Exhibit 10.4

 

 

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May 1, 2017

 

 

Werner Hugo

 

Dear Werner,

 

 

We are pleased to have you serve in the position of Senior Vice President,
Trucking Operations of USA Truck, Inc. (the "Company"). The following outlines
the terms of employment, but does not constitute a contract of employment or a
guarantee of employment. This offer is subject to final approval by the
Company's Board of Directors.

 

Compensation

 

 

•

Your annual base salary will be $250,000.00, which will be paid in monthly
installments on the last business day of each month of employment in the amount
of $20,833.33

 

 

 

•

You will participate in the established Company Management Bonus Plan, beginning
in 2017. For 2017, you will be entitled to:

 

 

•

A target cash bonus of 60% of your base salary for 2017 with a maximum
attainment level of 150% of the bonus target, depending upon actual performance
relative to goals determined by the Executive Compensation Committee of the
Company’s Board of Directors (the “Committee”). This bonus will be prorated from
your start date for the remainder of 2017;

 

 

•

STIP (short term incentive plan) – An equity grant of restricted shares of the
Company’s common stock equal to up to 30% (with a target of 18%) of your
prorated base salary for 2017. The restricted shares awarded will be at target
and based upon your prorated annualized base salary and the closing price of the
Company’s common stock on the award date, with the opportunity for additional
restricted shares to be earned up to maximum. Vesting of this award depends upon
performance relative to goals established by the Committee, and is subject to
additional time vesting. The Committee will determine whether such performance
goals have been achieved in early 2018 following receipt of the Company’s fiscal
year 2017 audited financial results, at which time some or all of the
restrictive shares may be forfeited if the performance goals are partially
achieved or not achieved, or additional restricted shares may be granted if the
performance goals are achieved above the target level. The non-forfeited
restricted shares will then vest 25% per annum, subject to continued employment
and certain other forfeiture provisions. For example, if the Committee
determines on January 31, 2018 that the performance goals for 2017 have been
achieved at the target level, none of the restricted shares granted would be
forfeited, 25% of the restricted shares will vest on the first anniversary of
your start date, and the remaining restricted shares will vest in annual
installments of 25% each, commencing January 31, 2019.

 

 
 

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•

With respect to the STIP award, upon the occurrence of a Payment Trigger
described in subparagraph (ii) of Paragraph (L) of Section 1 of Exhibit A
hereto, (i) if the Payment Trigger occurs prior to the date results are
certified, then 75% of the target amount will vest on the Payment Trigger and
the remainder will be automatically forfeited, and (ii) if the Payment Trigger
occurs after the date results are certified, any unvested (and non-forfeited)
portion will immediately vest in full on the Payment Trigger.

 

 

•

LTIP (long term incentive plan) – You will be eligible to participate in the
Company’s LTIP plan, whereby you will be eligible to receive a performance based
equity grant or an equivalently valued award settled in cash, as determined by
the Company, equivalent to a target amount of 60% of your base salary, up to a
maximum grant equivalent to 100% of your base salary, based upon the attainment
of certain Company objectives during the applicable performance period, as
prescribed and approved by the Committee. Such grant will be based upon the
closing price of the Company’s common stock on the award date. Full details
related to any said grant, including but not limited to specific Company
objectives, vesting criteria, and the duration of the performance period will be
more fully described in the award agreement relating to such grant.

 

 

•

With respect to the LTIP award, you will have the same vesting as other senior
executives upon the occurrence of such Payment Trigger.

 

 

•

You will receive a cash bonus of $125,000, payable in two (2) equal installments
– $62,500 of which will be payable promptly following your start date and the
remaining $62,500 of said bonus will be payable on October 31, 2017, provided
you and your family have established full time residency and completed your
permanent relocation to the Van Buren/Fort Smith, Arkansas, area and you are
continuously employed by the Company through October 31, 2017. Notwithstanding
the foregoing, failure to complete your and your family’s permanent relocation
to the Van Buren/Fort Smith, Arkansas area on or before October 31, 2017, or
your failure to be continuously employed by the Company through such date will
result in complete forfeiture of your rights to both installments of this bonus
and will require an immediate repayment in full of the initial installment.
Additionally, this bonus is contingent on continuous full time employment with
the Company for at least 24 months following your start date. If your employment
is terminated by the Company for cause or voluntarily by you at any time after
October 31, 2017 and prior to the expiration of 24 months from your start date,
you shall repay the $125,000 cash bonus on a pro-rated basis in relation to the
portion of such 24 month period during which you are actually employed by the
Company.

 

 

•

You may be required to serve as an officer and/or director of one or more
subsidiaries of the Company, for which you will receive no additional
compensation.

 

 

•

Your position with the Company requires that you establish full-time residency
in the Van Buren/Ft. Smith, Arkansas, area for you and your family. To assist
with your interim residency and timely relocation, you will receive a
reimbursement allowance for reasonable transitional housing expenses, including
meals and travel expenses (flights or mileage) and temporary housing for rental
property through July 31, 2017. The aforementioned expense reimbursement
allowance related to flights will include one basic coach-class airfare ticket
paid for by the Company every two (2) weeks until July 31, 2017. Any mileage
reimbursement(s) will be at the Company’s standard rate(s), in accordance with
its standard reimbursement policies.

 

 
 

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In addition, you will receive a one-time net payment of $50,000 as a relocation
bonus payable by the Company once you have scheduled your and your family’s
permanent relocation to the Van Buren/Ft. Smith, Arkansas, area with a
moving/relocation service provider and you agree that full-time residency and
permanent relocation of you and your family will be completed on or before
October 31, 2017. In the event said relocation is not completed on or before
October 31, 2017, you agree that you will not be eligible to receive said
relocation bonus and must repay any amount(s) related to this relocation bonus
to the Company. Once you have established full-time residency and permanent
relocation in the Ft. Smith/Van Buren, Arkansas, area of you and your family,
you will also receive a one-time net payment equal to the customary realtor
commissions payable upon the sale of your current home in Arizona.

 

•      You will be provided a laptop and smart phone at the Company's expense.

 

 

•

The Company will also pay you the net amount for 90 days of COBRA coverage to
assist you in continual coverage of your current healthcare plan during the
mandatory waiting period.

 

 

•

All payments provided for hereunder will be subject to required withholding of
federal, state and local income, excise, and employment-related taxes.

 

Benefits

 

 

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You will receive four (4) weeks paid vacation per year.

 

 

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You are eligible for, and may participate in, the Company's 401(k) Plan subject
to Company policies and the terms of that plan as in effect from time to time.

 

 

•

You are eligible for, and may participate in, the Company's Employee Stock
Purchase Plan subject to Company policies and the terms of that plan as in
effect from time to time.

 

 

•

The Company is currently a sponsor of the Arkansas Best Federal Credit Union and
you may be eligible to participate in programs made available to the Company's
employees.

 

 

•

You are eligible for, and may participate in, the Company's Medical, Dental and
Vision and Prescription Drug plans subject to Company policies and the terms of
those plans as in effect from time to time.

 

 

•

You will receive $1,000 per year to be applied towards premium payments on a
supplemental term life insurance or you may choose to receive it as wages in
your monthly payroll check (at the rate of $83.33 per month).

 

Confidential Information or Trade Secrets

 

You will observe all rules, regulations, and security requirements of the
Company concerning the safety of persons and property. You agree that you will
comply with the Company's employee handbook, Code of Business Conduct and Ethics
Policy, the Open Door Policy, the Whistleblower Policy, the Stock Ownership and
Anti-Hedging and Pledging Policy, the Clawback Policy, and any other policies of
the Company as they relate to employees, officers, or directors of the Company.

 

Executive Severance and Change in Control Agreement

 

You and the Company will enter into an Executive Severance and Change in Control
Agreement in the form of Exhibit A attached hereto and incorporated by reference
herein.

 

 
 

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This letter does not create an express or implied contract of employment or any
other contractual commitment. This letter contains the complete, final, and
exclusive embodiment of the understanding between you and the Company regarding
the terms of your employment and supersedes in all respects any prior or other
agreement or understanding, written or oral, between you and the Company with
respect to the subject matter of this letter. Your employment relationship with
the Company is on an at-will basis, which means that either you or the Company
may terminate the employment relationship at any time for any reason or no
reason, consistent with applicable law. Notwithstanding the terms of this
letter, the Company shall have the right change its compensation, welfare,
benefit, incentive, and employment plans, policies, and terms from time to time
in its sole discretion.

 

You represent and warrant that your signing of this letter and the performance
of your obligations under it (including, without limitation, your employment
with the Company and your performance of services for the Company) will not
breach or be in conflict with any covenant not to compete and/or similar
obligations by which you are or may be bound. You also agree that you will not
disclose to or use on behalf of the Company any proprietary information of
another person or entity without that person's or entity's consent.

 

We look forward to you joining USA Truck, Inc., and ask that you acknowledge
your acceptance of the terms of this letter by signing below and faxing or
emailing the signed letter to my attention.

 

Sincerely,

 

/s/ James D. Reed

 

James D. Reed

President and Chief Executive Officer

 

 
 

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Agreed and Accepted

 

 

 

   /s/ Johannes P. Hugo                                        

Werner Hugo

 

 

 

 

05-02-2017                             

Date

 

 
 

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Exhibit A

 

[Executive Severance and Change In Control Agreement Attached]