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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
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[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
P.A.M. TRANSPORTATION SERVICES, INC.
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Not Applicable
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
P.A.M. TRANSPORTATION SERVICES, INC.
HIGHWAY 412 WEST
TONTITOWN, ARKANSAS 72770
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Holders of Common Stock of P.A.M. Transportation Services, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of P.A.M.
Transportation Services, Inc., a Delaware corporation, will be held at the
Ritz-Carlton Golf Resort, 2600 Tiburon Drive, Naples, Florida 34109, on
Thursday, May 2, 2002 at 9:00 a.m. local time, for the following purposes:
(1) To vote upon a proposal to increase the size of the Board of Directors
from five members to eight members;
(2) To elect six directors (or five directors, if agenda item (1) is not
approved) to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified;
(3) To vote upon a proposal to amend the company's Certificate of
Incorporation to increase the number of authorized shares of common
stock of the company from 20,000,000 to 40,000,000;
(4) To vote upon a proposal to amend the company's Certificate of
Incorporation to delete the anti-takeover provisions contained in
Articles 12 and 13 thereof and to amend the Bylaws of the company to
delete Article XIII thereof, resulting in the company being governed by
the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law; and
(5) To conduct such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only stockholders of record as of the close of business on March 11,
2002 will be entitled to notice of and to vote at said meeting or any
adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Robert W. Weaver
-------------------------------------
Robert W. Weaver
President and Chief Executive Officer
April 15, 2002
Your vote is important. Whether or not you plan to attend the meeting in person,
----------------------
you are urged to complete, sign, date and mail the enclosed proxy in the
accompanying return envelope to which no postage need be affixed if mailed
within the United States.
P.A.M. TRANSPORTATION SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 2002
PROXY STATEMENT
This proxy statement and form of proxy, which are first being mailed to
stockholders on or about April 15, 2002, are furnished in connection with the
solicitation of proxies on behalf of our Board of Directors, for use at our
Annual Meeting of Stockholders to be held at the Ritz-Carlton Golf Resort, 2600
Tiburon Drive, Naples, Florida 34109, on Thursday, May 2, 2002, at 9:00 a.m.,
local time, and at any or all adjournments or postponements thereof. The address
of our principal executive offices is Highway 412 West, Tontitown, Arkansas
72770 and our telephone number is (479) 361-9111.
We are paying the costs of this solicitation. In addition to the mails,
proxies may be solicited by our officers and regular employees, without
remuneration, in person or by telephone or facsimile. It is anticipated that
banks, brokerage houses and other custodians, nominees and fiduciaries will
forward soliciting material to beneficial owners of stock entitled to vote at
the meeting, and such persons will be reimbursed for the out-of-pocket expenses
incurred by them in this connection.
Any proxy given pursuant to this solicitation may be revoked by any
stockholder who attends the meeting and gives oral notice of his or her election
to vote in person, without compliance with any other formalities. In addition,
any proxy given pursuant to this solicitation may be revoked prior to the
meeting by delivering to the Secretary of P.A.M. an instrument revoking it or a
duly executed proxy for the same shares bearing a later date. Proxies which are
returned properly executed and not revoked will be voted in accordance with the
stockholder's directions specified thereon. Where no direction is specified,
proxies will be voted FOR the approval of Agenda items 1, 3 and 4 and FOR the
election of each of the nominees for director listed herein. Abstentions and
broker non-votes will not be counted as votes either in favor of or against any
proposal and, with respect to any proposal other than the election of directors,
would have the effect of a vote against such proposal.
Only stockholders of record at the close of business on the record date
of March 11, 2002 will be entitled to notice of and to vote at the Annual
Meeting and any adjournments or postponements thereof. As of March 11, 2002,
there were 8,626,957 shares of our common stock outstanding. Each share of
common stock issued and outstanding on the record date is entitled to one vote.
AGENDA ITEM ONE
PROPOSAL TO INCREASE THE SIZE OF
THE BOARD OF DIRECTORS
Our Bylaws provide that the number of members of our Board of Directors
shall be established from time to time by our stockholders. The number of
members of the board is presently fixed at five. The Board recommends that
stockholders adopt a resolution at the Annual Meeting increasing the size of the
Board to eight members. The Board feels the addition of three new directors to
the board will expand the level of knowledge and expertise of the Board as a
whole, and allow the Board to better serve the stockholders of the company.
One of the three vacancies that would be created if this proposal is
adopted would be filled at the Annual Meeting. The Board has nominated Manuel J.
Moroun for election to the Board as a new director at the Annual Meeting, and
information regarding Mr. Moroun appears below under the heading "Election of
Directors." Two remaining vacancies, which are not proposed to be filled at the
Annual Meeting, will provide the Board the ability to elect two new outside
directors to the Board prior to next year's Annual Meeting without calling a
special stockholders' meeting. The Board of Directors is presently seeking to
identify two individuals to serve on the board, one of whom will replace
Frederick P. Calderone on the company's Audit Committee. As discussed below
under the heading "Election of Directors - Committees of the Board and
Meetings," the board does not believe that Mr. Calderone is "independent" as
defined by Nasdaq rules relating to audit committees, and the Board believes it
to be in the best interests of the company to have an Audit Committee consisting
solely of independent directors. If the stockholders approve this proposal, at
such time the Board selects two new directors, the Board could, pursuant to
Delaware law, elect such individuals to fill the remaining vacancies on the
Board, and such individuals would then serve as directors until the next Annual
Meeting of the company's stockholders.
The proposal to increase the size of the Board requires the affirmative
vote of holders of a majority of the shares represented at the Annual Meeting in
person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS APPROVE THE
PROPOSAL TO INCREASE THE SIZE OF THE BOARD OF DIRECTORS.
2
AGENDA ITEM TWO
ELECTION OF DIRECTORS
Members of the Board of Directors of the company are elected annually
to serve until the next annual meeting of stockholders or until their successors
are elected and qualified. Directors are elected by a plurality of the votes of
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors.
The following five individuals have been nominated by management for
re-election to the Board of Directors:
Robert W. Weaver, age 51, is one of our co-founders. He has over 19
years of experience with our company and has served as our Chief Executive
Officer since 1990.
Daniel C. Sullivan, age 61, has been a practicing attorney,
specializing in transportation law, for more than ten years. Mr. Sullivan is
currently a member of the firm of Sullivan, Hincks & Conway, Oak Brook,
Illinois. Mr. Sullivan has served as a director since June 1986.
Matthew T. Moroun, age 29, has been a director and manager of Liberty
Bell Agency, an insurance claims adjustment company, since 1994, and since 1995
has been Chairman of the Board of DuraRock Reinsurance, Ltd., a reinsurance
company. Mr. Moroun has also served as a director of CenTra, Inc., a
transportation holding company based in Warren, Michigan since 1993. Mr. Moroun
has served as a director of P.A.M. since May 1992. Mr. Moroun is the son of
Manuel J. Moroun, who is also a nominee for director if agenda item 1 is
approved.
Charles F. Wilkins, age 63, retired in January 1995 after 34 years of
employment with Ford Motor Company, and since January 1995 has been
self-employed as a transportation consultant. He served in various positions
with Ford Motor Company in transportation management, including three years of
service as Traffic Manager in Europe. Mr. Wilkins retired from the position of
Director, Transportation and Traffic Office, in which he had served since 1990.
Mr. Wilkins has been a member of the National Motor Carrier Advisory Committee
of the Federal Highway Administration and was previously active in the National
Industrial Transportation League as Chairman of the Audit Committee and Third
Vice Chairman. Mr. Wilkins is currently an associate member of the American
Society of Transportation and Logistics and a member of the Council of Logistics
Management. Mr. Wilkins has served as a director of P.A.M. since June 1995.
Frederick P. Calderone, age 51, has served as a Vice President of
CenTra, Inc. for the past 15 years. Prior to joining CenTra, Mr. Calderone was
a partner with Deloitte, Haskins, & Sells, Certified Public Accountants
(now Deloitte & Touche LLP). Mr. Calderone is a certified public accountant and
an attorney. Mr. Calderone has served as a director since May 1998.
Subject to the approval of the proposal to increase the size of the
board from five members to eight members, the following individual is also
nominated for election as a director at the Annual Meeting:
Manuel J. ("Matty") Moroun, 74, is the President and Chief Executive
Officer of CenTra, Inc., a transportation holding company headquartered in
Warren, Michigan. Mr. Moroun has been a principal stockholder and officer of
CenTra and its predecessor companies since 1954, and its Chief Executive Officer
since 1970. CenTra is one of the largest privately held transportation holding
companies in the United States. Mr. Moroun is the father of Matthew T. Moroun, a
director of the company who has been nominated for re-election at the Annual
Meeting.
3
Proxies received will be voted for the director nominees named above,
unless authority to do so is withheld. In the event any nominee is unable or
declines to serve as a director at the time of the meeting, the persons named as
proxies therein will have discretionary authority to vote the proxies for the
election of such person or persons as may be nominated in substitution by the
present Board of Directors. We are not aware of any current circumstances which
would render any nominee named herein unable to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES NAMED ABOVE.
Committees of the Board and Meetings
Our Board of Directors has the following standing committees:
(A) The Executive Committee, currently composed of Messrs. Weaver
and Matthew Moroun, exercises the authority of the Board of Directors in
accordance with our Bylaws between regular meetings of the Board. The Executive
Committee did not meet during 2001.
(B) The Audit Committee, currently composed of Messrs. Sullivan,
Wilkins and Calderone, reviews and makes recommendations to the Board of
Directors on our audit procedures and independent auditors' report to management
and recommends to the Board of Directors the appointment of our independent
auditors. The Committee is currently composed of three non-employee directors,
Daniel C. Sullivan, Charles F. Wilkins and Frederick P. Calderone. Messrs.
Sullivan and Wilkins are each "independent" as defined in Rule 4200(a)(14) of
the listing standards of the National Association of Securities Dealers. Mr.
Calderone is not considered "independent," as he is presently an employee of
CenTra, Inc., which is considered to be an affiliate of P.A.M. by virtue of the
fact that CenTra's controlling stockholder, Matthew T. Moroun, is a director and
the largest stockholder of the company. The Board of Directors believes that Mr.
Calderone's past and present membership on the Audit Committee is appropriate
because of his expertise in the areas of accounting and finance. Nevertheless,
the Board of Directors is searching for an additional director with significant
accounting and finance expertise who would replace Mr. Calderone on the Audit
Committee in order that the committee be made up entirely of independent
directors. The Board of Directors has adopted a written charter for the Audit
Committee and is currently contemplating modifications to the charter to
increase the oversight responsibilities of the Audit Committee. The Audit
Committee held one meeting during 2001.
(C) The Compensation and Stock Option Committee, currently composed of
Messrs. Sullivan, Wilkins and Calderone, reviews and makes recommendations to
the Board of Directors with respect to compensation of our officers and assists
the Board in the administration of our stock option plans. The Compensation and
Stock Option Committee did not meet during 2001.
The Board of Directors does not have a Directors Nominating Committee,
that function being reserved to the entire Board.
During 2001, the Board of Directors held three meetings. Each incumbent
director attended at least 75% of the aggregate of all meetings held by the
Board of Directors and by committees of the Board on which the director served.
Audit Committee Report
The Audit Committee (the "Committee") of the Board of Directors
oversees our financial reporting process on behalf of the Board. Management has
the primary responsibility for the financial statements and the reporting
process, including systems and internal controls. In fulfilling its oversight
responsibilities, the Committee reviewed and discussed our audited financial
statements for the year ended December 31, 2001 with management and discussed
with Arthur Andersen LLP, certified public
4
accountants, our independent auditors and accountants, the matters required to
be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU
Section 380) with respect to those statements.
The Committee also received and reviewed the letter from Arthur
Andersen LLP required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees) and discussed with Arthur Andersen LLP its independence in
connection with its audit of our most recent financial statements. Based on this
review and these discussions, the Committee recommended to the Board of
Directors that these audited financial statements be included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2001.
Daniel C. Sullivan
Charles F. Wilkins
Frederick P. Calderone
The information in the Audit Committee Report shall not be deemed to be
soliciting material, or be filed with the Securities and Exchange Commission or
subject to Regulation 14A or 14C or to liabilities of Section 18 of the
Securities Act, nor shall it be deemed to be incorporated by reference into any
filing under the Securities Act or the Exchange Act, except to the extent that
we specifically incorporate these paragraphs by reference.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who own more than 10% of our
outstanding common stock to file with the Securities and Exchange Commission
reports of changes in ownership of our common stock held by such persons.
Executive officers, directors and greater than 10% stockholders are also
required to furnish us with copies of all forms they file under this regulation.
To our knowledge, based solely on a review of the copies of such reports
furnished to us and representations that no other reports were required, during
the year ended December 31, 2001, our officers, directors and 10% stockholders
complied with all Section 16(a) filing requirements applicable to them except
that Mr. Moroun inadvertently failed to timely file a Form 4 relating to a
purchase of the company's common stock, and Mr. Weaver inadvertently failed to
file two Form 4's relating to his charitable donations of shares of common
stock.
5
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid to or accrued on behalf of each of our executive officers for
the years ended December 31, 2001, 2000 and 1999.
Summary Compensation Table
Annual Compensation All
Name and ------------------------------- Other
Principal Position Year Salary Bonus/(1)/ Compensation/(2)/
------------------------------------------------ ----------------------------
Robert W. Weaver 2001 $387,500 $131,810 $ --
President and Chief 2000 362,500 95,475 2,550
Executive Officer; Director 1999 343,500 70,000
--
W. Clif Lawson 2001 $204,000 $68,930 $2,550
Executive Vice President 2000 186,680 49,438 2,500
and Chief Operating 1999 171,680 35,836 1,625
Officer
Larry J. Goddard 2001 $162,500 $57,667 $2,450
Vice President of Finance, 2000 150,000 41,373 2,550
Chief Financial Officer 1999 137,500 30,000 2,253
and Secretary/Treasurer
-------------------
(1) Amounts shown for 2000 and 2001 represent bonuses accrued on behalf of the
executive officer during the respective year, which are payable over a
three-year period.
(2) Represents amounts contributed by P.A.M. pursuant to its 401(k) Plan.
Employment Agreements
We entered into an employment agreement with Robert W. Weaver effective
July 1, 1998, which will expire in July 2002. Mr. Weaver's present annual base
salary pursuant to the agreement is $400,000. Mr. Weaver was granted an option
upon execution of the agreement to purchase 30,000 shares of common stock. Under
the terms of the agreement, Mr. Weaver participates in bonus programs as
authorized by the Board of Directors and is provided an automobile.
We have entered into a new three-year employment contract with Mr.
Weaver that will become effective July 1, 2002 upon the expiration of the term
of his present employment agreement. We have also entered into employment
agreements with W. Clif Lawson, our Executive Vice President and Chief Operating
Officer, and Larry J. Goddard, our Vice President of Finance and Chief Financial
Officer, with terms commencing January 1, 2002 and ending on June 30, 2004 and
December 31, 2004, respectively. Under these employment agreements, each of the
executives receives a minimum annual base salary that increases throughout the
term of his respective agreement. Mr. Weaver's base salary ranges from $415,000
to $445,000, Mr. Lawson's base salary ranges from $214,000 to $234,000, and Mr.
Goddard's base salary ranges from $175,000 to $195,000. The base salaries may be
increased at any time in the sole discretion of the Board of Directors, and the
executives are also entitled to receive discretionary bonuses from time to time
as may be determined by the Board. Each agreement provides that if the executive
is
6
terminated due to medical disability, he shall continue to receive his then
current base salary for a period of twelve months, and if the executive is
terminated without cause, he will be entitled to receive all compensation due
under the respective agreement for the remainder of the term of the agreement.
Each agreement contains a three-year confidentiality provision and a one-year
non-competition provision. Each agreement may be extended at the company's
option for an additional one-year period. If the option is exercised, Messrs.
Weaver, Lawson and Goddard will be entitled to annual base salaries during the
extension period of $460,000, $244,000 and $205,000, respectively.
Compensation Committee Interlocks and Insider Participation
Matthew T. Moroun, a member of the Compensation and Stock Option
Committee of the Board of Directors and our largest stockholder, is the
controlling stockholder and a director of CenTra, Inc., a transportation holding
company based in Warren, Michigan. During 2001, certain subsidiaries of CenTra
paid us a total of $568,074 for transporting freight. We also made payments to
certain subsidiaries of CenTra during 2001 in the aggregate amount of
$1,324,041. These payments related to tire purchases and road services
($1,139,829), and other miscellaneous services or expenses ($184,212).
We believe that each of the above transactions was entered into on
terms as favorable to us as could have been obtained from unaffiliated third
parties at the time such transactions were negotiated.
Fiscal Year-End Option Values
The following table sets forth information regarding the number and
aggregate dollar value of unexercised options held by our executive officers at
December 31, 2001. No options were granted to or exercised by any executive
officers during 2001.
Value of Unexercised
In-the-Money
Number of Securities Options at
Underlying Unexercised Fiscal
Options at Fiscal Year-End Year-End(1)
--------------------------- -------------------------
Name Exercisable / Unexercisable Exercisable/Unexercisable
---- --------------------------- -------------------------
Robert W. Weaver 30,000/0 $102,900/$0
Larry J. Goddard 0/0 -
W. Clif Lawson 0/0 -
------------------
(1) Dollar values were calculated by determining the difference between the
fair market value ($12.68 per share at December 31, 2001) and the option's
exercise price, multiplied by the number of shares underlying the option.
An option is "in-the-money" if the market value of the common stock
underlying the option exceeds the option's exercise price.
Compensation of Directors
We currently pay our non-employee directors $6,000 per year and $1,000
per Board or committee meeting attended, and reimburse them for their expenses
in attending such meetings. Directors who are also employees of P.A.M. are not
additionally compensated for their services as members of the Board of
Directors.
Pursuant to automatic grant provisions under our Non-Qualified Stock
Option Plan, on March 2 of each year, each non-employee director is granted an
option to purchase 2,000 shares of our common
7
stock at an exercise price equal to the fair market value of our stock on the
date of grant. During 2001, options were granted to our four non-employee
directors, covering an aggregate of 8,000 shares of common stock at a per share
exercise price of $8.25.
Notwithstanding anything to the contrary set forth in any of our
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this proxy statement,
in whole or in part, the following Report of the Compensation and Stock Option
Committee on Executive Compensation and the Stockholder Return Performance Graph
shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION AND STOCK OPTION
COMMITTEE ON EXECUTIVE COMPENSATION
In accordance with the Proxy Statement Rules of the Securities and
Exchange Commission, the Compensation and Stock Option Committee of the Board of
the Directors offers the following report regarding compensation policies for
our executive officers and Chief Executive Officer with respect to compensation
paid to such persons during the last fiscal year.
During 2001, the Compensation and Stock Option Committee of the Board
of Directors was composed of Daniel C. Sullivan, Charles F. Wilkins, Frederick
P. Calderone, each of whom is a non-employee director of P.A.M. It is the
Committee's responsibility to review and make recommendations to the Board of
Directors with respect to compensation of P.A.M.'s officers. In formulating its
compensation policies and decisions, the Committee endeavors to provide a
competitive compensation package that enables the company to attract and retain
key executives and to integrate compensation programs with the company's annual
and long-term business strategies and objectives and focus executive actions on
the fulfillment of the objectives.
P.A.M.'s executive compensation program generally consists of base
salary and annual incentive compensation through a cash bonus plan. Stock
options are occasionally utilized in order to align executives' interests more
closely with the interests of stockholders. The amount of such awards, if any,
may be suggested from time to time by the Compensation and Stock Option
Committee, subject to final action by the Board of Directors.
Robert W. Weaver, P.A.M.'s President and Chief Executive Officer, is
presently employed pursuant to an employment agreement entered into on July 1,
1998. The initial term of the agreement expired June 30, 2001 and the company
exercised its option to extend the term of the agreement for a one-year period,
until June 30, 2002. During this one-year extension, Mr. Weaver's annual base
salary is $400,000. The company has also entered into a new three-year
employment agreement with Mr. Weaver which will become effective July 1, 2002,
and has entered into agreements with its two other executive officers, W. Clif
Lawson, Executive Vice President and Chief Operating Officer, and Larry J.
Goddard, Vice President and Chief Financial Officer. The terms of these
agreements are described on page 6 under the caption "Employment Agreements."
The Board of Directors has adopted an Incentive Compensation Plan
covering all employees (except employees who are participating in an existing
cash bonus plan), including executive officers, which allows employees to earn
annual bonuses, payable over a three-year period, based on the operating ratio
and revenues of the company. The Board of Directors believes this program serves
as an incentive to all participating employees (currently approximately 200
employees) to give greater effort on behalf of the company. During 2001, Messrs.
Weaver, Lawson and Goddard accrued bonuses of $131,810, $68,930 and $57,667,
respectively, pursuant to the company's Incentive Compensation Plan.
8
The Committee believes that the total compensation of the company's
executive officers has been competitive within the industry.
P.A.M.'s future compensation policies will be developed in light of the
P.A.M.'s profitability and with the goal of rewarding members of management for
their contributions to the company's success. It is the company's intention that
the compensation to be paid to its executive officers will not exceed the
present maximum allowable amount for purposes of deductibility set forth in the
Internal Revenue Code.
Daniel C. Sullivan
Charles F. Wilkins
Frederick P. Calderone
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total stockholder return on our common stock against the
cumulative total return of the CRSP Total Return Index for the Nasdaq Stock
Market (U.S. companies) and the CRSP Total Return Index for the Nasdaq Trucking
and Transportation Stocks for the period of five years commencing December 31,
1996 and ending December 31, 2001. The graph assumes that the value of the
investment in the our common stock and each index was $100 on December 31, 1996.
[GRAPH]
-------------------------------------------------------------- ----------------
1996 1997 1998 1999 2000 2001
-------------------------------------------------------------- ----------------
PTSI $100.00 $219.15 $197.24 $243.81 $176.00 $277.89
Nasdaq Stock Market U.S. $100.00 $122.48 $172.68 $320.83 $192.98 $153.12
Nasdaq Trucking &
Transportation Stocks $100.00 $128.15 $115.79 $110.36 $100.31 $118.63
-------------------------------------------------------------- ----------------
9
AGENDA ITEM THREE
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Our Board of Directors has approved an amendment to our Certificate of
Incorporation to increase the number of shares of common stock we are authorized
to issue from 20,000,000 to 40,000,000.
The Board of Directors recommends that stockholders approve the
proposal to amend the Certificate of Incorporation because it considers the
proposal to be in the best long-term and short-term interests of P.A.M. and its
stockholders and other constituencies. On April 12, 2002, 11,248,207 shares of
common stock were issued and outstanding and approximately 90,000 shares were
reserved for issuance under outstanding director and employee stock options. The
proposed increase in the number of shares of authorized common stock will ensure
that additional shares will be available, if needed, for issuance in connection
with any possible future transactions approved by the Board of Directors,
including, among others, stock option grants, stock splits, stock dividends,
acquisitions, financings and other corporate purposes.
The Board of Directors believes that the availability of the additional
shares of common stock for such purposes without delay or the necessity for a
special stockholders' meeting (except as may be required by applicable law,
regulatory authorities or Nasdaq rules) will be beneficial to the company by
providing the Board with flexibility in considering and responding to future
business opportunities and needs as they arise.
It should be noted that the availability of additional shares could
render more difficult or discourage a third party attempt to gain control of the
company. For example, additional shares of common stock could be issued and sold
to purchasers who oppose a takeover bid that the Board believes is not in the
best long-term and short-term interests of the company or could be issued to
increase the aggregate number of outstanding shares of common stock and thereby
dilute the interest of parties attempting to obtain control of the company. In
connection with any issuance of shares of common stock, the Board of Directors
is required to determine that such issuance would be in the best interests of
the company. The Board of Directors is presently unaware of any specific effort
to accumulate shares of the company's common stock or obtain control of the
company, and the company does not have any immediate agreements, arrangements,
commitments or understandings with respect to the issuance of any of the
additional shares of common stock which would be authorized by the proposal to
increase the number of authorized shares.
It is possible that shares of common stock may be issued at a time and
under circumstances that may increase or decrease earnings per share and
increase or decrease the book value per share of shares presently held.
The approval of the holders of a majority of the issued and outstanding
shares of common stock is required for the adoption of the proposed amendment to
the Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS APPROVE THE
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
10
AGENDA ITEM FOUR
PROPOSAL TO DELETE ARTICLES 12 AND 13
OF THE COMPANY'S CERTIFICATE OF INCORPORATION
AND ARTICLE XIII OF THE COMPANY'S BYLAWS
In 1987, the Board of Directors recommended and the company's
stockholders approved a proposal to amend the company's Certificate of
Incorporation to, among other things, add certain anti-takeover provisions. The
amendment added new Articles 12 and 13 which contain provisions that generally
render it more difficult for a person to acquire a significant portion of the
company's common stock and thereafter cause the company to engage in a
transaction with the person that the Board of Directors does not believe is in
the best interests of the company.
Subsequent to the company's addition of Articles 12 and 13 to its
Certificate of Incorporation, the State of Delaware enacted a new Section 203 to
the Delaware General Corporation Law. Section 203 is an anti-takeover statute
that contains provisions very similar to those contained in Article 12 of the
company's Certificate of Incorporation. Section 203 automatically applied to any
Delaware corporation in existence at the time of its enactment that had a class
of voting stock listed on a national securities exchange, authorized for
quotation on the Nasdaq Stock Market or held of record by more than 2,000
stockholders, unless the corporation adopted an amendment to its Bylaws
expressly electing not to be covered by Section 203. Following the enactment of
Section 203, the Board of Directors amended the company's Bylaws to add a new
Article XIII, electing not to be subject to Section 203, principally because of
the similarities between Article 12 and Section 203.
The Board of Directors now believes that it is in the best interests of
the company to remove the anti-takeover provisions contained in Articles 12 and
13 of the company's Certificate of Incorporation and to amend the company's
Bylaws to cause the company to be subject instead to the anti-takeover
provisions of Section 203 of Delaware law. The Board believes that the
provisions of Section 203 better accomplish the original intent of the Board in
adopting the anti-takeover provisions now contained in the Certificate of
Incorporation, and that reliance on Delaware law would provide more
predictability in the event of a takeover attempt than would the provisions
contained in the company's Certificate of Incorporation.
Comparison of Article 12 of the Certificate of Incorporation with Section 203
of Delaware Law
Both Article 12 of the Certificate of Incorporation and Section 203 of
Delaware law contain anti-takeover provisions that generally render it difficult
for a significant stockholder to cause the company to effect certain fundamental
transactions, such as a merger with the stockholder, a sale of substantially all
of the company's assets to the stockholder, or a liquidation of the company
(such a transaction is referred to in both Article 12 and Section 203 as a
"Business Combination"), by requiring supermajority approval of the transaction
by the company's stockholders, unless the Business Combination was approved by
the company's stockholders prior to the significant stockholder acquiring a
significant position in the stock of the company.
Subject to the exceptions described in the following paragraph, Article
12 requires the approval by stockholders owning 75% of the shares of the
company's stock entitled to vote in the election of directors of any Business
Combination involving an "Interested Person." Article 12 defines an "Interested
Person" generally as any person who, together with his affiliates and
11
associates, beneficially owns in excess of 5% of any class of stock of the
company, excluding any person who was both a director of the company and a 5%
stockholder on March 9, 1987.
By its terms, Article 12 does not apply to a Business Combination if
the Board of Directors approved the subject transaction prior to the Interested
Person becoming a 5% stockholder, or if the subject transaction was approved by
the Board and a majority of the directors voting in favor of approval were
directors prior to the Interested Person becoming a 5% stockholder.
Section 203 generally prohibits a Delaware corporation from engaging in
any Business Combination with any "interested stockholder" (one who owns 15% or
more of a corporation's outstanding voting stock), for a period of three years
following the date that such stockholder became an interested stockholder,
unless:
(i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder,
(ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, or
(iii) on or subsequent to such date, the business combination is
approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of holders of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
Under both Article 12 of the Certificate of Incorporation and Section
203 of Delaware law, a party desiring to effect a Business Combination with the
company is encouraged to negotiate with the Board of Directors prior to
acquiring a substantial ownership interest in the company. The most significant
differences between the two anti-takeover devices are as follows:
(i) under Article 12, a stockholder owning 5% or more of the
shares of any class of the company's stock will generally be subject
to the supermajority stockholder approval requirement, whereas under
Section 203, the supermajority voting requirement generally applies to
stockholders owning greater than 15% of the voting stock of the
company;
(ii) under Section 203, the anti-takeover protections do not
apply to a stockholder who has been an interested stockholder for a
period of three years, whereas there is no such exemption under
Article 12 for a long-time significant stockholder of the company; and
(iii) under Article 12, the approval of 75% of the shares
entitled to elect directors is generally required to approve a
business combination with an interested shareholder (including the
shares held by the interested stockholder), whereas Section 203
generally requires the approval of 66 2/3% approval of stockholders
other than the interested stockholder.
12
Article 13 of the Certificate of Incorporation
Article 13 of the company's Certificate of Incorporation provides that,
in addition to any approval required by Article 12 of the Certificate, the
approval of holders of a majority of the shares of stock entitled to vote in the
election of directors held by stockholders other than the interested stockholder
is required to approve a Business Combination with the interested stockholder,
unless certain criteria have been satisfied relating to the price to be received
in the proposed transaction by stockholders other than the interested
stockholder. Section 203 of Delaware law does not contain any comparable "fair
price" provisions. The Board of Directors believes that Section 203 provides
sufficient protection to the company and its stockholders, however, and believes
it to be in the best interests of the company to delete Article 13 of the
company's Certificate of Incorporation.
Article XIII of the Bylaws
As discussed above, Section 203 applies to any Delaware corporation in
existence on the date of its enactment unless the corporation amended its Bylaws
to specifically elect not to be subject to Section 203. In 1987, the company
adopted such an amendment to its Bylaws, contained in Article XIII, specifically
electing not to be subject to Section 203. The Board of Directors is now
recommending that stockholders amend the Bylaws to delete Article XIII in its
entirety and thus render the company subject to the anti-takeover provisions of
Section 203.
Reasons for Proposed Repeal of Articles 12 and 13 and Election to be Covered
by Section 203
The Board of Directors believes that Articles 12 and 13, on the one
hand, and Section 203, on the other, provide similar protection for the company
in the event of an attempt by a party to gain control of the company. The Board
believes, however, it is in the best interests of the company to repeal Articles
12 and 13 and elect to instead be covered by Section 203 of Delaware law, for
two primary reasons. First, the Board does not believe that the lack of an
exemption from the coverage of Articles 12 and 13 for a long-time significant
stockholder of the company furthers the original intent of those Articles of
protecting against a takeover attempt by a person following a rapid accumulation
of stock by that person. Second, the Board believes that it would be more
desirable for the company to be governed by Delaware law rather than by Articles
12 and 13 because, while Articles 12 and 13 are unique to the company, Section
203 has been interpreted extensively by the courts and legal scholars. The Board
believes that the existence of this significant body of case law and commentary
on Section 203 would provide valuable guidance to the Board of Directors in
making an informed judgment as to the application of the company's anti-takeover
devices in the event a party attempted to gain control of the company in a
transaction that the Board of Directors did not believe to be in the best
interests of the company.
Stockholders should note that one effect of the approval of this
proposal would be that Matthew T. Moroun, a director and the largest stockholder
of the company, would no longer be subject to a supermajority voting requirement
in the event that he proposed that the company engage in a Business Combination
with him or one of his affiliates. This would be the result because, as
described above, the anti-takeover protections of Section 203 do not apply to a
stockholder who has been an interested stockholder for a period of three years
(which Mr. Moroun has), while there is no such exemption under Article 12 for a
long-time significant stockholder of the company. Mr. Moroun has advised the
Board of Directors that he has no present intention to engage in such a
transaction. Mr.
13
Moroun abstained from the vote of the Board of Directors on this proposal, which
was unanimously approved by the disinterested directors
The full text of Articles 12 and 13 of the Certificate of Incorporation
is included as Exhibit A to this proxy statement, and the full text of Section
203 is included as Exhibit B to this proxy statement. The summary description of
the terms of Articles 12 and 13 and Section 203 set forth above is qualified in
its entirety by reference to Exhibit A and Exhibit B.
The proposal to delete Articles 12 and 13 of the Certificate of
Incorporation and to delete Article XIII of the company's Bylaws, resulting in
the company being governed by Section 203 of the Delaware General Corporation
Law, requires the affirmative vote of holders of 75% of the issued and
outstanding shares of common stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE
THIS PROPOSAL.
14
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 11, 2002 (the record date
for the Annual Meeting), information concerning ownership of our common stock by
our directors and executive officers, both individually and as a group, and by
each stockholder known by us to be the beneficial owner of more than 5% of our
outstanding common stock. On March 21, 2002 we completed a public offering of
our common stock in which the company issued and sold 2,100,000 shares of common
stock and Messrs. Moroun, Weaver, Lawson and Goddard sold 1,200,000, 50,000,
30,000 and 20,000 shares, respectively. On April 12, 2002, we sold an additional
521,250 shares of our common stock pursuant to the exercise of an "overallotment
option" by the underwriters of our public offering. Only shares issued and
outstanding on the record date are entitled to notice of and to vote at the
annual meeting.
Unless otherwise indicated, each person has sole voting and investment
power with respect to shares shown as beneficially owned by such person. The
number of shares of our common stock beneficially owned by a person includes
shares of common stock issuable with respect to options held by the person that
are exercisable within the next 60 days. The percentage of our common stock
beneficially owned by a person has been calculated assuming that the person has
exercised all such presently exercisable options the person holds and that no
other persons exercised any options.
Shares Percent
Beneficial Owner Beneficially Owned of Class
---------------- ------------------ --------
Matthew T. Moroun.................. 5,662,713(1) 65.6%
Robert W. Weaver................... 330,428(2) 3.8%
Daniel C. Sullivan................. 22,000(3) *
Charles F. Wilkins................. 11,000(3) *
Frederick P. Calderone............. 8,000(4) *
W. Clif Lawson..................... 83,000(5) 1.0%
Larry J. Goddard................... 82,313 1.0%
FMR Corporation.................... 846,600(6) 9.8%
Directors and executive
officers as a group (7 persons)... 6,199,454(7) 71.3%
----------------------------
* Less than 1%.
(1) Includes 2,561,713 shares owned directly, 9,000 shares subject to presently
exercisable options, and 3,092,000 shares held in a trust of which Mr.
Moroun is a co-trustee and a beneficiary (the "Moroun Trust"). Norman E.
Harned is co-trustee with Matthew T. Moroun of the Moroun Trust and may
therefore be deemed to beneficially own the shares held by the Moroun Trust.
The business address of each of Messrs. Moroun and Harned is 12225 Stephens
Road, Warren, Michigan 48091.
(2) Includes 30,000 shares subject to presently exercisable options.
(3) Includes 9,000 shares subject to presently exercisable options.
(4) Shares subject to presently exercisable options.
(5) Includes 1,500 shares held in a trust of which Mr. Lawson is trustee and his
sister is the trust beneficiary, and 1,500 shares held by Mr. Lawson as
custodian.
(6) Based upon a Schedule 13G dated February 14, 2002 filed by FMR Corp. which
indicates that it has the sole power to dispose of the shares. The Schedule
13G indicates that shares are held by the Fidelity Low Price Stock Fund, a
registered investment company, for which FMR Corp. acts as investment
adviser. We make no representation as to the accuracy or completeness of the
information reported. The address of FMR is 82 Devonshire Street, Boston,
Massachusetts 02109.
(7) Includes 65,000 shares subject to presently exercisable options.
15
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as our independent auditors for the fiscal
year ended December 31, 2001. The Board of Directors is presently in the process
of selecting independent auditors for fiscal 2002. Representatives of Arthur
Andersen LLP will not be present at the Annual Meeting.
Audit Fees. The aggregate fees billed by Arthur Andersen LLP for
professional services rendered for the audit of our annual financial statements
for the year ending December 31, 2001 and the reviews of the financial
statements included in our Forms 10-Q during 2001 were $49,000.
Financial Information Systems Design and Implementation Fees. During
2001, Arthur Andersen LLP did not perform any services with regard to financial
information systems design and implementation.
All Other Fees. The aggregate fees for non-audit services provided by
Arthur Andersen LLP were $15,550. The Audit Committee believes that the services
provided by Arthur Andersen LLP that resulted in such fees were not incompatible
with maintaining the independence of such firm.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain transactions between us and CenTra, Inc., a corporation
controlled by our largest stockholder, are described on page 7 under the caption
"Compensation Committee Interlocks and Insider Participation."
ANNUAL REPORT TO STOCKHOLDERS AND REPORT ON FORM 10-K
Additional information concerning us, including our financial
statements, is provided in our 2001 Annual Report to Stockholders that
accompanies this proxy statement. Our Annual Report on Form 10-K for the year
ended December 31, 2001, as filed with the Securities and Exchange Commission,
is available to stockholders who make a written request therefor to our
Secretary, Larry J. Goddard, at our offices, Highway 412 West, P.O. Box 188,
Tontitown, Arkansas 72770. Copies of exhibits filed with that report or
referenced therein will be furnished to stockholders of record upon request and
payment of our expenses in furnishing such documents.
STOCKHOLDER PROPOSALS
Any proposal to be presented at the 2003 Annual Meeting of Stockholders
must be received at our principal executive offices not later than December 17,
2002, directed to the attention of the Secretary, for consideration for
inclusion in our proxy statement and form of proxy relating to that meeting. Any
such proposals must comply in all respects with the rules and regulations of the
Securities and Exchange Commission.
In connection with our Annual Meeting of Stockholders to be held in
2003, if we do not receive notice of a matter or proposal to be considered by
March 3, 2003, then the persons appointed by the Board of Directors to act as
the proxies for such Annual Meeting (named in the form of proxy) will be allowed
to use their discretionary voting authority with respect to any such matter or
proposal at the Annual Meeting, if such matter or proposal is properly raised at
the Annual Meeting and put to a vote.
16
OTHER MATTERS
We do not know of any matters to be brought before the meeting other
than those described herein. If any other matter properly comes before the
meeting, the persons designated as proxies will vote on each such matter in
accordance with their best judgment.
By Order of the Board of Directors
/s/ Robert W. Weaver
Robert W. Weaver
President and Chief Executive Officer
April 15, 2002
17
APPENDIX A
----------
Articles 12 and 13
of the Certificate of Incorporation, as amended
of P.A.M. Transportation Services, Inc.
Article 12
----------
12. A. In addition to any approval of the Board of Directors or any
stockholder vote or consent required by the laws of the State of Delaware or any
other provision of this Amended and Restated Certificate of Incorporation or
otherwise, the affirmative vote or consent of the holders of seventy-five
percent (75%) of the shares of stock of the corporation entitled to elect
Directors shall be required to authorize, adopt or approve a Business
Combination; however, the provisions of this Article 12 shall not apply to any
Business Combination referred to in this Article 12 with any Interested Person
if (1) the Board of Directors of this corporation has approved a memorandum of
understanding with such Interested Person with respect to such transaction prior
to the time that such Interested Person shall have become a beneficial owner of
five percent (5%) or more of the shares of any class of stock entitled to vote
in elections of directors, or thereafter (2) if such Business Combination is
otherwise approved by the Board of Directors of this corporation, provided that
a majority of the members of the Board of Directors voting for the approval of
such transaction were duly elected and acting members of the Board of Directors
prior to the time that such Interested Person shall have become a beneficial
owner of five percent (5%) or more of the shares of any class of stock of the
corporation entitled to vote in elections of directors.
B. For the purpose of this Article 12:
(1) "Business Combination" shall mean
--------------------
(a) any merger or consolidation of the corporation or any
subsidiary of the corporation with or into any Interested Person
(regardless of the identity of the surviving corporation);
(b) any sale, lease, exchange, transfer or other disposition of
all or any substantial part of the assets of the corporation or
any subsidiary of the corporation to any Interested Person for
cash, real or personal property, including securities, or any
combination thereof;
(c) any issuance or delivery of shares of any class of
securities of the corporation or a subsidiary of the corporation
(which the beneficial owner shall have the right to vote, or to
vote upon exercise, conversion or by contract) to an Interested
Person in consideration for or in exchange of any securities or
other property (including cash); or
(d) the liquidation of the corporation.
A-1
(2) The term "Interested Person" as used herein shall mean and
include any individual, corporation, partnership or other person or
entity which, together with its "affiliates" and "associates" (as
those terms are defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, on
March 9, 1987), "beneficially" owns (as this term is defined in Rule
13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, on March 9, 1987) in the aggregate
five percent (5%) or more of the outstanding shares of any class of
stock of the corporation; provided, however, that the term "Interested
Person" shall not include the following:
(a) Any individual, who, as of March 9, 1987, (i) was a director
of the corporation and (ii) together with his affiliates and
associates "beneficially" owned (as this term is defined in Rule
13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, on March 9, 1987) in the
aggregate five percent (5%) or more of the outstanding shares of
any class of the stock of the corporation, or the estate,
personal representative, heir or legatee of any such person which
or who becomes the beneficial owner of five percent (5%) or more
of the outstanding shares of any class of stock of the
corporation by virtue of testamentary transfer or intestate
succession from such person.
C. No amendment to this Amended and Restated Certificate of
Incorporation shall amend, alter, change or repeal any of the provisions of this
Article 12 unless such amendment, in addition to receiving any stockholder vote
or consent required by the laws of the state of Delaware in effect at the time,
shall receive the affirmative vote or consent of the holders of seventy-five
percent (75%) of the outstanding shares of the stock of the corporation entitled
to elect Directors.
A-2
Article 13
----------
13. A. In addition to the requirements specified in Article 12, there shall be
required for the approval, authorization or ratification of any "Business
Combination," the affirmative vote or consent of a majority of all shares of
stock entitled to vote on the matter considered separately for the purposes of
this Article 13, which are not entitled to be voted directly or indirectly by
such Interested Person; provided, however, that said a majority voting
requirements shall not be applicable if all of the conditions specified in
subparagraphs (1), (2), and (3) below are met.
(1) The consideration to be received per share for any class of stock in
such Business Combination by stockholders other than the Interested
Person is payable in cash or other consideration, or a combination
of both, and such consideration has a fair market value per share
with respect to any such class of the corporation's stock of not
less than either:
(a) the highest price (including the highest per share brokerage
commissions, transfer tax and soliciting dealers fees) paid by
the Interested Person in acquiring any of the corporation's
stock of that class; or
(b) a price per share obtained by multiplying the aggregate
earnings per share of stock of the corporation (appropriately
adjusted for any subdivision of shares, stock dividend or
combination of shares during the period for the four full
consecutive fiscal quarters immediately preceding the record
date for solicitation of votes or consents on such Business
Combination by the figure obtained by dividing the highest per
share price (including the highest per share brokerage
commissions, transfer tax and soliciting dealers fees) paid by
such Interested Person in acquiring any of the corporation's
stock by the aggregate earnings per share of the corporation
for the four full consecutive fiscal quarters immediately
preceding the time when the Interested Person shall have become
the beneficial owner of five percent (5%) or more of the
outstanding shares of any class of stock of the corporation.
If any securities were issued by an Interested Person in
exchange for stock of the corporation prior to the proposed Business
Combination, the fair market value of said securities at the time of
issue shall be used in determining the per share price paid for said
stock.
(2) After the Interested Person has become the beneficial owner
of five percent (5%) or more of the outstanding shares of any class
of stock of the corporation and prior to the consummation of such
Business Combination, there
A-3
shall have been no reduction in the rate of dividends payable on any
class of the corporation's stock which would result in a quarterly
dividend rate per share which is less than the average quarterly
dividend rate per share for such class for the four full consecutive
fiscal quarters immediately preceding the time when the Interested
Person shall have become the beneficial owner of said five percent
(5%) or more of the outstanding shares of any class of stock of the
corporation, unless such reduction in rate of dividends has been
approved by three-fourths (3/4) of the entire membership of the
Board of Directors of the corporation. For the purposes of this
paragraph, "quarterly dividend rate per share" for any quarterly
dividend shall be equal to the percentage said quarterly dividend
per share bears to the earnings per share for the four full quarters
immediately preceding the declaration of said quarterly dividend.
(3) The consideration to be received by stockholders other than
the Interested Person shall be in cash or in the same form as the
Interested Person has previously paid for shares of such class of
stock; if the Interested Person has paid for shares of any class of
any stock with varying forms of consideration, the form of
consideration of such class of stock shall be either cash or the
form used to acquire the largest number of shares of such class of
stock previously acquired by such Interested Person.
B. For the purposes of this Article 13:
(1) The term "Business Combination" as used herein shall mean
(a)any merger or consolidation of the corporation or any subsidiary
of the corporation with or into any Interested Person (regardless of
the identity of the surviving corporation); or (b) any sale, lease,
exchange, transfer or other disposition of all or any substantial
part of the assets of the corporation or any subsidiary of the
corporation to any Interested Person for cash, real or personal
property, including securities, or any combination thereof.
(2) The term "Interested Person" as used herein shall mean and
include any individual, corporation, partnership or other person or
entity which, together with its "affiliates" and "associates" (as
those terms are defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended,
on March 9, 1987), "beneficially" owns (as this term is defined in
Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, on March 9, 1987) in the aggregate
five percent (5%) or more of the outstanding shares of any class of
stock of the corporation; provided, however, that the term
"Interested Person" shall not include the following:
(a) Any individual, who, as of March 9, 1987, (i) was a
director of the corporation and (ii) together with his
affiliates and associates "beneficially" owned (as this term is
defined in Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, on March
9, 1987) in the aggregate five percent (5%)
A-4
or more of the outstanding shares of any class of the stock of
the corporation, or the estate, personal representative, heir
or legatee of any such person which or who becomes the
beneficial owner of five percent (5%) or more of the
outstanding shares of any class of stock of the corporation by
virtue of testamentary transfer or intestate succession from
such person.
C. No amendment to this Amended and Restated Certificate of
Incorporation shall amend, alter, change or repeal any of the provisions of this
Article 13 unless such amendment, in addition to receiving any stockholder vote
or consent required by the laws of the State of Delaware in effect at the time,
shall receive the affirmative vote or consent of the holders of seventy-five
percent (75%) of the outstanding shares of the stock of the corporation entitled
to elect Directors.
A-5
APPENDIX B
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203. Business combinations with interested stockholders
(a) Notwithstanding any other provisions of this chapter, a corporation
shall not engage in any business combination with any interested stockholder for
a period of 3 years following the time that such stockholder became an
interested stockholder, unless:
(1) Prior to such time the board of directors of the corporation
approved either the business combination or the transaction which resulted
in the stockholder becoming an interested stockholder;
(2) Upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding for purposes of determining
the number of shares outstanding those shares owned (i) by persons who are
directors and also officers and (ii) employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or
(3) At or subsequent to such time the business combination is approved
by the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
(b) The restrictions contained in this section shall not apply if:
(1) The corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by this section;
(2) The corporation, by action of its board of directors, adopts an
amendment to its bylaws within 90 days of the effective date of this
section, expressly electing not to be governed by this section, which
amendment shall not be further amended by the board of directors;
(3) The corporation, by action of its stockholders, adopts an
amendment to its certificate of incorporation or bylaws expressly electing
not to be governed by this section; provided that, in addition to any other
vote required by law, such amendment to the certificate of incorporation or
bylaws must be approved by the affirmative vote of a majority of the shares
entitled to vote. An amendment adopted pursuant to this paragraph shall be
effective immediately in the case of a corporation that both (i) has never
had a class of voting stock that falls within any of the 3 categories set
out in subsection (b)(4) hereof, and (ii) has not elected by a provision in
its original certificate of incorporation or any amendment thereto to be
governed by this section. In all other cases, an amendment adopted pursuant
to this paragraph shall not be effective until 12 months after the adoption
of such amendment and shall not apply to any business combination between
such corporation and any person who became an interested stockholder of
such corporation on or prior to such adoption. A bylaw amendment adopted
pursuant to this paragraph shall not be further amended by the board of
directors;
(4) The corporation does not have a class of voting stock that is: (i)
Listed on a national securities exchange; (ii) authorized for quotation on
The NASDAQ Stock Market; or (iii) held of record by more than 2,000
stockholders, unless any of the foregoing results from action taken,
B-1
directly or indirectly, by an interested stockholder or from a transaction
in which a person becomes an interested stockholder;
(5) A stockholder becomes an interested stockholder inadvertently and
(i) as soon as practicable divests itself of ownership of sufficient shares
so that the stockholder ceases to be an interested stockholder; and (ii)
would not, at any time within the 3-year period immediately prior to a
business combination between the corporation and such stockholder, have
been an interested stockholder but for the inadvertent acquisition of
ownership;
(6) The business combination is proposed prior to the consummation or
abandonment of and subsequent to the earlier of the public announcement or
the notice required hereunder of a proposed transaction which (i)
constitutes one of the transactions described in the second sentence of
this paragraph; (ii) is with or by a person who either was not an
interested stockholder during the previous 3 years or who became an
interested stockholder with the approval of the corporation's board of
directors or during the period described in paragraph (7) of this
subsection (b); and (iii) is approved or not opposed by a majority of the
members of the board of directors then in office (but not less than 1) who
were directors prior to any person becoming an interested stockholder
during the previous 3 years or were recommended for election or elected to
succeed such directors by a majority of such directors. The proposed
transactions referred to in the preceding sentence are limited to (x) a
merger or consolidation of the corporation (except for a merger in respect
of which, pursuant to Section 251(f) of the chapter, no vote of the
stockholders of the corporation is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in 1 transaction or a
series of transactions), whether as part of a dissolution or otherwise, of
assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation (other than to any direct or indirect
wholly-owned subsidiary or to the corporation) having an aggregate market
value equal to 50% or more of either that aggregate market value of all of
the assets of the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the corporation; or
(z) a proposed tender or exchange offer for 50% or more of the outstanding
voting stock of the corporation. The corporation shall give not less than
20 days' notice to all interested stockholders prior to the consummation of
any of the transactions described in clause (x) or (y) of the second
sentence of this paragraph; or
(7) The business combination is with an interested stockholder who
became an interested stockholder at a time when the restrictions contained
in this section did not apply by reason of any of paragraphs (1) through
(4) of this subsection (b), provided, however, that this paragraph (7)
shall not apply if, at the time such interested stockholder became an
interested stockholder, the corporation's certificate of incorporation
contained a provision authorized by the last sentence of this subsection
(b) Notwithstanding paragraphs (1), (2), (3) and (4) of this subsection, a
corporation may elect by a provision of its original certificate of
incorporation or any amendment thereto to be governed by this section;
provided that any such amendment to the certificate of incorporation shall
not apply to restrict a business combination between the corporation and an
interested stockholder of the corporation if the interested stockholder
became such prior to the effective date of the amendment.
(c) As used in this section only, the term:
(1) "Affiliate" means a person that directly, or indirectly through 1
or more intermediaries, controls, or is controlled by, or is under common
control with, another person.
B-2
(2) "Associate," when used to indicate a relationship with any person,
means: (i) any corporation, partnership, unincorporated association or
other entity of which such person is a director, officer or partner or is,
directly or indirectly, the owner of 20% or more of any class of voting
stock; (ii) any trust or other estate in which such person has at least a
20% beneficial interest or as to which such person serves as trustee or in
a similar fiduciary capacity; and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same residence as such
person.
(3) "Business combination," when used in reference to any corporation
and any interested stockholder of such corporation, means:
(i) Any merger or consolidation of the corporation or any direct or
indirect majority-owned subsidiary of the corporation with (A) the
interested stockholder, or (B) with any other corporation, partnership,
unincorporated association or other entity if the merger or
consolidation is caused by the interested stockholder and as a result of
such merger or consolidation subsection (a) of this section is not
applicable to the surviving entity;
(ii) Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in 1 transaction or a series of transactions), except
proportionately as a stockholder of such corporation, to or with the
interested stockholder, whether as part of a dissolution or otherwise,
of assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation which assets have an aggregate market
value equal to 10% or more of either the aggregate market value of all
the assets of the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the corporation;
(iii) Any transaction which results in the issuance or transfer by
the corporation or by any direct or indirect majority-owned subsidiary
of the corporation of any stock of the corporation or of such subsidiary
to the interested stockholder, except: (A) Pursuant to the exercise,
exchange or conversion of securities exercisable for, exchangeable for
or convertible into stock of such corporation or any such subsidiary
which securities were outstanding prior to the time that the interested
stockholder became such; (B) pursuant to a merger under Section 251(g)
of this title; (C) pursuant to a dividend or distribution paid or made,
or the exercise, exchange or conversion of securities exercisable for,
exchangeable for or convertible into stock of such corporation or any
such subsidiary which security is distributed, pro rata to all holders
of a class or series of stock of such corporation subsequent to the time
the interested stockholder became such; (D) pursuant to an exchange
offer by the corporation to purchase stock made on the same terms to all
holders of said stock; or (E) any issuance or transfer of stock by the
corporation; provided however, that in no case under items (C) - (E) of
this subparagraph shall there be an increase in the interested
stockholder's proportionate share of the stock of any class or series of
the corporation or of the voting stock of the corporation;
(iv) Any transaction involving the corporation or any direct or
indirect majority-owned subsidiary of the corporation which has the
effect, directly or indirectly, of increasing the proportionate share of
the stock of any class or series, or securities convertible into the
stock of any class or series, of the corporation or of any such
subsidiary which is owned by the interested stockholder, except as a
result of immaterial changes due to fractional share adjustments or as a
result of any purchase or redemption of any shares of stock not caused,
directly or indirectly, by the interested stockholder; or
B-3
(v) Any receipt by the interested stockholder of the benefit,
directly or indirectly (except proportionately as a stockholder of such
corporation), of any loans, advances, guarantees, pledges or other
financial benefits (other than those expressly permitted in
subparagraphs (i) - (iv) of this paragraph) provided by or through the
corporation or any direct or indirect majority-owned subsidiary.
(4) "Control," including the terms "controlling," "controlled by" and
"under common control with," means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting stock, by
contract or otherwise. A person who is the owner of 20% or more of the
outstanding voting stock of any corporation, partnership, unincorporated
association or other entity shall be presumed to have control of such
entity, in the absence of proof by a preponderance of the evidence to the
contrary; Notwithstanding the foregoing, a presumption of control shall not
apply where such person holds voting stock, in good faith and not for the
purpose of circumventing this section, as an agent, bank, broker, nominee,
custodian or trustee for 1 or more owners who do not individually or as a
group have control of such entity.
(5) "Interested stockholder" means any person (other than the
corporation and any direct or indirect majority-owned subsidiary of the
corporation) that (i) is the owner of 15% or more of the outstanding voting
stock of the corporation, or (ii) is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the 3-year period immediately
prior to the date on which it is sought to be determined whether such
person is an interested stockholder; and the affiliates and associates of
such person; provided, however, that the term "interested stockholder"
shall not include (x) any person who (A) owned shares in excess of the 15%
limitation set forth herein as of, or acquired such shares pursuant to a
tender offer commenced prior to, December 23, 1987, or pursuant to an
exchange offer announced prior to the aforesaid date and commenced within
90 days thereafter and either (I) continued to own shares in excess of such
15% limitation or would have but for action by the corporation or (II) is
an affiliate or associate of the corporation and so continued (or so would
have continued but for action by the corporation) to be the owner of 15% or
more of the outstanding voting stock of the corporation at any time within
the 3-year period immediately prior to the date on which it is sought to be
determined whether such a person is an interested stockholder or (B)
acquired said shares from a person described in item (A) of this paragraph
by gift, inheritance or in a transaction in which no consideration was
exchanged; or (y) any person whose ownership of shares in excess of the 15%
limitation set forth herein is the result of action taken solely by the
corporation; provided that such person shall be an interested stockholder
if thereafter such person acquires additional shares of voting stock of the
corporation, except as a result of further corporate action not caused,
directly or indirectly, by such person. For the purpose of determining
whether a person is an interested stockholder, the voting stock of the
corporation deemed to be outstanding shall include stock deemed to be owned
by the person through application of paragraph (8) of this subsection but
shall not include any other unissued stock of such corporation which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(6) "Person" means any individual, corporation, partnership,
unincorporated association or other entity.
(7) "Stock" means, with respect to any corporation, capital stock and,
with respect to any other entity, any equity interest.
B-4
(8) "Voting stock" means, with respect to any corporation, stock of
any class or series entitled to vote generally in the election of directors
and, with respect to any entity that is not a corporation, any equity
interest entitled to vote generally in the election of the governing body
of such entity.
(9) "Owner," including the terms "own" and "owned," when used with
respect to any stock, means a person that individually or with or through
any of its affiliates or associates:
(i) Beneficially owns such stock, directly or indirectly; or
(ii) Has (A) the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise;
provided, however, that a person shall not be deemed the owner of stock
tendered pursuant to a tender or exchange offer made by such person or
any of such person's affiliates or associates until such tendered stock
is accepted for purchase or exchange; or (B) the right to vote such
stock pursuant to any agreement, arrangement or understanding; provided,
however, that a person shall not be deemed the owner of any stock
because of such person's right to vote such stock if the agreement,
arrangement or understanding to vote such stock arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made to 10 or more persons; or
(iii) Has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable proxy or consent as described in item (B) of subparagraph (ii)
of this paragraph), or disposing of such stock with any other person
that beneficially owns, or whose affiliates or associates beneficially
own, directly or indirectly, such stock.
(d) No provision of a certificate of incorporation or bylaw shall require,
for any vote of stockholders required by this section, a greater vote of
stockholders than that specified in this section.
(e) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all matters with respect to this section.
B-5
This Proxy is solicited on behalf of the Board of Directors
of
P.A.M. TRANSPORTATION SERVICES, INC.
The undersigned stockholder(s) of P.A.M. Transportation Services, Inc.,
a Delaware corporation, hereby appoints Robert W. Weaver and Larry J. Goddard,
and each of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 2002 Annual Meeting of Stockholders of P.A.M. Transportation
Services, Inc. to be held on Thursday, May 2, 2002 at 9:00 a.m., local time, at
the Ritz-Carlton Golf Resort, 2600 Tiburon Drive, Naples, Florida 34109, and at
any or all adjournments or postponements thereof, and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below:
(1) To increase the size of the Board of Directors from five members
to eight members:
|_| FOR |_| AGAINST |_| ABSTAIN
(2)(A) To elect five directors to serve until the next annual meeting
of stockholders and until their successors are elected
and qualified:
|-| FOR all nominees |-| WITHHOLD AUTHORITY
listed below (except as to vote for all nominees
otherwise indicated below)
Robert W. Weaver; Daniel C. Sullivan; Matthew T. Moroun;
Charles F. Wilkins; and Frederick P. Calderone
If you wish to withhold authority to vote for any individual nominee(s),
write the name(s) on the line below:
------------------------------------------------------------------------
(B) If proposal (1) above is approved, to elect Manuel J. Moroun to
serve as a director until the next annual meeting of
stockholders and until his successor is elected and qualified:
|-| FOR |-| WITHHOLD AUTHORITY
(3) To amend the company's Certificate of Incorporation to increase
the number of authorized shares of common stock of the company
from 20,000,000 to 40,000,000;
(4) To amend the company's Certificate of Incorporation to delete
Articles 12 and 13 thereof and amend the Bylaws of the company
to delete Article XIII thereof, resulting in the company being
governed by the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law.
(5) In their discretion, upon such other matter or matters which may
properly come before the meeting or any adjournment or
postponement thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This proxy, when
properly executed, will be voted in accordance with directions given by the
undersigned stockholder(s). If no direction is made, it will be voted FOR
proposals (1), (3) and (4) above, FOR the election of the nominees for director
named above, and as the proxies deem advisable on such other matters as may come
before the meeting.
Dated:______________________, 2002
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Signature
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Signature
This Proxy should be marked, dated, and
signed by the stockholder(s) exactly as his
or her name appears hereon, and returned
promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants
or as community property, both should sign.