Exhibit 10 (w)
STOCK PURCHASE ASSISTANCE AGREEMENT
THIS AGREEMENT is dated as of June 8, 1998 and is by and between OTR
Express, Inc. (the "Company") and Xxxx Xxxxxx, Vice President of the
Company ("Xxxxxx").
1. Purpose. The purpose of this Agreement is to promote the long-term
interests of the Company and its stockholders by encouraging and assisting
Xxxxxx, as an 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 Xxxxxx 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 Xxxxxx, 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 Xxxxxx 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) Xxxxxx'x willful malfeasance or misfeasance towards the Company
or any Subsidiary of the Company;
ii) Xxxxxx'x 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) Xxxxxx'x conviction of a misdemeanor involving moral turpitude
or the conviction of any felony;
iv) the commission by Xxxxxx 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 Xxxxxx or affiliates of Xxxxxx 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 Xxxxxx of this Agreement; or
vi) a failure by Xxxxxx to keep confidential the trade secrets and
other material proprietary information of the Company.
d) "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 an change in control of the Company for purposes of this
Agreement.
e) "Code" means the Internal Revenue Code, as amended.
f) "Compensation Committee" means the Compensation Committee of the
Board, or] any successor committee thereto.
g) "Common Stock" means the shares of common stock of the Company.
h) "Company" means OTR Express, Inc., a Kansas corporation.
i) "Disability" shall mean the physical or mental illness or
incapacity of Xxxxxx 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, Xxxxxx 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.
j) "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.
k) "Loan" means the loan made by Bank to Xxxxxx which is guarantied by
the Company pursuant to this Agreement.
l) "Agreement" means this Stock Purchase Assistance Agreement.
m) "Principal Payment Reimbursement" means the periodic payment by the
Company to Xxxxxx of an amount, as incentive compensation, not greater than
the amount of principal due and owing under the Loan for such period.
n) "Subsidiary" means any corporation at least 80 percent of the
outstanding voting stock of which is owned by the Company.
3. 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.
4. 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 Xxxxxx 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.
5. Loan/Guaranty Amount; General Terms.
a) Xxxxxx 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 $60,000 to provide funds to purchase Common Stock and for no
other purpose. If the Loan is approved by Xxxxxx 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 Xxxxxx have outstanding Loans which are
guaranteed by the Company under this Agreement in excess of $60,000
original principal amount. The Compensation Committee shall not approve
any Loan unless such Loan is payable by Xxxxxx over a term of six (6) years
and shall be full recourse against Xxxxxx and evidenced by a promissory
note by Xxxxxx to Bank.
b) The Company shall not be a party or in any way construed as a
lender or party under the Loan. Xxxxxx 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 Xxxxxx and the Compensation Committee. Each Guaranty
shall be in such form as is consistent with this Agreement and approved by
the Compensation Committee.
d) 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.
6. Purchase of Common Stock with Loan Proceeds. Upon Xxxxxx obtaining a
Loan which is guaranteed by the Company under this Agreement, Xxxxxx shall
purchase shares of Common Stock in the open market, in private transactions
and/or upon exercise of Company stock options hitherto granted to Xxxxxx.
Any purchases of Common Stock under this Agreement shall be (A) personally
negotiated by Xxxxxx 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. Xxxxxx 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, Xxxxxx 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 Xxxxxx and shall not be subject or beneficiary of any
Guaranty by the Company.
7. Principal Payment Reimbursement; Other Payments.
a) For each full Principal Payment Reimbursement period (quarterly or
annually, as determined by the Compensation Committee) as Xxxxxx is
employed by the Company in an officer position, the Company shall make
payments to Xxxxxx (or directly to the Bank, if instructed by Xxxxxx but if
Xxxxxx 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 Xxxxxx has a 6 year loan with principal payable in equal installments of
$10,000, on June 8 of every year, the Company's Principal Payment
Reimbursement would equal such installments assuming continuing eligibility
throughout such periods). Upon Xxxxxx'x 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 Xxxxxx ceases to be so employed by the Company in an officer
position (for whatever reason), dies or experiences Disability, Xxxxxx 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 Xxxxxx'x employment is terminated by the Company without Cause
(or if there is a Change of Control of the Company and Xxxxxx'x 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 Xxxxxx'x Loan
for the benefit of Xxxxxx (which amount may be taxable to Xxxxxx 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) Xxxxxx 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 Xxxxxx, his representatives and heirs against the Company
(and/or such successor).
8. Reimbursement Obligation of Xxxxxx.
a) In the event that Xxxxxx 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 Xxxxxx 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 Xxxxxx 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 Xxxxxx
(or, at the Company's sole discretion, will owe in the future, but in no
way obligating the Company to continue Xxxxxx'x 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.
9. 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 Xxxxxx 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 Xxxxxx for "Cause" and without any obligation to make further
or subsequent payments to Xxxxxx (as salary, bonus, severance compensation
or otherwise but excluding accrued and unpaid compensation).
10. Security for Guaranty.
a) Xxxxxx'x 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 Xxxxxx 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 Xxxxxx 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), Xxxxxx 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
$10,000 and the Company has a first and prior pledge of Common Stock worth
$20,000, the Company would release Common Stock worth $5,000 from such
pledge. It is understood that the Bank may have a first and prior pledge in
all shares of Common Stock acquired by Xxxxxx under the Bank's Loan until
full and final payment thereof, and therefor this subsection may never
provide for release of any such shares.
11. Obligation to Hold Shares. For so long as Xxxxxx 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 Xxxxxx.
12. 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.
13. General Provisions.
a) No Right to Employment. Xxxxxx 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, Xxxxxx 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 Xxxxxx. This Agreement shall be binding,
upon all successors and permitted assigns of Xxxxxx. 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/ Xxxx Xxxxxx
Xxxx Xxxxxx
OTR Express, Inc.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board
