| Item 1.01. | Entry into a Material Definitive Agreement. |
On March 20, 2023, U.S.
Xpress Enterprises, Inc., a Nevada corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Knight-Swift Transportation Holdings Inc., a Delaware corporation (“Knight-Swift”), and Liberty Merger
Sub Inc., a Nevada corporation and an indirect wholly owned subsidiary of Knight-Swift (“Merger Subsidiary”). The Merger Agreement
provides, among other things, and subject to the terms and conditions set forth therein, that Merger Subsidiary will be merged with and
into the Company, with the Company surviving as an indirect wholly owned subsidiary of Knight-Swift (the “Merger”).
As previously announced, the Company’s Board
of Directors (the “Board”) formed a Special Committee of the Board comprised solely of disinterested and independent directors
(the “Special Committee”) to exclusively delegate to the Special Committee the power to (i) evaluate any proposal from Knight-Swift
in connection with a potential acquisition of all, or part of, the equity interests and/or assets of the Company and (ii) direct and oversee
any preliminary discussions between Knight-Swift and the Company prior to the receipt of an actual proposal for a potential transaction.
At the conclusion of its review, the Special
Committee unanimously (A) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger and
the Charter Amendment (as defined below), were advisable, fair to, and in the best interests of the Company and its stockholders;
and (B) recommended that the stockholders approve the Merger Agreement and the transactions contemplated thereby, including the
Merger and the Charter Amendment. The Special Committee directed that the Merger Agreement and the transactions contemplated
thereby, including the Merger and the Charter Amendment be submitted to the stockholders of the Company for their adoption and
approval.
Merger Agreement
On the terms and subject
to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share
of Class A Common Stock, par value $0.01, and Class B Common Stock, par value $0.01 (collectively, the “Company Common Stock”)
issued and outstanding immediately prior to the Effective Time will be converted into the right to receive $6.15 in cash, without interest
(such amount per share, the “Per Share Price”), other than (i) those shares of Company Common Stock owned by the Company as
treasury stock, or by Knight-Swift or Merger Subsidiary, (ii) Company Restricted Shares (described below) and (iii) any shares of Company
Common Stock owned by any wholly owned subsidiary of Knight-Swift, Merger Subsidiary or of the Company (including the shares subject to
the Rollover Agreement described below).
The Merger Agreement provides that, in lieu of
receipt of the Per Share Price for approximately one-third of their shares of Company Common Stock, Max L. Fuller, FSBSPE 1, LLC, FSBSPE
2, LLC, FSBSPE 3, LLC, Fuller Family Enterprises, LLC, William E. Fuller, Max L. Fuller 2008 Irrevocable Trust FBO William E. Fuller and
Max Fuller Family Limited Partnership (collectively, the “Rollover Holders”) will, immediately prior to the Effective Time,
contribute such shares of Company Common Stock to Liberty Holdings Topco LLC, a subsidiary of Knight-Swift (“Holdings”), in
exchange for certain classes of units of Holdings, pursuant to the Rollover Agreement described below.
The Merger Agreement
also provides that at the Effective Time, each outstanding Company equity award with respect to Company Common Stock will be treated as
follows:
| · | Company
RSUs. Each restricted stock unit with respect to Company Common Stock (each a “Company RSU”) that is vested
immediately prior to the Effective Time (but not yet settled) or that vests solely as a result of the Merger or the transactions contemplated
by the Merger Agreement will be cancelled and converted into the right to receive an amount in cash (without interest) equal to (i) the
number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time multiplied by (ii)
the Per Share Price, less applicable taxes required to be withheld. Each Company RSU that is not vested immediately prior to the Effective
Time will be assumed by Knight-Swift and converted into a corresponding restricted stock unit award with respect to shares of Knight-Swift
common stock, par value, $0.01 (the “Knight-Swift Common Stock”). Each converted award will continue to have the same terms
and conditions, including with respect to vesting, acceleration and forfeiture, as applied to the corresponding Company RSU prior to
the Effective Time, except that each such award will cover that number of shares of Knight-Swift Common Stock equal to the product of
(rounded down to the nearest whole number) (A) the number of shares of Company Common Stock subject to the unvested portion of the corresponding
award of Company RSUs at the Effective Time multiplied by (B) a fraction equal to the Per Share Price over the volume weighted
average price per share of Knight-Swift Common Stock for the ten consecutive trading days ending immediately prior to the closing date
of the Merger (the “Exchange Ratio”). |
| · | Company
Restricted Shares. Each outstanding award of Company Common Stock granted under a Company equity plan that remain subject
to one or more unsatisfied vesting or vesting-equivalent forfeiture or repurchase conditions (each a “Company Restricted Share”)
that is unvested immediately prior to the Effective Time and that will not vest as a result of the consummation of transactions contemplated
by the Merger Agreement will be assumed by Knight-Swift and converted into an award of restricted shares denominated in shares of Knight-Swift
Common Stock. Each converted award will continue to have the same terms and conditions, including with respect to vesting, acceleration
and forfeiture, as applied to the corresponding Company Restricted Share prior to the Effective Time, except that each such award will
cover the number of shares of Knight-Swift Common Stock equal to the product (rounded down to the nearest whole number) of (i) the number
of shares of Company Common Stock subject to such award of Company Restricted Shares multiplied by (ii) the Exchange Ratio. |
| · | Company
PSUs. Each restricted stock unit with respect to Company Common Stock that is subject to outstanding performance-based
vesting criteria (each a “Company PSU”) that is vested immediately prior to the Effective Time (but not yet settled) or that
vests solely as a result of the Merger or the transactions contemplated by the Merger Agreement will be cancelled and converted into
the right to receive an amount in cash (without interest) equal to (i) the number of shares of Company Common Stock subject to such Company
PSU immediately prior to the Effective Time multiplied by (ii) the Per Share Price, less applicable taxes required to be withheld.
Each Company PSU that is not vested immediately prior to the Effective Time will be assumed by Knight-Swift and converted into a corresponding
restricted stock unit award with respect to shares of Knight-Swift Common Stock. Each converted award will continue to have the same
terms and conditions, including with respect to vesting, acceleration and forfeiture, as applied to the corresponding Company RSU prior
to the Effective Time, except that each such award will cover that number of shares of Knight-Swift Common Stock equal to the product
of (rounded down to the nearest whole number): (A) the number of shares of Company Common Stock subject to the unvested portion of the
corresponding award of Company RSUs at the Effective Time (with performance-based vesting conditions deemed satisfied at 100% of target
level achievement) multiplied by (B) the Exchange Ratio. |
| · | Company
Options. All options to purchase shares of Company Common Stock outstanding immediately prior to the Effective Time will
be cancelled for no consideration or payment at the Effective Time. |
The converted equity
awards described in the foregoing are subject to other immaterial adjustments to account for provisions rendered inoperative by reason
of the Merger or the transactions contemplated by the Merger Agreement and to reflect administrative or ministerial changes as Knight-Swift’s
board of directors may determine, in good faith, are appropriate.
The obligations of the
parties to consummate the Merger are subject to the satisfaction or waiver of customary closing conditions set forth in the Merger Agreement,
including:
| · | the adoption of the Merger Agreement and the
Merger by a majority of the voting power of the Company Common Stock entitled to vote on the Merger Agreement and the Merger (the “Single
Class Vote”); |
| · | the adoption of the Merger Agreement and the
Merger by holders of a majority of the outstanding shares of Company Class B Common Stock (voting as a single class) entitled to vote
on the Merger Agreement and the Merger (the “Class B Vote” and together with the Single Class Vote, the “Statutory Merger
Stockholder Approvals”); |
| · | the adoption of an amendment to the Company’s
Third Amended and Restated Articles of Incorporation (the “Charter Amendment”) by (i) a majority of the voting power of the
Company Common Stock entitled to vote on the Charter Amendment, (ii) the holders of a majority of the outstanding shares of Company Class
A Common Stock (voting as a single class) entitled to vote on the Charter Amendment, and (iii) the holders of a majority of the outstanding
shares of Company Class B Common Stock (voting as a single class) entitled to vote on the Charter Amendment, (collectively, the “Statutory
Charter Amendment Stockholder Approvals”); |
| · | in connection with the Single Class Vote, a majority
of the outstanding shares of Company Common Stock (other than the shares owned by (i) the Rollover Holders, certain trusts and entities
and family members of the Company’s Executive Chairman, Max L. Fuller, and the Company’s Chief Executive Officer, William
E. Fuller, and their Affiliates (as defined in the Merger Agreement), (ii) Knight-Swift and its Affiliates, and (iii) the directors and
executive officers of the Company), having been cast in favor of the Merger Agreement and the Merger, with each share of Company Common
Stock counted equally for this purpose (the “Majority-of-the-Minority-Approval Condition” and, together with the Statutory
Merger Stockholder Approvals and the Statutory Charter Amendment Stockholder Approvals, the “Requisite Stockholder Approval”); |
| · | the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; |
| · | the absence of any outstanding law, regulation,
or order, enacted, entered, or enforced by any governmental entity that prevents, materially restrains, materially impairs, or makes illegal
the consummation of the Charter Amendment or the Merger; |
| · | the accuracy of the representations and warranties
contained in the Merger Agreement, subject to customary materiality qualifications, as of the date of the closing of the Merger (except
to the extent that any such representation or warranty expressly speaks as of an earlier date); |
| · | compliance in all material respects with the
covenants and obligations contained in the Merger Agreement required to be performed and complied with at or prior to closing; and |
| · | the absence, since the date of the Merger Agreement,
of a Company Material Adverse Effect (as defined in the Merger Agreement). |
The closing of the Merger is not subject to a
financing condition. Under the terms of the Merger Agreement, consummation of the Merger will occur on the third business day following
the satisfaction or waiver of the conditions to closing of the Merger other than those conditions to be satisfied at closing.
If the Merger is consummated,
the Class A Common Stock of the Company will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
Each of the Company,
Knight-Swift and Merger Subsidiary have made customary representations and warranties and covenants in the Merger Agreement.
In addition, the Company
has agreed to customary covenants regarding the operation of the business of the Company and its subsidiaries prior to the Effective Time.
The Merger Agreement
contains covenants that the Company will not, directly or indirectly, (i) solicit, initiate, propose, or induce the making, submission,
or announcement of, or knowingly encourage, facilitate, or assist, any offer, inquiry, indication of interest, or proposal that constitutes,
or is reasonably expected to lead to, an Acquisition Proposal (as defined in the Merger Agreement); (ii) furnish to any third party any
non-public information relating to the Company or any of its subsidiaries or afford to any third party access to the business, properties,
assets, books, records, or other non-public information, or to any personnel, of the Company or any of its subsidiaries, in any such case
in connection with any Acquisition Proposal or with the intent to induce the making, submission, or announcement of, or to knowingly encourage,
facilitate, or assist, an Acquisition Proposal or the making of any offer, inquiry, indication of interest, or proposal that constitutes
or would reasonably be expected to lead to an Acquisition Proposal; (iii) participate or engage in discussions or negotiations with any
third party with respect to an Acquisition Proposal or with respect to any inquiries from third parties relating to any offer, indication
of interest, or proposal relating to an Acquisition Proposal; (iv) approve, endorse, or recommend any offer, inquiry, indication of interest,
or proposal that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal; (v) enter into any letter of intent,
memorandum of understanding, merger agreement, acquisition agreement, or other contract relating to an Acquisition Proposal or Acquisition
Transaction (as defined in the Merger Agreement), other than, in each case, an Acceptable Confidentiality Agreement (as defined in the
Merger Agreement); or (vi) authorize or commit to do any of the foregoing.
Notwithstanding these
limitations, prior to obtaining the Requisite Stockholder Approval, if (i) the Company has received an Acquisition Proposal that was not
the result of any material breach of Section 5.4(a) of the Merger Agreement and (ii) the Special Committee determines in good faith (after
consultation with its financial advisor and outside legal counsel) that such Acquisition Proposal either constitutes a Superior Proposal
(as defined in the Merger Agreement) or would be reasonably likely to lead to a Superior Proposal and the failure to take certain actions
regarding such Acquisition Proposal would be inconsistent with its fiduciary duties under applicable law then the Company, the Special
Committee, and the Company’s representatives are permitted, subject to the terms and conditions set forth in the Merger Agreement,
to (i) participate or engage in discussions or negotiations with the party making the Acquisition Proposal (including affording such party
access to the business, properties, assets, books, records, or other non-public information, or to any personnel, of the Company or its
subsidiaries), and (ii) terminate the Merger Agreement and change its recommendation to the Company’s stockholders regarding the
vote to approve the Merger Agreement in connection with a Superior Proposal (subject to certain notification and matching rights in favor
of Knight-Swift).
The Merger Agreement contains certain termination
rights for the parties, including the right of either party, subject to specified limitations, to terminate the Merger Agreement if the
Merger is not consummated by December 20, 2023 (as may be extended by either party to March 20, 2024 pursuant to the Merger Agreement,
the “Termination Date”).
The Merger Agreement
provides that Company will be required to pay Knight-Swift a termination fee of $6,300,000, if the Company terminates the Merger Agreement
within 45 days of signing of the Merger Agreement (or such extended period required to comply with the Notice Period (as defined in the
Merger Agreement)) to enter into an acquisition agreement with respect to a Superior Proposal. After such initial period, the termination
fee payable by the Company is increased to $12,600,000 and becomes payable if the Company terminates the Merger Agreement to accept a
Superior Proposal, if Knight-Swift terminates the Merger Agreement following a change in recommendation by the Special Committee and in
other customary circumstances.
The foregoing summary
of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and
is incorporated herein by reference.
Charter Amendment
In connection with the Merger Agreement, the Company
will take all actions to adopt the Charter Amendment, effective immediately prior to the Effective Time to revise Section 3.2(e) thereto
to exempt the transactions contemplated by the Merger Agreement (including the Merger) from the application thereof.
The foregoing summary of the Charter Amendment
does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Charter Amendment, the form
of which is attached as Exhibit A to the Merger Agreement, a copy of which is attached as Exhibit 2.1 and incorporated by reference herein.
Rollover Agreement
In connection with the
Merger Agreement, the Rollover Holders will roll over approximately one-third of their Company Common Stock (the “Rollover Shares”)
as set forth in a separate Rollover Agreement (the “Rollover Agreement”). The Rollover Shares will not be converted into
the right to receive the Per Share Price, but instead, immediately prior to the Effective Time, will be contributed to Holdings, in exchange
for two classes of units in Holdings intended to be approximately equivalent to a 10% equity position in the entity that will hold the
Company business unit of Knight-Swift after consummating the Merger (the “Company Unit”). Under an amended and restated operating
agreement of Holdings, the units received by the Rollover Holders will have certain limited consent rights and be subject to certain
optional and mandatory purchase provisions during the five-year period post-closing. One class of membership interests will be subject
to put and call rights at a defined fair market value measure in favor of the Rollover Holders and Knight-Swift, respectively and will
be purchased by Knight-Swift at that defined fair market value measure if outstanding at the fifth anniversary of the Merger. In order
for the put right to become exercisable, it is subject to a $175 million minimum adjusted operating income threshold for the Company
Unit. In addition, Knight-Swift will have a call right, exercisable only within the first 15 months after closing, at an exercise price
of approximately $140 million. The second class of membership interests will be repurchased by Knight-Swift for $40 million if the Company
Unit achieves $250 million in adjusted operating income for a trailing annual period at or prior to the fifth anniversary of closing.
If such threshold is not met, the second class of interests will be forfeited for no value.
The Rollover Agreement terminates upon the earliest to occur of (i) the valid termination of the Merger Agreement in accordance with its
terms or (ii) the mutual written consent of Knight-Swift and the Rollover Holders.
The foregoing summary
of the Rollover Agreement and related terms is only a summary, does not purport to be complete and is qualified by reference to the full
text of the Rollover Agreement, a copy of which is attached as Exhibits 10.1 hereto and incorporated by reference herein.
Support Agreement
In connection with entering
into the Merger Agreement, on March 20, 2023, the Company, the members of the Special Committee and the Rollover Holders, who collectively
beneficially own approximately 58% of the voting power of the Company, have entered into an Irrevocable Proxy and Agreement (the “Support
Agreement”), pursuant to which, among other things, the Rollover Holders have granted an irrevocable proxy in favor of the Special
Committee (acting as a majority) to vote the shares owned by the Rollover Holders: (i) in favor of (a) the approval of the Charter Amendment,
(b) the adoption of the Merger Agreement and the approval of the Merger, (c) the approval of any advisory proposal with respect to “golden
parachute compensation,” (d) the approval of any proposal to adjourn or postpone any stockholder meeting relating to the Merger
to a later date if the Company proposes or requests such postponement or adjournment, and (e) the approval of any other proposal to be
voted upon or consented to by the Company stockholders at any stockholder meeting relating to the Merger or at other meeting of stockholders
or in respect of any proposed action by written consent, the approval of which is necessary for the consummation of the Merger and the
other transactions contemplated by the Merger Agreement, but only to the extent that such Rollover Shares are entitled to be voted on
or consent to such proposal, and (ii) against (a) any proposal, action, or agreement that would reasonably be expected to result in a
breach of any covenant, representation, or warranty or other obligation or agreement of the Company contained in the Merger Agreement
or that would reasonably be expected to result in any condition set forth in the Merger Agreement not being satisfied or not being fulfilled
prior to the Termination Date, (b) any proposal to amend the articles of incorporation or bylaws of the Company, other than the Charter
Amendment, (c) any Acquisition Proposal, (d) any reorganization, dissolution, liquidation, winding up, or similar extraordinary transaction
involving the Company (except as contemplated by the Merger Agreement), and (e) any other proposal, action, or agreement that would reasonably
be expected to prevent or materially impede or materially delay the approval of the Charter Amendment or the consummation of the Merger
or any of the other transactions contemplated by the Merger Agreement.
Under the Merger Agreement,
the Company has agreed to (i) cause the proxy holder to cause the shares subject to the Support Agreement to appear at and be counted
as present for purposes of establishing a quorum and to vote or consent pursuant to the terms of the Support Agreement, and (ii) enforce
the terms of the Support Agreement, and not amend, modify, waive, or terminate any provision of the Support Agreement without the prior
written consent of Knight-Swift.
The Support Agreement
terminates upon the earliest to occur of (i) the valid termination of the Merger Agreement in accordance with its terms or (ii) the Effective
Time.
The foregoing summary of the Support Agreement
is only a summary, does not purport to be complete and is qualified by reference to the full text of the Support Agreement, a copy of
which is attached as Exhibit 10.2 hereto and incorporated by reference herein.
Stockholders’ Agreement
On March 20, 2023, the Company amended (the “Second Amendment”) that certain Stockholders’ Agreement (the “Stockholders’
Agreement”) among the Company and certain members of the Fuller and Quinn families (or trusts for the benefit of any of them or
entities owned by any of them), including without limitation executive officers and/or directors Max L. Fuller and William E. Fuller.
The Second Amendment provides that the restrictions on Transfer (as defined in the Stockholders’ Agreement) contained in Section 2.1 of
the Stockholders' Agreement will not apply to any Transfer to Knight-Swift or any subsidiary thereof.
The foregoing summary of the Second Amendment and related terms is only a summary, does not purport to be complete and is qualified by
reference to the full text of the Second Amendment, a copy of which is attached as Exhibits 10.3 hereto and incorporated by reference
herein.
