KLLM TRANSPORT SERVICES, INC.
3475 Lakeland Drive
Jackson, Mississippi 39208
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 15, 1997
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of
KLLM Transport Services, Inc., will be held at the Company's headquarters,
3475 Lakeland Drive, Jackson, Mississippi, on Tuesday, April 15,
1997, at 10:00 a.m., Jackson time, for the purpose of considering and
acting upon the following matters:
1. Election of six directors to serve until the next annual meeting
of shareholders and until their successors are elected and qualified.
2. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending January 2, 1998.
3. Approval of the Company's 1996 Stock Option Plan.
4. Approval of the Company's Amended and Restated 1996 Stock Purchase
Plan.
5. Transaction of such other business as may properly come before the
meeting or any adjournments thereof.
The directors have fixed the close of business on March 17, 1997, as
the record date for the determination of shareholders entitled to receive
notice of and vote at the Annual Meeting.
The directors sincerely desire your presence at the meeting. However,
so that we may be sure your vote will be included, please sign and return
the enclosed proxy promptly. A self-addressed, postage-paid
return envelope is enclosed for your convenience.
By order of the Board of Directors.
<TABLE>
<S> <C>
s/James Leon Young
JAMES LEON YOUNG, Secretary
</TABLE>
Date: March 20, 1997
SHAREHOLDERS ARE URGED TO VOTE BY DATING, SIGNING AND RETURNING THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES.
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
KLLM TRANSPORT SERVICES, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(4) Date Filed:
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KLLM TRANSPORT SERVICES, INC.
3475 Lakeland Drive
Jackson, Mississippi 39208
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 15, 1997
The following information is furnished in connection with the
Annual Meeting of Shareholders of KLLM Transport Services, Inc.
(the "Company") to be held on Tuesday, April 15, 1997, at 10:00 a.m.,
Jackson time, at the Company's headquarters, 3475 Lakeland Drive, Jackson,
Mississippi. A copy of the Company's annual report to shareholders for the
fiscal year ended January 3, 1997, accompanies this proxy statement. The
annual report is not to be considered part of the proxy solicitation
materials. Additional copies of the annual report, notice, proxy statement,
and form of proxy may be obtained from the Company's Secretary,
P. O. Box 6098, Jackson, Mississippi 39288.
The enclosed proxy is solicited by the Board of Directors of the
Company. The proxy may be revoked by a shareholder at any time before it is
voted by filing with the Company's Secretary a written revocation or a duly
executed proxy bearing a later date. The proxy may also be revoked by a
shareholder attending the meeting, withdrawing the proxy, and voting in
person.
All expenses incurred in connection with the solicitation of
proxies will be paid by the Company. In addition to the
solicitation of proxies by mail, directors, officers, and regular employees
of the Company may solicit proxies in person or by
telephone. The Company will, upon request, reimburse banks, brokerage
houses and other institutions, nominees, and fiduciaries for their
expenses in forwarding proxy material to their principals.
The approximate date of mailing this proxy statement and the
enclosed form of proxy is March 20, 1997. Shareholders of record at the
close of business on March 17, 1997, are eligible to vote at the Annual
Meeting. As of the record date, 4,351,922 shares of the Company's common
stock were outstanding. Each is entitled to one vote on each issue to be
considered at the Annual Meeting.
Other than the election of directors, which requires a plurality
of the votes cast, each matter to be submitted to the shareholders requires
the affirmative vote of a majority of the votes cast at the meeting. For
purposes of determining the number of votes cast with respect to a particular
matter, only those cast "For" or "Against" are included. Abstentions and broker
non-votes are counted only for purposes of determining whether a quorum is
present at the meeting.
ELECTION OF DIRECTORS
The Company's bylaws provide that the number of directors shall be
fixed by resolution of the Board of Directors and that the number may not be
less than three nor more than twelve. Pursuant to the bylaws, the Board of
Directors has fixed the number of directors at six. Unless otherwise
specified, proxies will be voted FOR the election of the six nominees named
below to serve until the next annual meeting of shareholders and until their
successors are elected and qualified. If, at the time of the meeting, any
of the nominees named below is not available to serve as director (which is
not anticipated), the proxies will be voted for the election of such other
person or persons as the Board of Directors may designate. The directors
recommend a vote FOR the six nominees listed below. Nominees Benjamin C.
Lee, Jr., James Leon Young, Walter P. Neely, Steven K. Bevilaqua, C. Tom
Clowe, Jr., and Leland R. Speed are now directors of the Company.
Nominees for Director
The table below sets forth certain information regarding the
nominees for election to the Board of Directors:
<TABLE>
<S> <C> <C>
Name and Position Age Principal Occupation, Business Experience
for the Past Five Years and Tenure with
the Company
Benjamin C. Lee, Jr.
Director and
Chairman of the
Board of Directors 69 Chairman of the Board of Directors since
February 14, 1996; Acting Chief Executive
Officer from November, 1994 to April, 1995;
Vice Chairman of the Board of Directors
from 1986 to February 14, 1996; Executive
Vice President from 1982 to 1986;
Secretary from January, 1964 to May, 1968
and from July, 1969 to January, 1982;
Treasurer from July, 1969 to January, 1982.
James Leon Young,
Secretary and Director 66 Attorney, Young, Williams, Henderson &
Fuselier, P.A., Jackson, Mississippi;
Director since 1965; Secretary since 1982.
Walter P. Neely
Director 51 Professor, Else School of Management,
Millsaps College, Jackson, Mississippi;
Private consultant; Trustee, Performance
Funds Trust, New York, New York, since
June, 1992; Director since 1986.
Steven K. Bevilaqua 45 President, Chief Executive Officer and
President, Chief Director since April, 1995; President -
Executive Officer Eastern Region of J. B. Hunt Co. from
and Director November, 1994 to March, 1995; Executive
Vice President of Operations of J. B.
Hunt Co. from February, 1992, to
November, 1994; Senior Vice President of
Sales and Marketing of J. B. Hunt Co.
from September, 1990 to February, 1992.
C. Tom Clowe, Jr. 63 President and Chief Operating Officer,
Director Missouri Gas Energy, Division of Southern
Union Corporation, from 1995 to present;
Chairman, President and Chief Operating
Officer of Central Freight Lines, Inc.,
Waco, Texas, from 1990 to 1995; Director
since June, 1995
Leland R. Speed 64 President and Director of Congress Street
Director Properties from February, 1984 to November
1994; Chairman and Director of Delta
Industries, Inc. from April, 1979 to
present; Trustee of EastGroup Properties
from 1978 to present; Chairman and Chief
Executive Officer of EastGroup Properties
from April, 1993 to present; Trustee of
Eastover Corporation from 1975 to
December, 1994; President of Eastover
Corporation from 1977 to December, 1994;
President and Director of EB, Inc. from
March, 1993 to present; Director of
Farm Fish, Inc. from October, 1982 to
present; Director of First Mississippi
Corp. from May, 1968 to present; President
and Director of LNH REIT, Inc. from
November, 1991 to present; Director of
Mississippi Valley Gas Co. from December,
1984 to present; Chairman and Chief
Executive Officer of The Parkway Company
from April, 1993 to present; Director since
May, 1995.
</TABLE>
Stock Ownership
The following table indicates the beneficial ownership as of
March 17, 1997, unless otherwise indicated below, of the Company's common
stock by each nominee and director, the CEO and the four most highly
compensated executive officers other than the CEO, by each person known by
the Company to be the beneficial owner of more than 5% of the Company's
outstanding shares, and by all directors and executive officers of the
Company as a group.
<TABLE>
<S> <C> <C>
Name of Beneficial Amount and Nature of Beneficial Percent of
Owner Ownership Class
Estate of William J. Liles, Jr. 680,400 (1)(2) 15.6%
Benjamin C. Lee, Jr. 608,933 (2)(3) 14.0%
James Leon Young 11,667 (4) Less than 1%
Walter P. Neely 4,499 (5) Less than 1%
Steven K. Bevilaqua 140,000 (6) 3.1%
C. Tom Clowe, Jr. 2,000 Less than 1%
Leland R. Speed 1,000 Less than 1%
John J. Ritchie 21,250 (7) Less than 1%
J. Kirby Lane 18,282 (8) Less than 1%
Nancy M. Sawyer 70,300 (9) 1.6%
Brinson Partners, Inc. 430,897 (10) 9.9%
Brinson Trust Company 125,655 (10) 2.9%
Brinson Holdings, Inc. 430,897 (10) 9.9%
SBC Holding (USA), Inc. 430,897 (10) 9.9%
Swiss Bank Corporation 430,897 (10) 9.9%
Dimensional Fund Advisors, Inc. 270,598 (11) 6.2%
Officers & Directors as a
Group (12 persons) 938,149 (12) 20.2%
</TABLE>
(1) Mr. Liles passed away on February 11, 1996. The current address for the
Estate is 112 Meadowbrook North, Jackson, Mississippi 39211. His widow, Mrs.
Margaret B. Liles, is Executor of the Estate.
(2) Mr. Liles' Estate and Mr. Lee may be deemed to control the Company because
of stock ownership and Mr. Lee's position with the Company.
(3) The address of Mr. Lee is P. O. Box 6098, Jackson, Mississippi 39288.
(4) 6,667 shares are unissued but are subject to an option that is exercisable
at any time prior to October 1, 1997.
(5) 1,199 shares are jointly owned with Dr. Neely's wife. 2,000 shares are
unissued but are subject to an option that is exercisable at any time prior
to October 1, 1997.
(6) 90,000 shares are unissued but are subject to an option that is exercisable
at any time prior to May 31, 2005. 50,000 shares are unissued but are subject
to an obligation to purchase under the Amended and Restated 1996 Stock Purchase
Plan on or before August 7, 2001.
(7) 1,250 shares are unissued but are subject to an option that is exercisable
at any time prior to March 31, 2006. 20,000 shares are unissued but are
subject to an obligation to purchase under the Amended and Restated 1996 Stock
Purchase Plan on or before August 7, 2001.
(8) 4,000 shares are unissued but are subject to an option that is exercisable
at any time prior to May 24, 1997. 12,500 shares are unissued but are subject
to an option that is exercisable at any time prior to May 24, 1997. Mr. Lane
resigned effective February 24, 1997.
(9) 50,000 shares are unissued but are subject to an obligation to purchase
under the Amended and Restated 1996 Stock Purchase Plan on or before August 7,
2001. 20,000 shares are owned jointly with her husband.
(10) Ownership is as of December 31, 1996. Shared voting and shared
dispositive power are claimed as to all shares. Brinson Trust Company, 209
South LaSalle, Chicago, Illinois 60604-1295, is a wholly-owned subsidiary of
Brinson Partners, Inc. Brinson Partners, Inc., 209 South LaSalle, Chicago,
Illinois 60604-1295, is a wholly-owned subsidiary of Brinson Holdings,
Inc. Brinson Holdings, Inc., 209 South LaSalle, Chicago, Illinois 60604-1295,
is a wholly-owned subsidiary of SBC Holding (USA), Inc. SBC Holding (USA),
Inc., 222 Broadway, New York, New York 10038, is a wholly-owned subsidiary of
Swiss Bank Corporation, Aeschenplatz, 6 CH-4002, Basel, Switzerland.
(11) 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
Ownership is as of December 31, 1996. Beneficial ownership of all shares is
disclaimed. Sole voting power is claimed as to 199,599 shares and sole
dispositive power is claimed as to all shares.
(12) 126,751 shares are unissued but are subject to options exercisable at
various times. 160,000 shares are unissued but are subject to obligations
to purchase under the Amended and Restated 1996 Stock Purchase Plan on or
before August 7, 2001.
Management
<TABLE>
The executive officers of the Company are as follows:
<S> <C> <C>
Principal Occupation
and Business Experience
Name, Position and Tenure with the Company Age for the Past Five Years
Benjamin C. Lee, Jr. 69 See table under Election
Chairman of the Board of Directors of Directors.
Steven K. Bevilaqua 45 See table under Election
President and Chief Executive Officer of Directors.
James Leon Young 66 See table under Election
Secretary and Director of Directors
Steven L. Dutro
Acting Chief Financial Officer 41 Employee of the Company
since 1986; Acting
Chief Financial Officer
since February, 1997;
Vice-President of
Finance, Profitability
and Planning from
December, 1995 to
February, 1997; Vice-
President of Finance
from 1994 to 1995;
Director of Finance
from 1993 to 1994;
Controller from 1986
to 1992.
James P. Sorrels 42 Employee of the Company
President - since 1978; President-
Express Systems Express Systems since
September, 1995;
President Contract
Logistics from January,
1995 to February, 1996;
Vice President-Customer
Service from February,
1994 to January, 1995;
Director of Operations
from April, 1992 to
February, 1994; Director
of Western Operations
from January, 1989 to
April, 1992.
Nancy M. Sawyer 52 Employee of the Company
President and President of Vernon
Vernon Sawyer Sawyer operations since
May, 1995; Vice President
of Operations of Vernon
Sawyer, Inc. from 1964 to
April, 1995; Secretary-
Treasurer of Vernon
Sawyer Inc., from 1986
to April, 1995.
John J. Ritchie 47 Employee of the Company
Senior Vice President and Senior Vice President
Sales and Marketing -Sales and Marketing
since April, 1996; Sales
and Marketing Vice
President of Marketing
of Central Transport
from August, 1995, to
March, 1996; Vice
President of Marketing
of Dawes Transport from
May, 1995 to July, 1995;
Vice President of Marketing
of Overnite Transpor-
tation from January,
1989, to February, 1995.
W. J. Liles, III 46 Employee of the Company
Vice President since 1974; Vice
President-Sales and
Marketing since April,
1996; Sales and
Marketing President-
Rail Services from
February, 1994 to
April, 1996; Vice
President-Sales and
Marketing-West from
1990 to 1994; Vice
President-Marketing
from October, 1986 to
1990; Marketing Director
from 1983 to October,
1986.
</TABLE>
The executive officers have no particular terms of office. They each serve at
the discretion of the Board of Directors.
Certain Transactions
In the following three paragraphs, the "Company" includes the
Company's subsidiaries.
On January 1, 1978, the Company entered into a ground lease with
Mr. Lee (principal shareholder and current Chairman of the Board of
Directors) and Mr. Liles (now deceased), for part of the real property on
which the Company's Richland, Mississippi, terminal (then the corporate
headquarters) is located. In 1986, this lease was renegotiated to include
contiguous property acquired by Mr. Lee and Mr. Liles, with the lease term
commencing January 31, 1986, and expiring January 31, 2006
("the 1986 Lease"). The monthly rental payments for the term of the 1986
Lease are $3,000. In the opinion of the disinterested members of the
Board of Directors, the rental payments under the lease were on terms no
less favorable to the Company than those available from unrelated third
parties. During the year ended January 3, 1997, total lease payments were
$36,000.
On December 31, 1991, Messrs. Liles and Lee granted the Company an
option to purchase the land covered by the 1986 Lease for $390,257 when that
lease expires in 2006. In the opinion of the disinterested members of the
Board of Directors, the option to purchase the land covered by the 1986 Lease
was on terms no less favorable to the Company that those available from
unrelated third parties.
James Leon Young, who is a director of the Company, is a
shareholder and officer in the Jackson, Mississippi, law firm
of Young, Williams, Henderson & Fuselier, P.A., general counsel to the Company.
During the year ended January 3, 1997, the Company paid Young, Williams,
Henderson & Fuselier, P.A., fees in payment of services rendered in connection
with litigation, corporate and other matters. No retainer fees were paid.
The total of all such fees did not exceed five percent of that firm's gross
revenues for its last full fiscal year.
Committees and Meeting Data
The standing Audit Committee of the Board of Directors consists of
Dr. Neely (Chairman), Mr. Young and Mr. Speed. The Audit Committee recommends
auditors for the Company, oversees the Company's accounting functions and is
the Board's liaison with the Company's independent auditors. The Audit
Committee met three times in the year ended January 3, 1997,
and meets at least once annually to review the reports of the Company's
independent auditors and to review the Company's internal accounting
procedures.
The Compensation Committee of the Board of Directors consists of
Mr. Young, Mr. Speed and Mr. Clowe (Chairman). The Compensation Committee
reviews the compensation for the officers of the Company. The Compensation
Committee met five times in the year ended January 3, 1997.
The Company does not have a nominating committee.
During the year ended January 3, 1997, the Board of Directors met
on five occasions. Each director attended 100% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board on which he served.
Executive Compensation
The following table summarizes the compensation paid by the Company
and its subsidiaries to the Company's Chief Executive Officer and to the
Company's four most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers at the end of the
year ended January 3, 1997, for services rendered in all capacities to
the Company and its subsidiaries during the fiscal years ended January 3, 1997,
December 29, 1995, and December 30, 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NAME AND
PRINCIPAL
POSITION YEAR SALARY BONUS OTHER RES- OPTIONS LTIP ALL
($) ($) ANNUAL TRICTED PAY OTHER
COMPEN- STOCK OUTS COMPEN
SATION AWARDS SATION
Steven K.
Bevilaqua
President
and CEO 1996 $225,000 --- $18,192(1) --- $6,348(2)
1995 $168,750 $50,000 $17,188(1) $150,000 ---
1994 --- --- ---
Benjamin
C. Lee, Jr.
Chairman of
the Board 1996 $117,000 $7,200(3)
1995 $117,000 5,160
1994 $114,500 5,060
J. Kirby Lane
Executive Vice
President
and CFO 1996 $150,000 6,667 $6,000(4)
1995 $145,833 --- 5,833
1994 $125,000 --- 5,000
John J.
Ritchie
Senior Vice
President
Sales and
Marketing 1996 $112,500 5,000 ---
1995 --- --- ---
1994 --- --- ---
Nancy M.
Sawyer
President
Vernon Sawyer 1996 $106,667 $4,267(4)
1995 $ 66,667 ---
</TABLE>
(1) Effective April, 1995, Mr. Bevilaqua assumed the position of President and
CEO. As an inducement to accept the position, in 1995, Mr. Bevilaqua was paid
$75,000 relative to his relocation, plus reimbursement for projected income
taxes associated therewith in the amount of $42,188 plus an additional $18,192
in 1996.
(2) Comprised of $6,000 of matching contributions by the Company to Mr.
Bevilaqua's 401(K) Retirement Plan Account and $348 in insurance premiums paid
by the Company with respect to term life insurance for Mr. Bevilaqua's
benefit.
(3) Comprised of $4,680 of matching contributions by the Company to Mr. Lee's
401(K) Retirement Plan Account and $2,520 in insurance premiums paid by the
Company with respect to term life insurance for Mr. Lee's benefit.
(4) Comprised of matching contributions by the Company to the officer's 401(K)
Retirement Plan Account.
The Company has no employment agreements with its executive
officers, except for Mr. Bevilaqua, whose base salary is $225,000.00
annually. Further, Mr. Bevilaqua has stock options as set forth in the tables
below and receives the perquisites provided to all Company executives.
Director Compensation
Directors who are also full-time employees of the Company receive
no additional compensation for their services as directors. In 1996, Dr.
Neely, Mr. Young, Mr. Clowe and Mr. Speed received $12,500.00 for their
services as directors, which included their services at all quarterly and
special Board meetings. The Company's standard arrangement is to pay directors
who are not also full-time employees of the Company $750.00 for each committee
meeting attended as members and $1,000.00 for each committee meeting attended
as chairmen. In 1996, Dr. Neely, Mr. Young, Mr. Speed and Mr. Clowe received
$3,750, $4,750, $3,750, and $2,750, respectively, for their services at
committee meetings attended.
Compensation Committee Report on Executive Compensation
The Compensation Committee recommended small increases in the
salaries of some of the officers based on length of service, level of
responsibility, and the particular performance of the officers in question.
The Committee determined that the salary of the President and Chief Executive
Officer would remain the same. Salaries are based on: (a) comparable salaries
for similar positions in the industry; and (b) a bi-annual survey of similarly
sized companies with sources such as the National Association of Finance
Council and the Geographic Reference Report. The Compensation Committee
targets executive compensation at the middle point of compensation paid by
comparable companies.
There was no objection nor modification by the Board of Directors
of the Committee's recommendations.
James Leon Young,
Leland R. Speed
C. Tom Clowe, Jr., Chairman
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended January 3, 1997, the Compensation
Committee of the Board of Directors consisted of Mr. Young, (Chairman),
Dr. Neely, and Mr. Clowe until April 16, 1996. From and after April 16, 1996,
the Compensation Committee consisted of Mr. Clowe (Chairman), Mr. Speed and
Mr. Young. Mr. Young is currently serving as Secretary and
has served in such capacity since 1982. Additionally, Mr. Young is a
shareholder and officer in the law firm of Young, Williams,
Henderson & Fuselier, P.A., which acts as general counsel to the Company.
During the year ended January 3, 1997, the Company paid Young, Williams,
Henderson & Fuselier, P.A. fees in payment of services rendered in connection
with litigation, corporate and other matters. No retainer fees were paid.
The total of all such fees did not exceed five percent of that firm's
gross revenues for its last full fiscal year.
Stock Option Plan
The following table sets forth (a) all individual grants of Stock
Options made by the Company and its subsidiaries during the year ended
January 3, 1997, to each of the executive officers named in the Summary
Compensation Table above, (b) the ratio that the number of options granted to
each individual bears to the total number of options granted to all
employees of the Company and its subsidiaries, (c) the exercise price and
expiration date of such options, and (d) estimated potential realizable
values with respect to each grant of options based on assumed appreciation
rates of 5% (compounded annually) and 10% (compounded annually):
<TABLE>
OPTIONS/SAR GRANTS
IN FISCAL YEAR ENDED JANUARY 3, 1997
Individual Grants Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
for Option Terms
<S> <C> <C> <C> <C> <C> <C>
Name Options/SARs % of Total Exercise or Expiration 5%($) 10%($)
Granted (#) Options/SARs Base Price Date
Granted to ($/Share)
Employees in
Steven K.
Bevilaqua
President
and CEO
Benjamin C.
Lee, Jr.
Chairman of
the Board
J. Kirby Lane 6,667 19.3% $11.25 4/15/2006 $40,059 $99,886
Executive Vice
President and
CFO
John J.
Ritchie
Senior Vice
President
Sales and
Marketing 5,000 14.5% $10.75 3/31/2006 $ 29,6340 72,990
Nancy M.
Sawyer
President
Vernon Sawyer
</TABLE>
The following table sets forth (a) the number of shares received
and the aggregate dollar value realized in connection with each exercise of
outstanding stock options during the year ended January 3, 1997, by each of
the executive officers named in the Summary Compensation Table above; (b)
the total number and value of all outstanding unexercised options (separately
identifying exercisable and unexercisable options) held by such executive
officers as of January 3, 1997; and (c) the aggregate dollar value of all
such unexercised options that are in-the-money (i.e., when the fair market
value of the common stock that is subject to the option exceeds the
exercise price of the option):
<TABLE>
AGGREGATED OPTIONS/SAR EXERCISES
IN FISCAL YEAR ENDED JANUARY 3, 1997
AND FISCAL YEAR-ENDED OPTION/SAR VALUES (1)
<S> <C> <C> <C> <C>
Name Shares Acquired Value Number of Value of
on Exercise Realized Unexercised Unexercised
(#) ($) Options/SARs In-the-Money
at FY/End(#) at FY-End($)
Exercisable/ Exercisable/
Unexercisable(2) Unexercisable
Steven K. Bevilaqua 60,000 $0
President and CEO 90,000 $0
Benjamin C. Lee, Jr. 0 $0
Chairman of the Board 0 $0
J. Kirby Lane
Executive Vice
President
and CFO 16,500 $0
6,667 $0
John J. Ritchie
Senior Vice President 0 $0
Sales and Marketing 5,000 $0
Nancy M. Sawyer
President 0 $0
Vernon Sawyer 0 $0
</TABLE>
(1) Not included in this table are options granted pursuant to the Company's
Employee Stock Purchase Plan which are made available to all employees on an
equal basis. For a detailed discussion of the extent of the executive
officers' participation in the plan, see the discussion under the heading
"Employee Stock Purchase Plan".
(2) The number listed represents the number of shares of the Company's common
stock subject to all of the options held by the named officer.
Employee Stock Purchase Plan ("ESPP")
The Company has in place its Employee Stock Purchase Plan ("ESPP")
pursuant to Section 423 of the Internal Revenue Code. The ESPP covers an
aggregate of 133,333 shares of the Company's common stock. 73,564 shares are
currently available for purchase under the ESPP. The purpose of the ESPP is
to promote employee ownership in the Company. The Company believes that
employees who participate in the ESPP will have a closer identification with
the Company by virtue of their ability as stockholders to participate in the
Company's growth and earnings. The ESPP is also designed to provide
motivation for participating employees to remain in the employ of the
Company and to give a greater effort on behalf of it.
The Company's Board of Directors acts as Administrator of the ESPP.
The Board does not receive any compensation from the ESPP. The Board of
Directors may, in its sole discretion, amend or terminate the ESPP, except
that a termination shall not affect any option granted under the ESPP and no
amendment may be made to the ESPP without approval of the stockholders if
the amendment would require the sale of more than 133,333 shares under the
ESPP. Unless earlier terminated, the ESPP will terminate when all 133,333
shares reserved for the ESPP are sold.
The ESPP permits eligible employees to purchase common stock in
cash or through payroll deductions that cannot exceed 20% of the
employee's regular base salary. Participants may purchase between 10 and
300 shares each year pursuant to the ESPP, and if the number of shares
subscribed for exceeds the number of shares available in the ESPP, the
purchase will be made pro rata. There are restrictions on purchase of shares
by owners of five percent of the voting stock of the Company and holders
of options to purchase stock of the Company outside the ESPP. The purchase
price for the stock is not less than 85% of its fair market value at the
beginning of the offering period and is set by the Board of Directors or a
committee thereof.
Employees of the Company on October 1 of the year in which an offering is
made who are customarily employed by the Company for at least 20 hours
per week on a regular basis are eligible to participate in the ESPP.
During 1996, the following executive officers listed in the
Summary Compensation Table participated in the ESPP and purchased shares
in the following amounts: Mr. Lane - 300; Ms. Sawyer - 300.
During 1996, 59 employees purchased 6,535 shares at $10.375 per
share. 64 employees currently have outstanding subscriptions to purchase
8,711 shares at $11.50 per share. The following executive officers listed
in the Summary Compensation Table presently have outstanding subscriptions
to purchase shares under the ESPP: Ms. Sawyer-300.
Performance Graph
The following line graph compares cumulative five-year shareholder
returns(1) among the Company's Common Stock, the University of Chicago's
Center for Research in Securities Prices ("CRSP") Total Return Index for
The NASDAQ Stock Market, and the CRSP NASDAQ Trucking & Transportation
Stocks Index:
<TABLE>
[GRAPH]
Total Return For The Year
<S> <C> <C> <C> <C> <C> <C>
Index 1991 1992 1993 1994 1995 1996
NASDAQ
COMPOSITE (US
ONLY) 100.0 116.4 133.6 130.6 184.7 227.2
NASDAQ TRUCKING
&
TRANSPORTATION 100.0 122.4 148.7 134.8 157.2 173.5
KLLM TRANSPORT
SERVICES, INC. 100.0 216.0 152.0 156.7 112.0 100.0
</TABLE>
(1) Assumes $100 invested on December 31, 1991, and reinvestment of all
dividends.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own more
than ten percent (10%) of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Such persons are also required
to furnish the Company with copies of all forms they file under this
regulation. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and representations that
no other reports were required, for the fiscal year ended January 3, 1997,
all Section 16(a) filing requirements applicable to its directors and
executive officers were complied with, except that Mr. Ritchie's Form 3 was
filed late and a Form 4 transaction by Mr. Lee involving a stock sale was
disclosed on a Form 5 filed for 1996.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee,
has appointed Ernst & Young LLP independent public accountants, to act as
auditors for the fiscal year ending January 2, 1998. Ernst & Young LLP have
audited the accounts of the Company since 1986. Representatives of Ernst &
Young LLP are expected to be present at the annual meeting and will have an
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions. Neither Ernst & Young LLP nor any of
its partners has any direct or indirect financial interest in the Company.
APPROVAL OF STOCK OPTION PLAN
On April 16, 1996, the Board of Directors adopted, and recommended
to the shareholders for approval, the KLLM Transport Services, Inc., 1996
Stock Option Plan (the "Option Plan"), under which a total of 200,000 shares
of common stock are reserved for issuance. The Option Plan is intended to
replace the 1986 Stock Option Plan, as amended, which expired on
April 1, 1996. The Board of Directors provided that the Option Plan be
submitted to the shareholders at the next annual meeting of shareholders
for approval. As of March 10, 1997, options to purchase an aggregate of
19,502 shares were outstanding, and 180,498 shares were available for future
grants. This summary of the Option Plan is qualified in its entirety
by the text of the Option Plan itself attached as "Exhibit A".
At the Annual Meeting, the shareholders are being requested to
consider and approve the Option Plan. On March 10, 1997, the market value
of the Company's common stock was $13.00 per share.
The Board of Directors believes that in order to attract and retain
qualified employees for the Company, it is necessary to continue to grant
options to purchase common stock to such employees and therefore unanimously
recommends that the shareholders approve the Option Plan.
Purpose of the Option Plan
The purpose of the Option Plan is to assist the Company (and its
subsidiaries) in securing and retaining key employees of outstanding ability,
to offer them an increased incentive to join or continue in the Company's
service, to associate the interests of such employees with those of the
Company's shareholders, and to increase their efforts for the Company's
welfare by participating in its ownership and growth.
Administration of the Purchase Plan
The Option Plan is administered by the Stock Option Committee
(the "Committee"), which consists of at least three members of the Board
of Directors. Members of the Committee are not eligible to participate in
the Option Plan. The Committee currently consists of C. Tom Clowe, Chairman,
Leland R. Speed and James Leon Young. Subject to the control of the Board,
the Committee has the power to interpret and apply the Option Plan and to
make regulations for carrying out its purpose. Members of the Committee
receive normal compensation for committee meetings attended, except for
meetings held by telephone conference call. Except as described above,
members of the Board receive no compensation for their services
in connection with the administration of the Option Plan.
Eligibility
The Option Plan provides that options may be granted to full-time
employees (including officers and directors who are also employees) of the
Company and its subsidiaries. Executive officers of the Company (other than
Messrs. Clowe, Speed and Young) are eligible to participate in the Option
Plan. The Committee selects the optionees and determines the form, amount
and timing of the options and the terms and provisions of the options and
the agreements evidencing them. In making these determinations, the
Committee takes into account the duties and responsibilities of the employee,
the value of the employee's services, his present and potential contributions
to the success of the Company, the anticipated future years of service of the
employee, and other relevant factors. The Option Plan does not provide for a
maximum number of shares of common stock that may be granted under option
to any one employee, but there is a $100,000 limit on the aggregate fair
market value of stock with respect to which incentive stock options are
exercisable for the first time by an Optionee during any calendar year under
all plans of the Optionee's employer corporation and its parent and
subsidiary corporations.
Terms of Options
The terms of options granted under the Option Plan are determined
by the Committee. Each option is evidenced by a stock option agreement
(an "Option Agreement") between the Company and the employee to whom the
option is granted and is subject to certain additional terms and conditions.
(a) Exercise of the Option. The Committee determines when options
granted under the Option Plan may be exercisable. An option is exercised
by giving written notice of exercise to the Company, specifying the number
of shares of common stock to be purchased, and tendering payment of the
purchase price to the Company. Payment for shares may consist of cash,
common stock of the Company previously acquired by the optionee, or any
combination thereof as determined by the Committee and set forth in the
Option Agreement.
(b) Option Price. The option price is determined by the
Committee but in no event may be less than the fair market
value of the common stock at the time the option is granted. The fair market
value on the date of grant is the closing price
as reported by NASDAQ on the day the option is granted.
(c) Termination of Employment. If the optionee's employment by
the Company is terminated for any reason other than death or disability,
the option may be exercised for three months after the termination, or for
the term specified in the Option Agreement, whichever is earlier. The option
may be exercised only with respect to the shares that could have been
purchased on the date of termination unless the Committee waives any
requirements concerning purchase in installments. The Committee may
provide that an optionee's termination of employment does not trigger the
expiration of an option, as long as the term does not extend beyond ten
years for an ISO or ten years and one day for an NSO.
(d) Death or Disability. If an employee dies or becomes disabled
while in the Company's employ, the option may be exercised for 12 months
from the date of the death or disability or for the remaining term of the
option, whichever is shorter. The optionee or his successor in interest may
exercise the option only as to the shares that could have been purchased on
the date of death or disability, except that the Committee may waive any
requirements concerning installment purchases contained in the Option
Agreement.
(e) Nontransferability. Options granted under the Option Plan
are not transferable other than by will or by the laws of descent and
distribution. An option is exercisable only by the optionee during the
optionee's lifetime.
(f) Additional Provisions. The Option Agreement may contain
such other terms and conditions not inconsistent with the provisions of
the Option Plan as the Committee may deem appropriate.
(g) Changes in Capitalization. If the Company's outstanding
shares are increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or
of any other corporation, as through a merger or stock split, and if the
Company continues in existence, the number and kind of shares that are
subject to option and the option price per share shall be proportionately
adjusted. If the Company does not remain in existence, or if
substantially all of its voting common stock will be purchased by a
single purchaser or group of purchasers acting together, then
options granted under the plan may terminate, or they may apply to the
securities of the successor corporation with appropriate
adjustments, or some combination thereof, as determined by the Committee.
Incentive Stock Options
Incentive Stock Options ("ISOs") are granted under the Option Plan
subject to the following requirements:
(a) Term. The term of each ISO is determined by the Committee,
but may be no longer than ten years after date of grant.
(b) Exercise. The aggregate fair market value of stock as to which
ISOs are exercisable for the first time by an optionee during any calendar
year under all plans offered by the Company may not exceed $100,000.
(c) Ten Percent Stockholders. If an employee owns more than 10%
of the total combined voting power of all classes of stock of the Company,
the option price must be at least 110% of the fair market value of the stock
subject to the ISO, and the term of the ISO is limited to five years.
Non-Qualified Stock Options
Non-Qualified Stock Options ("NSOs") may be issued subject to the
following provisions:
(a) Term. The Committee sets the term of each NSO, and this term
may be no longer than ten years and one day.
(b) Termination of Employment. The NSO may provide that an option
may be exercisable during a term that does not expire upon the expiration
of three months following an Optionee's termination of employment (one year
in the case of termination or death or disability) but in no event later than
the term described in (a) above.
Stock Appreciation Rights
The Committee may grant Stock Appreciation Rights ("SARs") in
connection with the grant of an option.
(a) Term and Exercise. SARs may be exercised only with the
approval of the Committee at such times as the option to which they relate
is exercisable and only if the fair market value of the common stock subject
to the option is greater than the option price.
(b) Payment of SAR. If the Committee agrees to permit exercise of
the SAR, the optionee surrenders his right to exercise the option relating
to the same number of shares. In return, the optionee receives the difference
between the fair market value of the stock subject to the surrendered option
and the exercise price of the option. This payment is made in cash
and/or in common stock.
(c) Transferability. SARs are transferable only to the extent
that the options to which they relate are transferable.
Amendment and Termination of the Plan
The Board of Directors may discontinue the Option Plan at any time
and may amend it from time to time. No amendment, without approval by the
stockholders, may increase the total number of shares that may be issued
under the Option Plan or to any individual under the Option Plan, reduce the
option price for shares that may be purchased pursuant to the Option Plan,
extend the period during which options may be granted, or change the class of
employees to whom options may be granted. The Option Plan expires April 15,
2006. No options may be granted under the Option Plan after that date, but
options granted on or before that date may be exercised in accordance with
their terms.
Tax Information
Incentive Stock Options. The Internal Revenue Code of 1986, as
amended, (the "Code") provides favorable tax treatment to the optionee upon
the exercise of ISOs. The optionee will recognize no income upon exercise of
the ISO, unless the optionee is subject to the alternative minimum tax rules.
See "Other Tax Considerations" below. The Company will not be allowed a
deduction for federal tax purposes in connection with the exercise of an ISO.
Upon the sale of the stock at least two years after the grant of
the ISO and one year after the exercise of the ISO, any gain will be taxed
to the optionee at long-term capital gain rates. If these holding periods
are not satisfied, the optionee will recognize ordinary income equal to the
difference between the exercise price and the lower of the fair market value
of the stock on the exercise date of the ISO or the sales price of the stock.
The Company will be entitled to a deduction equal to the ordinary income
recognized by the optionee. Any gain recognized on a premature sale of the
stock in excess of the amount treated as ordinary income will be taxed at
long-term capital gain rates if the sale occurs more than one year after
exercise of the ISO or as short-term capital gain if the sale is made earlier.
An ISO must be exercised either while the optionee is an employee
of the Company or one of its subsidiaries or during the three-month period
immediately following the optionee's termination of employment. The following
additional conditions must be satisfied for an option to obtain ISO treatment:
(i) the option must be exercisable only within ten years of the date
of grant; (ii) the exercise price must not be less than the fair market value
of the shares at the time the option is granted; (iii)
the Option Plan must be approved by the shareholders; (iv) the option must
be nontransferable other than by death and must be exercisable only by the
optionee during his lifetime; (v) if the optionee owns more than 10% of the
total combined voting power of all classes of the Company's stock immediately
before the option is granted, the exercise price must be at least 110%
of the fair market value of the stock and the option must be exercisable
only within 5 years of the date of grant; and (vi) no
options may be granted which, when exercisable for the first time, would
enable the optionee to purchase stock having an aggregate fair market
value (measured at the time of the option grant) in excess of $100,000
within any calendar year.
If shares of the Company's stock which were acquired either by the
exercise of an ISO or under the Company's Employee Stock Purchase Plan
("prior statutory option shares") are exchanged in connection with the
exercise of an ISO within two years after the date the option covering such
prior statutory option shares was granted or within one year after the date
of purchase, the exchange will be treated as a disqualifying disposition of
the prior statutory option shares, and the excess of the fair market
value of such shares on the date they were purchased over the purchase
price will be treated as ordinary income.
If before the expiration of the holding period the prior statutory option
shares are exchanged in connection with the exercise of an ISO and the
fair market value on the date of the exchange is less than the fair market
value on the exercise date, ordinary income will be limited to the amount
(if any) by which the fair market value at the date of the exchange exceeds
the option price paid for the prior statutory option shares. Any excess of
the fair market value of the prior statutory option shares at the
exercise date over the option price paid for the prior statutory option
shares which is not recognized as ordinary income as described above
will not be recognized as taxable gain at the time of the exchange. The
basis of the shares acquired in exchange for the prior statutory option
shares will reflect the option price paid for such prior statutory option
shares plus any ordinary income recognized on the exchange. Any loss
recognized on disposition of the prior statutory option shares is a capital
loss. Any loss recognized on disposition of shares will be treated as
long-term capital loss if the shares have been held for more than one
year prior to such disposition. In any event, the Company will be allowed a
eduction in the amount of the ordinary income recognized by the optionee.
Upon the death of an optionee who has not exercised his option,
the value of such option (determined under applicable Treasury regulations)
will be includable in the optionee's estate for federal estate tax purposes.
Upon the exercise of such option, the holder's basis in the option shares
will include the value of the option included in the estate plus the price
paid for the option shares.
Non-Statutory Options. Incentive stock options granted under the
Plan will be afforded the tax treatment summarized above. All other
options ("NSOs") will not qualify for any special tax benefits to the
optionee.
An optionee will not recognize any taxable income at the time he
is granted an NSO. Upon exercise of the NSO, the optionee will generally
recognize ordinary income for federal tax purposes measured by the excess,
if any, of the then fair market value of the shares over the exercise price.
However, if nonvested shares (i.e., shares subject to a repurchase option
of the Company) are purchased upon exercise of an NSO, no tax will be imposed
at the time of exercise with respect to such non-vested shares (and the
optionee's long-term capital gain holding period will not begin at such time)
unless the optionee files an election pursuant to Section 83(b) of the Code
within 30 days after the date of exercise. In the absence of such election,
the optionee is taxed (and the long-term holding period begins) at the time
at which the shares vest (i.e., the time at which the repurchase option
lapses with respect to such shares), and the optionee recognizes ordinary
income in the amount of the difference between the value of the shares at
that time and the option exercise price. If a Section 83(b) election is
timely filed, the non-vested shares will be treated for federal income tax
purposes as if they had been vested at the time of exercise.
Upon a sale of the shares by the optionee, any difference between
the sales price and the fair market value of the shares on the date of
exercise of an NSO will be treated as capital gain or loss and will qualify
for long-term capital gain or loss treatment if the shares have been held for
more than one year.
The Company will be entitled to a tax deduction in the amount and
at the time that the optionee recognizes ordinary income with respect to
shares acquired upon exercise of an NSO.
Officers and Directors Subject to Section 16(b) Liability. If
shares are purchased upon exercise of an ISO by an optionee who could be
subject to suit under Section 16(b) of the Securities Exchange Act of 1934
("the Exchange Act"), and the optionee disposes of such shares prior to
the expiration of the two-year and one-year holding periods described above,
the shares will be treated as if they had been acquired by the optionee
pursuant to an NSO. See "Non-statutory Options." It may
be possible for an optionee to file a "protective" election under Section
83(b) of the Code within 30 days after the date of exercise of an ISO.
However, the Internal Revenue Service has never considered the question of
whether a Section 83(b) election can be filed with respect to the exercise
of an ISO, and there can be no assurance that any such "protective" election,
even if properly and timely filed, would be recognized as effective by the
Internal Revenue Service. Therefore, such an optionee should consult his
or her own tax advisor prior to exercising an ISO concerning the advisability
of filing an election under Section 83(b) of the Code.
In the case of an optionee who could be subject to suit under
Section 16(b) of the Exchange Act in the event he or she disposed of the
shares acquired upon exercise of an NSO, such optionee would not recognize
income (and his or her long-term capital gain holding period would not
begin) until such optionee could no longer be subject to suit under Section
16(b) if he or she disposed of such shares at a profit. This would generally
defer the time of taxation and withholding requirements (as well as the
beginning of the long-term capital gain holding period) for six months after
the date of exercise of the option.
The optionee would recognize ordinary income upon expiration of such period
in an amount equal to the excess of the then fair market value of the shares
over the option price. An optionee can avoid this deferral provision by
filing an election with the Internal Revenue Service under Section 83(b) of
the Code within thirty (30) days after exercise of the option.
Other Tax Considerations. The exercise of an ISO, or the
disposition of shares acquired by exercise of either an ISO or an NSO,
may subject the optionee to the alternative minimum tax under Section 55 of
the Code. In calculating the alternative minimum tax, an individual's
taxable income for purposes of the regular income tax is increased by the
excess of the fair market value of the shares purchased pursuant to the
exercise of an ISO over the exercise price. The alternative minimum
tax is calculated by applying a tax rate of 21% to (i) taxable income,
plus (ii) items of tax preference, less (iii) an exclusion of
$40,000 for joint returns and $30,000 for individual returns.
If an optionee incurs alternative minimum tax liability as a
result of the exercise of an ISO, his tax basis in the
purchased shares will not be increased accordingly. Therefore, the
optionee may be taxed on the same exercise "spread" both
in the year of exercise of the option and in the year of disposition
of the shares. In many cases, an optionee can avoid liability
for alternative minimum tax by exercising his ISO in installments over
several years (rather than all in one year) and by exercising the
option only in years in which he has a relatively small amount of long-term
capital gain and other items of tax preference.
The foregoing summary of the effect of federal income taxation
upon the optionee and Company with respect to the grant of options and the
purchase of shares under the Plan does not purport to be complete, and
reference should be made to the applicable provisions of the Code. In
addition, this summary does not discuss the provisions of the income tax
laws of any state or foreign country in which the participant may reside.
It is advisable that an optionee consult his own tax advisor
concerning application of these tax laws.
Participation in the Plan
The Committee selects who is eligible to participate in the Option
Plan. The Committee selects persons in the regular full time employment of
the Company or its subsidiaries who are or are expected to be primarily
responsible for the management, growth or supervision of some part or all of
the business of the Company or its subsidiaries. Approximately 10
persons currently participate in the Option Plan. Since options are
granted in the sole discretion of the Committee, the
amounts to be received by any employee or group of employees is not
determinable.
APPROVAL OF STOCK PURCHASE PLAN
On February 13, 1997, the Board of Directors adopted the KLLM
Transport Services, Inc., Amended and Restated 1996 Stock Purchase Plan
(the "Purchase Plan"), under which a total of 300,000 shares of common stock
of the Company (the "Shares") are reserved for issuance. As of March 10,
1997, contracts to purchase an aggregate of 184,000 Shares were in effect
and 116,000 Shares were available for future purchase contracts or option
grants. As of March 10, 1997, no options to purchase
Shares had been granted under the Purchase Plan. This summary of the Purchase
Plan is qualified in its entirety by the text of the Purchase Plan itself
attached as "Exhibit B".
At the Annual Meeting, the shareholders are being requested to
consider and approve the Purchase Plan. All existing purchase contracts
in effect under the Purchase Plan provide for a purchase price of $12.375
per share. Such price is subject to increase as hereinafter explained.
On March 10, 1997, the market value of the Company's common stock was $13.00
per share.
The Board of Directors believes that in order to attract and
retain qualified employees, consultants and advisors for the Company,
it is necessary to continue to enter into securities purchase agreements,
and grant options to purchase common stock to such persons and therefore
unanimously recommends that the shareholders approve the Purchase Plan.
Purpose of the Purchase Plan
The purpose of the Purchase Plan is to encourage key personnel,
consultants, advisors, and the like of the Company and its subsidiaries,
to purchase stock of the Company, through contractual arrangements with the
Company or stock options issued by the Company, to further instill in them
a sense of ownership, responsibility, and entrepreneurship, with a goal of
increasing their efforts and motivation for the long term benefit of the
Company and all of its shareholders.
Administration of the Purchase Plan
The Purchase Plan is administered by the Compensation Committee
of the Company (the "Committee"), which consists of at least three members
of the Board of Directors. Members of the Committee are not eligible to
participate in the Purchase Plan. The Committee currently consists of C.
Tom Clowe, Chairman, Leland R. Speed and James Leon Young. Subject to
the control of the Board, the Committee has the power to interpret and apply
the Purchase Plan and to make regulations for carrying out its purpose.
Members of the Committee receive normal compensation for committee meetings
attended, except for meetings held by telephone conference call. Except as
described above, members of the Board receive no compensation for their
services in connection with the administration of the Purchase Plan.
Eligibility
The Purchase Plan provides that options or purchase rights may
be granted to covered employees and covered consultants of the Company and
its subsidiaries. "Covered Consultant" means any Person, including third
party non-employee consultants, advisors and the like, who may from time
to time be designated a Covered Consultant by the Committee. The power
to determine who is and who is not a Covered Consultant is reserved solely
for the Committee. "Covered Employee" means any Person, including
officers and directors in the regular full time employment of the Company
or its Subsidiaries, who may from time to time be designated a Covered
Employee by the Committee. The power to determine who is and who is not
a Covered Employee is reserved solely for the Committee. Covered Consultant
and Covered Employee may hereafter collectively be referred to as
"Eligible Participants". Executive officers of the Company (other than
Messrs. Clowe, Speed and Young) are eligible to participate in the Purchase
Plan. The Committee selects the Covered Employees and Covered
Consultants to whom purchase rights or options are granted and
determines the form, amount and timing of the options or purchase rights
and the terms and provisions of the agreements evidencing them. In making
these determinations, the Committee takes into account the duties and
responsibilities of the Eligible Participants, the value of such participant's
services, his present and potential contributions to the success of the
Company, the anticipated future years of service of such individual,
and other relevant factors.
Terms of Purchase Rights
The terms of purchase rights granted under the Purchase Plan are
determined by the Committee. Each purchase right is evidenced by a
Securities Purchase Agreement between the Company and the Eligible Participant
to whom the right is granted and is subject to the terms and conditions of the
Purchase Plan.
The terms and conditions of rights granted may vary, in the sole
discretion of the Committee, among the various Eligible Participants. As
of March 10, 1997 the terms and conditions of the various Securities Purchase
Agreements pursuant to which a total of 184,000 Shares are to be purchased
are identical with the exception of the number of Shares to which various
Eligible Participants have been granted purchase rights. The significant
provisions of all of the existing Securities Purchase Agreements are
as follows:
(a) Exercise of the Purchase Right. The Committee determines when
purchase rights granted under the Purchase Plan must be exercised. Under
the existing Securities Purchase Agreements the closing of the purchase will
take place at various times after a Closing Trigger Event. A Closing Trigger
Event is defined as (i) the giving of notice to the Company by the
Purchaser of his desire to hold a closing with respect to certain of the
securities to be purchased; (ii) the death of the Purchaser; (iii) the
For Cause termination of employment of the Purchaser with the Company or any
of its Subsidiaries by the Corporation or any of its Subsidiaries; (iv) the
termination of employment of the Purchaser with the Company or any of its
Subsidiaries at the instance of the Purchaser; or (v) the Default of the
Purchaser. All capitalized terms not defined herein have the meanings
set forth in either the Purchase Plan or the existing Securities Purchase
Agreements. Under all existing Securities Purchase Agreements the
closing will take place upon the earlier of the applicable number of days
following any Closing Trigger Event (or prior to such date if mutually
agreed to by the parties), or August 7, 2001. The closing shall occur (vi)
the next business day following the Company's receipt of proper notice from
the Purchaser of his desire to effect a closing or the Company's
notice to the Purchaser of an Event of Default involving the Purchaser;
(vii) 180 days following the death of a Purchaser; (viii) seven days
following the termination of the Purchaser's employment with the Company
or any of its Subsidiaries by the Company or any of its Subsidiaries
For Cause or the termination of Purchaser's employment by the Purchaser;
and (ix) 180 days following the termination of the Purchaser's employment
with the Company or any of its Subsidiaries by the Company or any of its
Subsidiaries other than For Cause. The existing Securities Purchase
Agreements provide that as to any Purchaser who is subject to the
constrictions of Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act"), and related regulations, such Purchaser will not be required
to close a purchase until he is beyond the applicable period of time within
which such a closing could occur, and in the opinion of counsel to the
Company, without being in violation of such Section 16(b).
(b) Purchase Price. The purchase price is determined by
the Committee. In all Securities Purchase Agreements now in effect, the
purchase price is $12.375 per share, which price is increased by an
escalation factor of seven percent (7%) per annum compounded quarterly
and computed through the day preceding the Closing Date.
(c) Nontransferability. Purchase rights granted under the
Purchase Plan are not transferable other than by will or by the laws of
descent and distribution. During the lifetime of an Eligible Participant,
the purchase rights may only be exercised by such participant.
(d) Additional Provisions. Pursuant to the Purchase Plan
the Committee has the right to establish all the terms and conditions of
the Securities Purchase Agreement to the extent not inconsistent with the
Purchase Plan. Under the Purchase Plan the Committee has the right to
vary the terms and conditions of each purchase agreement executed with
each Eligible Participant. However, at the present time, with the exception
of the number of shares to which the agreements relate, all Securities
Purchase Agreements are identical.
Stock Options
No options to acquire shares of the Company's stock have been
granted under the Purchase Plan. As a result, the Committee has not yet
determined the terms and conditions of options to be granted other than
the general terms of the Purchase Plan.
Changes in Capitalization
If the outstanding shares of common stock of the Company are
changed into or exchanged for a different number of kind of shares or
other securities of the Company or of any other corporation by reason of any
merger, sale of stock, consolidation, liquidation, recapitalization,
reclassification, stock splits, combination of shares, or stock dividend,
the total number of shares shall be proportionately and appropriately adjusted
by the Committee. If the Company continues in existence, the number and
kind of Shares that are subject to any agreement under the Plan and the
purchase price per share shall be proportionately and appropriately adjusted
without any change in the aggregate price to be paid therefor upon the
closing of a purchase or exercise of an option. With regard to agreements
obligating a Purchaser to purchase stock under the Plan, if the Company
will not remain in existence or substantially all of the common stock will be
purchased by a single purchaser or group of purchasers acting together, then
the Committee shall notify each Purchaser that such Purchaser's right and
obligation to purchase the Shares shall apply with appropriate adjustments
as determined by the Committee to the securities of the successor
corporation to which such Purchaser, as holder of the number of Shares of
common stock he is required to purchase, would have been entitled. With
regard to options issued under the Plan, if the Company will not remain in
existence or substantially all of the common stock will be purchased by a
single purchaser or group of purchasers acting together, then the
Committee may (i) declare that all options shall terminate thirty (30) days
after the Committee gives written notice to all Optionees of their
immediate right to exercise all options outstanding (without regard to
limitations on exercise otherwise contained in the option agreements), or
(ii) notify all Optionees that all options granted under the Plan shall
apply with appropriate adjustments as determined by the Committee to the
securities of the successor corporation to which holders of the
numbers of shares subject to such options would have been entitled,
or (iii) some combination of aspects of (i) and (ii). The
determination by the Committee as to the terms of any of the foregoing
adjustments shall be conclusive and binding.
Amendment and Termination of the Plan
The Board of Directors may discontinue the Purchase Plan at any
time and may amend it from time to time.
Tax Information
Securities Purchase Agreements. Stock purchases made by an
Eligible Participant pursuant to a Securities Purchase Agreement are not
accorded any special or preferential tax treatment. The tax effect of any
stock purchase made through a Securities Purchase Agreement will vary
depending upon the specific terms of the Agreement between the Eligible
Participant and the Company.
Options Granted Under the Purchase Plan. Options granted under
the Purchase Plan are intended to be non-statutory options ("NSO") under
existing law and regulations.
Options granted under the Purchase Plan will not have a readily
ascertainable fair market value (as defined by Internal Revenue Code
Section 83 and the regulations promulgated pursuant thereto) at the time
they are granted. As such, the optionee will not recognize taxable income
at the time the NSO is granted. Upon exercise of the NSO, the optionee will
generally recognize ordinary income for federal tax purposes measured by the
excess, if any, of the then fair market value of the Shares over the
exercise price. If however, at the time of exercise, the optioned property
has either a restriction as to transferability or it is subject to a
substantial risk of forfeiture, the optionee will not recognize income until
the optioned property is no longer subject to the restriction on
transferability or risk of forfeiture. The optionee may, however, elect to
recognize income at the time of the transfer even though his or her rights
in the optioned property are neither transferrable nor substantially vested.
The amount to be included in the optionee's gross income is equal to the fair
market value of the option less any amount paid by the optionee.
Upon the sale of Shares by the optionee, any difference between
the sales price and the fair market value of the Shares on the date of
exercise of an NSO will be treated as capital gain or loss and will qualify
for long term capital gain or loss treatment if the Shares have been held
for more than one year.
The Company will be entitled to a tax deduction in the amount
and at the time that the optionee recognizes ordinary income with respect
to Shares acquired upon exercise of an NSO.
Officers and Directors Subject to Section 16(b) Liability. If
an optionee exercises an option under the Purchase Plan, and as a result
thereof, could be subject to suit under Section 16(b) of the Exchange Act
in the event the optionee disposes of Shares acquired upon the exercise of
such option, such optionee would not recognize income (and his or her long
term capital gain holding period would not begin), until such optionee could
no longer be subject to suit under Section 16(b) if he or she disposed of
such Shares at a profit. This would generally defer the time of taxation
and withholding requirements (as well as the beginning of the long term
capital gain holding period) for six months after the date of the exercise
of the option.
The optionee would recognize ordinary income upon expiration of such period
in an amount equal to the excess of the then fair market value of the
Shares over the option price. An optionee can avoid this deferral provision
by filing an election with the Internal Revenue Service under Internal
Revenue Code Section 83(b) within thirty days after exercise of the option.
Participation in the Plan
Within the parameters set forth therein, the Committee selects
who is eligible to participate in the Purchase Plan. Eight persons
currently participate in the Purchase Plan. Since purchase rights and
options are granted in the sole discretion of the Committee, the amounts
to be received by any employee, group of employees, or consultants or
advisors, is not determinable other than the stated maximum number of
Shares stated in the Purchase Plan.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later
than November 1, 1997, to be included in the Company's proxy materials for
the 1998 Annual Meeting. Shareholder proposals should be addressed to:
KLLM Transport
Services, Inc.,
Post Office Box 6098,
Jackson, Mississippi 39288,
Attention Secretary.
No shareholder proposals were received for inclusion in the proxy materials
for the 1997 meeting.
OTHER MATTERS
The Board of Directors is not aware of any other matters which
may come before the meeting. However, if any other matters are properly
brought before the meeting, the proxies named in the enclosed proxy will vote
in accordance with their best judgment on such matters.
<PAGE>
KLLM TRANSPORT SERVICES, INC.
THIS PROXY IS BEING SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS.
The undersigned hereby appoints Benjamin C. Lee, Jr., and Steven K.
Bevilaqua, or either of them, as proxies with the power to appoint their
substitutes and hereby authorizes them to represent and vote, as designated
below, all the shares of Common Stock of KLLM Transport Services, Inc. (the
"Company"), held of record by the undersigned on March 17, 1997, at the
Annual Meeting of Stockholders of KLLM Transport Services, Inc., to be
held on Tuesday, April 15, 1997, and at any adjournments thereof, with all
powers the undersigned would possess if personally present.
1. Election of Directors. (Check only one box below. To withhold
authority for any individual nominee, strike
through the name of the nominee.)
To vote for all the nominees listed below:
Steven K. Bevilaqua; C. Tom Clowe, Jr.; Benjamin C. Lee, Jr.;
Walter P. Neely; Leland
R. Speed; James Leon Young
or
To withhold authority to vote for all nominees listed above.
2. Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors (check only one box below).
FOR AGAINST ABSTAIN
3. Approval of the Company's 1996 Stock Option Plan.
(check only one box below)
FOR AGAINST ABSTAIN
4. Approval of the Company's Amended and Restated 1996 Stock Purchase
Plan. (check only one box below)
FOR AGAINST ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournments
thereof. If a nominee for director is unable to serve or, for good
cause, will not serve as director, the proxies may vote for any person
for director in their discretion.
When properly executed, this proxy will be voted in the manner directed.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES LISTED AND FOR THE PROPOSALS SOLICITED. The undersigned hereby
revokes any proxy heretofore given by the undersigned to vote at the Annual
Meeting. This proxy may be revoked prior to its exercise, either in person
or in writing.
_________________________________________
Signature (Seal)
_________________________________________
Signature if held jointly (Seal)
____________________________________, 1997
(Date)
1. Sign your name exactly as it appears on the label.
2. When signing as attorney, executor, administrator,
trustee, or guardian, please state full title as such.
3. If a corporation, please sign in full corporate
name by president or other authorized officer.
4. If a partnership, please sign in partnership name
by authorized person.
5. When shares are held jointly, both stockholders
must sign this proxy.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
KLLM Transport Services, Inc.
1996 Stock Option Plan
________________________
ARTICLE I
GENERAL
1.1 Purposes of the Plan.
The purposes of the 1996 Stock Option Plan are to assist KLLM
Transport Services, Inc. (the "Company") (and its subsidiaries) in
attracting and retaining key employees of outstanding ability by
offering them an increased incentive to join or continue in the
service of the Company, to increase their efforts for its welfare
by participating in the ownership and growth of the Company, and to
associate the interests of such employees with those of the
Company's stockholders.
1.2 Definitions.
(a) "Acceleration Event" means any event which in the
opinion of the Board of Directors of the Company is likely to lead to
changes in control of share ownership of the Company, whether or
not such change in control actually occurs;
(b) "Board of Directors" or "Board" means the Board of
Directors of the Company;
(c) "Code" means the Internal Revenue Code of 1986, as
amended;
(d) "Common Stock" means voting common stock of the Company;
(e) "Fair Market Value" means such price as is set by the
Company's Board of Directors unless and until the Company sells
stock pursuant to a registration statement under the Securities Act
of 1933, or the Company is registered with the Securities and
Exchange Commission pursuant to Section 12(g) of the Securities
Exchange Act of 1934. Thereafter, it shall mean the closing
"asked" price of the shares in the over-the-counter market on the
day on which such value is to be determined or, if such "asked"
price is not available, the last sales price on such day or, if no
shares were traded on such day, on the next preceding day on which
the shares were traded, as reported by the National Association of
Securities Dealers Automatic Quotation System (NASDAQ) or other
national quotation service. If the shares are listed on a National
Securities Exchange, "fair market value" means the closing price of
the shares on such National Securities Exchange on the day on which
such value is to be determined or, if no shares were traded on such
day, on the next preceding day on which shares were traded, as
reported by National Quotation Bureau, Inc. or other national
quotation service. If the shares are traded on the NASDAQ National
Market System, "fair market value" means the closing price of the
shares on the National Market System on the day on which such value
is to be determined or, if no shares were traded on such day, on
the next preceding day on which shares were traded, as reported by
the NASDAQ National Market System;
(f) "Incentive Stock Option" means an option to purchase
shares of Common Stock which is intended to qualify as an incentive
stock option as defined in Section 422 of the Code;
(g) "Key Employee" means any person, including officers and
directors, in the regular full-time employment of the Company or
its Subsidiaries who, is designated a Key Employee by the Committee
referred to in Section 1.3, and is or is expected to be primarily
responsible for the management, growth, or supervision of some part
or all of the business of the Company or its Subsidiaries. The
power to determine who is and who is not a Key Employee is reserved
solely for the Committee;
(h) "Nonqualified Stock Option" means an option to purchase
shares of Common Stock which is not intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code;
(i) "Option" means an Incentive Stock Option or a
Nonqualified Stock Option;
(j) "Optionee" means a Key Employee to whom an Option is
granted under the Plan;
(k) "Parent" means any corporation which qualifies as a
parent of a corporation under the definition of "parent
corporation" contained in Section 424(e) of the Code;
(l) "Stock Appreciation Right" shall have the meaning stated
in Article IV of the Plan;
(m) "Subsidiary" means any corporation which qualifies as a
subsidiary of a corporation under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code;
(n) "Term" means the period during which a particular Option
may be exercised as determined by the Committee and as provided in
the option agreement;
1.3 Administration of the Plan.
The Plan shall be administered by the Stock Option Committee
(the "Committee") appointed by the Board of Directors consisting of
at least three members from the Board of Directors. No person
while a member of the Committee shall be eligible to participate in
the Plan. Subject to the control of the Board, and without
limiting the generality thereof, the Committee shall have the power
to interpret and apply the Plan and to make regulations for
carrying out its purpose. More particularly, the Committee shall
determine which Key Employees shall be granted Options under the
Plan, the number of shares subject to each Option, the price per
share under each Option, the Term of each Option, and any
restrictions on the exercise of each Option. When granting
Options, the Committee shall designate the Option as either an
Incentive Stock Option or a Nonqualified Stock Option. The
Committee shall also designate whether the Option is granted with
Stock Appreciation Rights. Determinations by the Committee under
the Plan (including, without limitation, determinations of the
person to receive Options, the form, amount and timing of such
Options, and the terms and provisions of such Options and the
agreements evidencing same) need not be uniform and may be made by
it selectively among persons who receive, or are eligible to
receive, Options under the Plan, whether or not such persons are
similarly situated.
1.4 Shares Subject to the Plan.
The total number of shares that may be purchased pursuant to
Options or transferred pursuant to the exercise of Stock
Appreciation Rights under the Plan shall not exceed 200,000 shares
of Common Stock. Shares subject to the Options which terminate or
expire prior to exercise shall be available for future Options.
Shares represented by an unexercised Option surrendered upon
exercise of Stock Appreciation Rights including, without
duplication, any shares issued in payment of any Stock Appreciation
Rights, shall be deducted from the aggregate and shall not be
available for further Options hereunder. Shares issued pursuant to
the Plan may be either unissued shares of Common Stock or
reacquired shares of Common Stock held in treasury.
1.5 Terms and Conditions of Options.
All Options shall be evidenced by agreements in such form as
the Committee shall approve from time to time subject to the
provisions of Article II or Article III, as appropriate, and the
following provisions:
(a) Exercise Price. The exercise price of the Option shall
not be less than the Fair Market Value (as determined by the
Committee) of the Common Stock at the time the Option is granted.
(b) Exercise. The Committee shall determine whether the
Option shall be exercisable in full at any time during the Term or
in cumulative or noncumulative installments during the Term.
(c) Termination of Employment. An Optionee's Option shall
expire on the earlier of the expiration of (i) three months after
the termination of the Optionee's employment for any reason other
than death or disability (as defined in Section 422(c)(6) of the
Code), or (ii) the Term specified in Section 2.1(a) or 3.1(a) as
the case may be. In the event of exercise of the Option after
termination of employment the Optionee may exercise the Option only
with respect to the shares which could have been purchased by the
Optionee at the date of termination of employment. However, the
Committee may, but is not required to, waive any requirements made
pursuant to Section 1.5(b) so that some or all of the shares
subject to the Option may be exercised within the time limitation
described in this subsection. An Optionee's employment shall be
deemed to terminate on the last date for which he receives a
regular wage or salary payment.
(d) Death or Disability. Upon termination of an Optionee's
employment by reason of death or disability (as determined by the
Committee consistent with the definition of Section 422(c)(6) of
the Code), the Option shall expire unless exercised upon the
earlier of the expiration of (i) 12 months of the date of such
termination, or (ii) the Term specified in Section 2.1(a) or 3.1(a)
as the case may be. The Optionee or his successor in interest, as
the case may be, may exercise the Option only as to the shares
which could have been purchased by the Optionee at the date of his
termination of employment. However, the Committee may, but is not
required to, waive any requirements made pursuant to Section 1.5(b)
so that some or all of the shares subject to the Option may be
exercised within the time limitation described in this subsection.
(e) Payment. Payment for shares as to which an Option is
exercised shall be made in such manner and at such time or times as
shall be provided in the option agreement, including cash, Common
Stock of the Company which was previously acquired by the Optionee,
or any combination thereof. The Fair Market Value of the
surrendered Common Stock as of the date of exercise shall be used
in valuing Common Stock used in payment for Options.
(f) Nontransferability. Options granted under the Plan shall
not be transferable other than by will or by the laws of descent
and distribution. During the lifetime of the Optionee, an Option
shall be exercisable only by the Optionee.
(g) Additional Provisions. Each option agreement may contain
such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee may deem appropriate from
time to time.
1.6 Stock Adjustments; Mergers.
(a) Notwithstanding Section 1.4, in the event the outstanding
shares are increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the
Company or of any other corporation by reason of any merger, sale
of stock, consolidation, liquidation, recapitalization,
reclassification, stock split up, combination of shares, or stock
dividend, the total number of shares set forth in Section 1.4 shall
be proportionately and appropriately adjusted by the Committee. If
the Company continues in existence, (i) the number and kind of
shares that are subject to any Option and the option price per
share shall be proportionately and appropriately adjusted without
any change in the aggregate price to be paid therefor upon exercise
of the Option, and (ii) the Committee may make such adjustments in
the number and kind of Stock Appreciation Rights as it shall deem
appropriate in the circumstances. If the Company will not remain
in existence or substantially all of its voting Common Stock and
Common Stock will be purchased by a single purchaser or group of
purchasers acting together, then the Committee may (i) declare that
all Options and Stock Appreciation Rights shall terminate 30 days
after the Committee gives written notice to all Optionees of their
immediate right to exercise all Options and Stock Appreciation
Rights then outstanding (without regard to limitations on exercise
otherwise contained in the Options), or (ii) notify all Optionees
that all Options and Stock Appreciation Rights granted under the
Plan shall apply with appropriate adjustments as determined by the
Committee to the securities of the successor corporation to which
holders of the numbers of shares subject to such Options and Stock
Appreciation Rights would have been entitled, or (iii) some
combination of aspects of (i) and (ii). The determination by the
Committee as to the terms of any of the foregoing adjustments shall
be conclusive and binding. Any fractional shares resulting from
any of the foregoing adjustments under this section shall be
disregarded and eliminated.
1.7 Acceleration Event.
If an Acceleration Event occurs in the opinion of the Board of
Directors, based on circumstances known to it, the Board of
Directors may direct the Committee to declare that all Options and
Stock Appreciation Rights granted under the Plan shall become
exercisable immediately notwithstanding the provisions of the
respective Option agreements regarding exercisability.
1.8 Notification of Exercise.
Options shall be exercised by written notice directed to the
Secretary of the Company at the principal executive offices of the
Company. Such written notice shall be accompanied by any payment
required pursuant to Section 1.5(e). Exercise by an Optionee's
heir or the representative of his estate shall be accompanied by
evidence of his authority to so act in form reasonably satisfactory
to the Company.
<PAGE>
ARTICLE II
INCENTIVE STOCK OPTIONS
2.1 Terms and Conditions of Incentive Stock Options.
In addition to the requirements of Section 1.5, Incentive
Stock Options granted shall be subject to the following
requirements:
(a) Term. Each Incentive Stock Option granted under the Plan
shall be exercisable only during a Term fixed by the Committee;
provided, however, that the Term shall end no later than 10 years
after the date the Incentive Stock Option is granted.
(b) Exercise. Each Incentive Stock Option agreement shall
provide that the aggregate Fair Market Value (determined at the
time the Incentive Stock Option is granted) of the stock with
respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year (under all plans
of the Optionee's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
2.2 Continued Employment.
Whether military, government or other service or other leave
of absence shall constitute a termination of employment shall be
determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A
termination of employment shall not occur where the Optionee
transfers from the Company to one of its Subsidiaries or transfers
from a Subsidiary to the Company.
2.3 Special Rule for Ten Percent Shareholder.
If at the time an Incentive Stock Option is granted, an
employee owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of his employer
corporation or of its Parent or any of its Subsidiaries, as
determined using the attribution rules of Section 424(d) of the
Code, then the terms of the Incentive Stock Option shall specify
that the option price shall be at least 110% of the Fair Market
Value of the stock subject to the Incentive Stock Option and such
Incentive Stock Option shall not be exercisable after the
expiration of five years from the date such Incentive Stock Option
is granted.
2.4 Interpretation.
In interpreting this Article II of the Plan, the Committee and
the Board shall be governed by the principles and requirements of
Sections 421, 422 and 424 of the Code, and applicable Treasury
Regulations.
ARTICLE III
NONQUALIFIED STOCK OPTIONS
3.1 Terms and Conditions of Options.
In addition to the requirements of Section 1.5, Nonqualified
Stock Options shall be subject to the following provisions:
(a) Term. Each Nonqualified Stock Option granted under the
Plan shall be exercisable only during a Term fixed by the
Committee; provided, however, that the Term shall end no later than
ten years and one day after the date the Nonqualified Stock Option
is granted.
(b) Termination of Employment. Notwithstanding the
provisions of Sections 1.5(c) and 1.5(d), the Stock Option
Committee in its discretion may provide, either upon the original
grant of an Option or in an amendment to an Incentive or
Nonqualified Stock Option, that an Option may be exercisable during
a Term that does not expire upon the expiration of three months
following an Optionee's termination of employment (one year in the
case of termination as a result of death or disability), but in no
event later than the Term specified in Section 3.1(a) above.
<PAGE>
3.2 Section 83(b) Election.
The Company recognizes that certain persons who receive
Nonqualified Stock Options may be subject to restrictions regarding
their right to trade Common Stock under applicable securities laws.
Such restrictions may cause Optionees exercising such Options not
to be taxable under the provisions of Section 83(c) of the Code.
Accordingly Optionees exercising such Nonqualified Stock Options
may consider making an election to be taxed upon exercise of the
Option under Section 83(b) of the Code and to effect such election
will file such election with the Internal Revenue Service within
thirty (30) days of exercise of the Option and otherwise in
accordance with applicable Treasury Regulations.
ARTICLE IV
STOCK APPRECIATION RIGHTS
4.1 Terms and Conditions of Stock Appreciation Rights.
Stock Appreciation Rights ("SAR") may be granted by the
Committee in connection with the grant of an Option but shall not
be granted unrelated to an Option. All SARs shall be in such form
as the Committee may from time to time determine and shall be
subject to the following terms and conditions:
(a) Term and Exercise. An SAR shall be exercisable only
(i) with the approval of the Committee, (ii) during the Term of the
Option to which it relates, (iii) at such times as the Option to
which it relates is exercisable, and (iv) if the Fair Market Value
of the Common Stock subject to the Option surrendered (on the date
surrendered) minus the aggregate option price of the Common Stock
subject to the Option surrendered is a positive amount.
(b) Payment. In the event the Committee agrees to permit
exercise of the SAR, the Optionee shall surrender to the Company
the right to exercise the Option with respect to a specified number
of shares as to which the Option is then exercisable. In return,
the Optionee shall receive from the Company no more than an amount
payable in cash and/or in shares (as determined by the Committee
after considering the request of the Optionee) equal to the
difference between the Fair Market Value of Common Stock as to
which the Optionee has surrendered the Option and the exercise
price with respect thereto. In the event the Committee determines
to tender shares in full or partial payment of the SAR, the number
of shares to be issued to the Optionee shall be based on the Fair
Market Value of the shares as of the date of exercise of the SAR.
No fractional shares shall be issued to Optionees upon exercise of
an SAR. Instead, the Company shall pay the Optionee the value of
such fractional share based upon the Fair Market Value of a share
on the date the SAR is exercised.
(c) Nontransferability. An SAR granted under the Plan shall
be transferable only when the Option to which it relates is
transferable.
4.2 Other Terms and Conditions.
Option agreements reflecting Stock Appreciation Rights which
are granted under the Plan may contain such other conditions not
inconsistent with the provisions of the Plan as the Committee may
deem appropriate from time to time.
4.3 Notification of Request to Exercise.
The Optionee shall request the Committee's approval to
exercise a Stock Appreciation Right by written notice to the
Secretary of the Company at the principal executive offices of the
Company. Such written notice shall state the number of shares
subject to the Option for which approval of the exercise of the SAR
is requested and the Optionee's preferred form of payment of the
SAR, as hereinafter provided. The Optionee may indicate his or her
preference to receive payment of the SAR in cash or in Common Stock
or in a combination thereof. Notwithstanding anything to the
contrary contained herein, the Committee shall have absolute
discretion in determining whether the request for approval of the
exercise of the SAR shall be approved and, if such approval is
given, whether payment shall be made in cash or Common Stock or in
a combination thereof.
Within 30 days after the delivery to the Secretary of the
Optionee's request to exercise the SAR as provided above, the
Committee shall inform the Optionee in writing of its determination
by personal delivery of such written determination to the Optionee
or by mailing its written determination to the Optionee by
certified or registered mail, return receipt requested. The
Optionee must act on any approved exercise of an SAR within 30 days
after the date of such determination by the Committee (or such
longer period as may be permitted by the Committee) and in
accordance with the terms approved by the Committee. Exercise
shall be by written notice actually delivered, or mailed by
certified or registered mail, return receipt requested, to the
Secretary of the Company at the principal executive offices of the
Company.
4.4 Effect of Exercise.
Upon exercise of a Stock Appreciation Right, the Option to
which it relates shall lapse with respect to the shares as to which
the SAR is exercised, and such shares shall not be available for
further grant of Options, as provided in Section 1.4.
ARTICLE V
ADDITIONAL PROVISIONS
5.1 Stockholder Approval.
The Plan shall be submitted for the approval of the
stockholders of the Company at the first meeting of stockholders
held subsequent to the adoption of the Plan and in all events
within one year of its approval by the Board of Directors. If at
said meeting the stockholders of the Company do not approve the
Plan, the Plan shall terminate.
5.2 Compliance with Other Laws and Regulations.
The Plan, the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such
Options, shall be subject to all applicable Federal and state laws,
rules, and regulations and to such approvals by any government or
regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for shares of Common
Stock prior to (a) the listing of such shares on any stock exchange
on which the Common Stock may then be listed and (b) the completion
of any registration or qualification of such shares under any
Federal or state law, or any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to
be necessary or advisable.
5.3 Amendments.
The Board of Directors may discontinue the Plan at any time,
and may amend it from time to time, but no amendment, without
approval by stockholders, may (a) increase the total number of
shares which may be issued under the Plan or to any individual
under the Plan, (b) reduce the Option price for shares which may be
purchased pursuant to Options under Articles II and III of the
Plan, (c) extend the period during which Options may be granted, or
(d) change the class of employees to whom Options may be granted,
except as provided in Section 1.6. Other than as expressly
permitted under the Plan, no outstanding Option may be revoked or
altered in a manner unfavorable to the Optionee without the consent
of the Optionee.
5.4 No Rights As Shareholder.
No Optionee shall have any rights as a shareholder with
respect to any Share subject to his or her Option prior to the date
of issuance to him or her of a certificate or certificates for such
shares.
5.5 Withholding.
Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall
have the right to require the Optionee to remit to the Company an
amount sufficient to satisfy any Federal, state or local
withholding tax liability prior to the delivery of any certificate
or certificates for such shares. Whenever under the Plan payments
are to be made in cash, such payments shall be made net of an
amount sufficient to satisfy any Federal, state, or local
withholding tax liability.
5.6 Continued Employment Not Presumed.
This Plan and any document describing this Plan and the grant
of any stock Option or Stock Appreciation Right hereunder shall not
give any Optionee or other employee a right to continued employment
by the Company or its Subsidiaries or affect the right of the
Company or its Subsidiaries to terminate the employment of any such
person with or without cause.
5.7 Effective Date; Duration.
The Plan shall be effective as of the date of its adoption by
the Board of Directors, subject to stockholder approval pursuant to
Section 5.1 and shall expire on April 15, 2006. No Options may be
granted under the Plan after April 15, 2006, but Options granted on
or before that date may be exercised according to the terms of the
option agreements and shall continue to be governed by and
interpreted consistent with the terms hereof.
<PAGE>
KLLM Transport Services, Inc.
Amended and Restated 1996 Stock Purchase Plan
________________________
ARTICLE I
GENERAL
1.1 Purpose of the Plan.
The purpose of the KLLM Transport Services, Inc. 1996 Stock
Purchase Plan (the "Plan") is to encourage key personnel,
consultants, advisors, and the like of KLLM Transport Services,
Inc. (the "Company") and its subsidiaries, to purchase stock of the
Company, through contractual arrangements with the Company or stock
options issued by the Company, to further instill in them a sense
of ownership, responsibility, and entrepreneurship, with a goal of
increasing their efforts and motivation for the long term benefit
of the Company and all of its shareholders.
1.2 Definitions.
"Board of Directors" means the Board of Directors of the
Company.
"Common Stock" means voting common stock of the Company, par
value $1.00 per share.
"Covered Consultant" means any Person, including third party
non-employee consultants, advisors and the like, who may from time
to time be designated a Covered Consultant by the Committee. The
power to determine who is and who is not a Covered Consultant is
reserved solely for the Committee.
"Covered Employee" means any Person, including officers and
directors in the regular full time employment of the Company or its
Subsidiaries, who may from time to time be designated a Covered
Employee by the Committee. The power to determine who is and who is
not a Covered Employee is reserved solely for the Committee.
"Optionee" means a Covered Employee or Covered Consultant to
whom a stock option is granted under the Plan.
"Person" shall mean an individual, partnership, corporation,
limited liability company, association, trust, joint venture or
unincorporated organization, or any government, governmental
department or agency or political subdivision thereof.
"Purchase Price" shall mean the price to be paid for a share
of Common Stock under the Plan as defined in Section 1.5 (a).
"Purchaser" shall mean any Covered Employee or Covered
Consultant purchasing Common Stock under the Plan and, if
applicable, his heirs, successors or assigns.
"Subsidiary" shall mean any Person of which the Company shall
at any time own directly or indirectly through another Subsidiary,
50% or more of the outstanding voting capital stock (or other
shares of beneficial interest with voting rights), or which the
Company shall otherwise control.
1.3 Administration of the Plan.
The Plan shall be administered by the Compensation Committee
(the "Committee") appointed by the Board of Directors consisting of
at least three members from the Board of Directors who serve at the
pleasure of the Board of Directors. No Person while a member of
the Committee shall be eligible to participate in the Plan. Subject
to the control of the Board of Directors, and without limiting the
generality thereof, the Committee shall have the power to interpret
and apply the Plan and to make regulations for carrying out its
purpose. More particularly, the Committee shall determine which
Covered Employees or Covered Consultants may purchase stock or be
issued options to purchase stock under the Plan and the terms of
such purchase or issuance. Determinations by the Committee under
the Plan need not be uniform and may be made by it selectively
among Persons participating in the Plan, whether or not such
Persons are similarly situated.
1.4 Shares Subject to the Plan.
The total number of shares that may be purchased or subject to
stock options pursuant to the Plan shall not exceed three hundred
thousand (300,000) shares of Common Stock. Shares subject to stock
options which terminate or expire prior to exercise shall be
available for future stock options. These shares may be either
unissued shares of Common Stock or reacquired shares of Common
Stock held in treasury.
1.5 Terms and Conditions.
All purchases of shares and issuances of stock options under
the Plan shall be evidenced by agreements in such form as the
Committee shall approve from time to time and the following
provisions:
(a) Purchase Price. The Committee shall determine from time
to time the Purchase Price for shares under the Plan.
(b) Payment. Payment for shares under the Plan shall be made
in such manner and at such time or times as shall be determined by
the Committee.
(c) Nontransferability. Agreements under the Plan and rights
arising thereunder shall not be transferable other than by will or
by the laws of descent and distribution.
(d) Additional Provisions. Each agreement under the Plan may
contain such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee may deem appropriate from
time to time.
1.6 Stock Adjustments; Mergers.
(a) Notwithstanding Section 1.4, if the outstanding shares of
Common Stock are changed into or exchanged for a different number
or kind of shares or other securities of the Company or of any
other corporation by reason of any merger, sale of stock,
consolidation, liquidation, recapitalization, reclassification,
stock splits, combination of shares, or stock dividend, the total
number of shares set forth in Section 1.4 shall be proportionately
and appropriately adjusted by the Committee. If the Company
continues in existence, the number and kind of shares that are
subject to any agreement under the Plan and the purchase price per
share shall be proportionately and appropriately adjusted without
any change in the aggregate price to be paid therefor upon the
closing of a purchase or exercise of an option. With regard to
agreements obligating a Purchaser to purchase stock under the Plan,
if the Company will not remain in existence or substantially all of
the Common Stock will be purchased by a single purchaser or group
of purchasers acting together, then the Committee shall notify each
Purchaser that such Purchaser's right and obligation to purchase
the shares shall apply with appropriate adjustments as determined
by the Committee to the securities of the successor corporation to
which such Purchaser, as holder of the number of shares of Common
Stock he is required to purchase, would have been entitled. With
regard to options issued under the Plan, if the Company will not
remain in existence or substantially all of the Common Stock will
be purchased by a single purchaser or group of purchasers acting
together, then the Committee may (i) declare that all options shall
terminate thirty (30) days after the Committee gives written notice
to all Optionees of their immediate right to exercise all options
outstanding (without regard to limitations on exercise otherwise
contained in the option agreements), or (ii) notify all Optionees
that all options granted under the Plan shall apply with
appropriate adjustments as determined by the Committee to the
securities of the successor corporation to which holders of the
numbers of shares subject to such options would have been entitled,
or (iii) some combination of aspects of (i) and (ii). The
determination by the Committee as to the terms of any of the
foregoing adjustments shall be conclusive and binding.
<PAGE>
ARTICLE II
ADDITIONAL PROVISIONS
2.1 Compliance with Other Laws and Regulations.
The Plan shall be subject to all applicable federal and state
laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required. The Company
shall not be required to issue or deliver any certificates for
shares of Common Stock prior to (a) the listing of such shares on
any stock exchange on which the Common Stock may then be listed and
(b) the completion of any registration or qualification of such
shares under any federal or state law, or any ruling or regulation
of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable.
2.2 Amendments.
The Board of Directors may discontinue the Plan at any time,
and may amend it from time to time.
2.3 No Rights As Shareholder.
No Purchaser or Optionee shall have any rights as a
shareholder with respect to any share purchased pursuant to the
Plan until payment of the Purchase Price and delivery to him of a
certificate or certificates for the purchased shares.
2.4 Continued Employment or Engagement Not Presumed.
This Plan, any document describing this Plan, and any
agreement entered into pursuant to this Plan, shall not give any
Covered Employee, Covered Consultant, Purchaser, Optionee or other
employee, consultant, advisor, or the like, a right to continued
employment or engagement by the Company or its Subsidiaries or
affect the right of the Company or its Subsidiaries to terminate
the employment or engagement of any such Person with or without
cause.
2.5 Effective Date; Duration.
The Plan shall be effective as of the date of its adoption by
the Board of Directors and shall expire July 30, 2006 (the
"Expiration Date"). No agreements under the Plan may be entered
into under the Plan after the Expiration Date, but agreements
entered into on or before that date may be carried out according to
their terms and shall continue to be governed by and interpreted
consistent with the terms hereof.
