<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to_______________
Commission File Number: 000-21407
LASON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-3214743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
1305 Stephenson Highway
Troy, Michigan 48083
(Address of principal executive offices including zip code)
Telephone: (248) 597-5800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of May 13, 1998, 12,039,039 shares of Common Stock, $.01 par value were
outstanding.
<PAGE> 2
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
March 31, 1998 (Unaudited) and December 31, 1997 2
Condensed Consolidated Statements of Income (Unaudited),
Three Months Ended March 31, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows (Unaudited),
Three Months Ended March 31, 1998 and 1997 4
Notes to Condensed Consolidated Financial Statements
(Unaudited) 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
1
<PAGE> 3
Lason, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except for shares)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,822 $ 2,925
Accounts receivable (net) 55,110 43,815
Supplies 5,514 3,964
Prepaid expenses and other 8,165 8,946
----------- ------------
Total current assets 70,611 59,650
Property and equipment (net) 32,072 22,575
Deferred income taxes 553 1,034
Intangible assets (net) 137,301 94,640
----------- ------------
TOTAL ASSETS $ 240,537 $ 177,899
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses $ 8,832 $ 6,984
Accounts payable 6,861 6,590
Notes payable 244 6,462
Customer deposits 3,920 2,810
Deferred income taxes 1,656 1,753
Other 6,158 3,714
----------- ------------
Total current liabilities 27,671 28,313
Revolving credit line borrowings 68,300 13,550
Other liabilities 8,283 3,431
----------- ------------
TOTAL LIABILITIES 104,254 45,294
----------- ------------
Common stock with a put option 1,060 1,060
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value; 20,000,000 shares authorized,
12,031,224 shares issued, 11,627,705 shares outstanding and 11,637,640
shares issued, 11,550,949 outstanding 116 115
Preferred stock, $.01 par value, 5,000,000 shares authorized,
none issued and outstanding - -
Additional paid-in capital 117,563 117,352
Retained earnings 17,544 14,078
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 135,223 131,545
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 240,537 $ 177,899
=========== ============
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
2
<PAGE> 4
Lason, Inc.
Condensed Consolidated Statements of Income
(In thousands, except for per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Revenues, net of postage $ 46,566 $ 26,236
Cost of revenues 29,811 18,147
-------------- --------------
Gross profit 16,755 8,089
Selling, general and administrative expenses 9,778 4,349
Compensatory stock option expense 69 54
Amortization of intangibles 966 480
-------------- --------------
Income from operations 5,942 3,206
Net interest expense 646 266
-------------- --------------
Income before income taxes 5,296 2,940
Provision for income taxes 1,830 1,047
-------------- --------------
Net Income $ 3,466 $ 1,893
============== ==============
Basic earnings per share $ 0.30 $ 0.22
============== ==============
Diluted earnings per share $ 0.29 $ 0.21
============== ==============
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE> 5
Lason, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1998 1997
--------- --------
<S> <C> <C>
--------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 2,084 $ 3,079
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisition of businesses,
net of cash acquired (47,610) (16,683)
Additions to property and equipment (4,250) (2,253)
Proceeds from sales of fixed assets - 122
--------- --------
Net cash used in investing activities (51,860) (18,814)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit 131,250 41,843
Repayments on revolving line of credit (76,500) (23,444)
Repayments of notes payable (6,218) -
Proceeds from exercise of employee stock options 141 46
--------- --------
Net cash provided by financing activities 48,673 18,445
--------- --------
Net (decrease) increase in cash and cash equivalents (1,103) 2,710
Cash and cash equivalents at beginning of period 2,925 79
--------- --------
Cash and cash equivalents at end of period $ 1,822 $ 2,789
========= ========
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Lason, Inc. (together with its subsidiaries, the "Company") have been
prepared in conformity with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, such interim financial statements do not include
all of the information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements.
In the opinion of management, all necessary adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation have
been included. The operating results for the three month period ended March 31,
1998 are not necessarily indicative of the results to be expected for the year
ending December 31, 1998.
For further information, refer to the consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 filed with the Securities and Exchange Commission
on March 31, 1998.
Certain reclassifications have been made to the consolidated financial
statements for 1997 to conform to the 1998 presentation.
NOTE 2. ACQUISITIONS
In February, 1998, the Company acquired Racom Corporation and its
affiliates by acquiring 100% of the outstanding common stock of its parent,
Southern Microfilm Associates, Inc. ("Racom"), for $20.9 million in cash and
188,372 shares of the Company's common stock valued at approximately $5.2
million. The shares of common stock are being held in escrow as collateral to
indemnify the Company if contingencies set forth in the purchase agreement
occur within 12 months from the date of acquisition.
In March, 1998, the Company acquired substantially all of the assets of
API Systems, Inc. for $21.5 million in cash and 117,702 shares of the Company's
common stock valued at approximately $3.8 million. Substantially all of the
shares of common stock are being held in escrow as collateral to indemnify the
Company if contingencies set forth in the purchase agreement occur within
12 months from the date of acquisition.
The aggregate purchase price for all acquisitions completed during the
first quarter of 1998, excluding liabilities assumed, was approximately $55.4
million. The purchase price was allocated to the assets acquired and liabilities
assumed based on the related fair values at the date of acquisition. The excess
of the aggregate purchase price over the fair values of assets acquired and
liabilities assumed has been allocated to goodwill and is being amortized on a
straight-line method over 30 years.
Each of the acquisitions was accounted for as a purchase. The results
of operations for the three months ended March 31, 1998 include the results of
operations for each of the acquired companies since the date of their respective
acquisition.
5
<PAGE> 7
In conjunction with these acquisitions, liabilities assumed and other
non-cash consideration was as follows:
Fair value of assets acquired $ 17,704
Goodwill 40,416
Net cash paid in consideration for companies acquired (46,152)
--------
Liabilities assumed $ 11,968
========
The following table summarizes pro forma unaudited results of
operations as if each of the acquisitions completed during the first quarter of
1998 had occurred at the beginning of the periods presented:
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
Revenues $56,989 $43,197
Income before income taxes 6,045 4,211
Net income 3,794 2,548
Basic earnings per share $ 0.33 $ 0.29
Diluted earnings per share $ 0.31 $ 0.27
NOTE 3. LONG-TERM DEBT
The Company has a credit agreement with a bank group providing for
revolving credit loans up to $80 million. Borrowings will be used to finance
additional acquisitions of businesses, working capital, capital expenditures and
for other corporate purposes. Borrowings under the credit agreement are
collateralized by substantially all of the Company's assets. The Company is not
required to make principal payments prior to 2001, the term of the loan.
Interest on amounts outstanding is calculated based on interest rates determined
at the time of borrowing. Borrowings bear interest at rates ranging from LIBOR
plus a maximum of 2.25% to a base percentage rate plus a maximum of 1.25%,
depending on the Company's leverage ratio. The credit agreement contains
restrictions on the acquisition of stock or assets, disposal of assets,
incurrence of other liabilities, minimum requirements for cash flow and certain
financial ratios.
6
<PAGE> 8
NOTE 4. EARNINGS PER SHARE
Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings
Per Share", is effective for financial statements issued after December 15,
1997. This Statement establishes standards for computing and presenting earnings
per share ("EPS") and supersedes Accounting Principles Board Opinion No. 15 and
its related interpretations. EPS amounts for the three months ended March 31,
1997 have been restated using the provisions of SFAS No. 128.
The following table presents a reconciliation of the numerator (income
applicable to common shareholders) and denominator (weighted average common
shares outstanding) for the basic and diluted earnings per share calculations
for the three months ended March 31, 1998 and 1997 (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
------------------------------ --------------------------------
Weighted Weighted
Net Average Per Net Average Per
Income Shares Share Income Shares Share
------ -------- ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS $ 3,466 11,608 $0.30 $1,893 8,694 $0.22
EFFECT OF DILUTIVE SECURITIES
Contingently issuable
shares of common stock -- 221 -- -- -- --
Potential shares of common
stock from stock options
outstanding -- 296 -- -- 368 --
------- ------- ------ -----
DILUTED EPS $ 3,466 12,125 $0.29 $1,893 9,062 $0.21
======= ====== ====== =====
</TABLE>
The weighted average common shares and common share equivalents
outstanding used to compute the dilutive effect of common stock options
outstanding was computed using the treasury stock method prescribed by SFAS No.
128.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited condensed consolidated financial statements of the Company and the
related notes and the other related financial information included elsewhere in
this Form 10-Q. The discussion in this section contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
elsewhere in this Form 10-Q and identified from time to time in the Company's
reports and registration statements filed with the Securities and Exchange
Commission.
OVERVIEW
One of the Company's principal strategies is to increase its revenues
and the markets it serves through the acquisition of complementary businesses.
Toward that end, during the first quarter of 1998, the Company acquired Racom
Corporation and its affiliates by acquiring 100% of the outstanding common
stock of its parent, Southern Microfilm Associates, Inc. and substantially all
of the assets of API Systems, Inc. The aggregate consideration for all
acquisitions consisted of $46.0 million in cash and 320,349 shares of the
Company's common stock valued at approximately $9.4 million.
Although management anticipates that the Company will continue to
acquire complementary businesses in the future, there can be no assurance that
the Company will be able to identify and acquire attractive acquisition
candidates, profitably manage such acquired companies or successfully integrate
such acquired companies into the Company without substantial costs, delays or
other problems. In addition, there can be no assurance that any companies
acquired in the future will be profitable at the time of acquisition or will
achieve sales and profitability justifying the Company's investment therein or
that the Company will recognize the synergies expected from such acquisitions.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE
MONTHS ENDED MARCH 31, 1997.
Consolidated net revenues increased 77% to $46.6 million for the three
months ended March 31, 1998 from $26.2 million in the first quarter of 1997.
Approximately $17.9 million of the increase was due to acquisitions and
approximately $2.5 million was due to growth in the Company's existing business.
The internal growth was primarily the result of a $2.7 million increase in image
and data capture revenue and a $550,000 increase in print on demand revenue,
partially offset by the effects of certain discontinued services.
Gross profit increased to $16.8 million for the first quarter of 1998
from $8.1 million for the comparable 1997 quarter primarily due to an increase
in net revenues and the Company's product mix. Gross profit as a percentage of
net revenues was 36% for the three months ended March 31, 1998 versus 31% for
the comparable period of 1997.
Selling, general and administrative expenses were $9.8 million for the
three months ended March 31, 1998 compared to $4.3 million for the comparable
1997 quarter. The increase was primarily due to selling, general and
administrative expenses incurred by acquired companies.
Amortization of intangibles increased to $966,000 for the three months
ended March 31, 1998 from $480,000 for the first quarter of 1997 primarily due
to the increase in goodwill related to business acquisitions completed during
the first quarter of 1998.
8
<PAGE> 10
Net interest expense was $646,000 for the 1998 first quarter compared
to $266,000 in 1997. The increase is primarily due to higher average borrowing
balances resulting from borrowings used to fund business acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations and acquisitions through a
combination of cash flow from operations, bank borrowings and the issuance of
shares of common stock.
Cash flows provided by operating activities totaled $2.1 million for
the three months ended March 31, 1998 compared to $3.1 million for the
comparable period of 1997. The decrease in operating cash flows in 1998 is
primarily due to increased net income and accrued expenses, offset by the
effects of increased accounts receivable balances, due to the increase in net
revenue, and increased prepaid expenses and other assets.
Cash flows used in investing activities totaled $51.9 million and $18.8
million for the three months ended March 31, 1998 and 1997, respectively, and
was primarily used to fund the acquisition of businesses and invest in capital
equipment. Cash used for acquisitions was approximately $47.6 million and $ 16.7
million for the three months ended March 31, 1998 and 1997, respectively. Cash
used to invest in capital equipment totaled $4.3 million for the 1998 first
quarter, compared to $2.3 million for the comparable period of 1997. The 1997
investment in capital equipment includes approximately $1.5 million of
previously leased equipment that was purchased during the first quarter of 1997.
Cash flows provided by financing activities totaled $48.7 million in
1998 compared to $18.4 million for the comparable period of 1997 and largely
consisted of borrowings on the Company's revolving line of credit. During the
first quarter of 1998, the Company repaid $6.2 million of short-term promissory
notes relating to certain business acquisitions the Company completed in the
fourth quarter of 1997.
Credit Agreement Borrowings
The Company has a credit agreement with a bank group providing for
revolving credit loans up to $80 million. Borrowings will be used to finance
additional acquisitions of businesses, working capital, capital expenditures and
for other corporate purposes. Borrowings under the credit agreement are
collateralized by substantially all of the Company's assets. The Company is not
required to make principal payments prior to 2001, the term of the loan.
Interest on amounts outstanding is calculated based on interest rates determined
at the time of borrowing. Borrowings bear interest at rates ranging from LIBOR
plus a maximum of 2.25% (6.65% as of May 13, 1998) to a base percentage rate
plus a maximum of 1.25% (8.50% as of May 13, 1998), depending on the Company's
leverage ratio. The credit agreement contains restrictions on the acquisition of
stock or assets, disposal of assets, incurrence of other liabilities, minimum
requirements for cash flow and certain financial ratios. As of May 13, 1998,
$75.0 million was borrowed under the credit agreement.
Future Capital Needs
The Company's liquidity and capital resources have been significantly
affected by acquisitions of businesses and, given the Company's acquisition
strategy, may be significantly affected for the foreseeable future. To date, the
Company has financed its acquisitions with borrowings under the credit
agreement, with shares of its common stock and with cash from operations.
9
<PAGE> 11
The Company's ability to obtain cash adequate to fund its needs depends
generally on the results of its operations and the availability of financing.
Management believes that cash flow from operations, in conjunction with
borrowings from its existing and any future credit agreements and possible
issuance of shares of its common stock, will be sufficient to meet debt service
requirements, make possible future acquisitions and fund capital expenditures in
the future. However, there can be no assurance in this regard or that the terms
available for any future financing, if required, would be favorable to the
Company.
YEAR 2000
The Company is currently addressing the need to achieve year 2000
conversion with no effect on customers or disruption to business operations. The
Company is communicating with suppliers, customers, and others with which it
does business to coordinate year 2000 conversion issues. The cost of compliance,
which is not yet completely determined, is not expected to be material in
relation to the Company's future results of operations due to the nature of the
Company's operating systems.
INFLATION
Certain of the Company's expenses, such as wages and benefits,
occupancy costs, and equipment repair and replacement, are subject to normal
inflation. Supplies, such as paper and related products, can be subject to
significant price fluctuations. Although the Company to date has been able to
substantially offset any such cost increases through increased operating
efficiencies, there can be no assurance that the Company will be able to offset
any future cost increases through similar efficiencies or increased charges for
its products and services.
LITIGATION
The Company is, from time to time, a party to legal proceedings arising
in the normal course of its business. Management believes that none of the legal
proceedings currently outstanding will have a material adverse effect on the
Company's business, financial condition or results of operations.
10
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit No. Description
----------- -----------
10.50 Employment Agreement between Image Conversion
Systems and John R. Messinger dated July 29, 1997.
10.51 Stock Option Agreement between Lason, Inc. and
John R. Messinger dated July 29, 1997.
10.52 Stock Option Agreement between Lason, Inc. and
Cary W. Newman dated December 14, 1995.
10.53 Stock Option Agreement between Lason, Inc. and
Cary W. Newman dated December 17, 1996.
27 Financial Data Schedule
b. Reports on Form 8-K
On March 17, 1998, the registrant filed Form 8-K reporting that it had
acquired Racom Corporation and its affiliates by acquiring all of the
common stock of its parent, Southern Microfilm Associates, Inc.
On March 20, 1998, the registrant filed Form 8-K reporting that it had
acquired substantially all of the assets of API Systems, Inc.
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASON, INC.
-----------
(Registrant)
May 14, 1998 /s/ William J. Rauwerdink
(Date) ------------------------------
Executive Vice President and
Chief Financial Officer
12
<PAGE> 14
Exhibit Index
Exhibit No. Description
- ----------- -----------
10.50 Employment Agreement between Image Conversion Systems and John
R. Messinger dated July 29, 1997.
10.51 Stock Option Agreement between Lason, Inc. and John R. Messinger
dated July 29, 1997.
10.52 Stock Option Agreement between Lason, Inc. and Cary W. Newman
dated December 14, 1995.
10.53 Stock Option Agreement between Lason, Inc. and Cary W. Newman
dated December 17, 1996.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.50
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 29th day of July, 1997, between
IMAGE CONVERSION SYSTEMS, INC., a Delaware corporation, the address of which is
717 West Algonquin Road, Arlington Heights, Illinois 60005 (the "CORPORATION")
and JOHN R. MESSINGER, whose address is 19 Stone Creek Drive, Hawthorne Woods,
IL 60047 ("EMPLOYEE").
R E C I T A L S:
The Corporation is engaged in the business of photocopying,
imaging, scanning and conversion, related services ancillary to all of the
foregoing and outgrowths thereof.
Employee is currently employed by the Corporation as
President and Chief Executive Officer.
Concurrently herewith, LASON SYSTEMS, INC. ("LASON") has
acquired all of the issued and outstanding capital stock of the Corporation
pursuant to an Agreement Of Purchase And Sale Of Stock (the "STOCK PURCHASE
AGREEMENT") among the Corporation, Lason, Lason, Inc., a Delaware corporation
("Lason, Inc.") and the shareholders of the Corporation, including the Employee.
The Corporation and Lason desire to continue to benefit from
the knowledge and experience of Employee relating to the Corporation's business
by employing Employee as President and Chief Executive Officer of the
Corporation, and Employee desires to continue to serve as President and Chief
Executive Officer of the Corporation, upon the terms and subject to the
conditions set forth herein.
THEREFORE, the parties agree as follows:
1. ENGAGEMENT OF EMPLOYEE. The Corporation hereby agrees to
continue to employ Employee for the term of this Agreement as set forth in
Paragraph 4 and, during the term of this Agreement, Employee agrees to accept
continued employment with the Corporation and to serve upon the terms and
conditions herein contained as President and Chief Executive Officer of the
Corporation. In such capacity, Employee shall perform the duties and have the
powers customarily incident to the office of a President and Chief Executive
Officer, including, but not limited to, having general responsibility for the
day-to-day management and operations of the Corporation and general supervision
of all subordinate officers, employees and agents of the Corporation. Employee
shall devote his full working time and attention to discharging the duties of
his position. Employee shall report to the Corporation's Chairman of the Board.
In addition, Employee shall perform those additional duties set forth in Exhibit
A attached hereto.
<PAGE> 2
2. COMPENSATION.
A. BASE SALARY. Commencing July 29, 1997, the
Corporation shall pay to Employee a base
salary at the annual rate of $150,000.00 per
year during each year of the term hereof;
provided, however, that effective January 1,
1999, the aforesaid annual salary rate shall
be adjusted to a mutually acceptable amount
but, in no event, shall such base salary
rate be adjusted by a percentage factor of
less than 10% per annum. Such base salary
shall be paid in equal bi-weekly
installments (less appropriate and necessary
withholdings for employment taxes),
commencing on the Corporation's next regular
payday and continuing on the Corporation's
regular payday every other week thereafter
during the term of this Agreement.
B. BONUS.
i. ICS COMPENSATION PLAN. Employee shall
be paid an annual bonus of $75,000.00
(the "Bonus Payment") pursuant to the
ICS Compensation Plan with adjusted
goals for the post- Lason acquisition
operation of the Corporation in 1997
and for 1998, as set forth on Exhibit
B attached hereto. For 1997, the
payment shall be pro-rated. In 1999,
the Bonus Amount shall be adjusted to
a mutually acceptable amount but, in
no event, shall such Bonus Amount be
adjusted by a percentage factor of
less than 10% per annum.
ii. LASON STOCK BONUS PLAN. Pursuant to
the Stock Purchase Agreement, in
consideration of the sale of their
shares of Common Stock in the
Corporation to Lason, certain of the
Management Shareholders, as defined in
the Stock Purchase Agreement and
including Employee, received the
consideration specified in Exhibit D
attached hereto comprised of cash and
shares of Common Stock of Lason, Inc.
("LASON SHARES") in the amounts and
values set forth in Exhibit D.
Employee received the number of shares
of the Lason Shares set forth in
Exhibit D ("EMPLOYEE SHARES").
Pursuant to the Stock Purchase
Agreement, the Employee Shares are
being held in escrow (the "STOCK
PURCHASE ESCROW AGREEMENT") to
facilitate any indemnification owed to
Lason by the Management Shareholders
thereunder.
2
<PAGE> 3
Retention of the Employee Shares by
Employee is subject to the following
bonus plan:
<TABLE>
<CAPTION>
LASON STOCK BONUS PLAN
----------------------
- ---------------------------------------------------------------------------------------------------------------------------
97 97 97 98 98 98 98 98
- ---------------------------------------------------------------------------------------------------------------------------
3rd Qtr. 4th Qtr. Final Six 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year-
Months End
Year-End
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
% TO EARN 15% 15% 10% 12% 12% 12% 12% 12%
- ---------------------------------------------------------------------------------------------------------------------------
OP. INCOME - 730* 870 1600* 855 930 1010 1100 3895
MAXIMUM
- ---------------------------------------------------------------------------------------------------------------------------
OP. INCOME - 630* 750 1380* 700 760 810 900 3170
MINIMUM
- ---------------------------------------------------------------------------------------------------------------------------
OP. INCOME - BASE 600* 700 1300* 650 700 750 800 2900
</TABLE>
*Amounts shall be prorated based on number of days remaining in third quarter
from and including the commencement date of the Agreement. For example, if the
Agreement commences on August 1, 1997, the Base requirement for the 1997 third
quarter will be 61 divided by 92 times $600,000 or $397,826 and the Base for the
1997 Six Months Year End will be $397,826 plus $700,000 or $1,097,826.
1) Depending on the amount of the
Corporation's operating
income, Employee may earn
during each of the six (6)
quarters and the six (6)
months ended December 31,
1997, and the twelve (12)
months ended December 31, 1998
(hereinafter each a
"YEAR-END") (in an amount per
quarter and Year- End shown
opposite the "% to Earn"): (i)
100% of his Employee Shares
earned for that particular
quarter or year end, and (ii)
100% of that percentage
referenced on Exhibit C hereto
of $3,000,000.00 (the "$3
MILLION INCENTIVE") earned for
that particular quarter or
year end, payable 66-2/3% in
cash and 33-1/3% in shares of
Lason, Inc. Common Stock at
the average closing price for
the five (5) trading days
prior to the end of the
quarter as reported in the
Wall Street Journal index of
NASDAQ National Market Issues.
Employee acknowledges and
agrees that he is only
entitled to that percentage
amount of the $3 Million
Incentive with the balance
being distributed among Daniel
3
<PAGE> 4
Bailey, Jay Hendricks, Michael
Riley and six other employees
of the Corporation, as set
forth on Exhibit C attached
hereto and incorporated herein
by reference.
2) The $3 Million Incentive shall
become subject to the terms of
the Stock Purchase Escrow
Agreement except that the
shares of Lason, Inc. Common
Stock ("$3 MILLION INCENTIVE
SHARES") shall be valued at
the price set forth is
Subsection 1 above. The $3
Million Incentive will be
determined as soon as
practicable after the
applicable quarterly and Year-
End operating income have been
determined by Lason, Inc.'s
Chief Financial Officer in
accordance with sub-section 10
below following the end of (i)
the 1997 fourth quarter; (ii)
the 1998 second quarter; and
(iii) the 1998 fourth quarter.
The cash portion of the $3.0
Million Incentive shall be
released from escrow within
five (5) business days after
the cash portion has been
determined if no claim(s) for
indemnification is pending or
overtly threatened under the
Stock Purchase Agreement at
such time; provided, however,
if a claim(s) is pending or
overtly threatened, and is
quantifiable, and the cash
portion exceeds such amount,
the excess cash portion of the
$3.0 Million Incentive shall
be released within five (5)
business days from escrow.
3) The Employee Shares are
subject to a 24-month lock-up
agreement pursuant to the
Stock Purchase Agreement. Any
of the $3 Million Incentive
Shares issued to Employee
shall also be subject to
similar lock-up agreements as
follows: (i) shares of Lason,
Inc. issued with respect to
the third and fourth quarters
and Year-End of 1997--24 month
lock-up from December 31, 1997
(the "1997 LOCK-UP"); and (ii)
shares of Lason, Inc. issued
with respect to the four
quarters and Year-End of 1998
shall be subject to a lock-up
terminating on the same date
as the 1997 Lock-Up. At the
termination of the 1997
Lock-Up and the subsequent
lock-up, Employee shall enjoy
the same registration rights
viz a viz the $3 Million
Incentive Shares as he enjoys
with regard to the Employee
Shares pursuant to Section 4.6
of
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<PAGE> 5
the Stock Purchase Agreement
provided that he makes
investment representations
substantially similar in form
and content as those set forth
in Section 2.31 of the Stock
Purchase Agreement.
4) If the Corporation's operating
income is the Base amount or
less for any quarter or
Year-End, Employee shall
receive none of the % to Earn
for that quarter or Year-End
of his Employee Shares or of
the $3 Million Incentive. Such
Employee Shares shall be
re-assigned to Lason, Inc. but
will not be credited against
any indemnification amount
owed to Lason pursuant to the
Stock Purchase Agreement.
5) If the Corporation's operating
income for a quarter or
Year-End is an amount between
the Base and the Minimum,
Employee shall (i) earn that
proportion of the % to Earn of
the Employee Shares obtained
by multiplying the % to Earn
by the quotient obtained by
dividing the difference
between the operating income
for the quarter or Year-End
and the Base by the difference
between the Minimum and the
Base for that quarter or
Year-End, respectively, and
(ii) not earn any of the % to
Earn of the $3 Million
Incentive. All Employee Shares
not earned by Employee for
such quarter or Year-End shall
be reassigned to Lason, Inc.
but will not be credited
against any indemnification
amount owed to Lason pursuant
to the Stock Purchase
Agreement.
6) If the Corporation's operating
income for a quarter or
Year-End is equal to the
Minimum for that quarter or
Year-End, Employee shall (i)
earn all of the % to Earn of
the Employee Shares for that
quarter or Year-End; and (ii)
not earn any of the % to Earn
of the $3 Million Incentive.
7) If the Corporation's operating
income for a quarter or
Year-End is an amount between
the Minimum and the Maximum,
in addition to earning all of
the Employee Shares for that
quarter or Year-End, Employee
shall earn that proportion of
the % to Earn of the $3
Million Incentive obtained by
multiplying the % to Earn by
the quotient obtained by
dividing the difference
between the operating
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<PAGE> 6
income for the quarter or
Year-End and the Minimum by
the difference between the
Minimum and the Maximum for
that quarter or Year-End,
respectively.
8) If the Corporation's operating
income for the third or fourth
quarter or Year-End in 1997 is
an amount between the Minimum
and the Maximum, that
proportion of the % to Earn of
the $3 Million Incentive not
earned by Employee for such
quarter or Year-End, as
provided in Paragraph 7 above,
shall be added to and evenly
distributed among the % to
Earn in the 1998 four quarters
and Year-End.
9) If the Corporation's operating
income for a quarter or
Year-End is equal to or
greater than the Maximum for
that quarter or Year-End,
Employee shall earn (i) all of
the % to Earn of the Employee
Shares for that quarter or
Year-End and (ii) all of the %
to Earn of the $3 Million
Incentive for that quarter or
Year-End.
10) Operating income shall mean
for any quarter or Year-End,
the operating income of the
Corporation, determined on a
stand-alone basis in
accordance with generally
accepted accounting principles
in a manner which is
materially consistent with the
Corporation's practices prior
to its acquisition by Lason
and including amortization
expense fixed at $93,000.00
per quarter, subject to the
upward adjustments relating to
amortization and interest
costs resulting from
acquisitions as referenced
below.
Subject to the ultimate
governance authority of its
Board of Directors (i.e., the
Board of Directors of the
Corporation, Lason, Lason,
Inc. or another affiliate, as
the case may be), in order to
create no material impediment
to Employee's opportunity to
earn the Bonus during the term
of this Agreement, the
Corporation whether it remains
a subsidiary of Lason or is
merged or consolidated with or
otherwise transferred to Lason
or another subsidiary of
Lason, will be operated in all
material respects in
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<PAGE> 7
a manner consistent with the
manner in which it was
operated prior to the
acquisition of control of the
Corporation by Lason except
that: (i) the Corporation will
participate in Lason's
centralized accounting, record
keeping, cash management and
budgeting process in a fair
and consistent manner as
Lason's other divisions and
subsidiaries; (ii) the
Corporation will participate
in Lason's centralized
purchasing system as may be in
place from time to time in a
fair and consistent manner as
Lason's other divisions and
subsidiaries; (iii) the
Corporation will participate
in other similar centralized
functions in a fair and
consistent manner as Lason's
other divisions and
subsidiaries; (iv) the
Corporation will participate
in Lason's benefit program;
and (v) the business conducted
by Corporation prior to the
acquisition of control by
Lason will continue to be done
by Corporation, but if such
business is diverted to other
divisions or subsidiaries
within Lason, Lason will
fairly credit such business to
the operating income of
Corporation. Further, in no
event will any of the
corporate overhead of Lason or
Lason, Inc. be allocated to
the Corporation (or its
successor business unit), it
being agreed that only direct
costs of the Corporation's (or
its successor business unit's)
business shall be so
attributed. In the event that
Employee believes that a
change in operational policy
will unduly impinge upon his
opportunity to earn the Bonus
he and a person or persons
designated by Lason shall meet
in order to discuss in good
faith an equitable resolution
to Employee's concerns to the
extent possible and if no such
resolution can be reached to
submit its' claim arbitration
pursuant to Section 6 hereof.
For the entire approximate 18
month period during which the
bonus set forth in
subparagraph B(ii) is
calculated, operating income
shall include up to an
aggregate of $1,200,000 of the
operating income of
acquisitions which are either
made by the Corporation or
made by Lason or an affiliate
but due to the efforts of the
Corporation's current senior
management team (i.e., Messrs.
Messinger, Hendricks, Bailey
and Riley) for purposes of
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<PAGE> 8
determining whether Employee
has earned the % to Earn of
the Employee Shares or $3
Million Incentive for any
quarter or Year-End, but only
if the Corporation, as a
result of the acquisition,
includes, as a deduction in
determining operating income,
the good will, amortization
expense and increased interest
costs of the acquisition. The
failure of the Corporation or
its parent to make an
acquisition, the decision by
the Corporation or its parent
not to pursue an acquisition,
or the decision by the
Corporation or its parent to
structure an acquisition in a
manner which excludes the
operating income from
inclusion in the Corporation's
operating income, whether
reasonable or unreasonable or
with reason or for no reason,
shall not be used by Employee
to claim that (i) the
Corporation's operating income
is understated as a result of
such failure or decision; or
(ii) Employee has been denied
the opportunity to earn the
Employee Shares or the $3
Million Incentive.
Employee will escrow his
Employee Shares and his
portion of the $3 Million
Incentive with Seyburn, Kahn,
Ginn, Bess, Deitch and Serlin,
P.C., counsel to Lason, Inc.
pursuant to the Stock Purchase
Escrow Agreement modified to
include the foregoing, and
execute assignments separate
from certificate in blank to
enable a re-assignment of his
Employee Shares and the $3
Million Incentive Shares in
case such re-assignment is
required as set forth above.
For purposes of this
Agreement, Employee Shares and
$3 Million Incentive Shares
include any securities of
Lason, Inc. issued in addition
to, in substitution of, or in
exchange for, any of the
Employee Shares or $3 Million
Incentive Shares (whether as a
distribution in connection
with any recapitalization,
reorganization or
reclassification, a stock
dividend or otherwise).
Employee shall promptly
deliver such securities to the
Escrow Agent together with
duly executed forms of
assignment.
C. BENEFITS. During the term of his Agreement,
Employee shall have the right to receive or
participate in any fringe benefits,
including, but not limited to, personal
days, group term life insurance programs,
disability insurance programs, medical
expense reimbursement plans, flexible
benefit plans, so-called qualified
8
<PAGE> 9
"pension or profit sharing plans," and other
reasonable and customary fringe benefits
which may from time-to-time be made
available by Corporation's Board of
Directors and which shall be generally
comparable to the benefits made available to
all similarly situated executive officers of
any of Lason, Inc. or Lason and its
subsidiaries; provided, however, that the
availability of such benefits is subject to
any applicable eligibility requirement of
each such program. Additionally, for a
period of 18 months from and after the date
of this Agreement, the Corporation shall
provide Employee with a policy of term life
insurance in the amount of $1,848,669
provided that Employee is insurable at
commercially reasonable rates. Further, it
is understood and agreed that compensation
arrangements among the executives of Lason,
Inc., Lason, and its subsidiaries vary and,
accordingly, a particular benefit may not be
made available to Employee even though it is
made available to another executive.
D. RELOCATION EXPENSES. Corporation agrees to
pay to Employee for his relocation expenses
in moving to Lason's headquarters the amount
of $100,000, subject to customary state and
federal tax withholdings. This payment
constitutes the Corporation's sole and
entire obligation with respect to Employee's
relocation expenses. To the extent
Employee's relocation expenses exceed
$100,000, Employee will personally be
responsible for such excess expenses. At his
request, Employee shall be entitled to a
$20,000 advance with regard to such payment.
If within twelve (12) months from the date
of this Agreement, there is a "Change in
Control" (as defined below) of Lason, Inc.,
and, at any time after the Change in
Control, Employee, while still in the employ
Corporation and/or Lason and its affiliates,
is required to relocate to another state
(except for a relocation to Chicago,
Illinois) or is Terminated without Cause (as
that term is defined herein), Employee shall
be paid, in addition to any other amounts
due hereunder, a cash bonus of $100,000. For
the purposes of this paragraph, a "Change in
Control" shall be deemed to have taken place
if (i) a third person (but not Lason, Inc.
or any of its affiliates), including a group
of individuals or entities, becomes a
beneficial owner of shares of Lason, Inc. or
the Corporation having fifty percent (50%)
or more of the total number of votes that
may be cast for the election of directors of
the Lason, Inc. or the Corporation, as the
case may be, or (ii) as a result of, or in
connection with any cash tender or exchange
offer, merger into or with any third party
not including Lason, Inc. or any of its
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<PAGE> 10
affiliates, consolidation or other business
combination, or sale of assets, or any
combination of the foregoing events, the
persons who are the directors of Lason, Inc.
or the Corporation before the occurrence of
such event or events cease to constitute
fifty percent (50%) of the Board of
Directors of Lason, Inc. or Corporation, as
the case may be.
3. GRANT OF OPTION. As a key employee of a corporation
controlled by Lason, Employee shall be eligible to participate in the Lason,
Inc. 1995 Stock Option Plan (the "PLAN") pursuant to the terms and conditions of
an Employee Stock Option Agreement entered into between Employee and Lason, Inc.
on this date (the "STOCK OPTION AGREEMENT"). Subject to the terms and conditions
of the Plan and the Stock Option Agreement: (i) Employee has been granted the
right and option (the "OPTION") to purchase up to 15,000 shares of Common Stock
of Lason, Inc. (the "OPTION SHARES") at an option price equal to $27.1875 per
share of Common Stock (the fair market value of the Shares of Common Stock of
Lason, Inc. as determined by the Board of Directors of Lason, Inc. in accordance
with generally accepted accounting principles on the date of this Agreement;
(ii) Employee may only exercise his Option to purchase Option Shares to the
extent that such Option Shares have vested and become exercisable with respect
to such Option Shares in accordance with the terms and conditions of the Stock
Option Agreement; and (iii) the Option Shares shall vest and become exercisable
in accordance with the following schedule, if as of each such date Employee is
still employed by the Corporation:
CUMULATIVE PERCENTAGE OF
OPTION SHARES
DATE VESTED AND EXERCISABLE
------------- ------------------------
July 29, 1998 20%
July 29, 1999 40%
July 29, 2000 60%
July 29, 2001 80%
July 29, 2002 100%
4. TERM AND TERMINATION. The term of this Agreement shall be
for two (2) years from July 29, 1997 to July 29, 1999 unless sooner terminated
for "Cause." The term of this Agreement shall be automatically extended for an
additional period of one (1) year if the Company shall have given notice to
Employee of its intent to extend such term. Such notice, to be effective, is to
be given not less than ninety (90) days prior to the last day of the term. In
the event the Company provides notice of extension to Employee, Employee's base
salary and other compensation will be increased in an amount mutually agreed to
by the Corporation and Employee.
For the purposes hereof, "CAUSE" shall mean:
A. Employee shall have materially breached his
lawful duties to Corporation or any material
written rules, regulations or policies of
Corporation now existing or hereafter arising,
which breach shall
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<PAGE> 11
remain unremedied for a period of 30 days after
Employee's receipt of written notice thereof
describing the breach in reasonable detail or
shall have acted with gross negligence or with
willful misconduct in the performance of his
material duties under this Agreement.
B. Employee shall have been convicted of a violation
of a felony or any law involving moral turpitude;
C. Employee shall have embezzled or otherwise
misappropriated any property belonging to
Corporation;
D. Employee shall have performed such other
commissions or omissions of a kind or nature
substantially similar to those enumerated in
subsections a, b, or c above, which commission or
omission seriously harms Corporation or the
employment relation of Corporation and Employee,
and which commission or omission shall remain
unremedied for a period of 30 days after
Employee's receipt of written notice thereof
describing the commission or omission in
reasonable detail; or
E. Employee dies or becomes unable to perform his
duties as contained in this Agreement
("DISABILITY") for a period of twelve (12)
consecutive weeks.
In the event that Employee quits his employment for other than
Good Reason (as defined below) or is terminated for Cause as set forth above,
then, and in that event, Employee shall be entitled to receive his base pay and
Bonus described in Paragraphs 2B(i) and (ii) and fringe benefits only through
the end of the week of termination but, in all events, including accrued bonus
amounts through the week of termination. "Good Reason" is defined as the
assignment to Employee (without his express written consent) of duties
materially inconsistent with and inferior to Employee's duties as set forth in
Paragraph 1 above or a required relocation by Employee to another state, other
than to the Chicago metropolitan area, which relocation is unacceptable to
Employee.
Notwithstanding the foregoing, in the event that Employee's
termination for Cause is occasioned by his Disability as defined in E above,
Employee shall be paid the Bonus described in Paragraph 2B(i) and (ii) for the
shorter of (i) one (1) additional quarter past the quarter in which his
Disability was established or (ii) the remaining term of the Agreement.
In the event that Employee is terminated by Corporation other
than for Cause or quits his employment for Good Reason, Employee shall be paid
his salary, the Bonus described in Paragraph 2B(i) if earned pursuant to
Paragraph 2B(i) during the applicable six-month term and fringe benefits at the
level in effect immediately prior to the giving of notice of termination for six
months following termination, and shall be paid the Bonus described in Paragraph
2B(ii) if earned pursuant to Paragraph 2B(ii) during the remaining term of the
Agreement.
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<PAGE> 12
5. NON-COMPETITION/CONFIDENTIALITY.
A. NON-COMPETITION AND SOLICITATION. Subject to
Section 4, in consideration of: (i) the
compensation described in this Agreement; and
(ii) the economic benefits accruing to Employee
under the Stock Purchase Agreement, Employee
agrees that while he is employed by Corporation
and for the two (2) year period following the
conclusion of his employment with the Corporation
(the "NON-COMPETE PERIOD"), Employee shall not,
either directly or indirectly (and whether or not
for compensation), work for, be employed by, own,
participate or engage in, or have any interest
in, any person, firm, entity, partnership,
limited partnership, limited liability company,
corporation or business (whether as an employee,
owner, partner, member, shareholder, officer,
director, agent, creditor, consultant or in any
capacity which calls for the rendering of
personal services, advice, acts of management,
operation or control) which is substantially the
same as or competitive with the activities
engaged in by Corporation or Lason, including but
not limited to the following: photocopying,
imaging, scanning and conversion, related
services ancillary to all of the foregoing and
outgrowths thereof (the "BUSINESS") so long as
Corporation or Lason shall, directly or
indirectly, be engaged in such activity in the
following states: Arkansas, California,
Connecticut, Delaware, Florida, Georgia, Idaho,
Illinois, Indiana, Kansas, Kentucky, Louisiana,
Massachusetts, Michigan, Minnesota, Missouri, New
Jersey, New York, Ohio, Oklahoma, Rhode Island,
South Carolina, Tennessee, Texas, Vermont and
Virginia (the "RESTRICTED TERRITORY"). The
foregoing shall not, however, be deemed to
prevent Employee and the Shareholders named in
the Stock Purchase Agreement from individually
and collectively owning in the aggregate up to 5%
of the securities of any corporation the shares
of which are traded on a securities exchange or
in the over-the-counter market.
Notwithstanding the above, in the event Employee
is terminated other than for Cause or Employee
terminates for Good Reason, the foregoing
restrictions shall not apply.
Employee further agrees that he shall directly or
indirectly, at any time during the Non-Compete
Period: (i) divert or attempt to divert from
Corporation or Lason any Business whether in the
Restricted Territory or not: (ii) solicit,
contact, call upon or attempt to solicit, or
provide services to, any of Corporation's or
Lason's customers, suppliers or actively sought
potential customers or suppliers for the purpose
of doing anything within the definition of the
Business or any work reasonably related to the
Business whether in the Restricted Territory or
not; or (iii) induce or attempt to induce any
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<PAGE> 13
person who is an employee of Corporation or Lason
to leave the employ of Corporation or Lason.
B. CONFIDENTIALITY. During the Non-Compete Period,
Employee shall keep secret and inviolate and
shall not divulge, communicate, use to the
detriment of Corporation or Lason or for the
benefit of any other person or persons or misuse
in any way any knowledge or information of the
confidential nature, including, without
limitation, all trade secrets, information,
computer programs, technical data, customer lists
and unpublished matters relating to the business,
assets, accounts, books, records, customers and
contracts of Corporation or Lason which he may
know as a result of his association with and
which is unique to Corporation or Lason
("CONFIDENTIAL INFORMATION"). Employee may
disclose Confidential Information if required by
any judicial or governmental request, requirement
or order; provided that Employee will take
reasonable steps to give Corporation and Lason
sufficient prior notice in order to contest such
request, requirement or order.
C. REMEDIES. Employee has had knowledge of the
affairs, trade secrets, customers, potential
customers and other proprietary information of
Corporation and Lason, and Employee acknowledges
and agrees that compliance with the covenants set
forth in this Paragraph 5 is necessary for the
protection of the Business, good will and other
proprietary interests of Corporation and Lason
and that violation of this Paragraph 5 will cause
severe and irreparable injury to the Business and
good will of Corporation and Lason, which injury
is not compensable by money damages. Accordingly,
in the event of a breach (or threatened or
attempted breach) of this Paragraph 5,
Corporation and Lason shall, in addition to any
other rights and remedies, be entitled to
immediate appropriate injunctive relief or a
decree of specific performance, without the
necessity of showing any irreparable injury or
special damages.
If, in any judicial proceeding, a court shall refuse to
enforce any of the covenants included herein, then said unenforceable
covenant(s) shall be deemed eliminated from these provisions for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants to be enforced. It is the intent and agreement of Lason and Employee
that these covenants be given the maximum force, effect and application
permissible under law.
The provisions of this Paragraph 5 shall survive the
termination of this Agreement.
6. ARBITRATION. If there is a disagreement(s) as to any of the
terms of this Agreement, including without limitation any disagreement relating
to the determination of operating income under Section 2.B.ii.(10), Employee
and/or Corporation shall provide notice to
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<PAGE> 14
the other of the disagreement. Following receipt of such notice, Employee and
Corporation agree to meet and attempt, in good faith, to resolve such
disagreement. If Employee and Corporation are unable to resolve the disagreement
to their mutual satisfaction within 10 business days from the notice, Employee
or Corporation, as applicable, shall each appoint within 5 business days an
arbitrator, and the two arbitrators so appointed shall appoint a third
arbitrator. If said two arbitrators cannot agree on the selection of a third
arbitrator within the next 10 business days, then either Employee or
Corporation, as applicable, shall be entitled to apply to the American
Arbitration Association sitting in the Chicago metropolitan area for the
selection of a third arbitrator who shall then participate in such arbitration
proceedings, and who shall be selected from a list of arbitrators possessing the
qualifications set forth below. Any arbitrator appointed pursuant to this
Section 6 shall be a qualified expert with generally recognized current
competence in employment matters. Except as otherwise provided herein, such
arbitration shall be conducted at Chicago, Illinois in accordance with the then
applicable Commercial Arbitration Rules of the American Arbitration Association.
Within 30 business days of the date of selection of the last of the
arbitrators to be selected by the foregoing procedure, the arbitrators shall
furnish the parties with their written determination. Such written determination
shall be certified and signed by at least a majority of the arbitrators, and
shall be final and binding on the parties. Judgment may be entered on any award
rendered by the arbitrators in any federal or state court having jurisdiction
over the parties. Each of Employee or Corporation, as applicable, shall pay the
arbitrator selected by it, and the costs of the third arbitrator shall be paid
1/2 by Employee and 1/2 by Corporation, as applicable.
It is understood and agreed that all claims under this Agreement shall
be resolved pursuant to arbitration as provided herein, however, in all cases
involving enforcement of a covenant not to compete or a confidentiality
agreement, if after attempting to resolve any such claim through good faith
negotiations as provided above, if a party in good faith believes that
resolution of its claim through good faith negotiations as provided above, will
require equitable relief, it may file suit in a court of competent jurisdiction
in lieu of arbitration.
7. MISCELLANEOUS. Neither party shall assign its or his rights
and obligations hereunder, except that Corporation may assign its rights and
obligations hereunder to Lason or an affiliate of Lason with the consent of
Employee, which consent shall not be unreasonably withheld. Subject to the
foregoing, all of the terms and conditions of this Agreement shall be binding
upon and shall inure to the benefit of the heirs, successors, administrators,
legal representatives and assigns, as the case may be, of the parties hereto.
Notwithstanding the above, however, Lason and its affiliates may merge
Corporation into Lason and/or its affiliates at any time without the consent of
Employee.
8. PARTIAL INVALIDITY. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable
in any manner, the remaining provisions of this Agreement shall nonetheless
continue in full force and effect without being impaired or invalidated in any
way. In addition, if any provision of this Agreement may be modified by a court
of competent jurisdiction such that it may be enforced, then that provision
shall be so modified and as modified shall be fully enforced.
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<PAGE> 15
9. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein, supersedes all prior and contemporaneous agreements, consulting
agreements, understandings and negotiations, and any and all employment
agreement(s) between Corporation and Employee dated prior to the date hereof;
and no evidence of prior or contemporaneous agreements, understandings and
negotiations shall govern or be used to construe or modify this Agreement.
Except as provided in this Agreement, no modification or alteration hereof shall
be deemed effective unless in writing and signed by the parties hereto. Neither
this Agreement nor any of its provisions may be changed, waived, or discharged
orally, but only by an instrument duly signed by the party against which
enforcement of the change, waiver, or discharge is sought.
10. NOTICES. Any notice, consent, approval or other
communication given pursuant to the provisions of this Agreement shall be in
writing and shall be (i) mailed by certified mail or registered mail, return
receipt requested, postage prepaid, or (ii) delivered by a nationally recognized
overnight courier, U.S. Post Office Express Mail, or similar overnight courier
which delivers only upon signed receipt of the addressee, and addressed as
follows:
TO EMPLOYEE AT: JOHN R. MESSINGER
19 Stone Creek Drive
Hawthorne Woods, IL 60047
WITH A COPY TO: EDWIN D. MASON, ESQ.
Foley & Lardner
One IBM Plaza - Suite 3300
330 N. Wabash Avenue
Chicago, Illinois 60611-3608
TO BUYER AT: LASON SYSTEMS, INC.
1305 Stephenson Highway
Troy, Michigan 48084
Attn: Gary L. Monroe, President and
Chief Executive Officer
WITH A COPY TO: LAURENCE B. DEITCH, ESQ.
Seyburn, Kahn, Ginn, Bess, Deitch
and Serlin
2000 Town Center, Suite 1500
Southfield, Michigan 48075-1195
The time of the giving of any notice shall be the time of receipt thereof by the
addressee or any agent of the addressee, except that in the event the addressee
or such agent of the addressee shall refuse to receive any notice given by
registered mail or certified mail as above provided or there shall be no person
available at the time of the delivery thereof to receive such notice, the time
of the giving of such notice shall be the time of such refusal or the time of
such delivery, as the case may be. Any party hereto may, by giving five (5) days
written notice to the other party hereto, designate any other address in
substitution of the foregoing address to which notice shall be given.
11. CHOICE OF LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, without giving
effect to any choice of law or conflict provision or rule, whether of the State
of Illinois (or any other jurisdiction) that would
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<PAGE> 16
cause the laws of any jurisdiction other than the State of Illinois to be
applied. In furtherance of the foregoing, the internal law of the State of
Illinois will control the interpretation and construction of this Agreement,
even if under such jurisdiction's choice of law or conflict of law or analysis,
the substantive law of some other jurisdiction would ordinarily apply. Further,
the parties hereto agree that jurisdiction and venue shall properly lie in the
courts of the State of Illinois or in the United States District Court for the
Northern District of Illinois.
12. HEADINGS. The headings in this Agreement are for reference
only and shall not limit or otherwise affect any of the terms or provisions
hereof.
13. COUNTERPARTS. This Agreement may be executed in two (2) or
more counterparts, each of which shall be considered an original, but all of
which together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]
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THIS AGREEMENT was executed as of date and year first set
forth above.
"CORPORATION"
IMAGE CONVERSION SYSTEMS, INC.,
a Delaware corporation
By:
--------------------------------------
J.E. HENDRICKS
Its: CHIEF FINANCIAL OFFICER
-------------------------------------
"EMPLOYEE"
-----------------------------------------
JOHN R. MESSINGER
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EXHIBIT 10.51
July 29, 1997
To: John R. Messinger
RE: NON-QUALIFIED STOCK OPTIONS
The Board of Directors (the "Board") of Lason, Inc., or the committee
(the "Committee") designated by the Board for the purpose of administering the
Lason, Inc. 1995 Stock Option Plan (the "Plan"), hereby grants you (the
"Grantee") a non-qualified stock option (each an "Option"), pursuant to the
Plan, a copy of which is attached hereto. Certain capitalized terms used in this
agreement (the "Agreement") are defined in paragraph 12 hereof. Certain
capitalized terms used in this Agreement which are not defined herein have the
meanings indicated for such terms in Section 10.1 of the Plan. As used herein
references to the "Company" refer to Lason, Inc. or to Lason, Inc. and/or any of
its Subsidiaries, as applicable.
1. STOCK OPTION. The Option entitles the Grantee (and such
Grantee's permitted transferee as described in paragraph 3(a) below) (each such
person, a "Purchaser") to purchase up to the number of shares of the Company's
Common Stock, par value $.01 per share (the "Option Shares"), specified below
opposite such Grantee's name, at an option price of $27.1875 per share (the
"Option Price"), subject to the terms and conditions of this Agreement:
GRANTEE NUMBER OF OPTION SHARES
------- -----------------------
John R. Messinger 15,000
2. ADDITIONAL TERMS. The Options are also subject to the
following provisions:
(a) EXERCISABILITY. Each Option may be exercised and Option
Shares may be purchased at any time and from time to time after the execution of
this Agreement, subject to the vesting limitations imposed by paragraph 2(b) of
this Agreement. The Option Price for Option Shares shall be paid in full in cash
or by check by the Purchaser of such Option Shares prior to the time of the
delivery of Option Shares, or, at the written request of such Purchaser, the
Committee may (but need not) permit payment to be made by (i) delivery to the
Company of outstanding Shares, (ii) retention by the Company of one or more of
such Option Shares or (iii) any combination of cash, check, such Purchaser's
delivery of outstanding Shares and retention by the Company of one or more of
such Option Shares. Option Shares acquired by Purchaser under this Agreement are
hereinafter referred to as the "Exercise Shares."
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(b) VESTING/EXERCISABILITY.
(i) Purchaser may only exercise the Option to purchase
Option Shares to the extent that such Option has vested and become exercisable
with respect to such Option Shares. Except as otherwise provided in Paragraph
2(b)(ii) below, the Option Shares will vest and become exercisable in accordance
with the following schedule, if as of each such date the Grantee is still
employed by the Company or any of its Subsidiaries:
CUMULATIVE PERCENTAGE
OF OPTION SHARES VESTED
DATE AND EXERCISABLE
------------- -----------------------
July 29, 1998 20%
July 29, 1999 40%
July 29, 2000 60%
July 29, 2001 80%
July 29, 2002 100%
Option Shares which have become vested and exercisable are referred to herein as
"Vested Shares" and all other Option Shares are referred to herein as "Unvested
Shares."
(ii) Upon the occurrence of a Sale of the Company, each
Option shall vest and all Unvested Shares shall be come Vested Shares if, but
only if, the Grantee thereof is employed by the Company or any of its
Subsidiaries on the date of such occurrence.
(c) PROCEDURE FOR EXERCISE. Subject to the vesting
limitations of Paragraph 2(b) above, a Purchaser may exercise all or any portion
of the Option, so long as it is valid and outstanding, at any time and from time
to time prior to its termination by delivering written notice to the Company as
provided in Section 6.4 of the Plan and written acknowledgment substantially in
the form of Exhibit A hereto that such Purchaser has read, and has been afforded
an opportunity to ask questions of the Company's management regarding all
financial and other information provided to Purchaser concerning the Company,
together with payment of the Option Price times the number of Option Shares
purchased. Subject to Section 6.7 of the Plan, at the time of exercise,
Purchaser will be entitled to review all financial and other information
regarding the Company it believes necessary to enable such Purchaser to make an
informed investment decision.
3. TRANSFERABILITY OF THE OPTIONS.
(a) The Grantee shall not sell, transfer, assign, pledge or
otherwise dispose of (a "Transfer") any interest in any Option with respect to
any Unvested Shares. Any Option with respect to any Vested Shares of the Grantee
shall not be Transferred other than as a result of the death of such Grantee,
testate or intestate, and the restrictions herein shall apply to any Transfer by
any such permitted transferee.
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(b) The Company may assign its rights and delegate its
duties under this Agreement.
4. TRANSFERABILITY OF EXERCISE SHARES.
(a) No Purchaser shall Transfer any Exercise Shares or any
interest therein except in accordance with the provisions of this Agreement.
(b) No holder of any Exercise Shares may Transfer any such
shares (except pursuant to an effective registration statement and/or re-offer
prospectus, as applicable, under the Securities Act) without first delivering to
the Company an opinion of counsel (reasonably acceptable in form and substance
to the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer. Notwithstanding the above, no Exercise Shares may be Transferred
within six (6) months from the date of grant of the Option.
5. CONFORMITY WITH PLAN. The Options are intended to conform
in all respects with, and are subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Inconsistencies between this
Agreement and the Plan shall be resolved in accordance with the terms of the
Plan, except as modified by Paragraph 2(b)(ii) of this Agreement. By executing
this Agreement, the Grantee acknowledges receipt of the Plan and agrees to be
bound by all of other terms of the Plan.
6. EMPLOYMENT. Notwithstanding any contrary oral
representations or promises made to the Grantee prior to or after the date
hereof, except as set forth in that certain Employment Agreement of even date
herewith between the Company and Grantee (the "Employment Agreement"), the
Grantee and the Company acknowledge that such Grantee's employment with the
Company is and will continue to be subject to the willingness of each to
continue such employment and nothing set forth herein or otherwise confers any
right or obligation on such Grantee to continue in the employ of the Company or
shall affect in any way such Grantee's right or the right of the Company to
terminate such Grantee's employment at any time, for any reason, with or without
cause.
7. ADJUSTMENT. The Board shall make appropriate and
proportionate adjustments to the terms of the Options to reflect any stock
dividend, stock split, combination or exchange of shares, merger, consolidation
or other change in the capitalization of the Company which the Board determines
to be similar, in its substantive effect upon the Plan or the Options, to any of
the changes expressly indicated in this sentence, as provided in Article 8 of
the Plan. The Board may (but shall not be required to) make any appropriate
adjustment to the terms of the Options to reflect any spin-off, spin-out or
other distribution of assets to shareholders or any acquisition of the Company's
stock or assets or other change which the Board determines to be similar, in its
substantive effect upon the Plan or the Options, to any of the changes expressly
indicated in this sentence, as provided in Article 8 of the Plan. In the event
of any adjustments described in the preceding two sentences, any and all new,
substituted,
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or additional securities or other property to which any Purchaser is entitled by
reason of the Option shall be immediately subject to such Option and be included
in the word "Option Shares" for all purposes of such Option with the same force
and effect as the Option Shares presently subject to such Option. After each
such event, the number of Option Shares and/or the Option Price shall be
appropriately adjusted.
8. SHARE LEGEND. Unless the Exercise Shares are the subject of
an effective registration statement and/or re-offer prospectus, as applicable,
all certificates representing any Exercise Shares subject to the provisions of
this Agreement shall have endorsed thereon the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED AS OF JULY 29, 1997, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET
FORTH IN AN EMPLOYEE STOCK OPTION AGREEMENT BETWEEN THE
COMPANY AND CERTAIN EMPLOYEES OF THE COMPANY DATED JULY 29,
1997. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
9. INVESTMENT REPRESENTATIONS. Upon the purchase of Option
Shares hereunder, the Purchaser thereof shall execute and deliver to the Company
a letter, substantially in the form attached hereto as Exhibit A, confirming
such Purchaser's investment representations.
10. EXPIRATION. Subject to Sections 6.3 and 6.7 of the Plan,
the Grantee's Option shall expire (a) with respect to Vested Shares, at the
earlier of (i) Termination for Cause of such Grantee's employment with the
Company or (ii) at 5:00 p.m., Detroit time, on the seventh anniversary of the
date hereof and (b) with respect to Unvested Shares, upon the termination of
such Grantee's employment with the Company.
Further, notwithstanding the above, with respect to Vested
Shares, if the termination of Grantee's employment with the Company is due to
death, disability, Termination Without Cause or Grantee quitting employment for
Good Reason, then the Option shall expire on the earlier of (i) the 90th day
following the termination of Grantee's employment or (ii) until 5:00 p.m.,
Detroit time, on the seventh anniversary of the date hereof.
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Further, notwithstanding the above, with respect to Vested
Shares, if the Company discovers after termination of Grantee's employment, that
Grantee engaged in conduct that would have justified Termination for Cause,
Grantee's Option shall expire immediately on the date of such discovery.
11. CONFIDENTIALITY/NON-COMPETITION. In consideration of the
Option granted herein, Grantee acknowledges and agrees to be fully bound by the
"Non-Competition/Confidentiality" covenants included in Paragraph 5 of that the
Employment Agreement, which is incorporated herein by reference. If Grantee
violates the Non- Competition/Confidentiality provisions incorporated into this
Paragraph 11, the Company, in addition to any other rights and remedies shall
not be obligated to sell any shares subject to the Option upon exercise of the
Option.
The provisions of this Paragraph 11 shall survive the
termination of this Agreement and Grantee's employment with the Company.
12. DEFINITIONS.
"DISABILITY" means permanent and total disability as such term
is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
"FULLY DILUTED BASIS" means, without duplication, (i) all
shares of Common Stock outstanding at the time of determination plus (ii) all
shares of Common Stock issuable upon conversion of any convertible securities or
the exercise of any option, warrant or similar right, whether or not such
conversion, right or option, warrant or similar right is then exercisable.
"GOOD REASON" shall have the meaning ascribed to such term in
the Employment Agreement.
"INDEPENDENT THIRD PARTY" means any person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Company's Common Stock on a Fully Diluted Basis (a "5% Owner"), who is not
controlling, controlled by or under common control with the Company or any such
5% Owner and who is not the spouse or descendent (by birth or adoption) of any
such 5% Owner or a trust for the benefit of such 5% Owner and/or such other
persons.
"SALE OF THE COMPANY" means the sale of the Company (by
merger, consolidation or sale of stock or assets) to an Independent Third Party
or group of Independent Third Parties pursuant to which such party or parties
acquire (i) capital stock of the Company possessing the voting power under
normal circumstances to elect a majority of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
The Sale of the Company does not include a sale of stock pursuant to a secondary
public offering by the Company.
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"TERMINATION FOR CAUSE" shall have the meaning ascribed to
such term in the Employment Agreement.
"TERMINATION WITHOUT CAUSE" means any termination by the
Company of Grantee's employment which is not a Termination for Cause, including,
but not limited to, a voluntary quit by Grantee other than for Good Reason.
13. FURTHER ACTIONS. The parties agree to execute such further
instruments and to take such further actions as may reasonably be required to
carry out the intent of this Agreement.
14. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
15. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
16. NOTICES. Any notice required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed, in the case of a Grantee, and, in
the case of the Company, to the respective addresses below:
Mr. John R. Messinger
19 Stone Creek Drive
Hawthorne Woods, IL 60047
Lason, Inc.
1350 Stephenson Highway
Troy, Michigan 48083
Attention: William J. Rauwerdink, Executive Vice
President
or at such other address as a party may designate by 10 days advance written
notice to each other party.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon
Grantee's heirs, executors, administrators, successors
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and assigns and inure to the benefit of Grantee's heirs, executors,
administrators, successors and permitted assigns.
18. GOVERNING LAW. This Agreement and all documents
contemplated hereby, and all remedies in connection therewith and all questions
or transactions relating thereto, shall be construed in accordance with and
governed by the laws of the State of Michigan.
19. ENTIRE AGREEMENT. This Agreement and the Plan constitute
the entire understanding between the Grantee and the Company, and supersede all
other agreements, whether written or oral, with respect to the acquisition by
the Grantee of Common Stock from the Company pursuant to any option or option
agreement.
Please sign as Grantee the extra copy of this Agreement in the
space below and return it to the Secretary of the Company, William J.
Rauwerdink, to confirm your understanding and acceptance of the agreements
contained in this letter.
Very truly yours,
LASON, INC.
By:
-----------------------------------
William J. Rauwerdink
Its: Executive Vice President
----------------------------------
THE UNDERSIGNED hereby acknowledges having read this
Agreement, the Plan, and the other enclosures to this Agreement, and hereby
agrees to be bound by all provisions set forth herein and in the Plan.
GRANTEE
-------------------------------------
John R. Messinger
7
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EXHIBIT 10.52
EMPLOYEE STOCK OPTION AGREEMENT
December 14, 1995
To: Cary Wood Newman
RE: INCENTIVE STOCK OPTIONS
The Board of Directors (the "Board") of Lason Holdings, Inc. (the
"Company"), or the committee (the "Committee") designated by the Board for the
purpose of administering the Lason Holdings, Inc. 1995 Stock Option Plan (the
"Plan"), hereby grants you (the "Grantee") a stock option (each an "Option"),
pursuant to the Plan, a copy of which is attached hereto. Certain capitalized
terms used in this agreement (the "Agreement") are defined in paragraph 12
hereof. Certain capitalized terms used in this Agreement which are not defined
herein have the meanings indicated for such terms in Section 10.1 of the Plan.
1. STOCK OPTION. The Option entitles the Grantee (and such Grantee's
permitted transferee as described in paragraph 3(a) below) (each such person, a
"Purchaser") to purchase up to the number of shares of the Company's Class A-2
Common Stock, par value $.01 per share (the "Option Shares"), specified below
opposite such Grantee's name, at an option price of $1.00 per share (the "Option
Price"), subject to the terms and conditions of this Agreement:
GRANTEE NUMBER OF OPTION SHARES
------- -----------------------
Cary Wood Newman 15,000
The Options are intended to be Incentive Stock Options.
2. ADDITIONAL TERMS. The Options are also subject to the following
provisions:
(a) EXERCISABILITY. Each Option may be exercised and Option
Shares may be purchased at any time and from time to time after the execution of
this Agreement, subject to the vesting limitations imposed by paragraph 2(b) of
this Agreement. The Option Price for Option Shares shall be paid in full in cash
or by check by the Purchaser of such Option Shares prior to the time of the
delivery of Option Shares, or, at the written request of such Purchaser, the
Committee may (but need not) permit payment to be made by (i) delivery to the
Company of outstanding Shares, (ii) retention by the Company of one or more of
such Option Shares or (iii) any combination of cash, check, such Purchaser's
delivery of outstanding Shares and retention by the Company of one or more of
such Option Shares. Option Shares acquired by Purchaser under this Agreement are
hereinafter referred to as the "Exercise Shares."
<PAGE> 2
(b) VESTING/EXERCISABILITY.
(i) Purchaser may only exercise his Option to purchase
Option Shares to the extent that such Option has vested and become exercisable
with respect to such Option Shares. Except as otherwise provided in paragraph
2(b)(ii) below, the Option Shares will vest and become exercisable in accordance
with the following schedule, if as of each such date the Grantee is still
employed by the Company or any of its Subsidiaries:
CUMULATIVE PERCENTAGE OF
OPTION SHARES VESTED
DATE AND EXERCISABLE
---------------- -------------------------
January 15, 1997 20%
January 15, 1998 40%
January 15, 1998 60%
January 15, 2000 80%
January 15, 2001 100%
Option Shares which have become vested and exercisable are referred to herein as
"Vested Shares" and all other Option Shares are referred to herein as "Unvested
Shares."
(ii) Upon the occurrence of a Sale of the Company or an
Initial Public Offering, each Option shall vest and all Unvested Shares shall be
come Vested Shares if, but only if, the Grantee thereof is employed by the
Company or any of its Subsidiaries on the date of such occurrence.
(c) PROCEDURE FOR EXERCISE. Subject to the vesting limitations
of paragraph 2(b) above, a Purchaser may exercise all or any portion of his
Option, so long as it is valid and outstanding, at any time and from time to
time prior to its termination by delivering written notice to the Company as
provided in Section 6.4 of the Plan and written acknowledgement substantially in
the form of Exhibit A hereto that such Purchaser has read, and has been afforded
an opportunity to ask questions of the Company's management regarding all
financial and other information provided to him concerning the Company, together
with payment of the Option Price times the number of Option Shares purchased.
Subject to Section 6.7 of the Plan, at the time of exercise, Purchaser will be
entitled to review all financial and other information regarding the Company it
believes necessary to enable such Purchaser to make an informed investment
decision.
3. TRANSFERABILITY OF THE OPTIONS.
(a) The Grantee shall not sell, transfer, assign, pledge or
otherwise dispose of (a "Transfer") any interest in any Option with respect to
any Unvested Shares. Any Option with respect to any Vested Shares of the Grantee
shall not be Transferred other
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than as a result of the death of such Grantee, testate or intestate, and the
restrictions herein shall apply to any Transfer by any such permitted
transferee.
(b) The Company may assign its rights and delegate its duties
under this Agreement.
4. TRANSFERABILITY OF EXERCISE SHARES.
(a) No Purchaser shall Transfer any Exercise Shares or any
interest therein except in accordance with the provisions of this Agreement and
paragraph III of the Stockholders Agreement.
(b) No holder of any Exercise Shares may Transfer any such
shares (except pursuant to an effective registration statement under the
Securities Act) without first delivering to the Company an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the Securities Act and applicable state
securities laws is required in connection with such transfer.
5. CONFORMITY WITH PLAN. The Options are intended to conform in all
respects with, and are subject to all applicable provisions of, the Plan, which
is incorporated herein by reference. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. By
executing this Agreement, the Grantee acknowledges his receipt of the Plan and
agrees to be bound by all of other terms of the Plan.
6. EMPLOYMENT. Notwithstanding any contrary oral representations or
promises made to the Grantee prior to or after the date hereof, the Grantee and
the Company acknowledge that such Grantee's employment with the Company and its
Subsidiaries is and will continue to be subject to the willingness of each to
continue such employment and nothing confers any right or obligation on such
Grantee to continue in the employ of the Company or its Subsidiaries or shall
affect in any way such Grantee's right or the right of the Company or its
Subsidiaries to terminate such Grantee's employment at any time, for any reason,
with or without cause.
7. ADJUSTMENT. The Board shall make appropriate and proportionate
adjustments to the terms of the Options to reflect any stock dividend, stock
split, combination or exchange of shares, merger, consolidation or other change
in the capitalization of the Company which the Board determines to be similar,
in its substantive effect upon the Plan or the Options, to any of the changes
expressly indicated in this sentence, as provided in Article 8 of the Plan. The
Board may (but shall not be required to) make any appropriate adjustment to the
terms of the Options to reflect any spin-off, spin-out or other distribution of
assets to shareholders or any acquisition of the Company's stock or assets or
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other change which the Board determines to be similar, in its substantive effect
upon the Plan or the Options, to any of the changes expressly indicated in this
sentence, as provided in Article 8 of the Plan. In the event of any adjustments
described in the preceding two sentences, any and all new, substituted, or
additional securities or other property to which any Purchaser is entitled by
reason of his Option shall be immediately subject to such Option and be included
in the word "Option Shares" for all purposes of such Option with the same force
and effect as the Option Shares presently subject to such Option. After each
such event, the number of Option Shares and/or the Option Price shall be
appropriately adjusted.
8. SHARE LEGEND. All certificates representing any Option
Shares subject to the provisions of this Agreement shall have
endorsed thereon the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF DECEMBER 14, 1995, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN EMPLOYEE STOCK
OPTION AGREEMENT BETWEEN THE COMPANY AND CERTAIN EMPLOYEES OF THE
COMPANY DATED AS OF DECEMBER 14, 1995. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
9. INVESTMENT REPRESENTATIONS. Upon the purchase of Option Shares
hereunder, the Purchaser thereof shall execute and deliver to the Company a
letter, substantially in the form attached hereto as Exhibit A, confirming such
Purchaser's investment representations.
10. EXPIRATION. Subject to Sections 6.3 and 6.7 of the Plan, the
Grantee's Option shall expire (a) with respect to Vested Shares, at 5:00 p.m.,
Chicago time, on the seventh anniversary of the date hereof and (b) with respect
to Unvested Shares, upon the termination of such Grantee's employment with the
Company and its Subsidiaries.
11. CONFIDENTIALITY/NON-COMPETITION. In consideration of the incentive
stock options granted herein, Grantee agrees that while he is employed by Lason
Systems, Inc., a subsidiary of the Company ("Lason") and for the eighteen (18)
month period following the date of employment, Grantee shall not, either
directly or indirectly (whether as sole proprietor, partner, consultant,
venturer, member, stockholder, director, officer, employee, or in any other
capacity
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as principal or agent), own, manage, operate, control, finance, or engage or
participate in the ownership, management, operation or control of, any person,
firm, entity, limited partnership, partnership, limited liability company,
corporation, or similar association which is engaged in any of the business
activities of Lason's imaging division and which is located in any part of the
United States or Canada in which Lason's imaging division does business.
Grantee further agrees that Grantee shall not, directly or indirectly,
at any time during such eighteen (18) month non-compete period:
(a) take any action that will cause the termination of a
business relationship between Lason and any customer or supplier of Lason; or
(b) solicit for employment or employ any person employed in
Lason's business.
At all times, Grantee shall keep secret and inviolate all knowledge or
information of a confidential nature, including, without limitation, all
unpublished matters relating to the business, assets, accounts, books, records,
customers and contracts of Lason which he may or hereafter come to know as a
result of his association with Lason.
Grantee acknowledges that if he violates this Agreement, he will cause
severe and irreparable injury to the business and goodwill of Lason, which
injury is not adequately compensable by money damages. Accordingly, in the event
of a breach (or threatened or attempted breach) of this Agreement, Lason shall,
in addition to any other rights and remedies, be entitled to immediate
appropriate injunctive relief or a decree of specific performance of this
Agreement, without the necessity of showing any irreparable injury or special
damages.
Grantee acknowledges that, due to his education and job skill, his
adherence to the terms of this confidentiality/non-competition provision will
not deprive him of the opportunity to obtain gainful employment with other
companies serving different product or geographic markets after the termination
of his employment with Lason.
Nothing herein shall be deemed to prevent Grantee from holding less
than five (5%) percent of the outstanding publicly-traded securities of any
person, firm, or corporation.
Notwithstanding anything to the contrary set forth herein or otherwise,
the covenants contained in this Section 11 shall not be operative in the event
Lason elects to terminate Grantee's employment for its own convenience and not
for cause.
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The provisions of this Section 11 shall survive the termination of this
Agreement and Grantee's employment with Lason.
12. DEFINITIONS.
"FULLY DILUTED BASIS" means, without duplication, (i) all
shares of Common Stock outstanding at the time of determination plus (ii) all
shares of Common Stock issuable upon conversion of any convertible securities or
the exercise of any option, warrant or similar right, whether or not such
conversion, right or option, warrant or similar right is then exercisable.
"INDEPENDENT THIRD PARTY" means any person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Company's Common Stock on a Fully Diluted Basis (a "5% Owner"), who is not
controlling, controlled by or under common control with the Company or any such
5% Owner and who is not the spouse or descendent (by birth or adoption) of any
such 5% Owner or a trust for the benefit of such 5% Owner and/or such other
persons.
"INITIAL PUBLIC OFFERING" means the sale in an initial
underwritten public offering registered under the Securities Act (other than on
Form S-8 or a similar form) of shares of the Company's Common Stock.
"SALE OF THE COMPANY" means the sale of the Company (by
merger, consolidation or sale of stock or assets) to an Independent Third Party
or group of Independent Third Parties pursuant to which such party or parties
acquire (i) capital stock of the Company possessing the voting power under
normal circumstances to elect a majority of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
dated as of the date hereof among the Company, Golder, Thoma, Cressey, Rauner
Fund IV, L.P., the Grantees, and certain other executives of the Company, as in
effect from time to time.
13. FURTHER ACTIONS. The parties agree to execute such further
instruments and to take such further actions as may reasonably be required to
carry out the intent of this Agreement.
14. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
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15. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
16. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed, in the case of a Grantee, and, in the case
of the Company, to the respective addresses below:
Lason Holdings, Inc.
1305 Stephenson Highway
Troy, Michigan 48084
Attention: Gary L. Monroe, Executive Vice President
with a copy, which will not constitute
notice to the Company, to:
Golder, Thoma, Cressey, Rauner, Inc.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: Bruce V. Rauner
Elliot W. Maluth
Cary Wood Newman
3586 West Bradford Drive
Birmingham, Michigan 48301
or at such other address as a party may designate by 10 days advance written
notice to each other party.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company and, subject
to the restrictions on transfer herein set forth, be binding upon Grantee's
heirs, executors, administrators, successors and assigns and inure to the
benefit of Grantee's heirs, executors, administrators, successors and permitted
assigns.
18. GOVERNING LAW. This Agreement and all documents contemplated
hereby, and all remedies in connection therewith and all questions or
transactions relating thereto, shall be construed in accordance with and
governed by the laws of the State of Michigan.
19. ENTIRE AGREEMENT. This Agreement and the Plan constitute the entire
understanding between the Grantee and the Company, and supersede all other
agreements, whether written or oral, with respect to the acquisition by the
Grantee of Common Stock from the Company pursuant to any option or option
agreement.
7
<PAGE> 8
Please execute the extra copy of this Agreement in the space below and
return it to the Secretary of the Company to confirm your understanding and
acceptance of the agreements contained in this letter.
Very truly yours,
LASON HOLDINGS, INC.
By:
--------------------------------
Gary L. Monroe
Its: Executive Vice President
-------------------------------
The undersigned hereby acknowledges having read this Agreement, the
Plan, and the other enclosures to this Agreement, and hereby agrees to be bound
by all provisions set forth herein and in the Plan.
GRANTEE
-----------------------------------
Cary Wood Newman
8
<PAGE> 1
EXHIBIT 10.53
December 17, 1996
To: Cary Newman
RE: NON-QUALIFIED STOCK OPTIONS
The Board of Directors (the "Board") of Lason, Inc., or the committee
(the "Committee") designated by the Board for the purpose of administering the
Lason, Inc. 1995 Stock Option Plan (the "Plan"), hereby grants you (the
"Grantee") a non-qualified stock option (each an "Option"), pursuant to the
Plan, a copy of which is attached hereto. Certain capitalized terms used in this
agreement (the "Agreement") are defined in paragraph 12 hereof. Certain
capitalized terms used in this Agreement which are not defined herein have the
meanings indicated for such terms in Section 10.1 of the Plan. As used herein
references to the "Company" refer to Lason, Inc. or to Lason, Inc. and/or any of
its Subsidiaries, as applicable.
1. STOCK OPTION. The Option entitles
the Grantee (and such Grantee's permitted
transferee as described in paragraph 3(a)
below) (each such person, a "Purchaser") to
purchase up to the number of shares of the
Company's Common Stock, par value $.01 per
share (the "Option Shares"), specified below
opposite such Grantee's name, at an option
price of $16.75 per share (the "Option
Price"), subject to the terms and conditions
of this Agreement:
GRANTEE NUMBER OF OPTION SHARES
------- -----------------------
Cary Newman 15,000
2. ADDITIONAL TERMS. The Options are
also subject to the following provisions:
(a) EXERCISABILITY. Each Option may be exercised and
Option Shares may be purchased at any time and from time to time after the
execution of this Agreement, subject to the vesting limitations imposed by
paragraph 2(b) of this Agreement. The Option Price for Option Shares shall be
paid in full in cash or by check by the Purchaser of such Option Shares prior to
the time of the delivery of Option Shares, or, at the written request of such
Purchaser, the Committee may (but need not) permit payment to be made by (i)
delivery to the Company of outstanding Shares, (ii) retention by the Company of
one or more of such Option Shares or (iii) any combination of cash, check, such
Purchaser's delivery of outstanding Shares and retention by the Company of one
or more of such Option Shares. Option Shares acquired by Purchaser under this
Agreement are hereinafter referred to as the "Exercise Shares."
1
<PAGE> 2
(b) VESTING/EXERCISABILITY.
(1) Purchaser may only exercise the Option to
purchase Option Shares to the extent that such
Option has vested and become exercisable with
respect to such Option Shares. Except as
otherwise provided in Paragraph 2(b)(ii) below,
the Option Shares will vest and become
exercisable in accordance with the following
schedule, if as of each such date the Grantee is
still employed by the Company or any of its
Subsidiaries:
CUMULATIVE PERCENTAGE OF
OPTION SHARES VESTED
DATE AND EXERCISABLE
----------------- ------------------------
December 17, 1997 20%
December 17, 1998 40%
December 17, 1999 60%
December 17, 2000 80%
December 17, 2001 100%
Option Shares which have become vested and exercisable are referred to herein as
"Vested Shares" and all other Option Shares are referred to herein as "Unvested
Shares."
(ii) Upon the occurrence of a Sale of the Company,
each Option shall vest and all Unvested Shares shall be come Vested Shares if,
but only if, the Grantee thereof is employed by the Company or any of its
Subsidiaries on the date of such occurrence.
(c) PROCEDURE FOR EXERCISE. Subject to the vesting
limitations of Paragraph 2(b) above, a Purchaser may exercise all or any portion
of the Option, so long as it is valid and outstanding, at any time and from time
to time prior to its termination by delivering written notice to the Company as
provided in Section 6.4 of the Plan and written acknowledgment substantially in
the form of Exhibit A hereto that such Purchaser has read, and has been afforded
an opportunity to ask questions of the Company's management regarding all
financial and other information provided to Purchaser concerning the Company,
together with payment of the Option Price times the number of Option Shares
purchased. Subject to Section 6.7 of the Plan, at the time of exercise,
Purchaser will be entitled to review all financial and other information
regarding the Company it believes necessary to enable such Purchaser to make an
informed investment decision.
3. TRANSFERABILITY OF THE OPTIONS.
2
<PAGE> 3
(a) The Grantee shall not sell, transfer, assign, pledge
or otherwise dispose of (a "Transfer") any interest in any Option with respect
to any Unvested Shares. Any Option with respect to any Vested Shares of the
Grantee shall not be Transferred other than as a result of the death of such
Grantee, testate or intestate, and the restrictions herein shall apply to any
Transfer by any such permitted transferee.
(b) The Company may assign its rights and delegate its
duties under this Agreement.
4. TRANSFERABILITY OF EXERCISE SHARES.
(a) No Purchaser shall Transfer any Exercise Shares or
any interest therein except in accordance with the provisions of this Agreement.
(b) No holder of any Exercise Shares may Transfer any
such shares (except pursuant to an effective registration statement and/or
re-offer prospectus, as applicable, under the Securities Act) without first
delivering to the Company an opinion of counsel (reasonably acceptable in form
and substance to the Company) that neither registration nor qualification under
the Securities Act and applicable state securities laws is required in
connection with such transfer.
5. CONFORMITY WITH PLAN. The Options are intended
to conform in all respects with, and are subject
to all applicable provisions of, the Plan, which
is incorporated herein by reference.
Inconsistencies between this Agreement and the
Plan shall be resolved in accordance with the
terms of the Plan, except as modified by
Paragraph 2(b)(ii) of this Agreement. By
executing this Agreement, the Grantee
acknowledges receipt of the Plan and agrees to be
bound by all of other terms of the Plan.
6. EMPLOYMENT. Notwithstanding any contrary oral
representations or promises made to the Grantee
prior to or after the date hereof, the Grantee
and the Company acknowledge that such Grantee's
employment with the Company is and will continue
to be subject to the willingness of each to
continue such employment and nothing set forth
herein or otherwise confers any right or
obligation on such Grantee to continue in the
employ of the Company or shall affect in any way
such Grantee's right or the right of the Company
to terminate such Grantee's employment at any
time, for any reason, with or without cause.
3
<PAGE> 4
7. ADJUSTMENT. The Board shall make appropriate
and proportionate adjustments to the terms of the
Options to reflect any stock dividend, stock
split, combination or exchange of shares,
merger, consolidation or other change in the
capitalization of the Company which the Board
determines to be similar, in its substantive
effect upon the Plan or the Options, to any of
the changes expressly indicated in this sentence,
as provided in Article 8 of the Plan. The Board
may (but shall not be required to) make any
appropriate adjustment to the terms of the
Options to reflect any spin-off, spin-out or
other distribution of assets to shareholders or
any acquisition of the Company's stock or assets
or other change which the Board determines to be
similar, in its substantive effect upon the Plan
or the Options, to any of the changes expressly
indicated in this sentence, as provided in
Article 8 of the Plan. In the event of any
adjustments described in the preceding two
sentences, any and all new, substituted, or
additional securities or other property to which
any Purchaser is entitled by reason of the Option
shall be immediately subject to such Option and
be included in the word "Option Shares" for all
purposes of such Option with the same force and
effect as the Option Shares presently subject to
such Option. After each such event, the number of
Option Shares and/or the Option Price shall be
appropriately adjusted.
8. SHARE LEGEND. Unless the Exercise Shares are
the subject of an effective registration
statement and/or re-offer prospectus, as
applicable, all certificates representing any
Exercise Shares subject to the provisions of this
Agreement shall have endorsed thereon the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED AS OF DECEMBER 17, 1996, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET
FORTH IN AN EMPLOYEE STOCK OPTION AGREEMENT BETWEEN THE
COMPANY AND
4
<PAGE> 5
CERTAIN EMPLOYEES OF THE COMPANY DATED DECEMBER
17, 1996. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
9. INVESTMENT REPRESENTATIONS. Upon the
purchase of Option Shares hereunder, the
Purchaser thereof shall execute and deliver to
the Company a letter, substantially in the form
attached hereto as Exhibit A, confirming such
Purchaser's investment representations.
10. EXPIRATION. Subject to Sections 6.3 and 6.7 of
the Plan, the Grantee's Option shall expire (a)
with respect to Vested Shares, at the earlier of
(i) a determination by the Option Committee that
the Grantee has been grossly negligent in the
performance of his duties to the Company,(ii) the
termination of such Grantee's employment with the
Company or (iii) at 5:00 p.m., Detroit time, on
the seventh anniversary of the date hereof and
(b) with respect to Unvested Shares, upon the
termination of such Grantee's employment with the
Company.
Further, notwithstanding the above, with respect to Vested
Shares, if the termination of Grantee's employment with the Company is due to
death, disability or Termination Without Cause, then the Option shall expire on
the earlier of (i) the 90th day following the termination of Grantee's
employment or (ii) until 5:00 p.m., Detroit time, on the seventh anniversary of
the date hereof.
Further, notwithstanding the above, with respect to Vested
Shares, if the Company discovers after termination of Grantee's employment, that
Grantee engaged in conduct that would have justified Termination for Cause,
Grantee's Option shall expire immediately on the date of such discovery.
11. CONFIDENTIALITY/NON-COMPETITION. In
consideration of the Option granted herein,
Grantee agrees that while Grantee is
employed by the Company and for the
eighteen (18) month period following the
date of employment, Grantee shall not,
either directly or indirectly (whether as
sole proprietor, partner, consultant,
venturer, member, stockholder, director,
officer,
5
<PAGE> 6
employee, or in any other capacity as
principal or agent), own, manage, operate,
control, finance, or engage or participate
in the ownership, management, operation or
control of, any person, firm, entity,
limited partnership, partnership, limited
liability company, corporation, or similar
association which is engaged in any of the
business activities of the Company and
which is located in any part of the United
States or Canada in which the Company does
business.
Grantee further agrees that Grantee shall not, directly or
indirectly, at any time during such eighteen (18) month non-compete period:
(a) take any action that will cause the termination of a
business relationship between the Company and any customer or supplier of the
Company; or
(b) solicit for employment or employ any person employed in
the Company's business.
At all times, Grantee shall keep secret and inviolate all
knowledge or information of a confidential nature, including, without
limitation, all unpublished matters relating to the business, assets, accounts,
books, records, customers and contracts of the Company which Grantee may or
hereafter come to know as a result of Grantee's association with the Company.
Grantee acknowledges that if Grantee violates this Paragraph
11, Grantee will cause severe and irreparable injury to the business and
goodwill of the Company, which injury is not adequately compensable by money
damages. Accordingly, in the event of a breach (or threatened or attempted
breach) of this Paragraph 11, the Company shall, in addition to any other rights
and remedies, (i) be entitled to immediate appropriate injunctive relief or a
decree of specific performance of this Agreement, without the necessity of
showing any irreparable injury or special damages, and (ii) not be obligated to
sell any shares subject to the option upon exercise of the option.
Grantee acknowledges that, due to Grantee's education and job
skill, Grantee's adherence to the terms of this confidentiality/non-competition
provision will not deprive Grantee of the opportunity to obtain gainful
employment with other companies serving different product or geographic markets
after the termination of Grantee's employment with the Company.
Nothing herein shall be deemed to prevent Grantee from holding
less than five (5%) percent of the outstanding publicly-traded securities of any
person, firm, or corporation.
6
<PAGE> 7
The provisions of this Paragraph 11 shall survive the
termination of this Agreement and Grantee's employment with the Company.
12. DEFINITIONS.
"DISABILITY" means permanent and total disability as such term
is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
"FULLY DILUTED BASIS" means, without duplication, (i) all
shares of Common Stock outstanding at the time of determination plus (ii) all
shares of Common Stock issuable upon conversion of any convertible securities or
the exercise of any option, warrant or similar right, whether or not such
conversion, right or option, warrant or similar right is then exercisable.
"INDEPENDENT THIRD PARTY" means any person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Company's Common Stock on a Fully Diluted Basis (a "5% Owner"), who is not
controlling, controlled by or under common control with the Company or any such
5% Owner and who is not the spouse or descendent (by birth or adoption) of any
such 5% Owner or a trust for the benefit of such 5% Owner and/or such other
persons.
"SALE OF THE COMPANY" means the sale of the Company (by
merger, consolidation or sale of stock or assets) to an Independent Third Party
or group of Independent Third Parties pursuant to which such party or parties
acquire (i) capital stock of the Company possessing the voting power under
normal circumstances to elect a majority of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
The Sale of the Company does not include a sale of stock pursuant to a secondary
public offering by the Company.
"TERMINATION FOR CAUSE" means termination by the Company of
Grantee's employment because of Grantee's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or the lawful violation of any law, rule or
regulation (other than minor traffic violations or similar offenses).
"TERMINATION WITHOUT CAUSE" means any termination by the
Company of Grantee's employment which is not a Termination for Cause.
13. FURTHER ACTIONS. The parties agree to
execute such further instruments and to take
such further actions as may reasonably be
required to carry out the intent of this
Agreement.
14. SEVERABILITY. Whenever possible, each
provision of this Agreement will be
interpreted in such manner as to be
7
<PAGE> 8
effective and valid under applicable law,
but if any provision of this Agreement is
held to be prohibited by or invalid under
applicable law, such provision will be
ineffective only to the extent of such
prohibition or invalidity, without
invalidating the remainder of this
Agreement.
15. COUNTERPARTS. This Agreement may be
executed simultaneously in two or more
counterparts, any one of which need not
contain the signatures of more than one
party, but all such counterparts taken
together will constitute one and the same
Agreement.
16. NOTICES. Any notice required or
permitted hereunder shall be given in
writing and shall be deemed effectively
given upon personal delivery or upon deposit
in the United States Post Office, by
registered or certified mail with postage
and fees prepaid, addressed, in the case of
a Grantee, and, in the case of the Company,
to the respective addresses below:
Lason, Inc.
1350 Stephenson Highway
Troy, Michigan 48083
Attention: William J. Rauwerdink, Executive Vice President
Mr. Cary Newman
356 West Bradfoxel Drive
Bloomfield Hills, MI 48301-4058
or at such other address as a party may designate by 10 days advance written
notice to each other party.
17. SUCCESSORS AND ASSIGNS. This Agreement
shall be binding upon and inure to the
benefit of the successors and assigns of the
Company and, subject to the restrictions on
transfer herein set forth, be binding upon
Grantee's heirs, executors, administrators,
successors and assigns and inure to the
benefit of Grantee's heirs, executors,
administrators, successors and permitted
assigns.
18. GOVERNING LAW. This Agreement and all
documents contemplated hereby, and all
remedies in connection therewith and all
questions or transactions
8
<PAGE> 9
relating thereto, shall be construed in
accordance with and governed by the laws of
the State of Michigan.
19. ENTIRE AGREEMENT. This Agreement and
the Plan constitute the entire understanding
between the Grantee and the Company, and
supersede all other agreements, whether
written or oral, with respect to the
acquisition by the Grantee of Common Stock
from the Company pursuant to any option or
option agreement.
Please sign as Grantee the extra copy of this Agreement in the
space below and return it to the Secretary of the Company, William J.
Rauwerdink, to confirm your understanding and acceptance of the agreements
contained in this letter.
Very truly yours,
LASON, INC.
By:
-----------------------------------
William J. Rauwerdink
Its: Executive Vice President
----------------------------------
THE UNDERSIGNED hereby acknowledges having read this
Agreement, the Plan, and the other enclosures to this Agreement, and hereby
agrees to be bound by all provisions set forth herein and in the Plan.
GRANTEE
-------------------------------------
Cary Newman
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,822
<SECURITIES> 0
<RECEIVABLES> 55,110
<ALLOWANCES> 0
<INVENTORY> 5,514
<CURRENT-ASSETS> 70,611
<PP&E> 32,072
<DEPRECIATION> 0
<TOTAL-ASSETS> 240,537
<CURRENT-LIABILITIES> 27,671
<BONDS> 0
0
0
<COMMON> 116
<OTHER-SE> 135,107
<TOTAL-LIABILITY-AND-EQUITY> 135,223
<SALES> 46,566
<TOTAL-REVENUES> 46,566
<CGS> 29,811
<TOTAL-COSTS> 29,811
<OTHER-EXPENSES> 10,813
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 646
<INCOME-PRETAX> 5,296
<INCOME-TAX> 1,830
<INCOME-CONTINUING> 3,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,466
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.29
</TABLE>
