<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LASON, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
LASON, INC.
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
--------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
Lason, Inc., a Delaware corporation, will be held at the Northfield Hilton,
Troy, Michigan 48098 on Friday, May 29, 1998, at 10:00 a.m., local time, for the
following purposes:
1. To elect three directors to serve for three years and until
their successors are elected.
2. To approve and adopt The 1998 Equity Participation Plan and
to reserve for issuance thereunder 900,000 shares of
Common Stock.
3. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
Only shareholders of record at the close of business on April 6, 1998
are entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign and return the enclosed Proxy as promptly as possible in the postage
prepaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person, even though he or she previously has returned a
Proxy.
By Order of the Board of Directors
William J. Rauwerdink
Secretary
Troy, Michigan
April 28, 1998
YOUR VOTE IS IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 3
LASON, INC.
1998 PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Lason, Inc. (the
"Company") for use at the 1998 Annual Meeting of Shareholders ("Annual Meeting")
to be held on Friday, May 29, 1998, at 10:00 a.m., local time, and at any
adjournment(s) or postponement(s ) thereof, for the purposes set forth herein
and in the accompanying Notice of 1998 Annual Meeting of Shareholders. The
Annual Meeting will be held at the Northfield Hilton, Troy, Michigan 48098. The
Company's principal executive offices are located at 1305 Stephenson Highway,
Troy, Michigan 48083 and its telephone number is (248) 597-5800. These proxy
solicitation materials were mailed on or about April 28, 1998, to all
shareholders entitled to vote at the Annual Meeting.
RECORD DATE AND OUTSTANDING SHARES
Shareholders of record at the close of business on April 6, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting. At such
Record Date, 12,031,224 shares of the Company's Common Stock, $0.01 par value,
were outstanding. The closing sales price for the Company's Common Stock on the
Record Date, as reported on the Nasdaq National Market System, was $36.50 per
share. The Company was aware of the following beneficial owners of more than 5%
of its Common Stock as of the Record Date:(1)
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage
of Beneficial Owner: Owned of Shares:
-------------------- ----- -----------
<S> <C> <C>
Golder, Thoma, Cressey, Rauner
Fund IV, L.P.(2) ..........................................766,959 6.4%
Golder, Thoma, Cressey, Rauner, Inc.
GTCR IV, L.P.
6100 Sears Tower
Chicago, Illinois 60606
Dresdner Bank, AG..........................................829,300 6.9%
Jurgen-Ponto-Platz 1
60301 Frankfurt, Germany
Dresdner RCM Global Investors LLC
RCM Limited L.P.
Four Embarcadero Center
San Francisco, CA 94111
</TABLE>
-------------------------
(1) This disclosure is based on information obtained from Schedule 13Gs
filed with the Securities and Exchange Commission (the "SEC") on
February 13, 1998 and February 6, 1998.
(2) See "Security Ownership of Management" with respect to certain
principals of Golder, Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR
Fund IV"), Golder, Thoma, Cressey, Rauner, Inc. ("GTCR") and GTCR
IV, L.P.
------------------------
<PAGE> 4
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
The presence, in person or by proxy, of the holders of a majority of
the votes entitled to be cast by the shareholders entitled to vote generally at
the Annual Meeting is necessary to constitute a quorum. Abstentions and broker
"non-votes" are counted as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.
A plurality of the votes duly cast is required for the election of
Directors (i.e., the nominees receiving the largest number of votes will be
elected). Votes withheld and broker "non-votes" while counted for purposes of
determining a quorum, have no other effect under Delaware law in the election of
Directors.
The affirmative vote by the holders of the majority of the Common Stock
present in person or represented by proxy and entitled to vote on The 1998
Equity Participation Plan (the "1998 Plan") is required to approve and adopt the
1998 Plan. An abstention is counted as a vote against and a broker "non-vote" is
not counted for purposes of approving the 1998 Plan at the Annual Meeting.
The affirmative vote by the holders of the majority of the Common Stock
present in person or represented by proxy and entitled to vote on the matter is
required to approve any other matter to be acted upon at the Annual Meeting. An
abstention is counted as a vote against and a broker "non-vote" is not counted
for purposes of approving other matters to be acted upon at the Annual Meeting.
The cost of soliciting proxies will be borne by the Company. Proxies
may be solicited on behalf of the Company by Directors, officers or employees of
the Company, without additional compensation, in person or by telephone,
facsimile transmission, telegram or electronic transmission. The Company retains
Corporate Communications, Inc. to assist in the management of the Company's
investor relations and other shareholder communications issues. As part of its
duties, Corporate Communications, Inc. may assist in the solicitation of
proxies.
In accordance with the regulations of the SEC, the Company will also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses incurred in sending proxies and proxy material to the beneficial
owners of Common Stock.
2
<PAGE> 5
ADVANCE NOTICE OF PROCEDURES
Under the Company's By-Laws, nominations for Director may be made only
by the Board, or by a shareholder entitled to vote who has delivered notice to
the Company not less than 120 nor more than 150 days prior to the first
anniversary of the annual meeting for the preceding year.
The By-Laws also provide that no business may be brought before an
annual meeting except as specified in the notice of the meeting (which includes
shareholder proposals that the Company is required to set forth in its Proxy
Statement under Securities and Exchange Commission ("SEC") Rule 14a-8) or as
otherwise brought before the meeting by or at the direction of the Board or by a
shareholder entitled to vote who has delivered notice to the Company (containing
certain information specified in the By-Laws) within the time limits described
above for delivering notice of a nomination for the election of a Director.
These requirements are separate and apart from, and in addition to, the SEC's
requirements that a shareholder must meet to have a shareholder proposal
included in the Company's Proxy Statement under SEC Rule 14a-8.
A copy of the full text of the By-Law provisions discussed above may be
obtained by writing to the Secretary of the Company.
SUBMISSION OF SHAREHOLDER PROPOSALS
It is expected that the 1999 Annual Meeting of the Company will be held
in May 1999. Pursuant to SEC Rule 14a-8, shareholders who intend to present
proposals at the 1999 Annual Meeting, and who wish to have such proposals
included in the Company's Proxy Statement for the 1999 Annual Meeting, must
ensure that such proposals are received by the Secretary of the Company at 1305
Stephenson Highway, Troy, Michigan 48083 not later than December 28, 1998. Such
proposals must meet the requirements set forth in the rules and regulations of
the SEC to be eligible for inclusion in the Company's 1999 Proxy Statement.
3
<PAGE> 6
PROPOSAL I
ELECTION OF DIRECTORS
GENERAL
The Board of Directors is divided into three classes, whose terms
expire at successive annual meetings. The Board currently consists of seven
Directors. Three Directors will be elected at the Annual Meeting to serve for a
term expiring at the Company's Annual Meeting in the year 2001.
The persons named in the enclosed proxy intend to vote such proxy for
the election of each of the three nominees named below, unless the shareholder
indicates on the proxy card that the vote should be withheld from any or all of
such nominees. Each nominee elected as a Director will continue in office until
his successor has been duly elected and qualified, or until his earlier death,
resignation or retirement.
The Company expects each nominee for election as a Director at the
Annual Meeting to be able to accept such nomination. If any nominee is unable to
accept such nomination, proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees. Each nominee is currently a
Director of the Company.
A quorum comprising the holders of the majority of the outstanding
shares of Common Stock on the Record Date must be present or represented by
proxy before the transaction of business at the Annual Meeting. If a quorum is
present, the three nominees receiving the highest number of votes will be
elected to the Board of Directors, whether or not such number of votes
represents a majority of the votes cast. Votes withheld and broker non-votes
will be counted for purposes of determining the presence or absence of a quorum
but have no other effect under Delaware law in the election of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
BELOW.
NOMINEES
Set forth below is the principal occupation of, and certain other
information regarding, such nominees and other Directors whose terms of office
will continue after the Annual Meeting.
NOMINEES FOR TERMS EXPIRING IN 2001
ALLEN J. NESBITT has served as a Director of the Company and its
predecessor since its inception. Mr. Nesbitt served as President of the
Company from its inception until his retirement in April 1997. From 1977 to
1985, Mr. Nesbitt served as Vice President of 3 P.M., Inc. Age: 51.
4
<PAGE> 7
JOSEPH P. NOLAN has served as a Director of the Company since
July 1996. Mr. Nolan is a principal and has been with GTCR since February
1994. From May 1990 to January 1994, Mr. Nolan was Vice President Corporate
Finance at Dean Witter Reynolds, Inc. Mr. Nolan is also a Director of
Province Healthcare Company. Age: 33.
FARIBORZ GHADAR has served as a Director of the Company since
January 1997. Dr. Ghadar has served as the Merrill Lynch William A. Schreyer
Chair of Global Management, Policies and Planning and Director of the Center for
Global Business Study at The Pennsylvania State University Smeal College of
Business Administration since August 1994. From September 1992 to June 1994, Dr.
Ghadar was Professor and Chairman of the International Business Department at
The George Washington School of Business and Public Management. Dr. Ghadar is
also Chairman of the Intrados/International Management Group, a Washington-
based business, offering executive development programs and strategic assessment
services. Age: 51.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999
DONALD M. GLEKLEN has served as a Director of the Company since August
1995. Mr. Gleklen has served as Chairman and Chief Executive Officer of
Intelihealth, Inc., a provider of healthcare information to consumers, since
July 1996, as President of The Maine Merchant Bank since October 1997, and as
President of Jocard Financial Services since February 1995. From March 1994 to
February 1995, Mr. Gleklen served as special counsel to Robert J. Brobyn &
Associates, Attorneys at Law. From September 1984 to March 1994, Mr. Gleklen
served as Senior Vice President - Corporate Development of Mediq Incorporated, a
publicly traded company in the healthcare services industry. Mr. Gleklen is also
a director of Nutramax Products, Inc., NewWest Eyeworks, Inc. and Home Health
Corporation of America. Age: 61.
ROBERT A. YANOVER has served as Chairman of the Board of the Company
and its predecessor from the inception of the Company until April l998. Mr.
Yanover has served as a Director of the Company and its predecessor since its
inception. Mr. Yanover also serves as President of Computer Leasing Company of
Michigan, Inc. See "Executive Compensation - Certain Transactions with
Management." Mr. Yanover was a founder and former President of 3 P.M., Inc. Age:
61.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000
GARY L. MONROE has served as Chairman of the Board of the Company
since April 1998, as President of the Company since April 1997, as Chief
Executive Officer of the Company since February 1996, and as a Director of the
Company since he joined the Company in September 1995. From September 1995 to
February 1996, Mr. Monroe served as Executive Vice President of the Company.
From May 1992 to September 1995, Mr. Monroe served as President of Kodak Imaging
Services, Inc., a subsidiary of Eastman Kodak Co. From August 1990 to May 1992,
Mr. Monroe served as Director of Finance and Strategic Planning of the Health
Sciences Division of Eastman Kodak Co. Age: 43.
BRUCE V. RAUNER has served as a Director of the Company since January
1995. Mr. Rauner is a principal and has been with GTCR since 1981. Mr. Rauner is
also a director of The Coinmach Corp., Metamor Worldwide, Inc., Polymer Group,
Inc., and Province Healthcare Company. Age: 42.
5
<PAGE> 8
BOARD MEETING AND COMMITTEES
The Board of Directors held a total of 8 meetings during 1997. The
Board of Directors has an Audit Committee, a Compensation Committee and an
Option Committee.
The Audit Committee currently consists of Messrs. Gleklen, Nolan and
Yanover. The Audit Committee was formed in October 1996 and met twice in 1997.
The Audit Committee selects the Company's independent accountants and is
primarily responsible for approving the services performed by the Company's
independent accountants, and for reviewing and evaluating the Company's
accounting policies and its system of internal accounting controls.
The Compensation Committee currently consists of Messrs. Gleklen and
Rauner. The Compensation Committee was formed in October 1996 and held no
meetings in 1997. The Compensation Committee or the full Board of Directors
determines the Company's executive compensation policies, including the
salaries, compensation and benefits of executive officers and employees of the
Company.
The Option Committee currently consists of Messrs. Gleklen, Nolan and
Rauner and held no meetings in 1997. The Option Committee is generally
responsible for administering, and granting options in accordance with, the
Company's 1995 Stock Option Plan, with authority to establish and administer
performance goals and to certify that such goals are attained. The Option
Committee will have similar administrative responsibilities with respect to the
1998 Plan, if the 1998 Plan is approved by Shareholders. See "Proposal II -
Summary of the 1998 Plan - Administration."
During the year ended December 31, 1997, each incumbent director, other
than Bruce V. Rauner, attended at least 75% of the aggregate number of meetings
of the Board of Directors and meetings of the committees of the Board on which
he served.
DIRECTOR COMPENSATION
Each Director who is not an employee of the Company receives $1,000 for
attendance of each meeting of the Board and for each committee meeting attended
on a day other than a Board meeting. Directors are reimbursed for out-of-pocket
expenses incurred in connection with attending meetings. Directors may also be
awarded options under the Company's 1995 Stock Option Plan and the proposed 1998
Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the year ended December 31, 1997, compensation of executive
officers of the Company was determined by the Board, which included Messrs.
Yanover and Monroe, who each abstained on voting with respect to compensation
for himself. The 1995 Stock Option Plan is and the proposed 1998 Plan, if
approved, will be administered by the Option Committee consisting of Messrs.
Gleklen, Nolan and Rauner.
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of shares of
Common Stock of the Company as of the Record Date, by each director, by each of
the executive officers named in the Summary Compensation Table, and by directors
and executive officers as a group. The shares and percentages shown below
include shares which may be acquired by the persons listed pursuant to presently
exercisable and outstanding stock options. Except as otherwise indicated below,
each of the persons named in the table has sole voting and investment power with
respect to the securities beneficially owned by him as set forth opposite his
name:
<TABLE>
<CAPTION>
Number of Shares Approximate
Name: Beneficially Owned: Percentage Owned:
----- ------------------- -----------------
<S> <C> <C>
Robert A. Yanover (1)..................... 391,183 3.3%
Gary L. Monroe (2)........................ 111,362 *
William J. Rauwerdink (2) ................ 27,668 *
Brian E. Jablonski (2).................... 26,202 *
Donald M. Gleklen (4)..................... 10,000 *
Fariborz Ghadar (5)...................... 1,000 *
Allen J. Nesbitt (3)....................... 451,790 3.8%
Joseph P. Nolan (6)........................ 771,968 6.4%
Bruce V. Rauner (6)........................ 766,959 6.4%
All Executive Officers and
Directors of the Company
as a group (9 persons) ..................1,792,123 14.7%(7)
</TABLE>
-------------------------
* Indicates less than 1% of the outstanding shares.
(1) Includes 301,183 shares of Common Stock held by Yanover
Associates Limited Partnership, and 90,000 shares held by
Yanover Family Limited Partnership (of which as to 60,000
shares, Mr. Yanover disclaims beneficial ownership).
Mr. Yanover's address is 133 Quayside Drive, Jupiter,
Florida 33477.
(2) Includes 111,362 shares, 17,668 and 26,202 shares of Common
Stock of Messrs. Monroe, Rauwerdink and Jablonski,
respectively, issuable upon exercise of exercisable options.
The address of Messrs. Monroe, Rauwerdink and Jablonski is
1305 Stephenson Highway, Troy, Michigan 48083.
(3) Includes 451,790 shares of Common Stock held by the Allen J.
Nesbitt Living Trust dated December 7, 1994. Mr. Nesbitt's
address is 48847 Meadowcourt, Plymouth, Michigan 48170.
(4) Includes 5,000 shares of Common Stock issuable upon exercise
of exercisable options. Mr. Gleklen's address is 212 Jeffrey
Lane, Newtown Square, Pennsylvania 19073.
(5) Includes 1,000 shares of Common Stock issuable upon exercise
of exercisable options. Mr. Ghadar's address is 555 Orlando
Avenue, State College, Pennsylvania, 16803
(6) Includes 766,959 shares of Common Stock held by GTCR Fund IV,
of which GTCR IV, L.P. is the general partner., and of which
GTCR is the general partner. See "Record Date and Outstanding
Shares" above. Each of Messrs. Rauner and Nolan is a principal
of GTCR, the general partner of GTCR IV, L.P., and therefore
may be deemed to share investment and voting control over the
shares of Common Stock held by GTCR Fund IV. Each of Messrs.
Rauner and Nolan disclaims beneficial ownership of the shares
of Common Stock owned by GTCR Fund IV. The address of each of
these holders is 6100 Sears Tower, Chicago, Illinois 60606.
(7) The percentage includes shares which may be acquired pursuant
to presently exercisable and outstanding stock options.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, as to the Chief Executive Officer and as to
each of the other three most highly compensated executive officers whose salary
plus bonus exceeded $100,000 during the last fiscal year, information concerning
all compensation paid for services to the Company in all capacities during the
last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation
Award(s) Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Year Salary (1) Bonus (2) sation Award Options (#) Payouts sation (3)
Position
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert A. Yanover (4) 1997 $ 65,000 -- -- -- -- -- $ 2,552
1996 65,000 $49,000 -- -- -- -- 334,651
1995 65,000 61,759 -- -- -- -- 5,929
Gary L. Monroe 1997 $190,866 $21,875 -- -- -- -- $ 11,866
Chairman of the Board, 1996 175,000 65,945 -- -- 20,000 -- 3,243
President and Chief 1995 46,723 -- -- -- 170,452 -- 40,000
Executive Officer (4)
William J. Rauwerdink 1997 $139,049 $16,875 -- -- -- -- $ 2,437
Executive Vice 1996 85,673 11,670 -- -- 70,000 (6) -- 232
President 1995 -- -- -- -- -- -- --
Chief Financial Officer
Treasurer and Secretary
Brian E. Jablonski 1997 $139,049 $16,875 -- -- -- -- $ 2,309
Executive Vice 1996 64,904 -- -- -- 75,000 -- 50,102
President of Strategic 1995 -- -- -- -- -- -- --
Marketing and Sales
</TABLE>
- ---------------------------------------------------------
(1) Salary includes amounts deferred, if any, pursuant to the
Company's 401(k) plan.
(2) Includes bonus amounts earned in 1997 by the executive
officers.
(3) Represents a matching contribution of $1,910, $3,166, $2,118,
and $2,118 by the Company to each of Messrs. Yanover, Monroe,
Rauwerdink and Jablonski's 401(k) accounts; and a contribution
of $602, $204, $319 and $191 by the Company for excess life
insurance on Messrs. Yanover, Monroe, Rauwerdink and
Jablonski, respectively.
(4) Mr. Yanover was Chairman of the Board until April 1998. Mr.
Monroe became Chairman of the Board in April 1998.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
There were no individual grants of stock options made during 1997 to
any executive officer named in the Summary Compensation Table.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above who holds options, certain
information regarding the exercise of stock options during the year ended
December 31, 1997 and the value of options held at year end:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Shares Underlying Unexercised Value of Unexercised In-the-Money
Acquired on Value Options at Year-End Options at Year-End(1)
Name Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Gary L. Monroe 38,090 $912,014 136,362/16,000 $3,510,746/$158,000
William J. Rauwerdink -- -- 17,668/41,332 $ 373,223/$805,602
Brian E. Jablonski 4,800 $104,640 26,202/43,998 $ 573,085/$868,100
</TABLE>
- ----------------------
(1) Market value of underlying securities at exercise date or year end, as
the case may be, minus the exercise price.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Monroe. The Company and Mr. Monroe are parties to an employment
agreement dated as of August 7, 1996 (the "Monroe Employment Agreement"), which
has a term of two years. The Monroe Employment Agreement provides that Mr.
Monroe will serve as Chief Executive Officer of the Company at an annual salary
of $175,000 plus a bonus targeted at 50% of his annual salary and will receive
options to purchase 170,452 shares of Common Stock. In June, 1997, Mr. Monroe's
annual salary was increased to $200,000. The Monroe Employment Agreement also
provides that if Mr. Monroe's employment is terminated or his duties materially
reduced, he would be entitled to severance payments at an annualized rate equal
to his base salary plus the greater of his actual bonus for the preceding year
or 50% of his base salary. Such severance payments shall be paid for the greater
of one year or the remaining term of the agreement.
9
<PAGE> 12
Mr. Rauwerdink. On April 30, 1996, the Company made a written offer
of employment to Mr. Rauwerdink, which Mr. Rauwerdink accepted. Pursuant to the
offer, the Company named Mr. Rauwerdink as its Chief Financial Officer,
Executive Vice President, Secretary and Treasurer at an annual salary of
$135,000 plus a bonus targeted at 50% of his annual salary, committed to grant
him an option to purchase 55,000 shares of its Common Stock, and agreed to
provide him severance payments equal to 90 days salary and bonus if the Company
were to terminate his employment without cause. In October, 1997, Mr.
Rauwerdink's salary was increased to $148,500.
Mr. Jablonski. On June 12, 1996, the Company made a written offer of
employment to Mr. Jablonski, which Mr. Jablonski accepted. Pursuant to the
offer, the Company agreed to name Mr. Jablonski as its Vice President of
Marketing and Sales at an annual salary of $135,000 plus a bonus targeted at 50%
of his annual salary, committed to grant him an option to purchase 60,000 shares
of its Common Stock and agreed to pay certain of his relocation expenses. In
October, 1997, Mr. Jablonski's salary was increased to $148,500.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Company leases property and a building in Livonia, Michigan, which
includes approximately 27,460 square feet of commercial space, from Mart
Associates, a Michigan general partnership ("Mart"). Mr. Yanover owns 43.34% of
Mart and is its managing partner. Mr. Nesbitt owns 33.33% of Mart and is one of
its partners. For the year ended December 31, 1997, the Company paid $150,150 in
rent for such property and building. In addition, the Company leases certain
equipment from Computer Leasing Company of Michigan, Inc. ("Computer Leasing").
Mr. Yanover owns 50% of Computer Leasing and serves as its president. For the
year ended December 31, 1997, the Company paid $116,500 for such operating
leases. The Company believes that each of the leases is at market terms and
rates.
The Company purchases printing services from Hatteras Printing, Inc.
("Hatteras"). Hatteras is owned by the wife of Mr. Nesbitt. For the year ended
December 31, 1997, the Company paid Hatteras $1,700,000 for such printing
services. The Company believes that it paid market prices for such printing
services. In addition, the Company sold copying and graphic art services to
Hatteras in the amount of $48,960 for the year ended December 31, 1997. Such
services were sold at the Company's current prices. Also effective December 1,
1997, the Company sold certain assets to Hatteras at their fair market value, as
determined by management, for $570,412, payable $350,000 at closing, with the
balance of $220,412 to be paid (together with interest at 8.0% per annum),
$125,000 on December 31, 1998 and $95,412 on December 31, 1999. The Company
purchased the assets in July, 1996 for approximately $387,000.
All material business transactions between the Company and any
executive officer or director of the Company or any member of their immediate
family are subject to review and approval by a majority of the Company's
disinterested directors. Additional transactions of the nature described above
may take place in the ordinary course of business in the future.
10
<PAGE> 13
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers (as defined in Rule 16a-1(f)), directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with the
SEC. Such persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it and written representations from certain
reporting persons that they have complied with the relevant filing requirements,
the Company believes that all filing requirements applicable to its officers,
directors and 10% shareholders were complied with during the year ended December
31, 1997.
REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
The following is the Report of the Board of Directors of the Company
describing the compensation policies and rationale applicable to the
Company's executive officers with respect to compensation paid to such
executive officers for the year ended December 31, 1997. The
information contained in the report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission nor shall such information be incorporated by reference into
any future filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that
the Company specifically incorporates it by reference into such filing.
EXECUTIVE COMPENSATION POLICY
All matters of executive compensation for the year ended December 31,
1997 were determined by the Board of Directors of the Company.
The Company's executive compensation program is designed to be aligned
with annual and long-term business plans, corporate performance and enhancement
of shareholder value. To this end, the Company's compensation strategy ties a
significant portion of executive compensation to individual performance and
overall Company success, including enhancement of shareholder value. The
principal objectives of this strategy are (i) to provide a competitive total
compensation package that enables the Company to attract and retain key
executive talent; (ii) integrate incentive compensation programs with the
Company's annual and longer-term strategic planning; (iii) provide variable
compensation opportunities that are linked to the performance of the Company;
and, (iv) link executive reward to shareholder total investment return.
11
<PAGE> 14
COMPONENTS OF EXECUTIVE COMPENSATION
The Company and certain of its executive officers are parties to
employment agreements which generally provide for a base salary, a bonus and the
right to receive stock options. See "Employment Contracts and Change-In-Control
Arrangements." In addition to the stock options provided under the employment
agreements, executive officers have been awarded stock options under the
Company's 1995 Stock Option Plan. The Company believes that its executive
officers' base salaries are below median and that their total cash compensation
(base salary and bonus) is between the median and 75th percentile on average,
based on an analysis of publicly traded peer companies (industry consolidators
and business services companies) selected on criteria including size, the nature
of the business conducted, and historical and anticipated growth (the "Peer
Group"). The Company intends through its long-term incentive program (the 1995
Stock Option Plan and the proposed 1998 Plan (see Proposal II below)) to
position executive officers' compensation at the 75th percentile of the Peer
Group. The option grants and/or restricted stock grants under the Company's 1995
Stock Option Plan and the proposed 1998 Plan are intended to align the interest
of management more closely with those of the shareholders of the Company by
increasing stock ownership by management and tying a meaningful and significant
portion of compensation to the performance of the Company's shares of Common
Stock.
In addition, the full compensation package afforded by the Company to
the executive officers generally includes various perks such as an automobile
allowance, insurance and other customary benefits. The Company also maintains a
broad-based employee benefit 401(k) plan, in which the Company's executive
officers may participate on the same terms as other employees who meet
applicable eligibility criteria, subject to legal limitations on the amounts
that may be contributed or the benefits that may be payable under the plan. The
Company may match a portion of each employee's contributions to this plan.
BASE SALARY
It is the Company's intention to compensate its executive officers,
including the Chief Executive Officer, competitively within the industry. Base
salaries for new executive officers of the Company are initially determined by
evaluating the responsibilities of the position held, the experience of the
individual and by reference to the competitive market place for executive
talent. It is anticipated that annual salary adjustments following the contract
terms will be based on overall corporate performance, a comparison of executive
compensation to peer group compensation and a subjective evaluation of the level
of performance of each executive officer.
BONUS
The Company established a Management Bonus Plan for 1997 (the "1997
Bonus Plan"). Participants in the 1997 Bonus Plan were selected by the Company's
Chief Executive Officer. Each participant in the 1997 Bonus Plan was entitled to
receive a bonus payment if the Company as a whole or, in the case of certain
participants, a defined portion of the Company with which such participant is
principally involved, exceeds a predetermined financial target with respect to a
quarter. Bonuses that are not obtained in any quarter are not carried over to
any subsequent quarter. For the year ended, December 31, 1997, Messrs. Monroe,
Rauwerdink and Jablonski were awarded bonuses of: $21,875, $16,875 and $16,875,
respectively. Bonuses aggregating $201,207 were awarded to all eligible
participants under the 1997 Bonus Plan.
12
<PAGE> 15
STOCK OPTIONS
The Company's 1995 Stock Option Plan serves as a long-term incentive
plan for the executive officers. The objective of the 1995 Stock Option Plan is
to align executive officers' long-range interests with those of all
shareholders. The approach used is designed to enhance the creation of
shareholder value over the long term since the full benefit of the compensation
package cannot be realized unless strong company performance occurs over a
number of years. Generally, the Option Committee is responsible for determining
the individuals to whom grants should be made, the timing of grants and the
number of shares subject to each option. The Company believes that stock options
provide the Company's executive officers with the opportunity to purchase and
maintain an equity interest in the Company and to share in the appreciation of
the value of the stock. The Committee believes that stock options directly
motivate an executive to maximize long-term shareholder value. The options also
utilize vesting periods in order to encourage key employees to continue in the
employ of the Company. Option grants are determined subjectively, considering
factors such as the individual performance of the executive officers and
competitive compensation packages in the industry.
SUMMARY
The Board of Directors believes that its executive compensation
philosophy of paying its executive officers well by means of competitive base
salary, annual bonus and long-term incentives, as described in this report,
serves the interests of the Company and the Company's shareholders.
Fariborz Ghadar Gary L. Monroe Bruce V. Rauner
Donald M. Gleklen Allen J. Nesbitt Robert A. Yanover
Joseph P. Nolan
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<PAGE> 16
PERFORMANCE GRAPH
Set forth below is a graph showing changes in the value of $100
invested in the Company's Common Stock, Nasdaq Composite Index and a Peer Group
Index for the period commencing on October 31, 1996 and ending with the last
quarter of 1997. The information contained in the performance graph shall not be
deemed "soliciting material" or to be 'filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing. The
stock price performance on the following graph is not necessarily indicative of
future stock price performance.
COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURN*
AMONG, LASON, INC., THE NASDAQ COMPOSITE INDEX AND A PEER GROUP
[GRAPHIC OMITTED]
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
<TABLE>
<CAPTION>
10/31/96 4TH 1ST 2ND 3RD 4TH
QTR. QTR. QTR. QTR. QTR.
1996 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C>
Lason, Inc. $100 $115 $113 $158 $156 $150
Nasdaq Composite Index $100 $106 $100 $118 $138 $129
Peer Group* $100 $110 $108 $86 $90 $97
</TABLE>
- ---------------
*The Peer Group Index consists of Donnelley Enterprise Solutions
Incorporated, F.Y.I. Incorporated, IKON Office Solutions, Inc. and Iron Mountain
Incorporated. The cumulative total returns of each company have been weighted
according to each company's stock market capitalization as of December 31, 1997.
14
<PAGE> 17
PROPOSAL II
THE 1998 EQUITY PARTICIPATION PLAN
GENERAL
On January 27, 1998, the Board of Directors adopted The 1998 Equity
Participation Plan (the "1998 Plan"), effective upon shareholder approval
thereof, for Company employees, consultants and non-employee directors and
reserved for issuance thereunder 900,000 shares of Common Stock. As of April 22,
1998, no options to purchase shares of the Common Stock and no restricted stock
have been awarded under the 1998 Plan.
At the Annual Meeting, the shareholders are being asked to approve the
1998 Plan and the reservation of shares thereunder. The Board of Directors
believes that adopting the 1998 Plan will provide the Company with equity award
opportunities to attract, retain and motivate the best available talent for the
successful conduct of its business. Currently, under the Company's 1995 Stock
Option Plan, there are approximately only 56,380 shares available for grant. The
Company does not believe that the number of remaining shares under the 1995
Stock Option Plan will be sufficient to accomplish its purposes.
SUMMARY OF THE 1998 PLAN.
The essential features of the 1998 Plan are outlined below.
PURPOSE. The purpose of the 1998 Plan is (i) to provide an incentive
for employees, consultants and non-employee directors to further the growth and
financial success of the Company by personally benefitting through the ownership
of shares of Common Stock; and (ii) to obtain and retain the services of
employees, consultants and non-employee directors considered essential to the
long-range success of the Company, by making available stock options and/or
shares of restricted stock.
ADMINISTRATION. The 1998 Plan will be administered by the Committee
(defined generally as the Option Committee of the Board or the Board of
Directors). The Option Committee currently consists of three outside directors.
Among other things, the Committee has the authority to establish and administer
performance goals, and to certify that they are attained. The Committee has the
power to interpret the 1998 Plan, the stock option agreements issued thereunder
and the agreements pursuant to which restricted stock awards are granted. The
Committee may adopt such rules for the administration, interpretation and
application of the 1998 Plan as are consistent with the 1998 Plan, and to
interpret, amend or revoke any such rules. The Company's Board of Directors,
acting by a majority of its members in office, shall administer the 1998 Plan
with respect to options granted to non-employee directors.
ELIGIBILITY. Officers, consultants and other employees (including
employee directors) of the Company and its subsidiaries and affiliates whom the
Committee believes have the potential to contribute to the future success of the
Company, and those non-employee directors who the Board of Directors believes
have the potential to contribute to the future success of the Company, shall be
eligible to receive awards under the 1998 Plan.
15
<PAGE> 18
AWARD. The maximum number of shares of Common Stock which may be
subject to a stock option award and a restricted stock award under the 1998 Plan
to any individual in any calendar year shall not exceed 250,000 shares of Common
Stock.
STOCK OPTIONS. The 1998 Plan permits the granting of non-transferable
stock options that are either intended to qualify as incentive stock options
("ISOs") or not intended to so qualify and are non-statutory stock options
("NSOs"). The Committee or the Board of Directors, as applicable, shall
determine whether stock options are to be ISOs or NSOs and whether such stock
options are to qualify as performance-based compensation as described in Section
162(m)(4)(C) (see reference below) of the Internal Revenue Code of 1986, as
amended (the "Code"). The option exercise price for each share covered by the
option may be less than the fair market value of a share of Common Stock on the
date of grant; however, in the case of ISOs or in the case of a grant to the
chief executive officer and the four other highest compensated executive
officers, the price shall be no less than 100% of the fair market value of a
share of Common Stock at the time such option is granted. The term of an option
shall be determined by the Committee provided, however, that in the case of
ISOs, the term shall not be more than 10 years from the date the ISO is granted.
The period during which the right to exercise an option in whole or in part
vests will be set by the Committee. Each option shall be evidenced by a written
stock option agreement which shall be executed by the optionee. Upon exercise of
an option, the optionee shall make full cash payment to the Company; however,
the Committee may allow (i) a delay in payment up to 30 days from the date the
option is exercised; (ii) payment, in whole or in part, through delivery of
shares of Common Stock owned by the optionee; (iii) payment, in whole or in
part, through the surrender of shares of Common Stock then issuable upon
exercise of the option; (iv) payment, in whole or in part, through the delivery
of property of any kind; (v) payment, in whole or in part, through the delivery
of a full recourse promissory note bearing interest; (vi) payment, in whole or
in part, through the delivery of a notice that the optionee has placed a market
sell order with a broker and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company; or (vii)
payment through any combination of the foregoing.
RESTRICTED STOCK. Restricted stock may be awarded to any participant
whom the Committee or the Board of Directors, as applicable, determines should
receive such an award. The Committee or the Board of Directors, as applicable,
may determine the purchase price, if any, and other terms and conditions
applicable to the restricted stock. The purchase price may be no less than the
par value of the Common Stock ($0.01) unless otherwise permitted under Delaware
state law. The Committee or the Board of Directors, as applicable, may impose
such conditions on the issuance of the restricted stock as deemed appropriate.
The Committee shall determine whether such stock options are to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code.
Restricted stock shall be issued only pursuant to a written restricted stock
agreement and shall contain such terms and conditions as the Committee shall
determine consistent with the 1998 Plan. The shares of restricted stock may be
placed into escrow by the Committee or the Board of Directors, as applicable,
and held until all the restrictions imposed under the restricted stock agreement
have been satisfied or removed.
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<PAGE> 19
SECTION 162(M) OF THE CODE. This Section precludes a public corporation
from taking a tax deduction for individual compensation in excess of $1 Million
dollars for its chief executive officer and its four other highest-paid
officers. This Section also provides for certain exemptions to this limitation,
specifically compensation that is performance based within the meaning of
Section 162(m). The Committee, however, reserves the right to award compensation
to its executives in the future that may not qualify under Section 162(m) as
deductible compensation. The Committee will, however, continue to consider all
elements of the cost to the Company of providing such compensation, including
the potential impact of Section 162(m).
FORFEITURE. The Committee may require a participant to agree that (i)
any proceeds, gains or other economic benefit received by the participant upon
receipt or exercise of an award or upon the receipt or resale of any Common
Stock underlying the award must be paid to the Company; and (ii) the award shall
terminate and any unexercised portion (whether or not vested) shall be forfeited
(a) upon the termination of employment of the participant at any time or prior
to a specified date or within a specified time period following receipt or
exercise of the award, or (b) if the participant engages in any activity in
competition with the Company.
ADJUSTMENTS FOR STOCK DIVIDENDS, MERGERS, AND CHANGES IN CONTROL. In
the event of a stock dividend, stock split, reorganization, merger, or similar
corporate transaction (other than a change in control), the Committee or the
Board of Directors, as applicable, is authorized to make appropriate adjustments
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the 1998 Plan or with respect to an
outstanding award. In addition, the Committee or the Board of Directors, as
applicable, may provide for either the purchase of any award for an amount of
cash equal to the amount that could have been obtained upon the exercise of the
option or the replacement of such award with other rights or property, provide
for the acceleration of the vesting period; for the assumption by any successor
or survivor corporation of the obligations of the Company with respect to the
award; or for the removal of restrictions imposed under a restricted stock
agreement. In the event of a change in control as defined in the 1998 Plan
(which includes, among other events, any person becoming the beneficial owner of
a majority of the combined voting power of the Company or generally, over a
period of 24 months or less, the current members of the Board, and any other
individuals who become directors of the Company after that date who were
approved by at least two-thirds of the then current Board, ceasing for any
reason to constitute a majority of the Board), each option granted shall become
exercisable as to all shares covered thereby simultaneously with the
consummation of such change in control and any restricted stock awarded shall
become fully vested and generally the restrictions included in any restricted
stock granted shall be deemed rescinded and terminated.
AMENDMENT OR TERMINATION OF THE 1998 PLAN. The 1998 Plan may be wholly
or partially amended or modified, suspended or terminated at any time from time
to time by the Board or the Committee. However, without approval of the
Company's shareholders given within 12 months before or after the action by the
Board or the Committee, no action of the Board or the Committee may, except as
otherwise provided in the 1998 Plan, increase the limits of the maximum number
of shares which may be issued under the 1998 Plan to any individual and no
action of the Board or the Committee may be taken that would otherwise require
shareholder approval as a matter of law, regulation or rule. No amendment,
suspension, or termination of the 1998 Plan shall, without the consent of the
participants, alter or impair any rights or obligations under any award
theretofore granted, unless the award itself expressly so provides.
17
<PAGE> 20
FEDERAL INCOME TAX INFORMATION. The following is only a brief summary
of the effect of federal income taxation upon the recipient and the Company
under the 1998 Plan based upon the Code. This summary does not purport to be
complete and does not discuss the income tax laws of any municipality, state or
country outside of the United States in which a participant may reside.
If any option granted under the 1998 Plan is an ISO, the optionee will
recognize no income upon grant of the ISO and will incur no tax liability due to
the exercise unless the optionee is subject to the alternative minimum tax. The
Company will not be allowed a deduction for federal income tax purposes as a
result of the exercise of an ISO regardless of the applicability of the
alternative minimum tax. Upon the sale or exchange of the shares at least two
years after the date of grant and at least one year after exercise of the
option, any gain (or loss) will be treated as a capital gain (or loss). If these
holding periods are not satisfied, the optionee will recognize ordinary income
equal to the difference between the exercise price and the lower of the fair
market value of the stock at the date of the option exercise or the sale price
of the stock. A different rule may operate to postpone the recognition date of
ordinary income upon such premature disposition if the optionee is subject to
Section 16 of the Securities Exchange Act of 1934. The Company will be entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee.
Options which do not qualify as ISOs are taxed as NSOs. An optionee
will not recognize any taxable income at the time he or she is granted an NSO.
However, upon the exercise of an NSO, the optionee will recognize ordinary
income measured by the excess of the then fair market value of the shares over
the exercise price. In certain circumstances, where the shares are subject to a
substantial risk of forfeiture when acquired or where the optionee is subject to
Section 16 of the Securities Exchange Act of 1934, the date of taxation may be
deferred unless the optionee files an election with the Internal Revenue Service
under Section 83(b) of the Code. The income recognized by an optionee who is
also an employee of the Company will be subject to tax withholding by the
Company by payment in cash or out of the current earnings paid to the optionee.
Upon sale of such shares by the optionee, any difference between the sales price
and the fair market value on the date of exercise, will be treated as capital
gain (or loss). The Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of an NSO.
The grant of restricted stock will generally be subject to the tax
consequences discussed above for NSOs. At such times as the restrictions on the
stock lapses or the stock is sold, such shareholders will recognize ordinary
income to the extent of the fair market value of such stock less the amount , if
any, which is paid for the stock. The income recognized by a shareholder who is
an employee will be subject to withholding by the Company by payment in cash or
out of the current earnings paid to the employee. The Company will be entitled
to a tax deduction in the same amount as the ordinary income recognized by the
shareholder.
18
<PAGE> 21
VOTE REQUIRED AND RECOMMENDATION.
The approval of the 1998 Plan, as described above, requires the
affirmative vote of the holders of a majority of the votes entitled to vote
under Delaware law. Votes that are cast against the proposal will be counted for
purposes of determining (i) the presence or absence of a quorum for the
transaction of business and (ii) the total number of votes cast with respect to
a proposal. Abstentions will be counted for purposes of determining both (i) the
presence of a quorum for the transaction of business and (ii) the total number
of votes cast with respect to the proposal. Accordingly, abstentions will have
the same effect as a vote against the proposal.
The discussion of the 1998 Plan is qualified in its entirety by the
actual terms and conditions of the 1998 Plan, a copy of which is included as
Appendix "A" to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE 1998 PLAN.
NOTICE OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors on October 23, 1997
selected Coopers & Lybrand, L.L.P., independent accountants, to audit the
consolidated financial statements for the year ended December 31, 1997. A
representative of Coopers & Lybrand, L.L.P. is expected to be present at the
meeting with the opportunity to make a statement if such representative desires
to do so and is expected to be available to respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent in accordance with their best judgment.
By Order of the Board of Directors
William J. Rauwerdink
Secretary
Dated: April 28, 1998
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<PAGE> 22
APPENDIX A
THE 1998 EQUITY PARTICIPATION PLAN
OF
LASON, INC.
Lason, Inc., a Delaware corporation, has adopted The 1998 Equity
Participation Plan of Lason, Inc. (the "Plan"), effective upon shareholder
approval thereof, for the benefit of its Employees (as such term is defined
below), Consultants (as such term is defined below) and Non-Employee Directors
(as such term is defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for Employees, Consultants and
Non-Employee Directors to further the growth, development and financial success
of the Company by personally benefiting through the ownership of Company stock.
(2) To enable the Company to obtain and retain the services of
directors, Employees, Consultants and Non-Employee Directors considered
essential to the long range success of the Company by offering them an
opportunity to own stock in the Company.
ARTICLE I.
DEFINITIONS
Section 1.1. General
Wherever the following terms are used in this Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise.
Section 1.2. Definitions
"Acquiring Person" means any Person other than the Company, any of the
Company's Subsidiaries, any employee benefit plan of the Company or of a
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a Subsidiary of the Company.
Section 1.3. Affiliate
"Affiliate" shall mean (a) with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person, and (b) with respect to the Company, also any entity designated by
the Board of Directors of the Company in which the Company or one of its
Affiliates has an interest. For purposes of the Plan, "control" shall have the
meaning given such term under Rule 405 of the Securities Act of 1933.
1
<PAGE> 23
Section 1.4. Award
"Award" shall mean a grant of an Option or Restricted Stock under this
Plan.
Section 1.5. Award Limit
"Award Limit" shall mean 250,000 shares of Common Stock.
Section 1.6. Board
"Board" shall mean the Board of Directors of the Company.
Section 1.7. Change in Control
"Change in Control" means the event that is deemed to have occurred if:
(a) any Acquiring Person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing a
majority of the combined voting power of the then outstanding
Voting Securities of the Company; or
(b) over a period of twenty-four months or less, members of the
Incumbent Board cease for any reason to constitute at least a
majority of the Board of Directors; or
(c) a public announcement is made of a tender or exchange offer by
any Acquiring Person for fifty percent or more of the
outstanding Voting Securities of the Company, and the Board of
Directors approves or fails to oppose that tender or exchange
offer in its statements in Schedule 14D-9 under the Exchange
Act; or its statements in Schedule 14D-9 under the Exchange
Act; or
(d) the stockholders of the Company approve a merger or
consolidation of the Company or any Subsidiary with any other
corporation or entity (or, if no such approval is required,
the consummation of such a merger or consolidation of the
Company), other than a merger or consolidation that would
result in the Voting Securities of the Company outstanding
immediately before the consummation thereof continuing to
represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity or of
a parent of the surviving entity) a majority of the combined
voting power of the Voting Securities of the surviving entity
(or its parent) outstanding immediately after that merger or
consolidation; or
(e) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets (or, if no such approval is required, the
consummation of such a liquidation, sale, or disposition in
one transaction or series
2
<PAGE> 24
of related transactions) other than a liquidation, sale or
disposition of all or substantially all the Company's assets
in one transaction or a series of related transactions to a
corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company.
Section 1.8. Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.9. Committee
"Committee" shall mean the Option Committee of the Board, or the full
Board or another committee of the Board, appointed as provided in Section 7.1.
Section 1.10. Common Stock
"Common Stock" shall mean the common stock of the Company, par value
$0.01 per share, and any equity security of the Company issued or authorized to
be issued in the future, but excluding any preferred stock and any warrants,
options or other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
Section 1.11. Company
"Company" shall mean Lason, Inc., a Delaware corporation.
Section 1.12. Consultant
"Consultant" shall mean an individual who is engaged to perform
services for the Company or any Subsidiary or Affiliate who is not an Employee
or Non-Employee Director and who is designated as a Consultant by the Committee.
Section 1.13. Director
"Director" shall mean a member of the Board.
Section 1.14. Employee
"Employee" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) and including employee directors of
the Company, or of any corporation which is a Subsidiary or Affiliate.
3
<PAGE> 25
Section 1.15. Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.16. Fair Market Value
"Fair Market Value" of a share of Common Stock as of a given date shall
be (i) the closing price of a share of Common Stock on the Nasdaq National
Market or on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on the Nasdaq OTC Market or a successor quotation system,
the mean between the closing representative bid and asked prices for the Common
Stock on the trading day previous to such date as reported by the Nasdaq OTC
Market or such successor quotation system; or (iii) if Common Stock is not
publicly traded on the Nasdaq National Market or an exchange and not quoted on
the Nasdaq OTC Market or a successor quotation system, the Fair Market Value of
a share of Common Stock as established by the Committee (or the Board, in the
case of Options granted to Non-Employee Directors) acting in good faith.
Section 1.17. Group
"Group" shall mean two or more Persons acting together as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company.
Section 1.18. Incentive Stock Option
"Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.
Section 1.19. Incumbent Board
"Incumbent Board" means the individuals who, as of the date on which
the Plan is approved by the stockholders of the Company, constitute the Board of
Directors and any other individual who becomes a director of the Company after
that date and whose election or appointment by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then comprising the Incumbent Board.
Section 1.20. Non-Employee Director
"Non-Employee Director" shall mean a member of the Board who is not
an Employee of the Company.
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<PAGE> 26
Section 1.21. Non-Qualified Stock Option
"Non-Qualified Stock Option" shall mean an Option which is designated
as such at the time of grant or which is not designated as an Incentive Stock
Option by the Committee.
Section 1.22. Option
"Option" shall mean a stock option granted under Article III of this
Plan. An Option granted under this Plan shall, as determined by the Committee,
be either a Non-Qualified Stock Option or an Incentive Stock Option; provided,
however, that Options granted to Non-Employee Directors and Consultants shall be
Non-Qualified Stock Options.
Section 1.23. Optionee
"Optionee" shall mean an Employee, Consultant or Non-Employee Director
granted an Option under this Plan.
Section 1.24. Participant
"Participant" shall mean an individual who is an Optionee or
Restricted Stockholder.
Section 1.25. Person
"Person" shall mean an individual, partnership, corporation, business
trust, limited liability company, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
Section 1.26. Plan
"Plan" shall mean The 1998 Equity Participation Plan of Lason, Inc.
Section 1.27. QDRO
"QDRO" shall mean a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
Section 1.28. Restricted Stock
"Restricted Stock" shall mean Common Stock awarded under Article VI of
this Plan.
Section 1.29. Restricted Stockholder
"Restricted Stockholder" shall mean an Employee, Consultant or
Non-Employee Director granted an award of Restricted Stock under Article VI of
this Plan.
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Section 1.30. Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
Section 1.31. Section 162(m) Participant
"Section 162(m) Participant" shall mean any Employee designated by the
Committee as an Employee whose compensation for the fiscal year in which the
Employee is so designated or a future fiscal year may be subject to the limit on
deductible compensation imposed by Section 162(m) of the Code.
Section 1.32. Stockholder's Agreement
"Stockholder's Agreement" shall mean the Stockholder's Agreement
between the Company and any Participant applicable to any grant or award to such
Participant.
Section 1.33. Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.34. Termination of Consultancy
"Termination of Consultancy" shall mean the time when the engagement of
a Participant as a Consultant to the Company or a Subsidiary is terminated for
any reason, with or without cause, including, but not by way of limitation, by
resignation, discharge, death or retirement; but excluding terminations where
there is a simultaneous commencement of employment with the Company or any
Subsidiary. The Committee, in its sole discretion, shall determine the effect of
all matters and questions relating to Termination of Consultancy, including, but
not by way of limitation, the question of whether a Termination of Consultancy
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
Section 1.35. Termination of Directorship
"Termination of Directorship" shall mean the time when a Participant
who is a Non-Employee Director ceases to be a Director for any reason,
including, but not by way of limitation, a termination by resignation, failure
to be elected, death or retirement. The Board, in its
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sole discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship with respect to Non-Employee Directors.
Section 1.36. Termination of Employment
"Termination of Employment" shall mean the time when the
employee-employer relationship between a Participant and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of a Participant by the
Company or any Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship, and
(iii) at the discretion of the Committee, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Committee, in its sole discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Employment; provided, however, that, with respect to Incentive Stock Options
unless otherwise determined by the Committee in its discretion, a leave of
absence, change in status from an employee to an independent contractor or other
change in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status
or other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section. Notwithstanding any other provision of this Plan, the Company or any
Subsidiary has an absolute and unrestricted right to terminate an Employee's
employment at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in writing.
Section 1.37. Voting Securities
"Voting Securities" means any securities that are entitled to vote
generally in the election of directors.
ARTICLE II.
SHARES SUBJECT TO PLAN
Section 2.1. Shares Subject to Plan
(a) The shares of stock subject to Awards shall be Common Stock,
initially shares of the Company's Common Stock, par value
$0.01 per share. The aggregate number of such shares which may
be issued upon the exercise of Awards under the Plan shall not
exceed nine hundred thousand (900,000). The shares of Common
Stock issuable upon the exercise of such Awards may be either
previously authorized but unissued shares or treasury shares.
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(b) The maximum number of shares which may be subject to Awards
granted under the Plan to any individual in any calendar year
shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which
are canceled continue to be counted against the Award Limit
and if, after grant of an Option, the price of shares subject
to such Option is reduced, the transaction will be treated as
a cancellation of the Option and a grant of a new Option and
both the Option deemed to be canceled and the Option deemed to
be granted will be counted against the Award Limit.
Section 2.2. Add-back of Options and Other Rights
If any Option expires or is canceled without having been fully
exercised, or is exercised in whole or in part for cash as permitted by this
Plan, the number of shares subject to such Option but as to which such Option
was not exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Options or other awards which are
adjusted pursuant to Section 10.3 and become exercisable with respect to shares
of stock of another corporation shall be considered canceled and may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are delivered by the Optionee or withheld by
the Company upon the exercise of any Option or other award under this Plan, in
payment of the exercise price thereof, may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. If any share of Restricted
Stock is forfeited by the Grantee or repurchased by the Company pursuant to
Section 6.6 hereof, such share may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. Notwithstanding the
provisions of this Section 2.2, no shares of Common Stock may again be optioned,
granted or awarded if such action would cause an Incentive Stock Option to fail
to qualify as an Incentive Stock Option under Section 422 of the Code unless the
Committee determines that such Option is no longer intended to so qualify.
ARTICLE III.
GRANTING OF OPTIONS
Section 3.1. Eligibility
Any Employee or Consultant selected by the Committee pursuant to
Section 3.4(a)(i) and each Non-Employee Director selected by the Board pursuant
to Section 3.4(d) shall be eligible to be granted an Option.
Section 3.2. Disqualification for Stock Ownership
No person may be granted an Incentive Stock Option under this Plan if
such person, at the time the Incentive Stock Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any then existing Subsidiary or parent
corporation (within the meaning of Section 422 of the Code) unless such
Incentive Stock Option conforms to the applicable provisions of Section 422 of
the Code.
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Section 3.3. Qualification of Incentive Stock Options
No Incentive Stock Option shall be granted to any person who is not an
Employee.
Section 3.4. Granting of Options
(a) The Committee shall from time to time, in its sole discretion,
and subject to applicable limitations of this Plan:
(i) Select from among the Employees and Consultants
(including Employees or Consultants who have
previously received Options or other awards under
this Plan) such of them as in its opinion should be
granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the
selected Employees or Consultants;
(iii) Subject to Section 3.3, determine whether such
Options are to be Incentive Stock Options or
Non-Qualified Stock Options and whether such Options
are to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that
the terms and conditions of Options intended to
qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and
conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code.
(b) Upon the selection of an Employee or Consultant to be granted
an Option, the Committee shall instruct the Secretary of the
Company to issue the Option and may impose such conditions on
the grant of the Option as it deems appropriate. Without
limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option
to an Employee or Consultant that the Employee or Consultant
surrender for cancellation some or all of the unexercised
Options, Awards or other rights which have been previously
granted to him under this Plan or otherwise. An Option, the
grant of which is conditioned upon such surrender, may have an
Option price lower (or higher) than the exercise price of such
surrendered Option, Award or other right, may cover the same
(or a lesser or greater) number of shares as such surrendered
Option, Award or other right, may contain such other terms as
the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition
of such surrendered Option, Award or other right.
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(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such Option from
treatment as an "incentive stock option" under Section 422 of
the Code.
(d) During the term of the Plan, the Board shall from time to
time, in its sole direction, and subject to applicable
limitations of this Plan:
(i) Select from among the Non-Employee Directors such of
them as in its opinion should be granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the
selected Non-Employee Directors; and
(iii) Determine the terms and conditions of such Options.
ARTICLE IV.
TERMS OF OPTIONS
Section 4.1. Option Agreement
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized officer of the Company
and which shall contain such terms and conditions as the Committee (or the
Board, in the case of Options granted to Non-Employee Directors) shall
determine, consistent with this Plan. As deemed necessary or advisable, Stock
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
Section 4.2. Option Price
The price per share of the shares subject to each Option shall be set
by the Committee or with respect to Non-Employee Directors, by the Board;
provided, however, that such price shall be no less than the par value of a
share of Common Stock, unless otherwise permitted by applicable state law, and
(i) in the case of Options intended to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code, such price shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted; (ii) in the case of Incentive Stock Options, such price shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted (or the date the Option is modified, extended or
renewed for purposes of Section 424(h) of the Code); and (iii) in the case of
Incentive Stock Options granted to an individual then owning (within the meaning
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary or parent corporation
thereof (within the meaning of Section 422 of the Code) such price
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shall not be less than 110% of the Fair Market Value of a share of Common Stock
on the date the Option is granted (or the date the Option is modified, extended
or renewed for purposes of Section 424(h) of the Code).
Section 4.3. Option Term
The term of an Option shall be set by the Committee or by the Board in
the case of Non- Employee Directors in their respective discretion; provided,
however, that, in the case of Incentive Stock Options, the term shall not be
more than ten (10) years from the date the Incentive Stock Option is granted, or
five (5) years from such date if the Incentive Stock Option is granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code). Except as limited by requirements of Section 422 of
the Code and regulations and rulings thereunder applicable to Incentive Stock
Options, the Committee may extend the term of any outstanding Option in
connection with any Termination of Employment or Termination of Consultancy of
the Optionee, or amend any other term or condition of such Option relating to
such a termination.
Section 4.4. Option Vesting
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the
Committee or by the Board in the case of Non- Employee
Directors, and the Committee or the Board, as applicable, may
determine that an Option may not be exercised in whole or in
part for a specified period after it is granted. At any time
after grant of an Option, the Committee or the Board, as
applicable, may, in their respective sole discretion,
accelerate the period during which an Option vests.
(b) No portion of an Option which is unexercisable at Termination
of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, shall thereafter become
exercisable, except as may be otherwise provided by the
Committee or the Board, as applicable, either in the Stock
Option Agreement or by action of the Committee or the Board,
as applicable, following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock
with respect to which "incentive stock options" (within the
meaning of Section 422 of the Code, but without regard to
Section 422(d) of the Code) are exercisable for the first time
by an Optionee during any calendar year (under the Plan and
all other incentive stock option plans of the Company and any
parent or subsidiary corporation (within the meaning of
Section 422 of the Code of the Company) exceeds $100,000, such
Options shall be treated as Non-Qualified Options to the
extent required by Section 422 of the Code. The rule set forth
in the preceding sentence shall be applied by taking Options
into account in the order in which they were granted. For
purposes
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of this Section 4.4(c), the Fair Market Value of stock shall
be determined as of the time the Option with respect to such
stock is granted.
Section 4.5. Consideration
In consideration of the granting of an Option, the Optionee shall
agree, in the written Stock Option Agreement, to render faithful and efficient
service to the Company or any Subsidiary. Nothing in this Plan or in any Stock
Option Agreement hereunder shall confer upon any Optionee any right to continue
in the employ of, or as a Consultant for, the Company or any Subsidiary, or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Optionee at any time for any reason whatsoever, with or without
good cause.
ARTICLE V.
EXERCISE OF OPTIONS
Section 5.1. Partial Exercise
An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional shares and the
Committee (or the Board, in the case of Options granted to Non-Employee
Directors) may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of shares.
Section 5.2. Manner of Exercise
All or a portion of an exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his
office:
(a) A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of
Options granted to Non-Employee Directors) stating that the
Option, or a portion thereof, is exercised. The notice shall
be signed by the Optionee or other person then entitled to
exercise the Option or such portion of the Option;
(b) Such representations and documents as the Committee (or the
Board, in the case of Options granted to Non-Employee
Directors), in its sole discretion, deems necessary or
advisable to effect compliance with all applicable provisions
of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee
or Board may, in its sole discretion, also take whatever
additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents
and registrars;
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(c) In the event that the Option shall be exercised pursuant to
Section 10.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to
exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof,
is exercised. However, the Committee (or the Board, in the
case of Options granted to Non-Employee Directors), may in its
discretion (i) allow a delay in payment up to thirty (30) days
from the date the Option, or portion thereof, is exercised;
(ii) allow payment, in whole or in part, through the delivery
of shares of Common Stock owned by the Optionee, duly endorsed
for transfer to the Company with a Fair Market Value on the
date of delivery equal to the aggregate exercise price of the
Option or exercised portion thereof; (iii) allow payment, in
whole or in part, through the surrender of shares of Common
Stock then issuable upon exercise of the Option having a Fair
Market Value on the date of Option exercise equal to the
aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and
valuable consideration; (v) allow payment, in whole or in
part, through the delivery of a full recourse promissory note
bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee
or the Board; (vi) allow payment, in whole or in part, through
the delivery of a notice that the Optionee has placed a market
sell order with a broker with respect to shares of Common
Stock then issuable upon exercise of the Option, and that the
broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the
Option exercise price; or (vii) allow payment through any
combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of
a promissory note, the Committee (or the Board, in the case of
Options granted to Non-Employee Directors) may also prescribe
the form of such note and the security to be given for such
note. The Option may not be exercised, however, by delivery of
a promissory note or by a loan from the Company when or where
such loan or other extension of credit is prohibited by law.
Section 5.3. Conditions to Issuance of Stock Certificates
The Company shall not be required to issue or deliver any certificate
or certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the
rulings or regulations of the Securities and
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Exchange Commission or any other governmental regulatory body
which the Committee or Board shall, in its sole discretion,
deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee (or
Board, in the case of Options granted to Non-Employee
Directors) shall, in its sole discretion, determine to be
necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case
of Options granted to Non-Employee Directors) may establish
from time to time for reasons of administrative convenience;
and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
Section 5.4. Rights as Stockholders
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 5.5. Ownership and Transfer Restrictions
The Committee (or Board, in the case of Options granted to Non-Employee
Directors), in its sole discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the exercise of an
Option as it deems appropriate. Any such restriction shall be set forth in the
respective Stock Option Agreement or Stockholder's Agreement or other written
agreement between the Company and the Optionee and may be referred to on the
certificates evidencing such shares. The Committee may require the Employee to
give the Company prompt notice of any disposition of shares of Common Stock
acquired by exercise of an Incentive Stock Option within (i) two years from the
date of grant (including the date the Option is modified, extended or renewed
for purposes of Section 424(h) of the Code) or (ii) one year after the transfer
of such shares to such Employee. The Committee may direct that the certificates
evidencing shares acquired by exercise of an Option refer to such requirement.
ARTICLE VI.
AWARD OF RESTRICTED STOCK
Section 6.1. Eligibility
Subject to the Award Limit, Restricted Stock may be awarded to any
Employee or any Consultant whom the Committee determines should receive such an
award. In addition, each
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Non-Employee Director shall be eligible to receive an award of Restricted Stock
if so determined by the Board.
Section 6.2. Award of Restricted Stock
(a) The Committee or the Board in the case of Non-Employee
Directors, may from time to time, in their respective sole
discretion:
(i) Select from among the Employees and Consultants or
Non-Employee Directors such of them as in its opinion
should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms
and conditions applicable to such Restricted Stock,
consistent with this Plan.
(b) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; provided, however, that
such purchase price shall be no less than the par value of the
Common Stock to be purchased, unless otherwise permitted by
applicable state law. In all cases, legal consideration shall
be required for each issuance of Restricted Stock.
(c) Upon the selection of a Participant to be awarded Restricted
Stock, the Committee or the Board, as applicable, shall
instruct the Secretary of the Company to issue such Restricted
Stock and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
Section 6.3. Restricted Stock Agreement
Restricted Stock shall be issued only pursuant to a written Restricted
Stock Agreement, which shall be executed by the selected Employee, Consultant or
Non-Employee Director and an authorized officer of the Company and which shall
contain such terms and conditions as the Committee or the Board, as applicable,
shall determine, consistent with this Plan.
Section 6.4. Consideration
As consideration for the issuance of Restricted Stock, in addition to
payment of any purchase price, the Restricted Stockholder shall agree, in the
written Restricted Stock Agreement, to render faithful and efficient service to
the Company or any Subsidiary. Nothing in this Plan or in any Restricted Stock
Agreement hereunder shall confer on any Restricted Stockholder any right to
continue in the employ of, as a Consultant for, or as a Non-Employee Director of
the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Restricted Stockholder at any time for any reason whatsoever,
with or without good cause.
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Section 6.5. Rights as Stockholders
Subject to Section 6.6, upon delivery of the shares of Restricted Stock
to the escrow holder pursuant to Section 6.8, the Restricted Stockholder shall
have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in his
Restricted Stock Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary distributions with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.6.
Section 6.6. Restriction
All shares of Restricted Stock issued under this Plan (including any
shares received by holders thereof with respect to shares of Restricted Stock as
a result of stock dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Restricted Stock Agreement, be subject to
such restrictions, if any, as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however,
that, except with respect to shares of Restricted Stock granted pursuant to
Section 6.10, by action taken after the Restricted Stock is issued, the
Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted Stock Agreement. Restricted Stock may not be sold or encumbered until
all restrictions are terminated or expire; provided, however, that, except with
respect to shares of Restricted Stock granted pursuant to Section 6.10, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire.
Section 6.7. Repurchase of Restricted Stock
The Committee or the Board, as applicable, shall provide in the terms
of each individual Restricted Stock Agreement that the Company shall have the
right to repurchase from the Restricted Stockholder the Restricted Stock then
subject to restrictions under the Restricted Stock Agreement immediately upon
Termination of Employment, Termination of Consultancy or Termination of
Directorship, as applicable between the Restricted Stockholder and the Company,
at a cash price per share equal to the price paid by the Restricted Stockholder
for such Restricted Stock; provided, however, that no such right of repurchase
shall exist in the event of a Change in Control of the Company or because of the
Restricted Stockholder's death or disability.
Section 6.8. Escrow
The Secretary of the Company or such other escrow holder as the
Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the
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restrictions that may have been imposed under the Restricted Stock Agreement
with respect to the shares evidenced by such certificate expire or shall have
been removed.
Section 6.9. Legend
In order to enforce the restrictions that may be imposed upon shares of
Restricted Stock hereunder, the Committee or the Board, as applicable, shall
cause a legend or legends to be placed on certificates representing all shares
of Restricted Stock that are still subject to any such restrictions under
Restricted Stock Agreements, which legend or legends shall make appropriate
reference to the conditions imposed thereby.
Section 6.10. Provisions Applicable to Section 162(m) Participants.
(a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant Restricted Stock to a Section 162(m)
Participant the restrictions with respect to which lapse upon
the attainment of performance goals for the Company which are
related to one or more of the following business criteria: (i)
pre-tax income, (ii) operating income, (iii) cash flow, (iv)
earnings per share, (v) return on equity, (vi) return on
invested capital or assets, (vii) cost reductions or savings,
(viii) funds from operations, (ix) appreciation in the fair
market value of Common Stock and (x) earnings before any one
or more of the following items: interest, taxes, depreciation
or amortization.
(b) To the extent deemed necessary or advisable to comply with
the performance-based compensation requirements of Section
162(m)(4)(C) of the Code, with respect to Restricted Stock
which may be granted to one or more Section 162(m)
Participants, no later than ninety (90) days following the
commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other
time as may be required or permitted by Section 162(m) of the
Code), the Committee shall, in writing, (i) designate one or
more Section 162(m) Participants, (ii) select the performance
goal or goals applicable to the fiscal year or other
designated fiscal period or period of service, (iii) establish
the various targets and amounts of Restricted Stock which may
be earned for such fiscal year or other designated fiscal
period or period of service and (iv) specify the relationship
between performance goals and targets and the amounts of
Restricted Stock to be earned by each Section 162(m)
Participant for such fiscal year or other designated fiscal
period or period of service. To the extent deemed necessary or
advisable to comply with the performance-based compensation
requirements of Section 162(m)(4)(C) of the Code, following
the completion of each fiscal year or other designated fiscal
period or period of service, and determining the amount earned
by a Section 162(m) Participant, the Committee shall certify
in writing whether the applicable performance targets have
been achieved for such fiscal year or other designated fiscal
period or period of service, and determining the amount earned
by a Section 162(m) Participant, the Committee shall have the
right to reduce (but not to increase)
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the amount payable at a given level of performance to take
into account additional factors that the Committee may deem
relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal
period or period of service.
ARTICLE VII.
ADMINISTRATION
Section 7.1. Option Committee; Subcommittee
(a) The Option Committee shall consist of two or more Directors,
appointed by and holding office at the pleasure of the Board,
none of whom shall be an Employee. Appointment of Committee
members shall be effective upon acceptance of appointment.
Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled
by the Board.
(b) A Subcommittee consisting of two or more Committee members,
appointed by and serving office at the pleasure of the Board,
each of whom is both a "non-employee director" as defined by
Rule 16b-3 and an "outside director" for purposes of Section
162(m) of the Code may be appointed at any time during which
(i) two or more Board members qualify as both "non-employee
directors" and "outside directors" and (ii) any other member
of the Committee does not qualify as both a "non-employee
director" and an "outside director."
Section 7.2. Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee and
the Subcommittee shall have the power to interpret this Plan, the Stockholders'
Agreements and the agreements pursuant to which Awards are granted and to adopt
such rules for the administration, interpretation and application of this Plan
as are consistent therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan (i) with
respect to Options granted to Non-Employee Directors and (ii) at any time when
there is no Subcommittee as described in Section 7.1(b) and not all of the
Committee members are "non-employee directors" as defined by Rule 16b-3, with
respect to any person who is subject to Section 16 of the Exchange Act at the
time such person is granted an Option. Any such grant or award under this Plan
need not be the same with respect to each Participant. Any such interpretations
and rules with respect to Incentive Stock Options shall be consistent with the
provisions of Section 422 of the Code. In its sole discretion, the Board may at
any time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code (as each may be applicable), or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee (or the Subcommittee, as applicable).
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Section 7.3. Majority Rule
The Committee and the Subcommittee shall each act by a majority of its
members in attendance at a meeting where quorum is present or by a memorandum or
other written instrument signed by all members of the Committee.
Section 7.4. Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee and the
Subcommittee may, with the approval of the Board, employ attorneys, consultants,
accountants, appraisers, brokers or other persons. The Committee, the Company
and the Company's officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee, the Board or the
Subcommittee in good faith shall be final and binding upon all Participants, the
Company and all other interested persons. No members of the Committee or the
Board shall be personally liable for any action, determination or interpretation
made in good faith with respect to this Plan or any Award, and all members of
the Committee and the Board shall be fully protected by the Company in respect
of any such action, determination or interpretation.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
Section 8.1. Not Transferable
Awards under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution or pursuant to a QDRO, unless and until such rights or awards have
been exercised, or the shares underlying such rights or awards have been issued,
and all restrictions applicable to such shares have lapsed. No Award or interest
therein shall be liable for the debts, contracts or engagements of the
Participant or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
During the lifetime of the Participant, only he may exercise an Award
(or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to a QDRO. After the death of the Participant, any
exercisable portion of an Award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Participant's will or under the then
applicable laws of descent and distribution.
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Section 8.2. Amendment, Suspension or Termination of this Plan
Except as otherwise provided in this Section 8.2, this Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board or the Committee. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Board or the Committee, no action of the Board or the
Committee may, except as provided in Section 8.3, increase the limits imposed in
Section 2.1 on the maximum number of shares which may be issued under this Plan,
and no action of the Board or the Committee may be taken that would otherwise
require stockholder approval as a matter of applicable law, regulation or rule.
The Award Limit may be increased by the Board or the Committee at any time and
from time to time, and Awards may be granted with respect to a number of shares
not in excess of such increased Award Limit; provided, however, that no such
increase of the Award Limit shall be effective unless and until such increase is
approved by the Company's stockholders and if such approval is not obtained all
Awards granted with respect to a number of shares in excess of the Award Limit
in effect prior to such increase shall be canceled and shall become null and
void. No amendment, suspension or termination of this Plan shall, without the
consent of the Participant alter or impair any rights or obligations under any
Awards theretofore granted, unless the Award itself otherwise expressly so
provides. No Award may be granted during any period of suspension or after
termination of this Plan, and in no event may any Incentive Stock Option be
granted under this Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted
by the Board; or
(b) The expiration of ten years from the date the Plan is approved
by the Company's stockholders under Section 8.4.
Section 8.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events
(a) Subject to Section 8.3(d), in the event that the Committee
(or the Board, in the case of Options granted to Non-Employee
Directors) determines that any of the following events (other
than those constituting a Change in Control, which will be
governed by Section 8.3(e)): a dividend or other distribution
(whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase,
liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the
Company, or exchange of Common Stock or other securities of
the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other
similar corporate transaction or event, in the Committee's
sole discretion (or in the case of Options granted to
Non-Employee Directors, the Board's sole discretion), affects
the Common Stock such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to
be made available under the Plan or with
20
<PAGE> 42
respect to an Award, then the Committee (or the Board, in the
case of Options granted to Non-Employee Directors) shall, in
such manner as it may deem equitable, adjust any or all of:
(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which
Awards may be granted (including, but not limited to,
adjustments of the limitations in Section 2.1 on the
maximum number and kind of shares which may be issued
and adjustments of the Award Limit);
(ii) the number and kind of shares of Common Stock (or
other securities or property) subject to outstanding
Awards; and
(iii) the grant or exercise price with respect to any Option.
(b) Subject to Section 8.3(d) and Section 8.3(e), in the event of
any transaction or event described in Section 8.3(a) or in the
event of a Change in Control or any unusual or nonrecurring
transactions or events affecting the Company, any affiliate of
the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or
accounting principles, the Committee (or the Board, in the
case of Options granted to Non-Employee Directors) in its
discretion is hereby authorized to take any one or more of the
following actions whenever the Committee (or the Board, in the
case of Options granted to Non-Employee Directors) determines
that such action is appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended
to be made available under the Plan or with respect to any
Option, other award under this Plan, to facilitate such
transactions or events or to give effect to such changes in
laws, regulations or principles:
(i) In its sole discretion, and on such terms and
conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to
Non-Employee Directors) may provide, either by the
terms of the agreement or by action taken prior to
the occurrence of such transaction or event and
either automatically or upon the request of the
Participant, for either the purchase of any such
Award for an amount of cash equal to the amount that
could have been attained upon the exercise of such
Award had such Award been currently exercisable or
payable or fully vested or the replacement of such
Award with other rights or property selected by the
Committee (or the Board, in the case of Options
granted to Non-Employee Directors) in its sole
discretion;
(ii) In its sole discretion, and on such terms and
conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to
Non-Employee Directors) may provide, either by the
terms of such Award
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<PAGE> 43
or by action taken prior to the occurrence of such
transaction or event, that for a specified period of
time prior to such transaction or event, such Award
shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in
(A) Section 4.4 or (B) the provisions of such Award;
(iii) In its sole discretion, and on such terms and
conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to
Non-Employee Directors) may provide, either by the
terms of such Award or by action taken prior to the
occurrence of such transaction or event, that upon
such event, such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar
Awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the
number and kind of shares and prices; and
(iv) In its sole discretion, and on such terms and
conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to
Non-Employee Directors) may make adjustments in the
number and type of shares of Common Stock (or other
securities or property) subject to outstanding Awards
and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included
in, Awards which may be granted in the future.
(v) In its sole discretion, and on such terms and
conditions as it deems appropriate, the Committee may
provide by the terms of a Restricted Stock award or
by action taken prior to the occurrence of such event
that, for a specified period of time prior to such
event, the restrictions imposed under a Restricted
Stock Agreement upon some or all shares of Restricted
Stock may be terminated.
(c) Subject to Section 8.3(d) and 8.8, the Committee (or the
Board, in the case of Options granted to Non-Employee
Directors) may, in its discretion, include such further
provisions and limitations in any Award agreement or
certificate, as it may deem equitable and in the best
interests of the Company.
(d) To the extent deemed necessary or advisable by the Committee,
with respect to any Award granted to any Section 162(m)
Participant that is intended to qualify as performance-based
compensation under Section 162(m)(4)(C), no adjustment or
action described in this Section 8.3(a)-(d) shall be
authorized to the extent that such adjustment or action would
cause such Award to fail to so qualify under Section
162(m)(4)(C) or any successor provision thereto. The Committee
reserves the right to make an Award to the executives of the
Company that may not qualify under Section 162(m) as
deductible compensation. Furthermore, no such adjustment or
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<PAGE> 44
action shall be authorized to the extent such adjustment or
action would result in short-swing profits liability under
Section 16 or violate the exemptive conditions of Rule 16b-3
unless the Committee (or the Board, in the case of Options
granted to Non-Employee Directors) determines that the Option
or other award is not to comply with such exemptive
conditions. The number of shares of Common Stock subject to
any Award shall always be rounded to the next whole number.
(e) Notwithstanding any other provision of this Plan, in addition
to whatever actions are taken by the Committee or by the
Board, as applicable under Section 8.3(b) which are not
inconsistent with the following, in the event of a Change in
Control:
(i) Except as otherwise specifically provided in a Stock
Option Agreement, each Option granted or awarded
hereunder shall automatically become exercisable as
to all shares covered thereby simultaneously with the
consummation of such Change in Control,
notwithstanding anything to the contrary in Section
4.4, and
(ii) Except as otherwise specifically provided in a
Restricted Stock Agreement, the Restricted Stock
shall become fully vested and the restrictions
included in any Restricted Stock granted or awarded
hereunder shall be deemed rescinded, terminated and
all of such Restricted Stock shall be immediately
released without restriction, except as to applicable
payment therefor, simultaneously with the
consummation of such Change in Control
notwithstanding anything to the contrary in Article
VI.
However, any Award granted to any individual who is then
subject to Section 16 of the Exchange Act, shall be subject to
any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are
requirements for the application of such exemptive Rule. To
the extent permitted by applicable law, an Award granted
hereunder shall be deemed amended to the extent necessary to
conform to such applicable exemptive Rule.
Section 8.4. Approval of Plan by Stockholders
This Plan will be submitted for the approval of the Company's
stockholders within twelve months after the date of the Board's initial adoption
of this Plan. Awards may be granted prior to such stockholder approval, provided
that such Awards shall not vest or be exercisable prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period all Awards
previously granted under this Plan shall thereupon be canceled and become null
and void.
Section 8.5. Tax Withholding
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<PAGE> 45
The Company shall be entitled to require payment in cash or deduction
from other compensation payable to each Participant of any sums required by
federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Award. The Committee (or the Board, in the
case of Options granted to Non-Employee Directors) may in its discretion and in
satisfaction of the foregoing requirement allow such Participant to elect to
have the Company withhold shares of Common Stock otherwise issuable under such
Award (or allow the return of shares of Common Stock) having a Fair Market Value
equal to the sums required to be withheld.
Section 8.6. Loans
The Committee may, in its discretion, extend one or more loans to
Employees in connection with the exercise or receipt of an Award granted under
this Plan. The terms and conditions of any such loan shall be set by the
Committee.
Section 8.7. Forfeiture Provisions
Pursuant to its general authority to determine the terms and conditions
applicable to awards under the Plan, the Committee (or the Board, in the case of
Options granted to Non-Employee Directors) shall have the right (to the extent
consistent with the applicable exemptive conditions of Rule 16b-3) to provide,
in the terms of Options or other awards made under the Plan, or to require the
recipient to agree by separate written instrument, that (i) any proceeds, gains
or other economic benefit actually or constructively received by the recipient
upon any receipt or exercise of the award, or upon the receipt or resale of any
Common Stock underlying such award, must be paid to the Company, and (ii) the
award shall terminate and any unexercised portion of such award (whether or not
vested) shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs at any time, prior to a
specified date, or within a specified time period following receipt or exercise
of the award, or (b) the recipient at any time, or during a specified time
period, engages in any activity in competition with the Company, or which is
inimical, contrary or harmful to the interests of the Company, as further
defined by the Committee (or the Board, as applicable).
Section 8.8. Limitations Applicable to Section 16 Persons and Performance-Based
Compensation
Notwithstanding any other provision of this Plan (other than Section
8.3(e)), this Plan and any Award granted to any individual who is then subject
to Section 16 of the Exchange Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of the
Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that
are requirements for the application of such exemptive rule. To the extent
permitted by applicable law, the Plan and Awards granted hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule. Furthermore, notwithstanding any other provision of this Plan (other than
Section 8.3(e)), to the extent deemed necessary or advisable by the Committee,
any Option or Restricted Stock which is granted to a Section 162(m) Participant
and is intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any
24
<PAGE> 46
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.
Section 8.9. Effect of Plan Upon Options and Compensation Plans.
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company (i) to establish any
other forms of incentives or compensation for Employees, Directors or
Consultants of the Company or any Subsidiary or (ii) to grant or assume Options
or other rights or awards otherwise than under this Plan in connection with any
proper corporate purpose including but not by way of limitation, the grant or
assumption of Options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.
Section 8.10. Compliance with Laws
This Plan, the granting and vesting of Awards under this Plan and the
issuance and delivery of shares of Common Stock and the payment of money under
this Plan or under Awards granted hereunder are subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities law and federal margin requirements) and
to such approvals by any listing, regulatory or governmental authority as may,
in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this Plan shall be subject
to such restrictions, and the person acquiring such securities shall, if
requested by the Company, provide such assurances and representations to the
Company as the Company may deem necessary or desirable to assure compliance with
all applicable legal requirements. To the extent permitted by applicable law,
the Plan, or Awards granted hereunder shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
Section 8.11 Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Plan.
Section 8.12. Governing Law
This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Delaware
without regard to conflicts of laws thereof.
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<PAGE> 47
LASON, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 29, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William J. Rauwerdink and Laurence B. Deitch,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, for and in the name, place and stead of the undersigned, to
represent the undersigned to vote, as directed below, all shares of Common Stock
of Lason, Inc. (the "Company") held by the undersigned as of April 6, 1998, at
the Company's 1998 Annual Meeting of Shareholders to be held at the Northfield
Hilton, Troy, Michigan 48098 on Friday, May 29, 1998, at 10:00 a.m., local time,
or at any postponement(s) or adjournment(s) of the meeting.
PROPOSAL 1: Election of Directors
Nominees: Fariborz Ghadar, Allen J. Nesbitt, and Joseph P. Nolan
for a three year term expiring in 2001.
[_] FOR all nominees listed above
(except as marked to the contrary below)
[_] WITHHOLD AUTHORITY
to vote for all nominees listed above
To withhold authority to vote for any individual nominee(s),
clearly print his name in this space.
----------------------------------------------------------------
PROPOSAL 2: Approval and Adoption of The 1998 Equity Participation Plan
[__] FOR[__] AGAINST[__] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE.
UNLESS YOU DIRECT OTHERWISE, THIS PROXY WILL BE VOTED "FOR" EACH
OF THE NOMINEES AND "FOR" THE 1998 EQUITY PARTICIPATION PLAN.
(continued on reverse side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(continued from reverse side)
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting, including any continuation of the
meeting caused by any adjournment(s) or any postponement(s) of the meeting.
Please mark, date and sign, and return promptly this proxy in the enclosed
envelope, which requires no postage if mailed in the U.S.A. When signing as
attorney, executor, administrator, trustee or guardian, or in any other
representative capacity, please give your full title as such. Each joint owner
must sign the proxy.
Signature(s) of shareholder(s) ________________ Date _________________, 1998
