the expiration of
its Term. When an Option is no longer exercisable, it shall be
deemed to have lapsed or terminated.
9.2 INCENTIVE STOCK OPTIONS. In addition to the other terms
and conditions applicable to all Options:
(a) the purchase price of each Share subject to an
Incentive Stock Option shall not be less than 100% of the Fair
Market Value of a Share as of the date the Incentive Stock
Option is granted if this limitation is necessary to qualify
the Option as an Incentive Stock Option (except as provided in
Section 19 of the Plan);
(b) the aggregate Fair Market Value (determined as of
the date the Option is granted) of the Shares with respect to
which Incentive Stock Options held by an individual first
become exercisable in any calendar year (under the Plan and
all other incentive stock option plans of the Company and its
Affiliates) shall not exceed $100,000 (or such other limit as
may be required by the Code) if this limitation is necessary
to qualify the Option as an Incentive Stock Option and to the
extent any Option granted to a Participant exceeds this limit
the Option shall be treated as a Non-Statutory Stock Option;
(c) an Incentive Stock Option shall not be
exercisable more than 10 years after the date of grant (or
such other limit as may be required by the Code) if this
limitation is necessary to qualify the Option as an Incentive
Stock Option;
(d) the Agreement covering an Incentive Stock Option
shall contain such other terms and provisions that the
Committee determines necessary to qualify the Option as an
Incentive Stock Option; and
(e) notwithstanding any other provision of the Plan
to the contrary, no Participant may receive an Incentive Stock
Option under the Plan if, at the time the Award is granted,
the Participant owns (after application of the rules contained
in Code Section 424(d), or its successor provision), Shares
possessing more than 10% of the total combined voting power of
all classes of stock of the Company or its Subsidiaries,
unless (i) the option price for that Incentive Stock Option is
at least 110% of the Fair Market Value of the Shares subject
to that Incentive Stock Option on the date of grant and (ii)
that Option is not exercisable after the date five years from
the date that Incentive Stock Option is granted.
10. STOCK APPRECIATION RIGHTS. An Award of a Stock Appreciation Right
shall entitle the Participant (or a Successor or Transferee), subject to terms
and conditions determined by the Committee, to receive upon exercise of the
Stock Appreciation Right all or a portion of the excess of (i) the Fair Market
Value of a specified number of Shares as of the date of exercise of the Stock
Appreciation Right over (ii) a specified price that shall not be less than 100%
of the Fair Market Value of such Shares as of the date of grant of the Stock
Appreciation Right. A Stock Appreciation Right may be granted in connection with
part or all of, in addition to, or completely independent of an Option or any
other Award under the Plan. If issued in connection with a previously or
contemporaneously granted Option, the Committee may impose a condition that
exercise of a Stock Appreciation Right cancels a pro rata portion of the Option
with which it is connected and vice versa. Each Stock Appreciation Right may be
exercisable in whole or in part on the terms provided in the Agreement. No Stock
Appreciation Right shall be exercisable at any time after the expiration of its
Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated. Upon exercise of a Stock Appreciation
Right, payment
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to the Participant or a Successor or Transferee shall be made at such time or
times as shall be provided in the Agreement in the form of cash, Shares or a
combination of cash and Shares as determined by the Committee. The Agreement may
provide for a limitation upon the amount or percentage of the total appreciation
on which payment (whether in cash and/or Shares) may be made in the event of the
exercise of a Stock Appreciation Right.
11. PERFORMANCE UNITS.
11.1 INITIAL AWARD.
(a) An Award of Performance Units under the Plan
shall entitle the Participant or a Successor or Transferee to
future payments of cash, Shares or a combination of cash and
Shares, as determined by the Committee, based upon the
achievement of pre-established performance targets. These
performance targets may, but need not, include, without
limitation, targets relating to one or more of the Company's
or a group's, unit's, Affiliate's or an individual's
performance. The Agreement may establish that a portion of a
Participant's Award will be paid for performance that exceeds
the minimum target but falls below the maximum target
applicable to the Award. The Agreement shall also provide for
the timing of the payment.
(b) Following the conclusion or acceleration of each
Performance Cycle, the Committee shall determine the extent to
which (i) performance targets have been attained, (ii) any
other terms and conditions with respect to an Award relating
to the Performance Cycle have been satisfied and (iii) payment
is due with respect to an Award of Performance Units.
11.2 ACCELERATION AND ADJUSTMENT. The Agreement may permit
an acceleration of the Performance Cycle and an adjustment of performance
targets and payments with respect to some or all of the Performance Units
awarded to a Participant, upon the occurrence of certain events, which may, but
need not include, without limitation, a Fundamental Change, a recapitalization,
a change in the accounting practices of the Company, a change in the
Participant's title or employment responsibilities, the Participant's death or
retirement or, with respect to payments in Shares with respect to Performance
Units, a reclassification, stock dividend, stock split or stock combination as
provided in Plan Section 16. The Agreement also may provide for a limitation on
the value of an Award of Performance Units that a Participant may receive.
12. EFFECTIVE DATE AND DURATION OF THE PLAN.
12.1 EFFECTIVE DATE. Upon its adoption by the Board, the
Plan shall be submitted for approval by the stockholders of the Company and
shall be effective as of the date of such approval.
12.2 DURATION OF THE PLAN. The Plan shall remain in effect
until all Stock subject to it shall be distributed, all Awards have expired or
lapsed, the Plan is terminated pursuant to Section 15 of the Plan or the tenth
anniversary of the Effective Date (the "Termination Date"); provided, however,
that Awards made before the Termination Date may be exercised, vested or
otherwise effectuated beyond the Termination Date unless limited in the
Agreement or otherwise. No Award of an Incentive Stock Option shall be made more
than 10 years after the Effective Date (or such other limit as may be required
by the Code) if this limitation is necessary to qualify the Option as an
Incentive Stock Option. The date and time of approval by the Committee of the
granting of an Award shall be considered the date and time at which the Award is
made or granted.
13. PLAN DOES NOT AFFECT EMPLOYMENT STATUS.
(a) Status as an eligible Employee shall not be
construed as a commitment that any Award will be made under
the Plan to that eligible Employee or to eligible Employees
generally.
(b) Nothing in the Plan or in any Agreement or
related documents shall confer upon any Employee or
Participant any right to continue in the employment of the
Company or any Affiliate or constitute any contract of
employment or affect any right that the Company or any
Affiliate may have to change such person's compensation, other
benefits, job responsibilities, or title, or to terminate the
employment of such person with or without cause.
14. TAX WITHHOLDING. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person (including a
Successor or a Transferee) an amount sufficient to cover any required
withholding taxes. The Company shall have the right to require a Participant or
other person receiving Shares under the Plan to pay the Company a cash amount
sufficient to cover any required withholding taxes before
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actual receipt of those Shares. In lieu of all or any part of a cash payment
from a person receiving Shares under the Plan, the Committee may permit the
individual to cover all or any part of the required withholdings through a
reduction of the number of Shares delivered or delivery or tender return to the
Company of Shares held by the Participant or other person, in each case valued
in the same manner as used in computing the withholding taxes under the
applicable laws.
15. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN.
(a) The Board may at any time and from time to time
terminate, suspend or modify the Plan. Except as limited in
(b) below, the Committee may at any time alter or amend any or
all Agreements under the Plan to the extent permitted by law.
(b) No termination, suspension, or modification of
the Plan will materially and adversely affect any right
acquired by any Participant or Successor or Transferee under
an Award granted before the date of termination, suspension,
or modification, unless otherwise agreed to by the Participant
in the Agreement or otherwise, or required as a matter of law;
but it will be conclusively presumed that any adjustment for
changes in capitalization provided for in Section 16 of the
Plan does not adversely affect these rights.
16. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Subject to any
required action by the Company's stockholders, appropriate adjustments, so as to
prevent enlargement of rights or inappropriate dilution -- (i) in the aggregate
number and type of Shares available for Awards under the Plan, (ii) in the
limitations on the number of Shares that may be issued to an individual
Participant as an Option or a Stock Appreciation Right in any calendar year or
that may be issued in the form of Restricted Stock or Shares without
restrictions, (iii) in the number and type of Shares and amount of cash subject
to Awards then outstanding, and (iv) in the Option price as to any outstanding
Options -- may be made by the Committee in its sole discretion to give effect to
adjustments made in the number or type of Shares through a Fundamental Change
(subject to Section 17 of the Plan), recapitalization, reclassification, stock
dividend, stock split, stock combination or other relevant change, provided that
fractional Shares shall be rounded to the nearest whole Share.
17. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:
(a) if the Fundamental Change is a merger or
consolidation or statutory share exchange, make appropriate
provision for the protection of the outstanding Options and
Stock Appreciation Rights by the substitution of options,
stock appreciation rights and appropriate voting common stock
of the corporation surviving any merger or consolidation or,
if appropriate, the parent corporation of the Company or such
surviving corporation; or
(b) at least ten days before the occurrence of the
Fundamental Change, declare, and provide written notice to
each holder of an Option or Stock Appreciation Right of the
declaration, that each outstanding Option and Stock
Appreciation Right, whether or not then exercisable, shall be
canceled at the time of, or immediately before the occurrence
of the Fundamental Change in exchange for payment to each
holder of an Option or Stock Appreciation Right, within ten
days after the Fundamental Change, of cash equal to (i) for
each Share covered by the canceled Option, the amount, if any,
by which the Fair Market Value (as defined in this Section)
per Share exceeds the exercise price per Share covered by such
Option or (ii) for each Stock Appreciation Right, the price
determined pursuant to Section 10, except that Fair Market
Value of the Shares as of the date of exercise of the Stock
Appreciation Right, as used in clause (i) of Section 10 of the
Plan, shall be deemed to mean Fair Market Value for each Share
with respect to which the Stock Appreciation Right is
calculated determined in the manner hereinafter referred to in
this Section. At the time of the declaration provided for in
the immediately preceding sentence, each Stock Appreciation
Right and each Option shall immediately become exercisable in
full and each person holding an Option or a Stock Appreciation
Right shall have the right, during the period preceding the
time of cancellation of the Option or Stock Appreciation
Right, to exercise the Option as to all or any part of the
Shares covered thereby or the Stock Appreciation Right in
whole or in part, as the case may be. In the event of a
declaration pursuant to this Section 17(b), each outstanding
Option and Stock Appreciation Right granted pursuant to the
Plan that shall not have been exercised before the Fundamental
Change shall be canceled at the time of, or immediately
before, the Fundamental
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Change, as provided in the declaration. Notwithstanding the
foregoing, no person holding an Option or a Stock Appreciation
Right shall be entitled to the payment provided for in this
Section 17(b) if such Option or Stock Appreciation Right shall
have terminated, expired or been cancelled. For purposes of
this Section only, "Fair Market Value" per Share means the
cash plus the fair market value, as determined in good faith
by the Committee, of the non-cash consideration to be received
per Share by the stockholders of the Company upon the
occurrence of the Fundamental Change.
18. FORFEITURES. An Agreement may provide that if a Participant has
received or been entitled to payment of cash, delivery of Shares, or a
combination thereof pursuant to an Award within six months before the
Participant's termination of employment with the Company and its Affiliates, the
Committee, in its sole discretion, may require the Participant to return or
forfeit the cash and/or Shares received with respect to the Award (or its
economic value as of (i) the date of the exercise of Options or Stock
Appreciation Rights, (ii) the date of, and immediately following, the lapse of
restrictions on Restricted Stock or the receipt of Shares without restrictions
or (iii) the date on which the right of the Participant to payment with respect
to Performance Units vests, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than 15 months after the Participant's
termination of employment with the Company and its Affiliates. The occurrences
may, but need not, include competition with the Company or any Affiliate,
unauthorized disclosure of material proprietary information of the Company or
any Affiliate, a violation of applicable business ethics policies of the Company
or any Affiliate or any other occurrence specified in the Agreement within the
period or periods of time specified in the Agreement.
19. CORPORATE MERGERS, ACQUISITIONS, ETC. The Committee may also grant
Options, Stock Appreciation Rights, Restricted Stock or other Awards under the
Plan in substitution for, or in connection with the assumption of, existing
options, stock appreciation rights, restricted stock or other awards granted,
awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving
a corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a Subsidiary is a party.
The terms and conditions of the substitute Awards may vary from the terms and
conditions set forth in the Plan to the extent as the Board at the time of the
grant may deem appropriate to conform, in whole or in part, to the provisions of
the awards in substitution for which they are granted.
20. UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Neither the Company, its Affiliates, the Committee, nor
the Board of Directors shall be deemed to be a trustee of any amounts to be paid
under the Plan nor shall anything contained in the Plan or any action taken
pursuant to its provisions create or be construed to create a fiduciary
relationship between the Company and/or its Affiliates, and a Participant or
Successor or Transferee. To the extent any person acquires a right to receive an
Award under the Plan, this right shall be no greater than the right of an
unsecured general creditor of the Company.
21. LIMITS OF LIABILITY.
(a) Any liability of the Company to any Participant
with respect to an Award shall be based solely upon
contractual obligations created by the Plan and the Award
Agreement.
(b) Except as may be required by law, neither the
Company nor any member of the Board of Directors or of the
Committee, nor any other person participating in any
determination of any question under the Plan, or in the
interpretation, administration or application of the Plan,
shall have any liability to any party for any action taken, or
not taken, in good faith under the Plan.
22. COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS. No certificate for
Shares distributable pursuant to the Plan shall be issued and delivered unless
the issuance of the certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of applicable
state securities laws, the Securities Act of 1933, as amended and in effect from
time to time or any successor statute, the Exchange Act and the requirements of
the exchanges on which the Company's Shares may, at the time, be listed.
23. DEFERRALS AND SETTLEMENTS. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.
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24. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay laws of any country
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or unless the Committee expressly
determines that an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.
25. BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate or
to the person who acquires the right to succeed to the Award by bequest or
inheritance.
26. REQUIREMENTS OF LAW.
(a) To the extent that federal laws do not otherwise
control, the Plan and all determinations made and actions
taken pursuant to the Plan shall be governed by the laws of
the State of Iowa without regard to its conflicts-of-law
principles and shall be construed accordingly.
(b) If any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or
invalidity shall not effect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.
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PROXY
SMITHWAY MOTOR XPRESS CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 13, 2005
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned holder(s) of Class A and/or Class B Common Stock
(individually or together referred to as "Common Stock") of Smithway Motor
Xpress Corp., a Nevada corporation (the "Company"), hereby appoint(s) G. Larry
Owens and Douglas C. Sandvig, and each or either of them, attorneys and proxies
of the undersigned, with power of substitution, to vote all of the Common Stock
that the undersigned are entitled to vote at the annual meeting of Stockholders
of the Company to be held at the Company's Headquarters, 2031 Quail Avenue, Fort
Dodge, Iowa 50501, on Friday, May 13, 2005, 10:00 a.m. Central Time, and at any
adjournment thereof, as follows:
1. Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
below
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a
line through the individual's name below.
Terry G. Christenberry
Labh S. Hira
Herbert D. Ihle
G. Larry Owens
Marlys L. Smith
2. Approval of the Smithway Motor Xpress Corp. 2005 Omnibus Stock Plan that
authorizes the issuance under the plan of up to 500,000 shares of our Class A
Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the proposal to ratify the selection of KPMG LLP as independent
auditors of the Company for the fiscal year ending December 31, 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the attorneys and proxies are authorized to vote upon
such other matters as may properly come before the meeting or any adjournment
thereof.
[ ] GRANT AUTHORITY to vote [ ] WITHHOLD AUTHORITY to vote
A vote FOR Proposals 1, 2 and 3, and granting the proxies discretionary
authority, is recommended by the board of directors of the Company. When
properly executed, this proxy will be voted in the manner directed by the
undersigned stockholder(s). If no direction is given, the proxy will be voted
"FOR" Proposals 1, 2 and 3, and, at the discretion of the proxy holder, upon
such other matters as may properly come before the meeting or any adjournment
thereof. Proxies marked "Abstain" are counted only for purposes of determining
whether a quorum is present at the meeting.
Dated
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Signature(s)
Please date and sign exactly as name(s)
appear(s) on your Common Stock
certificate(s). If shares are held
jointly, each owner should sign this
proxy. If acting as an executor,
administrator, trustee, custodian,
guardian, etc., you should so indicate
in signing. If the stockholder is a
corporation or other business entity,
the proxy should indicate the full legal
name of the corporation or entity, and
be signed by a duly authorized officer
(indicating his or her position).