SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities 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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
SWIFT TRANSPORTATION CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
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):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with 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:
------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------
3) Filing Party:
----------------------------------------------------
4) Date Filed:
------------------------------------------------------
SWIFT TRANSPORTATION CO., INC.
2200 SOUTH 75TH AVENUE
PHOENIX, ARIZONA 85043
---------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 2002
---------------------------------
To Our Stockholders:
The 2002 Annual Meeting of Stockholders of Swift Transportation Co., Inc.
will be held at our headquarters at 2200 South 75th Avenue, Phoenix, Arizona
85043, on June 6, 2002, beginning at 10:00 a.m. local time. At the Annual
Meeting, stockholders will act on the following matters:
* Election of two Class III directors, each for a term of three years;
* Amendment of Swift's Articles of Incorporation to increase the number
of shares of Common Stock authorized for issuance from 150,000,000 to
200,000,000;
* Amendment of the 1999 Stock Option Plan to authorize an additional
4,000,000 shares of Common Stock for issuance thereunder; and
* Amendment of the 1999 Stock Option Plan to (1) permit the grant of
options to Jerry Moyes, our Chairman, President, and Chief Executive
Officer and (2) increase the maximum number of shares underlying
options that may be granted to any one individual in a fiscal year
from 100,000 to 1,000,000; and
* Any other matters that properly come before the Annual Meeting or any
adjournment or postponement thereof. Management is presently aware of
no other business to come before the Annual Meeting.
Each outstanding share of Swift Common Stock entitles the holder of record
at the close of business on April 10, 2002, to receive notice of and to vote at
the Annual Meeting or any adjournment or postponement thereof. Shares of Common
Stock can be voted at the Annual Meeting only if the holder is present in person
or by valid proxy. We have enclosed a copy of our 2001 Annual Report to
Stockholders, which includes certified financial statements, and our Proxy
Statement. Management cordially invites you to attend the Annual Meeting.
- --------------------------------------------------------------------------------
IF YOU PLAN TO ATTEND:
PLEASE NOTE THAT SPACE LIMITATIONS MAKE IT NECESSARY TO LIMIT ATTENDANCE TO
STOCKHOLDERS AND ONE GUEST. REGISTRATION AND SEATING WILL BEGIN AT 9:00 A.M.
COMPLIMENTARY PARKING IS AVAILABLE AT OUR OFFICES. STOCKHOLDERS HOLDING STOCK IN
BROKERAGE ACCOUNTS ("STREET NAME" HOLDERS) WILL NEED TO BRING A COPY OF A
BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS OF THE RECORD DATE. CAMERAS,
RECORDING DEVICES AND OTHER ELECTRONIC DEVICES WILL NOT BE PERMITTED AT THE
MEETING.
- --------------------------------------------------------------------------------
By Order of the Board of Directors
Jerry Moyes
Phoenix, Arizona CHAIRMAN OF THE BOARD, PRESIDENT AND
April 29, 2002 CHIEF EXECUTIVE OFFICER
IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOUR VOTE IS IMPORTANT, SO
PLEASE ACT TODAY!
TABLE OF CONTENTS
Page
ABOUT THE MEETING..............................................................1
What is the purpose of the annual meeting?................................1
Who is entitled to vote?..................................................1
Who can attend the meeting?...............................................1
What constitutes a quorum?................................................1
How do I vote?............................................................2
What if I vote and then change my mind?...................................2
What are the Board's recommendations?.....................................2
What vote is required to approve each item?...............................2
Who will bear the costs of this proxy solicitation?......................3
BOARD OF DIRECTORS.............................................................4
What is the makeup of the Board of Directors?.............................4
Are there any directors who are not standing for re-election?.............4
Election of Class III Directors (Proposal No. 1).....................4
Continuing Directors - Class II......................................5
Continuing Directors - Class I.......................................5
How are non-employee directors compensated?...............................6
Are employees of Swift Transportation paid additional compensation
for service as a director?..............................................6
How often did the Board meet during fiscal 2001?..........................6
What committees has the Board established?................................7
Compensation Committee....................................................7
Audit Committee...........................................................7
Report of the Audit Committee.............................................7
EXECUTIVE OFFICERS OF SWIFT....................................................9
EXECUTIVE COMPENSATION........................................................10
Summary Compensation Table...............................................10
Options/SAR Grants in Last Fiscal Year...................................11
Aggregated Option/SAR Exercises In Last Fiscal Year
and Fiscal Year-End Option/SAR Values..................................12
Employment and Change of Control Agreements..............................13
Report of the Compensation Committee on Executive Compensation...........14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION...................17
STOCK PRICE PERFORMANCE GRAPH.................................................18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.......................18
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT...................19
CERTAIN TRANSACTIONS AND RELATIONSHIPS........................................21
AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES (Proposal No. 2)..........................................22
AMENDMENT TO 1999 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER (Proposal No. 3).........................23
AMENDMENTS TO 1999 STOCK OPTION PLAN TO PERMIT THE GRANT OF OPTIONS TO
JERRY MOYES AND INCREASE THE LIMITATION ON MAXIMUM ANNUAL GRANTS TO
A SINGLE INDIVIDUAL (Proposal No. 4)........................................26
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS.....................................27
STOCKHOLDER PROPOSALS AND NOMINATIONS.........................................27
OTHER MATTERS.................................................................28
ANNEX A: FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION..............A-1
ANNEX B: SWIFT TRANSPORTATION CO., INC. 1999 STOCK OPTION PLAN...............B-1
-i-
SWIFT TRANSPORTATION CO., INC.
2200 SOUTH 75TH AVENUE
PHOENIX, ARIZONA 85043
-------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement contains information related to the 2002 Annual
Meeting of Stockholders (the "Annual Meeting") of Swift Transportation Co., Inc.
("Swift" or the "Company") to be held on June 6, 2002, at 10:00 a.m. local time,
at our headquarters located at 2200 South 75th Avenue, Phoenix, Arizona 85043,
or at such other time and place to which the Annual Meeting may be adjourned or
postponed. THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF SWIFT.
The proxy materials relating to the Annual Meeting are first being mailed to
stockholders entitled to vote at the meeting on or about May 3, 2002.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Annual Meeting, stockholders will act upon the matters outlined in
the accompanying Notice of Annual Meeting of Stockholders. In addition,
management will report on the performance of Swift during fiscal 2001 and
respond to questions from stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on April 10, 2002 (the
"Record Date"), are entitled to receive notice of the Annual Meeting and to vote
the shares of Common Stock that they held on that date at the Annual Meeting, or
any postponement or adjournment of the Annual Meeting. Each outstanding share
entitles its holder to cast one vote on each matter to be voted upon.
WHO CAN ATTEND THE ANNUAL MEETING?
All stockholders as of the close of business on the Record Date, or their
duly appointed proxies, may attend the Annual Meeting, and each may be
accompanied by one guest. Registration and seating will begin at 9:00 a.m.
Cameras, recording devices and other electronic devices will not be permitted at
the Annual Meeting.
Please note that if you hold your shares in "street name" (that is, through
a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the Record Date and check in at
the registration desk at the Annual Meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the Record Date will
constitute a quorum, permitting Swift to conduct its business at the Annual
Meeting. As of the Record Date, 86,385,870 shares of Common Stock were
outstanding. Proxies received but marked as abstentions and broker non-votes
will be included in the calculation of the number of shares considered to be
present at the Annual Meeting.
HOW DO I VOTE?
You can vote on matters to come before the Annual Meeting in two ways:
1. You can attend the Annual Meeting and cast your vote in person; or
2. You can vote by completing, dating and signing the enclosed proxy card
and returning it in the enclosed postage-paid envelope. If you do so,
you will authorize the individuals named on the proxy card, referred
to as the proxies, to vote your shares according to your instructions
or, if you provide no instructions, according to the recommendation of
the Board of Directors.
WHAT IF I VOTE AND THEN CHANGE MY MIND?
You may revoke your proxy at any time before it is exercised by:
* sending written notice of revocation to the Secretary of Swift at P.O.
Box 29243, Phoenix, Arizona, 85038-9243; or
* sending in another duly executed proxy bearing a later date; or
* attending the Annual Meeting and casting your vote in person.
Your last vote will be the vote that is counted.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
The Board recommends that you vote FOR election of the nominated slate of
directors (see page 4), FOR approval of the proposed amendment to Swift's
Articles of Incorporation to increase the number of authorized shares of Common
Stock (see page 22), FOR approval of the proposed amendment to the 1999 Stock
Option Plan to increase the number of shares of Common Stock authorized for
issuance thereunder (see page 23) and FOR approval of the proposed amendments to
the 1999 Stock Option Plan to permit the grant of options to Jerry Moyes and
increase the limitation on maximum annual grants to a single individual (see
page 26). Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
Board's recommendation. With respect to any other matter that properly comes
before the meeting, the proxy holders will vote as recommended by the Board of
Directors or, if no recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The two nominees who receive the most votes will be
elected to the Board of Directors. A properly executed proxy marked "WITHHOLD
AUTHORITY" with respect to the election of one or more directors will not be
voted with respect to the director or directors indicated, although it will be
counted for purposes of determining whether there is a quorum. A broker
"non-vote" (DISCUSSED BELOW) will also have no effect on the outcome since only
a plurality of votes actually cast is required to elect a director.
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION. The proposed amendment to
the Articles of Incorporation to increase the number of shares of Common Stock
authorized for issuance requires the affirmative vote of the holders of a
majority of the issued and outstanding shares of Common Stock entitled to vote
at the Annual Meeting. A properly executed proxy marked "ABSTAIN" with respect
to the proposed amendment to the Articles of Incorporation will not be voted.
Accordingly, an abstention will have the effect of a negative vote. Similarly, a
broker non-vote (DISCUSSED BELOW) will have the same effect as a vote against
the proposed amendment to the Articles of Incorporation.
2
PROPOSED AMENDMENTS TO THE 1999 STOCK OPTION PLAN AND OTHER ITEMS. For each
other item, including each of the two proposals to amend the 1999 Stock Option
Plan, the affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the Annual Meeting and entitled to vote
thereat will be required for approval; provided, however, that if the shares of
stock so represented are less than the number required to constitute a quorum,
the affirmative vote must be such as would constitute a majority if a quorum
were present. A properly executed proxy marked "ABSTAIN" or a "broker non-vote"
(DISCUSSED BELOW) will not be counted as a vote "for" or "against" any such
item.
EFFECT OF BROKER NON-VOTES. If your shares are held in "street name"
through a broker or other nominee, your broker or nominee may not be permitted
to exercise voting discretion under certain circumstances. Brokers have the
authority under Nasdaq rules to vote customers' unvoted shares on certain
"routine" matters, including the election of directors. When a broker votes its
customers' unvoted shares, the shares are counted for purposes of establishing a
quorum. At the Annual Meeting, these shares will be counted as voted by the
broker in the election of directors, but will not be counted as voted for any
"non-routine" matters to be voted on.
WHO WILL BEAR THE COSTS OF THIS PROXY SOLICITATION?
We will bear the cost of solicitation of proxies. This includes the charges
and expenses of brokerage firms and others for forwarding solicitation material
to beneficial owners of our outstanding Common Stock. We may solicit proxies by
mail, personal interview, telephone or telegraph.
3
BOARD OF DIRECTORS
THIS SECTION GIVES BIOGRAPHICAL INFORMATION ABOUT OUR DIRECTORS AND
DESCRIBES THEIR MEMBERSHIP ON BOARD COMMITTEES, THEIR ATTENDANCE AT MEETINGS AND
THEIR COMPENSATION.
WHAT IS THE MAKEUP OF THE BOARD OF DIRECTORS?
The Board presently consists of eight members. The directors are divided
into three classes, with each class serving for a three-year period. The
stockholders elect approximately one-third of the Board of Directors each year.
There are currently three Class I directors, three Class II directors, and two
Class III directors.
ARE THERE ANY DIRECTORS WHO ARE NOT STANDING FOR RE-ELECTION?
No.
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
FOR TERM EXPIRING AT 2005 ANNUAL MEETING
CLASS III
The Board of Directors has nominated William F. Riley III and Lou A.
Edwards for election to Class III at the Annual Meeting. Each nominee will be
elected to serve until the 2005 Annual Meeting of Stockholders or until his
successor shall have been duly elected and qualified or his resignation or
removal, whichever first occurs.
Each of the nominees has consented to serve a three-year term. If any of
them should become unavailable to serve as a director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for the
substitute nominee designated by the Board.
Nominees standing for election are:
WILLIAM F. RILEY III, 55 DIRECTOR SINCE 1990
WILLIAM F. RILEY III has served as the Senior Executive Vice President of
Swift since January 2000. Mr. Riley has served as Swift's Chief Financial
Officer and Secretary since March 1990, at which time he was named an Executive
Vice President. Mr. Riley also has served as a Director on the Swift Board since
March 1990. In addition, Mr. Riley has acted as a Vice President of Swift
Leasing Co., Inc. and Cooper Motor Lines since May 1986 and April 1988,
respectively. Prior to joining Swift in February 1986, Mr. Riley was employed by
Armour Food Co. from 1978 to January 1986, serving in various transportation and
distributions assignments, principally as Manager of Business Planning of Armour
Food Express, its truckload motor carrier.
LOU A. EDWARDS, 88 DIRECTOR SINCE 1990
LOU A. EDWARDS has served as a Director of Swift since May 1990. Mr.
Edwards is a retired president of a truck dealership and has over 40 years of
experience in the trucking industry. Mr. Edwards also is a member of the board
of directors of Simon Transportation Services Inc., a publicly traded trucking
company providing nationwide, predominantly temperature controlled
transportation services for major shippers. Simon Transportation Services filed
for protection under Chapter 11 of the United States Bankruptcy Code on February
25, 2002.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE
DIRECTOR NOMINEES.
- --------------------------------------------------------------------------------
4
CONTINUING DIRECTORS
FOR TERM EXPIRING AT 2004 ANNUAL MEETING
CLASS II
The following Class II directors were elected at our 2001 Annual Meeting
for terms ending in 2004:
JERRY MOYES, 58 DIRECTOR SINCE 1984
JERRY MOYES has served as the Chairman of the Board, President and Chief
Executive Officer of Swift since 1984. Mr. Moyes joined Swift in 1966 as a Vice
President and served in that capacity until 1984. Mr. Moyes was President of the
Arizona Motor Transport Association from 1987 to 1988. Mr. Moyes also serves as
Chairman of the Board of Simon Transportation Services Inc., a publicly traded
trucking company providing nationwide, predominantly temperature controlled
transportation services for major shippers. Simon Transportation Services filed
for protection under Chapter 11 of the United States Bankruptcy Code on February
25, 2002.
ALPHONSE E. FREI, 63 DIRECTOR SINCE 1990
ALPHONSE E. FREI has served as a Director of Swift since May 1990. Mr. Frei
has served as the Chief Operating Officer of Autom Company, a wholesale and
retail distributor of religious products, since May 1999. Mr. Frei served in
various capacities, including Chief Financial Officer, with America West
Airlines from 1983 to 1994 and served as a director of America West Airlines
from 1986 to September 1993. Mr. Frei has served in various executive capacities
or as a consultant to a number of business organizations.
MICHAEL S. STARNES, 57 DIRECTOR SINCE 2001
MICHAEL S. STARNES has served as a Director of Swift since June 2001. Since
1978, Mr. Starnes has served as a director and the President and Chief Executive
Officer of our subsidiary M.S. Carriers, Inc., a major truckload carrier we
acquired through a merger in June 2001. Mr. Starnes also has served as a
director of RFS Hotel Investors, Inc. since 1992, Mid-America Apartment
Communities since 1996 and Union Planters Corporation since 2001.
CONTINUING DIRECTORS
FOR TERM EXPIRING AT 2003 ANNUAL MEETING
CLASS I
The following Class I directors were elected at our 2000 Annual Meeting for
terms ending in 2003 (with the exception of Edward A. Labry, III, who was
elected at our 2001 Annual Meeting for a term ending in 2003):
RODNEY K. SARTOR, 47 DIRECTOR SINCE 1990
RODNEY K. SARTOR has served as an Executive Vice President and a Director
of Swift since May 1990. Mr. Sartor joined Swift in May 1979. He served as
Director of Operations from May 1982 until August 1988 and as a Regional Vice
President from August 1988 until May 1990.
5
EARL H. SCUDDER, JR., 59 DIRECTOR SINCE 1993
EARL H. SCUDDER, JR., has served as a Director of Swift since May 1993. Mr.
Scudder has been President of Scudder Law Firm, P.C., L.L.O. in Lincoln,
Nebraska since February 1990, and has engaged in the private practice of law
since 1966. Mr. Scudder served as a director of Heartland Express, Inc., a
publicly traded trucking company, from 1986 until 1996. In addition, Mr. Scudder
served as a director of Simon Transportation Services Inc., a publicly traded
trucking company providing nationwide, predominantly temperature controlled
transportation services for major shippers, from 2000 until 2001. Simon
Transportation Services filed for protection under Chapter 11 of the United
States Bankruptcy Code on February 25, 2002.
EDWARD A. LABRY, III, 39 DIRECTOR SINCE 2001
EDWARD A. LABRY, III, has served as a Director of Swift since June 2001.
Mr. Labry is the President and a member of the board of directors of Concord
EFS, Inc., positions he has held since 1994 and 1993, respectively. He has
served on the board of directors of M.S. Carriers since September 1999.
HOW ARE NON-EMPLOYEE DIRECTORS COMPENSATED?
Swift directors who are employees do not receive additional compensation
for their service as directors. In 2001, non-employee directors were paid an
annual retainer of $3,000 for their service as directors and received $500 for
attending each board meeting and each committee meeting that was not held on the
same date as a board meeting. Beginning in 2002, non-employee directors will be
paid an annual retainer of $20,000 and receive $1,500 for each board meeting and
committee meeting that they attend. Under our Non-Employee Director Stock Option
Plan, each non-employee director also receives an option to purchase 5,000
shares of Common Stock every fifth year. These option grants vest and become
exercisable over four years beginning on the date of grant, permitting the
holder to purchase shares at 85% of their fair market value on the date of
grant, which was $11.10 in the case of options granted to Mssrs. Edwards, Frei
and Scudder in 2000 and $16.37 in the case of options granted to Mr. Labry in
2001. Unless earlier terminated, forfeited or surrendered pursuant to the plan,
each option granted will expire on the sixth anniversary date of the grant. Both
employee and non-employee directors are reimbursed for reasonable travel and
related expenses incurred in connection with their service on the board and
board committees.
ARE EMPLOYEES OF SWIFT TRANSPORTATION PAID ADDITIONAL COMPENSATION FOR SERVICE
AS A DIRECTOR?
No. We do, however, reimburse them for travel and other related expenses.
HOW OFTEN DID THE BOARD MEET DURING FISCAL 2001?
The Board of Directors held 4 meetings during fiscal 2001. Each of Swift's
Directors attended at least 75% of the Board and committee meetings to which the
Director was assigned.
6
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has standing Compensation and Audit Committees. We
do not maintain a standing nominating committee or other committee performing
similar functions. The function of nominating directors is carried out by the
entire Board of Directors. Our Bylaws, however, provide a procedure for you to
recommend candidates for director at an annual meeting. For more information,
see page 27 under "Stockholder Proposals and Nominations."
NAME COMPENSATION COMMITTEE AUDIT COMMITTEE
---- ---------------------- ---------------
Jerry Moyes X
Alphonse E. Frei X X
Lou A. Edwards X X
Earl H. Scudder, Jr. X
Edward A. Labry, III X
COMPENSATION COMMITTEE 1 MEETING IN FISCAL YEAR 2001
The Compensation Committee reviews and recommends compensation of executive
officers and administers Swift's stock option plans.
AUDIT COMMITTEE 2 MEETINGS IN FISCAL YEAR 2001
The audit committee makes recommendations regarding the selection of
Swift's independent auditors and receives and accepts the independent auditor's
report. In addition, the audit committee oversees the audit and non-audit
activities of the independent accountants. The audit committee meets with the
independent auditors to ensure that the scope of their activities has not been
restricted and that adequate responses to their recommendations have been
received. In addition, the audit committee may be called upon to review certain
proposals for major transactions.
REPORT OF THE AUDIT COMMITTEE
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY
OTHER FILING BY SWIFT UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT SWIFT SPECIFICALLY INCORPORATES THIS
REPORT.
Effective January 31, 2000, the SEC adopted new rules and amendments to
current rules relating to the disclosure of information about companies' audit
committees. In large part, the new rules are based on recommendations made by
the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit
Committees. The new rules require that, for all votes of stockholders occurring
after December 15, 2000, the proxy statement must contain a report of the audit
committee addressing several issues identified in the rules. In addition, the
SEC recommends that audit committees adopt written charters. Any such charter
must be included as an attachment to the proxy statement at least once every
three years. Our Audit Committee adopted a charter on June 7, 2000, which was
included as Annex E to the joint proxy statement/prospectus filed by Swift on
May 11, 2001 pursuant to Rule 424(b)(3) under the Securities Act of 1933, as
amended.
7
Our audit committee currently consists of three directors, each of whom are
independent directors. Consistent with Nasdaq's independent director and audit
committee listing standards, as amended on December 14, 1999, a director will
not be considered "independent" if, among other things he has:
* been employed by the corporation or its affiliates in the current or
past three years;
* accepted any compensation from the corporation or its affiliates in
excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non-discretionary compensation);
* an immediate family member who is, or has been in the past three
years, employed by the corporation or its affiliates as an executive
officer;
* been a partner, controlling stockholder or an executive officer of any
for-profit business to which the corporation made, or from which it
received, payments (other than those which arise solely from
investments in the corporation's securities) that exceed five percent
of the organization's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years; or
* been employed as an executive of another entity when any of the
company's executives serve on that entity's compensation committee.
The audit committee has reviewed and discussed the audited financial
statements for fiscal year 2001 with management and with the independent
auditors. Specifically, the audit committee has discussed with the independent
auditors the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Section 380), which includes, among other
things:
* methods used to account for significant unusual transactions;
* the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
* 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
* 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 our independent accountants, KPMG LLP, required by Independence Standards
Board Standard No. 1, Independence Discussion with Audit Committees.
Additionally, the audit committee has discussed with KPMG the issue of its
independence as it relates to us.
Based on its review of the audited financial statements and the various
discussions noted above, the audit committee recommended to Swift's board of
directors that the audited financial statements be included in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2001.
Alphonse E. Frei
Lou A. Edwards
Edward A. Labry, III
8
EXECUTIVE OFFICERS OF SWIFT
The table below sets forth, as of March 31, 2002, certain information
concerning our executive officers.
NAME AGE POSITION
- ---- --- --------
Jerry Moyes 58 President and Chief Executive Officer--Swift
Transportation Co., Inc.
William F. Riley III 55 Senior Executive Vice President, Chief
Financial Officer and Secretary--Swift
Transportation Co., Inc.
Rodney K. Sartor 47 Executive Vice President--Swift
Transportation Co., Inc.
Patrick J. Farley 57 Executive Vice President--Swift
TransportationCo., Inc.
Kevin H. Jensen 47 Executive Vice President--Swift
Transportation Co., Inc.
Michael S. Starnes 57 President and Chief Executive Officer--M.S.
Carriers, Inc.
M. J. Barrow 57 Senior Vice President of Finance and
Administration, Chief Financial Officer,
Secretary and Treasurer --M.S. Carriers, Inc.
James W. Welch 58 Senior Vice President of Marketing--M.S.
Carriers, Inc.
Except for the employment agreements Swift entered with Mssrs. Starnes,
Barrow and Welch in connection with its merger with M.S. Carriers, Swift does
not have fixed term employment contracts with its executive officers. The terms
of these employment agreements are summarized below under "Employment and
Termination Agreements."
PATRICK J. FARLEY became an Executive Vice President of Swift and was named
as one of its executive officers in May 1997. Mr. Farley joined Swift in October
1989 and served as Vice President of Western Sales prior to his promotion to
Executive Vice President in May 1997.
KEVIN H. JENSEN has served as an Executive Vice President of Swift since
December 1994, and was named an executive officer of Swift in October 1996. Mr.
Jensen joined Swift in December 1986 and served the Company in various
capacities, including Director of Operations - Eastern Division and Vice
President - Eastern Division, prior to his promotion to Executive Vice President
in December 1994.
M. J. BARROW has served as the Senior Vice President of Finance and
Administration of M.S. Carriers, Inc. since May 1989. Mr. Barrow joined M.S.
Carriers in 1982 as its Treasurer and Controller and was shortly thereafter
named Vice President of Finance. In February 1986, Mr. Barrow was appointed to
the positions of Secretary and Chief Financial Officer of M.S. Carriers. Mr.
Barrow has served as a director of M.S. Carriers since 1982.
JAMES W. WELCH has served as the Senior Vice President of Marketing of M.S.
Carriers since May 1989. Mr. Welch joined M.S. Carriers as a Vice President of
Sales in 1982 and served in that capacity until his promotion to Senior Vice
President of Marketing in May 1989. Mr. Welch has served as a director of M.S.
Carriers since 1982.
For biographical information regarding Mssrs. Moyes, Riley, Sartor, and
Starnes, see "Board of Directors" above.
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to Swift during the three
fiscal years ended December 31, 2001, of those persons who were, at December 31,
2001, (i) our Chief Executive Officer and (ii) our four other most highly
compensated executive officers (collectively, the "Named Executive Officers").
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------- ------------------------ ----------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) SARS PAYOUTS($) ($)(1)
- ------------------ ---- --------- -------- --------------- ----------- ---------- ---------- ------------
JERRY MOYES ............. 2001 $400,000 $261,532 $153,845
Chairman of the Board of 2000 $400,000 $261,532 $154,377
Directors, President and 1999 $270,371 $391,161 $164,231
Chief Executive Officer
WILLIAM F. RILEY III ... 2001 $250,000 $275,000 $ 14,210
Chief Financial Officer 2000 $250,000 $275,000 $ 14,060
and Senior Executive 1999 $162,225 $362,775 $ 23,280
Vice-President
RODNEY K. SARTOR ........ 2001 $200,000 $150,000 $ 10,025
Executive Vice-President 2000 $200,000 $150,000 $ 10,025
1999 $162,225 $187,775 $ 19,525
KEVIN H. JENSEN ......... 2001 $200,000 $150,000 $ 7,000
Executive Vice President 2000 $200,000 $150,000 $ 7,000
1999 $162,225 $187,775 $ 16,500
PATRICK J. FARLEY ....... 2001 $200,000 $150,000 $ 7,000
Executive Vice President 2000 $200,000 $150,000 $ 7,000
1999 $162,225 $187,775 $ 16,500
- ----------
(1) "All Other Compensation" for each of the Named Officers includes Swift's
contributions in the amount of $7,000 for 2001, $7,000 for 2000, and
$16,500 for 1999, pursuant to the Swift Transportation Co., Inc. Retirement
Plan, a 401(k) profit sharing plan (the "401(k) Plan"). The balance of
compensation included in "All Other Compensation" for Mr. Moyes during each
of the identified periods represents Swift payments of premiums under two
term life insurance policies with a combined face amount of $20 million for
the benefit of Mr. Moyes and his spouse. The aggregate annual premiums paid
by Swift under these polices were $146,845 $147,377 and $147,731 in 2001,
2000 and 1999, respectively. Swift's purpose in procuring and maintaining
these policies is to ensure that, in the event of the Moyes' deaths, their
estate would be able to satisfy estate taxes without having to sell a large
block of Swift Common Stock, which might adversely affect the market for
the Common Stock. The balance of compensation included in "All Other
Compensation" for Mssrs. Riley and Sartor during each of the identified
periods represents Swift payments of term life and disability insurance
premiums on behalf of Mssrs. Riley and Sartor. The amount of such insurance
premiums paid on behalf of Mr. Riley during 2001, 2000 and 1999 was $7,210,
$7,060, and $6,780, respectively. The amount of such insurance premiums
paid on behalf of Mr. Sartor during each of 2001, 2000 and 1999 was $3,025.
10
Swift does not pay such premiums for Mr. Jensen or Mr. Farley. In addition
to the amounts in the Summary Compensation Table above, Swift made
contingent deposits of $608,864 in 2001 and $507,387 in 2000 to an
investment account on behalf of Mr. Riley pursuant to a Nonqualified
Deferred Compensation Agreement.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
NONE
11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The table below sets forth information with respect to the exercise of
stock options during the fiscal year ended December 31, 2001, by the Named
Executive Officers. Other than Swift's 401(k) Plan and Mr. Riley's Deferred
Compensation Agreement, Swift does not have a long-term incentive plan or a
defined benefit or actuarial plan and has never issued any stock appreciation
rights. The number of options and the option exercise price reflect:
* a 3-for-2 stock split treated as a dividend, effected on November 18,
1993, of one share of Common Stock for every two shares of Common
Stock outstanding;
* a 2-for-1 stock split treated as a dividend of one share of Common
Stock for each share outstanding effected on November 18, 1994;
* a 3-for-2 stock split treated as a dividend, effected on March 12,
1998, of one share of Common Stock for every two shares of Common
Stock outstanding; and
* a 3-for-2 stock split treated as a dividend, effected on April 10,
1999, of one share of Common Stock for every two shares of Common
Stock outstanding.
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END ($)
EXERCISE VALUE REALIZED ----------------------------- ---------------------------------
NAME (#)(1) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE(3)
- ---- ------ -------- ----------- ------------- -------------- ----------------
Jerry Moyes -- -- -- -- -- --
President & Chief Executive
Officer(4)
William F. Riley III -- -- 75,000 37,500 $862,500 $ 431,250
Executive Vice President &
Chief Financial Officer(5)
Rodney K. Sartor -- -- -- 100,000 -- $1,041,000
Executive Vice President(6)
Kevin H. Jensen -- -- 36,000 283,000 $645,480 $3,220,170
Executive Vice President(7)
Patrick J. Farley 40,500 $629,670 3,600 150,400 $ 51,579 $1,609,769
Executive Vice President(8)
- ----------
(1) Represents shares of Common Stock acquired pursuant to exercise of options
under Swift's 1990 Stock Option Plan. The exercise price for such shares
was $1.54.
(2) Based on the $17.09 last reported sale price of Swift Common Stock on April
19, 2001.
(3) Based on the $21.51 last reported sales price of Swift Common Stock on
December 31, 2001.
(4) Mr. Moyes has not been awarded any stock options and is not eligible to
participate in Swift's 1999 Stock Option Plan or Employee Stock Purchase
Plan. See "Compensation Committee Report on Executive Compensation" below.
At the Annual Meeting, we are seeking stockholder approval of a proposal to
permit the grant of options to Mr. Moyes under the 1999 Stock Option Plan.
See "Amendments To 1999 Stock Option Plan To Permit The Grant Of Options to
Jerry Moyes and Increase the Limitation on Maximum Annual Grants to a
Single Individual (Proposal No. 4)."
(5) In 1997 Mr. Riley was granted options to purchase 112,500 shares at $10.01
per share. One-third of the shares underlying such options first became
exercisable in April 2000. Thereafter, one-third of the options become
exercisable in each successive year. These options will terminate in April
2007.
12
(6) In 2000, Mr. Sartor was granted options to purchase 100,000 shares at
$11.10 per share. Beginning June 2003, 50,000 options begin vesting at a
rate of one-third per year. The remaining 50,000 options begin vesting on
June 7, 2005 at a rate of one-fifth per year. These options will terminate
in June 2010.
(7) Mr. Jensen was granted options in 1992, 1994, 1997, and 1998 covering
67,500, 45,000, 90,000, and 75,000 shares of Swift's Common Stock,
respectively. The exercise price for each of Mr. Jensen's options is $3.15,
$4.87, $10.01 (as to 45,000 shares subject to options granted in 1997) and
$10.39 (as to 45,000 shares subject to options granted in 1997), and
$10.02, respectively. One-fifth of each such option grant becomes
exercisable on the fifth anniversary of the grant and one-fifth of each
such grant becomes exercisable in each successive year thereafter. In 2000,
Mr. Jensen was granted options to purchase 100,000 shares at $11.10 per
share. Beginning June 2003, 50,000 options begin vesting at a rate of
one-third per year. The remaining 50,000 options begin vesting on June 7,
2005 at a rate of one-fifth per year. All of Mr. Jensen's options terminate
on the ten year anniversary of the date of grant.
(8) Mr. Farley was granted options in 1991, January 1995, December 1995, April
1997, and July 1997 covering 67,500, 5,625, 3,375, 22,500, and 22,500
shares of Swift's Common Stock, respectively. The respective exercise
prices for such grants were $1.54, $8.12, $5.62, $10.01, and $11.17.
One-fifth of each such option grant becomes exercisable on the fifth
anniversary of the grant and one-fifth of each such grant becomes
exercisable in each successive year thereafter. In 2000, Mr. Farley was
granted options to purchase 100,000 shares at $11.10 per share. Beginning
June 2003, 50,000 options begin vesting at a rate of one-third per year.
The remaining 50,000 options begin vesting on June 7, 2005 at a rate of
one-fifth per year. All of Mr. Farley's options terminate on the ten year
anniversary of the date of grant.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
Swift currently does not have any employment contracts or severance
agreements with any of the Named Executive Officers. Swift has a deferred
compensation agreement with Mr. Riley, the contribution to which is described in
footnote (1) to the Summary Compensation Table. In addition, in connection with
our merger with M.S. Carriers, Inc. in June 2001, we entered into employment
agreements with Michael S. Starnes, M.J. Barrow, and James W. Welch.
Under Mr. Starnes' employment agreement, he will serve as the top executive
officer of our M.S. Carriers subsidiary for a period commencing on June 29, 2001
and ending on June 29, 2004. During his employment term, Mr. Starnes will be
paid an annual base salary of $325,000 and will receive a minimum annual bonus
of $175,000. Pursuant to Mr. Starnes' employment agreement, Swift will pay
premiums under a split dollar life insurance policy until April 7, 2011, when
Mr. Starnes attains the age of 65. A trust established by Mr. Starnes owns this
policy and his beneficiary will be entitled to the benefits, after repaying the
premiums advanced. Mr. Starnes' employment agreement also provides that he will
be entitled to participate in employee benefit plans of Swift that generally
apply to comparable employees of Swift.
The employment agreements for Mssrs. Barrow and Welch each provide for a
five-year term, an annual base salary of $200,000, and a minimum annual bonus of
$150,000. Until termination of employment, Swift will keep in force existing
split dollar life insurance policies on the lives of Messrs. Barrow and Welch
and provide each of them with an additional $1 million term life insurance
policy. In addition, Messrs. Barrow and Welch are entitled to participate in
employee benefit plans of Swift that generally apply to comparable employees of
Swift.
In the event that Swift sells all or substantially all of its assets, or
merges with or into another corporation, stock options outstanding are required
to be assumed or equivalent options are required to be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless Swift's Board of Directors determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the option
holder shall have the right to exercise his or her option, including shares as
13
to which such option would not otherwise be exercisable. If the Board makes
options fully exercisable in lieu of assumption or substitution in the event of
a merger or sale of assets, the Board must notify the option holder that the
option is fully exercisable for a period of thirty (30) days from the date of
such notice (but not later than the expiration of the term of the option) and
the option will terminate upon the expiration of such period.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE DOES NOT CONSTITUTE
SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE
INTO ANY OTHER FILING BY SWIFT UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT SWIFT SPECIFICALLY
INCORPORATES THIS REPORT.
The Compensation Committee has furnished the following report on executive
compensation for fiscal 2001.
SWIFT'S GENERAL PHILOSOPHY ON EXECUTIVE COMPENSATION. Swift's compensation
program for executive officers consists of three key elements:
* a base salary;
* a performance-based annual bonus; and
* long-term incentives in the form of stock option grants.
Certain executives also participate in various other benefit plans, including
medical plans and a 401(k) plan, which are generally available to all employees
of Swift Transportation.
The compensation committee believes that this three-part approach best
serves the interests of Swift and its stockholders. As described more fully
below, each element of Swift's executive compensation program has a somewhat
different purpose.
The three-part approach enables Swift to meet the requirements of the
competitive environment in which it operates, while ensuring that executive
officers are compensated in a way that advances both the short- and long-term
interests of the stockholders. Under this approach, compensation for these
officers was ultimately based upon:
* the compensation committee's assessment of the executive officers'
performance;
* the continuing demand for superior executive talent;
* Swift's overall performance both individually as a company and as
compared to its peers; and
* Swift's future objectives and challenges.
Swift's philosophy is to pay base salaries to executives that reward these
executives for ongoing performance throughout the year and that enable Swift to
attract, motivate and retain highly qualified executives. The annual bonus
program is designed to reward executives for performance and is based primarily
on Swift's financial results. The compensation committee's discretion in
determining the annual bonus of Michael Starnes, M.J. Barrow and James Welch is
somewhat limited in that the employment agreements Swift has entered into with
these executives provide for minimum annual bonuses. Stock option grants give
executives an opportunity to obtain equity in Swift and, because options result
in minimal or no rewards if Swift's stock price does not appreciate but provide
substantial rewards to executives if Swift's stock price appreciates, also
14
provide an incentive for outstanding performance in the long term. The
compensation committee believes that this mix of short- and long-term
compensation components provides a balanced approach that enables Swift to
attract and retain experienced executives, rewards such executives for their
individual and collective contribution to the profitability of Swift, and
ensures that the incentives of Swift's executives are aligned with the best
interests of its stockholders.
The compensation committee's recommendations concerning the specific fiscal
2001 compensation elements for individual executive officers, including the
Chief Executive Officer, were made within this broad framework and in light of
each executive officer's level of responsibility, performance, current salary
and prior-year bonus and other compensation awards. As noted below, the
compensation committee's specific decisions involving fiscal 2001 executive
officer compensation were ultimately based upon the committee's judgment
regarding the individual executive officer's performance, potential future
contributions, and whether each payment or award would provide an appropriate
reward and incentive for such officer to sustain and enhance Swift's long-term
performance. A more detailed breakdown of the compensation committee's decisions
with respect to each of the three key elements of Swift's executive compensation
program follows.
BASE SALARY. In setting base salaries of senior management for 2001,
including the salary of Jerry Moyes, Swift's Chief Executive Officer, the
compensation committee reviewed and considered:
* compensation information disclosed by similar publicly held truckload
motor carriers (all of which carriers are included in the Nasdaq
Trucking and Transportation Stocks Index);
* the financial performance of Swift, as well as the role and
contribution of the particular executive with respect to such
performance; and
* nonfinancial performance related to the individual executive's
contributions.
The compensation committee believes that the annual salaries of Swift's
Chief Executive Officer, Senior Executive Vice President and its Executive Vice
Presidents are at or slightly below median level salaries of executives
performing in similar positions at other publicly held truckload motor carriers
of comparable size. However, the committee believes that, when the base salary
and annual bonus for Swift's executives are aggregated, its compensation package
is competitive with those provided to similarly situated executives in the
truckload motor carrier industry. The committee has taken particular note of
management's success in growing Swift in terms of revenue, balanced against a
reduction in net earnings caused by increased operating costs, primarily
resulting from higher fuel costs impacting the industry generally, and other
factors.
ANNUAL BONUSES. The compensation committee annually considers the award of
bonus compensation to executive officers as additional compensation based upon
individual and Company financial performance. Company financial performance is
measured by review of a variety of factors, including earnings per share,
operating ratios, revenue growth, and size and performance relative to similarly
situated trucking industry competitors. The compensation committee evaluates
individual performance based upon contribution to financial performance goals
and review of other qualitative and quantitative factors. Accordingly, in years
in which Swift's performance goals are exceeded, bonus compensation will tend to
be higher. The compensation committee believes that this policy properly
motivates the executive officers to perform to the greatest extent of their
abilities to generate the highest attainable profits for Swift and to achieve
increased stockholder value. As noted above, the employment agreements Swift
entered into with Michael Starnes, M.J. Barrow and James Welch in connection
with the M.S. Carriers merger provide for minimum annual bonuses.
STOCK OPTIONS. Swift believes that it is important for executives to have
an equity stake in Swift in order to encourage them to focus on long-term
prospects. Toward this end, Swift makes option grants to its executive officers
from time to time pursuant to the Plan. In making option grants to Swift's
15
executive officers, the compensation committee evaluates the individual
officer's past and expected future contributions to Swift's achievement of its
long-term performance goals.
COMPENSATION OF SWIFT'S CHIEF EXECUTIVE OFFICER. The three members of the
compensation committee other than Mr. Moyes evaluate the Chief Executive
Officer's performance and make recommendations regarding the level of his
compensation to the board of directors. The committee has not to date included
stock options as a component of Mr. Moyes' overall compensation. Due primarily
to his significant contributions to Swift and the Company's dependence on his
services, Mr. Moyes' base salary is set significantly above the base salaries
for the other executive officers. The committee believes that Mr. Moyes' total
compensation is appropriate compared to the total compensation paid to CEOs of
comparable publicly held truckload motor carriers, especially in light of
Swift's operating results and the increase in stockholder value over time.
Jerry Moyes
Lou A. Edwards
Alphonse E. Frei
Earl H. Scudder, Jr.
16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Jerry
Moyes, Alphonse E. Frei, Lou A. Edwards and Earl H. Scudder, Jr. Mr. Moyes also
serves as the President and Chief Executive Officer of the Swift.
Interstate Equipment Leasing, Inc., a corporation wholly-owned by Jerry
Moyes, leases tractors to some of Swift's owner operators. In connection with
this program, during 2001 Swift acquired new tractors and sold them to
Interstate Leasing for $27.6 million and recognized fee income of $1.0 million.
During 2001, Swift also sold used revenue equipment to Interstate Leasing
totaling $20,000 and recognized a loss of $1,000. At December 31, 2001, nothing
was owed to Swift for this equipment.
In addition, Interstate Leasing operates as a fleet operator for Swift.
During 2001, Swift paid $26.8 million to Interstate Leasing for purchased
transportation services. At December 31, 2001, $376,000 was owed by Swift for
these transportation services. Also, Swift was paid $3.6 million by Interstate
Leasing and paid $104,000 to Interstate Leasing for various services, including
training. At December 31, 2001, $741,000 was owed to Swift and nothing was owed
by Swift for these services.
Swift Aviation Services, Inc., a corporation wholly-owned by Jerry Moyes,
provides air transportation services to Swift. Such services totaled $860,000
for the year ended December 31, 2001. At December 31, 2001, $60,000 was owed to
Swift Aviation for air transportation services.
Jerry Moyes acquired a significant ownership interest in Central Freight
Lines, Inc. during 1997. Swift provides transportation and other services to
Central Freight Lines and other entities owned by Mr. Moyes and recognized $11.2
million in operating revenue therefrom in 2001. At December 31, 2001, $986,000
was owed to Swift for these services. In addition, Swift paid $492,000 to
Central Freight Lines for facilities rental during the year ended December 31,
2001.
Swift provides transportation, repair and other services to Simon
Transportation Services, Inc., a publicly traded trucking company which is
majority owned by Jerry Moyes. Swift recognized $944,000 in revenues from these
services in 2001. At December 31, 2001, $102,000 was owed to Swift for these
services.
During 2001, Swift incurred fees for legal services to Scudder Law Firm in
the amount of approximately $337,000. Earl H. Scudder, Jr., is the President and
a member of Scudder Law Firm.
All of the foregoing arrangements were approved by the independent members
of the Board of Directors.
17
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the Nasdaq
Stock Market (U.S.) Index and the Nasdaq Trucking and Transportation Stocks
Index from December 31, 1996 to December 31, 2001. The graph assumes that $100
was invested on December 31, 1996, and any dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
SWIFT TRANSPORTATION CORPORATION, THE NASDAQ STOCK INDEX
AND THE NASDAQ TRUCKING AND TRANSPORTATION STOCKS INDEX
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Swift Transportation 100 137.772 178.935 168.757 189.707 205.955
NASDQ Stock Market (US) 100 122.476 172.68 320.894 193.012 153.152
Trucking & Transportation Index 100 128.15 115.792 111.53 101.378 119.991
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 our Common Stock, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than 10% stockholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file. Based solely upon a review of the copies of such forms furnished to
us, or written representations that no Forms 5 were required, we believe that
during our preceding fiscal year all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% beneficial owners
were complied with, except Mssrs. Starnes, Labry, Barrow and Welch did not
timely report their acquisition of Swift Common Stock in connection with the
merger of Swift and M.S. Carriers. Each of Mssrs. Starnes, Labry, Barrow and
Welch reported their acquisition of Swift Common Stock in subsequent filings.
18
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of March 31, 2002, the number and
percentage of outstanding shares of Common Stock beneficially owned by each
person known by us to beneficially own more than 5% of such stock, by each
director and Named Executive Officer of Swift and by all directors and executive
officers of Swift as a group.
Shares
Name and Address of Beneficial Owner(1) Beneficially Owned Percent Owned
- --------------------------------------- ------------------ -------------
Jerry Moyes 19,175,067(2) 22.20%
Ronald G. Moyes 9,018,353(2) 10.44%
William F. Riley III 418,272(3) *
Rodney K. Sartor 28,279 *
Lou A. Edwards 298,625(4) *
Alphonse E. Frei 7,875(5) *
Earl H. Scudder, Jr. 23,950(6) *
Kevin H. Jensen 34,505(7) *
Patrick J. Farley 13,545(8) *
Michael S. Starnes 4,724,560(9) 5.46%
Edward A. Labry, III 18,850(10) *
FMR Corporation 12,779,529 14.79%
Taunus Corporation, DB Alex Brown LLC 4,620,253 5.35%
All Directors and Named
Officers as a group (10 persons) 24,743,528 28.56%
- ----------
* Represents less than 1% of the Company's outstanding Common Stock.
(1) The address of each officer, director and Ronald G. Moyes is 2200 South
75th Avenue, Phoenix, Arizona 85043. The address of FMR Corporation is 82
Devonshire Street, Boston, Massachusetts 02109. The address for the Taunus
Corporation is 31 West 52nd Street, New York, New York and the address for
its subsidiary DB Alex Brown, LLC is 130 Liberty Street, New York, New York
10006. Information with respect to FMR Corporation, the Taunus Corporation
and DB Alex Brown is based upon statements on Schedule 13Gs filed by such
entities with the Securities and Exchange Commission.
(2) The shares beneficially owned by Jerry Moyes are held by him, as follows:
(i) 18,648,817 shares are held as a co-trustee of the Jerry and Vickie
Moyes Family Trust, (ii) 33,750 shares are held by VJM Investments, LLC, a
limited liability company in which Mr. Moyes has controlling interest, and
(iii) 492,500 shares are held by SME Industries, Inc. of which Jerry Moyes
is the majority shareholder. The shares shown for Jerry Moyes do not
include the 9,018,353 shares held by (i) the Moyes Children's Limited
Partnership, the sole general partner of which is Ronald Moyes, who has
19
sole investment and voting power over the limited partnership and (ii)
seven irrevocable trusts for the benefit of six children of Jerry and
Vickie Moyes and by an irrevocable trust for the benefit of Jerry and
Vickie Moyes and six of their children, the sole trustee of each of which
is Ronald Moyes, who has sole investment and voting power over the shares
held by the trusts. The Moyes Children's Limited Partnership has pledged
1,300,000 shares to an unaffiliated third party under a variable prepaid
forward contract dated May 8, 2001. The contract has a period of three
years. At the expiration of the contract, the partnership must deliver an
agreed settlement amount, which may be paid in cash, shares, or a
combination of the two. The shares shown for Jerry Moyes also do not
include 360,000 shares held by an irrevocable trust for the children of
Jerry and Vickie Moyes, the sole trustee of which is Gerald F. Ehrlich, who
has sole investment and voting power. Of the shares held by the Jerry and
Vickie Moyes Family Trust and the Moyes Children's Limited Partnership,
18,490,340 and 8,995,832 shares, respectively, have been pledged to secure
loans with lending institutions.
(3) Includes options to purchase 112,500 shares exercisable within 60 days, and
excludes 2,700 shares held by Mr. Riley's spouse.
(4) Includes options to purchase 2,000 shares exercisable within 60 days.
(5) Includes options to purchase 2,000 shares exercisable within 60 days.
(6) Includes options to purchase 6,750 shares exercisable within 60 days, and
excludes 8,700 shares owned by Mr. Scudder's spouse.
(7) Includes options to purchase 9,000 shares exercisable within 60 days.
(8) Includes options to purchase 9,225 shares exercisable within 60 days.
(9) Includes options to purchase 153,000 shares exercisable within 60 days. Mr.
Starnes has pledged 1,500,000 shares to an unaffiliated third party under
two separate variable prepaid forward contracts entered on November 9, 2001
and March 28, 2002. The contracts expire on March 6, 2003 and March 28,
2004, respectively. At the expiration of the contracts, Mr. Starnes must
deliver an agreed settlement amount, which may be paid in shares or cash.
(10) Includes options to purchase 4,400 shares exercisable within 60 days.
20
CERTAIN TRANSACTIONS AND RELATIONSHIPS
During 2001, Swift purchased $466,000 of refrigeration units from Thermo
King West, a corporation owned by William F. Riley III.
Edward A. Labry, III is the President of Concord EFS, Inc., which provides
financial services to Swift. Such services totaled $381,000 in 2001. At December
31, 2001, nothing was owed by Swift for these services.
In 2001, M.S. Carriers agreed to sell its interest in an aircraft to its
president Michael S. Starnes, who is a current member of Swift's Board of
Directors. The sale price was $3,240,000 and M.S. Carriers recognized a loss of
$430,000 on the sale.
Swift believes that the terms of the foregoing transactions were as
favorable to Swift as those which would have been available from an independent
third party. See "Compensation Committee Interlocks and Insider Participation"
above for a description of certain transactions between the Company and members
of the Compensation Committee.
21
AMENDMENT TO SWIFT'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE
(PROPOSAL NO. 2)
The Board of Directors has determined that it is in the best interests of
Swift and its stockholders to amend the Swift's Articles of Incorporation to
increase the authorized number of shares of Common Stock from 150,000,000 to
200,000,000 (the "Proposed Articles of Incorporation Amendment"). If Swift's
stockholders approve the Proposed Articles of Incorporation Amendment, the
Company will be authorized to issue a total of 201,000,000 shares of capital
stock: 200,000,000 shares of Common Stock and 1,000,000 shares of Preferred
Stock.
If the Company's stockholders approve the Proposed Articles of
Incorporation Amendment, it will become effective upon filing of a Certificate
of Amendment to Swift's Articles of Incorporation with the Secretary of State of
Nevada. A copy of the Swift's Amended and Restated Articles of Incorporation
reflecting the adoption of the Proposed Articles of Incorporation Amendment is
attached hereto as Annex A.
PURPOSE AND EFFECTS OF THE PROPOSED ARTICLES OF INCORPORATION AMENDMENT
The objective of the increase in the authorized number of shares of Common
Stock is to ensure that Swift has sufficient shares available for business needs
and activities as they arise. Such future activities may include, without
limitation, effecting stock splits or dividends, effecting additional
financings, providing equity incentives to employees, officers or directors, or
establishing strategic relationships with corporate partners. The additional
shares also may be issued to acquire or invest in other businesses.
On the Record Date, there were 86,385,870 shares of Common Stock issued and
outstanding. The issuance of additional shares of Common Stock would decrease
the proportionate equity interest of Swift's current stockholders and, depending
on the price paid for such additional shares, could result in dilution to
Swift's current stockholders. If issued, the additional shares of Common Stock
would have rights identical to the currently outstanding shares of Common Stock.
Adoption of the Proposed Articles of Incorporation Amendment would not affect
the rights of Swift's current stockholders, except for effects incidental to
authorizing an increase in the number of authorized shares of Common Stock.
If Swift's stockholders approve the Proposed Articles of Incorporation
Amendment, the Board of Directors may cause the issuance of additional shares of
Common Stock without further vote of the stockholders, subject to applicable
Nasdaq shareholder approval requirements. Current holders of Common Stock do not
have preemptive or similar rights, which means that current stockholders do not
have a prior right to purchase any new issue of capital stock of Swift in order
to maintain their proportionate ownership level. Other than existing stock
options and warrants, Swift currently has no commitments to issue additional
shares of Common Stock, although it is continually exploring potential
acquisitions and financing possibilities, which could lead to the issuance of
additional shares at any time.
There currently are no shares of Preferred Stock outstanding.
22
REQUIRED VOTE
The Proposed Articles of Incorporation Amendment requires the affirmative
vote of the holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote at the Annual Meeting.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
ADOPTION OF THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION.
- --------------------------------------------------------------------------------
AMENDMENT TO SWIFT 1999 STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
(PROPOSAL NO. 3)
GENERAL
At the Annual Meeting, the Company will seek stockholder approval of a
proposed amendment to the Swift Transportation Co., Inc. 1999 Stock Option Plan
(the "Plan") to increase the number of shares authorized for issuance thereunder
from 4,250,000 to 8,250,000. The Plan provides employees with an incentive to
actively direct and contribute to Swift's growth by enabling them to acquire a
proprietary interest in the Company. Swift's Board of Directors has approved the
proposed amendment to the Plan and has directed that it be submitted as a
proposal for stockholder approval at the Annual Meeting. The Plan was originally
adopted in 1999.
CURRENT PLAN PROVISIONS
The following is a brief summary of the Plan. A complete copy of the Plan,
reflecting the proposed amendments set forth in Proposal No. 3 and Proposal No.
4 hereof, is attached hereto as Annex B. You should refer to Annex B for further
information regarding the Plan.
The Plan authorizes grants of incentive stock options ("ISOs") and
non-qualified stock options ("NQSOs") to employees of the Company. Currently,
all of the Company's employees, except Jerry Moyes, are eligible to participate
in the Plan. At the Annual Meeting, we also are seeking stockholder approval of
an amendment to the Plan that would permit the grant of options to Mr. Moyes.
See "Amendments To 1999 Stock Option Plan To Permit The Grant of Options To
Jerry Moyes and Increase the Limitation on Maximum Annual Grants to a Single
Individual (Proposal No. 4)."
The Board of Directors believes that use of stock options authorized under
the Plan is beneficial to Swift as a means of promoting the success and
enhancing the value of the Company by linking the personal interests of its
employees and others to those of its stockholders and by providing employees and
others with an incentive for outstanding performance. These incentives also
provide Swift flexibility in its ability to attract and retain the services of
employees and others upon whose judgment, interest and special effort the
successful conduct of Swift's operation is largely dependent.
The Plan is administered by the Board of Directors or a committee appointed
by the Board consisting of at least two (2) non-employee directors (the
"Committee"). The Board of Directors or Committee have the exclusive authority
to administer the Plan, including the power to determine eligibility, the types
and sizes of options, the timing of options and the consideration to be paid to
Swift upon exercise of options. The form of payment upon exercise may include
cash, Common Stock, or other property.
INCENTIVE STOCK OPTIONS. An ISO is a stock option that satisfies the
requirements specified in Section 422 of the Internal Revenue Code (the "Code").
Under the Code, ISOs may only be granted to employees. In order for an option to
qualify as an ISO, the price payable to exercise the option must equal or exceed
the fair market value of the stock at the date of the grant (110% of the fair
market value at the date of grant for options granted to holders of 10% or more
of the Company's Common Stock), the option must lapse no later than 10 years
from the date of the grant (no later than 5 years from the date of grant for
options granted to holders of 10% or more of the Company's Common Stock), and
23
the stock subject to ISOs that are first exercisable by an employee in any
calendar year must not have a value of more than $100,000 as of the date of
grant. Certain other requirements must also be met.
An optionee is not treated as receiving taxable income upon either the
grant of an ISO or upon the exercise of an ISO. However, the difference between
the exercise price and the fair market value on the date of exercise is an item
of tax preference at the time of exercise in determining liability for the
alternative minimum tax, assuming that the Common Stock is either transferable
or is not subject to a substantial risk of forfeiture under Section 83 of the
Code. If at the time of exercise, the Common Stock is both nontransferable and
is subject to a substantial risk of forfeiture, the difference between the
exercise price and the fair market value of the Common Stock (determined at the
time the Common Stock becomes either transferable or not subject to a
substantial risk of forfeiture) will be a tax preference item in the year in
which the Common Stock becomes either transferable or not subject to a
substantial risk of forfeiture.
If Common Stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date such Common Stock is transferred to the optionee upon
exercise, any gain or loss resulting from its disposition is treated as
long-term capital gain or loss. If such Common Stock is disposed of before the
expiration of the above-mentioned holding periods, a "disqualifying disposition"
occurs. If a disqualifying disposition occurs, the optionee realizes ordinary
income in the year of the disposition in an amount equal to the difference
between the fair market value of the Common Stock on the date of exercise and
the exercise price, or the selling price of the Common Stock and the exercise
price, whichever is less. The balance of the optionee's gain on a disqualifying
disposition, if any, is taxed as capital gain.
Swift is not entitled to any tax deduction as a result of the grant or
exercise of an ISO, or on a later disposition of the Common Stock received. In
the event of a disqualifying disposition, Swift is entitled to a deduction equal
to the amount of ordinary income realized by the optionee.
To date, Swift has not granted any ISOs under the Plan.
NON-QUALIFIED STOCK OPTIONS. A NQSO is any stock option other than an ISO.
Such options are referred to as "non-qualified" because they do not meet the
requirements of, and are not eligible for, the favorable tax treatment provided
by Section 422 of the Code.
No taxable income is realized by an optionee upon the grant of a NQSO, nor
is Swift entitled to a tax deduction by reason of such grant. Upon the exercise
of a NQSO, the optionee realizes ordinary income in an amount equal to the
excess of the fair market value of the Common Stock on the date of exercise over
the exercise price and Swift is entitled to a corresponding tax deduction.
Upon a subsequent sale or other disposition of Common Stock acquired
through exercise of a NQSO, the optionee realizes a short-term or long-term
capital gain or loss to the extent of any intervening appreciation or
depreciation. Such a resale by the optionee has no tax consequence to Swift.
To date, all options granted by Swift under the Plan have been NQSOs. The
exercise price of NQSOs granted under the Plan is expected to be equal to 85% of
the fair market value of the Common Stock on the date of the grant. On April 29,
2002, the last reported sale price of the Common Stock on the Nasdaq National
Market was $19.32 per share.
Section 162(m) of the Code generally prohibits publicly held companies,
such as Swift, from deducting, for federal income tax purposes, annual
compensation in excess of $1 million paid to any of certain top executives,
except to the extent compensation is based upon the attainment of performance
goals set by the Committee pursuant to plans approved by the shareholders. NQSOs
granted under the Plan with an exercise price equal to the fair market value at
the time of grant would typically qualify for deduction as performance based
compensation under Section 162(m). However, as noted above, it is expected that
the Company will grant NQSOs with an exercise price equal to 85% of the fair
market value at the time of grant. As a result, compensation income recognized
by certain top executives on the exercise of their options may not fit within
section 162(m)'s definition of "performance-based" compensation and, therefore,
would not be deductible if the annual $1 million limit was exceeded.
The following table sets forth grants of options made under the Plan during
2001 to (i) each of the Named Executive Officers of Swift; (ii) all current
executive officers, as a group; (iii) all current directors who are not
executive officers, as a group; and (iv) all employees, including all current
officers who are not executive officers, as a group. Grants under the Plan are
made at the discretion of the Board of Directors or Committee. Accordingly,
future grants under the Plan are not yet determinable.
24
PLAN BENEFITS
1999 STOCK OPTION PLAN
WEIGHTED AVERAGE
NUMBER OF SHARES SUBJECT EXERCISE PRICE
NAME AND POSITION TO OPTIONS GRANTED (#) PER SHARE ($/SH)
----------------- ---------------------- ----------------
Jerry Moyes -- --
Chairman of the Board & President
William F. Riley III -- --
Senior Executive Vice President
& Chief Financial Officer
Rodney K. Sartor -- --
Executive Vice President
Patrick J. Farley -- --
Executive Vice President
Kevin H. Jensen -- --
Executive Vice President
Executive Officer Group 360,000 $16.37
Director Group -- --
Employee Group 415,000 $16.19
PROPOSED AMENDMENT TO THE PLAN
The Board of Directors has reviewed the options currently remaining in the
option pool for the Plan and has determined that it is appropriate to increase
the number of shares authorized for issuance under the Plan. As of March 31,
2001, (i) no shares have been issued upon exercise of options granted under the
Plan and (ii) option grants representing 2,334,850 shares were outstanding under
the Plan. The Board believes that an increase in the number of authorized shares
is necessary for the continued optimal use of the Plan. Therefore, the Board has
approved the the proposed amendment to the Plan that would increase the number
of shares authorized for issuance under the Plan from 4,250,000 to 8,250,000.
REQUIRED VOTE
Approval of the adoption of the proposed amendment to increase the number
of shares authorized for issuance under the Plan requires the affirmative vote
of a majority of shares of Common Stock present at the Annual Meeting in person
or by proxy.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
ADOPTION OF THE PROPOSED AMENDMENT TO THE SWIFT TRANSPORTATION CO., INC. 1999
STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
THEREUNDER.
- --------------------------------------------------------------------------------
25
AMENDMENTS TO SWIFT 1999 STOCK OPTION PLAN
TO PERMIT THE GRANT OF OPTIONS TO JERRY MOYES AND INCREASE THE
LIMITATION ON MAXIMUM ANNUAL GRANTS TO A SINGLE INDIVIDUAL
(PROPOSAL NO. 4)
GENERAL
At the Annual Meeting, Swift will seek stockholder approval of proposed
amendments to the Plan to permit the grant of options to Jerry Moyes and
increase the limitation and maximum annual grants to a single individual.
Currently, the Plan contains provisions that (1) specifically exclude Mr. Moyes
from participating in the Plan and (2) limit the number of shares underlying
options granted to a single individual in a fiscal year to 100,000. The proposed
amendments to the Plan would permit Jerry Moyes to participate in the Plan and
increase the maximum number of shares underlying options granted to a single
individual in a fiscal year to 1,000,000. The members of the Compensation
Committee other than Mr. Moyes have recommended, and Swift's Board of Directors
has approved, the proposed amendments to the Plan, and the Board has directed
that the proposed amendments be submitted as a proposal for stockholder approval
at the Annual Meeting. The current provisions of the Plan are summarized under
"Amendment To Swift 1999 Stock Option Plan To Increase The Number of Shares
Authorized For Issuance Thereunder (Proposal No. 3)" (see page 23). A complete
copy of the Plan, reflecting the proposed amendments set forth in Proposal No. 3
and Proposal No. 4 hereof, is attached hereto as Annex B.
PROPOSED AMENDMENT TO THE PLAN
The Plan currently contains a provision that specifically states that Mr.
Moyes is not eligible to participate in Plan. The proposed amendments would
remove this provision, thereby permitting Swift to grant options to Mr. Moyes
under the Plan. We anticipate that in 2002 Mr. Moyes would be granted
non-qualified options to purchase up to 1,000,000 shares of Common Stock with an
exercise price equal to 85% of the fair market value of the Common Stock on the
date of grant. However, the non-employee directors who comprise the Committee
will make the ultimate decision with respect to the grant of options to Mr.
Moyes.
In addition, the Plan currently provides that the maximum number of shares
of Common Stock underlying options granted to any one individual in a fiscal
year is 100,000. The proposed amendments would increase this maximum number to
1,000,000.
PURPOSE OF PROPOSED AMENDMENTS
When the Plan was originally adopted in 1999, Mr. Moyes was excluded from
participating due in part to the fact that he beneficially owned a substantial
percentage of Swift's outstanding Common Stock. Primarily as a result of our
merger with M.S. Carriers, the percentage of Swift's outstanding Common Stock
beneficially owned by Mr. Moyes has declined substantially, from approximately
30% in 1999 to approximately 22% at present. Moreover, the compensation of Chief
Executive Officers of some other publicly held truckload motor carriers is
comprised in part of stock options. The percentage of outstanding common stock
held by these Chief Executive Officers is similar to or exceeds that held by Mr.
Moyes.
The members of the Compensation Committee and Board of Directors other than
Mr. Moyes believe that the proposed amendment to permit the grant of options to
Mr. Moyes under Plan would serve two important objectives of Swift's
compensation philosophy. First, the grant of options to Mr. Moyes will provide
an effective incentive to enhance long-term performance and stockholder value.
Second, the proposed amendment will help to ensure that Mr. Moyes' compensation
remains competitive with that paid to executives performing similar functions
for other publicly held truckload motor carriers.
As noted above, we anticipate that in 2002 Mr. Moyes would be granted
options to purchase up to 1,000,000 shares of Common Stock. The proposed
amendment to increase the limitation on maximum annual grants to a single
individual would facilitate an option grant of this size to Mr. Moyes. Further,
the proposed amendment would provide the Compensation Committee with increased
flexibility in structuring executive compensation and responding to competitive
pressures in the market for executive talent.
REQUIRED VOTE
Approval of the adoption of the proposed amendments to the Plan to permit
the grant of options to Jerry Moyes and increase the limitation on maximum
annual grants to a single individual requires the affirmative vote of a majority
of the shares of Common Stock present at the Annual Meeting in person or by
proxy.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
ADOPTION OF THE PROPOSED AMENDMENTS TO THE SWIFT TRANSPORTATION CO., INC. 1999
STOCK OPTION PLAN TO PERMIT THE GRANT OF OPTIONS TO JERRY MOYES AND INCREASE THE
LIMITATION ON MAXIMUM ANNUAL GRANTS TO A SINGLE INDIVIDUAL.
- --------------------------------------------------------------------------------
26
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The principal independent public accounting firm utilized by Swift during
the fiscal year ended December 31, 2001 was KPMG LLP, independent certified
public accountants. It is presently contemplated that KPMG LLP will be retained
as the principal accounting firm to be utilized by Swift during the current
fiscal year. A representative of KPMG LLP will attend the annual meeting for the
purpose of responding to appropriate questions and will be afforded an
opportunity to make a statement if KPMG LLP so desires.
AUDIT FEES
The aggregate fees billed to Swift by KPMG LLP for professional services
rendered for the audit of Swift's annual financial statements for fiscal year
2001 and the reviews of the financial statements included in Swift's Forms 10-Q
for fiscal year 2001 was $310,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed to Swift by KPMG LLP for professional services
described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X ("Financial
Information Systems Design and Implementation Fees") during fiscal year 2001.
OTHER FEES
The aggregate fees billed to Swift by KPMG LLP for services not described
in the two preceding paragraphs during fiscal year 2001 was $891,000.
After consideration, the Swift audit committee has concluded that the
provision of non-audit services by KPMG LLP to Swift is compatible with
maintaining the independence of KPMG LLP.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
stockholder proposals for the 2003 Annual Meeting must be received at the
principal executive offices of Swift by December 24, 2002 to be considered for
inclusion in our proxy materials relating to such meeting.
If you wish to nominate directors for election at the 2003 Annual Meeting
of Stockholders or to submit a proposal that is not intended to be included in
our proxy materials relating to such meeting, our Bylaws require that:
* You notify the Corporate Secretary in writing no later than
January 24, 2003, which is 120 days prior to the anniversary date
of the 2002 Annual Meeting.
* Your notice to the Corporate Secretary contain the specific
information set forth in our Bylaws.
* You be a stockholder of record at the time you deliver your
notice to the Corporate Secretary and be entitled to vote at the
meeting of stockholders to which such notice relates.
27
A nomination or other proposal will be disregarded if it does not comply
with the above procedure and any additional requirements set forth in our
Bylaws. Please note that these requirements are separate from the SEC's
requirements to have your proposal included in our proxy materials.
All proposals and nominations should be sent to Swift Transportation Co.,
Inc., 2200 South 75th Avenue, Phoenix, Arizona 85043, Attention: Corporate
Secretary.
OTHER MATTERS
As of the date of this proxy statement, 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 matter is properly brought before the meeting for
action by stockholders, proxies in the enclosed form returned to Swift will be
voted in accordance with the recommendation of the Board of Directors or, in the
absence of such a recommendation, in accordance with the judgment of the proxy
holder.
April 29, 2002
SWIFT TRANSPORTATION CO., INC.
/s/ Jerry Moyes
----------------------------------------
Jerry Moyes
Chairman of the Board, President and
Chief Executive Officer
28
Annex A
FORM OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SWIFT TRANSPORTATION CO., INC.
(Reflecting Proposed Amendments)
ARTICLE I
NAME AND DURATION
The name of this corporation shall be SWIFT TRANSPORTATION CO., INC. The
duration of this corporation shall be perpetual.
ARTICLE II
PURPOSE
The purpose for which this corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under the
laws of the State of Nevada as they may be amended from time to time.
ARTICLE III
AUTHORIZED CAPITAL
The total number of shares of all classes of capital stock which the
corporation shall have the authority to issue is Two-Hundred-One million
(201,000,000) shares consisting of:
(i) Two-Hundred million (200,000,000) shares of Common Stock, par
value $0.001 per share (hereinafter referred to as "Common Stock"); and
(ii) One million (1,000,000) shares of Preferred Stock, par value
$.001 per share (hereinafter referred to as "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more series,
each of such series to have such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, as shall be stated and expressed in a resolution or resolutions
providing for the issue of such series adopted by the Board of Directors. As so
provided in such resolution or resolutions and as and to the extent permitted by
law, the shares of any series of the Preferred Stock may be made subject to
redemption, or convertible into or exchangeable for shares of any other class or
series, by the corporation at its option or at the option of the holders or upon
the happening of a specified event.
Shares of any series of Preferred Stock which shall be issued and
thereafter acquired by the corporation through purchase, redemption, conversion,
exchange or otherwise, shall return to the status of authorized but unissued
A-1
Preferred Stock of the same series unless otherwise provided in the resolution
or resolutions of the Board of Directors. Unless otherwise provided in the
resolution or resolutions of the Board of Directors providing for the issuance
thereof, the number of authorized shares of stock of any such series may be
increased or decreased (but not below the number of shares thereof then
outstanding) by resolution or resolutions of the Board of Directors. In case the
number of outstanding shares of any such series of Preferred Stock shall be
decreased, the shares representing such decrease shall, unless otherwise
provided in the resolution or resolutions of the Board of Directors providing
for the issuance thereof, resume the status of authorized but unissued Preferred
Stock, undesignated as to series.
No holder of Common Stock or any series of Preferred Stock shall have the
right to cumulate votes in the election of directors of the corporation or for
any other purpose.
ARTICLE IV
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or other securities of the corporation shall have any preemptive right to
purchase or subscribe for any unissued stock or security of any class or series
or any additional shares of any class or series to be issued by reason of
increase in the authorized capital stock of the corporation of any class or
series, bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of the corporation of any class or
series. Any such unissued stock, additional authorized issue of shares of any
class or series of stock or securities convertible into or exchangeable for
stock or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, whether such
holders or others, and upon such terms as may be deemed advisable by the Board
of Directors in the exercise of its sole discretion.
ARTICLE V
REGISTERED AGENT
The name and address of the initial registered agent of the corporation is
The Corporation Trust Company of Nevada, One East First Street, Reno, Nevada
89501.
ARTICLE VI
BOARD OF DIRECTORS
1. NUMBER AND CLASS OF DIRECTORS.
The Board of Directors shall have sole authority to determine the number of
Directors, within the limits set forth herein, and may increase or decrease the
exact number of Directors from time to time by resolution duly adopted by such
Board. No decrease in the number of Directors shall have the effect of
shortening the term of any incumbent Director. The exact number of Directors
shall be seven (7) until so increased or decreased.
The number of Directors shall be divided into three (3) classes, as nearly
equal in number as may be, to serve in the first instance until the first,
second and third annual meetings of the Stockholders to be held, respectively,
and until their successors shall be elected and shall qualify. In the case of
A-2
any increase in the number of Directors of the Corporation, the additional
Directors shall be so classified that all classes of Directors shall be
increased equally as nearly as may be, and the additional Directors shall be
elected as provided herein by the Directors or by the Stockholders at an annual
meeting. In case of any decrease in the number of Directors of the Corporation,
all classes of Directors shall be decreased equally, as nearly as may be.
Election of Directors shall be conducted as provided in these Articles, by law
or in the Bylaw.
The name and mailing address of each person who is to serve as a director
until the first, second and third annual meetings of the Stockholders and until
their successors are elected and qualified, and the class designation and term
of office of each director is:
NAME AND MAILING ADDRESS CLASS TERM OF OFFICE
------------------------ ----- --------------
Rodney K. Sartor Class I Term Ending 1994
1705 Marietta Way, Suite A
Sparks, Nevada 89431
Earl H. Scudder, Jr. Class I Term Ending 1994
1705 Marietta Way, Suite A
Sparks, Nevada 89431
Robert W. Cunningham Class II Term Ending 1995
1705 Marietta Way, Suite A
Sparks, Nevada 89431
Alphonse E. Frei Class II Term Ending 1995
1705 Marietta Way, Suite A
Sparks, Nevada 89431
Jerry C. Moyes Class III Term Ending 1996
1705 Marietta Way, Suite A
Sparks, Nevada 89431
William F. Riley III Class III Term Ending 1996
1705 Marietta Way, Suite A
Sparks, Nevada 89431
Lou A. Edwards Class III Term Ending 1996
1705 Marietta Way, Suite A
Sparks, Nevada 89431
2. VACANCIES.
Vacancies on the Board of Directors, whether created by increase in the
number of Directors, or by death, disability, resignation or removal, shall be
filled by a vote of a majority of the Directors then remaining in office at a
regular meeting, or a special meeting called for the purpose. Each Director so
chosen shall hold office until the next annual meeting of stockholders and until
his successor shall be elected and qualified, or until his earlier death,
resignation or removal.
A-3
3. REMOVAL OF DIRECTORS.
A Director may be removed with or without cause by the Stockholders at a
special meeting of the Stockholders, called for the purpose in conformity with
the Bylaws. The affirmative vote of the holders of two-thirds (2/3) of the
voting power of all the shares entitled to vote at such meeting shall be
required to remove a Director.
ARTICLE VII
INCORPORATORS
The name and address of each incorporator of the corporation is:
NAME ADDRESS
---- -------
A. Egelhoff 3225 N. Central Ave.
Phoenix, AZ 85012
R. Walters 3225 N. Central Ave.
Phoenix, AZ 85012
J. Hurley 3225 N. Central Ave.
Phoenix, AZ 85012
All powers, duties and responsibilities of the incorporators shall cease at
the time of delivery of those Articles of Incorporation to the Secretary of the
State of Nevada for filing.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
The corporation shall indemnify, defend and hold harmless any person who
incurs expenses, claims, damages, or liability by reason of the fact that he or
she is, or was an officer, director, employee or agent of the corporation, to
the fullest extent allowed pursuant to Nevada law.
ARTICLE IX
REPURCHASE OF STOCK
The Board of Directors of the corporation may, from time to time, cause the
corporation to purchase its own stock to the extent permitted by the laws of the
State of Nevada.
ARTICLE X
FISCAL YEAR
The fiscal year of the corporation shall be determined by the Board of
Directors at the organizational meeting and may thereafter be changed from time
to time by action of the Board of Directors.
A-4
ARTICLE XI
LIMITATION OF LIABILITY
To the fullest extent permitted by the laws of the State of Nevada, as the
same exist or may hereafter be amended, any director or officer of the
corporation shall not be liable to the corporation or its stockholders for
monetary or other damages for breach of fiduciary duties as a director or
officer. No repeal, amendment, or modification of this Article XI, whether
director or indirect, shall eliminate or reduce its effect with respect to any
act or omission of a director or officer of the corporation occurring prior to
such repeal, amendment, or modification. Notwithstanding any other provision of
these Articles of Incorporation, the affirmative vote of seventy-five percent
(75%) of the outstanding shares of stock of this corporation entitled to vote
shall be required to amend, alter, change or repeal, or adopt any provision
inconsistent with, this Article.
ARTICLE XII
NON-APPLICABILITY OF CERTAIN STATE ANTI-TAKEOVER LAWS
Pursuant to Arizona Revised Statutes Section 10-1211(A), the corporation
elects not to be subject to Article 2, Chapter 6, Title 10 of the Arizona
Revised Statutes, as the same may be amended from time to time. Furthermore,
pursuant to Nevada Revised Statutes Sections 78.378 and 78.434, the corporation
elects not to be governed by the provisions of Nevada Revised Statutes Sections
78.378 to 78.3793, inclusive, and 78.411 to 78.444, inclusive, as the same may
be amended from time to time.
A-5
ANNEX B
SWIFT TRANSPORTATION CO., INC.
1999 STOCK OPTION PLAN
(Reflecting Proposed Amendments)
1. PURPOSE OF THE PLAN. The purposes of this Swift Transportation Co., Inc.
1999 Stock Option Plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide successful management of
the Company's business, to provide additional incentive to certain key employees
of the Company, and to promote the success of the Company's business through the
grant of options to purchase shares of the Company's Common Stock.
Options granted hereunder may be either "Incentive Stock Options," as
defined in Section 422 of the Code, or "Non-Statutory Stock Options," at the
discretion of the Board and as reflected in the terms of the written option
agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company or the
Committee, if one has been appointed.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
(c) "COMMON STOCK" shall mean the common stock of the Company
described in the Company's Certificate of Incorporation, as amended.
(d) "COMPANY" shall mean Swift Transportation Co., Inc., a Nevada
corporation, and shall include any parent or subsidiary corporation of the
Company as defined in Section 424(e) and (f) of the Code.
(e) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with Section 4(a) of the Plan, if one is appointed.
(f) "EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.
(g) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "FAIR MARKET VALUE" shall mean, with respect to the date a given
Option is granted or exercised, the value of the Common Stock determined by the
Board in such manner as it may deem equitable for Plan purposes but, in the case
of an Incentive Stock Option, no less than is required by applicable laws or
regulations; provided, however, that where there is a public market for the
B-1
Common Stock, the Fair Market Value per Share shall mean, in the event the stock
is listed or admitted to trading on the National Association of Securities
Dealers Automated Quotation--National Market System, New York Stock Exchange or
the American Stock Exchange, the closing price of the Common Stock on such
exchange on the date of grant as reported in THE WALL STREET JOURNAL, or, if the
Common Stock is not listed or admitted to trading on any such exchange, the last
quoted price or, if not quoted, the average of the closing bid and asked prices
as reported by National Association of Securities Dealers Automated Quotation
(NASDAQ), or such other system then in use, or if the Common Stock is not quoted
by any such organization, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose.
(i) "INCENTIVE STOCK OPTION" shall mean an Option which is intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(j) "NON-EMPLOYEE DIRECTOR" means a member of the Board who qualifies
as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange Act,
or any successor definition adopted by the Board.
(k) "OPTION" shall mean a stock option granted under the Plan.
(l) "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
(m) "OPTIONEE" shall mean an Employee of the Company who has been
granted one or more Options.
(n) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(o) "PLAN" shall mean this Swift Transportation Co., Inc. 1999 Stock
Option Plan.
(p) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(q) "STOCK OPTION AGREEMENT" shall mean the written Agreement
evidencing the grant of an Option, in substantially the form of APPENDIX A or
APPENDIX B hereto.
(r) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(s) "TAX DATE" shall mean the date an Optionee is required to pay the
Company an amount with respect to tax withholding obligations in connection with
the exercise of an Option.
B-2
3. COMMON STOCK SUBJECT TO THE PLAN.
(a) NUMBER OF SHARES. Subject to the provisions of Section 11 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 8,250,000 Shares of Common Stock. The Shares may be
authorized, but unissued, or previously issued Shares acquired or to be acquired
by the Company and held in treasury.
(b) LAPSED OPTIONS. If an Option should expire or become unexercisable
for any reason without having been exercised in full, the unpurchased Shares
covered by such Option shall, unless the Plan shall have been terminated, be
available for future grants of Options.
(c) LIMITATION ON NUMBER OF SHARES SUBJECT TO OPTIONS. Notwithstanding
any provision in the Plan to the contrary, and subject to the adjustment in
Section 11, the maximum number of shares of Stock with respect to one or more
Options that may be granted to any one individual during the Company's fiscal
year is 1,000,000.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) The Plan shall be administered by the Board in accordance
with Securities and Exchange Commission Rule 16b-3 ("Rule 16b-3"); provided,
however, that the Board may appoint a Committee to administer the Plan at any
time or from time to time. If the Board appoints a Committee, the Committee
shall consist of at least two individuals, each of whom qualifies as (i) a
Non-Employee Director, and (ii) an "outside director" under Code Section 162(m)
and the regulations issued thereunder. Reference to the Committee shall refer to
the Board if the Board does not appoint a Committee.
(ii) Once appointed, the Committee shall continue to serve until
otherwise directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause), and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, in accordance with Section 422 of the Code and to grant "Non-Statutory
Stock Options;" (ii) to determine, upon review of relevant information and in
accordance with Section 2 of the Plan, the Fair Market Value of the Common
Stock; (iii) to determine the exercise price per Share of Options to be granted,
which exercise price shall be determined in accordance with Section 8(a) of the
Plan; (iv) to determine the Employees to whom, and the time or times at which
Options shall be granted and the number of shares to be represented by each
Option; (v) to interpret the Plan; (vi) to prescribe, amend and rescind rules
and procedures relating to the Plan; (vii) to determine the terms and provisions
of each Option granted (which need not be identical) and, with the consent of
the Optionee thereof, modify or amend each Option; (viii) to accelerate or defer
(with the consent of the Optionee) the exercise date of any Option; (ix) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Board; (x) to
B-3
accept or reject the election made by an Optionee pursuant to Section 17 of the
Plan; and (xi) to make all other determinations deemed necessary or advisable
for the administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. ELIGIBILITY.
(a) GENERAL. Consistent with the Plan's purposes, Options may be
granted only to key Employees of the Company as determined by the Board. An
Employee who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options. Incentive Stock Options may be granted
only to those Employees who meet the requirements applicable under Section 422
of the Code.
(b) INCENTIVE STOCK OPTIONS. With respect to Incentive Stock Options
granted under the Plan, the aggregate Fair Market Value (determined at the time
the Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by the Employee
during any calendar year (under all plans of the Company and its Parent and
Subsidiary corporations) shall not exceed One Hundred Thousand Dollars
($100,000). To the extent that Incentive Stock Options are first exercisable by
an Employee in excess of such limitation, the excess shall be considered
Non-Statutory Stock Options.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment at any time.
6. SHAREHOLDER APPROVAL AND EFFECTIVE DATES. The Plan shall take effect on
May 20, 1999, the date on which the Board and all stockholders approve the Plan.
No Option may be granted after May 20, 2009 (ten years from the effective date
of the Plan); provided, however, that the Plan and all outstanding Options shall
remain in effect until such Options have expired or until such Options are
canceled.
7. TERM OF OPTION. Unless otherwise provided in the Stock Option Agreement,
the term of each Incentive Stock Option shall be five (5) years from the date of
grant thereof. In no case shall the term of any Incentive Stock Option exceed
ten (10) years from the date of grant. Unless otherwise provided in the Stock
Option Agreement, the term of each Option which is not an Incentive Stock Option
shall be ten years from the date of grant. Notwithstanding the above, in the
case of an Incentive Stock Option granted to an Employee who, at the time the
Incentive Stock Option is granted, owns ten percent (10%) or more of the Common
Stock as such amount is calculated under Section 422(b)(6) of the Code ("Ten
Percent Shareholder"), the term of the Incentive Stock Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the Stock Option Agreement.
B-4
8. EXERCISE PRICE AND PAYMENT.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the Board, but
in the case of an Incentive Stock Option shall be no less than one hundred
percent (100%) of the Fair Market Value per Share on the date of grant;
provided, further, that in the case of an Incentive Stock Option granted to an
Employee who, at the time of the grant of such Incentive Stock Option, is a Ten
Percent Shareholder, the per Share exercise price shall be no less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant. In no event may the exercise price in the case of a Non-Statutory Stock
Option be less than eighty-five (85%) of the Fair Market Value per share on the
date of grant.
(b) PAYMENT. The price of an exercised Option and any taxes
attributable to the delivery of Common Stock under the Plan, or portion thereof,
shall be paid:
(i) In United States dollars in cash or by check, bank draft or
money order payable to the order of the Company; or
(ii) At the discretion of the Board, through the delivery of
shares of Common Stock (either actual tender or attestation), with an aggregate
Fair Market Value equal to the option price, provided that such shares of Common
Stock have been held by the Employee at least six months prior to the date of
delivery; or
(iii) By a combination of (i) and (ii) above.
The Board shall determine acceptable methods for tendering Common
Stock as payment upon exercise of an Option and may impose such limitations
and prohibitions on the use of Common Stock to exercise an Option as it
deems appropriate. With respect to Non-Statutory Stock Options, at the
election of the Optionee pursuant to Section 17, the Company may satisfy
its withholding obligations by retaining such number of Shares of Common
Stock subject to the exercised Option which have an aggregate Fair Market
Value on the exercise date equal to the Company's aggregate federal, state,
local and foreign tax withholding and FICA and FUTA obligations with
respect to income generated by the exercise of the Option by Optionee.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan. Unless otherwise determined by the Board at the time of grant, an Option
may be exercised in whole or in part. An Option may not be exercised for a
fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received
by the Company. Full payment may, as authorized by the Board, consist of
B-5
any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company)
of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.
No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option by the number of Shares as to which
the Option is exercised.
Notwithstanding anything contained in this Plan to the contrary, the
Board may establish certain restrictions on the times at which an Option
may be exercised after a number of elapsed years together with cumulative
exercise rights and may retain certain rights with respect to a fixed
repurchase price for the Option Stock if the Employee voluntarily
terminates his employment with the Company within a certain period of time
after exercising the Option or whose employment is involuntarily terminated
for gross misconduct, fraud, embezzlement, theft, breach of any fiduciary
duty owed to the Company or for nonperformance of duties.
(b) TERMINATION OF STATUS AS AN EMPLOYEE. Unless otherwise provided in
an Option Agreement relating to an Option that is not an Incentive Stock Option,
if an Employee's employment by the Company is terminated, except if such
termination is voluntary or occurs due to retirement with the consent of the
Board, death or disability, the Option, to the extent not exercised, shall cease
on the date on which Employee's employment by the Company is terminated. If an
Employee's termination is voluntary or occurs due to retirement with the consent
of the Board, then the Employee may, but only within thirty (30) days (or such
other period of time not exceeding three (3) months as is determined by the
Board) after the date he ceases to be an Employee of the Company, exercise his
Option to the extent that he was entitled to exercise it at the date of such
termination, but not later than the expiration of the term of the Option. To the
extent that he was not entitled to exercise the Option at the date of such
termination, or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall terminate.
(c) DISABILITY. Unless otherwise provided in an Option Agreement
relating to an Option that is not an Incentive Stock Option, notwithstanding the
provisions of Section 9(b) above, in the event an Employee is unable to continue
his employment with the Company as a result of his permanent and total
disability (as defined in Section 22(e)(3) of the Code), he may, but only within
three (3) months (or such other period of time not exceeding twelve (12) months
as it is determined by the Board) from the date of termination, exercise his
Option to the extent he was entitled to exercise it at the date of such
termination, but not later than the expiration of the term of the Option. To the
extent that he was not entitled to exercise the Option at the date of
termination, or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall terminate.
B-6
(d) DEATH OF OPTIONEE. Unless otherwise provided in an Option
Agreement relating to an Option that is not an Incentive Stock Option, if
Optionee dies during the term of the Option and is at the time of his death an
Employee of the Company who shall have been in continuous status as an Employee
since the date of grant of the Option, the Option may be exercised at any time
within one (1) year following the date of death (or such other period of time as
is determined by the Board), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that Optionee was entitled to exercise the Option on the date of
death and not later than the expiration of the term of the Option. To the extent
that decedent was not entitled to exercise the Option on the date of death, or
if the Optionee's estate, or person who acquired the right to exercise the
Option by bequest or inheritance, does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
10. NON-TRANSFERABILITY OF OPTION. Except as otherwise provided by the
Committee, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee or by his guardian or legal representative.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, consolidation,
subdivision, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class shall affect, and no adjustment by
reason thereof, shall be made with respect to the number or price of shares of
Common Stock subject to an Option.
In the event of a proposed dissolution or liquidation of the Company or the
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, all outstanding Options,
will become fully vested and exercisable except in the event that the surviving
or resulting entity agrees to assume the Options on terms and conditions that
substantially preserve the Optionee's rights and benefits of the Option then
outstanding. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Section 5(b), the excess Options will
be deemed to be non-qualified stock options. Upon, or in anticipation of, such
an event, the Committee may cause every Option outstanding hereunder to
terminate at a specific time in the future and will give each Optionee the right
to exercise Options during a period of time as the Committee, in its sole and
absolute discretion, will determine, except in the event that the surviving or
resulting entity agrees to assume the Options on terms and conditions that
B-7
substantially preserve the Optionee's rights and benefits of the Options then
outstanding.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee to whom an
Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board, or the Committee with the
Board's approval, may amend or terminate the Plan from time to time in such
respect as the Board may deem advisable; provided, however, that to the extent
necessary and desirable to comply with any applicable law, regulation, or stock
exchange rule, the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Optionee unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Share may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
In the case of an Incentive Stock Option, any Optionee who disposes of
Shares of Common Stock acquired on the exercise of an Option by sale or exchange
(a) either within two (2) years after the date of the grant of the Option under
which the Common Stock was acquired or (b) within one (1) year after the
acquisition of such Shares of Common Stock shall notify the Company of such
disposition and of the amount realized upon such disposition.
B-8
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. OPTION AGREEMENT. Options shall be evidenced by written Stock Option
Agreement in such form as the Board shall approve.
17. WITHHOLDING TAXES. Subject to Section 4(b)(x) of the Plan and prior to
the Tax Date, the Optionee may make an irrevocable election to have the Company
withhold from those Shares that would otherwise be received upon the exercise of
any Non-Statutory Stock Option, a number of Shares having a Fair Market Value
equal to the minimum amount necessary to satisfy the Company's federal, state,
local and foreign tax withholding obligations and FICA and FUTA obligations with
respect to the exercise of such Option by the Optionee.
An Optionee who is also an officer of the Company must make the
above-described election:
(a) at least six months after the date of grant of the Option (except
in the event of death or disability); and
(b) either:
(i) six months prior to the Tax Date, or
(ii) prior to the Tax Date and during the period beginning on the
third business day following the date the Company releases its quarterly or
annual statement of sales and earnings and ending on the twelfth business day
following such date.
18. MISCELLANEOUS PROVISIONS
(a) PLAN EXPENSES. Any expenses of administering this Plan shall be
borne by the Company.
(b) USE OF EXERCISE PROCEEDS. The payment received from Optionees from
the exercise of Options shall be used for the general corporate purposes of the
Company.
(c) CONSTRUCTION OF PLAN. The place of administration of the Plan
shall be in the State of Arizona, and the validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined in accordance
with the laws of the State of Nevada and in accordance with the Code.
(d) INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board, the members of the
Board shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option, and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them
in satisfaction of a judgment in any such action, suit or proceeding, except a
B-9
judgment based upon a finding of bad faith; provided that upon the institution
of any such action, suit or proceeding a Board member shall, in writing give the
Company notice thereof and an opportunity, at its own expense, to handle and
defend the same before such Board member undertakes to handle and defend it on
his own behalf.
(e) GENDER. For purposes of this Plan, words used in the masculine
gender shall include the feminine and neuter, and the singular shall include the
plural and vice versa, as appropriate.
B-10
APPENDIX A
NON-STATUTORY STOCK OPTION AGREEMENT
BY THIS STOCK OPTION AGREEMENT ("Agreement") made and entered into this
_____ day of __________, _____ ("Grant Date"), SWIFT TRANSPORTATION CO., INC., a
Nevada corporation (the "Company"), and ___________________, a key employee of
the Company (the "Optionee") hereby state, confirm, represent, warrant and agree
as follows:
I
RECITALS
1.1 The Company, through its Board of Directors (the "Board"), has
determined that in order to attract and retain the best available personnel for
positions of substantial responsibility to provide successful management of the
Company's business, it must offer a compensation package that provides key
employees of the Company a chance to participate financially in the success of
the Company by developing an equity interest in it.
1.2 As part of the compensation package, the Company has adopted the Swift
Transportation Co., Inc. 1999 Stock Option Plan (the "Plan") effective as of May
20, 1999.
1.3 Shareholders of the Company have adopted and approved the Plan on May
20, 1999.
1.4 By this Agreement, the Company and the Optionee desire to establish the
terms upon which the Company is willing to grant to the Optionee, and upon which
the Optionee is willing to accept from the Company, an option to purchase shares
of common stock of the Company ("Common Stock").
II
AGREEMENTS
2.1 GRANT OF NON-STATUTORY STOCK OPTION. Subject to the terms and
conditions hereinafter set forth and those provisions set forth and those
contained in the Plan, the Company grants to the Optionee the right and option
(the "Option") to purchase from the Company all or any part of an aggregate
number of _____________ (_____) shares of Common Stock, authorized but unissued
or, at the option of the Company, treasury stock if available (the "Optioned
Shares").
2.2 EXERCISE OF OPTION. Subject to the terms and conditions of this
Agreement and those of the Plan, the Option may be exercised only by completing
and signing a written notice in substantially the following form:
I hereby exercise the Option granted to me by Swift Transportation Co.,
Inc. and elect to purchase __________ shares of $.001 par value Common
Stock of Swift Transportation Co., Inc. for the purchase price to be
determined under Paragraph 2.3 of this Stock Option Agreement.
B-11
2.3 PURCHASE PRICE. The price to be paid for the Optioned Shares (the
"Purchase Price") shall be $______________ per share.
2.4 PAYMENT OF PURCHASE PRICE. Payment of the Purchase Price shall be made
as follows:
(a) In United States dollars in cash or by check, bank draft or money
order payable to the Company, or
(b) At the discretion of the Board, through the delivery of shares of
Common Stock with an aggregate fair market value at the date of such delivery,
equal to the Purchase Price, or
(c) By a combination of both (a) and (b) above.
The Board shall determine acceptable methods for rendering Common Stock as
payment upon exercise of an Option and may impose such limitations and
conditions on the use of Common Stock to exercise an Option as it deems
appropriate. At the election of the Optionee pursuant to Section 17 of the Plan,
and subject to the acceptance of such election by the Board, to satisfy the
Company's withholding obligations, it may retain such number of shares of Common
Stock subject to the exercised Option which have an aggregate Fair Market Value
(as defined in the Plan) on the date of exercise equal to the Company's
aggregate federal, state, local and foreign tax withholding and FICA and FUTA
obligations with respect to income generated by the exercise of the Option by
Optionee.
2.5 EXERCISABILITY OF OPTION. Subject to the provisions of Paragraph 2.6,
and except as otherwise provided in Paragraphs 2.8 and 2.9, the Option may be
exercised by the Optionee while in the employ of Company which shall include any
parent ("Parent") or subsidiary ("Subsidiary") corporation of the Company as
defined in Sections 425(e) and (f), respectively, of the Internal Revenue Code
of 1986, as amended ("Code"), in whole or in part from time to time, but only in
accordance with the following schedule:
CUMULATIVE PERCENTAGE OF
ELAPSED NUMBER OF YEARS SHARES SUBJECT TO OPTIONS AS TO
AFTER GRANT DATE WHICH OPTION MAY BE EXERCISED
---------------- -----------------------------
0-4 None
5 20%
6 40%
7 60%
8 80%
9 100%
For purposes of the foregoing schedule, a year is measured from the grant date
to the anniversary of the grant date and between anniversary dates thereof.
2.6 TERMINATION OF OPTION. Except as otherwise provided herein, the Option,
to the extent not heretofore exercised, shall terminate upon the first to occur
of the following dates:
B-12
(a) The date on which the Optionee's employment by the Company is
terminated except if such termination is voluntary, or occurs due to retirement
with the consent of the Board, death or disability within the meaning of Section
22(e)(3) of the Code;
(b) Thirty (30) days after voluntary termination or termination due to
retirement with the consent of the Board;
(c) Six (6) months afar termination due to disability within the
meaning of Section 22(e)(3) of the Code;
(d) One (1) year after the Optionee's death; or
(e) __________________, (being the expiration of a term equal to or
less than ten (10) years from the Grant Date).
2.7 ADJUSTMENTS. In the event of any stock split, reverse stock split,
stock divided, combination or reclassification of shares of Common Stock or any
other increase or decrease in the number of issued shares of Common Stock, the
number and kind of Optioned Shares (including any Option outstanding after
termination of employment or deal) and the Purchase Price per share shall be
proportionately and appropriately adjusted without any change in the aggregate
Purchase Price to be paid therefor upon exercise of the Option. The
determination by the Board as to the terms of any of the foregoing adjustments
shall be conclusive and binding.
2.8 LIQUIDATION, SALE OF ASSETS OR MERGER. In the event of a proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the option shall be assumed or an equivalent option shall be
substituted by such successor corporation, unless the Board determines that the
Optionee shall have the right to exercise the Option as to all of the Common
Stock subject to the Option. If the Board makes an Option fully exercisable, the
Board shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice (but not later than the
expiration of the Option term under Paragraph 2.6), and the Option will
terminate upon the expiration of such period. In the event the thirtieth (30th)
day referred to in this Paragraph shall fall on a day that is not a business
day, then the thirtieth (30th) day shall be the next following business day.
2.9 ACQUISITION. If any person, corporation or other entity or group
thereof (the "Acquiror"), acquires (an "Acquisition"), other than by merger or
consolidation or purchase from the Company, the beneficial ownership (as that
term is used in Section 13(d)(1) of the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder) or shares of the Company's common
stock which, when added to any other shares the beneficial ownership of which is
held by the Acquiror, shall have more than 50% of the votes that are entitled to
be cast at meetings of shareholders, any portion of the Option that was not
currently exercisable pursuant to Section 2.5 prior to the date of the
Acquisition shall become immediately exercisable and the Optionee may elect,
during the period commencing on the date of the Acquisition and ending at the
close of business on the thirtieth (30th) day following the date of the
Acquisition (but not later than the expiration of the Option term under
Paragraph 2.6), to exercise the Option in whole or in part. In the event the
thirtieth (30th) day referred to in this Section shall fall on a day that is not
B-13
a business day, then the thirtieth (30th) day shall be deemed to be the next
following business day.
2.10 NOTICES. Any notice to be given under the terms of the Agreement
("Notice") shall be addressed to the Company in care of its secretary at 2200
South 75th Avenue, Phoenix, Arizona 85043, or at its then current corporate
headquarters. Notice to be given to the Optionee shall be addressed to him or
her at his or her then current residential address as appearing on the payroll
records.
Notice shall be deemed duly given when enclosed in a properly sealed
envelope and deposited by certified mail, return receipt requested, in a post
office or branch post office regularly maintained by the United States
Government.
2.11 TRANSFERABILITY OF OPTION. The Option shall not be transferable by the
Optionee otherwise than by the will or the laws of descent and distribution, and
may be exercised during the life of the Optionee only by the Optionee.
2.12 OPTIONEE NOT A SHAREHOLDER. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the Optioned
Shares except to the extent that the Option herein granted shall have been
exercised with respect thereto and a stock certificate issued therefor.
2.13 DISPUTES OR DISAGREEMENTS. As a condition of the granting of the
Option herein granted, the Optionee agrees, for himself and his personal
representatives, that any disputes or disagreement which may arise under or as a
result of or pursuant to this Agreement shall be determined by the Board in its
sole discretion, and that any interpretation by the Board of the terms of this
Agreement shall be final, binding and conclusive.
2.14 RIGHT TO REPURCHASE. In the event that:
(a) Optionee voluntarily terminates employment with the Company or if
Optionee's employment is involuntarily terminated for nonperformance of duties
and if Optionee subsequently becomes a sole proprietor, partner, stockholder,
officer, director, employee, independent contractor or consultant of or to any
business which is engaged in the contract of common carriage of goods; or
(b) if Optionee's employment is involuntarily terminated for gross
misconduct, fraud, embezzlement, theft or breach of any fiduciary duty owed to
the Company (the "Triggering Event"), then the Board, at its discretion may
elect to repurchase from Optionee Optioned Shares for which an Option was
granted to and exercised by Optionee, for the Purchase Price paid by Optionee
under Paragraph 2.3, if such Triggering Event occurs any time within five years
after the Option for such Optioned Shares has been exercised by Optionee. The
Company shall exercise its rights hereunder by written notification to the
Optionee to be given within 180 days after the Board becomes aware of the
Triggering Event.
B-14
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer, and the Optionee has hereunto affixed his or her
signature.
SWIFT TRANSPORTATION CO., INC., a
Nevada corporation
By:
--------------------------------------
Its: President
------------------------------------------
"OPTIONEE"
B-15
APPENDIX B
INCENTIVE STOCK OPTION AGREEMENT
BY THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") made and entered
into this _____ day of __________, _____ ("Grant Date"), SWIFT TRANSPORTATION
CO., INC., a Nevada corporation (the "Company"), and _______________, a key
employee of the Company (the "Optionee") hereby state, confirm, represent,
warrant and agree as follows:
I
RECITALS
1.1 The Company, through its Board of Directors (the "Board"), has
determined that in order to attract and retain the best available personnel for
positions of substantial responsibility to provide successful management of the
Company's business, it must offer a compensation package that provides key
employees of the Company a chance to participate financially in the success of
the Company by developing an equity interest in it.
1.2 As part of the compensation package, the Company had adopted the Swift
Transportation Co., Inc. 1999 Stock Option Plan (the "Plan") effective as of May
20, 1999.
1.3 Shareholders of the Company have adopted and approved the Plan on May
20, 1999.
1.4 By this Agreement, the Company and the Optionee desire to establish the
terms upon which the Company is willing to grant to the Optionee, and upon which
the Optionee is willing to accept from the Company, an option to purchase shares
of common stock of the Company ("Common Stock").
II
AGREEMENTS
2.1 GRANT OF INCENTIVE STOCK OPTION. Subject to the terms and conditions
hereinafter set forth and those provisions set forth and those contained in the
Plan, the Company grants to the Optionee the right and option (the "Option") to
purchase from the Company all or any part of an aggregate number of
_____________ (_____) shares of Common Stock, authorized but unissued or, at the
option of the Company, treasury stock if available (the "Optioned Shares").
2.2 EXERCISE OF OPTION. Subject to the terms and conditions of this
Agreement and those of the Plan, the Option may be exercised only by completing
and signing a written notice in substantially the following form:
I hereby exercise the Option granted to me by Swift Transportation Co.,
Inc. and elect to purchase __________ shares of $.001 par value Common
Stock of Swift Transportation Co., Inc. for the purchase price to be
determined under Paragraph 2.3 of this Stock Option Agreement.
B-16
2.3 PURCHASE PRICE. The price to be paid for the Optioned Shares (the
"Purchase Price") shall be $______________ per share, which was not less than
the fair market value of the Optioned Shares as determined by the Board on the
Grant Date, or, in the case of an Option granted to an employee who, on the
Grant Date owns ten percent (10%) or more of the Common Stock, as such amount is
calculated under Section 422(b)(6) of the Internal Revenue Code of 1986, as
amended (the "Code") not less than one hundred and ten percent (110%) of the
fair market value of the Optioned Stock.
2.4 PAYMENT OF PURCHASE PRICE. Payment of the Purchase Price shall be made
as follows:
(a) In United States dollars in cash or by check, bank draft or money
order payable to the Company, or
(b) At the discretion of the Board, through the delivery of shares of
Common Stock with an aggregate fair market value at the date of such delivery,
equal to the Purchase Price, or
(c) By a combination of both (a) and (b) above.
The Board shall determine acceptable methods for rendering Common Stock as
payment upon exercise of an Option and may impose such limitations and
conditions on the use of Common Stock to exercise an Option as it deems
appropriate. At the election of the Optionee pursuant to Section 17 of the Plan,
and subject to the acceptance of such election by the Board, to satisfy the
Company's withholding obligations, it may retain such number of shares of Common
Stock subject to the exercised Option which have an aggregate Fair Market Value
(as defined in the Plan) on the date of exercise equal to the Company's
aggregate federal, state, local and foreign tax withholding and FICA and FUTA
obligations with respect to income generated by the exercise of the Option by
Optionee.
2.5 EXERCISABILITY OF OPTION. Subject to the provisions of Paragraph 2.6,
and except as otherwise provided in Paragraphs 2.8 and 2.9, the Option may be
exercised by the Optionee while in the employ of Company which shall include any
parent ("Parent") or subsidiary ("Subsidiary") corporation of the Company as
defined in Sections 425(e) and (f), respectively, of the Internal Revenue Code
of 1986, as amended ("Code"), in whole or in part from time to time, but only in
accordance with the following schedule:
CUMULATIVE PERCENTAGE OF
ELAPSED NUMBER OF YEARS SHARES SUBJECT TO OPTIONS AS TO
AFTER GRANT DATE WHICH OPTION MAY BE EXERCISED
---------------- -----------------------------
0-4 None
5 20%
6 40%
7 60%
8 80%
9 100%
For purposes of the foregoing schedule, a year is measured from the grant date
to the anniversary of the grant date and between anniversary dates thereof.
B-17
2.6 TERMINATION OF OPTION. Except as otherwise provided herein, the Option,
to the extent not heretofore exercised, shall terminate upon the first to occur
of the following dates:
(a) The date on which the Optionee's employment by the Company is
terminated except if such termination is voluntary, or occurs due to retirement
with the consent of the Board, death or disability within the meaning of Section
22(e)(3) of the Code;
(b) Thirty (30) days after voluntary termination or termination due to
retirement with the consent of the Board;
(c) Six (6) months afar termination due to disability within the
meaning of Section 22(e)(3) of the Code;
(d) One (1) year after the Optionee's death; or
(e) __________________, (being the expiration of a term equal to or
less than ten (10) years from the Grant Date).
2.7 ADJUSTMENTS. In the event of any stock split, reverse stock split,
stock divided, combination or reclassification of shares of Common Stock or any
other increase or decrease in the number of issued shares of Common Stock, the
number and kind of Optioned Shares (including any Option outstanding after
termination of employment or deal) and the Purchase Price per share shall be
proportionately and appropriately adjusted without any change in the aggregate
Purchase Price to be paid therefor upon exercise of the Option. The
determination by the Board as to the terms of any of the foregoing adjustments
shall be conclusive and binding.
2.8 LIQUIDATION, SALE OF ASSETS OR MERGER. In the event of a proposed
dissolution or liquidation of the Company or the proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option will become fully vested and
exercisable except in the event that the surviving entity or resulting entity
agrees to assume the Option. Upon or in anticipation of such event, the
Committee may cause the Option to terminate, but will provide the Optionee with
a period of time to exercise the Option prior to the termination.
2.9 ACQUISITION. If any person, corporation or other entity or group
thereof (the "Acquiror"), acquires (an "Acquisition"), other than by merger or
consolidation or purchase from the Company, the beneficial ownership (as that
term is used in Section 13(d)(1) of the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder) or shares of the Company's common
stock which, when added to any other shares the beneficial ownership of which is
held by the Acquiror, shall have more than 50% of the votes that are entitled to
be cast at meetings of shareholders, any portion of the Option that was not
currently exercisable pursuant to Section 2.5 prior to the date of the
Acquisition shall become immediately exercisable and the Optionee may elect,
during the period commencing on the date of the Acquisition and ending at the
close of business on the thirtieth (30th) day following the date of the
Acquisition (but not later than the expiration of the Option term under
Paragraph 2.6), to exercise the Option in whole or in part. In the event the
thirtieth (30th) day referred to in this Section shall fall on a day that is not
a business day, then the thirtieth (30th) day shall be deemed to be the next
following business day.
B-18
2.10 NOTICES. Any notice to be given under the terms of the Agreement
("Notice") shall be addressed to the Company in care of its secretary at 2200
South 75th Avenue, Phoenix, Arizona 85043, or at its then current corporate
headquarters. Notice to be given to the Optionee shall be addressed to him or
her at his or her then current residential address as appearing on the payroll
records.
Notice shall be deemed duly given when enclosed in a properly sealed
envelope and deposited by certified mail, return receipt requested, in a post
office or branch post office regularly maintained by the United States
Government.
2.11 NOTIFICATION OF DISPOSITION OF SHARES. The Optionee hereby
acknowledges that a disposition of shares of Common Stock acquired upon the
exercise of the Option within two (2) years from the Grant Date or within one
(1) year after the transfer of such shares of Common Stock to him or her would
result in detrimental income tax consequences to the Optionee.
The Optionee hereby agrees to promptly notify the Company of any
disposition of shares of Common Stock within either of the above time
limitations.
2.12 MODIFICATION OF AGREEMENT. With the consent of Optionee, the Board may
at any time and from time to time direct that the Agreement be modified in such
respects deemed advisable in order that the Option shall constitute an incentive
stock option pursuant to Section 422 of the Code.
2.13 TRANSFERABILITY OF OPTION. The Option shall not be transferable by the
Optionee otherwise than by the will or the laws of descent and distribution, and
may be exercised during the life of the Optionee only by the Optionee.
2.14 OPTIONEE NOT A SHAREHOLDER. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the Optioned
Shares except to the extent that the Option herein granted shall have been
exercised with respect thereto and a stock certificate issued therefor.
2.15 DISPUTES OR DISAGREEMENTS. As a condition of the granting of the
Option herein granted, the Optionee agrees, for himself and his personal
representatives, that any disputes or disagreement which may arise under or as a
result of or pursuant to this Agreement shall be determined by the Board in its
sole discretion, and that any interpretation by the Board of the terms of this
Agreement shall be final, binding and conclusive.
2.16 RIGHT TO REPURCHASE. In the event that:
(a) Optionee voluntarily terminates employment with the Company or if
Optionee's employment is involuntarily terminated for nonperformance of duties
and if Optionee subsequently becomes a sole proprietor, partner, stockholder,
officer, director, employee, independent contractor or consultant of or to any
business which is engaged in the contract of common carriage of goods; or
(b) if Optionee's employment is involuntarily terminated for gross
misconduct, fraud, embezzlement, theft or breach of any fiduciary duty owed to
the Company (the "Triggering Event"), then the Board, at its discretion may
elect to repurchase from Optionee Optioned Shares for which an Option was
granted to and exercised by Optionee, for the Purchase Price paid by Optionee
B-19
under Paragraph 2.3, if such Triggering Event occurs any time within five years
after the Option for such Optioned Shares has been exercised by Optionee. The
Company shall exercise its rights hereunder by written notification to the
Optionee to be given within 180 days after the Board becomes aware of the
Triggering Event.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer, and the Optionee has hereunto affixed
his or her signature.
SWIFT TRANSPORTATION CO., INC., a
Nevada corporation
By
-----------------------------------------
Its: President
---------------------------------------------
"OPTIONEE"
B-20
PROXY PROXY
SWIFT TRANSPORTATION CO., INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 6, 2002
I appoint Jerry Moyes and William F. Riley III, individually and together,
proxies with full power of substitution, to vote all my shares of common stock
of Swift Transportation Co., Inc. (the "Company") which I have the power to
vote, at the Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held at the Company's corporate headquarters at 2200 South 75th
Avenue, Phoenix, Arizona 85043 on June 6, 2002 beginning at 10:00 a.m. local
time and at any adjournments and postponements of the Annual Meeting. In the
absence of specific voting directions from me, my proxies will vote my shares in
accordance with the recommendations of the Board of Directors on the reverse
side of this card. My proxies may vote according to their discretion on any
other matter which may properly come before the Annual Meeting. I revoke any
proxy previously given and acknowledge that I may revoke this proxy prior to its
exercise.
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED FOR (1) THE ELECTION OF EACH
CLASS III DIRECTOR NOMINEE, (2) APPROVAL OF THE ADOPTION OF THE PROPOSED
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF ITS COMMON STOCK, (3) APPROVAL OF THE ADOPTION OF THE
PROPOSED AMENDMENT TO THE COMPANY'S 1999 STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER AND (4) APPROVAL OF THE
ADOPTION OF THE PROPOSED AMENDMENTS TO THE COMPANY'S 1999 STOCK OPTION PLAN TO
PERMIT THE GRANT OF OPTIONS TO JERRY MOYES AND INCREASE THE LIMITATION ON
MAXIMUM ANNUAL GRANTS TO A SINGLE INDIVIDUAL.
YOUR VOTE IS IMPORTANT: PLEASE SIGN AND DATE THE OTHER SIDE OF THIS PROXY CARD
AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be marked, signed and dated on the reverse side.)
SWIFT TRANSPORTATION CO., INC.
PLEASE MARK BOXES, SIGN AND DATE USING DARK INK ONLY.
The Board of Directors recommends a vote FOR Proposals 1 through 4.
For All
1. TO ELECT CLASS III DIRECTORS For Withhold Except Nominee
Nominees: William F. Riley III All All Written Below
and Lou A. Edwards
[ ] [ ] [ ]
To withhold authority
to vote for any
individual nominee,
write the name of
such nominee in the
space below:
_____________________
2. TO APPROVE THE AMENDMENT TO For Against Abstain
THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE [ ] [ ] [ ]
NUMBER OF SHARES OF COMMON
STOCK AUTHORIZED FOR ISSUANCE
FROM 150,000,000 TO
200,000,000.
3. TO APPROVE THE AMENDMENT TO For Against Abstain
THE COMPANY'S 1999 STOCK OPTION
PLAN TO INCREASE THE NUMBER OF [ ] [ ] [ ]
SHARES AUTHORIZED FOR ISSUANCE
FROM 4,250,000 TO 8,250,000.
4. TO APPROVE THE AMENDMENT TO THE For Against Abstain
COMPANY'S 1999 STOCK OPTION
PLAN TO PERMIT THE GRANT OF [ ] [ ] [ ]
OPTIONS TO JERRY MOYES AND
INCREASE THE MAXIMUM NUMBER OF
SHARES OF COMMON STOCK UNDERLYING
OPTIONS THAT MAY BE GRANTED TO
A SINGLE INDIVIDUAL IN A FISCAL
YEAR FROM 100,000 TO 1,000,000.
Please sign exactly as name(s) appear(s)
on your common stock certificate(s) and
date. If acting as an executor,
administrator, trustee, custodian,
guardian, etc., you should so indicate
in signing. If the stockholder is a
corporation, the proxy should indicate
the full corporate name and be signed by
a duly authorized officer (indicating
his or her position). If shares are held
jointly, each stockholder named on the
common stock certificate(s) should sign.
----------------------------------------
----------------------------------------
Signature
----------------------------------------
Signature
Dated: _____________, 2002
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS YOU SPECIFY ABOVE. IF NO
SPECIFIC VOTING INSTRUCTIONS ARE GIVEN BY YOU, THIS PROXY WILL BE VOTED FOR EACH
OF THE LISTED PROPOSALS AND, WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING, OR ANY ADJOURNMENTS OR POSTPONEMENTS, IN
ACCORDANCE WITH THE DISCRETION OF THE APPOINTED PROXIES. PLEASE SIGN, DATE AND
RETURN THIS PROXY PROMPTLY.