FORM OF
INDEMNIFICATION AGREEMENT
This Indemnification Agreement, made and entered into as of the day of
, 1998 ("Agreement"), by and among Lexmark International Group,
----------------
Inc., a Delaware corporation ("Company"), Lexmark International, Inc., a
Delaware corporation ("LII"), and ("Indemnitee"):
------------------------
WHEREAS, highly competent persons have become more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation;
WHEREAS, the Boards of Directors of the Company and LII (collectively,
the "Board") has determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing basis, at its
sole expense, liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities. Although the furnishing of such insurance
has been a customary and widespread practice among United States-based
corporations and other business enterprises, the Company and LII believe that,
given current market conditions and trends, such insurance may be available to
it in the future only at higher premiums and with more exclusions. At the same
time, directors, officers, and other persons in service to corporations or
business enterprises are being increasingly subjected to expensive and
time-consuming litigation relating to, among other things, matters that
traditionally would have been brought only against the Company, LII or business
enterprise itself;
WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons;
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company's and LII's stockholders and that the Company and LII should act to
assure such persons that there will be increased certainty of such protection in
the future;
WHEREAS, it is reasonable, prudent and necessary for each of the
Company and LII contractually to obligate itself to indemnify such persons to
the fullest extent permitted by applicable law so that they will serve or
continue to serve the Company and LII free from undue concern that they will not
be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the
By-Laws of the Company and LII and any resolutions adopted pursuant thereto, and
shall not be deemed a substitute therefore, nor to diminish or abrogate any
rights of Indemnitee thereunder;
WHEREAS, the Company's and LII's By-Laws and the Delaware corporate
indemnification statute (ss.145 of the Delaware General Corporation Law) each is
nonexclusive and, therefore, contemplates that contracts may be entered into
with respect to indemnification of directors, officers, employees and agents;
WHEREAS, it is reasonable, prudent and necessary for each of the
Company and LII contractually to obligate itself to indemnify, and to advance
expenses on behalf of, such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company and/or
LII free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company and/or LII on the
condition that Indemnitee be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company, LII and Indemnitee do hereby covenant and agree
as follows:
Section 1. Services by Indemnitee.
------------------------ Indemnitee agrees to serve as a
director, officer, employee and/or agent of the Company and/or any of its
subsidiaries and may serve, at the request of the Company or LII, as a director,
officer, employee and/or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise (a "Relevant
Enterprise"). Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law), in which event the Company and/or LII shall have no
obligation under this Agreement to continue Indemnitee in such position. This
Agreement shall not be deemed an employment contract between the Company, LII
(or any of their subsidiaries) and Indemnitee. Indemnitee specifically
acknowledges that Indemnitee's employment with the Company and/or LII (or any of
their subsidiaries), if any, is "at will", and the Indemnitee may be discharged
at any time for any reason, with or without cause, except as may be otherwise
provided in any written employment contract between Indemnitee and the Company
and/or LII (or any of their subsidiaries), other applicable formal severance
policies duly adopted by the Board, or, with respect to service as a director of
the Company and/or any of its subsidiaries, by the relevant company's
Certificate of Incorporation, By-laws, and the General Corporation Law of the
State of Delaware. The foregoing notwithstanding, this Agreement shall continue
in force after Indemnitee has ceased to serve as a director, officer, employee
and/or agent, as the case may be, of the Company, LII and their subsidiaries or
of a Relevant Enterprise.
Section 2. Indemnification - General.
-------------------------- The Company and LII, without
duplication, shall indemnify, and advance Expenses (as hereinafter defined) to,
Indemnitee (a) as provided in this Agreement and (b) (subject to the provisions
of this Agreement) to the fullest extent permitted by applicable law in effect
on the date hereof and as amended from time to time. The rights of Indemnitee
provided under the preceding sentence shall include, but shall not be limited
to, the rights set forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of the
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Company and/or any of its Subsidiaries.
---------------------------------------- Indemnitee shall be entitled to the
rights of indemnification provided in this Section 3 if, by reason of his
Corporate Status (as hereinafter defined), he is, or is threatened to be made, a
party to or a participant in any threatened, pending, or completed Proceeding
(as hereinafter defined), other than a Proceeding by or in the right of the
Company and/or any of its subsidiaries. Pursuant to this Section 3, Indemnitee
shall be indemnified against all Expenses, judgments, penalties, fines and
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amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company and/or any of its subsidiaries and,
with respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company and/or any of
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its Subsidiaries.
---------------- Indemnitee shall be entitled to the rights of indemnification
provided in this Section 4 if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to or a participant in any threatened, pending or
completed Proceeding brought by or in the right of the Company and/or any of its
subsidiaries to procure a judgment in its favor. Pursuant to this Section,
Indemnitee shall be indemnified against all Expenses (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses) actually and reasonably incurred by him or on his behalf in
connection with such Proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and/or any of its subsidiaries; provided, however, that, if applicable law so
provides, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company and/or any of its subsidiaries unless
and to the extent that the Court of Chancery of the State of Delaware, or the
court in which such Proceeding shall have been brought or is pending, shall
determine that such indemnification may be made.
Section 5. Partial Indemnification.
----------------------- Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee is, by reason of his Corporate
Status, a party to (or a participant in) and is successful, on the merits or
otherwise, in defense of any Proceeding, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in defense of such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company and LII shall
indemnify, without duplication, Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter. If Indemnitee is entitled under any
provision of this agreement to indemnification by the Company and LII for some
or a portion of the Expenses, judgments, penalties, fines and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, penalties,
fines and amounts paid in settlement) actually and reasonably incurred by him or
on his behalf in connection with such Proceeding or any claim, issue or matter
therein, but not, however, for the total amount thereof, the Company and LII
shall nevertheless indemnify, without duplication, Indemnitee for the portion to
which Indemnitee is entitled.
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Section 6. Indemnification for Additional Expenses.
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(a) The Company and LII shall indemnify, without duplication,
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
(within seven (7) business days of such request) advance such Expenses to
Indemnitee, which are incurred by Indemnitee in connection with any action
brought by Indemnitee for (i) indemnification or advance payment of Expenses by
the Company and LII under this Agreement or any other agreement or By-Law of the
Company or LII now or hereafter in effect; or (ii) recovery under any directors'
and officers' liability insurance policies maintained by the Company or LII,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
(b) Notwithstanding any other provision of this Agreement, to
the extent that Indemnitee is, by reason of his Corporate Status, a witness in
any Proceeding to which Indemnitee is not a party, he shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.
Section 7. Advancement of Expenses.
----------------------- The Company and LII shall advance,
without duplication, all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within seven (7) days after the
receipt by the Company and LII of a statement or statements from Indemnitee
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses. Notwithstanding the
foregoing, the obligation of the Company and LII to advance Expenses pursuant to
this Section 7 shall be subject to the condition that, if, when and to the
extent that the Company and LII determines that Indemnitee would not be
permitted to be indemnified under applicable law, the Company and LII shall be
entitled to be reimbursed, within thirty (30) days of such determination, by
Indemnitee (who hereby agrees to reimburse the Company and/or LII) for all such
amounts theretofore paid; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Company and LII that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company and/or LII for any
advance of Expenses until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed).
Section 8. Procedure for Determination of Entitlement to
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Indemnification.
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(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company and LII a written request, including therein or
therewith such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Company and LII
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shall, promptly upon receipt of such a request for indemnification, advise the
Board in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case: (i) if a Change in Control (as hereinafter
defined) shall have occurred, by Independent Counsel (as hereinafter defined) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A) by a
majority vote of the Disinterested Directors (as hereinafter defined), even
though less than a quorum of the Board, or (B) if there are no such
Disinterested Directors or, if such Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee or (C) if so directed by the Board, by the stockholders
of the Company and LII; and, if it is so determined that Indemnitee is entitled
to indemnification, payment to Indemnitee shall be made within seven (7) days
after such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company and LII (irrespective of the
determination as to Indemnitee's entitlement to indemnification), and the
Company and LII hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
hereof, the Independent Counsel shall be selected as provided in this Section
8(c). If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company and LII shall give
written notice to Indemnitee advising him of the identity of the Independent
Counsel so selected. If a Change of Control shall have occurred, the Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
and LII advising it of the identity of the Independent Counsel so selected. In
either event, Indemnitee or the Company and LII, as the case may be, may, within
10 days after such written notice of selection shall have been given, deliver to
the Company and LII or to Indemnitee, as the case may be, a written objection to
such selection; provided, however, that such objection may be asserted only on
the ground that the Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 17 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is so made and substantiated,
the Independent Counsel so selected may not serve as Independent Counsel unless
and until such objection is withdrawn or a court has determined that such
objection is without merit. If, within 20 days after submission by Indemnitee of
a written request for indemnification pursuant to Section 8(a) hereof, no
Independent Counsel shall have been selected and not objected to, either the
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Company and LII or Indemnitee, as the case may be, may petition the Court of
Chancery of the State of Delaware for resolution of any objection which shall
have been made by the Company and/or LII or Indemnitee to the other's selection
of Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court shall
designate, and the person with respect to whom all objections are so resolved or
the person so appointed shall act as Independent Counsel under Section 8(b)
hereof. The Company and LII shall pay, without duplication, any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 8(b) hereof, and the
Company and LII shall pay all reasonable fees and expenses incident to the
procedures of this Section 8(c), regardless of the manner in which such
Independent Counsel was selected or appointed. Upon the due commencement of any
judicial proceeding or arbitration pursuant to Section 10(a)(iii) of this
Agreement, Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
(d) The Company and LII shall not be required to obtain the
consent of the Indemnitee to the settlement of any Proceeding which the Company
and LII has undertaken to defend if the Company and LII assumes full and sole
responsibility for such settlement and the settlement grants the Indemnitee a
complete and unqualified release in respect of the potential liability. The
Company and LII shall not be liable for any amount paid by the Indemnitee in
settlement of any Proceeding that is not defended by the Company and LII, unless
the Company and LII have consented to such settlement, which consent shall not
be unreasonably withheld.
Section 9. Presumptions and Effect of Certain Proceedings.
----------------------------------------------
(a) In making a determination with respect to entitlement to
indemnification or the advancement of expenses hereunder, the person or persons
or entity making such determination shall presume that Indemnitee is entitled to
indemnification or advancement of expenses under this Agreement if Indemnitee
has submitted a request for indemnification or the advancement of expenses in
accordance with Section 8(a) of this Agreement, and the Company and LII shall
have the burden of proof to overcome that presumption in connection with the
making by any person, persons or entity of any determination contrary to that
presumption. Neither the failure of the Company and LII (including their board
of directors or independent legal counsel) to have made a determination prior to
the commencement of any action pursuant to this Agreement that indemnification
is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company and LII
(including their board of directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct.
(b) If the person, persons or entity empowered or selected
under Section 8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days after
receipt by the Company and LII of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
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misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional thirty (30)
days, if the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this Section
9(b) shall not apply (i) if the determination of entitlement to indemnification
is to be made by the stockholders pursuant to Section 8(b) of this Agreement and
if (A) within fifteen (15) days after receipt by the Company and LII of the
request for such determination, the Board of Directors has resolved to submit
such determination to the stockholders for their consideration at an annual
meeting thereof to be held within seventy-five (75) days after such receipt and
such determination is made thereat, or (B) a special meeting of stockholders is
called within fifteen (15) days after such receipt for the purpose of making
such determination, such meeting is held for such purpose within sixty (60) days
after having been so called and such determination is made thereat, or (ii) if
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue
or matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company and/or LII or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
(d) For purposes of any determination of Good Faith,
Indemnitee shall be deemed to have acted in Good Faith if Indemnitee's action is
based on the records or books of account of the Company and/or LII or relevant
subsidiary or Relevant Enterprise, including financial statements, or on
information supplied to Indemnitee by the officers of the Company and/or LII or
relevant subsidiary or Relevant Enterprise in the course of their duties, or on
the advice of legal counsel for the Company and/or LII or relevant subsidiary or
Relevant Enterprise by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Company and/or
LII or relevant subsidiary or Relevant Enterprise. The provisions of this
Section 9(d) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of any
other director, officer, agent or employee of the Company and/or LII or any of
its subsidiaries or Relevant Enterprise shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.
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Section 10. Remedies of Indemnitee.
----------------------
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 7 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 8(b) of this Agreement
within 90 days after receipt by the Company and LII of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
5 or 6 of this Agreement within ten (10) days after receipt by the Company and
LII of a written request therefor or (v) payment of indemnification is not made
within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication by
the Court of Chancery of the State of Delaware of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. Indemnitee shall commence such proceeding seeking an adjudication
or an award in arbitration within 180 days following the date on which
Indemnitee first has the right to commence such proceeding pursuant to this
Section 10(a); provided, however, that the foregoing clause shall not apply in
-------- -------
respect of a proceeding brought by Indemnitee to enforce his rights under
Section 5 of this Agreement.
(b) In the event that a determination shall have been made
pursuant to Section 8(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 10 shall be conducted in all respects as a de novo trial, or
-- ----
arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of
that adverse determination. If a Change of Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 10, the
Company and LII shall have the burden of proving that Indemnitee is not entitled
to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to
Section 8(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company and LII shall be bound by such determination in any judicial
proceeding or arbitration commenced pursuant to this Section 10, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to record damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company and LII, and shall be indemnified
by the Company and LII against, any and all expenses (of the types described in
the definition of Expenses in Section 17 of this Agreement) actually and
reasonably incurred by him in such judicial adjudication or arbitration, but
only if he prevails therein. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
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all of the indemnification or advancement of expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated. The Company and LII shall indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after receipt by the Company and LII of a written request
therefor) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee for indemnification or
advance of Expenses from the Company and LII under this Agreement or under any
directors' and officers' liability insurance policies maintained by the Company
and/or LII, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses or insurance recovery,
as the case may be.
(e) The Company and LII shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this Section 10
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company and LII are bound by all the provisions of this
Agreement.
Section 11. Non-Exclusivity; Survival of Rights; Insurance;
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Subrogation.
-----------
(a) The rights of indemnification and to receive advancement
of Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the relevant company's Certificate of Incorporation, By-Laws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect
of any action taken or omitted by such Indemnitee in his Corporate Status prior
to such amendment, alteration or repeal. To the extent that a change in the
General Corporation Law of the State of Delaware, whether by statute or judicial
decision, permits greater indemnification or advancement of Expenses than would
be afforded currently under the relevant company's By-Laws and this Agreement,
it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change. No right or remedy
herein conferred is intended to be exclusive of any other right or remedy, and
every other right and remedy shall be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other right or remedy.
(b) To the extent that the Company and/or LII maintains an
insurance policy or policies providing liability insurance for directors,
officers, employees, or agents of the Company and its subsidiaries or of a
Relevant Enterprise, Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum event of the coverage
available for any such director, officer, employee or agent under such policy or
policies.
(c) In the event of any payment under this Agreement, the
Company and LII shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and take
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all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company and LII to bring suit to
enforce such rights.
(d) The Company and LII shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
(e) The Company's and LII's obligations to indemnify or
advance expenses hereunder to Indemnitee who is or was serving a Relevant
Enterprise shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from such Relevant Enterprise.
Section 12. Duration of Agreement.
--------------------- This Agreement shall continue until
and terminate upon the later of: (a) 10 years after the date that Indemnitee
shall have ceased to serve as a director, officer, employee and/or agent of the
Company and its subsidiaries or of any Relevant Enterprise; or (b) the final
termination of any Proceeding then pending in respect of which Indemnitee is
granted rights of indemnification or advancement of expenses hereunder and of
any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement
relating thereto. This Agreement shall be binding upon the Company, LII and
their successors and assigns and shall inure to the benefit of Indemnitee and
his heirs, executors and administrators.
Section 13. Severability.
------------ If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; (b) such provision or
provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties
hereto; and (c) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
Section 14. Exception to Right of Indemnification or Advancement of
----------------------------------------------------------
Expenses. Except as provided in Section 6(a) of this Agreement, Indemnitee shall
--------
not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding (a) brought by Indemnitee (other than a
Proceeding by Indemnitee to enforce his rights under this Agreement), or (b)
brought by the Company, LII or any of their subsidiaries against the Indemnitee
prior to a Change in Control alleging (x) a willful violation by the Indemnitee
of the terms and conditions of the Employment Agreement (as defined below), any
other employment contract, or the Agreement Regarding Confidential Information
and Intellectual Property, (y) a willful misappropriation of corporate assets by
the Indemnitee or (z) any other willful and deliberate breach in bad faith of
the Indemnitee's duty to the Company, LII (or their subsidiaries) or their
10
stockholders, if the bringing of such Proceeding against Indemnitee shall have
been approved or subsequently ratified by the Board.
Section 15. Identical Counterparts.
----------------------- This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
Section 16. Headings.
-------- The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
Section 17. Definitions.
----------- For purposes of this Agreement:
(a) "Change in Control" shall mean the occurrence of any
of the following events:
(i) a majority of the members of the Board at any
time cease for any reason other than due to death or
disability to be persons who were members of the Board
twenty-four months prior to such time (the "Incumbent
Directors"); provided that any director whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the members of
the Board then still in office who are Incumbent Directors
shall be treated as an Incumbent Director;
(ii) any "person," including a "group" (as such terms
are used in Sections 13(d) and 14(d)(2) of the Act, but
excluding the Company, its subsidiaries, any employee benefit
plan of the Company or any of its subsidiaries, employees of
the Company or any of its subsidiaries or any group of which
any of the foregoing is a member) is or becomes the
"beneficial owner" (as defined in Rule 13(d)(3) under the
Act), directly or indirectly, including without limitation, by
means of a tender or exchange offer, of securities of the
Company representing 30% or more of the combined voting power
of the Company's then outstanding securities; or
(iii) the stockholders of the Company shall approve a
definitive agreement (x) for the merger or other business
combination of the Company with or into another corporation
immediately following which merger or combination (A) the
stock of the surviving entity is not readily tradable on an
established securities market, (B) a majority of the directors
11
of the surviving entity are persons who (1) were not directors
of the Company immediately prior to the merger and (2) are not
nominees or representatives of the Company or (C) any
"person,", including a "group" (as such terms are used in
Sections 13(d) and 14(d)(2) of the Act, but excluding the
Company, its subsidiaries, any employee benefit plan of the
Company or any of its subsidiaries, employees of the Company
or any of its subsidiaries or any group of which any of the
foregoing is a member) is or becomes the "beneficial owner"
(as defined in Rule 13(d)(3) under the Act), directly or
indirectly, of 30% or more of the securities of the surviving
entity or (y) for the direct or indirect sale or other
disposition of all or substantially all of the assets of the
Company.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
occur in the event the Company files for bankruptcy, liquidation or
reorganization under the United States Bankruptcy Code.
(b) "Corporate Status" describes the status of a person who is
or was a director, officer, employee, fiduciary or agent of the Company and its
subsidiaries or of a Relevant Enterprise.
(c) "Disinterested Director" means a director of the Company
and/or LII who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Effective Date" means April 30, 1998.
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding.
(f) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company, LII or Indemnitee in any matter material to either such party, or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company, LII or Indemnitee in an action to determine
Indemnitee's rights under this Agreement. The Company and LII agree to pay the
reasonable fees of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all Expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
12
(g) "Proceeding" includes any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company, LII
or otherwise and whether civil, criminal, administrative or investigative, in
which Indemnitee was, is, may be or will be involved as a party or otherwise, by
reason of the fact that Indemnitee is or was a director, officer, employee
and/or agent of the Company and/or any of its subsidiaries or of a Relevant
Enterprise or by reason of any action taken by him or of any inaction on his
part while acting in such capacity, in each case whether or not he is acting or
serving in any such capacity at the time any liability or expense is incurred
for which indemnification or advancement of expenses can be provided under this
Agreement; except for (i) one initiated by an Indemnitee pursuant to Section 10
of this Agreement to enforce his rights under this Agreement or (ii) one pending
on or before the Effective Date.
Section 18. Enforcement.
-----------
(a) Each of the Company and LII expressly confirms and agrees
that it has entered into this Agreement and assumed the obligations imposed on
it hereby in order to induce Indemnitee to serve as a director, officer,
employee and/or agent of the Company and/or any of its subsidiaries and/or a
Relevant Enterprise, and each of the Company and LII acknowledges that
Indemnitee is relying upon this Agreement in serving in such capacity.
(b) This Agreement, the Change of Control Agreement by and
among the Company, LII and the Indemnitee dated as of --------------,
199
-- (the "CIC Agreement"), and the Employment Agreement dated as
of
-------------- , 199
--
among the Company, LII and the Indemnitee (the "Employment Agreement")
constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof. To the extent that the amount and timing
of payments required to be made under this Agreement are inconsistent with or
different from the amount and timing payments required to be made pursuant to
the CIC Agreement and/or the Employment Agreement, the Indemnitee shall be
entitled to the most favorable benefits provided to the Indemnitee under the
provisions of any such agreements.
Section 19. Modification and Waiver.
------------------------ No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 20. Notice by Indemnitee.
-------------------- Indemnitee agrees promptly to notify
the Company and LII in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder. The failure of Indemnitee to so notify the Company
and LII shall not relieve the Company and LII of any obligation which it may
have to the Indemnitee under this Agreement or otherwise.
13
Section 21. Notices.
------- All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, at the address specified on the
signature page of this Agreement; and
(b) If to the Company to:
Lexmark International Group, Inc.
One Lexmark Centre Drive
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel;
(c) If to LII to:
Lexmark International, Inc.
One Lexmark Centre Drive
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel;
or to such other address as may have been furnished to Indemnitee by the Company
and/or LII or to the Company and/or LII by Indemnitee, as the case may be.
Section 22. Contribution.
------------ To the fullest extent permissible under
applicable law, if the indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever, the Company and LII, in
lieu of indemnifying Indemnitee, shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid
or to be paid in settlement and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in such proportion as
is deemed fair and reasonable in light of all of the circumstances of such
Proceeding in order to reflect (i) the relative benefits received by the Company
and LII, on the one hand, and Indemnitee, on the other, as a result of the
event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the
relative fault of the Company and LII, on the one hand, (and its directors,
officers, employees and agents) and Indemnitee, on the other, in connection with
such event(s) and/or transaction(s).
14
Section 23. Governing Law; Submission to Jurisdiction; Appointment of
-----------------------------------------------------------
Agent for Service of Process.
---------------------------- This Agreement and the legal relations among the
parties shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware, without regard to its conflict of laws rules.
Except with respect to any arbitration commenced by Indemnitee pursuant to
Section 10(a) of this Agreement, the Company, LII and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding arising
out of or in connection with this Agreement shall be brought only in the
Chancery Court of the State of Delaware (the "Delaware Court"), and not in any
other state or federal court in the United States of America or any court in any
other country, (ii) consent to submit to the exclusive jurisdiction of the
Delaware Court for purposes of any action or proceeding arising out of or in
connection with this Agreement, (iii) appoint, to the extent such party is not a
resident of the State of Delaware, irrevocably The Corporation Trust Company,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 as its agent in the State of
Delaware as such party's agent for acceptance of legal process in connection
with any such action or proceeding against such party with the same legal force
and validity as if served upon such party personally within the State of
Delaware, (iv) waive any objection to the laying of venue of any such action or
proceeding in the Delaware Court and (v) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the Delaware Court
has been brought in an improper or otherwise inconvenient forum.
Section 24. Miscellaneous.
------------- Use of the masculine pronoun shall be
deemed to include usage of the feminine pronoun where appropriate.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
LEXMARK INTERNATIONAL GROUP, INC.
By:
------------------------------
Xxxx X. Xxxxxxxxx
President and Chief Executive
Officer
LEXMARK INTERNATIONAL, INC.
By:
------------------------------
Xxxx X. Xxxxxxxxx
President and Chief Executive
Officer
INDEMNITEE:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
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