UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended June 30, 1998
--------------
Commission file number 0-15975
-------
LabOne, Inc.
------------
10310 West 84th Terrace
Lenexa, Kansas 66214
(913) 888-1770
Incorporated in Delaware
I.R.S. Employer Identification Number: 48-0952323
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 for 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 / /
Number of shares outstanding of the only class of Registrant's common
stock, $.01 par value, as of July 31, 1998 - 13,142,350 shares net of
1,857,650 shares held as treasury stock.
Page 1 of 32
<TABLE> PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements
LabOne, Inc. and Subsidiary
Consolidated Balance Sheets
<S> <C> <C>
June 30, December 31,
1998 1997
ASSETS --------- ---------
Current assets:
Cash and cash equivalents $12,220,186 18,284,672
Short-term investments 500,854 1,204,638
Accounts receivable-trade, net of allowance for doubtful
accounts of $1,549,232 in 1998 and $968,295 in 1997 15,684,044 12,604,687
Income taxes receivable 574,277 508,704
Inventories 1,629,271 2,203,471
Real estate available for sale 3,515,000 3,515,000
Prepaid expenses and other current assets 2,329,372 2,279,619
Deferred income taxes 3,646,057 3,299,387
---------- ----------
Total current assets 40,099,061 43,900,178
Property, plant and equipment 49,474,121 43,956,571
Less accumulated depreciation 34,381,182 33,515,280
---------- ----------
Net property, plant and equipment 15,092,939 10,441,291
Other assets:
Intangible assets, net of accumulated amortization 4,762,906 5,229,708
Deferred income taxes - noncurrent 336,224 321,799
Deposits and other assets 24,344 80,497
---------- ----------
Total assets $60,315,474 59,973,473
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,072,212 3,326,451
Deferred income taxes payable 9,308 -
Accrued payroll and benefits 3,949,042 4,530,235
Other accrued expenses 397,404 423,396
Other current liabilities 194,371 194,148
---------- ----------
Total current liabilities 8,622,337 8,474,230
Deferred income taxes - noncurrent 331,176 -
---------- ----------
Total liabilities 8,953,513 8,474,230
Stockholders' equity:
Preferred stock, $.01 par value per share;
1,000,000 shares authorized, none issued - -
Common stock, $.01 par value per share; 40,000,000 shares
authorized, 15,000,000 shares issued 150,000 150,000
Additional paid-in capital 13,806,438 13,723,250
Equity adjustment from foreign currency translation (729,424) (666,927)
Retained earnings 60,046,799 60,259,272
---------- ----------
73,273,813 73,465,595
Less treasury stock of 1,860,304 shares in
1998 and 1,874,706 shares in 1997 21,911,852 21,966,352
---------- ----------
Total stockholders' equity 51,361,961 51,499,243
---------- ----------
Total liabilities and stockholders' equity $60,315,474 59,973,473
========== ==========
See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.
Page 2
</TABLE>
<TABLE>
LabOne, Inc. and Subsidiary
Consolidated Statements of Earnings
<S> <C> <C> <C> <C>
Three months ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
Sales $ 25,762,263 20,307,489 49,095,697 38,047,474
Cost of sales 13,831,903 10,636,249 26,790,851 20,086,354
---------- ---------- ---------- ----------
Gross profit 11,930,360 9,671,240 22,304,846 17,961,120
Selling, general and administrative expenses 7,864,301 7,090,960 15,175,104 13,418,819
---------- ---------- ---------- ----------
Earnings from operations 4,066,059 2,580,280 7,129,742 4,542,301
Other income 167,897 272,647 400,796 597,901
---------- ---------- ---------- ----------
Earnings before income taxes 4,233,956 2,852,927 7,530,538 5,140,202
Income tax expense 1,717,646 1,166,427 3,014,167 2,094,220
---------- ---------- ---------- ----------
Net earnings $ 2,516,310 1,686,500 4,516,371 3,045,982
========== ========== ========== ==========
Basic and diluted earnings per common share $ 0.19 0.13 $ 0.34 0.23
====== ====== ===== =====
Dividends per common share $ 0.18 0.18 $ 0.36 0.36
====== ====== ===== =====
Basic weighted average common shares outstanding 13,136,962 13,102,359 13,135,928 13,093,553
========== ========== ========== ==========
Diluted weighted average common shares outstanding 13,327,517 13,309,189 13,323,253 13,327,078
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.
Page 3
LabOne, Inc. and Subsidiary
Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in comprehensive Retained Treasury stockholders' Comprehensive
stock capital income earnings stock equity income
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1997 $150,000 13,723,250 (666,927) 60,259,272 (21,966,352) 51,499,243
Comprehensive income:
Net earnings 4,516,371 4,516,371 4,516,371
Equity adjustment
from foreign
currency translation (62,497) (62,497) (62,497)
---------
Comprehensive income 4,453,874
=========
Cash dividends
($0.36 per share) (4,728,844) (4,728,844)
Stock options
exercised, net
(10,510 shares) 58,377 10,715 69,092
Directors' stock issued
(3,892 shares) 24,811 43,785 68,596
-------- ---------- -------- ---------- ----------- ----------
Balance at
June 30, 1998 $150,000 13,806,438 (729,424) 60,046,799 (21,911,852) 51,361,691
======== ========== ======== ========== =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.
Page 4
LabOne, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Six months ended June 30,
1998 1997
--------- ---------
Cash provided by (used for) operations:
Net earnings $ 4,516,371 3,045,982
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 2,091,470 2,183,620
Loss (gain) on disposal of property
and equipment 3,861 (111,570)
Directors' stock compensation 68,597 69,583
Provision for deferred taxes (25,864) (174,559)
Changes in:
Accounts receivable (3,079,357) (3,716,667)
Income taxes (65,573) 16,907
Inventories 574,200 (879,582)
Prepaid expenses and other current assets (49,753) 51,232
Accounts payable 745,761 449,178
Accrued payroll & benefits (581,193) 890,313
Accrued expenses (25,992) 74,145
Other current liabilities 223 24,037
---------- ----------
Net cash provided by operations 4,172,751 1,922,619
---------- ----------
Cash provided by (used for) investment transactions:
Purchases of investments held to maturity (5,461,090) (10,190,477)
Proceeds from maturities of investments held
to maturity 6,201,894 5,232,335
Property, plant and equipment, net (6,318,937) (2,383,890)
Acquisition of intangible assets, net - (4,128,274)
Other 56,153 2,139
---------- ----------
Net cash used for investment transactions (5,521,980) (11,468,167)
---------- ----------
Cash provided by (used for) financing transactions:
Issuance of treasury stock, net of proceeds
from the exercise of stock options 69,092 249,895
Cash dividends (4,728,844) (4,714,419)
---------- ----------
Net cash used for financing transactions (4,659,752) (4,464,524)
---------- ----------
Effect of foreign currency translation (55,505) (18,733)
---------- ----------
Net decrease in cash and cash equivalents (6,064,486) (14,028,805)
Cash and cash equivalents - beginning of period 18,284,672 28,647,378
---------- ----------
Cash and cash equivalents - end of period $12,220,186 14,618,573
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income Taxes $ 3,058,933 221,022
========== ==========
See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.
Page 5
LabOne, Inc. and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1998 and 1997
The accompanying consolidated financial statements include the accounts of
LabOne, Inc. and its wholly-owned subsidiary Lab One Canada Inc. (a Canadian
corporation). All significant intercompany transactions have been eliminated
in consolidation.
The financial information furnished herein as of June 30, 1998 and for the
periods ended June 30, 1998 and 1997 is unaudited; however, in the opinion of
management, it reflects all adjustments, consisting of normal recurring
adjustments, which are necessary to fairly state the Company's financial
position and the results of its operations and cash flows. The balance sheet
information as of December 31, 1997 has been derived from the audited
financial statements as of that date. The financial statements have been
prepared in conformity with generally accepted accounting principles
appropriate in the circumstances, and included in the financial statements are
certain amounts based on management's estimates and judgments.
The financial information herein is not necessarily representative of a full
year's operations because levels of sales, capital additions and other factors
fluctuate throughout the year. These same considerations apply to all year-
to-year comparisons. See the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, for additional information not required by this
report on Form 10-Q.
Business Segment Information
- ----------------------------
The company operates in three lines of business: insurance risk appraisal
testing, clinical diagnostic testing and substance abuse testing. The
following table presents selected financial information for each segment:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales:
Insurance $ 17,571,796 15,896,373 34,394,248 30,325,512
Clinical 4,723,128 2,120,393 8,377,171 3,661,378
Substance abuse testing 3,467,339 2,290,723 6,324,278 4,060,584
---------- ---------- ---------- ----------
Total sales $ 25,762,263 20,307,489 49,095,697 38,047,474
========== ========== ========== ==========
Operating income (loss):
Insurance $ 5,573,412 4,734,529 10,785,673 9,045,872
Clinical (1,509,398) (1,894,760) (3,444,445) (3,999,060)
Substance abuse testing 40,165 (197,886) (138,622) (507,488)
General corporate income (expense) (38,120) (61,603) (72,864) 2,977
--------- --------- ---------- ---------
Total earnings from operations 4,066,059 2,580,280 7,129,742 4,542,301
Other income (expense) 167,897 272,647 400,796 597,901
--------- --------- --------- ---------
Earnings before income taxes $ 4,233,956 2,852,927 7,530,538 5,140,202
========= ========= ========= =========
</TABLE>
There were no material changes in asset levels by segment or in the basis of
segmentation or measurement of segment operating income or loss.
Page 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
- ---------------------
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 % Increase 1998 1997 %Increase
----------- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 25,762,263 20,307,489 27% $49,095,697 38,047,474 29%
Net earnings 2,516,310 1,686,500 49% 4,516,371 3,045,982 48%
Earnings per common share $0.19 0.13 $0.34 0.23
Cash dividends per common share $0.18 0.18 $0.36 0.36
</TABLE>
The Company provides high-quality laboratory testing services to insurance
companies, physicians and employers.
LabOne provides risk-appraisal laboratory services to the insurance industry.
The tests performed by the Company are specifically designed to assist an
insurance company in objectively evaluating the mortality and morbidity risks
posed by policy applicants. The majority of the testing is performed on
specimens of individual life insurance policy applicants. The Company also
provides testing services on specimens of individuals applying for individual
and group medical and disability policies.
LabOne's clinical testing services are provided to the healthcare industry to
aid in the diagnosis and treatment of patients. LabOne operates only one
highly automated and centralized laboratory, which the Company believes has
significant economic advantages over other conventional laboratory
competitors. LabOne markets its clinical testing services to the payers of
healthcare--insurance companies and self-insured groups. The Company does
this through Lab Card(Registered), a Laboratory Benefits Management (LBM)
program.
The Lab Card Program provides laboratory testing at reduced rates as compared
to traditional laboratories. It uses a unique benefit design that shares the
cost savings with the patient, creating an incentive for the patient to help
direct laboratory work to LabOne. Under the Program, the patient incurs no
out-of-pocket expense when the Lab Card is used, and the insurance company or
self-insured group receives substantial savings on its laboratory charges.
Additionally, BlueCross BlueShield of Tennessee selected LabOne to provide
routine outpatient laboratory testing services for BlueCare members throughout
Tennessee effective February 1, 1998. BlueCare is BlueCross BlueShield of
Tennessee's plan for Tenncare participants and covers approximately 350,000
members. The Company's LBM programs, including BlueCare and the Lab Card
Program, have approximately two million lives enrolled.
LabOne is certified by the Substance Abuse and Mental Health Services
Administration (SAMHSA) to perform substance abuse testing services for
federally regulated employers and is currently marketing these services
throughout the country to both regulated and nonregulated employers. The
Company's rapid turnaround times and multiple testing options help clients
reduce downtime for affected employees and meet mandated drug screening
guidelines.
Page 7
SECOND QUARTER ANALYSIS
Net sales increased 27% to $25.8 million in the second quarter 1998 from $20.3
million in the second quarter 1997 due to increases in all business segments.
Insurance segment revenue increased to $17.6 million during the second quarter
1998 as compared to $15.9 million in the same quarter last year. The increase
was due to an increase in market share and an increase in oral fluid testing
on applicants applying for smaller face-amount policies. The total number of
insurance applicants tested in the second quarter 1998 increased by 13% as
compared to the same quarter last year. Average revenue per applicant
decreased 4% during the same periods due to competitive pricing pressures.
Insurance kit and container revenue increased, due primarily to an increase in
the number of blood and oral fluid kits sold.
Clinical (diagnostic) laboratory revenue increased 123% from $2.1 million in
the second quarter 1997 to $4.7 million in 1998 due to an 94% increase in
testing volumes and a 15% increase in the average revenue per patient.
Substance abuse testing (SAT) revenue increased 51% from $2.3 million in the
second quarter 1997 to $3.5 million in 1998 primarily due to increased testing
volumes.
Cost of sales increased $3.2 million in the second quarter 1998 as compared to
the prior year, due primarily to increases in supplies, inbound freight and
outside laboratory testing and collection services. Laboratory supplies
increased due to the increased specimen volumes tested in each segment.
Insurance kit supplies increased due to the higher volume of kits sold.
Inbound freight and outside laboratory testing and collection services
increased primarily due to the increased specimen volumes in the clinical and
SAT segments. Clinical cost of sales expenses were $3.6 million as compared
to $2.1 million in the second quarter 1997. SAT cost of sales expenses were
$2.3 million as compared to $1.7 million in the second quarter 1997.
As a result of the above factors, gross profit for the quarter increased $2.3
million (23%) from $9.7 million in 1997 to $11.9 million in 1998. Clinical
gross profit increased to $1.1 million in the second quarter 1998 from $39,000
in the second quarter 1997. SAT gross profit increased to $1.1 million in the
second quarter 1998 from $0.6 million last year.
Selling, general and administrative expenses increased $0.8 million (11%) in
the second quarter 1998 as compared to the prior year, due primarily to
increases in payroll expenses and bad debt accruals. These were partially
offset by a decrease in depreciation expense. Clinical expenses, including
allocated overhead, were $2.6 million as compared to $1.9 million in 1997.
SAT expenditures, including allocations, were $1.1 million as compared to $0.7
million last year. The overhead allocation to the clinical and SAT testing
segments for the second quarter 1998 was $1.3 million as compared to an
allocation of $0.8 million in 1997.
Operating income increased from $2.6 million in the second quarter 1997 to 4.1
million in 1998. The insurance segment increased $0.8 million. The clinical
segment improved $0.4 million to an operating loss of $1.5 million for the
quarter. The SAT segment improved $0.2 million from an operating loss of $0.2
million in the second quarter 1997 to an operating gain of $40,000 in 1998.
Investment income decreased $0.1 million due primarily to less funds available
for investment. The effective income tax rate remained steady at 41% in 1997
and 1998.
The combined effect of the above factors resulted in net earnings of $2.5
million or $0.19 per share in the second quarter 1998 as compared to $1.7,
million or $0.13 per share, in the same period last year.
Page 8
YEAR-TO-DATE ANALYSIS
Revenue in the six month period ended June 30, 1998 was $49.1 million as
compared to $38.0 million in the same period last year. The increase of $11.0
million is due to increases in clinical laboratory revenue of $4.7 million,
insurance laboratory revenue of $2.8 million, SAT revenue of $2.3 million and
kit revenue of $1.3 million.
The total number of insurance applicants tested in the six month period
increased by 15% as compared to last year, while average revenue per
applicant declined 3%. Kit and container revenue increased $1.3 million due
primarily to an increase in the number of full blood and oral fluid kits sold.
Clinical laboratory revenue increased from $3.7 million during the first six
months of 1997 to $8.4 million for the same period in 1998 due to increased
testing volumes and higher revenue per patient. SAT revenue increased from
$4.1 million in 1997 to $6.3 million in 1998 due to a 55% increase in testing
volumes.
Cost of sales increased $6.7 million year to date as compared to the prior
year. This increase is due primarily to increases in laboratory and kit
supplies, payroll expenses, inbound freight and outside laboratory services.
Lab supplies increased 27% due to the larger volume of all specimen types
processed, and insurance kit expense increased due to the higher volume of
kits sold. Payroll increased 16%. Freight and outside testing increased
primarily due to the substantial growth in clinical and SAT specimen volumes.
Clinical cost of sales expenses were $7.0 million as compared to $4.0 million
during the first six months of 1997. SAT cost of sales expenses were $4.4
million as compared to $3.1 million during 1997.
As a result of the above factors, gross profit for the first six months
increased from $18.0 million in 1997 to $22.3 million in 1998. Clinical gross
profit improved from a loss of $0.3 million in 1997 to a gain of $1.4 million
in 1998. SAT gross profit increased to $1.9 million in the first six months
of 1998 from $0.9 million last year.
Selling, general and administrative expenses increased $1.8 million (13%) in
the six month period ended June 30, 1998 as compared to the prior year due
primarily to increases in payroll expenses and bad debt accruals. Payroll
expense increased primarily due to a 13% increase in headcount and increased
benefit expenses. These were partially offset by a decrease in depreciation
expense. Clinical expenditures were $4.9 million as compared to $3.7 million
in 1997. SAT expenses increased from $1.5 million in 1997 to $2.1 million in
1998. The overhead allocation to the clinical and SAT segments for the period
was $2.4 million as compared to an allocation of $1.5 million in 1997.
Operating income increased from $4.5 million in the first six months of 1997
to $7.1 million in 1998, primarily due to an increase in the insurance segment
operating income of $1.7 million. The clinical segment had an operating loss
of $3.4 million for the six month period ended June 30, 1998 as compared to an
operating loss of $4.0 million in 1997. The SAT segment improved from an
operating loss of $0.5 million in 1997 to a loss of $0.1 million in 1998.
Investment income decreased $0.2 million primarily due to less funds available
for investment. The effective income tax rate declined from 41% in 1997 to
40% in 1998.
The combined effect of the above factors resulted in net earnings of $4.5
million or $0.34 per share in the six month period ended June 30, 1998 as
compared to $3.0 million or $0.23 per share in the same period last year.
Page 9
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
- ---------------------------------------------------
LabOne's working capital position decreased by $3.9 million to $31.5 million
at June 30, 1998, from $35.4 million at December 31, 1997. This decrease is
primarily due to capital additions and dividends paid exceeding cash provided
by operations before changes in working capital. Cash flow from operations
before changes in working capital increased by $1.6 million year to date as
compared to 1997. The increase is primarily attributable to the increase in
net earnings.
Trade accounts receivable increased $3.1 million or 24% from December 31,
1997, due to the increase in revenue for the six month period. Net additions
to property, plant and equipment in the first six months of 1998 were $6.3
million, as compared to $2.4 million in 1997. The increase is primarily
related to construction of the new facility.
The new facility project is expected to cost approximately $33 million and
will be financed with an industrial revenue bond (IRB) approved by the City of
Lenexa (Kansas). The IRB is expected to be in place during the third quarter
1998. Interest on the bond will be based on a taxable seven day variable
rate. The Company will sell $20 million of the $33 million IRB, and $13
million will be purchased by LabOne. The company expects to repay the
outstanding portion over 11 years at approximately $1.85 million per year plus
interest. As of June 30, 1998, total capital expenditures for this project
were $10.0 million.
In May 1998, LabOne's Board of Directors declared the regular quarterly
dividend of $0.18 per common share. This dividend was paid on June 2, 1998,
to stockholders of record as of May 26, 1998, and totaled approximately $2.4
million. The board will review the dividend payment policy on a periodic
basis. There are currently no restrictions that would limit the Company's
ability to make future dividend payments.
The total number of shares held in treasury at June 30, 1998 was approximately
1.9 million at a total cost of $21.9 million or $11.78 per share. The Company
had no short-term borrowings in the second quarter 1998. The Company expects
to fund operations and future dividend payments from a combination of cash
flows from operations and cash reserves. At June 30, 1998, LabOne had total
cash and investments of $12.7 million as compared to $19.5 million at December
31, 1997.
LabOne is actively addressing Year 2000 computer concerns. The company has
established an oversight committee which includes management from all parts of
the Company and meets periodically to review progress. The Company expects to
complete all internal Year 2000 objectives by the end of the first quarter,
1999 and is assessing the Year 2000 preparation and contingency plans of its
clients and vendors. Total expenses related to this project are not expected
to be material to the Company. However, there can be no assurance that the
Company's adjustments to its computer systems will completely eliminate all
Year 2000 problems. In addition, there can be no assurance that the systems
of clients and vendors will be converted to address Year 2000 problems in a
timely and effective manner or that such conversions will be compatible with
the Company's computer systems. A failure to properly address the Year 2000
problem could have a material adverse effect on the Company's business,
financial condition and results of operations.
Page 10
PART II. OTHER INFORMATION
Item 4. - Submission of Matters to a Vote of Security Holders.
(a) The annual stockholders' meeting was held on May 14, 1998.
(c) Brief description of each matter voted:
(1) Election of directors. For Messrs. William D. Grant, Rifkind,
Seward, Thompson, Walker and Wright, there were 12,558,110 shares
voted in favor thereof and 14,572 shares withheld. For Mr. Brewer,
there were 12,557,445 shares voted in favor thereof and 15,237
shares withheld. For Messrs. W. Thomas Grant II, Hespe, Sadler and
Schweiker, there were 12,546,482 shares voted in favor thereof and
26,200 shares withheld. There were 0 abstentions and 0 broker
nonvotes for all directors.
(2) Election to approve the 1997 Long-Term Incentive Plan. Of the
12,572,682 shares voted, 11,741,278 were voted in favor thereof and
257,195 were opposed. There were 16,660 abstentions and 557,549
broker nonvotes.
(3) Election to ratify the appointment of KPMG Peat Marwick LLP as
independent certified public accountants of the corporation and its
subsidiary for the present fiscal year. Of the 12,572,682 shares
voted, 12,539,139 were voted in favor thereof and 10,969 were
opposed. There were 22,573 abstentions and 1 broker nonvote.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Registrant's 1997 Long-Term Incentive Plan.
10.2 Form of Stock Option Agreement pursuant to the LabOne 1997
Long-Term Incentive Plan.
27. Financial Data Schedule - as filed electronically by the
Registrant in conjunction with this second quarter 1998 Form 10-Q.
Page 11
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.
LabOne, Inc.
Date: August 12, 1998 By /s/ Kurt E. Gruenbacher
-----------------------
Kurt E. Gruenbacher, V.P. Finance, CAO
and Treasurer
Date: August 12, 1998 By /s/ Robert D. Thompson
----------------------
Robert D. Thompson, Executive V.P., Chief
Operating Officer and Chief Financial
Officer
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
second quarter 1998 Form 10-Q for LabOne, Inc. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000816151
<NAME> LABONE, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 12,220,186
<SECURITIES> 500,854
<RECEIVABLES> 17,233,276
<ALLOWANCES> 1,549,232
<INVENTORY> 1,629,271
<CURRENT-ASSETS> 40,099,061
<PP&E> 49,474,121
<DEPRECIATION> 34,381,182
<TOTAL-ASSETS> 60,315,474
<CURRENT-LIABILITIES> 8,622,337
<BONDS> 0
0
0
<COMMON> 150,000
<OTHER-SE> 51,211,961
<TOTAL-LIABILITY-AND-EQUITY> 60,315,474
<SALES> 0
<TOTAL-REVENUES> 49,095,697
<CGS> 0
<TOTAL-COSTS> 26,790,851
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,530,538
<INCOME-TAX> 3,014,167
<INCOME-CONTINUING> 4,516,371
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,516,371
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
Exhibit 10.1
------------
LABONE, INC.
1997 LONG-TERM INCENTIVE PLAN
1. Purpose.
The purpose of the LabOne, Inc. 1997 Long-Term Incentive Plan (the "Plan")
is to further the earnings of LabOne, Inc. ("LabOne") and its subsidiaries
(collectively the "Company") by: (i) assisting the Company in attracting,
retaining and motivating officers, directors, employees and consultants of high
caliber and potential and (ii) providing for the award of long-term incentives
to such officers, directors, employees and consultants. The Plan is not
intended to be a Plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended. Certain capitalized terms used herein are
defined in Section 15 below.
2. Administration.
(a) Committee. The Plan shall be administered by a committee
(the "Committee") consisting of two or more members of the Board of Directors
of LabOne (the "Board"). The members of the Committee shall be appointed by
and may be changed from time to time in the discretion of the Board. The Board
may, in its sole discretion, bifurcate the powers of the Committee among one
or more separate committees, or retain all powers and duties of the Committee
in a single committee; provided, however, that except as otherwise determined
by the Board, (i) if a Committee is authorized to grant Awards or make
determinations with respect to a Reporting Person, each member of such
Committee shall be a "non-employee director" within the meaning of Rule 16b-3
under the 1934 Act, or any successor rule of similar import, and (ii) if a
Committee is authorized to grant Awards or make determinations with respect to
a Covered Employee, each member of such Committee shall be an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
(b) Authority. The Committee shall have full and final power and
authority to administer and interpret the Plan. In addition to such general
power and authority, and subject to the provisions of the Plan, the Committee
shall have full and final authority in its discretion to: (i) determine the
eligible persons to whom Awards shall be made under the Plan, (ii) determine
the type or types of Awards to be granted to each Participant hereunder, (iii)
determine the time or times when Awards shall be granted, (iv) determine the
terms and conditions of Awards and the terms and conditions of any agreement
evidencing an Award, (v) authorize the issuance of Shares pursuant to Awards
granted under the Plan, (vi) interpret, construe and administer the Plan and
any instrument or agreement relating to or evidencing an Award under the Plan,
(vii) establish, amend, suspend or waive rules and guidelines relating to the
Plan and Awards hereunder, (viii) correct any defect, supply any omission and
reconcile any inconsistency in the Plan and (ix) make any other determination
or take any other action that it deems necessary or desirable for
administration of the Plan or any Award hereunder. Decisions of the Committee
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shall be final, binding and conclusive on all persons, including the Company
and any Participant. The Committee may hold meetings and otherwise take action
in the manner permitted under the applicable provisions of the Certificate of
Incorporation and By-laws of the Company, resolutions of the Board and
applicable law. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award under
the Plan.
(c) Delegation of Authority. To the extent permitted by applicable
law, the Committee may delegate to one or more executive officers of the
Company the power to make Awards to Participants who are not Reporting Persons
or Covered Employees and to make all determinations under the Plan with respect
to such Participants, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion.
(d) Power and Authority of the Board of Directors.
Notwithstanding anything to the contrary contained herein, the Board of
Directors may at any time and from time to time, without any further action of
the Committee, exercise the powers and duties of the Committee under the Plan.
3. Stock Subject to the Plan.
(a) Amount. LabOne may grant Awards under the Plan with respect to
not more than a total of 1,000,000 Shares, subject, however, to adjustment as
provided in subparagraph (b) hereof. Such Shares may be authorized and
unissued Shares or treasury Shares. If for any reason any Award expires or
lapses or is terminated, surrendered, forfeited, cancelled, exercised or
settled in a manner that results in fewer shares outstanding than were awarded
pursuant to the Award, the Shares subject to such Award, to the extent of such
expiration, lapse, termination, surrender, forfeiture, cancellation or
decrease, shall again be available for award under the Plan. Notwithstanding
the provisions of this paragraph 3(a), no Shares shall again be subject to
Awards if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code.
(b) Adjustment. In the event that the Committee determines that any
dividend or distribution (whether in the form of cash, Shares, other securities
or other property), recapitalization, merger, consolidation, reorganization,
spin-off or split-up, reverse stock split, combination or exchange of Shares or
other transaction affects the Shares such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan, then the Committee may, in such manner as it may deem equitable and
without the consent of any affected Participant, adjust the number and kind of
securities which may be issued under the Plan, the number and kind of
securities subject to outstanding Awards and the exercise price of each
outstanding stock option granted under the Plan, and may make such other
changes in outstanding Awards as it deems equitable in its absolute discretion.
Fractional Shares resulting from any such adjustments shall be eliminated. No
adjustment or action described in this paragraph 3(b) shall be authorized to
the extent that such adjustment or action would cause the Plan or any
outstanding Incentive Stock Option to violate Section 422 of the Code or would
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cause any Performance-Based Award to fail to qualify as "qualified performance-
based compensation" under Section 162(m) of the Code and the regulations
promulgated thereunder.
(c) Limit on Individual Grants. The maximum number of Shares
subject to stock options and underlying stock appreciation rights which may be
granted in the aggregate under the Plan in any calendar year to any Participant
shall not exceed 150,000 Shares, subject to adjustment as provided in
subparagraph (b) hereof. The maximum number of Shares subject to restricted
stock awards which may be granted under the Plan in any calendar year to any
Participant shall not exceed 150,000 Shares, subject to adjustment as provided
in subparagraph (b) hereof. In addition, the maximum amount of compensation
payable in respect of performance unit awards, other stock-based awards under
paragraph 10 hereof, cash in addition to an Award under paragraph 12 hereof and
dividend equivalents under paragraph 14(c) hereof that may be paid in the
aggregate under the Plan in any calendar year to any Participant shall not
exceed $1,500,000. In all events, determinations under this subparagraph shall
be made in a manner that is consistent with Section 162(m) of the Code and the
regulations promulgated thereunder.
4. Eligibility to Receive Awards.
All officers, directors, key employees and consultants of the Company are
eligible to be Participants in the Plan. As used herein, key employees are
employees determined by the Committee to be capable of contributing
significantly to the profitability and success of the Company. Incentive Stock
Options (as defined below) may be granted only to persons eligible to receive
such options under the Code.
5. Form of Awards.
Subject to the provisions of the Plan, Awards may be made from time to
time by the Committee in the form of stock options to purchase Shares, stock
appreciation rights, performance units, restricted stock, other stock-based
awards as provided herein or any combination of the above. Stock options may
be options which are intended to qualify as incentive stock options within the
meaning of Section 422 of the Code or any successor provision ("Incentive Stock
Options") or options which are not intended to so qualify ("Nonqualified Stock
Options").
6. Stock Options.
(a) Award. Subject to the provisions of the Plan, the Committee
shall determine the terms and conditions of each stock option granted by the
Committee, which may include without limitation: (i) the type of option
(Incentive Stock Option or Nonqualified Stock Option), (ii) the number of
Shares subject to the option, (iii) the time or times at which and/or the
conditions upon which the option shall become exercisable in whole or in part,
(iv) the term of the option, and (v) the exercise price per Share, provided
that the exercise price per Share shall not be less than the par value of a
Share. In addition, the exercise price per Share for stock options which are
intended to be Performance-Based Awards (other than Performance-Based Awards
described in paragraph 11(b) hereof) shall not be less than the fair market
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value of a Share on the date of grant. The Committee, in its discretion, may
provide for circumstances under which the option shall become immediately
exercisable, in whole or in part, and, notwithstanding the foregoing, may
accelerate the exercisability of any option, in whole or in part, at any time.
A stock option granted under this Plan shall be an Incentive Stock Option only
if the relevant Award Agreement by its terms expressly states that it is
intended to qualify as an Incentive Stock Option and the stock option is
designated as an Incentive Stock Option in the Award Agreement.
(b) Payment for Shares. The Committee shall determine the form of
payment of the purchase price of the Shares with respect to which an option is
exercised, which may include without limitation (i) cash (which may include
personal checks, certified checks, cashier's checks or money orders), (ii)
Shares at fair market value, (iii) the optionee's written request to the
Company to reduce the number of Shares otherwise issuable to the optionee upon
the exercise of the option by a number of Shares having a fair market value
equal to such purchase price, (iv) a payment commitment of a financial
institution or brokerage firm in connection with the "cashless exercise" of an
option, (v) any other lawful consideration, including, without limitation, an
Award or a note or other commitment satisfactory to the Committee or (vi) a
combination of any of the foregoing.
(c) Incentive Stock Options. In the case of an Incentive Stock
Option, each Award shall contain such other terms, conditions and provisions as
the Committee determines to be necessary or desirable in order to qualify such
option as an Incentive Stock Option within the meaning of Section 422 of the
Code or any successor provision.
7. Stock Appreciation Rights.
(a) Award. Stock Appreciation Rights ("SARs") may be granted by the
Committee either in connection with a previously or contemporaneously granted
stock option or independently of a stock option. Subject to the provisions of
the Plan, the Committee shall determine the terms and conditions of each SAR.
SARs shall entitle the grantee, subject to such terms and conditions as may be
determined by the Committee, to receive upon exercise thereof all or a portion
of the excess of (i) the fair market value at the time of exercise, as
determined by the Committee, of a specified number of Shares with respect to
which the SAR is exercised, over (ii) a specified price which shall not be less
than 100 percent of the fair market value of the Shares at the time the SAR is
granted, or, if the SAR is granted in connection with a previously or
contemporaneously issued stock option, not less than the exercise price of the
Shares subject to the option, provided that the specified price for SARs which
are intended to be Performance-Based Awards (other than Performance-Based
Awards described in paragraph 11(b) hereof) shall in no event be less than the
fair market value of a Share on the date the SAR is granted.
(b) SARs Related to Stock Options. If an SAR is granted in relation
to a stock option, unless otherwise determined by the Committee, (i) the SAR
shall be exercisable only at such times, and by such persons, as the related
option is exercisable, (ii) the grantee's right to exercise the related option
shall be canceled if and to the extent that the Shares subject to the option
are used to calculate the amount to be received upon the exercise of the
related SAR and (iii) the grantee's right to exercise the related SAR shall be
canceled if and to the extent that the Shares subject to the SAR are purchased
upon the exercise of the related option, provided that an SAR granted with
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respect to less than the full number of Shares covered by a related option
shall not be reduced until the exercise or termination of the related option
exceeds the number of Shares not covered by the SAR.
(c) Other Terms. Each SAR shall have such other terms and
conditions as the Committee shall determine in its sole discretion. The
Committee may, in its discretion, provide in the Award circumstances under
which the SARs shall become immediately exercisable, in whole or in part, and
may, notwithstanding the foregoing, accelerate the exercisability of any SAR,
in whole or in part, at any time. Upon exercise of an SAR, payment shall be
made in cash, Shares at fair market value on the date of exercise, other
Awards, other property or any combination thereof, as the Committee may
determine.
8. Restricted Stock Awards.
(a) Award. Restricted stock awards under the Plan shall consist of
Shares free of any purchase price or for such purchase price as may be
established by the Committee, subject to forfeiture, and subject to such other
terms and conditions (including attainment of performance objectives) as may be
determined by the Committee.
(b) Restriction Period. Restrictions shall be imposed for such
period or periods as may be determined by the Committee. The Committee shall
determine the terms and conditions upon which any restrictions upon restricted
stock awarded under the Plan shall expire, lapse, or be removed. The
Committee, in its discretion, may provide in the Award circumstances under
which the restricted stock shall become immediately transferable and
nonforfeitable, or under which the restricted stock shall be forfeited, and,
notwithstanding the foregoing, may accelerate the expiration of the restriction
period imposed on any Shares at any time.
(c) Restrictions Upon Transfer. Restricted stock and the right to
vote such Shares and to receive dividends thereon, may not be sold, assigned,
transferred, exchanged, pledged, hypothecated, or otherwise encumbered during
the restriction period applicable to such Shares, except to the extent
determined by the Committee. Notwithstanding the foregoing, and except as
otherwise provided in the Plan or determined by the Committee, the grantee of
the restricted stock shall have all of the other rights of a stockholder,
including, but not limited to, the right to receive dividends and the right to
vote such Shares. The Committee, in its discretion, may provide that any
dividends or distributions paid with respect to Shares subject to the unvested
portion of a restricted stock award will be subject to the same restrictions as
the Shares to which such dividends or distributions relate.
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(d) Registration. Any restricted stock issued hereunder may be
evidenced in such manner as the Committee in its sole discretion may deem
appropriate, including without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event any certificate or
certificates are to be issued, the Committee, in its sole discretion, shall
determine when the certificate or certificates shall be delivered to the
grantee, may provide for the holding of such certificate or certificates in
escrow or in custody by the Company or its designee pending their delivery to
the grantee, and may provide for any appropriate legend to be borne by the
certificate or certificates.
9. Performance Units.
Performance unit awards under the Plan shall entitle grantees to future
payments based upon the achievement of pre-established performance objectives.
Subject to the provisions of the Plan, the Committee shall determine the terms
and conditions applicable to each performance unit award, which may include
without limitation the following: (a) one or more performance periods, (b) the
initial value of a performance unit, (c) performance targets to be achieved
during each applicable performance period and (d) the terms of payment of
performance unit awards. Performance targets established by the Committee may
relate to financial and nonfinancial performance goals, may relate to
corporate, division, unit, individual or other performance and may be
established in terms of growth in gross revenue, earnings per share, ratios of
earnings to equity or assets, or such other measures or standards as may be
determined by the Committee in its discretion. Multiple targets may be used
and may have the same or different weighting, and they may relate to absolute
performance or relative performance measured against other companies or
businesses. At any time prior to payment of a performance unit award, the
Committee may adjust previously established performance targets or other terms
and conditions, including the Company's or other entity's financial performance
for Plan purposes, to reflect unforeseen events, including without limitation,
changes in laws, regulations or accounting practices, mergers, acquisitions or
divestitures or other extraordinary, unusual or non-recurring items or events.
Payment on performance unit awards may be made in cash, Shares, other Awards,
other property or any combination thereof.
10. Other Stock-Based Awards.
The Committee may grant to Participants, either alone or in addition to
other Awards granted under the Plan, awards which are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on or
related to Shares (including, without limitation, securities or other
instruments convertible into Shares). Subject to the terms of the Plan, the
Committee shall determine the terms and conditions of such Awards. Such Awards
may be paid in Shares, cash, other Awards, other property or any combination
thereof, as the Committee may determine. Such Awards may be issued for no cash
consideration, for such minimum consideration as may be required by applicable
law or for such other consideration as the Committee may determine. The form
or forms of consideration payable for Shares or other securities delivered
pursuant to a purchase right granted under this paragraph may include any form
of consideration specified in paragraph 6(b) hereof. The Committee may
establish certain performance criteria that may relate in whole or in part to
receipt of awards hereunder.
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11. Performance-Based Awards.
(a) Applicability. Awards granted and other compensation payable
under the Plan which are intended to qualify as Performance-Based Awards shall
be subject to the provisions of this paragraph 11. In the event of any
conflict between the provisions of this paragraph 11 and any other provisions
of this Plan, the provisions of this paragraph 11 shall prevail.
(b) Performance Goals. The specific performance goals for the
following Performance-Based Awards shall be one or more Stockholder-Approved
Performance Goals, as selected by the Committee in its sole discretion: (i)
Performance-Based Awards granted under paragraphs 8, 9, 10, 12 and 14(c) hereof
and (ii) Performance-Based Awards granted under paragraphs 6 and 7 hereof which
are made on account of, or the vesting or exercisability of which is contingent
upon, attainment of one or more performance goals. To the extent required
under Section 162(m) of the Code and the regulations promulgated thereunder,
the Committee shall (I) establish in the applicable Award Agreement the
specific performance targets relative to the Stockholder-Approved Performance
Goals which must be attained before compensation under the Performance-Based
Award becomes payable, (II) provide in the applicable Award Agreement the
method for computing the amount of compensation payable to the Participant if
the target or targets are attained, and (III) at the end of the relevant
performance period and prior to any payment of compensation, certify whether
the applicable target or targets were achieved and whether any other material
terms were in fact satisfied. The specific targets and the method for
computing compensation shall be established within the time period permitted
under Section 162(m) of the Code and the regulations promulgated thereunder.
The Committee may reserve the right in any Award Agreement covering a
Performance-Based Award to reduce the amount payable at a given level of
performance. The Committee shall be precluded from increasing the amount of
compensation payable that would otherwise be due upon attainment of a
performance goal contained in a Performance-Based Award, to the extent required
under Section 162(m) of the Code and the regulations promulgated thereunder for
Performance-Based Awards to qualify as "qualified performance-based
compensation" under Section 162(m) of the Code.
(c) Modification of Performance Goals. Except where a modification
would cause a Performance-Based Award to no longer qualify as "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code, the Committee may in its discretion modify any performance goal or target
relating to a Performance-Based Award, in whole or in part, as the Committee
deems appropriate and equitable, subject to the provisions of paragraph 14(i)
hereof.
(d) Discretion; Compliance. Notwithstanding any other provision of
this Plan to the contrary, neither the Board nor the Committee shall be
entitled to exercise any discretion otherwise authorized under this Plan with
respect to any Performance-Based Award or with respect to the amendment or
modification of any provision of this Plan without stockholder approval, if the
ability to exercise such discretion (as opposed to the exercise of such
discretion) would cause any Performance-Based Award to fail to qualify as
"qualified performance-based compensation" under Section 162(m) of the Code.
Notwithstanding any other provision of this Plan to the contrary, the Plan
shall be deemed to include such additional limitations or requirements set
forth in Section 162(m) of the Code and the regulations and rulings promulgated
thereunder which are required to be included in the Plan in order for
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Performance-Based Awards to qualify as "qualified performance-based
compensation" under Section 162(m) of the Code, and this Plan shall be deemed
amended to the extent necessary to conform to such limitations and requirements
from time to time.
12. Loans and Supplemental Cash Payments.
The Committee in its sole discretion to further the purpose of the Plan
may provide for cash payments to individuals in addition to an Award, or loans
to individuals in connection with all or any part of an Award. Supplemental
cash payments shall be subject to such terms and conditions as shall be
prescribed by the Committee, provided that in no event shall the amount of
payment exceed:
(a) In the case of an option, the excess of the fair market value of
a Share on the date of exercise over the option price multiplied by the number
of Shares for which such option is exercised, or
(b) In the case of an SAR, performance unit, or restricted stock
Award, the value of the Shares and other consideration issued in payment of
such Award.
Any loan shall be evidenced by a written loan agreement or other instrument in
such form and containing such terms and conditions (including, without
limitation, provisions for interest, payment schedules, collateral, forgiveness
or acceleration) as the Committee may prescribe from time to time.
13. General Restrictions.
Each Award under the Plan shall be subject to the requirement that if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the Shares subject or related thereto upon any securities
exchange or under any state or federal law, or (ii) the consent or approval of
any regulatory body, or (iii) an agreement by the recipient of an Award with
respect to the disposition of Shares, or (iv) the satisfaction of withholding
tax or other withholding liabilities is necessary or desirable as a condition
of or in connection with the granting of such Award or the issuance or purchase
of Shares thereunder, such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval, agreement,
or withholding shall have been effected or obtained free of any conditions not
acceptable to the Committee. Any such restriction affecting an Award shall
not extend the time within which the Award may be exercised; and neither the
Company nor its directors or officers nor the Committee shall have any
obligation or liability to the grantee or to a Beneficiary with respect to any
Shares with respect to which an Award shall lapse or with respect to which the
grant, issuance or purchase of Shares shall not be effected, because of any
such restriction.
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14. General Provisions Applicable to Awards.
(a) Award Agreements. Each Award under the Plan shall be evidenced
by a written agreement entered into by and between LabOne and the Participant
("Award Agreement") containing such terms and conditions not inconsistent with
the provisions of the Plan as the Committee in its sole discretion deems
necessary or advisable. Each Participant to whom an Award has been granted
shall agree that such Award shall be subject to all of the terms and conditions
of the Plan and the terms and provisions of the applicable Award Agreement. A
Participant shall have no rights with respect to any Award unless the
Participant shall have executed and delivered to the Company a copy of the
Award Agreement with respect to such Award.
(b) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other Award. Multiple Awards, multiple forms
of Awards, or combinations thereof may be evidenced by a single Award
Agreement or multiple Award Agreements, as determined by the Committee.
Successive Awards may be granted to the same Participant whether or not any
Awards previously granted to such Participant remain outstanding. The
Committee's determinations under the Plan need not be uniform and may be made
selectively among persons who receive, or are eligible to receive, Awards under
the Plan, whether or not such persons are similarly situated. No person shall
have any claim or right to be granted an Award under the Plan.
(c) Dividends. In the discretion of the Committee, any Award under
the Plan may provide the Participant with dividends or dividend equivalents
payable in cash or property, currently or deferred, with or without interest.
Dividend equivalents granted with respect to a stock option which is a
Performance-Based Award may not be made contingent upon exercise of the stock
option, to the extent prohibited by Section 162(m) of the Code and the
regulations promulgated thereunder with respect to qualified performance-based
compensation.
(d) Termination of Employment or Consulting Arrangement. The
Committee shall determine the effect, if any, on an Award of the disability,
death, retirement or other termination of employment or services of a
Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Beneficiary may receive payment
of an Award or exercise rights thereunder.
(e) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company (as defined
by the Committee), the Committee in its discretion may take one or more of the
following actions: (i) provide for the acceleration of any time period relating
to the exercise, realization or payment of the Award, (ii) provide for payment
to the Participant of cash or other property with a fair market value, as
determined by the Committee, equal to the amount that would have been received
upon the exercise or payment of the Award had the Award been exercised or paid
upon the change in control, (iii) adjust the terms of the Award in a manner
determined by the Committee to reflect the change in control, (iv) cause the
Award to be assumed, or new rights substituted therefor, by another entity, or
(v) make such other provisions as the Committee may consider equitable to the
Participant and in the best interests of the Company.
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(f) Transferability. In the discretion of the Committee, any Award
may be made transferable upon such terms and conditions and to such extent as
the Committee determines, provided that Incentive Stock Options may be
transferable only to the extent permitted by the Code. The Committee may in
its discretion waive any restriction on transferability. Unless the Committee
determines otherwise, a Participant's rights and interest under any Award or
any Award Agreement may not be assigned or transferred in whole or in part,
voluntarily or involuntarily, including by operation of law, except by will, by
the laws and descent and distribution or pursuant to an effective Beneficiary
designation.
(g) Withholding.
(i) Prior to the issuance or transfer of Shares or other
property under the Plan, the recipient shall remit to the Company an amount
sufficient to satisfy any Federal, state or local withholding tax requirements.
The recipient may satisfy the withholding requirement in whole or in part by
delivering Shares or electing to have the Company withhold Shares having a
value equal to the amount required to be withheld. The value of such Shares
shall be the fair market value, as determined by the Committee, of the stock on
the date that the amount of tax to be withheld is determined (the Tax Date).
Such Election must be made prior to the Tax Date, must comply with all
applicable securities law and other legal requirements, as interpreted by the
Committee, and may not be made unless approved by the Committee, in its
discretion.
(ii) Whenever payments to a Participant in respect of an Award
under the Plan are to be made in cash, such payments shall be net of the amount
necessary to satisfy any Federal, state or local withholding tax requirements.
(h) Deferred or Installment Payments. The Committee may provide
that the issuance of Shares or the payment or transfer of cash or property upon
the settlement of Awards may be made in a single payment or transfer or in
installments, and may authorize the deferral of, or permit a Participant to
elect to defer, any such issuance, payment or transfer, all in accordance with
such rules, requirements, conditions and procedures as may be established by
the Committee. The Committee may also provide that any such installment or any
such deferred issuance, payment or transfer shall include the payment or
crediting of dividend equivalents, interest or earnings on deferred amounts.
(i) Amendment of Awards. Subject to the terms and conditions of the
Plan, the Committee will have the authority under the Plan to amend or modify
the terms of any outstanding Award (including the applicable Award Agreement)
in any manner, prospectively or retroactively, including, without limitation,
the authority to modify the number of shares or other terms and conditions of
an Award, extend the term of an Award, accelerate the exercisability or vesting
or otherwise terminate any restrictions relating to an Award, convert an
Incentive Stock Option to a Nonqualified Stock Option, accept the surrender of
any outstanding Award and authorize the grant of new Awards in substitution for
surrendered Awards; provided, however, that the amended or modified terms are
permitted by the Plan as then in effect and provided, further, that if the
Committee determines that such amendment or modification, taking into account
any related action, materially and adversely affects a Participant, such
Participant shall have consented to such amendment or modification. Nothing in
this subsection shall be deemed to limit the Committee's authority to amend or
modify any outstanding Award pursuant to paragraph 3(b) of the Plan.
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15. Certain Definitions
(a) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
(b) "Award" means any award of stock options to purchase Shares,
stock appreciation rights, performance units, restricted stock, other
stock-based awards as provided herein or any combination of the above granted
under the Plan.
(c) "Beneficiary" means the person or persons designated in writing
by the grantee of an Award as the grantee's Beneficiary with respect to such
Award; or, in the absence of an effective designation or if the designated
person or persons predecease the grantee, the grantee's Beneficiary shall be
the grantee's estate or the person or persons who acquire by bequest or
inheritance the grantee's rights in respect of an Award. In order to be
effective, a grantee's designation of a Beneficiary must be on file with the
Committee before the grantee's death, but any such designation may be revoked
and a new designation substituted therefor at any time before the grantee's
death.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor law.
(e) "Covered Employee" means a "covered employee" for a particular
taxable year of the Company within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder or any Participant who the Committee
believes will be such a covered employee for a particular taxable year of the
Company, and who the Committee believes will have remuneration in excess of
$1,000,000 for such taxable year, as provided in Section 162(m) of the Code.
(f) "Participant" means any person selected to receive an Award
pursuant to the Plan.
(g) "Outside Director" means a member of the Board of Directors who
is not an employee of LabOne or any parent corporation or subsidiary
corporation of LabOne (as defined in Sections 424(e) and (f) of the Code).
(h) "Performance-Based Awards" means Awards and other compensation
payable under the Plan which the Committee from time to time determines are
intended to qualify as "qualified performance-based compensation" under Section
162(m) of the Code.
(i) "Reporting Person" means any person subject to Section 16 of the
1934 Act, or any successor rule.
(j) "Shares" means shares of Common Stock, $.01 par value per share,
of LabOne as constituted on the effective date of the Plan, and any other
shares into which such Common Stock shall thereafter be changed by reason of
any transaction described in paragraph 3(b) hereof.
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(k) "Stockholder-Approved Performance Goals" means the measurable
performance objective or objectives established pursuant to this Plan for
Participants who have received grants of Performance-Based Awards described in
paragraph 11(b) hereof. To the extent permitted under Section 162(m) of the
Code and the regulations promulgated thereunder, Stockholder-Approved
Performance Goals may be described in terms of objectives related to the
performance of the Participant, LabOne, any subsidiary, or any division, unit,
department, region or function within LabOne or any subsidiary in which the
Participant is employed. Stockholder-Approved Performance Goals may be made
relative to the performance of other companies. To the extent permitted under
Section 162(m) of the Code and the regulations promulgated thereunder,
Stockholder-Approved Performance Goals applicable to any Performance-Based
Award shall be based on specified levels of or changes in one or more of the
following criteria: (i) cash flow, which may include net cash flow from
operations, or net cash flow from operations, financing and investing
activities, (ii) earnings per share, (iii) pre-tax income, (iv) net income,
(v) return on sales, (vi) return on equity, (vii) return on assets,
(viii) return on capital, (ix) return on investment, (x) revenue growth,
(xi) market share, (xii) retained earnings, (xiii) improved gross margins,
(xiv) operating expense ratios, (xv) earnings before interest, taxes,
depreciation and amortization, (xvi) costs, (xvii) cost reductions or savings,
(xviii) debt reduction, (xix) selling, general and administrative expenses and
(xx) total return to shareholders (share appreciation plus dividends).
16. Miscellaneous.
(a) Rights of a Shareholder. Except as otherwise provided in
paragraph 8 hereof and subject to the provisions of the applicable Award
Agreement, the recipient of any Award under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for Shares are
issued to him, and the issuance of Shares shall confer no retroactive right to
dividends.
(b) Rights to Terminate Employment. Nothing in the Plan or in any
Award Agreement shall confer upon any person the right to continue in the
employment of the Company or affect any right which the Company may have to
terminate the employment of such person.
(c) Amendment and Termination of Plan. The Board may terminate,
amend, modify or suspend the Plan at any time, subject to such stockholder
approval as the Board determines to be necessary or desirable to comply with
any tax, regulatory or other requirement. If the Committee determines that any
such termination, modification, amendment or suspension of the Plan shall
materially and adversely affect the rights of any grantee or Beneficiary under
an Award previously granted, the consent of such grantee or Beneficiary shall
be required, provided that it shall be conclusively presumed that any
adjustment pursuant to paragraph 3(b) hereof does not materially and adversely
affect any such right.
-12-
(d) Effect on Other Plans; Nature of Payments. Nothing contained in
this Plan shall prevent the Company from adopting other or additional
compensation arrangements or other benefit or incentive plans or shall affect
any Participant's eligibility to participate in any other such arrangement or
plan. Each grant of an Award and each issuance of Shares thereunder shall be
in consideration of services performed for the Company by the Participant
receiving the Award. Each such grant and issuance shall constitute a special
incentive payment to the Participant receiving the Award and shall not be taken
into account in computing the amount of salary or compensation of the
Participant for the purposes of determining any pension, retirement, death or
other benefits under (i) any pension, retirement, profit-sharing, bonus, life
insurance or other benefit plan of the Company or (ii) any agreement between
the Company and the Participant, except as such plan or agreement shall
otherwise expressly provide.
(e) Effective Date and Duration of Plan. The Plan shall become
effective when adopted by the Board, provided that the Plan is approved by the
stockholders of LabOne in accordance with Delaware law before the first
anniversary of the date the Plan is adopted by the Board, and provided,
further, that no payment on any Award shall be made unless and until such
stockholder approval is obtained. Unless it is sooner terminated in accordance
with subparagraph (c) hereof, the Plan shall remain in effect until all Awards
under the Plan have been satisfied or have expired or otherwise terminated, but
no Incentive Stock Option shall be granted more than ten years after the
earlier of the date the Plan is adopted by the Board or is approved by the
Company's shareholders.
(f) Unfunded Plan. The Plan shall be unfunded, except to the extent
otherwise provided in accordance with Section 8 hereof. Neither the Company
nor any affiliate shall be required to segregate any assets that may be
represented by Awards, and neither the Company nor any affiliate shall be
deemed to be a trustee of any amounts to be paid under any Award. Any
liability of the Company or any affiliate to pay any grantee or Beneficiary
with respect to an Award shall be based solely upon any contractual obligations
created pursuant to the provisions of the Plan, and no such obligations will be
deemed to be secured by a pledge or encumbrance on any property of the Company
or an affiliate.
(g) Governing Law. The Plan shall be governed by, and shall be
construed, enforced and administered in accordance with, the laws of the State
of Delaware, except to the extent that such laws may be superseded by any
Federal law.
-13-
Exhibit 10.2
------------
STOCK OPTION AGREEMENT
pursuant to the
LABONE, INC.
1997 LONG-TERM INCENTIVE PLAN
AGREEMENT dated as of February 13, 1998, and entered into, in duplicate,
by and between LabOne, Inc. (LabOne), a Delaware corporation, and ------, the
("Optionee").
WITNESSETH that:
WHEREAS, LabOne has duly adopted the LabOne, Inc. 1997 Long-Term Incentive
Plan (the "Plan"); and
WHEREAS, the Committee referred to in the Plan (the "Committee"), pursuant to
authority vested in it by LabOne's Board of Directors, has authorized the
granting to the Optionee of a Nonqualified Stock Option as defined in the Plan
(the "Option"), to purchase shares of stock of LabOne upon the terms and
subject to the conditions hereinafter set forth, and LabOne desires by this
instrument to grant said Option and to specify the terms and conditions
thereof; and
WHEREAS, the shares of the common stock of LabOne that are covered by the
Option hereby granted under the Plan, when added to the other shares of the
common stock of LabOne that are covered by other stock options granted under
the Plan, do not exceed the total number of shares of the common stock of
LabOne with respect to which awards are authorized pursuant to Section 3 of
the Plan to be granted under the Plan.
NOW, THEREFORE, it is hereby covenanted and agreed by and between LabOne and
the Optionee as follows:
Section 1.
- ----------
LabOne hereby grants to the Optionee an Option to purchase an aggregate of
- ----- shares of the common stock of LabOne ("Shares") of par value one cent
($0.01) per Share. Subject to all of the terms and conditions hereinafter
set forth, such Option shall be irrevocable.
Section 2.
- ----------
The Option price with respect to the Shares covered by this Agreement shall
be -------- share (market price on date of grant).
Section 3.
- ----------
(a) Subject to all of the other terms and conditions hereinafter set forth,
the Option may be exercised by the Optionee on or after the respective dates
hereinafter specified, but not later than ten (10) years and one (1) day from
the date of this Agreement, namely:
Page 1
On and after February 13, 1999, the Option may be exercised in respect
of 20% of the aggregate number of Shares specified in Section 1, above;
On and after February 13, 2000, the Option may be exercised in respect
of an additional 20% of the aggregate number of Shares specified in
Section 1, above;
On and after February 13, 2001, the Option may be exercised in respect
of an additional 20% of the aggregate number of Shares specified in
Section 1, above;
On and after February 13, 2002, the Option may be exercised in respect
of an additional 20% of the aggregate number of Shares specified in
Section 1, above; and
On and after February 13, 2003, the Option may be exercised in respect
of an additional 20% of the aggregate number of Shares specified in
Section 1, above.
(b) Notwithstanding the provisions of Section 3 (a) above, the Option may be
exercised with respect to all of the Shares specified in Section 1, above,
immediately upon the occurrence of a Change of Control. "Change of Control"
means the occurrence of any of the following events:
(i) any Person (within the meaning of Section 13 (d) and 14 (d) of the
Securities Exchange Act of 1934, as amended [the "1934 Act"]), other than
Lab Holdings, Inc. ("LAB HOLDINGS") or an affiliate (as that term is
defined in Rule 12b-2 under the 1934 Act) of LAB HOLDINGS as of the date of
this Agreement, becomes the beneficial owner (within the meaning of Rule 13d-3
under the 1934 Act) of 20% or more of the combined voting power of LAB
HOLDINGS or any company that directly or indirectly controls LabOne (a "LabOne
Affiliate"); or
(ii) a majority of the Board of Directors of LAB HOLDINGS or a LabOne
Affiliate ceases to consist of Continuing Directors ("Continuing Director"
means, as to LAB HOLDINGS, any person who was a member of the Board of
Directors of LAB HOLDINGS as of the date of this Agreement, and any person who
subsequently becomes a member of such Board of Director if such person's
election or nomination for election to such Board of Directors is recommended
or approved by a majority of the Continuing Directors of LAB HOLDINGS; and as
to a LabOne Affiliate, "Continuing Director" means any person who is a member
of the Board of Directors of such LabOne Affiliate if such person is elected
to such Board of Directors with the approval of LAB HOLDINGS and/or any
affiliate of LAB HOLDINGS as the holder of at least a majority of the
outstanding voting interests of such LabOne Affiliate or if such person's
election or nomination for election to such Board of Directors is recommended
or approved by a majority of the Continuing Directors of such LabOne
Affiliate); or
(iii) the stockholders of LAB HOLDINGS or of any LabOne Affiliate approve an
agreement to merge or consolidate with another corporation, unless such merger
of consolidation (A) is approved by a majority of the Continuing Directors of
LAB HOLDINGS or of the LabOne Affiliate, as the case may be, and (B) is
specifically designated by a majority of the Continuing Directors of LAB
HOLDINGS or of the LabOne Affiliate, as the case may be, not to constitute a
change of control for purposes of the Plan; or
Page 2
(iv) the stockholders of LAB HOLDINGS or of any LabOne Affiliate approve an
agreement (including a plan of liquidation) to sell or otherwise dispose of
all or substantially all of the assets of LAB HOLDINGS or of any LabOne
Affiliate, unless such sale or other disposition is (A) approved by a majority
of the Continuing Directors of LAB HOLDINGS or the LabOne Affiliate, as the
case may be, and (B) is specifically designated by a majority of the
Continuing Directors of LAB HOLDINGS or of the LabOne Affiliate, as the case
may be, not to constitute a change of control for purposes of the Plan.
Section 4.
- ----------
Subject to all of the other terms and conditions set forth
hereinafter and in the Plan, the Optionee may exercise the Option in respect
of Shares on and after the appropriate dates set forth in Section 3 (a),
above, in whole at any time, or in part from time to time. The Optionee shall
give the committee a written notice to exercise the Option in whole or in a
specified part, and such notice shall be accompanied by cash (including
personal checks, certified checks, cashier's checks, or money orders) in full
payment for the Shares then being purchased. The Optionee shall have the
right, with the consent of, and subject to such terms and conditions as may be
established by, the Committee, to elect to pay all or a part of the option
price for the Shares by requesting LabOne to reduce the number of Shares
otherwise issuable to the Optionee upon the exercise of the Option by a number
of Shares having a fair market value at the time of exercise equal to such
option price.
The Option shall be deemed to be exercised (i) on the date that the notice of
exercise and the cash and/or election are received by the Committee or (ii) if
such notice of exercise and cash and/or election are mailed in the United
States and the United State Postal Service has stamped its postmark thereon,
then on the date of such postmark.
Section 5.
- ----------
(a) In no event may the Option be exercised later than one day after the
tenth (10th) anniversary of this Agreement; provided, however, that the Option
may be sooner terminated in accordance with the provisions of the Plan and of
this Section 5.
(b) If the Optionee's employment with LabOne and its subsidiaries (the
"Company") terminates for any reason other than Disability or Retirement (both
as defined in Section 6 (e) of the Plan) or death, and said termination does
not occur within twelve (12) months after a Change of Control, as defined in
Section 3 (b), above, the Optionee shall have the right to exercise the Option
within a period of three months after such termination to the extent that the
Option was exercisable at the time of termination. For purposes of this
Agreement, a leave of absence authorized by LabOne or a LabOne subsidiary to
the Optionee in writing shall not be deemed to be a termination of employment.
As used herein, the term Retirement means retirement pursuant to the pension
plan maintained by LabOne, as amended from time to time. As used herein, the
term Disability means a condition that, in the judgment of the committee, has
rendered a grantee completely and presumably permanently unable to perform any
and every duty of his regular occupation.
Page 3
(c) If the Optionee's employment with the Company terminates because of the
Optionee's death, or if the Optionee dies within twelve (12) months after
termination of employment due to Disability or Retirement, or if the Optionee
dies within three (3) months after termination of employment for any reason,
the Option, if held by the Optionee on the date of the Optionee's death, may
be exercised within (but not later than) twelve (12) months after the
Optionee's death, and only to the extent that the Option could have been
exercised immediately before the Optionee's death. In that event, the Option
may be exercised only by the Optionee's Beneficiary as defined in Section 15
(c) of the Plan. For purposes of this Section 5 (c), the Optionee may
designate in writing a person or persons as his Beneficiary with respect to an
Option; or, in the absence of an effective designation or if the designated
person or persons predeceased the Optionee, the Optionee's Beneficiary shall
be the Optionee's estate on the person or persons who acquire by bequest or
inheritance the Optionee's right in respect of an Option. In order to be
effective, an Optionee's designation of a Beneficiary must be on file with the
Committee before the Optionee's death. Any such designation may be revoked
and a new designation substituted therefor at any time before the Optionee's
death.
(d) If the Optionee's employment with the Company terminates because of his
Retirement or Disability, the Optionee may exercise the Option, to the extent
that it could be exercised upon such termination of employment, at any time
within twelve (12) months after the Optionee's employment so terminates.
(e) If the Optionee's employment with the Company terminates for any reason,
other than Retirement or Disability or death, within twelve (12) months after
a Change of Control, as defined in Section 3 (b), above, the Optionee may
exercise the Option at any time within twelve (12) months after the Optionee's
employment so terminates.
(f) In the case of an Optionee who is a director of the Company, (i) the term
"employment" as used in this Section 5 shall mean Optionee's service as a
director of the Company or his employment with the Company, whichever
terminates later, and (ii) the term "Retirement" as used in this Section 5
shall mean the termination of the Optionee's service as a director of the
Company (unless the termination of such service precedes the termination of
the Optionee's employment as an employee of the Company, in which case the
term "Retirement" shall have the meaning ascribed thereto by Section 5 (b)
hereof).
(g) Anything in this Agreement to the contrary notwithstanding, nothing in
this Section 5 or elsewhere in this Agreement shall be deemed or construed as
extending the ten-year-and-one-day period described in Section 5 (a), above.
Section 6.
- ----------
At the time of exercise of the Option, notice having been given as
aforesaid, Shares shall be delivered by LabOne against full payment of the
Option price in respect of the Shares delivered, subject to the provisions of
Section 7 hereof.
Section 7.
- ----------
Each exercise of the Option shall be subject to the condition that
if at any time LabOne shall determine, in its discretion, that it is necessary
or desirable as a condition of, or in connection with, such exercise (or the
delivery or purchase of Shares thereunder) (i) to satisfy withholding tax or
Page 4
other withholding liabilities, (ii) to effect the listing, registration, or
qualification on any securities exchange or under any state or federal law of
any Shares otherwise deliverable in connection with such exercise, (iii) to
obtain an agreement by the Optionee with respect to the disposition of the
Shares, then in any such event such exercise shall not be effective unless
such withholding, listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to LabOne. Any such limitation affecting the right to exercise an
Option shall not extend the time within which the Option may be exercised,
unless the Committee determines otherwise in its sole discretion; and neither
the Company nor its directors or officers nor the Committee shall have any
obligation or liability to the Optionee or to a Beneficiary with respect to
any Shares with respect to which the Option shall lapse or with respect to
which the purchase of Shares shall not be effected, because of such
limitation.
Section 8.
- ----------
The Optionee shall be solely responsible for any federal, state or
local income taxes imposed in connection with the exercise of the Option or
the delivery of Shares incident thereto. Prior to the transfer of Shares to
the Optionee in connection with the exercise of the Option, the Optionee shall
remit to LabOne an amount sufficient to satisfy any federal, state or local
withholding tax requirements. The optionee may satisfy the withholding
requirements in whole or in part by electing (the "Election") to have LabOne
withhold Shares having a value of equal to the amount required to be withheld.
The value of each Share to be withheld shall be the fair market value, as
determined by the Committee, of a Share on the date that the amount of tax to
be withheld is determined (the "Tax Date"). Such Election must be made prior
to the Tax Date, must comply with all applicable securities law and other
legal requirements, as interpreted by the Committee, and may not be made
unless approved by the Committee, in its discretion.
Section 9.
- ----------
If the Optionee disposes of any of the Shares purchased pursuant
to the Option, then, in order to provide the Company with the opportunity to
claim the benefit of any income tax deduction that may be available to it
under the circumstances, the Optionee shall promptly notify the Company of the
dates of acquisition and disposition of such Shares, the number of Shares so
disposed of and the consideration, if any, received for such Shares.
Section 10.
- -----------
Each Option is personal to the Optionee, is not transferable by
the Optionee other than by will or by the laws of descent and distribution in
accordance with Section 5 (c), above, and is exercisable, during the
Optionee's lifetime, only by the Optionee.
Section 11.
- -----------
Unless otherwise provided by the Plan, the Optionee shall have no
rights as a shareholder with respect to any Shares covered by this Agreement
unless and until certificates for such Shares are issued to him, and the
issuance of Shares shall confer no retroactive right to dividends.
Page 5
Section 12.
- -----------
Subject to the provisions of Section 3 (b) of the Plan, in the
event that the Committee determines that any dividend or distribution (whether
in the form of cash, Shares, other securities or other property),
recapitalization, merger, consolidation, reorganization, spin-off or split-up,
reverse stock split, combination or exchange of Shares or other transaction
affects the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in such manner as it may deem equitable and without the consent
of Optionee, adjust the number and kind of securities subject to the Option
and the exercise price per share, and may make such other changes as it deems
equitable in its absolute discretion. Fractional Shares resulting from any
such adjustments shall be eliminated.
Section 13.
- -----------
Nothing contained in this Agreement shall be deemed by
implication or otherwise to impose any limitation on any right of LabOne or
any of its subsidiaries to terminate the Optionee's employment at any time, in
the absence of a specific agreement to the contrary.
Section 14.
- -----------
Any notice to be given hereunder by the Optionee shall be sent by
mail addressed to LabOne, Inc., 10310 W. 84th Terrace, Lenexa, Kansas, 66214,
for the attention of the Corporate Secretary, and any notice by LabOne to the
Optionee shall be sent by mail addressed to the Optionee at the address of the
Optionee listed in the records of the company. Either party may, by notice
given to the other in accordance with the provisions of this Section, change
the address to which subsequent notices shall be sent.
Section 15.
- -----------
It is expressly understood and agreed that the Optionee assumes
all risks incident to any change hereafter in the applicable laws or
regulations or incident to any change in the market value of the Shares after
the exercise of the Option in whole or in part.
Section 16.
- -----------
The Option is not, is not intended to be, and shall not be treated as, an
Incentive Stock Option (as defined in the Plan).
Section 17.
- -----------
This Agreement is entered into pursuant to the Plan (a copy of which is
delivered to the Optionee concurrently with this grant). This Agreement is
subject to all of the terms and provisions of the Plan, which are incorporated
into this Agreement by reference. In the event of a conflict between this
Agreement and the Plan, the provisions of the Plan shall govern.
Page 6
Section 18.
- -----------
The Option is subject to and contingent upon approval of the Plan by the
stockholders of LabOne at a meeting of stockholders duly held in accordance
with the applicable laws of the State of Delaware within twelve (12) months
after the effective date of the Plan. Should stockholders fail to so approve
the Plan, this Option shall be null and void. Any other provisions of this
Option to the contrary notwithstanding, the Option may not be exercised in
whole or in part until after such stockholder approval has been obtained.
Section 19.
- -----------
This Agreement shall be governed by, and shall be construed, enforced and
administered in accordance with, the laws of the State of Delaware, except to
the extent that such laws may be superseded by any federal law. This
Agreement may not be modified orally.
IN WITNESS WHEREOF, LabOne, Inc. has caused this Agreement to be executed in
its corporate name, and the Optionee has executed the same in evidence of the
Optionee's acceptance hereof, upon the terms and conditions herein set forth,
as of the day and year first above written.
LABONE, INC.
By:
---------------------------------
------------------------------------
Optionee
Page 7
