SMITHWAY MOTOR XPRESS CORP.



                                  NEW EMPLOYEE
                              INCENTIVE STOCK PLAN


































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     1. Purpose and Scope of the Plan. The purpose of this incentive  stock plan
is to attract the best  available new  employees  for  positions of  substantial
responsibility  and to promote the  success of the  Company's  business.  Awards
granted  under  the Plan may be  Incentive  Stock  Options,  Nonstatutory  Stock
Options,  Restricted Stock Awards, Reload Options,  Other Stock Based Awards, or
Other  Benefits at the  discretion of the Board.  The Plan shall not confer upon
any  Participant  any  right  with  respect  to  continuation  of an  employment
relationship  with the Company or any Subsidiary,  nor shall it interfere in any
way with  the  right of any  Participant  or of the  Company  or any  Parent  or
Subsidiary to terminate the employment relationship at any time.

     2.  Definitions.  As used in this Plan,  the  following  definitions  shall
apply:

          (a) "Award" shall mean  Incentive  Stock Options,  Nonstatutory  Stock
     Options, Restricted Stock Awards, Reload Options, Other Stock Based Awards,
     or Other Benefits granted pursuant to the Plan.

          (b) "Board" shall mean the Committee,  if one has been  appointed,  or
     the Board of Directors of the Company, if no Committee is appointed.

          (c) "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (d) "Common Stock" shall mean the Class A Common Stock of the Company,
     par value $0.01 per share.

          (e)  "Company"  shall  mean  Smithway  Motor  Xpress  Corp.,  a Nevada
     corporation,  or any permitted successor that assumes the obligations under
     this Plan by agreement or operation of law.

          (f)  "Committee"  shall mean the  Committee  appointed by the Board of
     Directors in accordance with Section 4 of the Plan, if one is appointed.

          (g)  "Continuous  Status as an Employee" shall mean the absence of any
     interruption or termination of service as an employee of the Company or any
     Parent or Subsidiary of the Company. Continuous Status as an Employee shall
     not be considered interrupted in the case of sick leave, military leave, or
     any other leave of absence approved by the Board;  provided that such leave
     is for a period of not more than ninety (90) days or reemployment  upon the
     expiration of such leave is guaranteed by contract or statute.

          (h)  "Director"  shall mean a member of the Board of  Directors of the
     Company, Parent, or any Subsidiary.

          (i) "Eligible Person" shall mean any person not previously employed by
     the  Company or any Parent or  Subsidiary  of the  Company  that is offered
     employment.

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          (j) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
     amended, and the rules and regulations promulgated thereunder.

          (k) "Fair  Market  Value"  shall mean the closing  price of the Common
     Stock on the date the Award is  granted,  as such price is  reported by The
     Nasdaq Stock Market, other  over-the-counter  market, or stock exchange, as
     applicable. If no reported quotation or sale of Common Stock takes place on
     the date in question,  the last reported  closing price of the Common Stock
     shall be determinative.

          (l) "Incentive  Stock Option" shall mean an Option intended to qualify
     as an incentive stock option within the meaning of Section 422 of the Code.

          (m)  "Nonstatutory  Stock Option" shall mean an Option not intended to
     qualify as an Incentive Stock Option.

          (n) "Option" shall mean a stock option granted pursuant to the Plan.

          (o) "Optioned Stock" shall mean the Common Stock subject to an Option.

          (p) "Other  Benefits"  shall mean types of Awards  granted  under this
     Plan as determined by the Board in addition to those specifically provided.

          (q) "Other Stock Based Awards" shall mean awards valued in whole or in
     part by reference to, or otherwise based on, the Company's Common Stock.

          (r)  "Parent"  shall  mean  a  "parent  corporation,"  whether  now or
     hereafter existing, as defined in Section 424(e) of the Code.

          (s) "Participant" shall mean an Eligible Person who receives an Award.

          (t) "Plan" shall mean this New Employee Incentive Stock Plan.

          (u)  "Reload  Option"  shall  mean an Option to  purchase  for cash or
     Shares a number of shares of Common Stock up to (i) the number of shares of
     Common Stock used to exercise the underlying option, and (ii) the number of
     shares of Common  Stock used to  satisfy  any tax  withholding  requirement
     incident to the exercise of the underlying  option,  in either case through
     the use of shares of Common Stock or vested options.

          (v)  "Restricted  Stock"  shall mean  shares of Common  Stock that are
     subject to the restrictions described in this Plan and such other terms and
     conditions as the Board may prescribe.

          (w)  "Securities  Act"  shall  mean the  Securities  Act of  1933,  as
     amended, and the rules and regulations promulgated thereunder.

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          (x) "Share" or "Shares"  shall mean a share or shares of Common Stock,
     as adjusted in accordance with Section 12 of the Plan.

          (y) "Subsidiary" shall mean a "subsidiary corporation," whether now or
     hereafter existing, as defined in Section 424(f) of the Code.

     3. Stock  Subject to the Plan.  Subject to the  provisions of Section 12 of
the Plan, the maximum aggregate number of Shares that may be optioned,  sold, or
granted through Awards under the Plan is four hundred  thousand  (400,000).  The
Shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should  expire  or become  unexercisable  for any  reason  without  having  been
exercised in full, the unpurchased  Shares that were subject to the Option shall
become  available  for future  grant under the Plan,  unless the Plan shall have
been  terminated.  Any Shares of Restricted Stock that are forfeited shall again
be available for Awards under the Plan.  Fractional  Shares shall not be issued.
The Board will  determine  the manner in which  fractional  Share values will be
treated.  Each  Award  shall  state the total  number of Shares  subject to such
Award.  Shares issued under the Plan and later  repurchased by the Company shall
become available for future grant or sale under the Plan.

     4. Administration of the Plan.

          (a)  Procedure.  The  Plan  shall  be  administered  by the  Board  of
     Directors  of  the  Company  or a  committee  appointed  by  the  Board  in
     accordance  with this  Section  4. The  Board of  Directors  may  appoint a
     committee consisting of not less than two members of the Board of Directors
     to administer the Plan on behalf of the Board of Directors, subject to such
     terms  and  conditions  as the  Board  of  Directors  may  prescribe.  Once
     appointed,  the committee shall continue to serve until otherwise  directed
     by the Board of  Directors.  From time to time the Board of  Directors  may
     increase the size of the  Committee and appoint  additional  members of the
     Board,  remove members (with or without cause),  appoint new members,  fill
     vacancies  however  caused,  or remove  all  members of the  Committee  and
     thereafter directly administer the Plan.

          (b) Powers of the Board.  Subject to the  provisions of the Plan,  the
     Board shall have the authority,  in its discretion:  (i) to grant Incentive
     Stock Options,  Nonstatutory Stock Options, Restricted Stock Awards, Reload
     Options concurrently with the grant of any Award of Incentive Stock Options
     or  Nonstatutory  Stock  Options,  Other  Stock  Based  Awards,  and  Other
     Benefits;  (ii) to determine,  upon review of relevant  information  and in
     accordance  with  Section  2.(k) of the Plan,  the Fair Market Value of the
     Common Stock; (iii) to determine the exercise price per Share of Options to
     be granted,  which  exercise  price shall be determined in accordance  with
     Section 8.(a) of the Plan; (iv) to determine  Eligible Persons to whom, and
     the time or times at  which,  Awards  shall be  granted  and the  number of
     Shares to be represented by each Award;  (v) to interpret the Plan; (vi) to
     prescribe,  amend, and rescind rules and regulations  relating to the Plan;
     (vii) to determine the terms and  provisions  of each Award granted  (which
     need not be  identical)  and,  with the consent of the holder of the Award,
     modify or amend each Award; (viii) to accelerate or defer (with the consent
     of the Participant)  the exercise or vesting date of any Award,  consistent
     with the provisions of

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     Section 7 of the Plan; (ix) to authorize any person to execute on behalf of
     the Company any  instrument  required to  effectuate  the grant of an Award
     previously  granted by the Board; and (x) to make all other  determinations
     deemed necessary or advisable for the administration of the Plan.

          (c) Effect of Board's  Decision.  All decisions,  determinations,  and
     interpretations of the Board shall be final and binding on all Participants
     and any other holders of any Awards granted under the Plan.

     5. Eligibility.

          (a)  Generally.  Awards may be granted only to Eligible  Persons as an
     inducement  essential  to the  individual's  entering  into  an  employment
     relationship with the Company or any Parent or Subsidiary of the Company.

          (b) Limitations on Incentive Stock Options.  The aggregate Fair Market
     Value  (determined as of the date of grant) of Common Stock with respect to
     which  Incentive  Stock Options are  exercisable  for the first time by any
     Participant  during any  calendar  year  (under  all plans of the  Company,
     Parent,  or any Subsidiary)  shall not exceed $100,000.  If the Fair Market
     Value  (determined as of the date of grant) of Common Stock with respect to
     which  Incentive  Stock Options are  exercisable  for the first time by any
     Participant during any calendar year exceeds $100,000, then the Options for
     the first  $100,000  worth of Common  Stock to become  exercisable  in such
     calendar  year shall be  Incentive  Stock  Options  and the Options for the
     amount in excess of $100,000 that become  exercisable in that calendar year
     shall be  Nonstatutory  Stock  Options.  In the event  that the Code or the
     regulations  promulgated  thereunder are amended after the date of the Plan
     to provide for a different  limit on the Fair Market  Value of Common Stock
     permitted to be subject to Incentive  Stock Options,  such different  limit
     shall be  automatically  incorporated in this Section 5.(b) and shall apply
     to any  Incentive  Stock Options  granted after the effective  date of such
     amendment.

          (c) Other Stock Based Awards.  The Board shall have the right to grant
     Other Stock Based Awards that may include, without limitation, the grant of
     Common Stock based on certain conditions,  including the issuance of Common
     Stock  in lieu of cash  under  other  incentive  or  deferred  compensation
     programs of the Company.

          (d) Other  Benefits.  The Board shall have the right to provide  Other
     Benefits, if the Board believes that such Awards would further the purposes
     for which this Plan was established.

     6. Term of Plan. The Plan shall become effective upon adoption by the Board
of Directors.  It shall continue in effect until  terminated under Section 14 of
the Plan. No Awards of Incentive  Stock Options  shall be made  hereunder  after
August 6, 2011.

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     7. Term of Awards. The maximum term of each Incentive Stock Option shall be
ten (10) years from the date of grant or such shorter term as may be provided in
any notice or agreement evidencing such Award; provided, however, in the case of
an  Incentive  Stock  Option  granted  to a  Participant  who,  at the  time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting  power of all  classes of stock of the Company or any Parent
or Subsidiary,  the maximum term of the Incentive Stock Option shall be five (5)
years  from the date of grant or such  shorter  time as may be  provided  in the
Incentive Stock Option agreement. The foregoing notwithstanding,  if the Code or
regulations  promulgated  thereunder are  subsequently  amended to provide for a
different  percentage of voting power or maximum option term for Incentive Stock
Options,  such new limits shall be automatically  incorporated in this Section 7
and shall apply to any Incentive  Stock Options granted after the effective date
of such  amendment.  The  term of each  Reload  Option  shall  be  equal  to the
remaining  option term of the  underlying  Option.  The term of each  Award,  if
applicable,  that is not an  Incentive  Stock  Option or Reload  Option shall be
determined by the Board and set forth in the agreement or notification  relating
to Nonstatutory  Stock Options,  Restricted Stock,  Other Stock Based Awards, or
Other Benefits.

     8. Exercise Price and Consideration.

          (a) Exercise Price.  The per Share exercise price for the Shares to be
     issued  pursuant  to  exercise  of an  Option  shall  be such  price  as is
     determined by the Board, but shall be subject to the following:

               (i) In the case of an Incentive  Stock Option,  any  restrictions
          imposed by the Code at the time of grant, which restrictions currently
          are as follows:

                    (A) grants to an  Eligible  Person  who,  at the time of the
               grant of such  Incentive  Stock Option,  owns stock  representing
               more than ten percent (10%) of the voting power of all classes of
               stock of the  Company or any Parent or  Subsidiary,  shall have a
               per Share  exercise  price no less than one  hundred  ten percent
               (110%) of the Fair  Market  Value per Share on the date of grant;
               or

                    (B)  grants to any other  Eligible  Person  shall have a per
               Share exercise  price no less than one hundred  percent (100%) of
               the Fair Market Value per Share on the date of grant.

               (ii) In the case of Nonstatutory Stock Options,  at any price per
          Share determined by the Board.

               (iii) In the case of Reload Options, unless otherwise established
          by the Board, the exercise price per share of Common Stock deliverable
          upon the exercise of a Reload Option shall be the Fair Market Value of
          a share of  Common  Stock on the date the grant of the  Reload  Option
          becomes effective.


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          (b) Consideration for Restricted Stock,  Other Stock Based Awards, and
     Other  Benefits.  In the case of Restricted  Stock,  an award of Restricted
     Stock  may  provide  that the  Participant  be  required  to  furnish  such
     consideration for the Award as the Board shall determine,  or may be issued
     in exchange  for past  services or other legal  consideration.  An Award of
     Restricted  Stock may provide that such  Restricted  Stock may be exchanged
     during the Restricted Period for other Restricted Stock upon such terms and
     conditions  as the Board may permit or shall  require.  Payment  under or a
     settlement of any Other Stock Based Awards and Other Benefits shall be made
     in such manner and at such times as the Board may determine.

          (c) Form of Consideration. The consideration to be paid for the Shares
     to be issued upon exercise of an Option or grant of an Award, including the
     method  of  payment,  shall be  determined  by the  Board  and may  consist
     entirely of (i) cash, (ii) check, (iii) other shares of Common Stock having
     a Fair  Market  Value  on the  date of  surrender  equal  to the  aggregate
     exercise  price of the  Shares as to which the Option  shall be  exercised,
     (iv)  vested  and  exercisable  (but  unexercised)  Options  valued  at the
     difference  between the exercise price and Fair Market Value of the Shares,
     or (v) any combination of such methods of payment,  or other  consideration
     and method of payment for the  issuance  of Shares to the extent  permitted
     under the Nevada General Corporation Law.

     9. Exercise of Option.

          (a) Generally.  Any Option granted under the Plan shall be exercisable
     at such  times  and under  such  conditions  as  determined  by the  Board,
     including  performance  criteria  with  respect to the  Company  and/or the
     Participant,  and as shall be  permissible  under the terms of the Plan. An
     Option may not be  exercised  for a fraction  of a Share.  Anything  to the
     contrary  notwithstanding,  each Reload Option is fully exercisable two (2)
     years  from the  effective  date of grant  (or if fewer  than two (2) years
     remain until the termination of this Plan, then such Reload Option shall be
     exercisable within ninety (90) days prior to termination of the Plan).

          (b) Procedure.  An Option shall be deemed to be exercised when written
     notice of exercise in  accordance  with  Section  22.(c) and (d) hereof (if
     applicable,  in the form required by the  Nonstatutory  or Incentive  Stock
     Option  agreement  or notice) has been given to the  Company in  accordance
     with the terms of the Option by the person  entitled to exercise the Option
     and full  payment  for the  Shares  with  respect  to which  the  Option is
     exercised has been received by the Company. Full payment may, as authorized
     by the Board,  consist of any consideration and method of payment allowable
     under  Section  8 of the  Plan.  The  Company  shall  issue (or cause to be
     issued) the stock  certificate  promptly  upon  exercise of the Option.  No
     adjustment  will be made for a dividend or other right for which the record
     date is prior to the  date the  stock  certificate  is  issued,  except  as
     provided  in  Section 12 of the Plan.  Exercise  of an Option in any manner
     shall  result in a decrease in the number of Shares that may be  available,
     both for  purposes of the Plan and for  purchase  under the Option,  by the
     number of Shares as to which the Option is exercised.

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     10. Conditions and Restrictions Affecting Awards.

          (a)  Certain  Events  Affecting   Exercisability  of  Incentive  Stock
     Options.  Notwithstanding  anything  in  the  Plan  to  the  contrary,  all
     Incentive Stock Options to the extent not already exercised shall terminate
     upon  expiration  of a term equal to ten (10) years from the date of grant,
     subject to adjustment under Section 7.

          (b) Certain Conditions Affecting Restricted Stock Awards.

               (i) Restriction.  Except as provided in Section  10.(b)(iii),  at
          the time of an Award of Restricted  Stock,  the Board may establish in
          its discretion,  for each  Participant a vesting schedule and a period
          of time ("Restricted Period") during which Restricted Stock may not be
          sold, assigned, transferred,  pledged, or otherwise encumbered, except
          as  hereinafter  provided.  Except  for  such  restrictions  as may be
          provided in the  Restricted  Stock  agreement or notice and subject to
          this  Section  10.(b),  the  Participant  shall  have all  rights of a
          stockholder  with respect to such Restricted  Stock. The Board, in its
          discretion,  may  accelerate  the  time  at  which  any  or all of the
          restrictions  shall  lapse with  respect  to any Shares of  Restricted
          Stock prior to the expiration of the  Restricted  Period or remove any
          or all of such restrictions, as it deems appropriate.

               (ii)  Registration  and  Redelivery  of  Restricted  Stock.  Each
          certificate of Restricted Stock shall be registered in the name of the
          Participant  and deposited by the  Participant,  together with a stock
          power  endorsed  in blank,  with the  Company.  During the  Restricted
          Period,  the  Restricted  Stock shall remain in the  possession of the
          Company.  At the  end of the  Restricted  Period,  the  Company  shall
          redeliver   to   the   Participant   (or   the   Participant's   legal
          representative or personal  representative) the certificates of Common
          Stock deposited pursuant to this Section 10.(b)(ii).  The Common Stock
          so  delivered  to the  Participant  shall no longer be  subject to the
          provisions of this Section 10.(b).

               (iii)  Termination  of Employment.  Unless the  Restricted  Stock
          agreement or notice otherwise provides, in the event the Participant's
          employment  with the  Company  and/or  its  Subsidiaries  or Parent is
          terminated   for  reasons  other  than  death,   total  and  permanent
          disability (as defined in Section 22(e)(3) of the Code), or retirement
          after the age of sixty-five (65), all Restricted Stock awarded to such
          Participant  which is still subject to restriction shall be forfeited.
          For the purposes of this Section  10.(b)(iii),  the forfeiture  period
          for each Award of Restricted Stock shall be separately calculated from
          the date of the Award. Unless the Restricted Stock agreement or notice
          otherwise  provides,  the restrictions  contained in Section 10.(b)(i)
          shall  terminate  on the  Participant's  death,  total  and  permanent
          disability (as defined in Section 22(e)(3) of the Code), or attainment
          of age sixty-five (65).

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          (c) Certain Conditions Affecting Reload Options.

               (i) Non-Qualification as Incentive Stock Option.  Notwithstanding
          the fact that the underlying  Option may be an Incentive Stock Option,
          a Reload  Option is not  intended  to  qualify as an  Incentive  Stock
          Option.

               (ii) Reload Option  Amendment.  Each  Incentive  Stock Option and
          Nonstatutory  Stock Option agreement or notice shall state whether the
          Board has  authorized  Reload  Options with respect to the  underlying
          options.  Upon the exercise of an underlying  option,  any  additional
          Reload  Option must be evidenced  by an  amendment  to the  underlying
          agreement or notice or by a new notice from the Board.

               (iii)  Termination  of Employment.  No additional  Reload Options
          shall be granted to Participants  when Options are exercised  pursuant
          to the terms of this Plan following  termination of the  Participant's
          employment.

               (iv)  Application  Sections.  Applicable  sections of the Plan or
          written   notice  or  agreement   regarding  the  manner  of  payment,
          restrictions,  death,  retirement,  total or permanent  disability (as
          defined  in  Section  22(e)(3)  of the Code) of the  Participant,  and
          similar provisions relating to the underlying Option, are incorporated
          by reference in this Section 10(c) as though fully set forth herein.

          (d) Certain  Conditions  Affecting  Other Stock Based Awards and Other
     Benefits.  Unless the agreement or notice relating to the Other Stock Based
     Awards or Other  Benefits  otherwise  provides,  except in the event of the
     Participant's  death, total or permanent  disability (as defined in Section
     22(e)(3) of the Code), or retirement  after attaining age sixty-five  (65),
     in the event that the  Participant  terminates  employment with the Company
     and/or its Subsidiaries or Parent prior to the time benefits become payable
     pursuant  to Awards of Other  Stock Based  Awards or Other  Benefits,  such
     Awards  shall be  immediately  forfeited.  Unless the  agreement  or notice
     relating  to the  Other  Stock  Based  Awards or Other  Benefits  otherwise
     provides,  in the  event of the  Participant's  death,  total or  permanent
     disability  (as  defined in Section  22(e)(3) of the Code),  or  retirement
     after  attaining  age  sixty-five  (65),  the  Company  shall  pay  to  the
     Participant  (or  the  Participant's   legal   representative  or  personal
     representative)  the amount that would have been payable to the Participant
     had the  Participant  satisfied  all of the  requirements  contained in the
     agreement  relating  to  such  Award  calculated  as of  the  date  of  the
     occurrence of an event described in this sentence.

          (e) Right to Repurchase;  Refund of Benefit. Agreements evidencing the
     grant of an Award may provide the Company a right to repurchase any Shares,
     whether  issued  upon  grant,  exercise,  or  otherwise,   and/or,  if  the
     Participant has already  disposed of all or some of the Shares,  a right to
     the refund of any benefit conferred upon the Participant.

     11. Transferability of Options. Except with Board approval and otherwise in
accordance with applicable provisions of the Code and SEC rules and regulations,
all Awards  may not be  transferred  in any manner  other than by will or by the
laws of descent or distribution and may

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be exercised,  during the lifetime of the Participant,  only by the Participant.
Following  transfer,  the Awards shall  continue to be subject to the same terms
and conditions as were applicable  immediately prior to transfer,  provided that
the term "Participant" shall be deemed to refer to the transferee.

     12.  Adjustments  Upon  Certain  Changes.  Unless the  agreement  or notice
relating to the Award provides otherwise,

          (a) In the event of any  change  in the  outstanding  Common  Stock by
     reason of a stock split,  stock  dividend,  combination,  reclassification,
     exchange, recapitalization,  merger, consolidation, or other similar event,
     the Shares  authorized  hereunder and  outstanding  Awards,  as applicable,
     shall be  proportionately  adjusted by the Board in its sole discretion and
     any such judgment shall be binding and conclusive on all persons. Provided,
     however,  in the case of Incentive Stock Options,  no such adjustment shall
     be made if the result thereof would be that the excess of (i) the aggregate
     Fair Market Value of the new or substituted  Shares over (ii) the aggregate
     exercise  price of such Shares is more than (x) the excess of the aggregate
     Fair Market Value of all Shares  subject to the Option  immediately  before
     such  substitutions or assumption over (y) the aggregate  exercise price of
     such  Shares,  or that the new Option or the  assumption  of the old Option
     gives the  Participant  additional  benefits which the  Participant did not
     have under the old Option.

          (b) In the event of any sale of all or substantially all of the assets
     of the  Company  and its  Subsidiaries  taken as a whole or if any  person,
     corporation, or other entity or group thereof other than William and Marlys
     Smith (the "Acquiror"), acquires (an "Acquisition"),  other than by merger,
     consolidation,   recapitalization,   reorganization,   or   other   similar
     transaction or series of  transactions,  the beneficial  ownership (as that
     term is used in  Section  13(d)(1)  of the  Exchange  Act and the rules and
     regulations  promulgated  thereunder)  of Shares  which,  when added to any
     other Shares the  beneficial  ownership  of which is held by the  Acquiror,
     shall have more than fifty  percent (50%) of the votes that are entitled to
     be cast at meetings of  stockholders,  any portion of an Award that was not
     currently  exercisable or vested prior to the date of the Acquisition shall
     become fully vested and exercisable or deliverable immediately.

          (c) In the  event of a  proposed  dissolution  or  liquidation  of the
     Company, all Awards will terminate immediately prior to the consummation of
     such proposed action,  unless otherwise provided by the Board. In the event
     of a  merger,  consolidation,  recapitalization,  reorganization,  or other
     similar  transaction or series of transactions (a  "Transaction"),  (i) the
     unexercised  portion of Option shall be assumed,  or an  equivalent  option
     shall be substituted, by the successor corporation,  and (ii) the Board, at
     the time of  grant or later  may,  in its  discretion,  determine  that any
     portion of an Award that was not currently  exercisable  or vested prior to
     the date of the  Transaction  shall become fully vested and  exercisable or
     deliverable immediately.

     13.  Time of  Granting  Awards.  The  date of grant  of an  Award,  for all
purposes,  shall be the date on which the Board makes the determination granting
that Award or such other effective date as the Board may specify in its grant of
the Award. Notice of the determination shall be given

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<PAGE>
to each Eligible  Person to whom an Award is so granted within a reasonable time
after the date of such  grant and such  notice or the Award  agreement  shall be
effective as of the date of the grant.

     14. Amendment and Termination of the Plan.

          (a)  Amendment and  Termination.  The Board may amend or terminate the
     Plan from time to time in such  respects  as the Board may deem  advisable,
     unless otherwise required by any applicable laws.

          (b) Effect of Amendment or  Termination.  Any amendment or termination
     of the Plan shall not affect Awards already  granted and those Awards shall
     remain in full  force and  effect as if this Plan had not been  amended  or
     terminated,  unless mutually agreed  otherwise  between the Participant and
     the Board, which agreement must be in writing and signed by the Participant
     and the Company.

     15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the  exercise or grant of an Award unless the exercise or grant of such Award
and the  issuance  and  delivery  of  Shares  shall  comply  with  all  relevant
provisions of law,  including,  without  limitation,  the Securities Act and the
Exchange Act, and the  requirements  of any stock  exchange or quotation  system
upon which the Shares  may then be listed,  and shall be further  subject to the
approval of counsel for the Company with respect to such  compliance.  The Board
may require any person receiving Common Stock hereunder to acknowledge that such
Common Stock is being acquired for  investment  purposes and not with a view for
resale or  distribution  and such Common Stock shall not be sold or  transferred
unless in accordance with  applicable law and  regulations.  If the Company,  as
part of an offering of securities or  otherwise,  finds it desirable  because of
legal or regulatory  requirements  to reduce the period during which Options may
be exercised, the Board may, in its discretion and without the holders' consent,
so reduce such period on not less than fifteen (15) days' written  notice to the
holders thereof.

     16. Reservation of Shares. The Company, during the term of this Plan, shall
at all  times  reserve  and keep  available  the  number  of  Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to  obtain  authority  from  any  regulatory  body  having  jurisdiction,  which
authority  is deemed by the  Company's  counsel  to be  necessary  to the lawful
issuance or sale of any Shares under the Plan,  shall relieve the Company of any
liability  in respect of the failure to issue or sell the Shares as to which the
requisite authority shall not have been obtained.

     17. Award  Agreement.  Awards shall be evidenced by written  agreements  or
notices in form as the Board shall approve.

     18. Tax Withholding.

          (a) The Board shall have sole  discretion  whether to  withhold  stock
     sufficient  to satisfy any  withholding  or other tax due with  respect the
     exercise of an Option,  the  vesting of  Restricted  Stock,  or any similar
     transaction  under the Plan,  or to demand  such  amounts in

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     cash.  Any tax  withholding  effected in shares of Common Stock must comply
     with all applicable laws.

          (b)  Notwithstanding  anything  in  the  Plan  to  the  contrary,  the
     Participant  acknowledges that under certain  circumstances,  including but
     not limited to a  "disqualifying  disposition" of an Incentive Stock Option
     under Section 422(a)(i) of the Code, the Participant may recognize ordinary
     income that, for tax purposes, is considered payment of wages for services.
     As a result,  the Company may have certain tax  withholding  and  reporting
     obligations.  The  Company  shall  not be  obligated  to  issue  any  stock
     certificate upon the exercise of the right to purchase, or the transfer of,
     Shares until the  Participant has delivered  sufficient  funds to cover all
     income,  FICA, FUTA, and other applicable tax withholding.  The Participant
     shall  notify  the  Company  of any  disqualifying  disposition  of  Shares
     underlying the Option  (currently,  any disposition within two (2) years of
     the date of grant or one year of the  exercise  date or  cashless  exercise
     with Shares underlying the Option tendered in payment) and take all actions
     necessary for the Company to obtain a tax deduction if compensation  income
     is deemed to result from any exercise or disposition. The Participant shall
     indemnify and hold the Company  harmless against any loss it may experience
     as a result of the  Participant's  failure to comply with this Section.  At
     the  Board's  sole  discretion,   to  satisfy  the  Company's   withholding
     obligations,  the Company may retain such number of shares of Common  Stock
     subject to the exercised  Option which have an aggregate  Fair Market Value
     on the date of exercise equal to the Company's  aggregate  federal,  state,
     local, and foreign tax withholding  obligations as a result of the exercise
     of the Option by the Participant.  The Board may consider the Participant's
     preference in making such determination,  but the Participant  acknowledges
     that the  Board is under no  obligation  to  follow  or even  consider  the
     Participant's preference.

     19.  Non-Uniform  Determinations.  The  Board's  determinations,  including
without limitation, (a) the Participants' right to receive Awards, (b) the form,
amount,  and timing of Awards,  (c) the terms,  conditions,  and  provisions  of
Awards (including vesting and forfeiture provisions),  and (d) the agreements or
notices  evidencing  the  same,  need  not be  uniform  and  may be  made  by it
selectively  among  Participants  who  receive,  or who are eligible to receive,
Awards under the Plan, whether or not such Participants are similarly situated.

     20.  Indemnification.  Directors  shall be indemnified and held harmless by
the Company  from any loss,  liability,  or expense  that may be imposed upon or
incurred by such present or past Director in connection  with or resulting  from
any claim,  action, or proceeding in which the Director is involved by reason of
any action taken or failure to act under the Plan;  provided such Director shall
give the Company an  opportunity,  at its own expense,  to defend the same.  The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification  to which  such  persons  may be  entitled  under the  Company's
Articles of  Incorporation or Bylaws,  as a matter or law, or otherwise,  or any
power that the Company may have to indemnify them or hold them harmless.


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<PAGE>
     21. Requirements of Law. Awards,  agreements,  notices, and the issuance of
shares  of  Common  Stock  shall be  subject  to  applicable  laws,  rules,  and
regulations,  and to such approvals by any  governmental  agencies or securities
exchanges or quotation systems as may be required.

     22. Miscellaneous.

          (a) Participant Not a Stockholder. The Participant shall not be deemed
     for any  purposes to be a  stockholder  of the Company  with  respect to an
     Award  except to the extent  that a stock  certificate  has been issued (as
     evidenced  by the  appropriate  entry on the books of the  Company) or of a
     duly  authorized  transfer  agent of the Company  and, if  applicable,  the
     Option exercised and payment made.

          (b) Disputes or Disagreements. The Participant agrees, for himself and
     his  personal  representatives,  that any disputes or  disagreements  which
     arise under or as a result of this Plan or any agreement hereunder shall be
     determined by the Board in its sole discretion,  and any  interpretation by
     the  Board  of the  terms of this  Plan or any  Agreement  shall be  final,
     binding, and conclusive.

          (c) Notices.  Any notice to be given  hereunder  shall be addressed to
     the Company in care of its Chief  Executive  Officer at 2031 Quail  Avenue,
     Fort Dodge,  Iowa 50501,  or at its then  current  corporate  headquarters.
     Notice to be given to the  Participant  shall be addressed to him or her by
     hand  delivery  or at  his or  her  then  current  residential  address  as
     appearing  on the payroll  records.  Notice shall be deemed duly given when
     enclosed in a properly  sealed  envelope and  deposited by certified  mail,
     return receipt requested,  in a post office or branch post office regularly
     maintained by the United States Government.

          (d)  Exercise  of  Incentive  Stock  Option.  Subject to the terms and
     conditions of the Plan and any agreement  reflecting the grant of Incentive
     Stock Option, such Option may be exercised only by completing and signing a
     written notice in substantially the following form:

           I hereby exercise [all/part of] the Option granted to me by
           Smithway Motor Xpress Corp. on ____________ (date of grant),
           and elect to purchase ____________ (______) shares of Common
           Stock for $_______ per share, representing the Fair Market
           Value on the date of grant.





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