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EXHIBIT 10.39
SECURED PROMISSORY NOTE
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Troy, Michigan
FOR VALUE RECEIVED, _______________ ("Borrower") promises to pay to the
order of Lason, Inc., a Delaware corporation (the "Company"), at 0000 Xxxxxxxxxx
Xxxxxxx, Xxxx, Xxxxxxxx 00000, or at such other place as the Company may
designate in writing, the principal sum of up to ________________ U.S. Dollars
($_________) (the "Available Credit Facility") or such lesser amount as shall
have been advanced to the Borrower by the Company under Section 1 of this Note
(the "Principal Sum"), together with interest on the unpaid balance of the
Principal Sum, as follows:
1. ANNUAL ADVANCES. The Company shall advance 25% of the Available
Credit Facility to the Borrower on the date hereof (the "Execution Date").
Thereafter for each of the next three (3) successive anniversary dates of the
Execution Date, the annual amount for which the Borrower may request an
additional advance will be determined as follows:
Number of option shares under the Borrower's May 29, 1998 option grant X
(Company's share price at anniversary date -$27.50);
provided, however, that the amount funded in a particular year, when taken
together with previous advances under the Note, may not exceed the following
cumulative percentages of the Available Credit Facility for the following
anniversary dates:
Anniversary Maximum Cumulative Percentage of Available Credit Facility
1st 50%
2nd 75%
3rd 100%
If the Company's share price on any anniversary date is below $27.50, the
Borrower will not be entitled to an advance for that particular year, but no
reduction in the outstanding principal amount of the Note will be required.
Notwithstanding anything to the contrary, (i) the Company shall advance
one hundred percent (100%) of the unadvanced portion of the Available Credit
Facility in the event of a change in control of the Company, as defined in the
Company's 1998 Equity Participation Plan (a "Change in Control"), which occurs
prior to the fourth anniversary of the Execution Date if the Company's stock
price is at least $40.50 at the time the Change in Control occurs; (ii) if a
Change in Control occurs prior to the fourth anniversary of the Execution Date
and the Company's share price is greater than $27.50 and less than $40.50 at the
time the Change in Control occurs, then the Company shall
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advance an amount equal to (A) the number of option shares under the Borrower's
May 29, 1998 option grant multiplied by (the Company's share price at the time
the Change in Control occurs minus $27.50) minus (B) all amounts previously
advanced under this Note; and (iii) no amounts are to be advanced under this
Note following the fourth anniversary of the Execution Date, regardless of
whether the entire Available Credit Facility has been advanced. In the event
that the amount calculated under (ii) of the preceding sentence is a negative
number, no reduction in the outstanding principal amount of the Note will be
required.
2. INTEREST. Interest shall accrue on the unpaid balance of the
Principal Sum at the Applicable Federal Rate as in effect on the date hereof and
on each successive anniversary date of this Note. In no event shall the interest
rate payable under this Note exceed the maximum rate permitted by law. To the
extent that Xxxxxxxx is employed by the Company at the end of any calendar year
prior to the Maturity Date, as defined below, all accrued and unpaid interest on
the unpaid balance of the Principal Sum shall be deemed to have been paid by
Borrower to the Company, and shall be considered and treated as increased W-2
earnings to Borrower.
3. MATURITY; PREPAYMENT. The Principal Sum, together with accrued and
unpaid interest thereon, shall be due and payable upon the first to occur of the
following: (i) the tenth anniversary of the date of this Note; (ii) termination
of the Borrower's employment with the Company for any reason, other than death
or permanent disability (as defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended), within the forty-eight (48) month period beginning on
the date of this Note; or (iii) acceleration of the Note upon an Event of
Default as described in Section 4 (the "Maturity Date"). If the Principal Sum is
not paid within five (5) days of the Maturity Date, interest shall thereafter
accrue on the unpaid balance of the Principal Sum at the per annum rate of three
percent (3%) plus the Applicable Federal Rate in effect on the Maturity Date.
Borrower may prepay any and all principal and accrued interest due under this
Note at any time without additional interest or penalty. All amounts outstanding
under this Note will be canceled and forgiven in the event of a Change in
Control of the Company; provided that the Note is not in default and has not
matured prior to the Change in Control.
4. SECURITY. To secure full and timely performance under this Note,
Xxxxxxxx agrees to pledge or cause to be pledged, and to grant or cause to be
granted, a security interest in the Borrower's unexercised stock options under
that certain Stock Option Agreement between the Borrower and the Company dated
as of May 29, 1998, together with any Common Stock of the Company acquired upon
the exercise of such stock options or any proceeds thereof (collectively, the
"Collateral"), pursuant to that certain Pledge and Security Agreement between
the Borrower and the Company dated as of ___________, 1998. This Note is
entitled to all benefits arising under, and is subject to the terms of, the
Pledge and Security Agreement, which among other things provides for the
acceleration of the Maturity Date hereof upon the occurrence of certain events.
All the representations, warranties, agreements, terms and conditions contained
in the Pledge and Security Agreement are incorporated herein. Borrower shall
execute and deliver or cause to be executed and delivered, all agreements,
instruments, documents and other written matter (collectively, the "Supplemental
Documentation") that the Company may request, in form and substance acceptable
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to the Company, to perfect and maintain perfected liens and a security
interest in the Collateral and which may be required by virtue of the Company's
status as a public company.
5. EVENT OF DEFAULT; ACCELERATION; OFFSET. During the continuance of an
Event of Default (as defined in the Pledge and Security Agreement), the
obligations evidenced by this Note, including, without limitation, the entire
unpaid Principal Sum together with any accrued interest, shall become
immediately due and payable without any notice or demand. During the continuance
of an Event of Default (as defined in the Pledge and Security Agreement), the
Company shall have the right to offset any amounts owing by the Company to
Borrower for whatever reason, including, but not limited to, salary, bonus or
expense reimbursement, against any unpaid portion of the Principal Sum advanced
by the Company and accrued interest thereon.
6. COSTS AND EXPENSES. In addition to all other sums payable under this
Note, Xxxxxxxx also agrees to pay to the Company upon demand all costs and
expenses incurred by the Company in the enforcement of Borrower's obligations
under this Note, including, without limitation, reasonable attorneys' fees. If
Borrower fails to pay such costs and expenses within five (5) days of the
receipt by Borrower of the Company's written demand therefor, then interest
shall accrue on such costs and expenses at the rate specified in the second
sentence of Section 3 from the date of demand until the date of payment.
7. SEVERABILITY. If any provision of this Note is held to be invalid or
unenforceable by a court of competent jurisdiction, the other provisions of this
Note shall remain in full force and effect and shall be construed liberally in
favor of the Company in order to effectuate the provisions of this Note.
8. GOVERNING LAW. This instrument shall be governed by and construed
according to the laws of the State of Michigan.
9. WAIVER. Borrower waives presentment, demand, notice of protest and
notice of dishonor and any and all other notices and demands in connection with
any delivery, acceptance, performance or default of this Note and agrees that
this Note may be modified only by an agreement in writing signed by the Company
and Borrower.
10. NO RIGHT TO CONTINUED EMPLOYMENT. The Company's acceptance of this
Note is a strictly voluntary undertaking on the part of the Company and shall
not constitute consideration for, or any inducement or condition of, the
employment of the Borrower by the Company. Nothing contained in this Note shall
give the Borrower the right to be retained in the service of the Company or to
interfere with or restrict the right of the Company, which is hereby expressly
reserved, to discharge or retire the Borrower at any time or for any reason not
prohibited by law, with or without cause.
11. MARGIN STOCK. Borrower represents and warrants that none of the
advances under this Note will be used for the purpose of buying or carrying
"margin stock," as that term is defined
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by Regulation U of the Federal Reserve Board. "Margin stock" includes any
equity security registered or having unlisted trading privileges on a national
securities exchange, any OTC security designated as qualified for trading in the
Nasdaq National Market System, any debt security convertible into a margin stock
or carrying a warrant or right to subscribe to or purchase a margin stock, any
warrant or right to subscribe to or purchase a margin stock, and, with certain
exceptions, securities issued by an investment company registered under Section
8 of the Investment Company Act of 1940.
By:___________________________________
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