Exhibit 10(s)
STOCK PURCHASE ASSISTANCE AGREEMENT
THIS AGREEMENT is dated as of February 27, 1998 and is by and between
OTR Express, Inc. (the "Company") and Steven W. Ruben, Vice President-Finance
and Chief Financial Officer of the Company ("Ruben").
1.Purpose. The purpose of this Agreement is to promote the long-term
interests of the Company and its stockholders by encouraging and
assisting Ruben, as executive officer of the Company, to make
meaningful investments in the Common Stock of the Company so
that, as stockholders, his views and interests will be identified
with the views and interests of the other stockholders. Meaningful
stock ownership will provide Ruben with an additional incentive to
exert his best efforts to increase the value of the Company for the
benefit of all stockholders. This Agreement will also strengthen the
Company's ability to retain Ruben, who has special competence to
contribute to the Company's success.
2.Definitions.
a."Bank" means a third party source of financing, such as a bank (including
but not limited to HSBC Business Loans, Inc.), which has agreed to (and
which does) loan money to Ruben for the purposes of his purchase of
Common Stock.
b."Board" means the Board of Directors of the Company.
c."Cause" means any of the following:
i.Ruben's willful malfeasance or misfeasance towards the Company or any
Subsidiary of the Company;
ii.Ruben's failure to discharge all or any material part of his duties or
obligations to the Company as have been customarily performed by
his position, after notice thereof and a reasonable opportunity to
cure such failure;
iii. Ruben's conviction of a misdemeanor involving moral turpitude or
the conviction of any felony;
iv.the commission by Ruben of any act of fraud, embezzlement,
misappropriation of funds or breach of fiduciary duty against the
Company, any Subsidiary of the Company or any customer, vendor or
affiliate of the Company, including but not limited to
any acts of material personal enrichment of Ruben or affiliates of
Ruben at the expense of the Company, any Subsidiary of the Company
or any customer, vendor or affiliate of the Company;
v.a failure to make timely Guaranty Payments when due under this
Agreement or any other material breach by Ruben of this Agreement; or
vi.a failure by Ruben to keep confidential the trade secrets and other
material proprietary information of the Company.
a."Change in Control" means the first to occur of any one of the events
described below:
i.A tender offer or exchange offer is made whereby the effect of such
offer is to take over and control the affairs of the Company and
such offer is consummated for the ownership of securities of the
Company representing twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding
voting securities.
ii.The Company is merged or consolidated with another corporation and,
as a result of such merger or consolidation, less than fifty percent
(50%) of the outstanding voting securities of the surviving or
resulting corporation shall then be owned in the aggregate by the
former stockholders of the Company other than affiliates
within the meaning of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any party to such merger or consolidation.
iii.The Company transfers substantially all of its assets to another
corporation or entity that is not a wholly-owned subsidiary of the
Company.
iv.Any person or group (as such terms are used in Sections 13(d)(3) and
14(d)(3) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities, and that in
related Schedule 13D/G filings such person or group has expressed
the intention to take over and control the affairs of the Company.
v.Any other event or series of events which, notwithstanding any other
provisions of this definition, is determined by the Board to
constitute a change in control of the Company for purposes of this
Agreement.
a."Code" means the Internal Revenue Code, as amended.
b."Compensation Committee" means the Compensation Committee of the
Board, or any successor committee thereto.
c."Common Stock" means the shares of common stock of the Company.
d."Company" means OTR Express, Inc., a Kansas corporation.
e."Disability" shall mean the physical or mental illness or incapacity of
Ruben such that, in the judgment of a physician chosen or approved by
the Company and specializing in the area of such physical or mental
illness or disability, Ruben is unable to perform the essential
functions of his employment with or without reasonable accommodation,
for a period of at least three (3) consecutive months or for shorter
periods totaling more than three (3) months during any period of six
(6) months.
f."Guaranty" means the guaranty of payment of the principal and certain
other amounts owing under the Loan, by the Company in favor of the Bank,
as provided in the Guaranty executed by the Company in favor of the Bank.
g."Loan" means the loan made by Bank to Ruben which is guarantied by the
Company pursuant to this Agreement.
h."Agreement" means this Stock Purchase Assistance Agreement.
i."Principal Payment Reimbursement" means the periodic payment by the
Company to Ruben of an amount, as incentive compensation, not greater
than the amount of principal due and owing under the Loan for such
period.
j."Subsidiary" means any corporation at least 80 percent of the outstanding
voting stock of which is owned by the Company.
1.Administration on Behalf of Company.
a.The Compensation Committee. The Compensation Committee shall be
comprised of two or more members of the Board, all of whom shall be
"disinterested persons" as defined in Rule 16b-3 under the Exchange Act
and "outside directors" as that term is used in Section 162 of the Code
and the regulations promulgated thereunder, but in any event consistent
with the Bylaws of the Company and applicable Kansas corporate law.
b.Powers. The Compensation Committee shall have full and exclusive
discretionary power to interpret this Agreement on behalf of the Company
and to determine eligibility for the Guaranty and Principal Payment
Reimbursement and to make such other discretionary decisions as may be
provided under this Agreement.
1.Guaranty.
a.Benefit to Company. The Board has determined that this Agreement may
reasonably be expected to benefit the Company, in conformity with KSA
17-6303 (or its successor provision).
b.Purpose of Guaranty. The Company may Guaranty all or part of the
principal amount of such Loans from time to time to Ruben to be used
solely for the purpose of:
i.Acquiring Common Stock at fair market value in open market transactions
or at negotiated prices in private transactions;
ii.Acquiring Common Stock upon the exercise of stock options granted under
a stock option plan of, or otherwise by, the Company; or
iii.Any combination of the above.
1.Loan/Guaranty Amount; General Terms.
a.Ruben shall use his commercially reasonable efforts to obtain from a Bank
a line of credit for, or loans in the aggregate original principal amount
of $120,000 to provide funds to purchase Common Stock and for no other
purpose. If the Loan is approved by Ruben and the Compensation
Committee, the Company shall offer to guaranty such Loan provided that
the amount of the Loan does not exceed the fair market value of the shares
of Common Stock to be purchased with the proceeds of the Loan, as
determined at purchase, and in no event shall Ruben have outstanding
Loans which are guaranteed by the Company
under this Agreement in excess of $120,000 original principal amount.
The Compensation Committee shall not approve any Loan unless such Loan
is payable by Ruben over a term of six (6) years and shall be full
recourse against Ruben and evidenced by a promissory note by Ruben to
Bank.
b.The Company shall not be a party or in any way construed as a lender or
party under the Loan. Ruben shall be solely liable to Bank for payment
of all principal, interest and charges under the Loan.
c.Each Guaranty shall be made only for such Loans which are reviewed and
approved by both Ruben and the Compensation Committee. Each Guaranty
shall be in such form as is consistent with this Agreement and approved
by the Compensation Committee.
e.In the event that the Company's collateral or other security arrangements
in favor of the Bank respecting the Guaranty are terminated or released
and Bank either desires (i) new or replacement collateral or other
security arrangements or (ii) to declare a default under the
Loan documents or be paid the Loan in full, the Company shall use its best
commercially reasonable efforts to provide such new or replacement
collateral or other security arrangements or to refinance the Loan
(through another bank or directly by the Company), as the case may be.
1.Purchase of Common Stock with Loan Proceeds. Upon Ruben obtaining a
Loan which is guaranteed by the Company under this Agreement, Ruben shall
purchase shares of Common Stock in the open market, in private transactions
and/or upon exercise of Company stock options hitherto granted to Ruben.
Any purchases of Common Stock under this Agreement shall be (A) personally
negotiated by Ruben or his broker, without Company involvement, (B) made
in compliance with the Company's "insider" trading policies, applicable
securities laws and other laws and (C) reported, as applicable, pursuant
to Section 16 of the Securities Act of 1933, as amended. The Company does
not make any guarantees or representations whatsoever as to the
price or fair market value of any shares so purchased nor as to the future
performance of the Company. Ruben shall use his commercially reasonable
efforts to fully invest all the Loan proceeds in the purchase of Common
Stock prior to June 10, 1998 but for purposes only of
determining the reasonableness of such efforts, Ruben shall not have any
obligation to purchase Common Stock at greater than $9.00 per share. Any
amounts available under the Loan which are not invested in the purchase of
Common Stock by June 10, 1998 shall not deemed loaned to
Ruben and shall not be subject or beneficiary of any Guaranty by the
Company.
2.Principal Payment Reimbursement; Other Payments.
a.For each full Principal Payment Reimbursement period (quarterly or
annually, as determined by the Compensation Committee) as Ruben is
employed by the Company in an officer position, the Company shall make
payments to Ruben (or directly to the Bank, if instructed by Ruben but
if Ruben is in default under the Loan, then if instructed by the
Bank) of an amount of Principal Payment Reimbursement equal to the
amount of principal scheduled due and owing to the Bank under the Loan
for such period (e.g., if Ruben has a 6 year loan with principal payable
in equal installments of $20,000, on February 27 of every year, the
Company's Principal Payment Reimbursement would equal such installments
assuming continuing eligibility throughout such periods). Upon Ruben's
receipt of any such payment, he shall apply such funds to the payment of
the principal amount of the Loan to which it relates (unless he has
already made such Loan payment from personal or other sources).
b.If Ruben ceases to be so employed by the Company in an officer position
(for whatever reason), dies or experiences Disability, Ruben and (as
required by the Guaranty) the Company shall give notice thereof to the
Bank; further, the Company's obligation to make Principal Payment
Reimbursement payments shall thereupon immediately cease and
terminate.
c.If Ruben's employment is terminated by the Company without Cause (or if
there is a Change of Control of the Company and Ruben's employment with
the Company or a successor entity is terminated by the Company or such
successor entity without Cause after such Change of Control), then the
Company (or such successor) shall pay, directly to the Bank,
the balance of principal amount outstanding (if any) at such termination
on Ruben's Loan for the benefit of Ruben (which amount may be taxable
to Ruben as compensation) provided that contemporaneously with such
payment (i) the Bank shall execute and deliver to the Company (and/or
such successor) a termination of the Guaranty and a release of the
Company (or such successor) from any and all obligations thereunder and
(ii) Ruben executes and delivers to the Company (and/or such successor) a
comprehensive release of claims, including any employment related
claims, that are or may be alleged by Ruben, his representatives and
heirs against the Company (and/or such successor).
1.Reimbursement Obligation of Ruben.
a.In the event that Ruben defaults on the Loan or otherwise entitles Bank to
make demand for payment to the Company under the Guaranty and the Bank
does in fact make such demand and the Company does in fact make payment
to the Bank therefor (in any partial or full amount, a "Guaranty
Payment"), then Ruben hereby irrevocably agrees to make
payment to the Company a money amount equal to the Guaranty Payment
(the "Guaranty Reimbursement") no later than fifteen (15) days after
written demand by the Company therefor provided that the Company is not
then in default with respect to Section 7 of this Agreement.
b.The Guaranty Reimbursement may be made (i) by cash payment (or wire
transfer) made by Ruben to the Company and to the extent payment by (i)
is not timely made, (ii) by offset or credit to the Company against any
amount or amounts (dollar for dollar) that it indisputably
and duly owes to Ruben (or, at the Company's sole discretion, will owe in
the future, but in no way obligating the Company to continue Ruben's
employment, accrue such amounts or mitigate its damages), including
those amounts related to or in connection with wages,
compensation, expense reimbursement, Principal Payment Reimbursement
and any other amounts howsoever derived.
1.Failure to Make Guaranty Reimbursement. If the Guaranty Reimbursement
is not timely paid or satisfied in full as described in Section 8(b),
then (i) such deficient amount shall accrue, and Ruben shall owe to the
Company, interest per annum (360 day year) thereon at the prime rate (as
reported in the Wall Street Journal with regard to large money center
banks) plus two percent (2%) compounded quarterly until paid in full and
(ii) such nonpayment shall entitle the Company, at its
discretion, to terminate the employment (whether or not under any
written employment contract) of Ruben for "Cause" and without any obligation
to make further or subsequent payments to Ruben (as salary, bonus, severance
compensation or otherwise but
excluding accrued and unpaid compensation).
2.Security for Guaranty.
a.Ruben's obligations to make the Guaranty Reimbursement shall be secured
by the pledge, subject to any prior or senior pledge in favor of the
Bank relating to the Loan applicable to such Guaranty, of those shares
of Common Stock acquired with the proceeds of the Loan. Such pledge
shall be evidenced by a pledge agreement executed by Ruben in
favor of the Company, in form satisfactory to Company's counsel. To the
extent permissible under the Loan, shares of Common Stock so pledged
shall, from time to time, be physically delivered to the Company,
together with a stock power endorsed in blank by Ruben in favor of the
Company and such other documentation as the Company, with
advice of counsel, may request.
b.Except for shares released under Section 10(c), Ruben shall not pledge,
hypothecate, grant a security interest in or otherwise transfer, sell
or assign any of the shares of Common Stock acquired with the proceeds
of the Loan to any person or entity except to the Bank (but
only in connection with such Loan) or the Company (in connection with
such Guaranty), and any such prohibited action shall be void and of no
effect against the Bank and the Company.
c.On an annual basis, the Company shall release from any first and prior
pledge (not subject to the pledge favoring the Bank) it holds (if any)
that number of shares (to the nearest 100 shares) of Common Stock, if
any, of a value in excess of 150% of the amount of the maximum Guaranty
Reimbursement that exists and could theoretically still then arise
under this Agreement. For example, if the maximum Guaranty
Reimbursement that exists and could theoretically still then arise under
this Agreement is $100,000 and the Company has a first and prior pledge
of Common Stock worth $200,000, the Company
would release Common Stock worth $50,000 from such pledge. It is
understood that the Bank may have a first and prior pledge in all shares
of Common Stock acquired by Ruben under the Bank's Loan until full and
final payment thereof, and therefor this subsection may never provide for
release of any such shares.
1.Obligation to Hold Shares. For so long as Ruben is employed by the
Company, he agrees not to sell, transfer or assign any of the shares of
Common Stock purchased under Loans made in connection with this Agreement
(and free of any pledge benefiting the Bank or the Company)
except (a) for 25% of such shares and (b) as the Compensation Committee
or Company may permit him to do, in their discretion, because of a financial
hardship incurred by Ruben.
2.Tax Withholding. The Company may make such withholding and take such
action as may be necessary or appropriate to satisfy tax withholding
requirements for any federal, state or local laws or regulations in
connection with the Guaranty and any payments provided for herein.
3.General Provisions.
a.No Right to Employment. Ruben shall not have any claim or right to be
retained in the employment of the Company or a Subsidiary by reason of
this Agreement or any Guaranty or Loan to him.
b.Compliance With Laws. No Guaranty or payment shall be made hereunder
unless counsel for the Company shall be satisfied that such Guaranty
or payment will be in compliance with all applicable federal, state,
and local laws.
c.Agreement Expenses. The expenses of this Agreement and its
administration shall be borne by the Company.
d.Agreement Not Funded. This Agreement shall be unfunded. The Company
shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the making of any
Guaranty or payment under this Agreement.
e.Acceptance of Actions Taken Under Agreement. By accepting a Guaranty
under this Agreement, Ruben shall be deemed conclusively to have
indicated his acceptance and consent to any action taken under this
Agreement by the Company, the Board, or the Compensation Committee.
f.Reports. The appropriate officers of the Company shall cause to be filed
any reports, returns, or other information regarding Guaranties and
payments hereunder, as may be required by any applicable statute, rule,
or regulation.
g.Governing Law. The validity, construction, and effect of this Agreement,
and any actions relating to this Agreement, shall be determined in
accordance with the laws of the State of Kansas and applicable federal
law.
h.Successors and Assigns of Ruben. This Agreement shall be binding, upon
all successors and permitted assigns of Ruben. including, without
limitations his estate, the
personal representative, executor, administrator, or trustee of such
estate, or any trustee in bankruptcy or representative of his creditors.
i.Amendment of this Agreement. This Agreement may not be modified or
amended except by a writing executed by all parties hereto.
j.Effective Date of Agreement. This Agreement shall be effective as of
the date hereof but subject to the approval of the stockholders of the
Company if required by applicable law, the certificate of incorporation
or bylaws of the Company or applicable SEC or Nasdaq regulations.
IN WITNESS WHEREOF, each of the parties have executed this Agreement
intending to be bound thereby.
/s/ Steven W. Ruben
Steven W. Ruben
OTR Express, Inc.
By: /s/ William P. Ward
Name: William P. Ward
Title: Chairman of the Board