PROPOSAL 5 – APPROVAL OF THE AMENDED AND RESTATED U.S. XPRESS ENTERPRISES, INC. 2018 OMNIBUS INCENTIVE
PLAN
Summary
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The Board is asking for stockholder approval of our Amended and Restated U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan (the “Amended and Restated Omnibus Plan”) to increase the
number of shares of Class A common stock available for issuance thereunder. Equity compensation is critical for the Company to attract, motivate and retain qualified executive officers and other key personnel through competitive
compensation packages, and it aligns our executives’ and stockholders’ short- and long-term interests by creating a strong and direct link between executive pay and stockholder return.
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The Compensation Committee believes the shares of Class A common stock remaining under the U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan (the “Omnibus Plan”) are insufficient to
fulfill the Company’s objectives. If stockholders do not approve the Amended and Restated Omnibus Plan, the Company will have approximately 965,673 remaining shares of Class A common stock under the Omnibus Plan for future awards and may
need to resort to greater cash compensation to remain competitive.
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In addition, the Board is asking for stockholder approval of the Amended and Restated Omnibus Plan to make certain changes that support governance best practices, including:
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(i)
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adding a double-trigger vesting requirement upon a change in control;
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(ii)
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prohibiting vesting periods of less than twelve months for future awards (subject to limited exceptions as described below);
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(iii)
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prohibiting share recycling related to exercise of stock options, shares available for issuance upon the grant of stock appreciation rights (“SARs”) and shares forfeited for tax withholding
obligations with respect to stock options and SARs; and
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(iv)
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prohibiting share recycling related to tax withholdings above the applicable minimum statutory rate.
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Introduction
At the Annual Meeting, our stockholders are being asked to approve the proposed Amended and Restated Omnibus Plan to (i) increase the number of shares of Class A common stock available for issuance
thereunder to 5,750,000 shares, less shares that were granted under the Omnibus Plan after February 28, 2020 and prior to the date on which the Amended and Restated Omnibus Plan is approved by our stockholders, (ii) implement additional changes
designed to support governance best practices, (iii) provide that if an employee becomes a director (including by continuing his or her service on the Board), upon termination of such Employee’s employment with the Company, such employee’s ceasing
to be an employee of the Company would not be treated as termination for purposes of his or her outstanding awards, subject to the discretion of the Compensation Committee, (iv) provide that the Compensation Committee has the discretion to increase
or decrease the payout under any Performance Award, (v) clarify that the Compensation Committee may provide that stock options shall be deemed to be exercised at the close of business on the scheduled expiration date if at such time the option by
its terms remains exercisable and, if so exercised, would result in a payment to the holder of such option, and (vi) make such other miscellaneous, administrative and conforming changes as are necessary. The Compensation Committee has approved the
Amended and Restated Omnibus Plan and the Board has directed that it be submitted for stockholder approval at the Annual Meeting. If approval of the Amended and Restated Omnibus Plan is not obtained at the Annual Meeting from our stockholders, the
Omnibus Plan will remain in full force and effect, and our ability to grant equity awards to attract, motivate and retain new and existing key employees, directors, officers and eligible participants (collectively, “Participants”) would be limited.
In that event, to remain competitive, the Company may be required to adopt additional cash or equity related compensation programs.
Before approving the Amended and Restated Omnibus Plan, the Compensation Committee considered a number of factors, including share usage since our IPO, shares expected to be required in the future
based upon historical practices, and shares expected to be required as the Company continues to retain and complement our leadership team. The Compensation Committee believes additional shares are needed to (i) recruit talent to fill open positions
on our management team as they arise and (ii) continue to make equity-based awards to Participants, which tie a significant portion of total compensation to equity awards and align with stockholder interests. Furthermore, a significant portion of
our executives’ total annual compensation is in the form of equity awards.
In deciding to increase the number of shares of Class A common stock available for issuance, the Compensation Committee considered, among other factors:
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the number of shares of Class A common stock currently available for issuance under the Omnibus Plan;
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the number of shares of Class A common stock necessary to attract, motivate and retain qualified executive officers and other key personnel;
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the Compensation Committee’s desire to have sufficient availability to grant awards for at least the next three years;
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our average burn rate for 2018–2019 of approximately 1.67%, calculated based upon the number of options granted plus the number of full value shares, divided by our weighted average basic
Class A common shares outstanding;
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the number of shares of Class A common stock outstanding, the dilutive effects of awards, and our projected burn rate; and
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the effect of the price of our Class A common stock on the number of shares needed to maintain the significant percentage of our compensation packages for key employees that is currently
granted in the form of equity.
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In addition to the factors above, the Compensation Committee also considered the following factors, among others, when determining whether to approve the Amended and Restated Omnibus Plan:
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the Compensation Committee’s belief that equity-based grants to employees are a highly effective recruiting and retention tool that allows key employees to share in the ownership of our
Company and contribute to our revenue and earnings growth by aligning the long-term interests of our management and key employees with those of our stockholders;
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the Compensation Committee’s belief that if additional shares are not available for future awards, we would be required to discontinue or significantly curtail our current equity incentive
program and increase the use of cash awards, which could have an adverse impact on our ability to attract, motivate, and retain employees and our results of operations; and
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the provisions in the Amended and Restated Omnibus Plan designed to protect stockholders’ interests, as described below.
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Provisions Designed to Protect Stockholders
The Amended and Restated Omnibus Plan and our governance and compensation policies contain a number of provisions that we believe are designed to protect stockholder interests and support
governance best practices, including:
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prohibition of share recycling related to exercise of stock options, shares available for issuance upon the grant of SARs and shares forfeited for tax withholding obligations with respect
to stock options and SARs;
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prohibition of the repricing of stock options and SARs without stockholder approval;
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prohibition of the issuance of stock options or SARs with an exercise price less than the fair market value of the common stock on the grant date;
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limiting the maximum term of a stock option and SARs to ten years;
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prohibition of payment of dividends and dividend equivalent rights on unvested awards unless and until such awards vest;
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prohibition of vesting periods less than twelve months for most future awards;
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no automatic single-trigger vesting upon a change in control, double-trigger vesting upon a change in control when awards are assumed, and no 280G change in control excise tax gross-up
payments;
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administration by the Compensation Committee, which is comprised entirely of independent directors;
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the Compensation Committees’ ability to exercise negative discretion to eliminate or reduce the size of an award if appropriate;
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no “evergreen” design, with the Amended and Restated Omnibus Plan providing a fixed number of shares available for issuance;
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robust transfer restrictions;
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annual limit on cash and equity compensation payable under the Amended and Restated Omnibus Plan;
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awards subject to the Company’s clawback policy;
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awards to Participants are subject to limits as to the number of shares or cash received; and
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our Executive and Director Stock Ownership, Retention, and Anti-Hedging and Pledging Policy, which, among other things, (i) require certain of our executive officers and non-employee
directors to build certain stock ownership over time through equity grants, expressed as multiples of annual base salary or cash retainer, as applicable, (ii) require certain executive officers and directors to retain post-tax shares from
each award on exercise, vesting or earn-out, until such individual complies with the stock ownership levels required by the Executive and Director Stock Ownership, Retention, and Anti-Hedging and Pledging Policy, and (iii) prohibit hedging
transactions in our common stock and pledging our common stock on margin or incurring any indebtedness secured by a margin or similar account in which our securities are held without the prior approval of our Board, as further provided in
our Executive and Director Stock Ownership, Retention, and Anti-Hedging and Pledging Policy.
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Historical Award Information and Equity Usage
Summarized below, as of February 28, 2020, is the total number of shares of Class A and Class B common stock outstanding pursuant to awards granted and shares of Class A common stock available for
future grant under the Amended and Restated Omnibus Plan. Also shown below is the number of shares of Class A common stock that would be available for future grant if the Amended and Restated Omnibus Plan is approved.
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Shares of Class A Common Stock Subject to Outstanding Stock Options(1)
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Shares of Class A and Class B Common Stock Subject to Outstanding RSUs and PRSUs(2)
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Shares of Class A Common Stock Available for Future Grant
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As of February 28, 2020
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354,899
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2,495,251
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965,673
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Shares of Class A Common Stock Available for Future Grant if the Amended and Restated Omnibus Plan is Approved
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5,750,000(3)
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(1)
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As of February 28, 2020, the stock options outstanding had a weighted average exercise price of $11.90 and a weighted average remaining term of 8.6 years.
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Includes 260,000 outstanding Class A PRSUs, 1,635,240 outstanding Class A RSUs, and 600,011 outstanding Class B RSUs.
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Equals the sum of (i) 4,784,327 new shares, plus (ii) 965,673 shares that remained available for grant as of February 28, 2020. The share reserve will be reduced by grants made after
February 28, 2020 and prior to stockholder approval of the Amended and Restated Omnibus Plan.
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Description of the Amended and Restated Omnibus Plan
In connection with our IPO, the Board and our pre-IPO stockholders approved the Omnibus Plan. If approved by our stockholders at the Annual Meeting, the Amended and Restated Omnibus Plan will be
effective as of May 27, 2020, its approval date. The principal provisions of the Amended and Restated Omnibus Plan are summarized below. This summary is qualified in its entirety by reference to the text of the Amended and Restated Omnibus Plan as
currently in effect. The Amended and Restated Omnibus Plan is attached as Appendix B to this Proxy Statement. You are urged to read the actual text of the Amended and Restated Omnibus Plan in its entirety.
The purposes of the Amended and Restated Omnibus Plan are to: (i) provide our employees with an opportunity to acquire Class A common stock in a manner that reinforces our performance goals and
provides an incentive to continue employment with us and work toward our long-term growth, development and financial success; (ii) attract, motivate and retain qualified executive officers and other key personnel by providing them with long-term
incentives and reward such Participants by the issuance of equity grants so that these employees and directors will contribute to and participate in our long-term performance; and (iii) align our executives’ and stockholders’ short- and long-term
interests by creating a strong and direct link between executive pay and stockholder return. In furtherance of these purposes, the Amended and Restated Omnibus Plan authorizes the grant of stock options and restricted stock, subject to applicable
law, to our employees, directors and consultants.
The Amended and Restated Omnibus Plan allows the Compensation Committee to link compensation to performance over a period of time by granting Awards (as defined in the Amended and Restated Omnibus
Plan) that have multiple-year vesting schedules. Awards with multiple-year vesting schedules, such as restricted stock grants, provide balance to the other elements of our compensation program that otherwise link compensation to our short-term
performance. Awards with multiple-year vesting schedules create an incentive for executive officers to increase stockholder value over an extended period of time because the value received from such Awards is based upon the growth of the stock
price. Furthermore, the Amended and Restated Omnibus Plan provides that most future Awards granted on or after the date on which the Amended and Restated Omnibus Plan is approved by our stockholders subject to vesting over a period of time will not
vest in periods of less than twelve months from the grant date of such Award (except for Substitute Awards (as defined in the Amended and Restated Omnibus Plan)), shares delivered in lieu of fully vested cash Awards, and certain Awards to
participants representing no more than 5% of the shares authorized for grant under the Amended and Restated Omnibus Plan). Such Awards also incentivize executives to remain with us over an extended period of time. Thus, we believe the Amended and
Restated Omnibus Plan is an effective way of aligning the interests of our executive officers with those of our stockholders.
Subject to certain equitable adjustments as provided in the Amended and Restated Omnibus Plan, the maximum number of shares of Class A common stock available for grant of Awards under the Amended
and Restated Omnibus Plan is 5,750,000 shares, less shares that were granted under the Omnibus Plan after February 28, 2020 and prior to the date on which the Amended and Restated Omnibus Plan is approved by our stockholders. The maximum number of
shares of Class A common stock available for grant of Awards under the Amended and Restated Omnibus Plan consists of (i) 4,784,327 new shares, plus (ii) 965,673 shares that remained available for grant as of February 28, 2020.
Burn Rate
Our average burn rate for 2018–2019 was approximately 1.67%, calculated based upon the number of options granted plus the number of full value shares, divided by our weighted average basic Class A
common shares outstanding.
Types of Awards
A description of the Awards that may be made pursuant to the Amended and Restated Omnibus Plan follows. Such descriptions are qualified in their entirety by reference to the text of the Amended and
Restated Omnibus Plan. All terms used but not otherwise defined herein shall have the meanings ascribed to them in the Amended and Restated Omnibus Plan.
Stock Options. Pursuant to the Amended and Restated Omnibus Plan, the Compensation Committee may grant Awards in the form of stock options to purchase
shares of Class A common stock, which stock options may be non-qualified or incentive stock options for federal income tax purposes. Stock options granted under the Amended and Restated Omnibus Plan vest and become exercisable at such times and
upon such terms and conditions as may be determined by the Compensation Committee. Any stock option granted in the form of an incentive stock option must satisfy the requirements of Section 422 of the Code. Other than in connection with Substitute
Awards, the exercise price per share of Class A common stock for any stock option cannot be less than 100% of the fair market value of a share of Class A common stock, as determined by the Compensation Committee, on the day that the stock option is
granted. For purposes of the Amended and Restated Omnibus Plan, the fair market value means the closing price of the Class A common stock on the NYSE on the day the stock option is granted (or, if no sale takes place on such date, the last reported
sale price regular way on the next preceding date on which such sale took place). In addition, the term of the stock option may not exceed ten years. The type (incentive or non-qualified), vesting, exercise price and other terms of each stock
option will be set forth in the Award Notice for such stock option.
A stock option may be exercised by paying the exercise price in cash or its equivalent and/or, to the extent permitted by the Compensation Committee and applicable law, shares of Class A common
stock, a combination of cash and shares of Class A common stock, or through the delivery of irrevocable instruments to a broker to sell the shares obtained upon the exercise of the stock option and to deliver to us an amount equal to the exercise
price. The Compensation Committee may provide that an option shall be deemed to be exercised at the close of business on the scheduled expiration date of such option if at such time the option remains exercisable and, if so exercised, would result
in a payment to the holder.
Stock Appreciation Rights. The Compensation Committee may grant Awards in the form of stock appreciation rights, either in tandem with a stock option
("Tandem SARs") or independent of a stock option ("Freestanding SARs"). The exercise price of a stock appreciation right is an amount determined by the Compensation Committee, but, except in connection with Substitute Awards, in no event is such
amount less than 100% of the fair market value of a share of Class A common stock on the date that the stock appreciation right was granted or, in the case of a Tandem SAR, the exercise price of the related stock option (subject to the requirements
of Section 409A of the Code and except in the case of Substitute Awards). A SAR shall have a term not greater than ten years.
A Tandem SAR may be granted either at the time of grant of the related stock option or at any time thereafter during the term of the related stock option. A Tandem SAR is exercisable to the extent
its related stock option is exercisable. Each Tandem SAR will entitle the holder of such stock appreciation right to surrender the related stock option and to receive an amount equal to (i) the excess of (A) the fair market value on the exercise
date of one share of Class A common stock over (B) the stock option exercise price per share of Class A common stock, times (ii) the number of shares of Class A common stock covered by the stock option that is surrendered. Upon the exercise of a
stock option as to some or all of the shares of Class A common stock covered by such stock option, the related Tandem SAR is automatically cancelled to the extent of the number of shares of Class A common stock covered by the exercise of the stock
option.
Each Freestanding SAR will entitle the holder of such stock appreciation right upon exercise to an amount equal to (i) the excess of (A) the fair market value on the exercise date of one share of
Class A common stock over (B) the exercise price, times (ii) the number of shares of Class A common stock covered by the Freestanding SAR and as to which the stock appreciation right is exercised.
The type (Tandem SAR or Freestanding SAR), exercise price, vesting and other terms of each stock appreciation right will be set forth in the Award Notice for such stock appreciation rights. The
Compensation Committee may provide that a SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR if at such time the SAR remains exercisable and, if so exercised, would result in a payment to the
holder.
Payment of stock appreciation rights may be made in shares of Class A common stock or in cash or a combination of shares of Class A common stock and cash, as determined by the Compensation
Committee.
Other Stock-Based Awards. The Compensation Committee may grant Awards in the form of Stock Awards (for either unrestricted or restricted shares of Class A
common stock), Restricted Stock Unit Awards, and other Awards that are valued in whole or in part by reference to, or are otherwise based on the fair market value of, Class A common stock. Such other stock-based Awards will be in such form, and
dependent on such conditions, as the Compensation Committee determines, including, without limitation, the right to receive, or vest with respect to, one or more shares of Class A common stock (or the equivalent cash value of such shares of Class A
common stock) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives.
Performance Units. The Compensation Committee may grant Awards in the form of performance units, which are units
valued by reference to designated criteria established by the Compensation Committee other than Class A common stock. Performance units will be in such form, and dependent on such conditions, as the Compensation Committee determines, including,
without limitation, the right to receive a designated payment upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. The form, applicable conditions and other terms of
each performance unit will be set forth in the Award Notice for such performance unit.
Performance Awards. Performance Awards may take the form of Stock Awards, Restricted Stock Unit Awards or performance units that are conditioned upon the
satisfaction of enumerated Performance Criteria during a stated Performance Period, which Awards, in addition to satisfying the requirements otherwise applicable to that type of Award generally, also satisfy the requirements of Performance Awards
under the Amended and Restated Omnibus Plan. Performance Awards may be paid in cash, shares of Class A common stock, other property, or any combination thereof, in the sole discretion of the Compensation Committee. Performance Awards may be paid in
a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Compensation Committee, on a deferred basis subject to the requirements of Section 409A of the Code.
Performance Awards may be based upon one or more of the following performance criteria: (a) revenues (including, without limitation, measures such as revenue per mile (loaded or total) or revenue
per tractor); (b) net revenues and/or return on revenues; (c) fuel surcharges; (d) accounts receivable collection or days sales outstanding; (e) safety and claims (including, without limitation, measures such as accidents per million miles, number
of significant accidents, number of worker's compensation claims, changes in safety scores and ratings); (f) working capital measures; (g) leverage measures; (h) productivity and efficiency measures (including, without limitation, measures such as
driver turnover, trailer-to-tractor ratio, tractor-to-non-driver ratio, average revenue per tractor, average percentages of loaded and empty miles, average fuel savings and fuel surcharge revenues); (i) cash position; (j) return on invested
capital; (k) market share (in aggregate or by segment); (l) economic value added models or completion of acquisitions (with or without specified size); (m) operating ratio; (n) expenses, cost reductions and savings (or limits on cost increases);
(o) debt to capitalization and/or debt to equity (in each case with or without lease adjustment); (p) earnings; (q) earnings before interest and taxes; (r) earnings before interest, taxes, depreciation and amortization; (s) earnings before
interest, taxes, depreciation, amortization and operating leases; (t) earnings before interest, taxes, depreciation, amortization and rents; (u) earnings per share (or diluted earnings per share or adjusted diluted earnings per share); (v) net
income (or adjusted net income) and/or income before taxes and/or cumulative compound net income growth rate; (w) operating income or earnings; (x) increase in total revenue; (y) net sales; (z) assets and return on assets; (aa) return on capital
employed; (ab) return on equity; (ac) return on stockholders' equity or total stockholders' return; (ad) net margin, gross margin, operating margin, or contribution margin; (ae) net profit or profit margins (including profitability of an
identifiable business unit or product); (af) operating profits; (ag) profits before tax; (ah) ratio of operating earnings to capital spending; (ai) cash flow measures (including, without limitation, free cash flow); (aj) equity or stockholders'
equity; (ak) Class A common stock price per share; (al) attainment of strategic or operational initiatives; (am) book, economic book or intrinsic book value (including book value per share); (an) appreciation in or maintenance of the price of the
Class A common stock or any other publicly traded securities of the Company, or other stockholder return measures; (ao) credit rating; (ap) borrowing levels; (aq) enterprise value; (ar) improvements in capital structure; (as) customer satisfaction
survey results; (at) implementation or completion of critical projects; or (au) any other metric as may be selected by the Compensation Committee; or (av) any combination of the foregoing, which, in each case, may be applied on an absolute basis
and/or be relative to one or more peer group companies or indices, and may include comparisons with past performance of the Company (including one or more divisions thereof, if any) and/or the current or past performance of other companies or any
combination thereof. In addition, the Compensation Committee may establish, as additional performance criteria, the attainment by a Participant of one or more personal objectives and/or goals that the Compensation Committee deems appropriate,
including, without limitation, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic plans for the Company or the exercise of specific areas of managerial
responsibility. The Compensation Committee may provide for exclusion of the impact of an event or occurrence which the Compensation Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations,
extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures, (e) reorganization or change in the
corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, division, business segment or business unit or not within the reasonable control of management, (g) foreign exchange
gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j), unbudgeted capital expenditures, (k) the issuance or repurchase of equity securities and other changes in the
number of outstanding shares, (l) conversion of some or all of convertible securities to common stock, (m) any business interruption event (n) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting
principles, or (o) the effect of changes in other laws or regulatory rules affecting reported results.
For each Performance Period, the Compensation Committee designates, in its sole discretion, within an initial period, which of the Company's employees, directors or consultants are eligible for
Performance Awards for such period, the length of the Performance Period, the types of Performance Awards to be issued, the performance criteria to be used to establish performance goals, the kind or level of performance goals and other relevant
matters.
After the close of each Performance Period, the Compensation Committee will determine whether the performance goals for the cycle have been achieved. The Compensation Committee has the discretion
to increase or decrease the payout under any such Award to the extent it determines appropriate.
The Award Notice for each Performance Award will set forth or make reference to the Performance Period, performance criteria, performance goals, performance formula, performance pool and other
terms applicable to such Performance Award.
Administration
The Compensation Committee or such other committee as may be designated by the Board of Directors, which consists of at least two individuals who are intended to qualify as “non-employee directors”
within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) and an “independent director” for purpose of the rules of the principal national securities exchange on which the common stock is then listed or admitted
to trading, will administer the Amended and Restated Omnibus Plan. The Compensation Committee may allocate all or any portion of its responsibilities and powers under the Amended and Restated Omnibus Plan to any one or more of its members, the
Company's CEO or other senior members of management as the Compensation Committee deems appropriate; however, only the Compensation Committee, or another committee consisting of two or more individuals who qualify both as "non-employee directors"
may select and grant Awards to Participants who are subject to Section 16 of the Exchange Act.
The Compensation Committee will have broad authority in its administration of the Amended and Restated Omnibus Plan, including, but not limited to, the authority to interpret the Amended and
Restated Omnibus Plan; to establish rules and regulations for the operation and administration of the Amended and Restated Omnibus Plan; to select the persons to receive Awards; to determine the type, number, terms, conditions, limitations and
restrictions of Awards (or the waiver or lapse of such restrictions), including, without limitation, terms regarding vesting, exercisability, payment and the effect of certain events, such as a change in
control of the Company or the Participant's death, disability, retirement or termination as a result of breach of agreement; to create additional forms of Awards consistent with the terms of the Amended and Restated Omnibus Plan; and to take all other action it deems necessary or advisable to administer the Amended and Restated Omnibus Plan.
Awards under the Amended and Restated Omnibus Plan may be made in the form of stock options, stock
appreciation rights, stock awards, restricted stock units, performance awards, performance units, any other form established by the Compensation Committee pursuant to the Amended and Restated Omnibus Plan, or a combination thereof. Each award will be subject to the terms, conditions, restrictions and limitations of the Amended and Restated Omnibus Plan and the applicable Award Notice.
Share Counting and Maximum Awards
Any shares of Class A common stock related to Awards under the Amended and Restated Omnibus Plan (i) that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such
shares or the payment of cash or other consideration in respect thereof or (ii) are exchanged with the Compensation Committee’s permission for Awards not involving shares of Class A common stock, will become available again under the Amended and
Restated Omnibus Plan. Further, in the event the event that withholding tax liabilities arising from an Award other than an option or stock appreciation right are satisfied by the tendering of shares of Class A common stock (either actually or by
attestation) or by the withholding of shares of Class A common stock by the Company, the shares so tendered or withheld shall be added to the shares available for Awards under the Amended and Restated Omnibus Plan; provided that any shares withheld
above the applicable minimum statutory rate shall not be added back to the available share pool of the Amended and Restated Omnibus Plan and shall not again be available for awards under the Amended and Restated Omnibus Plan. In addition, the
following shares of Class A common stock will not be added to the shares authorized for grant under the Amended and Restated Omnibus Plan: (i) shares tendered by a Participant or withheld by the Company in payment of the purchase price of an option
or to satisfy any tax withholding obligation with respect to options or SARs; (ii) shares subject to a SAR that are not issued in connection with its stock settlement on exercise thereof; and (iii) shares reacquired by the Company on the open
market or otherwise using cash proceeds from the exercise of options.
Subject to the Compensation Committee's authority to adjust Awards upon specified events described under “Proposal 5: Approval of the Amended and Restated U.S. Xpress Enterprises, Inc. 2018 Omnibus
Incentive Plan — Description of the Omnibus Plan and the Amended and Restated Omnibus Plan — Adjustments Upon Certain Events” below, the maximum number of shares of Class A common stock subject to all Awards (including incentive stock options) that
are denominated in shares and granted to any one Participant, except for a Director, under the Amended and Restated Omnibus Plan during any calendar year is 1,000,000 shares of Class A common stock. During any calendar year no Participant (other
than a Director) may be granted Awards that are denominated in cash under which more than $5,000,000 may be earned for each twelve (12) months in the vesting or Performance Period. Each of the limitations in this section shall be multiplied by two
(2) with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company. Subject to the Compensation Committee's authority to adjust Awards upon specified events described
under “Proposal 5: Approval of the Amended and Restated U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan — Description of the Omnibus Plan and the Amended and Restated Omnibus Plan — Adjustments Upon Certain Events” below, the aggregate
grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted during a single calendar year to any Director, taken together with any cash fees paid to such Director for
services for such calendar year, shall not exceed $400,000 in total value. For the avoidance of doubt, any Director compensation that is deferred shall be counted toward this limit for the year in which the compensation was first earned, and not in
the year of payment/settlement. The shares of Class A common stock available for issuance under the Amended and Restated Omnibus Plan may be authorized and unissued shares or treasury shares, including shares purchased in open market or private
transactions.
Substitute Awards, defined in the Amended and Restated Omnibus Plan as Awards granted or shares of Class A common stock issued by the Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or with which the Company merges, shall not reduce the shares authorized for grant under the Amended and Restated Omnibus
Plan or the applicable limitations on grants to a Participant under the Amended and Restated Omnibus Plan, nor shall shares subject to a Substitute Award be added to the shares available for Awards under the Plan. Additionally, in the event that a
company acquired by the Company or with which the Company merges has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the
terms of such pre-existing plan (as appropriately adjusted) may be used for Awards under the Amended and Restated Omnibus Plan and shall not reduce the shares authorized for grant under the Amended and Restated Omnibus Plan (and shares subject to
such Awards shall not be added to the shares available for Awards under the Amended and Restated Omnibus Plan); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms
of the pre-existing plan, absent the acquisition or merger, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or merger. The terms of Substitute Awards may vary from the terms set forth in the
Amended and Restated Omnibus Plan to the extent the Compensation Committee deems appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.
The Compensation Committee has the exclusive power and authority, consistent with the provisions of the Amended and Restated Omnibus Plan, to establish the terms and conditions of any Award and to
waive any such terms or conditions as described under “Proposal 5: Approval of the Amended and Restated U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan — Description of the Omnibus Plan and the Amended and Restated Omnibus Plan
—Administration” above. Because the benefits conveyed under the Amended and Restated Omnibus Plan will be at the discretion of the Compensation Committee, it is not possible to determine in advance what benefits Participants will receive under the
Amended and Restated Omnibus Plan.
Minimum Vesting Requirements
Equity-based Awards granted under the Amended and Restated Omnibus Plan shall vest no earlier than the first anniversary of the date the Award is granted (excluding, for this purpose, any (i)
Substitute Awards and (ii) shares delivered in lieu of fully vested cash Awards); provided, that, the Compensation Committee may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five
percent (5%) of the available share reserve authorized for issuance under the Amended and Restated Omnibus Plan; and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Compensation Committee’s
discretion to provide for accelerated exercisability or vesting of any Award, including in cases of retirement, death, disability or a change in control, in the terms of the Award or otherwise.
Payment Terms
Awards may be paid in cash, shares of Class A common stock, a combination of cash and shares of Class A common stock or in any other permissible form, as the Compensation Committee determines.
Payment of Awards may include such terms, conditions, restrictions and/or limitations, if any, as the Compensation Committee deems appropriate, including, in the case of Awards paid in shares of Class A common stock, restrictions on transfer of
such shares and provisions regarding the forfeiture of such shares under certain circumstances.
At the discretion of the Compensation Committee, a Participant may defer payment of any Award, salary, bonus compensation, Board of Directors compensation, dividend or dividend equivalent on
vested Awards, or any portion thereof. If permitted by the Compensation Committee, a deferral must be made in accordance with any administrative guidelines established by the Compensation Committee for such purpose. Such deferred items may be
credited with interest (at a rate determined by the Compensation Committee) or invested by the Company and, with respect to those deferred awards denominated in the form of Class A common stock, credited with dividends or dividend equivalents,
provided such Awards have vested. All deferrals must be in compliance with Section 409A of the Code.
The Company is entitled to deduct from any payment to a Participant under the Amended and Restated Omnibus Plan the amount of all applicable income and employment taxes required by law to be
withheld with respect to such payment or may require the Participant to pay to the Company such tax prior to and as a condition of the making of such payment. Subject to certain limitations, the Compensation Committee may allow a Participant to
pay the amount of taxes required by law to be withheld from an Award by withholding any shares of Class A common stock to be paid under such Award or by permitting the Participant to deliver to the Company shares of Class A common stock having a
fair market value equal to the amount of such taxes (or, to the extent permitted by the Compensation Committee, such greater amount reflecting the Participant's actual taxes on such Award). However, any shares of Class A common stock that may be
withheld above the applicable minimum statutory rate will not be added back to the share pool and will not again be available for Awards under the Amended and Restated Omnibus Plan.
Subject to the provisions of the Amended and Restated Omnibus Plan and any Award Notice, the recipient of an Award other than an option or SAR may, if so determined by the Compensation Committee,
be entitled to receive amounts equivalent to cash, stock or other property dividends on Class A common stock ("Dividend Equivalents") with respect to the number of shares covered by the Award, as determined by the Compensation Committee, in its
sole discretion. The Compensation Committee may provide that the Dividend Equivalents (if any) shall be deemed to have been reinvested in additional shares or otherwise reinvested. Notwithstanding the foregoing, dividends and Dividend Equivalents
shall not be paid out on an unvested Award unless and until such underlying Award vests.
Effect of Change in Control
All equity awards granted after our IPO include a double-trigger vesting requirement, which provides for the acceleration of vesting of the equity award following a Change in Control (as defined in
the Award Notice) only when the recipient is terminated by the Company or its successor without Cause (as defined in the Award Notice) or by such recipient for Good Reason (as defined in the Award Notice), in each case, within 365 days following a
Change in Control (as defined in the Award Notice). Subject to the approval of our stockholders, the Amended and Restated Omnibus Plan includes double-trigger vesting for Awards granted on or after the date on which the Amended and Restated Omnibus
Plan is approved by our stockholders, provided the Awards are assumed, continued, or substituted for by an acquirer or successor.
In addition, the Compensation Committee has the right to provide that in the event of a Change in Control, (i) options and SARs outstanding as of the date of the Change in Control may be cancelled
and terminated without payment if the fair market value of one share of Class A common stock as of the date of the Change in Control is less than the per share option exercise price or SAR grant price, and (ii) all Performance Awards may be (x)
considered to be earned and payable based on achievement of performance goals or based on target performance (either in full or pro rata based on the portion of the Performance Period completed as of the date of the Change in Control), and any
limitations or other restrictions may lapse and such Performance Awards may be immediately settled or distributed or (y) converted into restricted stock or RSU Awards based on achievement of performance goals or based on target performance (either
in full or pro rata based on the portion of the Performance Period completed as of the date of the Change in Control).
Transfer Restrictions
Except as otherwise provided in an Award Notice or elsewhere in the Amended and Restated Omnibus Plan, no Awards or any other payment under the Amended and Restated Omnibus Plan will be subject in
any manner to alienation, anticipation, sale, transfer (except by will or the laws of descent and distribution), assignment or pledge, nor will any Award be payable to or exercisable by anyone other than the Participant to whom it was granted. To
the extent and under such terms and conditions as determined by the Compensation Committee, a Participant may assign or transfer an Award without consideration to a Permitted Assignee, which is defined as (i) the Participant's spouse, children or
grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) a partnership, limited
liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or stockholders or (iv) for charitable donations; provided that such Permitted Assignee will be bound by and subject
to all of the terms and conditions of the Amended and Restated Omnibus Plan and the Award Notice relating to the transferred Award and will execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such
Participant will remain bound by the terms and conditions of the Amended and Restated Omnibus Plan.
Adjustments Upon Certain Events; Prohibition on Repricing
In the event that there is a stock dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or transaction or exchange of Class A common stock or other
corporate exchange, or any distribution to stockholders of Class A common stock or other property or securities or any extraordinary cash dividends (other than regular cash dividends) or any transaction similar to the foregoing or other transaction
that results in a change to the Company's capital structure, the Amended and Restated Omnibus Plan provides that the Compensation Committee will make substitutions and/or adjustments to the maximum number of shares available for issuance under the
Amended and Restated Omnibus Plan, the maximum Award payable, the number of shares to be issued pursuant outstanding Awards, the option prices, exercise prices or purchase prices of outstanding Awards and/or any other affected terms of an Award or
the Amended and Restated Omnibus Plan as the Compensation Committee, in its sole discretion, deems equitable or appropriate. Except for such adjustments, repricing of any stock options and/or stock appreciation rights by the Compensation Committee
is prohibited unless such action is approved by our stockholders. “Reprice,” as used in the Amended and Restated Omnibus Plan, means the reduction, directly or indirectly, in the per-share exercise price of an outstanding stock option(s) and/or
stock appreciation right(s) issued under the Amended and Restated Omnibus Plan by amendment, cancellation or substitution (for cash or another Award, except in connection with a Change in Control of the Company, as such term is defined in the
Amended and Restated Omnibus Plan), or any other action with respect to an option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the Class A common stock is then
listed or admitted to trading.
Termination and Amendment
The Compensation Committee may suspend or terminate the Amended and Restated Omnibus Plan at any time for any reason with or without prior notice. In addition, the Compensation Committee may, from
time to time for any reason and with or without prior notice, amend the Amended and Restated Omnibus Plan in any manner, but may not, without stockholder approval, adopt any amendment which would require the vote of the stockholders of the Company
if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws or regulations, including, but not limited to, the listing requirements of the stock exchanges or quotation systems on which the securities
of the Company are listed. No Awards may be made pursuant to the Amended and Restated Omnibus Plan after June 8, 2028. No amendment may materially and adversely affect any of the rights of such Participant under any Award theretofore granted to
such Participant under the Amended and Restated Omnibus Plan.
Securities Act Registration
The shares of Class A common stock issuable under the Amended and Restated Omnibus Plan will be registered on Form S-8 as soon as practicable, subject to our stockholders' approval of the Amended
and Restated Omnibus Plan.
Clawback/Forfeiture
Awards to certain officers will be subject to clawback or forfeiture to the extent required by applicable law (including, without limitation, Section 304 of the Sarbanes-Oxley Act and Section 954
of the Dodd-Frank Wall Street Reform and Consumer Protection Act) and/or the rules and regulations of the NYSE or other applicable securities exchange,.
Awards are also subject to the Company’s clawback policy. In the event of a restatement of the Company’s consolidated audited financial statements due to a material error, we will, to the extent
practicable and not prohibited by the applicable law, seek to recover from the executive the amount by which the executive’s performance-based incentive compensation, including cash- and equity-based incentive compensation, for the relevant period
exceeded the lower payment that would have been made based on the restated financial results. The policy has a three-year look-back period.
Eligibility
Participants in the Amended and Restated Omnibus Plan will be selected by the Compensation Committee from the executive officers, directors, employees and consultants of the Company and its
Subsidiaries. The selection of those persons within a particular class who will receive Awards is entirely within the discretion of the Compensation Committee. Only employees, however, are eligible to receive “incentive stock options” within the
meaning of Section 422 of the Code.
The Compensation Committee has not determined how many persons are likely to participate in the Amended and Restated Omnibus Plan over time. The Compensation Committee intends, however, to grant
most Awards to those persons who are in a position to have a significant direct impact on our growth, profitability and success, which would include a portion of the Participants in the Amended and Restated Omnibus Plan. As of March 30, 2020,
approximately 76 employees, which includes 12 executive officers, and four non-employee directors were eligible to participate in the Amended and Restated Omnibus Plan. The number of active engagements with consultants varies from time to time, and
the Compensation Committee has not historically made grants to these individuals under the Omnibus Plan.
Federal Income Tax Status of Amended and Restated Omnibus Plan Awards
The following is only a summary of the effect of federal income taxation upon us and the Participants under the Amended and Restated Omnibus Plan. It does not purport to be
complete and does not discuss all of the tax consequences of a Participant's death or the provisions of the income tax laws of any state, municipality or foreign country in which the Participants may reside.
Incentive Stock Options. A Participant is not treated as receiving taxable income upon either the grant of an incentive stock option (an “ISO”) or upon the
exercise of an ISO. However, the difference between the exercise price and the fair market value on the date of exercise is an item of tax preference at the time of exercise in determining liability for the alternative minimum tax, assuming that
the shares of Class A common stock is either transferable or is not subject to a substantial risk of forfeiture under Section 83 of the Code. If at the time of exercise, the Class A common stock is both nontransferable and is subject to a
substantial risk of forfeiture, the difference between the exercise price and the fair market value of the Class A common stock (determined at the time the Class A common stock becomes either transferable or not subject to a substantial risk of
forfeiture) will be a tax preference item in the year in which the common stock becomes either transferable or not subject to a substantial risk of forfeiture.
If shares of Class A common stock acquired by the exercise of an ISO is not sold or otherwise disposed of within two years from the date of its grant and is held for at least one year after the
date such Class A common stock is transferred to the Participant upon exercise, any gain or loss resulting from its disposition is treated as long-term capital gain or loss. If such Class A common stock is disposed of before the expiration of the
above-mentioned holding periods, a “disqualifying disposition” occurs. If a disqualifying disposition occurs, the Participant realizes ordinary income in the year of the disposition in an amount equal to the difference between the fair market value
of the Class A common stock on the date of exercise and the exercise price, or the selling price of the Class A common stock and the exercise price, whichever is less. The balance of the Participant’s gain on a disqualifying disposition, if any, is
taxed as capital gain.
We are not entitled to any tax deduction as a result of the grant or exercise of an ISO, or on a later disposition of the Class A common stock received, except that in the event of a disqualifying
disposition, we are entitled to a deduction equal to the amount of ordinary income realized by the Participant.
Non-Qualified Stock Options. A Participant does not recognize any taxable income upon the grant of a non-qualified stock option (a “NSO”), and we are not
entitled to a tax deduction by reason of such grant. Upon exercise of a NSO, the Participant recognizes ordinary income generally measured by the excess of the then fair market value of the shares of Class A common stock over the exercise price,
and we are entitled to a corresponding tax deduction. Upon a disposition of shares of Class A common stock acquired upon exercise of a NSO by the Participant, any difference between the sale price and the exercise price, to the extent not
recognized as ordinary income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period. Such subsequent disposition by the Participant of the shares of Class A common stock has no tax
consequence to us.
Stock Appreciation Rights. No income is realized by a Participant at the time a stock appreciation right is awarded, and no deduction is available to us at
such time. A Participant realizes ordinary income upon the exercise of the stock appreciation right in an amount equal to the fair market value of the shares of Class A common stock received by the Participant from such exercise.
Unrestricted Stock-Based Award. Upon the grant of an unrestricted stock-based Award, a Participant will realize taxable income equal to the fair market
value at such time of the shares of Class A common stock received by the Participant under such Award (less the purchase price therefor, if any).
Restricted Stock-Based Award. Upon the grant of a restricted stock-based Award, no income will be realized by a Participant (unless a Participant timely
makes an election to accelerate the recognition of the income to the date of the grant), and we will not be allowed a deduction at that time. When the Award vests and is no longer subject to a substantial risk of forfeiture for income tax
purposes, the Participant will realize taxable ordinary income in an amount equal to the fair market value at such time of the shares of Class A common stock received by the Participant under such Award (less the purchase price therefor, if any),
and we will be entitled to a corresponding deduction at such time, subject to limitations under Sections 280G and 162(m) of the Code (to the extent such limitations remain relevant under any applicable “grandfathering” rules relating thereto). If
a Participant does make a timely election to accelerate the recognition of income, then the Participant will recognize taxable ordinary income in an amount equal to the cash and the fair market value at the time of grant of the shares of Class A
common stock to be received by the Participant under such Award (less the purchase price therefor, if any), and we will be entitled to a corresponding deduction at such time, subject to limitations under Sections 280G and 162(m) of the Code (to the
extent such limitations remain relevant under any applicable “grandfathering” rules relating thereto). Participants will only be eligible to make such an election on restricted stock-based Awards that constitute an Award of “property” within the
meaning of Section 83 of the Code (e.g., shares of restricted stock) as of the grant date.
Performance Units and Performance Awards. A Participant receiving a performance unit or a Performance Award will not recognize income, and we will not be
allowed a deduction, at the time such Award is granted. When a Participant receives payment of a performance unit or Performance Award, the amount of the fair market value of any shares of Class A common stock received will be ordinary income to
the Participant.
Effect of Deferral on Taxation of Awards. If the Compensation Committee permits a Participant to defer the receipt of payment of an Award and such
Participant makes an effective election to defer the payment of the Award in accordance with the administrative guidelines established by the Compensation Committee, the Participant will not realize taxable income until the date the Participant
becomes entitled to receive such payment pursuant to the terms of the deferral election, and we will not be entitled to a deduction until such time, subject to limitations under Sections 280G and 162(m) of the Code (to the extent such limitations
remain relevant under any applicable “grandfathering” rules relating thereto), assuming the deferral arrangement complies with Section 409A of the Code. Any interest or dividends paid on, or capital gains resulting from, the investment by us of the
amount deferred during the deferral period will be taxable to us in the year recognized. At the time the Participant becomes entitled to receive the deferred payment, the Participant will recognize taxable income in an amount equal to the actual
payment to be received, including any interest or earnings credited on the amount deferred during the deferral period. Section 409A of the Code generally establishes rules that must be followed with respect to covered deferred compensation
arrangements in order to avoid the imposition of an additional 20% penalty tax (plus interest) on the employee or other service provider who is entitled to receive the deferred compensation.
Limitation on Income Tax Deduction
U.S. federal income tax law generally prohibits publicly held companies from deducting compensation paid to certain executive officers that exceeds $1 million during the tax year. Historically
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"), provided an exemption from the deductibility limit for certain compensation that was "performance-based" and meet various requirements as set forth under Section
162(m). The 2017 Tax Cuts and Jobs Act repealed this exemption, and now compensation paid to such executive officers in excess of $1 million in 2018 and later is no longer deductible, even if performance-based, unless it meets certain limited
transition relief. While guidance has been issued on the scope of this transition relief, its application is based on interpretation and no assurance can be given as to whether Awards that are intended to qualify for the Section 162(m) exemption
(as such exemption existed prior to January 1, 2018) will be deductible under the applicable transition relief guidance. We retain the ability to pay compensation that exceeds deductibility limits and believe that having flexibility to recruit,
retain and motivate our employees with a compensation program that promotes long-term value creation, even though some compensation awards may not be tax-deductible, is in the best interests of our stockholders.
No person connected with the Amended and Restated Omnibus Plan in any capacity, including, but not limited to, the Company and its directors, officers, agents, and employees, makes any
representation, commitment or guarantee that any tax treatment, including, but not limited to, federal, state, and local income, estate and gift tax treatment, will be applicable with respect to the tax treatment of any Award, any amounts deferred
under the Amended and Restated Omnibus Plan, or paid to or for the benefit of a Participant under the Amended and Restated Omnibus Plan, or that such tax treatment will apply to or be available to a Participant on account of participation in the
Amended and Restated Omnibus Plan.
Omnibus Plan Benefits
The following table sets forth certain information regarding grants of equity awards made under the Omnibus Plan during 2019 to (i) each of the Named Executive Officers; (ii) all current executive
officers of the Company as a group; (iii) all current directors who are not executive officers as a group; and (iv) all employees, including all current officers who are not executive officers, as a group. Future Awards, if any, that will be made
to eligible Participants under the Amended and Restated Omnibus Plan are subject to the discretion of the Compensation Committee. Accordingly, future grants of Awards under the Amended and Restated Omnibus Plan are not determinable.
|
|
|
2019(1)
|
|
|
Name and Principal Position
|
|
Dollar Value
($)(2)
|
|
|
Number of
Equity Awards
|
|
|
Eric Fuller
|
|
|
990,004
|
|
|
|
164,905
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Eric Peterson
|
|
|
325,994
|
|
|
|
54,301
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
Max Fuller
|
|
|
299,998
|
|
|
|
49,971
|
|
|
Executive Chairman
|
|
|
|
|
|
|
|
|
|
Robert Pischke
|
|
|
224,998
|
|
|
|
23,936
|
|
|
Chief Information Officer
|
|
|
|
|
|
|
|
|
|
Cameron Ramsdell
|
|
|
1,117,833
|
|
|
|
200,959
|
|
|
President, U.S. Xpress Ventures
|
|
|
|
|
|
|
|
|
|
Executive Group
|
|
|
4,741,995
|
|
|
|
736,252
|
|
|
Non-Executive Director Group
|
|
|
334,566
|
|
|
|
59,907
|
|
|
Employee Group
|
|
|
2,767,330
|
|
|
|
350,911
|
|
|
(1)
|
Represents the 2019 grants that were granted at various dates during the year.
|
|
(2)
|
This column represents the grant date fair value of the stock awards under FASB ASC Topic 718 granted to the recipients during 2019. The fair value of the equity awards is accounted for in
accordance with FASB ASC Topic 718.
|
Equity Compensation Plan Information
The following table provides certain information, as of December 31, 2019, with respect to our compensation plans and other arrangements under which shares of our Class A common stock are
authorized for issuance. The number of shares of Class A common stock reflected in column (c) of the following table is comprised entirely of shares available for future grant under the Omnibus Plan as of December 31, 2019.
|
Plan category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities
remaining eligible for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,548,379(1)
|
|
|
|
11.93(2)
|
|
|
|
3,988,937(3)
|
|
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
|
1,548,379
|
|
|
|
11.93
|
|
|
|
3,988,937
|
|
|
(1)
|
Represents 242,877 shares of Class A common stock underlying unvested Class A RSUs granted under our Restricted Membership Units Plan (the “RMUP”) prior to our IPO and 712,264 shares of
Class A common stock underlying unvested Class A RSUs, 195,824 shares of Class A common stock underlying unvested Class A restricted stock awards and 397,414 shares of Class A common stock underlying unexercised Class A options granted
under the Omnibus Plan.
|
|
(2)
|
The weighted-average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs and restricted stock awards, since they have no exercise price.
|
|
(3)
|
Includes 1,768,877 Class A shares available for issuance under the Omnibus Plan and 2,220,060 Class A shares available for issuance under our Employee Stock Purchase Plan of which 98,179
were subsequently issued on January 2, 2020.
|
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDED AND RESTATED OMNIBUS PLAN.
PROPOSAL 6 – APPROVAL OF AMENDMENT TO THE COMPANY’S SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION ALLOWING SHARES OF CLASS B COMMON
STOCK, REGARDLESS OF HOW THE SHARES ARE HELD, TO BE PLEDGED WITHOUT CONVERSION TO SHARES OF CLASS A COMMON STOCK
Our Board of Directors has approved and recommends to stockholders that they approve a proposal to amend our Second Amended and Restated Articles of Incorporation to allow shares of Class B common
stock, regardless of how the shares are held, to be pledged without converting to shares of Class A common stock. Currently, our existing individual holders of Class B common stock can pledge Class B common stock they hold without conversion to
Class A common stock. This amendment extends the ability to pledge to all holders of Class B common stock, regardless of whether the shares are held individually or through Permitted Entities (including Permitted Trusts).
Class A common stock and Class B common stock are substantially identical in all respects, except that Class B common stock has five votes per share while Class A common stock has one vote per
share. The proposed amendment would allow holders of Class B shares to pledge those shares without the shares automatically converting to Class A shares and consequently, reducing their voting power, regardless of how the shares are held. The
Board believes that forcing the conversion of Class B common stock (thereby eliminating the super voting rights of these shares) upon pledges by holders, regardless of how the shares are held, serves no benefit to the Company and hinders the
ability of holders of Class B common stock to freely conduct planning activities with their shares.
The proposed amendment would modify Section 3.2(f)(i)(5)(C) of the Second Amended and Restated Articles of Incorporation such that “the pledge of shares of Class B common stock that creates a mere
security interest in such shares pursuant to a bona fide loan or indebtedness transaction, so long as the stockholder that pledges such shares does not transfer or assign Voting Control over such pledged shares to the pledgee thereof,” would not be
deemed a transfer. As stated above, such an amendment would prevent applicable pledges of shares by Class B stockholders from being considered transfers and automatically converting to Class A common stock, thereby preserving the voting rights of
the class. As of March 30, 2020, 1,208,518 shares of Class B Common Stock were held by individuals and are currently eligible for pledging without being converted to Class A Common Stock, and 14,598,577 additional shares of Class B Common Stock
were held by Permitted Entities and would become eligible for pledging without being converted into Class A Common Stock if the amendment is approved.
This proposal will require an amendment to the Company’s Second Amended and Restated Articles of Incorporation. Under the Second Amended and Restated Articles of Incorporation and Nevada law, such
an amendment requires: (i) the affirmative vote of a majority of the voting power of the shares of Class A and Class B common stock cast by stockholders entitled to vote and represented in person or by proxy at the Annual Meeting, voting together
as a single class; and (ii) the affirmative vote of a majority of the voting power of the Class B common stock issued and outstanding, voting as a separate class. In the absence of contrary instructions, each proxy will be voted “for” the approval
of the amendment. If approved by stockholders, the amendment will become effective on the date it is filed with the Nevada Secretary of State, and we anticipate that the appropriate filing to effect the amendment will be made as soon after the
Annual Meeting as practicable. A copy of the proposed amendment of the Company’s Second Amended and Restated Articles of Incorporation is attached as Appendix C to this proxy statement.
THE BOARD RECOMMENDS A VOTE “FOR” THIS PROPOSAL TO AMEND THE COMPANY’S SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION ALLOWING CLASS B SHARES TO BE PLEDGED WITHOUT
AUTOMATICALLY CONVERTING TO CLASS A SHARES.
This Notice of Meeting and Proxy Statement are furnished in connection with the solicitation of proxies from the stockholders of U.S. Xpress Enterprises, Inc., a Nevada corporation, to be voted at
the Annual Meeting, which will be held at our principal executive office, 4080 Jenkins Road, Chattanooga, Tennessee 37421, at 11:30 a.m. Eastern Daylight Time, on Wednesday, May 27, 2020, and any adjournment thereof.
The safety of our employees, customers, communities, and stockholders is our first priority. We are closely monitoring statements issued by the World Health Organization and the Centers for Disease
Control and Prevention regarding the novel coronavirus disease, COVID-19. As part of our precautions, we reserve the right to reconsider the date, time, and/or means of convening the Annual Meeting, including solely by means of remote
communications. If we change the date, time, and/or means of convening the Annual Meeting, we will announce our decision in advance, and details on how to participate will be posted on our website at www.usxpress.com and filed with the SEC as
additional proxy material. We encourage attendees to review guidance from public health authorities on this issue, and to check our website prior to the Annual Meeting if you plan to attend.
A Notice of Internet Availability of Proxy Materials (the “Internet Notice”) were first sent on April 17, 2020, to stockholders of record of our Class A common stock and Class B common stock at the
close of business on March 30, 2020 (the “Record Date”). The Internet Notice will instruct you as to how you may access and review the proxy materials, as well as how you request a printed copy of the Proxy Statement. This Proxy Statement, the
proxy card, and our Annual Report to Stockholders for the fiscal year ended December 31, 2019 (our “2019 Annual Report”), which collectively comprise our “proxy materials,” are first being made available to stockholders on April 17, 2020. Our proxy
materials are also available free of charge at http://www.astproxyportal.com/ast/22219/.
Voting Requirements and Board Recommendations
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Proposal Number
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Description
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Board Recommendation
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Vote Required for Approval
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Effect of Abstentions(2)
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Effect of Broker Non-Vote(3)
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1
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Election of directors
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FOR
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Plurality of votes cast(1)
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No effect
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No effect
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2
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Advisory and non-binding vote to approve Named
Executive Officer compensation
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FOR
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Majority of the voting power of the shares of Class A and Class B common stock represented at
the meeting and entitled to vote, voting together as a single class
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Same effect as a vote “Against”
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No effect
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3
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Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for 2020
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FOR
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Majority of the voting power of the shares of Class A and Class B common stock represented at the meeting and entitled to vote, voting together as a single class
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Same effect as a vote “Against”
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Discretionary vote of broker
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4
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Approval of the amendment of the Company’s Second Amended and Restated Bylaws to implement proxy access
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FOR
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Two-thirds of the voting power of the shares of Class A and Class B common stock issued and outstanding, voting together as a single class
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Same effect as a vote “Against”
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Same effect as a vote “Against”
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5
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Approval of the Amended and Restated Omnibus Plan
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FOR
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Majority of the voting power of the shares of Class A and Class B common stock represented at the meeting and entitled to vote, voting together as a single class
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Same effect as a vote “Against”
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No effect
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6
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Approval of the amendment of the Company’s Second Amended and Restated Articles of Incorporation to allow shares of Class B common stock, regardless of how the shares are held, to be pledged without conversion
to shares of Class A common stock
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FOR
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Majority of the voting power of the shares of Class A and Class B common stock issued and outstanding, voting together as a single class
AND
Majority of the voting power of the Class B common stock issued and outstanding, voting as a separate class
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Same effect as a vote “Against”
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Same effect as a vote “Against”
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(1)
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The seven director nominees receiving the highest number of votes for their election will be elected. Any incumbent director who receives a greater number of votes “withheld” from or
voted “against” his election than are voted “for” such election (excluding abstentions and broker non-votes) shall be subject to the majority vote policy described under “Corporate Governance – The Board of Directors and Its Committees –
Board of Directors – Majority Vote Policy.”
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(2)
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“Abstentions” (or “withhold votes” in the case of the election of directors) are shares that are entitled to vote but that are not voted at the direction of the holder.
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(3)
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“Broker non-votes” are shares that are not voted by a broker or other record holder due to the absence of instructions from the beneficial owner.
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In order to transact business at the Annual Meeting, a quorum must be present. A quorum is present if the holders of a majority of the voting power of the issued and outstanding shares of stock
entitled to vote are represented at the Annual Meeting in person or by proxy. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
When a proxy is executed and returned (and not revoked) prior to the Annual Meeting, the proxy will be voted according to the instructions the stockholder made when granting the proxy. Unless
otherwise specified or if no choice is indicated on a proxy, all proxies received pursuant to this solicitation will be voted in accordance with the recommendations by our Board.
If you do not provide voting instructions on Proposals 1, 2, 3, 4, 5, or 6 or for any other matters properly presented at the Annual Meeting, your proxy also gives such persons the discretionary
authority to vote your shares represented thereby as recommended above by the Board and in accordance with any such person's best judgment. In the event any director nominee becomes unwilling or unable to serve as a director prior to the vote on
Proposal 1 at the Annual Meeting, the shares represented by your proxy will be voted for any substitute nominee designated by the Board, unless you expressly withhold authority to vote your shares for the unavailable nominee or substitute nominee.
None of the proposals discussed in this Proxy Statement that are intended to be acted upon at the Annual Meeting are related to or conditioned upon the approval of any other matters.
Record Date and Voting Rights
The Record Date for the Annual Meeting is March 30, 2020. Only stockholders of record at the close of business on the Record Date are entitled to vote at the Annual Meeting, either in person or by
valid proxy. Holders of Class A common stock are entitled to one vote for each share held. Holders of Class B common stock are entitled to five votes for each share held. If any person other than Messrs. Max Fuller and Eric Fuller and Ms. Lisa
Quinn Pate (collectively, the “Qualifying Stockholders”) (or certain trusts for the benefit of any of them or their family members or certain entities owned by any of them or their family members) obtains beneficial ownership of shares of Class B
common stock, then such shares of Class B common stock will immediately and automatically convert into shares of Class A common stock on a one-for-one basis. Additionally, each share of Class B common stock immediately and automatically converts
into an equal number of shares of Class A common stock on the last day of the first calendar quarter during which the outstanding shares of Class B common stock shall constitute less than ten percent of all of our outstanding common stock. After
the conversion of shares of Class B common stock into shares of Class A common stock under the occurrence of either event described above, the holders of such converted shares will be entitled to one vote per share. The Class A common stock and
Class B common stock vote together as a single class, except as otherwise required by applicable law and except that a separate vote of the holders of Class B common stock is required for: any amendment of our Articles of Incorporation or Bylaws
that modifies the voting, conversion, or other powers, preferences, other special rights or privileges, or restrictions of the Class B common stock; or any reclassification of outstanding shares of Class A common stock into shares having rights as
to dividends or liquidation that are senior to the Class B common stock or the right to more than one vote for each share thereof. We have no other class of stock outstanding. Holders of Class A common stock and Class B common stock are not
entitled to cumulative voting in the election of directors. On the Record Date, the closing market price of our Class A common stock as reported on The New York Stock Exchange was $3.40 per share.
On the Record Date, there were issued and outstanding (i) 34,325,367 shares of Class A common stock (including 765,211 shares of restricted Class A common stock subject to certain time vesting
provisions, which carry voting rights), entitled to cast an aggregate 34,325,367 votes on all matters subject to a vote at the Annual Meeting and (ii) 15,807,095 shares of Class B common stock, entitled to cast an aggregate 79,035,475 votes on all
matters subject to a vote at the Annual Meeting. The total number of shares of our Class A common stock and Class B common stock issued and outstanding on the Record Date was approximately 50,132,462 and the holders of such shares are entitled to
cast an aggregate of 113,360,842 votes on all matters subject to a vote at the Annual Meeting. The Inspector of Elections will tabulate votes cast at the Annual Meeting, and the results of all items voted upon will be announced at the Annual
Meeting. We will also disclose the final voting results in a Current Report on Form 8-K filed with the SEC in accordance with SEC rules.
Your type of stock ownership determines the method by which you may vote your shares. If your shares are registered directly in your name in the stock register and stock transfer books of the
Company or with our transfer agent (American Stock Transfer & Trust Company, LLC), you are a "registered holder" and considered the stockholder of record with respect to those shares. If you hold your shares through a broker, rather than
holding shares registered directly in your name, you are considered a "beneficial owner" of shares held in street name. Beneficial owners have the right to instruct their broker how to vote the shares held in their account.
If you are a registered holder of record of our Class A common stock, you may vote your shares either:
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•
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over the telephone by calling a toll-free number;
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•
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by using the Internet and visiting the designated website;
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•
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by mailing your proxy card; or
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•
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in person at the Annual Meeting by notifying and obtaining a ballot from the Inspector of Elections prior to the occurrence of any votes.
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Registered holders of our Class B stock may vote either:
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•
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by mailing your proxy card; or
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•
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in person at the Annual Meeting by notifying and obtaining a ballot from the Inspector of Elections prior to the occurrence of any votes.
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For 2020, we have arranged for telephone and Internet-voting procedures to be used. These procedures have been designed to authenticate your identity, to allow you to give instructions, and to
confirm that those instructions have been recorded properly. If you choose to vote by telephone or by using the Internet by accessing the designated website, please refer to the specific instructions on the proxy card. The deadline for voting by
telephone or the Internet is 11:59 p.m. Eastern Daylight Time on Tuesday, May 26, 2020. If you wish to vote using the proxy card, please complete, sign, and date your proxy card and return it to us before the Annual Meeting.
Beneficial owners who hold their shares in street name will need to obtain a voting instruction form from the broker or institution that holds their stock and must follow the voting instructions
given by that broker or institution. If you do not provide voting instructions to your broker, whether your shares can be voted on your behalf depends on the type of item being considered for vote. Under NYSE rules, brokers are permitted to
exercise discretionary voting authority only on “routine” matters. Therefore, your broker may vote on Proposal 3 (“Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for 2020”) even if you do
not provide voting instructions, because it is considered a routine matter. Your broker is not permitted to vote on the other Proposals if you do not provide voting instructions because those items involve matters that are considered non-routine. A
beneficial owner of shares may not vote in person at the Annual Meeting unless they obtain from their broker or institution a legal proxy that gives them the right to vote the shares.
Returning a proxy card now will not interfere with your right to attend the Annual Meeting or to vote your shares personally at the Annual Meeting, if you wish to do so. Stockholders who execute
and return proxies may revoke them at any time before they are exercised during the call to vote by either:
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•
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giving written notice of their revocation to our Executive Vice President, Chief Legal Officer, and Secretary at our principal executive office address;
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•
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executing a subsequent proxy and delivering it to our Executive Vice President, Chief Legal Officer, and Secretary;
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•
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re-voting by telephone or Internet; or
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•
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attending the Annual Meeting and voting in person.
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Attendance at the Annual Meeting, in and of itself, will not constitute a revocation of a proxy.
We will bear the cost of solicitation of proxies, which we expect to be nominal, and we will include reimbursements for the charges and expenses of brokerage firms and others for forwarding
solicitation materials to beneficial owners of our outstanding common stock. Proxies will be solicited by mail, and may be solicited personally by directors, officers, and our regular employees, who will not receive any additional compensation for
any such services.
As of the mailing date of this Proxy Statement, the Board does not intend to present at the Annual Meeting any matters other than those described herein and does not presently know of any matters
that will be presented by other parties. As to other business (if any) that may properly be brought before the Annual Meeting, we intend that proxies solicited by the Board will be voted in accordance with the best judgment of those voting the
proxies.
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U.S. Xpress Enterprises, Inc.
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/s/ Max Fuller
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Max Fuller
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Executive Chairman of the Board
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April 17, 2020
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Article II, Section 15:
(d) Nothing contained in this Section 15 of this Article II shall be deemed to affect any rights of stockholders to request inclusion of nominees for director in the
Corporation’s proxy statement pursuant to Section 17 of this Article II.
Article II, Section 17:
17. Stockholder Nominations Included in the Corporation’s Proxy Materials.
(a) Definitions. For purposes of this Section 17 of this Article II, the following terms shall have the meanings set forth below, except as otherwise provided herein.
“Eligible Holder” is a person who has either (i) been a record holder of the shares of Class A Common Stock used to satisfy the eligibility requirements of Section 17(d) of this Article II
continuously for the three (3)-year period as described in Section 17(d) of this Article II, or (ii) provides to the Secretary of the Corporation, within the time period specified in Section 17(e) of this Article II, evidence of continuous
ownership of such shares for such three (3)-year period from one or more securities intermediaries in a form that the Board of Directors, or its designee, acting in good faith, determines would be acceptable for purposes of a stockholder proposal
under Rule 14a-8(b)(2) under the Exchange Act (or any successor rule).
“Maximum Number” with respect to any annual meeting of the stockholders, means that number of nominees for election to the Board of Directors that constitutes no more than 20% of the total number
of directors of the Corporation as of the last day on which a Qualified Nomination Notice may be submitted pursuant to Section 17(e) of this Article II (rounded down to the nearest whole number), but not less than two (2). The Maximum Number shall
be subject to the adjustments described in Section 17(c) of this Article II.
“Minimum Number” means 3% of the Corporation’s issued and outstanding shares of Class A Common Stock as of the most recent date for which such amount is given in any filing made by the Corporation
with the Securities and Exchange Commission (the “SEC”) prior to the submission of the Qualified Nomination Notice.
“Qualified Nomination Notice” means a notice given by a Nominating Stockholder that complies with the requirements of Section 17(e) of this Article II and names a Nominee.
“Nominating Stockholder” means an Eligible Holder or group of up to 20 Eligible Holders who nominate a nominee for election to the Board of Directors.
“Nominee” means any person nominated for election to the Board of Directors by a Nominating Stockholder that, individually and collectively, in the case of a group, satisfy all applicable
procedures set forth in Section 17(d) and 17(e) of this Article II.
(b) Inclusion of Nominee in Proxy Statement. Subject to the provisions of this Section 17 of this Article II, if expressly requested in a Qualified Nomination Notice delivered by a
Nominating Stockholder, the Corporation shall include in its proxy statement for any annual meeting of the stockholders:
(i) the name of the Nominee, which shall also be included on the Corporation’s form of proxy and ballot;
(ii) disclosures about the Nominee and Nominating Stockholder required under the rules of the SEC or other applicable law to be included in the proxy statement;
(iii) any statement included by the Nominating Stockholder in the Qualified Nomination Notice for inclusion in the proxy statement in support of the Nominee’s election to the Board of
Directors (subject, without limitation, to Section 17(e)(ii) of this Article II), if such statement does not exceed 500 words; and
(iv) any other information that the Corporation or the Board of Directors determines, in its discretion to include in the proxy statement relating to the nomination of the Nominee,
including, without limitation, any statement in opposition to the nomination and any of the information provided pursuant to this Section 17 of this Article II.
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(c)
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Maximum Number of Nominees.
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(i) The Corporation shall not be required to include in the proxy statement for an annual meeting of the stockholders more Nominees than the Maximum Number for such annual meeting. The
Maximum Number for a particular annual meeting of the stockholders shall be reduced by: (1) Nominees who are subsequently withdrawn or that the Board of Directors itself decides to nominate for election at such annual meeting, and (2) the number of
incumbent directors who were Nominees with respect to any of the preceding two annual meetings of the stockholders and whose reelection at the upcoming annual meeting of the stockholders is being recommended by the Board of Directors. If one or
more vacancies for any reason occurs on the Board of Directors after the deadline set forth in Section 17(e) of this Article II, but before the date of the annual meeting of the stockholders, and the Board of Directors resolves to reduce the size
of the Board in connection therewith, the Maximum Number shall be calculated based on the number of directors in office as so reduced.
(ii) If the number of Nominees pursuant to this Section 17 of this Article II for any annual meeting of the stockholders exceeds the Maximum Number then, promptly upon notice from the
Corporation, each Nominating Stockholder will select one Nominee for inclusion in the proxy statement until the Maximum Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Nominating
Stockholder’s Qualified Nomination Notice, with the process repeated if the Maximum Number is not reached after each Nominating Stockholder has selected one Nominee. If, after the deadline for submitting a Qualified Nomination Notice as set forth
in Section 17(e) of this Article II, a Nominating Stockholder becomes ineligible or withdraws its nomination, or a Nominee becomes unwilling to serve on the Board of Directors, whether before or after the mailing of the definitive proxy statement,
then the nomination shall be disregarded, and the Corporation (1) shall not be required to include in its proxy statement or on any ballot or form of proxy the disregarded Nominee or any successor or replacement Nominee proposed by the Nominating
Stockholder or by any other Nominating Stockholder, and (2) may otherwise communicate to its stockholders, including, without limitation, by amending or supplementing its proxy statement or ballot or form of proxy, that the Nominee will not be
included as a Nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the annual meeting of the stockholders.
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(d)
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Eligibility of Nominating Stockholder.
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(i) An Eligible Holder or group of up to twenty (20) Eligible Holders may submit a nomination in accordance with this Section 17 of this Article II only if the person or group (in the
aggregate) has continuously owned at least the Minimum Number of shares of the Class A Common Stock (as adjusted for any stock splits, stock dividends, or similar events) throughout the three (3)-year period preceding, including the date of
submission of, the Qualified Nomination Notice, and continues to own at least the Minimum Number through the date of the annual meeting of the stockholders. A group of funds under common management and investment control shall be treated as one
Eligible Holder if such Eligible Holder shall provide, together with the Qualified Nomination Notice, documentation reasonably satisfactory to the Corporation that demonstrates that the funds are under common management and investment control. For
the avoidance of doubt, in the event of a nomination by a group of Eligible Holders, any and all requirements and obligations for an individual Eligible Holder that are set forth in this Section 17 of this Article II, including the minimum holding
period, shall apply to each member of such group; provided, however, that the Minimum Number shall apply to the ownership of the group in the aggregate. If any stockholder withdraws from a group of Eligible Holders acting together as a Nominating
Stockholder at any time prior to the annual meeting of the stockholders, the group of Eligible Holders shall only be treated as owning the shares held by the remaining members of the group.
(ii) For purposes of this Section 17(d) of this Article II, an Eligible Holder “owns” only those outstanding shares of Class A Common Stock as to which the Eligible Holder possesses both:
(A) the full voting and investment rights pertaining to the shares; and (B) the full economic interest in (including the opportunity for profit and risk of loss on) such shares. The number of shares calculated in accordance with clauses (A) and (B)
shall not include any shares: (1) sold by such Eligible Holder or any of its affiliates in any transaction that has not been settled or closed, (2) borrowed by such Eligible Holder or any of its affiliates for any purpose or purchased by such
Eligible Holder or any of its affiliates pursuant to an agreement to resell, or (3) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Holder or any of its
affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of Class A Common Stock, in any such case which instrument or agreement has, or is intended
to have, the purpose or effect of: (x) reducing in any manner, to any extent or at any time in the future, such Eligible Holder’s or any of its affiliates’ full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting,
or altering to any degree, gain or loss arising from the full economic ownership of such shares by such Eligible Holder or any of its affiliates. An Eligible Holder “owns” shares held in the name of a Nominee or other intermediary, so long as the
Eligible Holder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest (including the opportunity for profit and risk of loss on) in the shares. An Eligible Holder’s
ownership of shares shall be deemed to continue during any period in which the Eligible Holder has delegated any voting power by means of a proxy, power of attorney, or other similar instrument or arrangement that is revocable at any time by the
Eligible Holder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of Class A Common Stock are “owned” for these purposes shall be determined by the Board of Directors,
acting in good faith.
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(iii)
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No person shall be permitted to be in more than one group constituting a Nominating Stockholder, and if any person appears as a member of more than one group, it shall be
deemed to be a member of the group that has the largest ownership position as reflected in the Qualified Nomination Notice.
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(e) Qualified Nomination Notice. To nominate a Nominee, the Nominating Stockholder must, no earlier than one hundred fifty
(150) days and no later than one hundred twenty (120) days before the anniversary of the date that the Corporation mailed its proxy statement for the prior year’s annual meeting of the stockholders, submit to the Secretary of the Corporation at
the principal executive office of the Corporation all of the following information and documents (collectively, the “Qualified Nomination Notice”); provided, however, that if (and only if) the annual meeting of the stockholders is not scheduled
to be held within a period that commences thirty (30) days before the anniversary date of the prior year’s annual meeting of stockholders and ends thirty (30) days after such anniversary date (an annual meeting of the stockholders date outside
such period being referred to herein as an “Other Meeting Date”), the Qualified Nomination Notice shall be given in the manner provided herein by the later of the close of business on the date that is one hundred eighty (180) days prior to such
Other Meeting Date or the tenth (10th) day following the date such Other Meeting Date is first publicly announced or disclosed:
(i) A Schedule 14N (or any successor form) relating to the Nominee, completed and filed with the SEC by the Nominating Stockholder as applicable, in accordance with SEC rules;
(ii) A written notice of the nomination of such Nominee that includes the following additional information, agreements, representations and warranties by the Nominating Stockholder
(including each group member): (A) the details of any relationship that existed within the past three (3) years and that would have been described pursuant to Item 6(e) of Schedule 14N (or any successor item) if it existed on the date of submission
of the Schedule 14N; (B) a representation and warranty that the Nominating Stockholder did not acquire, and is not holding, securities of the Corporation for the purpose or with the effect of influencing or changing control of the Corporation; (C)
a representation and warranty that the Nominee’s candidacy or, if elected, Board of Directors membership would not violate applicable state or federal law or the rules of any stock exchange on which the Corporation’s securities are traded; (D) a
representation and warranty that the Nominee: (1) does not have any direct or indirect relationship with the Corporation other than those relationships that have been deemed categorically immaterial pursuant to the Corporation’s corporate
governance guidelines as most recently published on its website and otherwise qualifies as independent under the rules of the primary stock exchange on which the Corporation’s securities are traded; (2) meets the Audit Committee independence
requirements under the rules of any stock exchange on which the Corporation’s securities are traded; (3) is a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule); and (4) is not and has not been
subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933, as amended (the “Securities Act”) or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without
reference to whether the event is material to an evaluation of the ability or integrity of the Nominee; (E) a representation and warranty that the Nominating Stockholder satisfies the eligibility requirements set forth in Section 17(d) of this
Article II and has provided evidence of ownership to the extent required by Section 17(d) of this Article II; (F) a representation and warranty that the Nominating Stockholder intends to continue to satisfy the share ownership eligibility
requirements described in Section 17(d) of this Article II through the date of the annual meeting of the stockholders; (G) details of any position of the Nominee as an officer or director of any competitor (that is, any entity that produces
products or provides services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates) of the Corporation, within the five (5) years preceding the submission of the
Qualified Nomination Notice; (H) a representation and warranty that the Nominating Stockholder will not engage in a “solicitation” within the meaning of Rule 14a-1(l) of the Exchange Act (without reference to the exception in Rule 14a-1(l)(2)(iv)
of the Exchange Act) (or any successor rules) with respect to the annual meeting of the stockholders, other than with respect to the Nominee or any nominee of the Board; (I) a representation and warranty that the Nominating Stockholder will not use
any proxy card other than the Corporation’s proxy card in soliciting stockholders in connection with the election of a Nominee at the annual meeting of the stockholders; (J) if desired, a statement for inclusion in the proxy statement in support of
the Nominee’s election to the Board of Directors, provided that such statement shall not exceed 500 words and shall fully comply with Section 14 of the Exchange Act and the rules and regulations thereunder, including Rule 14a-9; (K) in the case of
a nomination by a group, the designation by all group members of one group member who is authorized to act on behalf of all group members with respect to all matters relating to the nomination, including withdrawal of the nomination; and (L) the
information required to be included in a stockholder’s notice referenced in Section 15(a) and Section 15(c) of Article II;
(iii) An executed agreement, which must be submitted within seven (7) days of the Nominating Stockholder’s first submission of any information required by this Section 17 of this Article
II, in a form deemed satisfactory by the Board of Directors or its designee, acting in good faith, pursuant to which the Nominating Stockholder (including each group member) agrees: (A) to comply with all applicable laws, rules and regulations in
connection with the nomination, solicitation and election; (B) to file any written solicitation or other communication with the Corporation’s stockholders relating to one or more of the Corporation’s directors or director nominees or any Nominee
with the SEC, regardless of whether any such filing is required under rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation; (C) to assume all liability stemming from an action, suit or
proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication by the Nominating Stockholder with the Corporation, its stockholders or any other person in connection with the nomination or election of
directors, including, without limitation, the Qualified Nomination Notice; (D) to indemnify and hold harmless (jointly with all other group members, in the case of a group member) the Corporation and each of its directors, officers and employees
individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any threatened or pending action, suit or proceeding, whether legal, administrative, or investigative, against the
Corporation or any of its directors, officers or employees arising out of or relating to a failure or alleged failure of the Nominating Stockholder to comply with, or any breach or alleged breach of, its obligations, agreements or representations
under this Section 17 of this Article II, or otherwise arising out of any nomination, solicitation or other activity by any Nominating Stockholder in connection with its efforts under this Section 17 of this Article II; and (E) if any information
included in the Qualified Nomination Notice, or any other communication by the Nominating Stockholder (including with respect to any group member), with the Corporation, its stockholders or any other person in connection with the nomination or
election ceases to be true and accurate in all material respects (or due to a subsequent development omits a material fact necessary to make the statements made no misleading), or the Nominating Stockholder (including any group member) fails to
continue to satisfy the eligibility requirements described in Section 17(d) of this Article II, to promptly (and in any event within 48 hours of discovering such misstatement or omission) notify the Corporation and any other recipient of such
communication of the misstatement or omission in such previously provided information and of the information that is required to correct the misstatement or omission; and
(iv) An executed agreement, which must be submitted within seven (7) days of the Nominating Stockholder’s first submission of any information required by this Section 17 of this Article
II, in a form determined to be satisfactory by the Board of Directors, or its designee, acting in good faith, by the Nominee: (A) to provide to the Corporation such other information, including completion of the Corporation’s director
questionnaire, as it may reasonably request; (B) that the Nominee has read and agrees, if elected, to serve as a member of the Board of Directors, to adhere to the Corporation’s corporate governance guidelines and code of ethical conduct and any
other Corporation policies and guidelines applicable to directors as adopted from time to time; and (C) that the Nominee will promptly and fully disclose to the Corporation if the Nominee is or becomes a party to (1) any compensatory, payment or
other financial agreement, arrangement or understanding with any person or entity in connection with service or action as a director of the Corporation, (2) any agreement, arrangement or understanding with any person or entity as to how the Nominee
would vote or act on any issue or question as a director (a “Voting Commitment”) that has not been disclosed to the Corporation, or (3) any Voting Commitment that could limit or interfere with the Nominee’s ability to comply, if elected as a
director of the Corporation, with its fiduciary duties under applicable law.
The information and documents required by this Section 17(e) of this Article II shall be: (i) provided with respect to and executed by each group member, in the case of information applicable to
group members; and (ii) provided with respect to the persons specified in Instruction 1 to Items 6(c) and (d) of Schedule 14N (or any successor items) in the case of a Nominating Stockholder or group member that is an entity. The Qualified
Nomination Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 17(e) of this Article II (other than such information and documents contemplated to be provided after the date the
Qualified Nomination Notice is provided) have been delivered to or, if sent by mail, received by the Secretary of the Corporation.
(i) Notwithstanding anything to the contrary contained in Section 17 of this Article II, the Corporation may omit from its proxy statement any Nominee and any information concerning such
Nominee (including a Nominating Stockholder’s statement in support) and no vote on such Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Stockholder may not,
after the last day on which a Qualified Nomination Notice would be timely, cure in any way any defect preventing the nomination of the Nominee, if: (A) the Nominating Stockholder or the designated lead group member, as applicable, or any qualified
representative thereof, does not appear at the meeting of stockholders to present the nomination submitted pursuant to this Section 17 of this Article II or the Nominating Stockholder withdraws its nomination; (B) the Board of Directors, acting in
good faith, determines that such Nominee’s nomination or election to the Board of Directors would result in the Corporation violating or failing to be in compliance with these Bylaws or Articles of Incorporation or any applicable law, rule or
regulation to which the Corporation is subject, including any rules or regulations of any stock exchange on which the Corporation’s securities are traded; (C) the Nominee was nominated for election to the Board of Directors pursuant to this Section
17 of this Article II at one of the Corporation’s two (2) preceding Annual Meetings of stockholders and either withdrew or became ineligible or received less than 25% of the votes that all stockholders are entitled to cast for such Nominee; (D) the
Nominee has been, within the past three (3) years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended, or (E) the Corporation is notified, or the Board of Directors acting
in good faith determines, that a Nominating Stockholder has failed to continue to satisfy the eligibility requirements described in Section 17(d) of this Article II, any of the representations and warranties made in the Qualified Nomination Notice
ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statement not misleading), the Nominee becomes unwilling or unable to serve on the Board of Directors or any material violation or breach occurs
of the obligations, agreements, representations or warranties of the Nominating Stockholder or the Nominee under this Section 17 of this Article II.
(ii) Notwithstanding anything to the contrary contained in this Section 17 of this Article II, the Corporation may omit from its proxy statement, or may supplement or correct, any
information, including all or any portion of the statement in support of the Nominee included in the Nomination Notice, if the Board of Directors in good faith determines that: (A) such information is not true in all material respects or omits a
material statement necessary to make the statements made not misleading; (B) such information directly or indirectly impugns character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or
immoral conduct or associations, without factual foundation, with respect to, any person; or (C) the inclusion of such information in the proxy statement would otherwise violate the SEC proxy rules or any other applicable law, rule or regulation.
(iii) The Corporation may solicit against, and include in the proxy statement its own statement relating to, any Nominee.
U.S. XPRESS ENTERPRISES, INC.
AMENDED AND RESTATED 2018 OMNIBUS INCENTIVE PLAN
ARTICLE 1
PURPOSE AND TERM OF PLAN
Section 1.1 Purpose. The purpose of the Plan is to provide motivation to selected Employees, Directors and Consultants to put forth
their efforts toward the continued growth, profitability and success of the Company by providing incentives to such Employees, Directors and Consultants through the ownership and performance of Common Stock.
Section 1.2 Effective Date; Expiration. The Plan, as amended and restated, was approved by the Commitee on March 20, 2020, but will
be effective as of the date it is approved by the stockholders at the Company’s 2020 annual meeting (the “Effective Date”). If approved by the stockholders, the Plan shall amend and restate the U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive
Plan (the “Original Plan”), which was originally effective June 8, 2018 (the “Original Commencement Date”); provided, however, that the terms of the Original Plan as in effect immediately prior to the Effective Date shall continue to govern all
Awards granted under the Original Plan until such Awards have been exercised, forfeited, canceled, or have otherwise expired or terminated. If the Company’s stockholders do not approve the Plan, the Original Plan will continue in full force and
effect on the terms and conditions as in effect immediately prior to the Effective Date. The expiration date of the Plan, on and after which date no Awards may be granted, shall be the tenth anniversary of the Original Commencement Date;
provided, however, that such expiration shall not affect Awards then outstanding, and the terms and conditions of the Plan shall continue to apply to such Awards.
DEFINITIONS
In any necessary construction of a provision of this Plan, the masculine gender may include the feminine, and the singular may include the plural, and vice versa.
Section 2.1 “Award” means any form of stock option, stock appreciation right, Stock Award, Restricted Stock Unit, performance unit,
Performance Award or other incentive award granted under the Plan, whether singly, in combination, or in tandem, to a Participant by the Committee pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee may
establish by the Award Notice or otherwise.
Section 2.2 “Award Notice” means the document establishing the terms, conditions, restrictions and/or limitations of an Award in
addition to those established by this Plan and by the Committee’s exercise of its administrative powers. The Committee will establish the form of the document in the exercise of its sole and absolute discretion.
Section 2.3 “Board” means the Board of Directors of USX.
Section 2.4 “CEO” means the Chief Executive Officer of USX.
Section 2.5 “Cause” means, with respect to the termination of a Participant’s employment by USX or its successor, and unless
otherwise set forth in an Award agreement or other agreement between the Company and Participant: (i) the Participant’s falsification of the accounts of USX or any Subsidiary, embezzlement of funds or other assets of USX or any Subsidiary, or
other fraud or dishonesty with respect to USX or any Subsidiary or any of its affiliates that causes or could reasonably be expected to cause actual harm to USX or any Subsidiary or any of its affiliates; (ii) any material breach of the
Participant’s employment agreement or other agreement between the Company and Participant which, if capable of cure, is not cured within ten (10) days of receipt of written notice of such breach by the Participant; (iii) conviction of, or entry
of a plea of guilty or nolo contendere to charges of, any crime involving moral turpitude (defined as a crime involving obscenity, crimes of a sexual nature, or crimes punishable by death or more than one year of imprisonment (it being understood
that, for instance, violation of a motor vehicle code does not constitute such crime)) or crimes of dishonesty; (iv) conviction of, or entry of a plea of guilty or nolo contendere to charges of, any felony or other crime which has or may have a
materially adverse effect on the Participant’s ability to carry out the Participant’s duties or on the reputation or business activities of USX or any Subsidiary or its affiliates; (v) actions or failures to act constituting negligence by the
Participant in the performance of the Participant’s duties or failure by the Participant to perform the Participant’s duties as expected in his or her employment, each after the Participant has not cured such actions or failure to act within
thirty (30) days after written request by the Board to do so; (vi) the Participant’s breach of a fiduciary duty owed to USX or any Subsidiary, its stockholders, or any of its affiliates involving duty of care, duty of loyalty, corporate
opportunity, or similar doctrines as determined in good faith by the Board; and (vii) any disparagement of USX or any Subsidiary, its affiliates, or their officers or directors. The Board’s determination of “Cause” is binding upon the
Participant.
Section 2.6 “Change in Control” means the occurrence of one (1) of the conditions set forth in Section 16.19, unless otherwise set
forth in an Award agreement.
Section 2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time, including the regulations thereunder and
any successor provisions and the regulations thereto.
Section 2.8 “Committee” means the Compensation Committee of the Board, or such other Board committee as may be designated by the
Board to administer the Plan; provided that the Committee shall consist of two or more Directors, all of whom are “Non-Employee Directors” within the meaning of Rule 16b-3 under the Exchange Act and an “independent director” for purpose of the
rules of the principal national securities exchange on which the Common Stock is then listed or admitted to trading, to the extent required by such rules.
Section 2.9 “Common Stock” means the Class A common stock, par value $.01 per share, of USX.
Section 2.10 “Company” means USX and its Subsidiaries. In the event of a Change in Control, the term “Company” as used herein shall
also refer to any successor entity.
Section 2.11 “Consultants” means the consultants, advisors and independent contractors retained by the Company.
Section 2.12 “Director” means a non-Employee member of the Board.
Section 2.13 “Effective Date” means the date an Award is determined to be effective by the Committee upon its grant of such Award,
which date shall be set forth in the applicable Award Notice.
Section 2.14 “Employee” means any person employed by the Company on a full- or part-time basis.
Section 2.15 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including the rules thereunder
and any successor provisions and the rules thereto.
Section 2.16 “Fair Market Value” means the closing price of the Common Stock on the principal national securities exchange on which
the Common Stock is then listed or admitted to trading, and the closing price shall be the last reported sale price regular way on such date (or, if no sale takes place on such date, the last reported sale price regular way on the next preceding
date on which such sale took place), as reported by such exchange. If the Common Stock is not then so listed or admitted to trading on a national securities exchange, then Fair Market Value shall be the closing price (the last reported sale price
regular way) of the Common Stock in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), if the closing price of the Common Stock is then reported by NASDAQ. If the
Common Stock closing price is not then reported by NASDAQ, then Fair Market Value shall be the mean between the representative closing bid and closing asked prices of the Common Stock in the over-the-counter market as reported by NASDAQ. If the
Common Stock bid and asked prices are not then reported by NASDAQ, then Fair Market Value shall be the quote furnished by any member of the Financial Industry Regulatory Authority selected from time to time by USX for that purpose. If no member
of the Financial Industry Regulatory Authority then furnishes quotes with respect to the Common Stock, then Fair Market Value shall be the value determined by the Committee in good faith.
Section 2.17 “Good Reason” means, unless otherwise set forth in an Award agreement or other agreement between the Company and
Participant, the occurrence of any of the following, without the Participant’s written consent, at any time within 365 days following a Change in Control (unless the Participant’s employment agreement or Award agreement specifies a longer time
period, in which case such longer time period will apply); provided that the Participant give the Company notice of such Good Reason condition within thirty (30) days of its occurrence and the Company has not cured such condition within a
subsequent sixty (60) day period: (i) a material reduction in the Participant’s base salary, other than a general reduction in base salary of not more than 10% that affects all similarly situated employees or executives, as applicable, in
substantially the same proportions; (ii) a material reduction in the Participant’s annual bonus opportunity, other than a general reduction that affects all similarly situated employees, executives, or directors, as applicable, in substantially
the same proportions; (iii) a relocation of the Participant’s principal place of employment by more than 50 miles; (iv) any material breach by the Company of the Participant’s employment agreement or other agreement between Participant and the
Company; (v) USX’s failure to obtain an agreement from any successor company to assume and agree to perform the Participant’s employment agreement in the same manner and to the extent that USX would be required to perform if no succession had
taken place, except where such assumption occurs by operation of law; (vi) a material, adverse change in the Participant’s title, authority, duties, or responsibilities (other than temporarily while the Participant is physically or mentally
incapacitated or as required by applicable law) taking into account USX’s size, status as a public company, and capitalization; or (vii) a material, adverse change in the reporting structure applicable to the Participant.
Section 2.18 “Participant” means either an Employee, Director or Consultant to whom an Award has been granted under the Plan.
Section 2.19 “Performance Awards” means the Stock Awards and performance units granted pursuant to Article 7.
Section 2.20 “Performance Criteria” means the one or more criteria that the Committee shall select for purposes of establishing the
Performance Goal(s) for a Performance Period. The Performance Criteria that may be used to establish such Performance Goal(s) may be expressed in terms of the attainment of specified levels of one or any variation or combination of the following:
(a) revenues (including, without limitation, measures such as revenue per mile (loaded or total) or revenue per tractor), (b) net revenues and/or return on revenues, (c) fuel surcharges, (d) accounts receivable collection or days sales
outstanding, (e) safety and claims (including, without limitation, measures such as accidents per million miles, number of significant accidents, number of worker's compensation claims, changes in safety scores and ratings), (f) working capital
measures, (g) leverage measures, (h) productivity and efficiency measures (including, without limitation, measures such as driver turnover, trailer-to-tractor ratio, tractor-to-non-driver ratio, average revenue per tractor, average percentages of
loaded and empty miles, average fuel savings and fuel surcharge revenues), (i) cash position, (j) return on invested capital, (k) market share (in aggregate or by segment), (l) economic value added models or completion of acquisitions (with or
without specified size); (m) operating ratio, (n) expenses, cost reductions and savings (or limits on cost increases) (o) debt to capitalization and/or debt to equity (in each case with or without lease adjustment), (p) earnings, (q) earnings
before interest and taxes, (r) earnings before interest, taxes, depreciation and amortization, (s) earnings before interest, taxes, depreciation, amortization and operating leases, (t) earnings before interest, taxes, depreciation, amortization
and rents, (u) earnings per share (or diluted earnings per share or adjusted diluted earnings per share), (v) net income (or adjusted net income) and/or income before taxes and/or cumulative compound net income growth rate, (w) operating income
or earnings, (x) increase in total revenue, (y) net sales, (z) assets and return on assets, (aa) return on capital employed, (ab) return on equity, (ac) return on stockholders’ equity or total stockholders’ return, (ad) net margin, gross margin,
operating margin, or contribution margin (ae) net profit or profit margins (including profitability of an identifiable business unit or product), (af) operating profits, (ag) profits before tax, (ah) ratio of operating earnings to capital
spending, (ai) cash flow measures (including, without limitation, free cash flow), (aj) equity or stockholders’ equity, (ak) Common Stock price per share, (al) attainment of strategic or operational initiatives, (am) book, economic book or
intrinsic book value (including book value per share) (an) appreciation in or maintenance of the price of the Common Stock or any other publicly traded securities of the Company, or other stockholder return measures, (ao) credit rating, (ap)
borrowing levels, (aq) enterprise value, (ar) improvements in capital structure, (as) customer satisfaction survey results, (at) implementation or completion of critical projects; or (au) any other metric as may be selected by the Committee; or
(av) any combination of the foregoing, which, in each case, may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, and may include comparisons with past performance of the Company (including one or
more divisions thereof, if any) and/or the current or past performance of other companies or any combination thereof. In addition, the Committee may establish, as additional Performance Criteria, the attainment by a Participant of one or more
personal objectives and/or goals that the Committee deems appropriate, including, without limitation, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic
plans for the Company or the exercise of specific areas of managerial responsibility. The Committee may provide for exclusion of the impact of an event or occurrence which the Committee determines should appropriately be excluded, including (a)
restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures,
(e) reorganization or change in the corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, division, business segment or business unit or not within the reasonable
control of management, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j), unbudgeted capital expenditures, (k) the issuance or repurchase
of equity securities and other changes in the number of outstanding shares, (l) conversion of some or all of convertible securities to common stock, (m) any business interruption event (n) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting principles, or (o) the effect of changes in other laws or regulatory rules affecting reported results.
Section 2.21 “Performance Formula” means, for a Performance Period, the one or more objective formulas (expressed as a percentage or
otherwise) applied against the relevant Performance Goal(s) to determine, with regards to the Award of a particular Participant, whether all, some portion but less than all, or none of the Award has been earned for the Performance Period.
Section 2.22 “Performance Goals” means, for a Performance Period, the one or more goals established by the Committee for the
Performance Period based upon the Performance Criteria.
Section 2.23 “Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Award.
Section 2.24 “Plan” means this Amended and Restated 2018 Omnibus Incentive Plan, as amended from time to time.
Section 2.25 “Restricted Stock Unit Award” means an Award granted pursuant to Article 11 in the form of a right to receive shares of
Common Stock on a future date.
Section 2.26 “Stock Award” means an award granted pursuant to Article 10 in the form of shares of Common Stock and/or restricted shares of Common Stock.
Section 2.27 “Subsidiary” means a corporation or other business entity in which USX directly or indirectly has an ownership interest
of 20 percent or more, except that with respect to incentive stock options, “Subsidiary” shall mean “subsidiary corporation” as defined in Section 424(f) of the Code.
Section 2.28 “Substitute Awards” means Awards granted or shares of Common Stock issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or with which the Company merges.
Section 2.29 “USX” means U.S. Xpress Enterprises, Inc.
ELIGIBILITY
Section 3.1 In General. Subject to Section 3.2 and Article 4, all Employees, Directors and Consultants are eligible to participate in
the Plan. The Committee may select, from time to time, Participants from those Employees, Directors and Consultants.
Section 3.2 Incentive Stock Options. Only Employees shall be eligible to receive “incentive stock options” (within the meaning of
Section 422 of the Code).
PLAN ADMINISTRATION
Section 4.1 Responsibility. The Committee shall have total and exclusive responsibility to control, operate, manage and administer
the Plan in accordance with its terms.
Section 4.2 Authority of the Committee. The Committee shall have all the authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Plan. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to:
(a) determine eligibility for participation in the Plan;
(b) select the Participants and determine the type of Awards to be made to Participants, the number of shares subject to Awards and the terms,
conditions, restrictions and limitations of the Awards, including, but not by way of limitation, restrictions on the transferability of Awards and conditions with respect to continued employment, performance criteria, confidentiality and
non-competition;
(d) construe any ambiguous provision, correct any default, supply any omission and reconcile any inconsistency of the Plan;
(e) issue administrative guidelines as an aid to administer the Plan and make changes in such guidelines as it from time to time deems proper;
(f) make regulations for carrying out the Plan and make changes in such regulations as it from time to time deems proper;
(g) to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions and limitations;
(h) promulgate rules and regulations regarding treatment of Awards of a Participant under the Plan in the event of such Participant’s death, disability,
retirement, termination from the Company or breach of agreement by the Participant, or in the event of a change of control of USX;
(i) accelerate the vesting, exercise or payment of an Award or the Performance Period of an Award when such action or actions would be in the best
interest of the Company;
(j) establish such other types of Awards, besides those specifically enumerated in Article 5 hereof, which the Committee determines are consistent with
the Plan’s purpose;
(k) subject to Section 4.3, grant Awards in replacement of Awards previously granted under this Plan or any other executive compensation plan of the
Company;
(l) establish and administer the Performance Goals with respect to Awards and certify whether, and to what extent, they have been attained;
(m) determine the terms and provisions of any agreements entered into hereunder;
(n) take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan; and
(o) make all other determinations it deems necessary or advisable for the administration of the Plan, including factual determinations.
The decisions of the Committee and its actions with respect to the Plan shall be final, binding and conclusive upon all persons having or claiming to have any right or
interest in or under the Plan.
Section 4.3 Option Repricing. Except for adjustments pursuant to Section 6.2, the Committee shall not reprice any stock options
and/or stock appreciation rights unless such action is approved by USX’s stockholders. For purposes of the Plan, the term “reprice” shall mean the reduction, directly or indirectly, in the per-share exercise price of an outstanding stock
option(s) and/or stock appreciation right(s) issued under the Plan by amendment, cancellation or substitution (for cash or another Award, except in connection with a Change in Control), or any other action with respect to an option or SAR that
would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the Common Stock is then listed or admitted to trading.
Section 4.4 Allocation and Delegation of Authority. The Committee may allocate all or any portion of its responsibilities and powers
under the Plan to any one or more of its members, the CEO or other senior members of management as the Committee deems appropriate, and may delegate all or any part of its responsibilities and powers to any such person or persons, provided that
any such allocation or delegation be in writing; provided, however, that only the Committee, or other committee consisting of two or more Directors, all of whom are “Non-Employee Directors” within the meaning of Rule 16b-3 under the Exchange Act,
may select and grant Awards to Participants who are subject to Section 16 of the Exchange Act. The Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice.
ARTICLE 5
FORM OF AWARDS
Section 5.1 In General. Awards may, at the Committee’s sole discretion, be paid in the form of Performance Awards pursuant to Article
7, stock options pursuant to Article 8, stock appreciation rights pursuant to Article 9, Stock Awards pursuant to Article 10, Restricted Stock Unit Awards pursuant to Article 11, performance units pursuant to Article 12, any form established by
the Committee pursuant to Section 4.2(j) or a combination thereof. The terms of Substitute Awards may vary from the terms set forth in the Plan to the extent the Committee deems appropriate to conform, in whole or in part, to the provisions of
the awards in substitution for which they are granted. Each Award shall be subject to the terms, conditions, restrictions and limitations of the Plan and the Award Notice for such Award. Awards under a particular Article of the Plan need not be
uniform and Awards under two or more Articles may be combined into a single Award Notice. Any combination of Awards may be granted at one time and on more than one occasion to the same Participant.
Section 5.2 Foreign Jurisdictions.
(a) Special Terms. In order to facilitate the making of any Award to Participants who are employed or retained
by the Company outside the United States as Employees, Directors or Consultants (or who are foreign nationals temporarily within the United States), the Committee may provide for such modifications and additional terms and conditions (“Special
Terms”) in Awards as the Committee may consider necessary or appropriate to accommodate differences in local law, policy or custom or to facilitate administration of the Plan. The Special Terms may provide that the grant of an Award is subject to
(1) applicable governmental or regulatory approval or other compliance with local legal requirements and/or (2) the execution by the Participant of a written instrument in the form specified by the Committee, and that in the event such conditions
are not satisfied, the grant shall be void. The Special Terms may also provide that an Award shall become exercisable or redeemable, as the case may be, if an Employee’s employment or Director or Consultant’s relationship with the Company ends as
a result of workforce reduction, realignment or similar measure and the Committee may designate a person or persons to make such determination for a location. The Committee may adopt or approve sub-plans, appendices or supplements to, or
amendments, restatements or alternative versions of, the Plan as it may consider necessary or appropriate for purposes of implementing any Special Terms, without thereby affecting the terms of the Plan as in effect for any other purpose;
provided, however, no such sub-plans, appendices or supplements to, or amendments, restatements or alternative versions of, the Plan shall: (a) increase the limitations contained in Section 6.3; (b) increase the number of available shares under
Section 6.1; or (c) cause the Plan to cease to satisfy any conditions of Rule 16b-3 under the Exchange Act.
(b) Currency Effects. Unless otherwise specifically determined by the Committee, all Awards and payments
pursuant to such Awards shall be determined in U.S. currency. The Committee shall determine, in its discretion, whether and to the extent any payments made pursuant to an Award shall be made in local currency, as opposed to U.S. dollars. In the
event payments are made in local currency, the Committee may determine, in its discretion and without liability to any Participant, the method and rate of converting the payment into local currency.
ARTICLE 6
SHARES SUBJECT TO PLAN
Section 6.1 Available Shares. (a) Subject to adjustment as provided in Section 6.2, the maximum number of shares of Common Stock
which shall be available for grant of Awards under the Plan (including incentive stock options) during its term shall not exceed 5,750,000, less one (1) share for every one (1) share that was subject to an Award granted after February 28, 2020 and prior to the Effective Date under the Plan. The shares of Common Stock available for issuance under the Plan may be authorized and unissued shares or treasury shares, including shares purchased in open
market or private transactions. Shares subject to Awards shall be counted on a one-for-one basis.
(b) Any shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such
shares or the payment of cash or other consideration in respect thereof, or are exchanged with the Committee’s permission for Awards not involving Common Stock, shall be available again for grant under the Plan in accordance with Section 6.1(c)
below. In the event that withholding tax liabilities arising from an Award other than an option or stock appreciation right are satisfied by the tendering of shares (either actually or by attestation) or by the withholding of shares by the
Company, the shares so tendered or withheld shall be added to the shares available for Awards under the Plan in accordance with Section 6.1(c) below. Notwithstanding anything to the contrary contained herein, the following shares shall not be
added to the shares authorized for grant under paragraph (a) of this Section: (i) shares tendered by the Participant or withheld by the Company in payment of the purchase price of an option or to satisfy any tax withholding obligation with
respect to options or stock appreciation rights, (ii) shares subject to a stock appreciation right that are not issued in connection with its stock settlement on exercise thereof, and (iii) shares reacquired by the Company on the open market or
otherwise using cash proceeds from the exercise of options. .
(c) Any shares that again become available for Awards under the Plan pursuant to this Section shall be added as one (1) share for every one (1) share
granted.
Section 6.2 Adjustment Upon Certain Events. In the event that there is, with respect to USX, a stock dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination, combination or transaction or exchange of Common Stock or other corporate exchange, or any distribution to stockholders of Common Stock or other property or
securities or any extraordinary cash dividends (other than regular cash dividends) or any transaction similar to the foregoing or other transaction that results in a change to USX’s capital structure, then the Committee shall make substitutions
and/or adjustments to the maximum number of shares available for issuance under the Plan, the maximum Award payable under Section 6.3, the number of shares to be issued pursuant outstanding Awards, the option prices, exercise prices or purchase
prices of outstanding Awards and/or any other affected terms of an Award or the Plan as the Committee, in its sole discretion and without liability to any person, deems equitable or appropriate. Unless the Committee determines otherwise, in no
event shall the Award of any Participant be adjusted pursuant to this Section 6.2.
Section 6.3 Maximum Award Payable. Subject to Section 6.2, and notwithstanding any provision contained in the Plan to the contrary,
the maximum number of shares of Common Stock subject to all Awards that are denominated in shares and granted to any one Participant, except for a Director, under the Plan during any calendar year is 1,000,000 shares of Common Stock. During any
calendar year no Participant (other than a Director) may be granted Awards that are denominated in cash under which more than $5,000,000 may be earned for each twelve (12) months in the vesting or
Performance Period. Each of the limitations in this section shall be multiplied by two (2) with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company. Subject to
Section 6.2, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted during a single calendar year to any Director, taken together with any cash fees
paid to such Director for services for such calendar year, shall not exceed $400,000 in total value. For the avoidance of doubt, any Director compensation that is deferred shall be counted toward this limit for the year in which the compensation
was first earned, and not in the year of payment/settlement.
Section 6.4 Substitute Awards. Substitute Awards shall not reduce the shares authorized for grant under the Plan or the applicable
limitations on grants to a Participant under Section 6.3, nor shall shares subject to a Substitute Award be added to the shares available for Awards under the Plan as provided above. Additionally, in the event that a company acquired by the
Company or with which the Company merges has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or merger to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or merger) may be used for Awards under the Plan and shall not reduce the shares authorized for grant under the Plan (and shares subject to such Awards shall not be added to the shares available for Awards under
the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or merger, and shall only be
made to individuals who were not Employees or Directors prior to such acquisition or merger.
Section 6.5 Minimum Vesting Requirement. Notwithstanding any other provision of the Plan to the contrary, equity-based Awards
granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted (excluding, for this purpose, any (i) Substitute Awards and (ii) shares delivered in lieu of fully vested cash Awards); provided, that, the
Committee may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 6.1
(subject to adjustment under Section 6.2); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including
in cases of retirement, death, disability or a Change in Control, in the terms of the Award or otherwise.
PERFORMANCE AWARDS
Section 7.1 Purpose. For purposes of Performance Awards issued to Employees, Directors and Consultants, the provisions of this
Article 7 shall apply in addition to and, where necessary, in lieu of the provisions of Article 10, Article 11 and Article 12. The provisions of this Article 7 shall control over any contrary provision contained in Article 10, Article 11 or
Article 12.
Section 7.2 Eligibility. For each Performance Period, the Committee will, in its sole discretion, designate which Employees,
Directors and Consultants will be Participants for such period. However, designation of an Employee, Director or Consultant as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the
period. The determination as to whether or not such Participant becomes entitled to an Award for such Performance Period shall be decided solely in accordance with the provisions of this Article 7. Moreover, designation of an Employee, Director
or Consultant as a Participant for a particular Performance Period shall not require designation of such Employee, Director or Consultant as a Participant in any subsequent Performance Period and designation of one Employee, Director or
Consultant as a Participant shall not require designation of any other Employee, Director or Consultant as a Participant in such period or in any other period.
Section 7.3 Discretion of Committee with Respect to Performance Awards. The Committee shall have the authority to determine which
Employees, Directors or Consultants shall be Participants of a Performance Award. With regards to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of
Performance Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s), whether the Performance Goal(s) is (are) to apply to the Company or any one
or more subunits thereof and the Performance Formula. For each Performance Period, with regards to the Performance Awards to be issued for such period, the Committee will exercise its discretion with respect to each of the matters enumerated in
the immediately preceding sentence of this Section 7.3 and record the same in writing.
Section 7.4 Payment of Performance Awards.
(a) Condition to Receipt of Performance Award. Unless otherwise provided in the relevant Award Notice, a
Participant must be employed by the Company on the last day of a Performance Period to be eligible for a Performance Award for such Performance Period.
(b) Limitation. Unless otherwise provided in the relevant Award Notice, a Participant shall be eligible to
receive a Performance Award for a Performance Period only to the extent that: (i) the Performance Goals for such period are achieved; and (ii) and the Performance Formula as applied against such Performance Goals determines that all or some
portion of such Participant’s Performance Award has been earned for the Performance Period; provided, however, that the Committee has the discretion to increase or decrease the payout under any such Award to the extent it determines appropriate
notwithstanding the foregoing.
(c) Certification. Following the completion of a Performance Period, the Committee shall meet to review and
certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to also calculate and certify in writing the amount of the Performance Awards earned for the period based upon the
Performance Formula. The Committee shall then determine the actual size of each Participant’s Performance Award for the Performance Period.
(d) Timing of Award Payments. The Awards granted for a Performance Period shall be paid to Participants as soon
as administratively practicable following completion of the certifications required by Section 7.4(c). Performance Awards may be paid in cash, shares of Common Stock, other property, or any combination thereof, in the sole discretion of the
Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section
409A of the Code.
STOCK OPTIONS
Section 8.1 In General. Awards may be granted in the form of stock options. These stock options may be incentive stock options within
the meaning of Section 422 of the Code or non-qualified stock options (i.e., stock options which are not incentive stock options), or a combination of both.
Section 8.2 Terms and Conditions of Stock Options. An option shall be exercisable in accordance with such terms and conditions and at
such times and during such periods as may be determined by the Committee. Other than in connection with Substitute Awards, the price at which Common Stock may be purchased upon exercise of a stock option shall be not less than 100 percent of the
Fair Market Value of the Common Stock, as determined by the Committee, on the Effective Date of the option’s grant. In addition, the term of a stock option may not exceed ten years. Notwithstanding the foregoing, in the event that on the last
business day of the term of an option (other than an incentive stock option) (i) the exercise of the option is prohibited by applicable law or (ii) shares may not be purchased or sold by certain employees or directors of the Company due to the
“black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the option shall be extended for a period of thirty (30) days following the end of the legal
prohibition, black-out period or lock-up agreement.
Section 8.3 Restrictions Relating to Incentive Stock Options. Stock options issued in the form of incentive stock options shall, in
addition to being subject to the terms and conditions of Section 8.2, comply with Section 422 of the Code. Accordingly, the aggregate Fair Market Value (determined at the time the option was granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company) shall not exceed $100,000 (or such other limit as may be required by Section 422 of the Code).
Section 8.4 Exercise. Upon exercise, the option price of a stock option may be paid in cash, or, to the extent permitted by the
Committee, through net settlement in shares or through tendering, by either actual delivery of shares or by attestation, shares of Common Stock, a combination of the foregoing or such other consideration as the Committee may deem appropriate. The
Committee shall establish appropriate methods for accepting Common Stock, whether restricted or unrestricted, and may impose such conditions as it deems appropriate on the use of such Common Stock to exercise a stock option. Stock options awarded
under the Plan may also be exercised by way of a broker-assisted stock option exercise program, if any, provided such program is available at the time of the option’s exercise. Notwithstanding the foregoing or the provision of any Award Notice, a
Participant may not pay the exercise price of a stock option using shares of Common Stock if, in the opinion of counsel to the Company, there is a substantial likelihood that the use of such form of payment would result in accounting treatment to
the Company under generally accepted accounting principles that the Committee reasonably determines is adverse to the Company.
Section 8.5 Deemed Exercise. The Committee may provide that an option shall be deemed to be exercised at the close of business on the
scheduled expiration date of such option if at such time the option by its terms remains exercisable and, if so exercised, would result in a payment to the holder of such option.
STOCK APPRECIATION RIGHTS
Section 9.1 In General. Awards may be granted in the form of stock appreciation rights (“SARs”). SARs entitle the Participant to
receive a payment equal to the appreciation in a stated number of shares of Common Stock from the exercise price to the Fair Market Value of the Common Stock on the date of exercise. The “exercise price” for a particular SAR shall be defined in
the Award Notice for that SAR. An SAR may be granted in tandem with all or a portion of a related stock option under the Plan (“Tandem SARs”), or may be granted separately (“Freestanding SARs”). A Tandem SAR may be granted either at the time of
the grant of the related stock option or at any time thereafter during the term of the stock option. A SAR shall have a term not greater than ten years. Notwithstanding the foregoing, in the event that on the last business day of the term of a
SAR (x) the exercise of the SAR is prohibited by applicable law or (y) shares of Common Stock may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement
undertaken in connection with an issuance of securities by the Company, the term shall be extended for a period of thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement.
Section 9.2 Terms and Conditions of Tandem SARs. A Tandem SAR shall be exercisable to the extent, and only to the extent, that the
related stock option is exercisable, and the “exercise price” of such a SAR (the base from which the value of the SAR is measured at its exercise) shall be the option price under the related stock option (subject to the requirements of Section
409A of the Code and except in the case of Substitute Awards). However, at no time shall a Tandem SAR be issued if the option price of its related stock option is less than the Fair Market Value of the Common Stock, as determined by the
Committee, on the Effective Date of the Tandem SAR’s grant. If a related stock option is exercised as to some or all of the shares covered by the Award, the related Tandem SAR, if any, shall be canceled automatically to the extent of the number
of shares covered by the stock option exercise. Upon exercise of a Tandem SAR as to some or all of the shares covered by the Award, the related stock option shall be canceled automatically to the extent of the number of shares covered by such
exercise. Moreover, all Tandem SARs shall expire not later than ten years from the Effective Date of the SAR’s grant.
Section 9.3 Terms and Conditions of Freestanding SARs. Freestanding SARs shall be exercisable or automatically mature in accordance
with such terms and conditions and at such times and during such periods as may be determined by the Committee. Except in connection with Substitute Awards, the exercise price of a Freestanding SAR shall be not less than 100 percent of the Fair
Market Value of the Common Stock on the Effective Date of the Freestanding SAR’s grant. Moreover, all Freestanding SARs shall expire not later than ten years from the Effective Date of the Freestanding SAR’s grant.
Section 9.4 Deemed Exercise. The Committee may provide that a SAR shall be deemed to be exercised at the close of business on the
scheduled expiration date of such SAR if at such time the SAR by its terms remains exercisable and, if so exercised, would result in a payment to the holder of such SAR.
Section 9.5 Payment. Unless otherwise provided in an Award Notice, an SAR may be paid in cash, Common Stock or any combination
thereof, as determined by the Committee, in its sole and absolute discretion, at the time that the SAR is exercised.
STOCK AWARDS
Section 10.1 Grants. Awards may be granted in the form of Stock Awards. Stock Awards shall be awarded in such numbers and at such
times during the term of the Plan as the Committee shall determine.
Section 10.2 Performance Criteria. For Stock Awards conditioned, restricted and/or limited based on performance criteria, the length
of the performance period, the performance objectives to be achieved during the performance period, and the measure of whether and to what degree such objectives have been attained shall be conclusively determined by the Committee in the exercise
of its absolute discretion. Performance objectives may be revised by the Committee, at such times as it deems appropriate during the performance period, in order to take into consideration any unforeseen events or changes in circumstances.
Section 10.3 Rights as Stockholders. During the period in which any restricted shares of Common Stock are subject to any
restrictions, the Committee may, in its sole discretion, deny a Participant to whom such restricted shares have been awarded all or any of the rights of a stockholder with respect to such shares, including, but not by way of limitation, limiting
the right to vote such shares or the right to receive dividends on such shares. Any dividends that are payable shall be subject to the requirements of Article 14 below.
Section 10.4 Evidence of Award. Any Stock Award granted under the Plan may be evidenced in such manner as the Committee deems
appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates, with such restrictive legends and/or stop transfer instructions as the Committee deems appropriate.
RESTRICTED STOCK UNIT AWARDS
Section 11.1 Grants. Awards may be granted in the form of Restricted Stock Unit Awards. Restricted Stock Unit Awards shall be awarded
in such numbers and at such times during the term of the Plan as the Committee shall determine.
Section 11.2 Rights as Stockholders. Until the shares of Common Stock to be received upon the vesting of such Restricted Stock Unit
Award are actually received by a Participant, the Participant shall have no rights as a stockholder with respect to such shares.
Section 11.3 Evidence of Award. A Restricted Stock Unit Award granted under the Plan may be recorded on the books and records of USX
in such manner as the Committee deems appropriate.
PERFORMANCE UNITS
Section 12.1 Grants. Awards may be granted in the form of performance units. Performance units, as that term is used in this Plan,
shall refer to units valued by reference to designated criteria established by the Committee, other than Common Stock.
Section 12.2 Performance Criteria. Performance units shall be contingent on the attainment during a performance period of certain
performance objectives. The length of the performance period, the performance objectives to be achieved during the performance period, and the measure of whether and to what degree such objectives have been attained shall be conclusively
determined by the Committee in the exercise of its absolute discretion. Performance objectives may be revised by the Committee, at such times as it deems appropriate during the performance period, in order to take into consideration any
unforeseen events or changes in circumstances.
PAYMENT OF AWARDS
Section 13.1 Payment. Absent a Plan or Award Notice provision to the contrary, payment of Awards may, at the discretion of the
Committee, be made in cash, Common Stock, a combination of cash and Common Stock or any other form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions and/or limitations,
if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Common Stock, restrictions on transfer and forfeiture provisions; provided, however, such terms, conditions, restrictions and/or limitations are not
inconsistent with the Plan.
Section 13.2 Withholding Taxes. The Company shall be entitled to deduct from any payment under the Plan, regardless of the form of
such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the Participant to pay to it such tax prior to and as a condition of the making of such payment. In
accordance with any applicable administrative guidelines it establishes, the Committee may allow a Participant to pay the amount of taxes required by law to be withheld from an Award by withholding from any payment of Common Stock due as a result
of such Award, or by permitting the Participant to deliver to USX, shares of Common Stock having a Fair Market Value equal to the minimum amount of such required withholding taxes (or, to the extent permitted by the Committee, such greater amount
reflecting the Participant’s actual taxes on such Award). Notwithstanding the foregoing or the provision of any Award Notice, a Participant may not pay the amount of taxes required by law to be withheld using shares of Common Stock if, in the
opinion of counsel to the Company, there is a substantial likelihood that the use of such form of payment would result in adverse accounting treatment to the Company under generally accepted accounting principles; and further provided that any
shares of Common Stock that may be withheld above the applicable minimum statutory rate shall not be added back to the share pool pursuant to Section 6.1 of the Plan and shall not again be available for awards under the Plan.
DIVIDEND AND DIVIDEND EQUIVALENTS
Subject to the provisions of the Plan and any Award Notice, the recipient of an Award other than an option or SAR may, if so determined by the Committee, be entitled to
receive amounts equivalent to cash, stock or other property dividends on Common Stock (“Dividend Equivalents”) with respect to the number of shares covered by the Award, as determined by the Committee, in its sole discretion. The Committee may
provide that the Dividend Equivalents (if any) shall be deemed to have been reinvested in additional shares or otherwise reinvested. Notwithstanding the foregoing, dividends and Dividend Equivalents shall not be paid out on an unvested Award
unless and until such underlying Award vests.
DEFERRAL OF AWARDS
Subject to Section 16.8, at the discretion of the Committee, payment of any Award; salary or bonus compensation; or Company board compensation; dividend or dividend
equivalent, or any portion thereof, may be deferred by a Participant until such time as the Committee may establish. All such deferrals shall be accomplished by the delivery of a written, irrevocable election by the Participant prior to the time
established by the Committee for such purpose, on a form provided by the Company. Further, all deferrals shall be made in accordance with administrative guidelines established by the Committee to ensure that such deferrals comply with all
applicable requirements of the Code. Deferred payments shall be paid in a lump sum or installments, as determined by the Committee. Deferred Awards may also be credited with interest, at such rates to be determined by the Committee, or invested
by the Company, and, with respect to those deferred Awards denominated in the form of Common Stock, credited with dividends or dividend equivalents.
MISCELLANEOUS
Section 16.1 Nonassignability. Except as otherwise provided in an Award Notice or below, no Awards or any other payment under the
Plan shall be subject in any manner to alienation, anticipation, sale, transfer (except by will or the laws of descent and distribution), assignment or pledge, nor shall any Award be payable to or exercisable by anyone other than the Participant
to whom it was granted. To the extent and under such terms and conditions as determined by the Committee, a Participant may assign or transfer an Award without consideration (each transferee thereof, a “Permitted Assignee”) (i) to the
Participant’s spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for the benefit of one or more of the Participant or the persons referred to in clause
(i), (iii) to a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders or (iv) for charitable donations; provided that such Permitted
Assignee shall be bound by and subject to all of the terms and conditions of the Plan and the Award Notice relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided
further that such Participant shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section.
Section 16.2 Regulatory Approvals and Listings. Notwithstanding anything contained in this Plan to the contrary, USX shall have no
obligation to issue or deliver certificates of Common Stock evidencing Stock Awards or any other Award resulting in the payment of Common Stock prior to (i) the obtaining of any approval from any governmental agency which USX shall, in its sole
discretion, determine to be necessary or advisable, (ii) the admission of such shares to listing on the stock exchange on which the Common Stock may be listed, and (iii) the completion of any registration or other qualification of said shares
under any state or federal law or ruling of any governmental body which USX shall, in its sole discretion, determine to be necessary or advisable.
Section 16.3 No Right to Continued Employment or Grants. Participation in the Plan shall not give any Participant the right to remain
in the employ or other service of the Company. The Company reserves the right to terminate the employment or other service of a Participant at any time. Further, the adoption of this Plan shall not be deemed to give any Employee, Director or any
other individual any right to be selected as a Participant or to be granted an Award. In addition, no Employee, Director or any other individual having been selected for an Award, shall have at any time the right to receive any additional Awards.
The Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship.
Section 16.4 Amendment/Termination. The Committee may suspend or terminate the Plan at any time for any reason with or without prior
notice. In addition, the Committee may, from time to time for any reason and with or without prior notice, amend the Plan in any manner, but may not without stockholder approval adopt any amendment which would require the vote of the stockholders
of USX if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws or regulations, including, but not limited to, the listing requirements of the stock exchanges on which the securities of USX are
listed. Notwithstanding the foregoing, without the consent of a Participant (except as otherwise provided in Section 6.2), no amendment may materially and adversely affect any of the rights of such Participant under any Award theretofore granted
to such Participant under the Plan. No Awards shall be granted under the Plan after the tenth anniversary of the Original Commencement Date, but Awards theretofore granted may extend beyond that date.
Section 16.5 Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Nevada, except as
superseded by applicable federal law, without giving effect to its conflicts of law provisions.
Section 16.6 No Right, Title or Interest in Company Assets. No Participant shall have any rights as a stockholder as a result of
participation in the Plan until the date of issuance of a stock certificate in his or her name, and, in the case of restricted shares of Common Stock, such rights are granted to the Participant under the Plan. To the extent any person acquires a
right to receive payments from the Company under the Plan, such rights shall be no greater than the rights of an unsecured creditor of the Company and the Participant shall not have any rights in or against any specific assets of the Company. All
of the Awards granted under the Plan shall be unfunded.
Section 16.7 No Guarantee of Tax Consequences. No person connected with the Plan in any capacity, including, but not limited to, the
Company and its directors, officers, agents and employees, makes any representation, commitment or guarantee that any tax treatment, including, but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable
with respect to the tax treatment of any Award, any amounts deferred under the Plan, or paid to or for the benefit of a Participant under the Plan, or that such tax treatment will apply to or be available to a Participant on account of
participation in the Plan.
Section 16.8 Section 409A. This Plan and Awards issued hereunder shall be interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to
the contrary, in the event that the Committee determines that any amounts payable hereunder will be taxable to a Participant under Section 409A of the Code and related Department of Treasury guidance prior to payment to such Participant of such
amount, the Company may (a) adopt such amendments to the Plan and Awards and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the
intended tax treatment of the benefits provided by the Plan and Awards hereunder and/or (b) take such other actions as the Committee determines necessary or appropriate to avoid the imposition of an additional tax under Section 409A of the Code;
provided, however, that neither the Company, the Committee nor any of the Company’s employees, directors or representatives shall have any liability to Participants with respect to this Section 16.8.
Should any payments made in accordance with the Plan to a “specified employee” (as defined under Section 409A of the Code) be determined to be payments from a nonqualified
deferred compensation plan and are payable in connection with a Participant’s “separation from service” (as defined under Section 409A of the Code), that are not exempt from Section 409A of the Code as a short-term deferral or otherwise, these
payments, to the extent otherwise payable within six (6) months after the Participant’s separation from service, and to the extent necessary to avoid the imposition of taxes under Section 409A of the Code, will be paid in a lump sum on the
earlier of the date that is six (6) months and one day after the Participant’s date of separation from service or the date of the Participant’s death. For purposes of Section 409A of the Code, the payments to be made to a Participant in
accordance with this Plan shall be treated as a right to a series of separate payments.
Section 16.9 Successors and Assigns. The Plan shall be binding on all successors and assigns of the Company and a Participant,
including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.
Section 16.10 Recoupment. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy
maintained by the Company or that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Notice as the Board determines necessary or appropriate, including but
not limited to a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of “cause” (as such term may be defined in an Award Notice or other Company agreement). No recovery of compensation under
such a clawback policy will be an event giving rise to a right to voluntary terminate employment upon a “resignation for good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company.
Section 16.11 Stop Transfer Orders. All certificates for shares delivered under the Plan pursuant to any Award shall be subject to
such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which the Common Stock is then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
Section 16.12 Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be
performed for the Company, division or business unit of the Company. Any income or gain realized pursuant to Awards under the Plan constitutes a special incentive payment to the Participant and shall not be taken into account, to the extent
permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company except as may be determined by the Committee or by the Board (or as may be required by the terms of such plan).
Section 16.13 Other Plans. Nothing contained in the Plan shall prevent the Committee or the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. In addition, the grant of any Award under the Plan and the
issuance of shares pursuant to any Award does not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the
Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, options or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior
to or affect the shares of Common Stock or the rights thereof or which are convertible into or exchangeable for shares of Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar character or otherwise.
Section 16.14 Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or
her services for the Company is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave
of absence) after the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is
scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction,
the Participant will have no right with respect to any portion of the Award that is so reduced or extended; provided, however, that if an Employee becomes a Director (including by continuing his or her service on the Board of Directors) upon the
termination of such Employee’s employment with the Company or any Subsidiary or its affiliates, such Employee’s ceasing to be an Employee of the Company or any Subsidiary or its affiliates shall not be treated as a termination for purposes of his
or her outstanding Awards, unless otherwise determined by the Committee.
Section 16.15 No Obligation to Notify or Minimize Taxes; No Liability for Taxes. The Company has no duty or obligation to any
Participant to advise such holder as to the time or manner of exercising an Award. Furthermore, the Company has no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period
in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award and will not be liable to any holder of an Award for any adverse tax consequences to such
holder in connection with an Award. As a condition to accepting an Award under the Plan, each Participant (i) agrees to not make any claim against the Company, or any of its officers, Directors, or Employees related to tax liabilities arising
from such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done
so or knowingly and voluntarily declined to do so.
Section 16.16 Severability. The provisions of the Plan shall be deemed severable. If any provision of the Plan shall be held
unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction or by reason of change in a law or regulation, such provision shall (a) be deemed limited to the extent that such court of competent
jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the
making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction or any governmental regulatory agency, or impermissible under
the rules of any securities exchange on which the shares of Common Stock are listed, such unlawfulness, invalidity, unenforceability or impermissibility shall not prevent any other payment or benefit from being made or provided under the Plan,
and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or impermissible, then such unlawfulness, invalidity or impermissibility shall not prevent such
payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or impermissible and the maximum payment or benefit that would not be unlawful, invalid or impermissible shall be made or provided under
the Plan.
Section 16.17 Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With
respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the shares of Common Stock or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the Plan.
Section 16.18 Indemnity. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board and any
person to whom the Committee has delegated any of its authority under the Plan shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such person in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all
amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or
By-laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
Section 16.19 Change in Control. Provided the applicable Award has been assumed, substituted, or otherwise continued by a successor
or acquiring company in the event of a Change in Control (as defined below), and if, during the 365 days following a Change in Control (unless the Participant’s employment agreement or Award agreement specifies a longer time period, in which case
such longer time period will apply), USX or its successor terminates the Participant’s employment without Cause or the Participant voluntarily terminates his or her employment for Good Reason (each, a “Qualifying Termination”), then any unvested
portion of such Award will immediately vest in full on the date of the occurrence of such Qualifying Termination, with any performance-based awards being calculated as set forth in the Award agreement, unless a Participant’s Award agreement
provides for different treatment. If the applicable Award is not assumed, substituted, or otherwise continued by a successor or acquiring company in the event of a Change in Control, then unless otherwise provided in an Award agreement, any
unvested portion of the Award will vest in full immediately prior to and subject to the consummation of such Change in Control, with performance awards being calculated as set forth in the Award agreement. A Change in Control will be deemed to
have occurred when:
(i) Any “person” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) of the Exchange Act (but excluding USX and any Subsidiary and any employee benefit plan sponsored or maintained by USX or any Subsidiary (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of USX representing 35% or more of the combined voting power of USX’s then outstanding securities (other than indirectly as a result of USX’s redemption of its
securities); provided, however, that in no event will a Change in Control be deemed to have occurred under this Section 5(b)(i) so long as (x) the combined voting power of shares beneficially owned by (A) USX’s executive officers (as defined in
Rule 16a-1(f) under the Exchange Act) then in office (the “Executive Officer Shares”), (B) members of the Max Fuller and Anna Marie Quinn families and their lineal descendants (the “Founder Shares”), and (C) the shares beneficially owned by any
other members of a “group” that includes the Founder Shares and/or a majority of the Executive Officer Shares, exceeds 75% of the combined voting power of USX’s current outstanding securities and remains the person or group with beneficial
ownership of the largest percentage of combined voting power of USX’s outstanding securities and (y) USX remains subject to the reporting requirements of the Exchange Act; or
(ii) The consummation of any merger or other business combination of USX, a sale of 51% or more of USX’s assets, liquidation or dissolution of USX or
a combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which either (x) the stockholders of USX and any trustee or fiduciary of any USX employee benefit plan immediately prior to the
Transaction own at least 51% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser of or successor to USX’s assets; (C) both the surviving corporation and
the purchaser in the event of any combination of Transactions; or (D) the parent company owning 100% of such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the case may be ((A), (B), (C) or (D), as
applicable, the “Surviving Entity”) or (y) the Incumbent Directors, as defined below, shall continue to serve as a majority of the board of directors of the Surviving Entity without an agreement or understanding that such Incumbent Directors will
later surrender such majority; or
(iii) Within any 365 day period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall
cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to USX, including any Surviving Entity. For this purpose, any director who was not a director at the beginning of
such period will be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as
such director was not nominated by a person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a person (other than the Board) or who has entered into an agreement to effect a Change in Control or
expressed an intention to cause such a Change in Control).
Notwithstanding the foregoing, the Committee shall have the right to provide that in the event of a Change in Control of the Company: (i) options and stock appreciation
rights outstanding as of the date of the Change in Control shall be cancelled and terminated without payment if the Fair Market Value of one share of Common Stock as of the date of the Change in Control is less than the per share option exercise
price or stock appreciation right grant price, and (ii) all performance-based Awards shall be (x) considered to be earned and payable based on achievement of performance goals or based on target performance (either in full or pro rata based on
the portion of the Performance Period completed as of the date of the Change in Control), and any limitations or other restrictions shall lapse and such performance Awards shall be immediately settled or distributed or (y) converted into
restricted stock or restricted stock unit Awards based on achievement of performance goals or based on target performance (either in full or pro rata based on the portion of Performance Period completed as of the date of the Change in Control).
(C) the pledge of shares of Class B Common Stock by a Qualifying Stockholder that
creates a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction (which, anything to the contrary notwithstanding, may include a transfer to a broker or nominee
in connection with such pledge) so long as the Qualifying Stockholder continues to exercise stockholder that pledges such
shares does not transfer or assign Voting Control over such pledged shares to the pledgee thereof; provided, however, that a foreclosure on such shares of Class B Common Stock
or other similar action by the pledgee shall constitute a “Transfer.”
(iv) Each share of Class B Common Stock held (including without
limitation any share subject to a pledge that does not constitute a Transfer pursuant to clause (f)(i)(5)(C) of record by a Qualifying Stockholder, by such Qualifying Stockholder’s Family
Members, or by such Qualifying Stockholder’s Permitted Entities, Section 3.2 hereof) shall automatically, without any further action, convert into one (1) fully paid and
nonassessable share of Class A Common Stock on the last day of the first calendar quarter during which the outstanding shares of Class B Common Stock shall constitute less than ten percent (10%) of all outstanding Common Stock.