NON-QUALIFIED STOCK OPTION AGREEMENT
pursuant to
LEXMARK INTERNATIONAL GROUP, INC.
NONEMPLOYEE DIRECTOR STOCK PLAN
(Amended and Restated Effective April 30, 1998)
This NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement")
between Lexmark International Group, Inc., a Delaware corporation (the
"Company"), and the person specified on the signature page hereof (the
"Optionee") is entered into as of the 30th day of April, 1998 pursuant to the
Lexmark International Group, Inc. Nonemployee Director Stock Plan, amended and
restated effective April 30, 1998, as the same may be amended from time to time
(the "Plan").
WHEREAS, the Optionee is a member of the Board of Directors of
the Company, who is not also an employee of the Company or one of its
Subsidiaries or affiliated with any stockholder of the Company holding 5% or
more of the Company's equity securities, and the Company has determined that it
would be to the advantage and in the interest of the Company to grant the option
provided for herein to the Optionee as an inducement to the Optionee to remain
in the service of the Company and as an incentive to the Optionee to devote his
best efforts and dedication to the performance of such services and to maximize
shareholder value;
WHEREAS, the Optionee desires to accept from the Company the
grant of the options evidenced hereby on the terms and subject to the conditions
herein;
NOW, THEREFORE, in consideration of the premises and subject
to the terms and conditions set forth herein and in the Plan, the parties hereto
hereby covenant and agree as follows:
1. Grant of Option; Exercise Price.
-------------------------------
(a) Grant of Option; Exercise Price.
------------------------------- The Company hereby grants
to the Optionee, effective as of the date hereof and on the terms and conditions
herein, an option (the "Option") to purchase shares (the "Option Shares")
-----
of the Company's Class A Common Stock, par value $.01 per share (the "Common
Stock"), at an exercise price per Option Share equal to $ , which was the
-------
closing price per share of Common Stock on . The Option is not
---------------
intended to be an incentive stock option under the Internal Revenue Code of
1986, as amended.
(b) Nonemployee Director Stock Plan.
------------------------------- This Agreement is subject
in all respects to the terms of the Plan, all of which terms are made a part of
and incorporated in this Agreement by reference. In the event of any conflict or
inconsistency between the terms of this Agreement and the terms of the Plan, the
terms of the Plan shall control. The Optionee hereby acknowledges that a copy of
the Plan may be obtained from the Vice President of Human Resources and agrees
to comply with and be bound by all of the terms and conditions thereof. Terms
used in this Agreement with initial capital letters, but not defined herein,
shall have the meanings assigned to them under the Plan.
2. Vesting; Period of Exercise of Option.
-------------------------------------
(a) Vesting.
------- Subject to the provisions of Section 4, the
Option shall become vested and exercisable in five equal installments on each of
the first five anniversaries of the date hereof, subject in the case of each
such installment to the provisions of Section 2(b) below.
(b) Termination of Director Status.
------------------------------ In the event the Optionee
ceases to serve as a member of the Board for any reason,
(i) if such Optionee has completed three Years of Board
Service or less as of the date of such termination, any portion of the
Option (x) which is then vested and exercisable on the date of
-
termination may be exercised by the Optionee or, if applicable, his
beneficiary for a period of 90 days following the date of the
Optionee's termination of service, but in no event later than the
expiration date of the Option Period (as defined in Section 2(c)), and
(y) which is not vested and exercisable on the date of termination
-
shall be canceled, in full, on the date of such termination;
(ii) if such Optionee has completed more than three Years of Board
Service as of the date of such termination, any portion of the Option
(x) which is then vested and exercisable on the date of termination may
be exercised by the Optionee or, if applicable, his beneficiary until
the third anniversary of the date of the Optionee's termination of
service, but in no event later than the expiration date of the term of
the Option, and (y) which is not vested and exercisable on the date of
termination shall thereafter become exercisable by the Optionee or, if
applicable, his beneficiary at the time or times indicated in Section
2(a) and, once exercisable, will remain exercisable for a period of
three years following the date of the Optionee's termination of
service, but in no event later than the expiration date of the Option
Period.
(c) Term of Option Exercise Period.
------------------------------ Except to the extent that
the Option or any portion thereof shall sooner terminate in accordance with
Section 2(b), once any portion of the Option has become vested and exercisable,
such portion shall remain exercisable until the end of the day preceding the
tenth anniversary of the date hereof (the "Option Period").
3. Method of Exercise and Payment; Reload Option; Certain
-----------------------------------------------------------
Restrictions on Resale.
----------------------
(a) Exercise and Payment.
-------------------- Once vested and exercisable, the
Option, or any such portion thereof, may be exercised by the Optionee (or his
beneficiary or estate) by delivering to the Company on any business day (the
"Option Exercise Date") written notice (the "Option Exercise Notice"), in such
manner and form as may be required by the Board, specifying the number of Option
Shares the Optionee then desires to purchase and the aggregate exercise price
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for such Option Shares (the "Option Exercise Price"). The Option Exercise Notice
shall be accompanied by payment of the Option Exercise Price and any other
amounts required to be paid pursuant to Section 4.
The Optionee may pay the Option Exercise Price by delivering
to the Company cash, shares of Qualifying Common Stock (as defined below)
already owned by the Optionee or a combination of cash and such shares of
Qualifying Common Stock, provided that the aggregate Fair Market Value on the
Option Exercise Date of the shares of Qualifying Common Stock delivered in
payment of any portion of the Option Exercise Price shall be equal to the excess
of (x) the Option Exercise Price, over (y) the amount of any cash delivered by
the Optionee in payment of the Option Exercise Price. For purposes of this
Agreement, shares of Common Stock shall constitute Qualifying Common Stock that
may be delivered in payment of the Option Exercise Price if such shares (i) are
not subject to any outstanding loan or other obligation and are not pledged as
collateral with respect to any loan or other obligation other than any such loan
or other obligation extended to the Optionee by the Company or any Subsidiary,
and (ii) have been owned by the Optionee without restriction for a continuous
period of at least six months.
Within a reasonable period of time after the Option Exercise
Date, subject to payment of the Option Exercise Price and any amounts required
to be paid by the Optionee pursuant to Section 4, the Company shall direct its
stock transfer agent to make (or to cause to be made) an appropriate book entry
reflecting the Optionee's ownership of the Option Shares then being purchased by
the Optionee. Upon request, the Company shall deliver to the Optionee a
certificate or certificates for the number of Option Shares purchased by the
Optionee, registered in the name of the Optionee. In the event that the Company
or the Board, in its sole discretion, shall determine that, under applicable
U.S. federal or state or non-U.S. securities laws, the transfer of any Option
Shares must be subject to restriction, any certificates issued under this
Section 3(a) shall bear an appropriate legend restricting the transfer of such
Option Shares, and appropriate stop transfer instructions shall be delivered to
the Company's stock transfer agent.
(b) Reload Option.
-------------- Effective on the date of the exercise by
the Optionee of any portion of the Option (the "Reload Grant Date"), if any
portion of the Option Exercise Price in respect thereof is satisfied by the
Optionee by delivery to the Company of Qualifying Common Stock, the Optionee
shall automatically be granted a new option (the "Reload Option") to purchase a
number of shares of Common Stock equal to the number of shares of Qualifying
Common Stock so delivered, at an exercise price per share equal to the Fair
Market Value of a share of Common Stock on the Reload Grant Date. The Reload
Option shall be fully vested and exercisable on the Reload Grant Date. In all
other respects, such Reload Option shall be subject to the same terms and
conditions (including the same Option Period) as the related Option, and all
references herein to the "Option" shall be deemed to include the Reload Option.
(c) Restrictions on Sale upon Public Offering.
------------------------------------------ The Optionee
hereby agrees that, during the 20 day period prior to and the 180 days following
the effective date of any registration statement filed by the Company under the
Securities Act of 1933, as amended, with respect to any underwritten public
offering of any shares of the Company's capital stock, the Optionee will not
effect any public sale or distribution of shares of Common Stock (other than as
part of such underwritten public offering).
3
4. Tax Withholding.
---------------- The delivery of any directions to the
Company's stock transfer agent or any certificates for shares of Common Stock
pursuant to Section 3 shall not be made until the Optionee, or, if applicable,
the Optionee's beneficiary or estate, has made appropriate arrangements for the
payment to the Company of an amount sufficient to satisfy any applicable U.S.
federal, state and local and non-U.S. tax withholding or other tax requirements,
as determined by the Company.
5. Assignability.
------------- Except as set forth in Section 10 of the
Plan, the Option may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated by the Optionee otherwise than by will or the laws of
descent and distribution and is exercisable during Optionee's lifetime only by
the Optionee.
6. Adjustment in Capitalization.
----------------------------
(a) The aggregate number of shares of Common Stock subject to
the Option and the option exercise price and/or vesting and exercisability
criteria applicable to the Option shall be proportionately adjusted to reflect,
as deemed equitable and appropriate by the Board, an Adjustment Event. To the
extent deemed equitable and appropriate by the Board, subject to any required
action by stockholders, in any merger, consolidation, reorganization,
liquidation, dissolution or other similar transaction, other than any such
transaction that constitutes a Change in Control, the Option shall pertain to
the securities and other property to which a holder of the number of shares of
Common Stock then covered by the Option would have been entitled to receive in
connection with such event.
(b) Any shares of stock (whether Common Stock, shares of stock
into which shares of Common Stock are converted or for which shares of Common
Stock are exchanged or shares of stock distributed with respect to Common Stock)
or cash or other property received with respect to the Option as a result of any
Adjustment Event, any distribution of property or any merger, consolidation,
reorganization, liquidation, dissolution or other similar transaction shall be
subject to the same terms and conditions, including vesting and restrictions on
exercisability or transfer, as are applicable to the Option with respect to
which such shares, cash or other property is received, and stock certificate(s)
representing or evidencing any shares of stock or other property so received
shall be legended as appropriate.
7. Preemption by Applicable Laws and Regulations.
--------------------------------------------------------
Notwithstanding anything in the Plan or this Agreement to the contrary, the
issuance of shares of Common Stock hereunder shall be subject to compliance with
all applicable U.S. federal, state and non-U.S. securities laws. Without
limiting the foregoing, if any law, regulation or requirement of any
governmental authority having jurisdiction shall require either the Company or
the Optionee (or the Optionee's beneficiary or estate) to take any action in
connection with the issuance of any shares of Common Stock hereunder, the
issuance of such shares shall be deferred until such action shall have been
taken to the satisfaction of the Company.
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8. Interpretation; Construction.
------------------------------ All of the powers and
authority conferred upon the Board pursuant to any term of the Plan or the
Agreement shall be exercised by the Board, in its discretion. All
determinations, interpretations or other actions made or taken by the Board
pursuant to the provisions of the Plan or the Agreement shall be final, binding
and conclusive for all purposes and upon all persons and, in the event of any
judicial review thereof, shall be overturned only if arbitrary and capricious.
The Board may consult with legal counsel, who may be counsel to the Company, and
shall not incur any liability for any action taken in good faith in reliance
upon the advice of counsel.
9. Amendment.
--------- The Board shall have the right to alter or amend
this Agreement from time to time, subject to the restrictions set forth in the
Plan, for the purpose of promoting the objectives of the Plan, provided that no
such amendment shall impair the Optionee's rights under this Agreement without
the Optionee's consent. Subject to the preceding sentence, any alteration or
amendment of this Agreement by the Board shall, upon adoption thereof by the
Board, become and be binding and conclusive on all persons affected thereby
without requirement for consent or other action with respect thereto by any such
person. The Company shall give written notice to the Optionee of any such
alteration or amendment of this Agreement as promptly as practicable after the
adoption thereof. This Agreement may also be amended by a writing signed by both
the Company and the Optionee.
10. Change in Control.
------------------ In the event of a Change in Control,
any outstanding portion of the Option shall become fully vested and exercisable.
11. No Rights as a Stockholder.
--------------------------- The Optionee shall have no
voting or other rights as a stockholder of the Company with respect to any
Option Shares until the exercise of the Option and the recording of the
Optionee's ownership of the Option Shares on the stock transfer records for the
Common Stock. No adjustment shall be made for dividends or other rights issued
with respect to the Common Stock for which the record date is prior to the
recording of such ownership of the Option Shares.
12. 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 delivery, to the Company or the Optionee, as
the case may be, at the following addresses or to such other address as the
Company or the Optionee, as the case may be, shall specify by notice to the
others delivered in accordance with this Section 12(a):
(i) if to the Company, to it at:
One Lexmark Centre Drive
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
---------
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(ii) if to the Optionee, to the Optionee at the address set
forth on the signature page hereof.
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.
(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. 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.
------ Any party hereto may by written notice to the
other party (i) extend the time for the performance of any of the obligations or
other actions of the other party under this Agreement, (ii) waive compliance
with any of the conditions or covenants of the other party contained in this
Agreement and (iii) waive or modify performance of any of the obligations of the
other party under this Agreement. 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 any 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 a
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.
(d) Applicable Law.
--------------- This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the law that might be applied under principles of conflict of laws.
(e) Section and Other Headings, Etc.
---------------------------------- 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.
(f) 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 Optionee have executed
this Agreement as of the date first above written.
LEXMARK INTERNATIONAL GROUP, INC.
By:
--------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President of Human Resources
OPTIONEE:
By:
--------------------------------
Name:
Title: Director
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