SCHEDULE 14a
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the 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
TRANSPORT CORPORATION OF AMERICA, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transactions
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
TRANSPORT
AMERICA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1997
Notice is hereby given that the Annual Meeting of Shareholders of
Transport Corporation of America, Inc. will be held in the Admiral's Room at the
Pool and Yacht Club, 1600 Lilydale Road, St. Paul, MN 55118, on Tuesday, May 13,
1997 at 2:30 p.m. for the following purposes:
1. To elect a Board of Directors.
2. To ratify and approve amendments to the Company's 1986 Employee
Stock Option Plan and 1995 Stock Plan to bring both plans into
compliance with Section 162(m) of the Internal Revenue Code of
1986, as amended.
3. To ratify and approve the selection of independent public
accountants for the current year.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 28, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors,
Rosalyn A. Hennen
Secretary
Eagan, Minnesota
April 3, 1997
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY ON THE ENCLOSED PROXY CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY SO DESIRE.
TRANSPORT CORPORATION OF AMERICA, INC.
1769 YANKEE DOODLE ROAD
EAGAN, MN 55121
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 13, 1997
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Transport Corporation of America, Inc. (the
"Company") of proxies for the Annual Meeting of Shareholders of the Company to
be held in the Admiral's Room at the Pool and Yacht Club, 1600 Lilydale Road,
St. Paul, MN 55118, on Tuesday, May 13, 1997 at 2:30 p.m. Central Daylight Time,
or any adjournment or adjournments thereof. This Proxy Statement and the
enclosed proxy card are being mailed to shareholders on or about April 3, 1997.
The Company's Annual Report for the fiscal year ended December 31, 1996,
including audited financial statements, is being mailed to shareholders
concurrently with the Proxy Statement.
Proxies may be revoked at any time before they are exercised by the
execution and delivery of a later proxy, and shareholders present at the meeting
may withdraw their proxies and vote in person. Unless revoked, proxies will be
voted and, where a choice is specified with respect to any matter to be voted
upon, the proxies will be voted as specified.
The total number of shares outstanding and entitled to vote at the
meeting as of March 28, 1997 consists of 6,617,108 shares of $.01 par value
Common Stock. Each share of Common Stock is entitled to one vote and there is no
cumulative voting. Only shareholders of record at the close of business on March
28, 1997 will be entitled to vote at the Annual Meeting. The presence in person
or by proxy of holders of a majority of the shares of stock entitled to vote at
the Annual Meeting of Shareholders constitutes a quorum for the transaction of
business.
Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum and in tabulating
votes cast on proposals presented to shareholders, but as unvoted for purposes
of determining the approval of the matter. Consequently, an abstention will have
the same effect as a negative vote. If a broker indicates on the proxy that it
does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company is currently composed of the five
members who are nominees for election at the Annual Meeting. It is the
recommendation of the Company's Board of Directors that the five nominees named
below be reelected as directors, to serve as directors until the next Annual
Meeting of Shareholders and until their successors shall be duly elected as
directors.
Unless otherwise directed, the proxies solicited by the Board of
Directors will be voted for the election as directors of the nominees named
below. The Company believes that each nominee named below will be able to serve;
but should any such nominee be unable to serve as a director, the persons named
in the proxies have advised that they will vote for the election of such
substitute nominee as the Board may propose.
The names and ages of the nominees, and their principal occupations and
tenure as directors, are set forth below based upon information furnished to the
Company by the nominees.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION SINCE
- ------------------------- ------------------------------------------------------------------ --------
<S> <C> <C> <C>
James B. Aronson (58) Chief Executive Officer of the Company since August 1984; President 1984
of the Company from August 1984 to June 1994 and June 1996 to
present; Prior to August 1984, President and Chief Operating
Officer of Overland Express, Inc.
Dennis M. Mathisen (57) President and Chief Executive Officer of Marshall Financial 1992
Group, Inc. (a merchant banking firm in Minneapolis, Minnesota);
Director of Community First Bankshares, Inc.
Anton J. Christianson (44) Managing General Partner of Cherry Tree Investment, Inc. (a venture 1987
capital investment company) since October 1980; Director of Fourth Shift
Corporation and TRO Learning, Inc.
Michael J. Paxton (50) Chairman, President and Chief Executive Officer of O-Cedar Brands, Inc. 1995
since January 1996; President and Chief Executive Officer of Haagen-Dazs
Company, Inc. (a subsidiary of Grand Metropolitan PLC) from 1992 through
1995; President of the Baked Goods Division of Pillsbury Company (a
subsidiary of Grand Metropolitan PLC) from 1989 to 1992; Director of
Epitope, Inc. (a bio-technology company in Beaverton, Oregon).
Kenneth J. Roering (54) Professor of Marketing in the Carlson School of Management 1992
at the University of Minnesota since September 1981; Director of
TSI, Inc., Sheldahl, Inc. and Arctic Cat Inc.
</TABLE>
VOTE REQUIRED. The affirmative vote of a majority of the shares of the
Company's Common Stock represented at the meeting in person or by proxy is
required for the election of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES.
MEETINGS. During fiscal 1996, the Board of Directors met five times.
Each director attended more than 75% of the meetings of the Board of Directors
and any committee on which he served.
BOARD COMMITTEES. The Board of Directors has established an Audit
Committee and a Compensation Committee. The Audit Committee, which met one time
during the last fiscal year, is currently composed of Messrs. Christianson
(Chairman), Mathisen and Roering. The Audit Committee meets with the Company's
independent auditors and representatives of management to review the internal
and external financial reporting of the Company, reviews the scope of the
internal auditors' examination, considers comments by the auditors regarding
internal controls and accounting procedures and management's response to these
comments and approves any material non-audit services to be provided by the
Company's independent auditors.
The Compensation Committee, which met one time during the last fiscal year, is
currently composed of Messrs. Roering (Chairman), Paxton and Mathisen. The
Compensation Committee reviews and makes recommendations to the Board of
Directors regarding salaries, compensation, stock options and benefits of
officers and employees. The Board of Directors has established a Stock Grant
Subcommittee of the Compensation Committee, currently composed of Messrs.
Mathisen and Paxton, for the purpose of granting awards under the Company's 1986
Employee Stock Option Plan and the 1995 Stock Plan.
The Company does not have a nominating committee.
DIRECTOR COMPENSATION. Each non-employee member of the Board of
Directors receives $1,000 per month, plus $500 per meeting, as compensation for
his service. Non-employee directors are also reimbursed for certain expenses in
connection with attendance at Board and committee meetings. In addition,
pursuant to the Company's 1995 Stock Plan, each non-employee director of the
Company automatically receives annually on the date of election or reelection as
a director an option to purchase 2,000 shares of the Company's Common Stock at
an option price equal to the fair market value of the Company's Common Stock on
the date that the option is granted. All such options vest immediately and are
exercisable at any time during the five year term or within 30 days of the date
when the director terminates his service as a director, whichever period is
shorter. The Board may, in appropriate circumstances, waive or modify the
requirement that a director exercise an option within 30 days of the date when
the director's services as a director terminate. The 1995 Stock Plan also
permits granting of additional or alternative options to directors at the
discretion of the Board.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER INFORMATION
The following table shows, for fiscal years 1996, 1995 and 1994, the
cash compensation paid by the Company, as well as certain other compensation
paid or accrued for those years, to James B. Aronson, the Company's Chief
Executive Officer, and to each of the two other executive officers of the
Company whose total cash compensation exceeded $100,000 during 1996 (together
with Mr. Aronson, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------- ----------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) STOCK OPTIONS (#) COMPENSATION
- --------------------------- ---- ---------- --------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
James B. Aronson 1996 $250,000 $-0- 12,387 2,634(2)
President and Chief 1995 240,000 57,600(1) -0- 2,290(2)
Executive Officer 1994 210,000 15,543(1) 18,750 2,100(2)
Robert J. Meyers 1996 190,000 -0- 9,290 2,367(2)
Executive Vice President, 1995 180,000 43,200(1) -0- 2,093(2)
Chief Financial Officer
and Chief Information Officer 1994 139,230 44,467(1) 30,000 1,617(2)
Robert E. Johnson(3) 1996 106,096 -0- 9,600 168,805(2)
President and 1995 186,000 44,640(1) -0- 20,494(2)
Chief Operating 1994 94,231 10,000(1) 67,500 24,773(2)
Officer
</TABLE>
- -------------
(1) Represents a bonus earned in the year indicated but paid in the
following year.
(2) Except with respect to Mr. Johnson, represents Company contributions to
the Company's 401(k) Retirement Plan. For fiscal 1995, the Company's
contributions to the Company's 401(k) Retirement Plan for Mr. Johnson
was $924. The amounts indicated for Mr. Johnson also include $95,728
reported in 1996 as compensation to Mr. Johnson due to stock option
exercises, his total severance payments of $73,077, $19,570 paid in 1995
and $24,773 paid in 1994 as relocation expense and related tax payment
reimbursement.
(3) The employment of Mr. Johnson terminated in June 1996 and his stock
option to purchase 9,600 shares of the Company's Common Stock was
canceled.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement effective June 13, 1994 with
Robert E. Johnson, the Company's President and Chief Operating Officer, which
provided for a base salary for Mr. Johnson of $175,000 per year. Pursuant to the
agreement, Mr. Johnson was granted an option to purchase 67,500 shares of Common
Stock at a price of $6.47 per share, which vests with respect to one-third of
the shares on the date of grant and one-third of the shares on each of the first
and second anniversaries of the date of grant. In addition, Mr. Johnson received
relocation expenses in the amounts indicated in the above table and received a
car allowance. Mr. Johnson's employment with the Company terminated in June 1996
and he was paid a total of $73,077 as part of his severance arrangement. Mr.
Johnson also received an option grant to purchase 9,600 shares of the Company's
Common Stock in 1996 which option was canceled in June 1996. The Company has no
other employment agreements.
STOCK OPTIONS
The following table contains information concerning individual grants of
stock options under the 1995 Stock Plan to each of the named individuals during
the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER VALUE
OF AT ASSUMED ANNUAL
SECURITIES PERCENT OF TOTAL MARKET RATES
UNDERLYING OPTIONS GRANTED TO PRICE OF STOCK PRICE
OPTIONS EMPLOYEES IN EXERCISE ON GRANT EXPIRATION APPRECIATION
NAME GRANTED FISCAL YEAR PRICE ($) DATE ($) DATE FOR OPTION TERM ($)
- ------------------ ---------- ------------------ --------- -------- ---------- -------------------
5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
James B. Aronson 12,387(1) 39.6% $11.63 $11.63 02/27/01 39,801 87,951
Robert J. Meyers 9,290(1) 29.7% 11.63 11.63 02/27/01 29,850 65,961
Robert E. Johnson 9,600(2) 30.7% 11.63 11.63 06/96 -- --
</TABLE>
- ------------
(1) Becomes exercisable as to one-third of the shares on February 27, 1997
and each of the two anniversaries thereafter.
(2) The employment of Mr. Johnson terminated in June 1996 and these options
were canceled at that time.
The following table sets forth information with respect to the named
individuals concerning the exercise of options during 1996 and unexercised
options held as of December 31, 1996:
AGGREGATED OPTION EXERCISES
AND DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/31/96 (#) AT 12/31/96 ($)(1)
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James B. Aronson 0 -- 27,879 14,508 $122,688 $ 8,750
Robert J. Meyers 0 -- 60,596 16,194 $378,625 $14,000
Robert E. Johnson(2) 67,500 $305,775 -- -- -- --
</TABLE>
- ------------
(1) Based on a market price of $10.75 per share of Common Stock on December
31, 1996.
(2) The employment of Mr. Johnson terminated in June 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives are made by the
Compensation Committee of the Board consisting of Messrs. Roering (Chairman),
Mathisen and Paxton. All decisions by the Compensation Committee relating to the
compensation of the Company's executive officers were during 1996 and will be in
1997 reviewed by the full Board. Pursuant to rules promulgated by the Securities
and Exchange Commission ("SEC") designed to enhance disclosure of companies'
policies with regard to executive compensation, set forth below is a report
submitted by the Compensation Committee addressing the Company's compensation
policies for 1996 as they affected Mr. Aronson, the Company's Chief Executive
Officer and Messrs. Meyers and Johnson, the executive officers other than the
Chief Executive Officer who, for 1996, were the Company's only executive
officers whose compensation exceeded $100,000 (together with Mr. Aronson, the
"Named Executives"). The following report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 (the "1933 Act") or
the Securities Exchange Act of 1934 (the "1934 Act"), except to the extent that
the Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the 1933 Act or the 1934 Act.
COMPENSATION PHILOSOPHY. The Compensation Committee's executive
compensation policies are designed to reflect the following objectives: payment
for actual performance; attraction and retention of executives who contribute to
the success of the Company; payments commensurate with the best companies in the
truckload industry; and alignment of the interests of management with those of
stockholders.
BASE SALARY. The Compensation Committee annually reviews each officer's
salary, including those of the Named Executives. In determining the base salary
levels, the Compensation Committee considers levels of responsibility,
experience, equity, external pay practices and industry trends. With respect to
external pay practices, the Compensation Committee reviews the base salaries
paid by the Company to a survey of national, public transportation companies.
The Company attempts to maintain base salary levels which it believes allows the
Company to attract and retain the quality of executive talent needed.
ANNUAL BONUS. The Compensation Committee established the 1996 Executive
Compensation Plan, an annual bonus plan for the Company's management, including
the Named Executives, for 1996. Under this plan, the Named Executives were
eligible to receive an annual bonus based on improvement of the Company's actual
operating ratio over a pre-established target operating ratio. The amount of
bonuses were scheduled to increase as the operating ratio improved up to a
maximum of approximately 50% of base salary. For fiscal 1996, the
pre-established operating ratio was not met and no bonuses were paid.
LONG-TERM INCENTIVES. To align the interests of management with those of
shareholders the Compensation Committee has, using the information obtained from
a national accounting and consulting firm, instituted a long-term incentive
program which consists of options to be granted to Named Executives upon
achieving or exceeding a target operating ratio. Once the target operating ratio
is met or exceeded, the Board grants a fixed number of options under a formula
based on current stock valuation and base pay. To foster a longer-term
perspective, stock options typically vest over a three year period. In 1996, the
pre-established operating ratio was not met and no options were granted.
OTHER COMPENSATION PROGRAMS. The Company maintains certain broad-based
employee benefit plans in which its executive officers, including the Named
Executives, have been permitted to participate, including retirement, life and
health insurance plans. The Company's retirement plan consists of a 401(k)
employee saving plan which allows employees to make pre-tax contributions, and
in which the Company may, at its discretion, match a portion of the employee
contributions. During 1996 the Company contributed amounts equal to one-fourth
of the employee deferrals, up to 1% of each participant's compensation. Other
non-cash compensation benefits are provided to the Named Executives. None of
these benefits are directly or indirectly tied to the Company's performance. In
1996, the Company has instituted an Employee Stock Purchase Plan which allows
all Company employees who meet certain eligibility requirements to purchase
Company stock at a discount from market. Mr. Meyers is eligible to participate
in the Plan.
MR. ARONSON'S 1996 COMPENSATION. Mr. Aronson's base salary for 1996,
which was determined on the same basis as the other Named Executives, was
$250,000, which was set at the low end of the competitive scale of chief
executive officer compensation for comparable companies. Mr. Aronson did not
receive a bonus under the 1996 Executive Compensation Plan described above.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Anton J. Christianson Dennis M. Mathisen Michael J. Paxton
PERFORMANCE GRAPH
In accordance with the rules of the SEC, the following performance graph
compares performance of the Company's Common Stock on the Nasdaq National Market
to the S&P 500 Index and to the ABS Truckload Index prepared by Alex. Brown &
Sons Incorporated. The graph compares the cumulative total return from November
4, 1994 (the date of the Company's initial public offering) to December 31, 1996
on $100 invested on November 4, 1994, assumes reinvestment of all dividends and
has been adjusted to reflect stock splits. The performance graph is not
necessarily indicative of future investment performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH]
TRANSPORT AMERICA ABS TRUCKLOAD INDEX STANDARD & POOR'S
----------------- ------------------- -----------------
11/04/94 100 100 100
12/30/94 86.4 91.6 99.4
03/31/95 102.3 86.6 108.3
06/30/95 98.9 79.8 117.8
09/29/95 122.7 78.9 126.4
12/29/95 104.6 74.7 133.2
03/29/96 120.5 84.7 139.6
06/28/96 114.8 88.7 145.1
09/30/96 102.3 86 148.7
12/31/96 97.7 87.6 160.2
The performance graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the 1933 Act or the 1934 Act, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under the 1933 Act or the 1934 Act.
BENEFICIAL OWNERSHIP OF
COMMON STOCK
The following table presents information provided to the Company as to
the beneficial ownership of the Company's Common Stock as of March 28, 1997 by
(i) the only shareholders known to the Company to hold 5% or more of such stock,
(ii) each of the directors and Named Executives of the Company and (iii) all
directors and officers as a group. Unless otherwise indicated, all shares
represent sole voting and investment power.
PERCENT OF
COMMON STOCK OUTSTANDING SHARES
BENEFICIAL OWNERS BENEFICIALLY OWNED OF COMMON STOCK
- ----------------- ------------------ ------------------
James B. Aronson(1) ................. 593,305 8.9%
1769 Yankee Doodle Road
Eagan, MN 55121
Anton J. Christianson(2) ............ 535,548 8.1%
1400 Northland Plaza
3800 West 80th Street
Minneapolis, MN 55431
Cowen & Company(4) .................. 664,900 10.0%
Financial Square, 31st Floor
New York, NY 10005
Wellington Management Co LLP(4) ..... 643,100 9.7%
75 State Street
Boston, MA 02109
Central Securities Corporation ...... 533,757 8.1%
375 Park Avenue
New York, NY 10152
Franklin Mutual Advisers, Inc.(4) ... 385,000 5.8%
777 Mariners Island Blvd ...........
San Mateo, CA 94404
T. Rowe Price Associates Inc.(4) .... 336,295 5.1%
100 East Pratt Street
Baltimore, MD 21202
Dennis M. Mathisen(1)(3) ............ 215,412 3.3%
Michael J. Paxton(1) ................ 5,200 *
Kenneth J. Roering(1) ............... 97,750 1.5%
Robert J. Meyers(1) ................. 157,777 2.4%
Robert E. Johnson(5) ................ 47,500 *
All officers and directors as a group
(6 persons)(1)(2)(3) ............... 1,604,992 23.8%
- ------------
* Less than 1%
(1) Includes the following shares for the indicated individual which may be
purchased within 60 days from the date hereof pursuant to the exercise
of outstanding options or warrants: Mr. Aronson, 27,879 shares; Mr.
Meyers, 60,596 shares; Mr. Mathisen, 4,000; Mr. Paxton, 4,000; Dr.
Roering, 41,500 shares; all officers and directors as a group, 137,975.
(2) The shares indicated as being owned by Mr. Christianson are owned by
Cherry Tree Ventures III, a limited partnership, which owns 535,548
shares, of which Mr. Christianson is a managing general partner. As
such, he is deemed to beneficially own such shares.
(3) Includes 66,700 shares of Common Stock held by Marshall Financial Group,
Inc., a corporation in which Mr. Mathisen is a shareholder, director and
executive officer. Also includes 137,500 shares held by an entity
controlled by Mr. Mathisen's wife, with respect to which Mr. Mathisen
disclaims beneficial ownership.
(4) Based on a Schedule 13G filed with the Securities and Exchange
Commission.
(5) The employment of Mr. Johnson terminated in June 1996. Securities held
by Mr. Johnson are not included in the calculation of securities
ownership of all officers and directors as a group.
COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT
Based upon its review of Forms 3, 4 and 5 and any amendments thereto
furnished to the Company pursuant to Section 16 of the 1934 Act, the Company
believes all of such forms were filed on a timely basis by reporting persons
during the fiscal year ended December 31, 1996.
PROPOSAL 2
AMENDMENT TO THE COMPANY'S 1986
AND 1995 STOCK PLANS
GENERAL INFORMATION
On December 1, 1986, the Board of Directors adopted the 1986 Employee
Stock Option Plan (the "1986 Plan") and on March 21, 1995, the Board of
Directors adopted the 1995 Stock Plan (the "1995 Plan"). The purpose of the 1986
Plan and the 1995 Plan is to enable the Company and its subsidiaries to retain
and attract executives and other key employees who contribute to the Company's
success by their ability, ingenuity and industry, and to enable such individuals
to participate in the long-term success and growth of the Company by giving them
a proprietary interest in the Company. In addition, the 1995 Plan allows the
Company to grant stock options or restricted stock awards to consultants or
non-employee directors.
There are 25,170 and 316,323 shares of Common Stock available for
issuance under the 1986 Plan and the 1995 Plan, respectively. Only
"non-qualified stock options" may currently be granted under the 1986 Plan.
Eligible persons will not pay any consideration to the Company in order to
receive options, but will pay the exercise price upon exercise of an option.
AMENDMENT TO THE 1986 PLAN AND THE 1995 PLAN
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the Company's deduction for federal income tax purposes of
compensation in excess of $1 million per individual paid to the Company's Chief
Executive Office and its four highest paid executive officers. Compensation
plans which are performance-based, approved by the Company's shareholders,
granted by a committee consisting solely of two or more outside directors, and
have an annual cap on the number of shares that may be granted to any given
individual will not be subject to the deduction limit. Neither the 1986 Plan nor
the 1995 Plan currently has an annual cap on the amount of shares subject to an
option grant. On December 5, 1996, the Board of Directors amended the 1986 Plan
and the 1995 Plan, subject to ratification and approval of the shareholders, to
bring each plan into compliance with Section 162(m) of the Code by providing for
an annual cap on the number of shares granted to an individual of 100,000
shares. By adopting this change, the Company may deduct any compensation expense
resulting from the grant or exercise of options issued under the Plan without
regard to the limitations under Code Section 162(m), including options to the
individuals described above.
SUMMARY OF THE 1986 PLAN AND THE 1995 PLAN
GENERAL. In 1996, the SEC adopted new rules under Section 16 of the 1934
Act which required certain amendments to the 1986 Plan and the 1995 Plan
(together, the "Plans"). On December 5, 1996, the Board of Directors amended the
Plans to bring them into compliance with the new rules. The following provides a
short summary of the provisions of the Plans, as amended.
ELIGIBILITY AND ADMINISTRATION. Officers and other key employees of the
Company and its subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and its
subsidiaries are eligible to be granted awards under the Plans. Selected
consultants under contract to the Company and non-employee directors are
eligible to be granted awards only under the 1995 Plan. The Plans are
administered by the Board, or in its discretion, by a committee of not less than
two directors, each of whom must be "non-employee directors" and "outside
directors," as defined in the Plans (the "Committee"), who shall be appointed by
the Board. The Board of Directors has established a Stock Grant Subcommittee of
the Compensation Committee, currently composed of Messrs. Mathisen and Paxton,
for the purpose of granting awards under the Plans. The term "Board" as used in
this section refers to the Company's Board of Directors or the Committee. The
Board has the power to make awards, determine the number of shares covered by
each award and other terms and conditions of such awards, interpret the Plans,
and adopt rules, regulations and procedures with respect to the administration
of the Plans. The Board may delegate its authority to officers of the Company
for the purpose of selecting key employees who are not officers of the Company
to be participants in the 1995 Plan.
AWARDS UNDER THE PLANS
EMPLOYEE STOCK OPTIONS. Under the 1995 Plan, the Board may grant stock
options that either qualify as "incentive stock options" under the Code or are
"non-qualified stock options" in such form and upon such terms as the Board may
approve from time to time. Only "non-qualified stock options" may currently be
granted under the 1986 Plan. Stock options granted under the Plans may be
exercised during their respective terms as determined by the Board. The purchase
price may be paid by tendering cash or, in the Board's discretion, by tendering
promissory notes or common stock. The Committee may, in its sole discretion,
permit optionees to pay the option exercise price by having the Company withhold
upon exercise of the option a number of shares with a fair market value equal to
the aggregate option exercise price. No stock option shall be transferable by
the optionee or exercised by anyone else during the optionee's lifetime.
Stock options may be exercised during varying periods of time after a
participant's termination of employment, depending upon the reason for the
termination. Under the 1986 Plan, following a participant's death, the
participant's stock options may be exercised by the legal representative of the
estate or the optionee's legatee for a period of three months or until the
expiration of the stated term of the option, whichever is less. Under the 1995
Plan, following a participant's death, the participant's stock options may be
exercised by the legal representative of the estate or the optionee's legatee
for a period of nine months or until the expiration of the stated term of the
option, whichever is less. The time periods that apply if the participant is
terminated by reason of disability are one year and nine months under the 1986
Plan and the 1995 Plan, respectively. Under both Plans, if the participant's
employment is terminated by reason of retirement or for any other reason, the
participant's stock options may be exercised for a period of three months or
until the expiration of the stated term of the option, whichever is less. In the
event of termination of employment by reason of disability or retirement, if an
incentive stock option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, the option will thereafter
be treated as a non-qualified stock option.
No incentive stock options shall be granted under the 1986 Plan after
December 1, 1996 and under the 1995 Plan after March 21, 2005. The term of an
incentive stock option may not exceed 10 years (or 5 years if issued to a
participant who owns or is deemed to own more than 10% of the combined voting
power of all classes of stock of the Company, any subsidiary or affiliate). The
aggregate fair market value of the Common Stock with respect to which an
incentive stock option is exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. The exercise price under an
incentive stock option may not be less than the fair market value of the Common
Stock on the date the option is granted (or, in the event the participant owns
more than 10% of the combined voting power of all classes of stock of the
Company, the option price shall be not less than 110% of the fair market value
of the stock on the date the option is granted). The exercise price for
non-qualified stock options granted under the 1995 Plan may be less than 100% of
the fair market value of the Common Stock on the date of grant.
RESTRICTED STOCK. Only under the 1995 Plan, the Board may grant
restricted stock awards that result in shares of Common Stock being issued to a
participant subject to restrictions against disposition during a restricted
period established by the Board. The Board may condition the grant of restricted
stock upon the attainment of specified performance goals or service
requirements. The provisions of restricted stock awards need not be the same
with respect to each recipient.
The restricted stock granted under the 1995 Plan will be held in custody
by the Company until the restrictions thereon have lapsed. During the period of
the restrictions, a participant has the right to vote the shares of restricted
stock and to receive dividends. Unless and until any restrictions on the shares
shall have lapsed, participants shall have no right to sell, transfer, pledge or
assign the restricted stock awarded under the 1995 Plan. Notwithstanding the
foregoing, all restrictions with respect to restricted stock lapse ten (10)
business days prior to the occurrence of a dissolution, merger or other
significant corporate change in the Company, as provided in the 1995 Plan.
Except as otherwise provided in the award agreement, upon termination of
employment of a participant voluntarily by the participant or for Cause (as
defined therein), all such shares with respect to which restrictions have not
lapsed will be forfeited by the participant, subject to the right of the
Committee to waive such restrictions in the event of a participant's death,
total disability, retirement or under special circumstances approved by the
Committee. If employment is terminated for any other reason, all remaining
restrictions on the shares shall immediately lapse and complete beneficial
ownership of the shares shall vest in the participant or, if applicable, his or
her estate.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS. The 1995 Plan provides for the
annual, automatic granting of a defined number of options to directors who are
not employees of the Company. Such options are granted to each person who is not
an employee of the Company and who is elected or re-elected as a director by the
shareholders at any annual or special meeting of the shareholders. As of the
date of such an annual or special meeting, each such director shall
automatically receive a non-qualified stock option to purchase 2,000 shares of
Common Stock with the option price equal to the fair market value of the
Company's Common Stock on such date. These options will have five-year terms and
will be exercisable at any time following the date of grant. The purchase price
payment terms, transfer restrictions and other similar provisions of employee
stock options apply to non-employee director stock options. Non-employee
directors may also receive discretionary stock options or restricted stock
awards under the 1995 Plan. In the event that discretionary stock options or
restricted stock awards are granted to members of the Committee, such awards
must be granted by the Board of Directors.
GENERAL PROVISIONS. The Board may, at the time of any grant under the
1995 Plan, provide that the shares received under the 1995 Plan shall be subject
to repurchase by the Company in the event of termination of employment of the
participant. The repurchase price will be the fair market value of the stock or,
in the case of a termination for Cause, the amount of consideration paid for the
stock. The Board may also, at the time of grant, provide the Company with
similar repurchase rights, upon terms and conditions specified by the Board,
with respect to any participant who, at any time within two years after
termination of employment with the Company, directly or indirectly competes
with, or is employed by a competitor of, the Company.
FEDERAL INCOME TAX CONSEQUENCES
STOCK OPTIONS. An optionee will not realize taxable compensation income
upon the grant of an incentive stock option. In addition, an optionee generally
will not realize taxable compensation income upon the exercise of an incentive
stock option if he or she exercises it as an employee or within three months
after termination of employment (or within one year after termination if the
termination results from a permanent and total disability). The amount by which
the fair market value of the shares purchased exceeds the aggregate option price
at the time of exercise shall be treated as alternative minimum taxable income
for purposes of the alternative minimum tax.
If stock acquired pursuant to an incentive stock option is not disposed
of prior to the date two years from the option grant date or prior to one year
from the option exercise date, any gain or loss realized upon the sale of such
shares will be characterized as capital gain or loss. If the applicable holding
periods are not satisfied, then any gain realized in connection with the
disposition of such stock will generally be taxable as compensation income in
the year in which the disposition occurred, to the extent of the difference
between the fair market value of such stock on the date of exercise and the
option exercise price. The Company is entitled to a tax deduction to the extent,
and at the time, that the participant realizes compensation income. The balance
of any gain will be characterized as a capital gain. Under current law, net
long-term capital gains are taxed at a maximum federal tax rate of 28% while
other income may be taxed at a higher federal rate.
An optionee will not realize taxable compensation income upon the grant
of a non-qualified stock option, which includes options granted to non-employee
directors. When an optionee exercises a non-qualified stock option, he or she
will realize taxable compensation income at that time equal to the difference
between the aggregate option price and the fair market value of the stock on the
date of exercise. If, however, an optionee is subject to Section 16(b) of the
1934 Act (i.e., is an executive officer, director or 10% stockholder of the
Company) and the optionee exercises the option within six months after the date
the option was granted, he or she will not realize taxable compensation income
until six months after the grant of the non-qualified stock option. In such
event, the amount of the optionee's compensation income will equal the
difference between the aggregate option price and the fair market value of the
stock on the date immediately preceding the sixth month anniversary of the date
of grant. An optionee who is subject to Section 16(b) may, however, elect under
Section 83(b) of the Code to be taxed at the time of exercise of a non-qualified
stock option in the same manner as an optionee who is not subject to Section
16(b). In any event, the Company is entitled to a tax deduction to the extent,
and at the time, that the optionee realizes compensation income.
Upon the exercise of a non-qualified stock option, the Plans require the
optionee to pay to the Company any amount necessary to satisfy applicable
federal, state or local withholding tax requirements. Under the 1995 Plan, the
Board may grant options that permit the optionee to elect to satisfy withholding
tax requirements associated with the exercise of an option by authorizing the
Company to retain from the number of shares that would otherwise be deliverable
to the optionee that number of shares having an aggregate fair market value
equal to the tax required to be withheld. The Company would pay the tax
liability from its own funds.
RESTRICTED STOCK. The grant of restricted stock should not result in
immediate income for the participant or in a deduction for the Company for
federal income tax purposes, assuming the shares are nontransferable and subject
to restrictions which would result in a "substantial risk of forfeiture" as
intended by the Company. If the shares are transferable or there are no such
restrictions, the participant would recognize compensation income when any such
restrictions lapse. The amount of such income will be the value of the Common
Stock on that date less any amount paid for the shares. Dividends paid on the
Common Stock and received by the participant during the restricted period would
also be taxable compensation income to the participant. In any event, the
Company will be entitled to a tax deduction to the extent, and at the time, that
the participant realizes compensation income. A participant may elect, under
Section 83(b) of the Code, to be taxed on the value of the stock at the time of
award. If this election is made, the fair market value of the stock at the time
of the election is taxable to the participant as compensation income, and the
Company is entitled to a corresponding deduction. Dividends on the stock are
then taxable to the participant and are no longer deductible by the Company.
Participants may be required to pay in cash to the Company any taxes
required to be withheld at the date restrictions lapse with respect to
restricted stock. The participant may elect to satisfy withholding, in whole or
in part, by having the Company withhold shares of Common Stock having an
aggregate fair market value equal to the amount required to be withheld. The
Company would pay the tax liability from its own funds.
VOTE REQUIRED
Shareholder approval of the amendment to the 1986 Plan and the 1995 Plan
to impose an annual cap on the number of shares granted to an individual of
100,000 shares requires the affirmative vote of the holders of a majority of the
shares of Common Stock represented at the Annual Meeting in person or by proxy
and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT
TO THE 1986 PLAN AND THE 1995 PLAN.
PROPOSAL 3
APPROVAL OF AUDITORS
KPMG Peat Marwick LLP, independent certified public accountants, were
the auditors for the Company for fiscal 1996 and have been reappointed by the
Board of Directors, upon recommendation of the Audit Committee, as the Company's
auditors for the current fiscal year and shareholder approval of the appointment
is requested. In the event the appointment of KPMG Peat Marwick LLP is not
approved by the shareholders, the Board of Directors will make another
appointment to be effective at the earliest feasible time.
A representative of KPMG Peat Marwick LLP is expected to be present at
the Annual Meeting of Shareholders and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF KPMG
PEAT MARWICK LLP.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit
shareholders, after timely notice to a company, to present proposals for
shareholder action in a company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by corporate action in accordance with the
proxy rules. The Company's Annual Meeting of Shareholders for the fiscal year
ended December 31, 1997 is expected to be held on or about May 12, 1998 and
proxy materials in connection with that meeting are expected to be mailed on or
about April 2, 1998. Shareholder proposals prepared in accordance with the proxy
rules must be received by the Company on or before December 2, 1997.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the
Notice of Annual Meeting of Shareholders, this Proxy Statement, the proxy
itself, and the cost of soliciting proxies relating to the meeting will be borne
by the Company. In addition to use of the mails, proxies may be solicited by
officers, directors, and other regular employees of the Company by telephone,
telegraph, or personal solicitation, and no additional compensation will be paid
to such individuals. The Company will, if requested, reimburse banks, brokerage
houses, and other custodians, nominees and certain fiduciaries for their
reasonable expenses incurred in mailing proxy material to their principals.
OTHER MATTERS
The Board of Directors knows of no business other than that described
herein that will be presented for consideration at the Annual Meeting. If,
however, other business shall properly come before the meeting, the persons in
the enclosed form of proxy intend to vote the shares represented by said proxies
on such matters in accordance with their judgment in the best interest of the
Company.
The Annual Report of the Company for the past fiscal year is enclosed
herewith and contains the Company's Financial Statements for the fiscal year
ended December 31, 1996. A copy of Form 10-K, the Annual Report filed by the
Company with the Securities and Exchange Commission, will be furnished without
charge to any shareholder who requests it in writing from the Company, at the
address noted on the first page of this Proxy Statement.
By Order of the Board of Directors,
Rosalyn A. Hennen
Secretary
TRANSPORT CORPORATION OF AMERICA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 13, 1997
The undersigned hereby appoints James B. Aronson and Kenneth J. Roering,
or either of them, as proxies with full power of substitution, to vote all
shares of stock of Transport Corporation of America, Inc. of record in the name
of the undersigned at the close of business on March 28, 1997 at the Annual
Meeting of Shareholders to be held in the Admiral's Room at the Pool and Yacht
Club, 1600 Lilydale Road, St. Paul, MN 55118, on May 13, 1997 at 2:30 p.m., or
any adjournment or adjournments, hereby revoking all former proxies.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below
(EXCEPT AS MARKED TO THE CONTRARY BELOW)
[ ] WITHHOLD AUTHORITY
TO VOTE FOR ALL NOMINEES LISTED BELOW
JAMES B. ARONSON DENNIS M. MATHISEN MICHAEL J. PAXTON
ANTON J. CHRISTIANSON KENNETH J. ROERING
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE FOR BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. PROPOSAL TO AMEND THE COMPANY'S 1986 AND 1995 STOCK PLANS TO IMPOSE AN
ANNUAL CAP ON THE NUMBER OF SHARES GRANTED TO AN INDIVIDUAL OF 100,000
SHARES.
[ ] For [ ] Against [ ] Abstain
(continued on other side)
(continued from other side)
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS.
[ ] For [ ] Against [ ] Abstain
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1), (2)
AND (3) IN ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" SUCH PROPOSALS IF
THERE IS NO SPECIFICATION.
Dated: , 1997
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Signature
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Signature if held jointly
Please sign exactly as name(s) are shown at left. When signing as executor,
administrator, trustee, or guardian, give full title as such; when shares have
been issued in names of two or more persons, all should sign.
TRANSPORT CORPORATION OF AMERICA, INC.
1986 EMPLOYEE STOCK OPTION PLAN
1. Purpose. The purpose of the Transport Corporation of America, Inc.
1986 Employee Stock Option Plan is to provide a continuing, long-term incentive
to selected eligible officers and key employees of Transport Corporation of
America, Inc. (the "Corporation") and of any subsidiary corporation of the
Corporation (the "Subsidiary"), as herein defined; to provide a means of
rewarding outstanding performance; and to enable the Corporation to maintain a
competitive position to attract and retain key personnel necessary for continued
growth and profitability.
2. Definitions. The following words and phrases as used herein shall
have the meanings set forth below:
2.1 "Board" shall mean the Board of Directors of the Corporation.
2.2 "Change in Control" shall mean the time at which any entity, person
or group (other than the Corporation, any subsidiary of the Corporation or any
savings, pension or other benefit plan for the benefit of any employees of the
Corporation or its subsidiaries) which prior to such time beneficially owned
less than twenty percent (20%) of the then outstanding Common Stock acquires
such additional shares of Common Stock in one or more transactions, or a series
of transactions, such that following such transaction or transactions such
entity, person or group beneficially owns, directly or indirectly, twenty
percent (20%), or more, of the outstanding Common Stock.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "Committee" shall mean a committee of the Board as may be
designated by the Board, from time to time, for the purpose of administering
this plan as contemplated by Article 4 hereof.
2.5 "Common Stock" shall mean the common stock, par value $.0l per
share, of the Corporation.
2.6 "Corporation" shall mean Transport Corporation of America, Inc., a
Minnesota corporation.
2.7 "Fair Market Value" of any security on any given date shall be
determined by the Committee as follows: (a) if the security is listed for
trading on one or more national securities exchanges (including the NASDAQ
National Market System), the reported last sales price on the principal such
exchange on the date in question, or if such security shall not have been traded
on such principal exchange on such date, the reported last sales price on such
principal exchange on the first day prior thereto on which such security was so
traded; or (b) if the security is not listed for trading on a national
securities exchange (including the NASDAQ National Market System) but is traded
in the over-the-counter market, the mean of the highest, and lowest bid prices
for such security on the date in question, or if there are no such bid prices
for such security on such date, the mean of the highest and lowest bid prices on
the first day prior thereto on which such prices existed; or (c) if neither (a)
nor (b) is applicable, by any means deemed fair and reasonable by the Committee,
which determination shall be final and binding on all parties.
2.8 "ISO" shall mean any stock option granted pursuant to this Plan as
an "incentive stock option" within the meaning of Section 422 the Code
2.9 "Non-Employee Director" shall mean a "Non-Employee Director" within
the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act, as amended,
or any successor rule.
2.10 NQO" shall mean any stock option granted pursuant to this Plan
which is not an ISO.
2.11 "Option" shall mean any stock option granted pursuant to this
Plan, whether an ISO or an NQO.
2.12 "Optionee" shall mean any person who is the holder of an Option
granted pursuant to this Plan.
2.13 "Outside Director" shall mean a director who (a) is not a current
employee of the Corporation or any member of an affiliated group which includes
the Corporation; (b) is not a former employee of the Corporation who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year; (c) has not been an officer of the
Corporation; (d) does not receive remuneration from the Corporation, either
directly or indirectly, in any capacity other than as a director, except as
otherwise permitted under Code Section 162(m) and regulations thereunder. For
this purpose, remuneration includes any payment in exchange for goods or
services. This definition shall be further governed by the provisions of Code
Section 162(m) and regulations promulgated thereunder.
2.14 "Plan" shall mean this 1986 Employee Stock Option Plan of the
Corporation.
2.15 "Subsidiary" shall mean any corporation which at the time
qualifies as a subsidiary of the Corporation under Section 425(f) of the Code.
3. Shares Available Under Plan. The number of shares which may be
issued pursuant to options granted under this Plan shall not exceed 500,000
shares of the Common Stock of the Corporation; provided, however, that shares
which become available as a result of canceled, unexercised, lapsed or
terminated options granted under this Plan shall be available for issuance
pursuant to options subsequently granted under this Plan. The shares issued upon
exercise of options granted under this Plan may be authorized and unissued
shares or shares previously acquired or to be acquired by the Corporation.
4. Administration.
4.1 The Plan will be administered by the Board or by a Committee of at
least two directors, all of whom shall be Outside Directors and Non-Employee
Directors. The Committee may be a subcommittee of the Compensation Committee of
the Board.
4.2 The Committee will have plenary authority, subject to provisions of
the Plan, to determine when and to whom Options will be granted, the term of
each Option, the number of shares covered by it, the participation by the
Optionee in other plans, and any other terms or conditions of each Option. The
Committee shall determine with respect to each grant of an Option whether a
participant shall receive an ISO or an NQO. The number of shares, the term and
the other terms and conditions of a particular kind of Option need not be the
same, even as to options granted at the same time. The Committee's
recommendations regarding option grants and terms and conditions thereof will be
conclusive.
4.3 The Committee will have the sole responsibility for construing and
interpreting the Plan, for establishing and amending any rules and regulations
as it deems necessary or desirable for the proper administration of the Plan,
and for resolving all questions arising under the Plan. Any decision or action
taken by the Committee arising out of or about the construction, administration,
interpretation and effect of the Plan and of its rules and regulations will, to
the extent permitted by law, be within its absolute discretion, except as
otherwise specifically provided herein, and will be conclusive and binding on
all Optionees, all successors, and any other person, whether that person is
claiming under or through any Optionee or otherwise.
4.4 The Committee will designate one of its members as chairman. It
will hold its meetings at the times and places as it may determine. A majority
of its members will constitute a quorum, and all determinations of the Committee
will be made by a majority of its members. Any determination reduced to writing
and signed by all members will be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
secretary, who need not be a member of the Committee, and may make such rules
and regulations for the conduct of its business as it may deem advisable.
4.5 No member of the Committee will be liable, in the absence of bad
faith, for any act or omission with respect to his services on the Committee.
Service on the Committee will constitute service as a member of the Board, so
that the members of the Committee will be entitled to indemnification and
reimbursement as Board members pursuant to its Bylaws.
4.6 The Committee will regularly inform the Board as to its actions
with respect to all Options granted under the Plan and the terms and conditions
and any such Options In a manner, at any times, and in any form as the Board may
reasonably request.
4.7 Any other provision of the Plan to the contrary notwithstanding,
the Committee is authorized to take such action as it, in its discretion, may
deem necessary or advisable and fair and equitable to Optionees in the event of:
a Change in Control of the Corporation; a tender, exchange or similar offer for
all or any part of the Common Stock made by any entity, person or group (other
than the Corporation, any Subsidiary of the Corporation or any savings, pension
or other benefit plan for the benefit of employees of the Corporation and its
Subsidiaries); a merger of the Corporation into, a consolidation of the
Corporation with, or an acquisition of the Corporation by another corporation;
or a sale or transfer of all or substantially all of the Corporation's assets.
Such action, in the Committee's discretion, may include (but shall not be deemed
limited to): establishing, amending or waiving the forms, terms, conditions or
duration of Options so as to provide for earlier, later, extended or additional
terms for exercise of the whole, or any installment, thereof; alternate forms of
payment; or other modifications. The Committee may take any such actions
pursuant to this Section 4.7 by adopting rules or regulations of general
applicability to all Optionees, or to certain categories of Optionees; by
amending or waiving terms and conditions in stock option agreements; or by
taking action with respect to individual Optionees. The Committee may take any
such actions before or after the public announcement of any such Change in
Control, tender offer, exchange offer, merger, consolidation, acquisition or
sale or transfer of assets.
5. Participants.
5.1 Participation in this Plan shall be limited to key personnel of the
Corporation or of a Subsidiary, who are salaried employees of the Corporation or
of a Subsidiary. Officers will be employees for this purpose, whether or not
they are also members of the Board, but a member of the Board who is not such an
employee will not be eligible to receive an Option.
5.2 Subject to other provisions of this Plan, Options may be granted to
the same participants on more than one occasion.
5.3 The Committee's determination under the Plan including, without
limitation, determination of the persons to receive Options, the form, amount
and type of such Options, and the terms and provisions of Options need not be
uniform and may be made selectively among otherwise eligible participants,
whether or not the participants are similarly situated.
5.4 No person shall receive Options under this Plan which exceed
100,000 shares during any fiscal year of the Corporation.
6. Terms and Conditions.
6.1 Each Option granted under the Plan shall be evidenced by a written
agreement, which shall be subject to the provisions of this Plan and to such
other terms and conditions as the Corporation may deem appropriate.
6.2 Each Option agreement shall specify the period for which the Option
thereunder is granted (which in no event shall exceed ten years from the date of
the grant for options granted pursuant to Section 6.3(a) hereof and five years
from the date of grant for Options granted pursuant to 6.3(b) hereof) and shall
provide that the Option shall expire at the end of such period; provided,
however, the term of each Option shall be subject to the power of the Committee,
among other things, to accelerate or otherwise adjust the terms for exercise of
Options pursuant to Section 4.7 hereof in the event of the occurrence of any of
the events set forth therein.
6.3 The exercise price per share shall be determined by the Committee
at the time any Option is granted and shall be determined as follows:
(a) For employees who do not own stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation or of any Subsidiary, the ISO exercise price
per share shall not be less than one hundred percent (100%) of Fair
Market Value of the Common Stock of the Corporation on the date the
Option is granted, as determined by the Committee.
(b) For employees who own stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Corporation or of any Subsidiary, the ISO exercise price
per share shall not be less than one hundred ten percent (110%) of the
Fair Market Value of the Common Stock of the Corporation on the date
the Option is granted, as determined by the Committee.
(c) For all employees, the NQO exercise price per share shall
not be less than one hundred percent (100%) of the Fair Market Value of
the Common Stock of the Corporation on the date the Option is granted,
as determined by the Committee.
6.4 The aggregate Fair Market Value (determined as of the time the
Option is granted) of the Common Stock with respect to which an ISO under this
Plan or any other plan of the Corporation or its Subsidiaries is exercisable for
the first time by an Optionee during any calendar year shall not exceed
$100,000.
6.5 An Option shall be exercisable at such times, and with respect to
such minimum number of shares, as may be determined by the Corporation at the
time of grant. The Option agreement may require, if so determined by the
Corporation, that no part of the Option may be exercised until the Optionee
shall have remained in the employ of the Corporation or of a Subsidiary for such
period after the date of the Option as the Corporation may specify.
Notwithstanding the foregoing and subject to the discretionary acceleration
rights of the Committee, an Option granted to a director, officer or 10%
shareholder of the Corporation shall not be exercisable for a period of six (6)
months after the date of grant unless the Option has been approved by the Board,
the Committee or the shareholders of the Corporation.
6.6 The Corporation may prescribe the form of legend which shall be
affixed to the stock certificate representing shares to be issued and the shares
shall be subject to the provisions of any repurchase agreement or other
agreement restricting the sale or transfer thereof. Such agreements or
restrictions shall be noted on the certificate representing the shares to be
issued.
7. Exercise of Option.
7.1 Each exercise of an Option granted hereunder, whether in whole or
in part, shall be by written notice thereof, delivered to the Secretary of the
Corporation (or such other person as he may designate). The notice shall state
the number of shares with respect to which the Options are being exercised and
shall be accompanied by payment in full for the number of shares so designated.
Shares shall be registered in the name of the Optionee unless the Optionee
otherwise directs in his or her notice of election.
7.2 Payment shall be made to the Corporation either (i) in cash,
including certified check, bank draft or money order, (ii) at the discretion of
the Corporation, by delivering Corporation Common Stock already owned by the
participant or a combination of Common Stock and cash, or (iii) at the
discretion of the Corporation, by delivering a promissory note, containing such
terms and conditions acceptable to the Corporation, for all or a portion of the
purchase price of the shares so purchased. With respect to (ii), the Fair Market
Value of stock so delivered shall be determined as of the date immediately
preceding the date of exercise.
7.3 Upon notification of the amount due and prior to, or concurrently
with, the delivery to the Optionee of a certificate representing any shares
purchased pursuant to the exercise of an Option, the Optionee shall promptly pay
to the Corporation any amount necessary to satisfy applicable federal, state or
local tax requirements.
8. Assignments. Any Option granted under this Plan shall be exercisable
only by the Optionee to whom granted during his or her lifetime and shall not be
assignable or transferable otherwise than by will or by the laws of descent and
distribution.
9. Severance; Death; Disability. An Option shall terminate, and no
rights thereunder may be exercised, if the person to whom it is granted ceases
to be employed by the Corporation or by a Subsidiary except that:
9.1 If the employment of the Optionee is terminated by any reason other
than his or her death or disability, the Optionee may at any time within not
more than three months after termination of his or her employment, exercise his
or her Option rights but only to the extent they were exercisable by the
Optionee on the date of termination of his or her employment; provided, however,
that if the employment is terminated by deliberate, willful or gross misconduct
as determined by the Committee, all rights under the Option shall terminate and
expire upon such termination.
9.2 If the Optionee dies while in the employ of the Corporation or a
Subsidiary, or within not more than three months after termination of his or her
employment, the Optionee's rights under the Option may be exercised at any time
within three months following such death by his or her personal representative
or by the person or persons to whom such rights under the Option shall pass by
will or by the laws of descent and distribution.
9.3 If the employment of the Optionee is terminated because of
permanent disability, the Optionee, or his or her legal representative, may at
any time within not more than one (1) year after termination of his or her
employments exercise his or her Option rights but only to the extent they were
exercisable by the Optionee on the date of termination of his or her employment.
9.4 Notwithstanding anything contained in Sections 9.1, 9.2 and 9.3 to
the contrary, no Option rights shall be exercisable by anyone after the
expiration of the term of the Option.
9.5 Transfers of employment between the Corporation and a Subsidiary,
or between Subsidiaries, will not constitute termination of employment for
purposes of any Option granted under this Plan. The Committee may specify in the
terms and conditions of an Option whether any authorized leave of absence or
absence for military or government service or for any other reasons will
constitute a termination of employment for purposes of the Option and the Plan.
10. Rights of Participants. Neither the participant nor the personal
representatives, heirs, or legatees of such participant shall be or have any of
the rights or privileges of a shareholder of the Corporation in respect of any
of the shares issuable upon the exercise of an Option granted under this Plan
unless and until certificates representing such shares shall have been issued
and delivered to the participant or to such personal representatives, heirs or
legatees.
11. Securities Registration. If any law or regulation of the Securities
and Exchange Commission or of any other body having jurisdiction shall require
the Corporation or the participant to take any action in connection with the
exercise of an Option, then notwithstanding any contrary provision of an Option
agreement or this Plan, the date for exercise of such Option and the delivery of
the shares purchased thereunder shall be deferred until the completion of the
necessary action. In the event that the Corporation shall deem it necessary, the
Corporation may condition the grant or exercise of an Option granted under this
Plan upon the receipt of a satisfactory certificate that the Optionee is
acquiring the Option or the shares obtained by exercise of the Option for
investment purposes and not with the view or intent to resell or otherwise
distribute such Option or shares. In such event, the stock certificate
evidencing such shares shall bear a legend referring to applicable laws
restricting transfer of such shares. In the event that the Corporation shall
deem it necessary to register under the Securities Act of 1933, as amended, or
any other applicable statute, any Options or any shares with respect to which an
Option shall have been granted or exercised, then the participant shall
cooperate with the Corporation and take such action as is necessary to permit
registration or qualification of such Options or shares.
12. Duration and Amendment.
12.1 There is no express limitation upon the duration of the Plan,
except for the requirement of the Code that all ISOs must be granted within ten
years from the date the Plan is approved by the stockholders.
12.2 The Board may terminate or may amend the Plan at any time,
provided, however, that the Board may not without approval of the stockholders
of the Corporation, (i) increase the maximum number of shares as to which
Options may be granted under the Plan, (ii) permit the granting of Options at
less than 100% of Fair Market Value at time of grant, or (iii) change the class
of employees eligible to receive Options under the Plan.
13. Approval of Shareholders. This Plan expressly is subject to
approval of holders of a majority of the outstanding shares of Common Stock of
the Corporation, and if it is not so approved on or before one year after the
date of adoption of this Plan by the Board, the Plan shall not come into effect,
and any Options granted pursuant to this Plan shall be deemed canceled.
14. Conditions of Employment. The granting of an Option to a
participant under this Plan shall impose no obligation on the Corporation to
continue the employment of any participant and shall not lessen or affect the
right of the Corporation to terminate the employment of the participant.
15. Other Options. Nothing in the Plan will be construed to limit the
authority of the Corporation to exercise its corporate rights and powers,
including, by way illustration and not by way of limitation, the right to grant
options for proper corporate purposes otherwise than under the Plan to any
employee or any other person, firm, corporation, association, or other entity,
or to grant options to, or assume options of, any person for the acquisition by
purchase, lease, merger, consolidation, or otherwise, of all or any part of the
business and assets of any person, firm, corporation, association, or other
entity.
Adopted by the Board of Directors and Shareholders on December 1, 1986.
TRANSPORT CORPORATION OF AMERICA, INC.
1995 STOCK PLAN
SECTION CONTENTS PAGE
1. General Purpose of Plan; Definitions 1
2. Administration 3
3. Stock Subject to Plan 4
4. Eligibility 4
5. Stock Options 5
6. Restricted Stock 9
7. Transfer, Leave of Absence, etc. 11
8. Amendments and Termination 12
9. Unfunded Status of Plan 12
10. General Provisions 13
11. Effective Date of Plan 14
TRANSPORT CORPORATION OF AMERICA, INC.
1995 STOCK PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the Transport Corporation of America, Inc.
1995 Stock Plan (the "Plan"). The purpose of the Plan is to enable Transport
Corporation of America, Inc. (the "Company") and its Subsidiaries to retain and
attract executives, other key employees, consultants and directors who
contribute to the Company's success by their ability, ingenuity and industry,
and to enable such individuals to participate in the long-term success and
growth of the Company by giving them a proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of the Company.
b. "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a
felony, or a participant's willful misconduct or
dishonesty, any of which is directly and materially
harmful to the business or reputation of the Company.
c. "Code" means the Internal Revenue Code of 1986, as
amended.
d. "Committee" means the Committee referred to in Section 2
of the Plan. If at any time no Committee shall be in
office, then the functions of the Committee specified in
the Plan shall be exercised by the Board.
e. "Company" means Transport Corporation of America, Inc.,
a corporation organized under the laws of the State of
Minnesota (or any successor corporation).
f. "Disability" means permanent and total disability as
determined by the Committee.
g. "Early Retirement" means retirement, with consent of the
Committee at the time of retirement, from active
employment with the Company and any Subsidiary or Parent
Corporation of the Company.
h. "Fair Market Value" means the value of the Stock on a
given date as determined by the Committee in accordance
with Section 422 of the Code and any applicable Treasury
Department regulations with respect to "incentive stock
options."
i. "Incentive Stock Option" means any Stock Option intended
to be and designated as an "Incentive Stock Option"
within the meaning of Section 422 of the Code.
j. "Non-Employee Director" means a "Non-Employee Director"
within the meaning of Rule 16b-3(b)(3) of the Securities
Exchange Act, as amended, or any successor rule.
k. "Non-Qualified Stock Option" means any Stock Option that
is not an Incentive Stock Option, and is intended to be
and is designated as a "Non-Qualified Stock Option."
l. "Normal Retirement" means retirement from active employ
ment with the Company and any Subsidiary or Parent
Corporation of the Company on or after age 65.
m. "Outside Director" means a director who (a) is not a
current employee of the Company or any member of an
affiliated group which includes the Company; (b) is not
a former employee of the Company who receives
compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable
year; (c) has not been an officer of the Company; (d)
does not receive remuneration from the Company, either
directly or indirectly, in any capacity other than as a
director, except as otherwise permitted under Code
Section 162(m) and regulations thereunder. For this
purpose, remuneration includes any payment in exchange
for goods or services. This definition shall be further
governed by the provisions of Code Section 162(m) and
regulations promulgated thereunder.
n. "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if each of the corporations (other than the Company)
owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations
in the chain.
o. "Restricted Stock" means an award of shares of Stock that
are subject to restrictions under Section 6 below.
p. "Retirement" means Normal Retirement or Early Retirement.
q. "Stock" means the Common Stock, $.01 par value per share,
of the Company.
r. "Stock Option" means any option to purchase shares of
Stock granted pursuant to Section 5 below.
s. "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company
if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one
of the other corporations in the chain.
SECTION 2. Administration.
The Plan shall be administered by the Board of Directors or by a
Committee appointed by the Board consisting of at least two directors, all of
whom shall be Outside Directors and Non-Employee Directors and who shall serve
at the pleasure of the Board. The Committee may be a subcommittee of the
Compensation Committee of the Board.
The Committee shall have the power and authority to grant to
eligible employees, consultants and directors pursuant to the terms
of the Plan: (i) Stock Options and (ii) Restricted Stock.
In particular, the Committee shall have the authority:
(i) to select the officers, other key employees, consultants and
directors of the Company and its Subsidiaries to whom Stock
Options and/or Restricted Stock awards may from time to time
be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, or Restricted Stock
awards, or a combination of the foregoing, are to be granted
hereunder;
(iii) to determine the number of shares to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder
(including, but not limited to, any restriction on any Stock
Option or other award and/or the shares of Stock relating
thereto); and
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to
an award under this Plan shall be deferred either
automatically or at the election of the participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 350,000. Such shares may consist, in whole
or in part, of authorized and unissued shares.
If any shares that have been optioned cease to be subject to Stock
Options, or if any shares subject to any Restricted Stock award granted
hereunder are forfeited or such award otherwise terminates without a payment
being made to the participant, such shares shall again be available for
distribution in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Stock Options granted under the Plan, and in the number
of shares subject to Restricted Stock awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
SECTION 4. Eligibility.
Officers, other key employees, consultants and members of the Board of
the Company and Subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options or Restricted Stock awards
under the Plan. The optionees and participants under the Plan shall be selected
from time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares covered by each award.
Notwithstanding the foregoing, no person shall receive grants of Stock
Options and Restricted Stock awards under this Plan which exceed 100,000 shares
during any fiscal year of the Company.
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after March 21, 2005.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options. To the
extent that any option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non- Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Stock
Option as an Incentive Stock Option, provided the optionee consents in writing
to the modification or amendment.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of the Fair Market Value of the Stock on the date
of the grant of the Stock Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is
granted to such employee, the option price shall be no less than 110% of the
Fair Market Value of the Stock on the date the option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time, provided, however, that unless the Stock Option has been approved by
the Board, the Committee or the shareholders of the Company, a Stock Option to a
director, officer or a 10% shareholder of the Company or its Subsidiaries shall
not be exercisable for a period of six (6) months after the date of the grant.
Notwithstanding the foregoing, unless the Stock Option Agreement provides
otherwise, any Stock Option granted under this Plan shall be exercisable in
full, without regard to any installment exercise or vesting provisions, for a
period specified by the Board, but not to exceed sixty (60) days nor be less
than seven (7) days, prior to the occurrence of any of the following events: (i)
dissolution or liquidation of the Company other than in conjunction with a
bankruptcy of the Company or any similar occurrence, (ii) any merger,
consolidation, acquisition, separation, reorganization, or similar occurrence,
where the Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 75% or more of the outstanding
Stock of the Company.
(d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds
to pay the exercise price. As determined by the Committee, in its sole
discretion, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee or Restricted Stock subject to
an award hereunder (based on the Fair Market Value of the Stock on the date the
option is exercised, as determined by the Committee); provided, however, that in
the event payment is made in the form of shares of Restricted Stock, the
optionee will receive a portion of the option shares in the form of, and in an
amount equal to, the Restricted Stock award tendered as payment by the optionee.
If the terms of an option so permit, or the Committee, in its sole discretion,
so permits, an optionee may elect to pay all or part of the option exercise
price by having the Company withhold from the shares of Stock that would
otherwise be issued upon exercise that number of shares of Stock having a Fair
Market Value equal to the aggregate option exercise price for the shares with
respect to which such election is made. No shares of Stock shall be issued until
full payment therefor has been made. An optionee generally shall have the rights
to dividends and other rights of a shareholder with respect to shares subject to
the option when the optionee has given written notice of exercise, has paid in
full for such shares, and, if requested, has given the representation described
in paragraph (a) of Section 10.
(e) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title 1 of the Employee Retirement Income Security Act, or the
rules thereunder, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(f) Termination by Death. If an optionee's employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of death, the
Stock Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at or
after grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of nine months (or such
shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter.
(g) Termination by Reason of Disability. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after nine months (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is shorter. In the event of termination of employment by reason of Disability,
if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, the option will
thereafter be treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise determined by
the Committee, if an optionee's employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of Retirement, any Stock Option held by
such optionee may thereafter be exercised to the extent it was exercisable at
the time of such Retirement, but may not be exercised after three months (or
such shorter period as Committee shall specify at grant) from the date of such
termination of employment or the expiration of the stated term of the option,
whichever period is shorter. In the event of termination of employment by reason
of Retirement, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, the
option will thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than death, Disability or Retirement, the Stock
Option may be exercised to the extent it was exercisable at such termination for
the lesser of three months or the balance of the option's term.
(j) Annual Limit on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.
(k) Directors Who Are Not Employees. Each person who is not an employee
of the Company or its Subsidiaries who on and after the date this Plan is
adopted is elected or reelected to the Board at any annual or special meeting of
the shareholders of the Company shall as of the date of such meeting
automatically be granted a Stock Option to purchase 2,000 shares of the
Company's Stock at an exercise price per share equal to 100% of the Fair Market
Value of a share of the Company's Stock on the date of the grant of the Stock
Option; provided, that any director who is not an employee may decline receipt
of said Stock Option. All such Stock Options shall be designated as
Non-Qualified Stock Options and shall be subject to the same terms and
provisions as are then in effect with respect to the grant of Non-Qualified
Stock Options to officers and key employees of the Company, except that the term
of each such Stock Option shall be equal to five years, which term shall expire
30 days after termination of service as a director, unless the Board, in its
discretion, shall waive or modify the term of the grant.
In the event discretionary Stock Options are granted to members of the
Committee, such Stock Options shall be granted by the Board.
SECTION 6. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
Committee may also condition the grant of Restricted Stock upon the attainment
of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
In the event that Restricted Stock awards are granted to members of the
Committee, such awards shall be granted by the Board.
(b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate in
respect of shares of Restricted Stock awarded under the Plan. Such
certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Transport
Corporation of America, Inc. 1995 Stock Plan and an
Agreement entered into between the registered owner and
Transport Corporation of America, Inc. Copies of such Plan
and Agreement are on file in the executive offices of
Transport Corporation of America, Inc.
(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this Section 6,
the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional shares of Restricted Stock (to the
extent shares are available under Section 3 and subject to paragraph
(f) of Section 10). Certificates for shares of Unrestricted Stock shall
be delivered to the grantee promptly after, and only after, the period
of forfeiture shall have expired without forfeiture in respect of such
shares of Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (c)(iv) of this Section 6, upon termination of employment for
any reason during the Restriction Period, all shares still subject to
restriction shall thereupon be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause),
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to such participant's
shares of Restricted Stock.
(v) All restrictions with respect to any participant's shares
of Restricted Stock shall lapse or be deemed to have lapsed or been
terminated on the tenth (10th) business day prior to the occurrence of
any of the following events: (i) dissolution or liquidation of the
Company, other than in conjunction with a bankruptcy of the Company or
any similar occurrence, (ii) any merger, consolidation, acquisition,
separation, reorganization or similar occurrence, where the Company
will not be the surviving entity or (iii) the transfer of substantially
all of the assets of the Company or 75% or more of the outstanding
Stock of the Company.
SECTION 7. Transfer, Leave of Absence, etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.
SECTION 8. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option or Restricted Stock award
theretofore granted, without the optionee's or participant's consent, or (ii)
which without the approval of the stockholders of the Company would cause the
Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act of
1934, Section 422 of the Code or any other regulatory requirements. Further,
paragraph k of Section 5 shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.
SECTION 9. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
SECTION 10. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan pursuant
to any Restricted Stock awards shall be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed, and any applicable
Federal or state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted Stock
awards under the Plan (not including Stock Options) are not required to make any
payment or provide consideration other than the rendering of services.
(c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.
(d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includable as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with the award by (i) authorizing the
Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this Section 10(d). Any such election shall be in accordance
with, and subject to, applicable tax and securities laws, regulations and
rulings.
(e) At the time of grant, the Committee may provide in connection with
any grant or award made under this Plan that the shares of Stock received as a
result of such grant shall be subject to a repurchase right in favor of the
Company, pursuant to which the participant shall be required to offer to the
Company upon termination of employment for any reason any shares that the
participant acquired under the Plan, with the price being the then Fair Market
Value of the Stock or, in the case of a termination for Cause, an amount equal
to the cash consideration paid for the Stock, subject to such other terms and
conditions as the Committee may specify at the time of grant. The Committee may,
at the time of the grant of an award under the Plan, provide the Company with
the right to repurchase, or require the forfeiture of, shares of Stock acquired
pursuant to the Plan by any participant who, at any time within two years after
termination of employment with the Company, directly or indirectly competes
with, or is employed by a competitor of, the Company.
(f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if the Committee (or the
Company's chief executive or chief financial officer) certifies in writing that
under Section 3 sufficient shares are available for such reinvestment (taking
into account then outstanding Stock Options and other Plan awards).
SECTION 11. Effective Date of Plan.
The Plan was approved by the Board and became effective on March 21,
1995. The Plan was further amended by the Board on December 5, 1996.
