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EXHIBIT 10.40
December 17, 1996
To: Xxxx Xxxxxx
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 Xxxxxxx'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
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Xxxx Xxxxxx 20,000
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.
a. 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
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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.
(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
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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 Xxxxxxx'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 Xxxxxxx'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, or additional securities or other property to
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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 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 Xxxxxxx's employment
with the Company.
Further, notwithstanding the above, with respect to Vested Shares, if
the termination of Xxxxxxx'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.
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Further, notwithstanding the above, with respect to Vested Shares, if
the Company discovers after termination of Xxxxxxx's employment, that Xxxxxxx
engaged in conduct that would have justified Termination for Cause, Xxxxxxx's
Option shall expire immediately on the date of such discovery.
11. CONFIDENTIALITY/NON-COMPETITION. In consideration of the Option
granted herein, Xxxxxxx acknowledges and agrees to be fully bound by the
"Non-Competition/Confidentiality" covenants included in Paragraph 5 of that
certain Employment Agreement dated August 7, 1996, between the Company and
Grantee 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 Xxxxxxx'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 Xxxxxxx's
employment because of Xxxxxxx's personal dishonesty, willful misconduct, breach
of fiduciary duty
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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 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.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Executive Vice President
Xx. Xxxx Xxxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
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 Xxxxxxx's
heirs, executors, administrators, successors and assigns and inure to the
benefit of Xxxxxxx's heirs, executors, administrators, successors and permitted
assigns.
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(i) 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.
18. 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, Xxxxxxx X. Xxxxxxxxxx, to
confirm your understanding and acceptance of the agreements contained in this
letter.
Very truly yours,
LASON, INC.
By:
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Xxxxxxx X. Xxxxxxxxxx
Its: Executive Vice President
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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
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Xxxx Xxxxxx
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EXHIBIT A TO EMPLOYEE STOCK
OPTION AGREEMENT
INVESTMENT LETTER
Lason, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Executive Vice President
Gentlemen:
This is to inform you that the undersigned (the "Purchaser") hereby
exercises the option granted to the Purchaser under the Lason, Inc. 1995 Stock
Option Plan with respect to _____ shares of the Common Stock, par value $.01
per share (the "Securities") of Lason, Inc., a Delaware corporation (the
"Company").
In connection with the proposed purchase of shares of the Common Stock,
par value $.01 per share (the "Securities"), of Lason, Inc., a Delaware
corporation (the "Company"), by the undersigned (the "Purchaser"), the
Purchaser hereby agrees, represents and warrants as follows:
1. PURCHASE ENTIRELY FOR OWN ACCOUNT.
The Purchaser represents and warrants that Purchaser is purchasing the
Securities solely for Purchaser's own account for investment and not with a
view to sale or distribution of the Securities or any portion thereof and not
with any present intention of selling, offering to sell, or otherwise disposing
of or distributing the Securities or any portion thereof. The Purchaser also
represents that the entire legal and beneficial interest of the securities
Purchaser is purchasing is being purchased for, and will be held for the
account of, the Purchaser only and neither in whole nor in part for any other
person.
2. INFORMATION CONCERNING COMPANY.
The Purchaser represents and warrants that Purchaser has heretofore
discussed the Company and its plans, operations and financial condition with
its officers and received all such information as Purchaser deems necessary and
appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Securities of the Company, and the Purchaser
further represents and
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warrants that Purchaser has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof.
3. ECONOMIC RISK.
The Purchaser represents and warrants that Purchaser is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Securities, Purchaser realizes that Purchaser's purchase of
the Securities will be a highly speculative investment and that Purchaser is
able, without impairing Purchaser's financial condition, to hold the Securities
for an indefinite period of time and to suffer a complete loss on Purchaser's
investment, should that be the case.
Dated as of ____________, _____.
Very truly yours,
ACCEPTED AND AGREED TO:
LASON, INC.
By:
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Xxxxxxx X. Xxxxxxxxxx
Its: Executive Vice President
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