Exhibit 10.18
SENIOR MANAGERS NON-QUALIFIED STOCK OPTION AGREEMENT
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SENIOR MANAGERS NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of April
30, 1992, between Lexmark Holding, Inc., a Delaware corporation (the "Company"),
and the Grantee whose name appears on the signature page hereof (the "Grantee").
W I T N E S E T H:
- - - - - - - - -
WHEREAS, pursuant to an Amended and Restated Master Acquisition
Agreement, dated as of December 19, 1990, as amended (the "Master Acquisition
Agreement"), among the Company, International Business Machines Corporation, a
New York corporation ("IBM"), and Lexmark International, Inc. (formerly IBM
Information Products Corporation), a Delaware corporation ("Lexmark"), the
Company acquired all of the capital stock of Lexmark from IBM and subsidiaries
of the Company acquired or will acquire certain assets of the foreign portions
of the Information Products Division of IBM from subsidiaries of IBM
(collectively, the "Acquisition");
WHEREAS, in connection with the Acquisition, the Company issued (a)
2,050,787 shares of its Class A Common Stock, par value $.01 per share (the
"Common Stock"), to The Xxxxxxx & Dubilier Private Equity Fund IV Limited
Partnership (together with any successor investment vehicle managed by Xxxxxxx &
Dubilier, Inc. the "C&D Fund"), (b) an aggregate of 550,000 shares of the
Company's Class B Common Stock, par value $.01 per share, to certain
institutional investors pursuant to Note and Stock Purchase Agreements among the
Company and Lexmark and each such investor, (c) an aggregate of 850,000 shares
of Common Stock to certain other institutional investors (the "Institutional
Investors") pursuant to a Securities Purchase Agreement among the Company and
the Institutional Investors, (d) 375,000 shares of Common Stock to IBM pursuant
to the Master Acquisition Agreement and (e) 50,000 shares of Common Stock to an
individual investor pursuant to a stock subscription agreement between the
Company and such investor;
WHEREAS, in connection with the Acquisition, the Company also (A)
issued shares of its Senior Cumulative Exchangeable Preferred Stock, having an
aggregate $85 million initial liquidation preference, to the Institutional
Investors, (B) issued 50,000 shares of its Non-Cumulative Junior Participating
Preferred Stock to the Lexmark Savings Plan Trust, which stock is exchangeable
for shares of Common Stock under certain circumstances, and (C) issued a warrant
to purchase up to 79,000 shares of Common Stock to Lexmark, which in turn
transferred such warrant to Spectrum Sciences B.V.;
WHEREAS, following the Acquisition, up to 680,000 shares, and options
to purchase shares, of Common Stock have been made available, sold and/or
granted, respectively, to non-employee directors of the Company or its
subsidiaries, and to existing and newly-hired members of the management and
employees of and consultants to the Company and its subsidiaries; and up to
3,500 shares of Common Stock have been made available and/or sold to senior
executives of corporations in which entities managed or sponsored by Xxxxxxx &
Dubilier, Inc. have made equity investments;
WHEREAS, the Board of Directors of the Company (the "Board") has
designated the Compensation and Pension Committee of the Board (the "Committee")
to administer the Company's Stock Option Plan for Senior Managers (the "Plan");
and
WHEREAS, the Committee has granted to the Grantee, under the Plan, a
non-qualified stock option to purchase the number of shares of the Common Stock
set forth in the attached letter dated April 30, 1992, from Xxxxxx Xxxx (the
"Shares") at an exercise price of $115 per share;
NOW, THEREFORE, to evidence the option so granted, and to set forth its
terms and conditions under the Plan, the Company and the Grantee hereby agree as
follows:
1. CONFIRMATION OF GRANT; OPTION PRICE. The Company hereby evidences
and confirms its grant to the Grantee, effective as of the date hereof, of an
option (the "Option") to purchase the Shares at an
option price of $115 per share (the "Option Price"). The Option is not intended
to be an Incentive Stock Option ("ISO") under the Internal Revenue Code of 1986,
as amended. This Agreement is subordinate to, and the terms and conditions of
the Option granted hereunder are subject to the terms and conditions of the
Plan.
2. EXERCISABILITY. Except as otherwise provided in this Agreement, 60%
of the Option shall become available for exercise upon Special Registration (as
defined in Section 4 (d)), subject to the provisions hereof, and with an
additional 20% becoming exercisable on each of the first and second
anniversaries of the date of the Special Registration, PROVIDED that, in the
event that the Grantee's employment with each of the Company and its
subsidiaries that employ the Grantee terminates by reason of the Grantee's
death, Permanent Disability (as defined in Section 4 (d)) or Retirement at
Normal Retirement Age (as defined in Section 4 (d)), 100% of the Option shall
become available for exercise upon the later to occur of the Special
Registration or the date of the Grantee's termination of employment. In the
event that the Grantee's employment with each of the Company and its
subsidiaries that employ the Grantee terminates for any reason other than (i)
death, Permanent Disability or Retirement at Normal Retirement Age or (ii) for
Cause, then any portion of the Option held by the Grantee and then exercisable
shall remain exercisable after such termination of employment at any time on or
after the Special Registration, PROVIDED that the Committee may at any time
determine that 100% of the Option shall become immediately available for
exercise at any time on or after the Special Registration. Any Shares which have
become eligible for purchase may thereafter be purchased, subject to the
provisions hereof, and pursuant to and subject to the provisions contained in
the Management Stock Subscription Agreement (as defined in Section 5) related to
such Shares, at any time and from time to time on or after such anniversary
until the date one day prior to the date on which the Option terminates.
3. TERMINATION OF OPTION.
(a) NORMAL TERMINATION DATE. Unless an earlier termination date is
specified in Section 3 (b), the Option shall terminate on the tenth anniversary
of the date hereof (the "Normal Termination Date").
(b) EARLY TERMINATION. If the Grantee's active employment with each of
the Company and its subsidiaries that employs the Grantee is voluntarily or
involuntarily terminated for any reason whatsoever prior to the Normal
Termination Date (i) any portion of the Option that has not become exercisable
on or before the date of such termination shall terminate on such date, and (ii)
if the Grantee's active employment is terminated by his employer for Cause, the
Option (including any portion of such option that shall have become exercisable
prior to such termination) shall no longer be exercisable on or after such
termination date. Notwithstanding the foregoing, and except in the case of a
termination by reason of death, Permanent Disability or Retirement at Normal
Retirement Age prior to the Special Registration, if the corresponding ISO
granted to the Grantee under the Plan shall not have been exercised in full
within 90 days after the Special Registration, this Option shall terminate on
the 91st day following the Special Registration as to the number of Shares equal
to the product of
(i) the total number of Shares times
(ii) a fraction,
(A) the numerator of which is the number of shares of
Common Stock as to which the ISO is not exercised and
(B) the denominator of which is the total number of
shares of Common Stock which were originally subject
to the ISO.
Nothing in this Agreement shall be deemed to confer on the Grantee any right to
continue in the employ of the Company or any of its subsidiaries, or to
interfere with or limit in any way the right of the Company or any of its
subsidiaries to terminate such employment at any time.
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4. RESTRICTIONS ON EXERCISE; NON-TRANSFERABILITY OF OPTION; REPURCHASE
OF OPTION.
(a) RESTRICTIONS ON EXERCISE. The Option may be exercised only with
respect to full shares of Common Stock. No fractional shares of Common Stock
shall be issued. Notwithstanding any other provision of this Agreement, the
Option may not be exercised in whole or in part, and no certificates
representing Shares shall be delivered, (i) unless all requisite approvals and
consents of any governmental authority of any kind having jurisdiction over the
exercise of options shall have been secured, (ii) unless the purchase of the
Shares upon the exercise of the Option shall be exempt from registration under
applicable federal and state securities laws or the Shares shall have been
registered under such laws, (iii) unless all applicable federal, state and local
tax withholding requirements shall have been satisfied and (iv) if such exercise
would result in a violation of the terms or provisions of or a default or an
event of default under any of the Financing Agreements (as such term is defined
in Section 8).
(b) NON-TRANSFERABILITY OF OPTION. The Option may be exercised only by
the Grantee or by his estate. The Option is not assignable or transferable, in
whole or in part, and it may not, directly or indirectly, be offered,
transferred, sold, pledged, assigned, alienated, hypothecated or otherwise
disposed of or encumbered (including without limitation by gift, operation of
law or otherwise) other than by operation of law to the estate of the Grantee
upon his death, PROVIDED that the deceased Grantee's beneficiary or the
representative of his estate shall acknowledge and agree in writing, in a form
reasonably acceptable to the Company, to be bound by all of the provisions of
this Agreement and the Plan as if such beneficiary or estate were the Grantee.
(c) REPURCHASE OF OPTION ON TERMINATION OF EMPLOYMENT. If the Grantee's
active employment with each of the Company and any subsidiaries of the Company
that employ the Grantee is terminated for any reason whatsoever, each of the
Company and Lexmark shall have an option to purchase all (but not less than all)
of the portion of the Option that is then exercisable (the "Covered Option"),
and shall have a period of 30 days beginning on the later of the date of
termination of employment and the Special Registration (the "First Purchase
Period") during which to give notice in writing to the Grantee of its exercise
of such right to purchase the Covered Option, PROVIDED that if the Company gives
notice during the First Purchase Period of its exercise of such right to
purchase the Covered Option, Lexmark's right to purchase the Covered Option
shall terminate. If the Company and Lexmark fail to exercise their rights to
purchase the Covered Option within the First Purchase Period, the C&D Fund shall
have the right to purchase the Covered Option and shall have 30 days following
the end of the First Purchase Period, or 30 days from the date of receipt of
notice of the Grantee's termination in accordance with Section 4 (e), whichever
is later (the "Second Purchase Period"), to give notice in writing to the
Grantee of the C&D Fund's exercise of its right to purchase the Covered Option.
If the right to purchase the Covered Option of the Company, Lexmark and the C&D
Fund granted in this sub-section is not exercised as provided herein (other than
as a result of Section 8), the Grantee shall be entitled to retain the Covered
Option, subject to all of the provisions of the Agreement. If the Company,
Lexmark and the C&D Fund have failed to exercise their respective rights to
purchase the Covered Option pursuant to this Section 4 (c) within the time
periods specified herein, and if the Grantee's active employment with each of
the Company and any subsidiaries of the Company that employ the Grantee is
terminated (i) by such employer or employers without Cause (as defined in
Section 4 (d)) or (ii) by the Grantee by Retirement at Normal Retirement Age (as
defined in Section 4 (d)) or (iii) by reason of Permanent Disability (as defined
in Section 4 (d)) or death, on notice from the Grantee (or his estate) in
writing and delivered to the Company within 30 days following the end of the
Second Purchase Period, the Company shall purchase the Covered Option. All
purchases pursuant to this Section 4 (c) by the Company, Lexmark or the C&D Fund
shall be for a purchase price and in the manner prescribed by Sections 4 (g),
(h) and (i).
(d) CERTAIN DEFINITIONS. As used in this Agreement the following terms
shall have the following meanings:
(i) "CAUSE" shall mean (A) the willful failure by the Grantee to
perform substantially his duties as an employee of the Company
or any of it subsidiaries (other than due to physical or
mental illness) after reasonable notice to the Grantee of such
failure, (B) the Grantee's engaging in serious misconduct that
is injurious to the Company or any
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subsidiary of the Company, (C) the Grantee's having been
convicted of, or entered a plea of NOLO CONTENDERE to, a crime
that constitutes a felony or (D) the breach by the Grantee of
any written covenant or agreement with the Company or any
subsidiary of the Company not to disclose any information
pertaining to the Company or any of its subsidiaries or not to
compete or interfere with the Company or any of its
subsidiaries.
(ii) "RETIREMENT AT NORMAL RETIREMENT AGE" shall mean retirement at
or after normal retirement age under the terms of any
retirement plan sponsored by the Company or any of its
subsidiaries, whichever employs the Grantee.
(iii) "PERMANENT DISABILITY" shall mean a physical or mental
disability or infirmity of the Grantee, as defined in any
disability plan sponsored by the Company, Lexmark or any
Subsidiary, whichever employees such Grantee, or, if no such
plan is sponsored by the Grantee's employer, the Lexmark Long
Term Disability Plan.
(iv) "SPECIAL REGISTRATION" means the later of (i) the time at
which a registration statement under the Securities Act of
1933, as amended, covering any offer to sell and sales of
Common Stock issued upon exercise of Option granted pursuant
to the Plan, becomes effective and (ii) the third anniversary
of the effective date of the Plan.
(e) NOTICE OF TERMINATION. The Company shall give written notice of any
termination of the Grantee's active employment with each of the Company and any
subsidiaries of the Company that employ the Grantee to the C&D Fund, except that
if such termination (if other than as a result of death) is by the Grantee, the
Grantee shall give written notice of such termination to the Company and the
Company shall give written notice of such termination to the C&D Fund.
(f) PUBLIC OFFERING. In the event that an underwritten public offering
in the United States of the Common Stock by an underwriter of nationally
recognized standing (a "Public Offering") has been consummated, none of the
Company, the C&D Fund or the Grantee shall have any rights to purchase or sell
the Covered Option, as the case may be, pursuant to this Section 4, and this
Section 4 shall not apply to a sale as part of a Public Offering.
(g) PURCHASE PRICE. The purchase price to be paid to the Grantee for
the Covered Option (the "Purchase Price") shall be equal to the difference
between (i) the fair market value of the Shares which may be purchased upon
exercise of the Covered Option (the "Fair Market Value") and (ii) the aggregate
exercise price of the Covered Option. Whenever a determination of Fair Market
Value is required by this Agreement, such Fair Market Value shall be determined
as of the time of the event that gives rise to the repurchase and shall be an
amount determined in good faith by the Board (or, if the authority to make such
determination has been specifically delegated by the Board to the Committee, by
the Committee). The Fair Market Value as determined in good faith by the Board
(or the Committee, as the case may be) shall, in the absence of fraud, be
binding and conclusive upon all parties hereto. If the Company at any time
subdivides (by any stock split, stock dividend or otherwise) the Common Stock
into a small number of shares, the Purchase Price shall be appropriately
adjusted to reflect such subdivision or combination.
(h) PAYMENT. Subject to Section 8, the completion of a purchase
pursuant to this Section 4 shall take place at the principal office of the
Company on the tenth business day following (i) the Grantee's receipt of the C&D
Fund's, Lexmark's or the Company's notice of its respective exercise of the
right to purchase the Covered Option pursuant to Section 4(c) or (ii) the
Company's receipt of the Grantee's notice to sell the Covered Option pursuant to
Section 4(c). The Purchase Price shall be paid by delivery to the Grantee of a
check for the Purchase Price payable to the order of the Grantee, against
delivery of such instruments as the Company may reasonably request, signed by
the Grantee.
(i) APPLICATION OF THE PURCHASE PRICE TO CERTAIN LOANS. The Grantee
agrees that the Company, Lexmark and the C&D Fund shall be entitled to apply any
amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase the Covered Option pursuant to this Section 4 to discharge any
indebtedness of the Grantee to the Company or any of its subsidiaries, or that
may be
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guaranteed by the Company or any of its subsidiaries, including, but not limited
to, any indebtedness of the Grantee incurred to purchase any shares of Common
Stock under any other agreement with the Company.
(j) WITHHOLDING. Whenever Shares are to be issued pursuant to the
Option, the Company may require the recipient of the Shares to remit to the
Company an amount sufficient to satisfy federal, state, local or other
withholding tax requirements. In the event any cash is paid to the Grantee or
his estate or beneficiary pursuant to this Section 4, the Company shall have the
right to withhold an amount from such payment sufficient to satisfy any federal,
state, local or other tax withholding requirements. If shares of Common Stock
are traded on a national securities exchange or bid and ask prices for shares of
Common Stock are quoted on the "NASDAQ National Market System" operated by the
National Association of Securities Dealers, Inc., the Company may, if requested
by the Grantee, withhold shares to satisfy applicable withholding requirements,
subject to the provisions of the Plan and any rules adopted by the Board or any
committee thereof regarding compliance with applicable law, including, but not
limited to, Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
5. MANNER OF EXERCISE. To the extent that the Option shall have become
and remains exercisable as provided in Section 2 and subject to such
administrative regulations as the Board or the Committee may have adopted, the
Option may be exercised from time to time, in whole or in part, by notice to the
Secretary of the Company in writing given 30 days prior to the date on which the
Grantee will so exercise the Option (the "Exercise Date"), specifying the number
of Shares with respect to which the Option is being exercised (the "Exercise
Shares") and the Exercise Date, PROVIDED that if shares of Common Stock are
traded on a national securities exchange or bid and ask prices for Shares of
Common Stock are quoted over the "NASDAQ National Market System" operated by the
National Association of Securities Dealers, Inc., notice may be given five
business days before the Exercise Date. On or before the Exercise Date, the
Company and the Employee shall enter into a Management Stock Subscription
Agreement (the "Management Stock Subscription Agreement") in a form reasonably
satisfactory to the Company and containing rights by the Company and the C&D
Fund to purchase the Exercise Shares, which rights are similar to the purchase
rights with respect to the Options described in this Agreement, and a right of
first refusal of the Company and the C&D Fund with respect to the Exercise
Shares. In accordance with the Management Stock Subscription Agreement, (a) on
or before the Exercise Date, the Employee shall deliver to the Company full
payment for the Exercise Shares in United States dollars in cash, or cash
equivalent satisfactory to the Company, and in an amount equal to the aggregate
purchase price for the Exercise Shares and (b) on the Exercise Date, the Company
shall deliver to the Employee a certificate or certificates representing the
Exercise Shares, registered in the name of the Employee. If shares of Common
Stock are listed for trading on a national securities exchange or bid and ask
prices for shares of Common Stock are quoted over the "NASDAQ National Market
System" operated by the National Association of Securities Dealers, Inc., the
Employee may, in lieu of cash, tender shares of Common Stock having a Fair
Market Value on the Exercise Date equal to the purchase price of the Exercise
Shares or may deliver a combination of cash and shares of Common Stock having a
Fair Market Value equal to the difference between the exercise price and the
amount of such cash as payment for the purchase price of the Exercise Shares,
subject to such rules and regulations as may be adopted by the Board or the
Committee to provide for the compliance of such payment procedure with
applicable law, including Section 16(b) of the Exchange Act. The Company may
require the Grantee to furnish or execute such other documents as the Company
shall deem necessary (i) to evidence such exercise, (ii) to determine whether
registration is then required under the Securities Act of 1933, as amended (the
"Securities Act"), and (iii) to comply with or satisfy the requirements of the
Securities Act, state securities laws or any other law.
6. GRANTEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) INVESTMENT INTENTION. The Grantee represents and warrants that the
Option has been, and any Exercise Shares will be, acquired by him solely for his
own account for investment and not with a view to or for sale in connection with
any distribution thereof. The Grantee agrees that he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
all or any portion of the Option or any of the Exercise Shares (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of all or any
portion of the Option or any of the Exercise Shares), except in compliance with
the Securities Act and the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder,
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and in compliance with applicable state securities or "blue sky" laws. The
Grantee further understands, acknowledges and agrees that none of the Shares may
be transferred, sold, pledged, hypothecated or otherwise disposed of (i) unless
the provisions of the related Management Stock Subscription Agreement shall have
been complied with or have expired, (ii) unless (A) such disposition is pursuant
to an effective registration statement under the Securities Act, (B) the Grantee
shall have delivered to the Company an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, to the effect that such
disposition is exempt from the provisions of Section 5 of the Securities Act or
(C) a no-action letter from the Commission, reasonably satisfactory to the
Company, shall have been obtained with respect to such disposition and (iii)
unless such disposition is pursuant to registration under any applicable state
securities laws or an exemption therefrom, except that if the Grantee is a
citizen or resident of any country other than the United States, or the Grantee
desires to effect any transfer in any such country, in addition to the
foregoing, counsel for the Grantee (which counsel shall be reasonably
satisfactory to the Company) shall have furnished the Company with an opinion or
other advice reasonably satisfactory to the Company to the effect that such
transfer will comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, the Company acknowledges and agrees that no
opinion of counsel is required in connection with a transfer to the Company,
Lexmark or the C&D Fund.
(b) LEGEND. Any certificate representing the Exercise Shares shall bear
the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF
___________, 199_, AND NEITHER THIS CERTIFICATE NOR THE SHARES
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT STOCK SUBSCRIPTION
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO THE
BENEFITS PROVIDED TO MANAGERS IN, AND ARE BOUND BY THE OBLIGATIONS SET
FORTH IN, A REGISTRATION AND PARTICIPATION AGREEMENT, DATED AS OF MARCH
27, 1991, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) (A) SUCH DISPOSITION
IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, (B)
THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF
COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF SUCH ACT OR (C) A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL
FOR THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO REGISTRATION UNDER
ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM, EXCEPT
THAT IF THE GRANTEE IS A CITIZEN OR RESIDENT OF ANY COUNTRY OTHER THAN
THE UNITED STATES, OR THE GRANTEE DESIRES TO EFFECT ANY TRANSFER IN ANY
SUCH COUNTRY, IN ADDITION TO THE FOREGOING, COUNSEL FOR THE GRANTEE
(WHICH COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE COMPANY) SHALL
HAVE FURNISHED THE COMPANY WITH AN OPINION OR OTHER ADVICE REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH TRANSFER WILL
COMPLY WITH THE SECURITIES LAWS OF SUCH JURISDICTION."
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(c) SECURITIES LAW MATTERS. The Grantee acknowledges receipt of advice
from the Company that the Option has not been registered under the Securities
Act or qualified under any state securities or "blue sky laws" and, upon
exercise of the Option, (i) the Exercise Shares will not be registered under the
Securities Act or qualified under any state securities or "blue sky" laws, (ii)
the Exercise Shares must be held indefinitely and the Grantee must continue to
bear the economic risk of the investment in the Exercise Shares unless such
Exercise Shares are subsequently registered under the Securities Act and such
state laws or an exemption from such registration is available, (iii) it is not
anticipated there will be any public market for the Exercise Shares, (iv) Rule
144 promulgated under the Securities Act is not presently available with respect
to the sales of any securities of the Company, (v) when and if the Exercise
Shares may be disposed of without registration in reliance upon Rule 144, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule, (vi) if the exemption afforded by Rule 144 is not
available, sales of the Exercise Shares may be difficult to effect because of
the absence of public information concerning the Company, (vii) a restrictive
legend in the form heretofore set forth shall be placed on the certificates
representing the Exercise Shares and (viii) a notation shall be made in the
appropriate records of the Company indicating that the Exercise Shares are
subject to restrictions on transfer and, if the Company should in the future
engage the services of a stock transfer agent, appropriate stop-transfer
restrictions will be issued to such transfer agent with respect to the Exercise
Shares.
(d) COMPLIANCE WITH RULE 144. If any of the Exercise Shares are to be
disposed of in accordance with Rule 144 under the Securities Act, the Grantee
shall transmit to the Company an executed copy of Form 144 (if required by Rule
144) no later than the time such form is required to be transmitted to the
Commission for filing and such other documentation as the Company may reasonably
require in connection with such disposition.
(e) ABILITY TO BEAR RISK. The Grantee covenants that he will not
exercise all or any portion of the Option unless (i) the financial situation of
the Grantee is such that he can afford to bear the economic risk of holding the
Exercise Shares for an indefinite period and (ii) he can afford to suffer the
complete loss of his investment in the Exercise Shares.
(f) QUESTIONNAIRE. The Grantee agrees that he will furnish such
documents and comply with such reasonable requests of the Company as may be
necessary to substantiate his status as a qualifying investor in connection with
any private offering of the Exercise Shares to the Grantee and that all
information contained in any written materials concerning the status of the
Grantee furnished by the Grantee to the Company in connection with such requests
will be true and correct in all material respects.
(g) ACCESS TO INFORMATION. The Grantee represents and warrants that (i)
he has been granted the opportunity to ask questions of, and receive answers
from, representatives of the Company concerning the terms and conditions of the
Options and the purchase of the Exercise Shares upon exercise of the Options,
(ii) his knowledge and experience in financial and business matter is such that
he is capable of evaluating the risks of an investment in the Exercise Shares
and (iii) he is a key employee or manager of the Company, Lexmark or a
subsidiary of either on the date hereof.
(h) REGISTRATION; RESTRICTIONS ON SALE UPON PUBLIC OFFERING. In respect
of any Shares purchased upon exercise of all or any portion of the Option, the
Grantee shall be entitled to the rights and subject to the obligations created
under the Registration and Participation Agreement, dated as of March 27, 1991,
among the Company and certain stockholders of the Company, to the extent set
forth therein. The Grantee agrees that, in the event that the Company files a
registration statement under the Securities Act with respect to an underwritten
public offering of any shares of its capital stock, the grantee will not effect
any public sale or distribution of any shares of the Common Stock (other than as
part of such underwritten public offering) during the 20 days prior to and the
180 days after the effective date of such registration statement.
(i) SECTION 83(b) ELECTION. The Grantee agrees that, within 20 days of
any Exercise Date, he shall give notice to the Company as to whether or not he
has made an election pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended, with respect to the Exercise Shares purchased on such date,
and acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in
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connection with his receipt of the Exercise Shares or attributable to his making
or failing to make such an election.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, ETC. The Company
represents and warrants to the Grantee that this Agreement has been duly
authorized and executed and delivered by the Company.
8. CERTAIN RESTRICTIONS ON REPURCHASES.
(a) FINANCING AGREEMENTS, ETC. Notwithstanding any other provision of
this Agreement, the Company shall not be permitted or obligated to repurchase
all or any portion of the Option if (i) there exists and is continuing a default
or an event of default under (A) the Secured United States Credit Agreement,
dated as of March 27, 1991, among the Company, Lexmark, the financial
institutions named on the signature pages thereof and Xxxxxx Guaranty Trust
Company of New York, as agent for such institutions (the "Credit Agreement"),
(B) the Note and Stock Purchase Agreements, dated as of March 27, 1991, among
Lexmark and the Company and each of the institutional investors named on the
signature pages thereof, relating to certain subordinated notes of Lexmark (the
"Note Purchase Agreements"), (C) the Securities Purchase Agreement, dated as of
March 27, 1991, among the Company and the Institutional Investors relating to
the Company's senior cumulative exchangeable preferred stock (together with the
Credit Agreement and the Note Purchase Agreements, the "Loan Agreements"), or
(D) any other financing or security agreement or document entered into in
connection with the Acquisition, or the financing of the Acquisition, or
permitted under the Loan Agreements (such agreements and documents and the Loan
Agreements, as each may be amended, modified or supplemented form time to time,
are hereinafter referred to as the "Financing Agreements"), in each case as the
same may be amended, modified or supplemented from time to time, (ii) such
repurchase would result in a violation of the terms or provisions of or a
default or an event of default under any of the Financing Agreements or (iii)
such repurchase would violate any of the terms or provisions of the Certificate
of Incorporation of the Company. In the event that a repurchase otherwise
permitted or required under Section 4(c) is prevented solely by the terms of the
foregoing sentence, such repurchase shall take place without the application of
further conditions or impediments (other than as set forth in Section 4 or in
this Section 8) at the first opportunity thereafter when no such default, event
of default or violation exists or when such repurchase will not result in any
such default, event of default or violation under any of the Financing
Agreements or in a violation of any term or provision under the Certificate of
Incorporation of the Company.
(b) DELAWARE GENERAL CORPORATION LAW. Notwithstanding any other
provisions of this Agreement, if any repurchase of all or any portion of the
Option pursuant to Section 4 would otherwise take place at a time when the
Company has no funds legally available therefor under the General Corporation
Law of the State of Delaware, such repurchase will be postponed and will take
place without the application of further conditions or impediments (other than
as set forth in Section 4 or in this Section 8) at the first opportunity
thereafter when the Company has funds legally available therefor.
(c) PURCHASE PRICE ADJUSTMENT. In the event that the Company is
prohibited from repurchasing all or any portion of the Option from the Grantee
as contemplated by this Section 8, the Purchase Price therefor shall be (i) the
Purchase Price of such Shares, determined in accordance with Section 4 at the
time the purchase of such Shares would have occurred but for the operation of
this Section 8 plus (ii) an amount equal to interest on such Purchase Price at
the rate publicly announced from time to time by Xxxxxx Guaranty Trust Company
of New York as its reference rate for the period from the date on which the
completion of the purchase would have taken place but for the operation of this
Section 8 to the date on which such purchase actually takes place.
9. NO RIGHTS AS STOCKHOLDER. The Grantee shall have no voting or other
rights as a stockholder of the Company with respect to any Shares covered by the
Option until the exercise of the Option and the issuance of a certificate or
certificates to him for such Shares. No adjustment shall be made for dividends
or other rights for which the record date is prior to the issuance of such
certificate or certificates.
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10. CAPITAL ADJUSTMENTS. The number and price of the Shares covered by
the Option shall be proportionately adjusted to reflect, as deemed equitable and
appropriate by the Board in its sole discretion, any stock dividend, stock split
or share combination of the Common Stock or any recapitalization of the Company.
To the extent deemed equitable and appropriate by the Board in its sole
discretion, subject to any required action by the stockholders of the Company,
in any merger, consolidation, reorganization, exchange of shares, liquidation or
dissolution, the Option shall pertain to the securities and other property, if
any, that a holder of the number of shares of Common Stock covered by the Option
would have been entitled to receive in connection with such event.
11. MISCELLANEOUS.
(a) NOTICES. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified or express mail, return
receipt requested, postage prepaid, or by any recognized international
equivalent of such mail delivery, to the Company, Lexmark, the C&D Fund or the
Grantee, as the case may be, at the following addresses or to such other address
as the Company, Lexmark, the C&D Fund or the Grantee, as the case may be, shall
specify by notice to the other parties:
(i) if to the Company or Lexmark, to it at:
00 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxx 00000
ATTENTION: Secretary
(ii) if to the Grantee, to the Grantee at the address set forth on the
signature page hereof.
(iii) if to the C&D Fund, to:
The Xxxxxxx & Dubilier Private Equity
Fund IV Limited Partnership
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
ATTENTION: Xxxxxxx & Dubilier Associates
IV Limited Partnership,
Xxxxxx X. Xxxx, III
All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof. Copies
of any notice or other communication given under this Agreement shall also be
given to:
Xxxxxxx & Dubilier, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx X. Xxxx, III
and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx X. Xxxxxxxxx, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Grantee and the Company under this Agreement at its address as set
forth above.
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(b) BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Section 4, nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
(c) WAIVER; AMENDMENT.
(i) WAIVER. Either party hereto may by written notice to the other (A)
extend the time for the performance of any of the obligations or other actions
of the other under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other contained in this Agreement and (C) waive
or modify performance of any of the obligations of the other under this
Agreement, PROVIDED that any waiver of the provisions of Section 4 must be
consented to by the C&D Fund. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with representations,
warranties, covenants or agreements contained herein. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
either party to exercise any right or privilege hereunder shall be deemed a
waiver of such party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any subsequent time or
times hereunder.
(ii) AMENDMENT. This Agreement may be amended, modified or supplemented
only by a written instrument executed by the Grantee and the Company, PROVIDED
that any amendment adversely affecting the rights of the C&D Fund hereunder must
be consented to by the C&D Fund. The parties hereto acknowledge that the
Company's consent to an amendment or modification of this Agreement is subject
to the terms and provisions of the Financing Agreements.
(d) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the Grantee without the prior written
consent of the other party.
(e) APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of Delaware, regardless of the law that
might be applied under principles of conflict of laws.
(f) SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement. In this Agreement all
references to "dollars" or "$" are to United States dollars.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
LEXMARK HOLDING, INC.
By:
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XXXXXX X. XXXX
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GRANTEE:
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Name (Please Print)
----------------------------------------
Signature of Grantee
----------------------------------------
Serial Number
Address of Grantee:
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BENEFICIARY:
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Name (Please Print)
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Address of Beneficiary:
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