RETIREMENT AGREEMENT
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This RETIREMENT AGREEMENT, dated as of April 29, 1999 (this
"Agreement"), is made and entered into among Lexmark International, Inc., a
Delaware corporation ("LII"), Lexmark International Group, Inc., a Delaware
corporation ("Group"), and Xxxxxx X. Xxxx (the "Retiree").
W I T N E S S E T H:
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WHEREAS, Retiree desires to retire from the employ of LII and Group,
and LII, Group and Retiree desire to enter into a retirement agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the parties hereto hereby agree as follows:
1. Term.
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This Agreement shall take effect on the Retirement Date (as
defined below) and, except as otherwise provided herein, shall remain in effect
until and including April 29, 2009, except as extended with respect to any
particular benefit or service pursuant to the terms hereof (such period being
referred to herein as the "Restricted Period").
2. Retirement.
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Retiree hereby retires and resigns as employee, Chairman of
LII and Chairman of Group, effective as of April 29, 1999 (the "Retirement
Date").
3. Payments.
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Pursuant to Retiree's previously submitted Deferral Election
Form, LII hereby agrees to pay to Retiree $190,684.93, which is a pro rata
portion of Retiree's annual incentive award for 1999 assuming that 100% of the
Operating Target (as defined in Retiree's Employment Agreement among Group, LII
and Retiree dated as of March 18, 1997 (the "Employment Agreement")) is met for
1999, in Deferred Stock Units and provide the Retiree with the Supplemental
Units in accordance with Group's Stock Incentive Plan, as amended and restated
effective April 30, 1998 (the "Plan").
4. Options and Other Awards.
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(a) Stock Options.
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On August 28, 1991, Retiree was granted 420,000 stock options
pursuant to the Lexmark Holding, Inc. Stock Option Plan for Executives and
Senior Officers (the "Option Plan"), all of which have vested and 84,000 remain
exercisable.
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On May 26, 1992, Retiree was granted 420,000 stock options
pursuant to the Option Plan, all of which have vested, 197,946 remain
exercisable by Retiree and 32,214 remain exercisable by a trust established by
Retiree.
On November 15, 1995, Retiree was granted 112,500 stock
options pursuant to the Plan, 67,500 of which have become vested and exercisable
and 45,000 remain unvested and unexercisable.
On November 15, 1995, Retiree was granted 112,056 stock
options pursuant to the Plan, all of which have become vested and exercisable.
On November 15, 1995, Retiree was granted 52,944 stock options
pursuant to the Plan, all of which have become vested and exercisable.
On February 13, 1997, Retiree was granted 90,000 stock options
pursuant to the Plan, 36,000 of which have become vested and exercisable, and
54,000 remain unvested and unexercisable.
On February 12, 1998, Retiree was granted 125,000 stock
options pursuant to the Plan, 25,000 of which have become vested and
exercisable, and 100,000 remain unvested and unexercisable.
On February 11, 1999, Retiree was granted 35,438 stock options
pursuant to the Plan, none of which have become vested and exercisable.
As part of this Agreement, all such unvested and unexercisable
stock options shall continue to be issued and outstanding, shall continue to
vest and become exercisable by Retiree in accordance with the vesting schedules
in the stock option agreements entered into between Group and Retiree
representing such stock options and shall expire in accordance with the
expiration dates set forth in such option agreements; provided, that,
notwithstanding the above and the terms of any such stock option agreement,
Retiree shall no longer be entitled to receive any Reload Options (as such term
is defined in such stock option agreements).
(b) Deferred Stock Units.
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On February 27, 1997, Retiree deferred his annual incentive
bonus into 10,714 Elective Deferred Stock Units and received 2,143 Supplemental
Deferred Stock Units.
On February 25, 1999, Retiree deferred his annual incentive
bonus into 12,650 Elective Deferred Stock Units and received 2,530 Supplemental
Deferred Stock Units.
All such Elective Deferred Stock Units are entitled to be
settled through the issuance of Group's Class A Common Stock on the Retirement
Date, or such later date as the Retiree shall elect pursuant to the terms and
conditions of the Plan. Retiree has elected to defer the settlement of the
February 27, 1997 deferral of 10,714 Elective Deferred Stock Units until April
29, 2002, the settlement of the February 25, 1999 deferral of 12,650 Elective
Deferred Stock Units until April 29, 2003, and the settlement of the Elective
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Deferred Stock Units to be received in lieu of Retiree's annual incentive award
for 1999 pursuant to Section 3 above until April 29, 2004.
All such Supplemental Deferred Stock Units shall continue to
be issued and outstanding under the Plan and shall vest on the fifth anniversary
of the respective dates of grant. Supplemental Deferred Stock Units will be
settled through the issuance of Group's Class A Common Stock on each vesting
date, or such later date as the Retiree shall elect pursuant to the terms and
conditions of the Plan.
(c) Restricted Stock Units.
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On February 12, 1998, Retiree was granted 6,750 restricted
stock units pursuant to the Plan, all of which remain unvested. As part of this
Agreement, all such restricted stock units shall continue to be issued and
outstanding under the Plan and shall continue to vest in accordance with the
vesting schedule in, and be subject to, the restricted stock award agreement
between Group and Retiree representing such restricted stock units.
(d) Performance Award.
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On July 31, 1997, Retiree was granted performance units
pursuant to the Plan. Pursuant to this Agreement, Retiree shall continue to be
entitled to receive up to 7,875 performance units, the actual number dependent
upon the achievement of certain performance goals of Group in accordance with
the amended award agreement between Group and Retiree with respect to the grant
of the performance units. In connection therewith, Retiree shall receive shares
of Group's Class A Common Stock and a cash payment upon completion of the
performance period (January 1, 1997 through December 31, 2000).
Notwithstanding any provision of this Agreement, Retiree shall
continue to be subject to the prohibition under the Securities Exchange Act of
1934, as amended, against "short swing profits" applicable to insiders of Group
for a period of six (6) months following April 29, 1999. In order to facilitate
compliance with this law, Retiree agrees not to engage, or to permit any entity
over which he exercises control to engage, in any transaction involving Group's
Class A Common Stock until October 29, 1999, without first obtaining the
approval of the General Counsel of Group. After receiving such approval and
during such period, Retiree agrees to report the details of all transactions, as
soon as consummated, to the General Counsel of Group.
5. Consulting Appointment.
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(a) Appointment.
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Retiree hereby agrees, upon the Retirement Date, to provide
consulting services to LII, Group and/or their subsidiaries for a period of five
years from the date of this Agreement. LII and Group hereby retain Retiree as an
independent contractor (in such capacity, "Consultant") to provide such services
as may be specified by LII, Group and/or their subsidiaries from time to time
during such five-year term. LII and Group may, at their option, retain
Consultant for an additional five-year period on the same terms as those
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outlined in this Section or upon any other terms mutually agreed upon by LII,
Group and Consultant.
(b) Services.
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Consultant hereby accepts said appointment and agrees to make
available to LII, Group and/or any of their subsidiaries, on request of the
Chief Executive Officer and/or the Board of Directors of LII or Group,
Consultant's advice, expertise and experience for purposes of aiding the conduct
of the business of, or acting as a company representative or spokesman on behalf
of, LII, Group and/or any of their subsidiaries. These consulting services shall
be in addition to Consultant's service on the Board of Directors of LII and
Group. LII, Group and Consultant agree that Consultant shall provide a minimum
of twenty (20) days and a maximum of thirty (30) days of consulting services per
year. The maximum number of days per year that such services shall be provided
may be increased by mutual consent of the parties to this Agreement.
(c) Independent Contractor.
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It is expressly understood and agreed that in performing his
obligations under this Agreement, Consultant shall act solely as an independent
contractor and not as an employee of LII, Group and/or any of their subsidiaries
and is not entitled to any employee benefits from such entities for so acting as
Consultant.
(d) Remuneration.
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As compensation for the consulting services hereunder, LII
shall pay to Consultant consulting fees for a minimum of twenty (20) days per
year in the amount of $3,000 per day, regardless of whether Consultant is
requested by the Chief Executive Officer and/or the Board of Directors of LII or
Group to perform any consulting services. The payment of such $60,000 annual
retainer fee shall be paid in a lump sum by LII to the Consultant on or before
March 31 of each year for services rendered in that year. Compensation for
services above the twenty (20) day minimum shall be made reasonably promptly
after receipt of Consultant's invoice.
(e) Expenses.
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LII shall reimburse the Consultant for reasonable travel,
lodging and meal and other out-of-pocket expenses incurred by him in connection
with his performance of consulting services hereunder, upon submission of
evidence satisfactory to LII of the incurrence and purpose of each such
expenses.
(f) Financial Advisory Services.
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During the term of this Agreement, LII shall reimburse Retiree
for the fees and expenses of a financial advisor, in an aggregate amount up to
$8,000 in each year, which amount may be increased from time to time in the
discretion of LII's Board of Directors.
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6. Directorships.
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Subject to the nomination of the Board of Directors of LII
and/or Group and the vote of the stockholders of LII and/or Group, Retiree shall
continue in his role as a director of LII and/or Group. On and after April 29,
1999, Retiree shall be compensated as a nonemployee director in accordance with
the policies of LII and Group. In the event that Retiree does not seek
reelection, or is not reelected to the Board of Directors of LII and/or Group,
Retiree agrees, at the request of LII, to be elected to the board of directors
of one of the subsidiaries of LII for the remaining term of this Agreement.
7. Office and Support Staff.
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During the term of this Agreement, Retiree shall be entitled
to the use of an office, secretarial support, and systems support at Group's
headquarters office in Lexington, Kentucky. In addition, LII shall arrange and
pay for Retiree's use of reasonable office, secretarial and systems support at
two other locations of Retiree's choice outside Lexington, Kentucky.
8. Unauthorized Disclosure.
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During the Restricted Period, Retiree shall not, without the
written consent of LII's Board, the General Counsel of LII, or the Chief
Executive Officer of LII, disclose to any person (other than an employee or
director of LII or Group or any of their subsidiaries) any confidential or
proprietary information, knowledge or data whether obtained by him while in the
employ of the LII, Group and/or any of their subsidiaries or affiliates, as a
consultant or board member of LII, Group and/or any of their subsidiaries or
otherwise, that is not theretofore publicly known and in the public domain, with
respect to LII, Group and/or any of its subsidiaries or affiliates or with
respect to any products, improvements, formulas, recipes, designs, processes,
customers, methods of sales, distribution, operation or manufacture, sales,
prices, profits, costs, contracts, suppliers, business prospects, business
methods, techniques, research, plans, strategies, personnel, organization, trade
secrets or know-how of LII, Group and/or any of their subsidiaries or affiliates
(collectively, "Proprietary Information"), except as may be required by law or
in connection with any judicial or administrative proceeding or inquiry.
9. Non-Competition.
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(a) During the Restricted Period, Retiree shall not engage,
directly or indirectly, in, become employed by, serve as an agent or consultant
to, or become a partner, principal or stockholder of, any partnership,
corporation or other entity which competes with a business that represents 5% or
more of the aggregate gross revenues of LII, Group or any of their subsidiaries
and which is then engaged in such competition in any geographical area in which
Group, LII and/or any of their subsidiaries or affiliates is then engaged in
such business, without first obtaining written approval from LII. Provided,
however, Retiree's ownership of less than 1% of the issued and outstanding stock
of any corporation whose stock is traded on an established securities market
shall not constitute competition with LII, Group and/or any of their
subsidiaries or affiliates. LII may grant or deny its approval in its sole
discretion.
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(b) During the Restricted Period, Retiree will not serve as a
director of any corporation without first obtaining written approval from LII,
except that Retiree shall be entitled to continue to serve as a director of the
M.A. Xxxxx Company, Imation Corporation and Dynatech Corporation and as a
trustee of Fidelity Investments. The Chief Executive Officer of LII may grant or
deny such approval in his sole discretion.
10. Non-Interference.
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During the Restricted Period, Retiree will not, directly or
indirectly, for his own account or the account of any other person or entity,
(a) employ in a business of the kind in which LII, Group and/or any of their
subsidiaries or affiliates is engaged, or solicit or endeavor to entice away
from LII, Group and/or any of their subsidiaries or affiliates, or otherwise
intentionally interfere with LII's, Group's or any of their subsidiaries' or
affiliates' relationship with, any person or entity who or which is at the time
employed by or otherwise engaged to perform services for LII, Group and/or any
of their subsidiaries or affiliates or (b) intentionally interfere with LII's
relationship with any person or entity who or which is, or has been within the
previous 36 months, a customer, client or supplier of LII, Group and/or any of
their subsidiaries or affiliates.
11. Return of Documents.
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Retiree has or promptly will deliver to Group, LII and/or any
of their subsidiaries or affiliates all non-personal documents and data of any
nature pertaining to his work with LII, Group and/or any of their subsidiaries
or affiliates and Retiree will not take with him any documents or data of any
description or any reproduction thereof, or any documents containing or
pertaining to any Proprietary Information, other than those documents necessary
for Retiree to continue in his role as a director of LII and/or Group or to
perform the consulting services described in Section 5 of this Agreement. The
parties to this Agreement acknowledge that Retiree will have continuing access
to LII's systems and that such access shall not be deemed to violate the terms
of this provision as long as the confidentiality of all Proprietary Information
is maintained by Retiree.
12. Forfeiture of Options and Other Awards and Option and Share Gain
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for Breach of this Agreement.
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If Retiree violates any material provision of this Agreement
after written notice of violation by LII or Group and a thirty (30) day
opportunity to cure, if such violation is curable, with the determination of
whether such a violation occurred being made by a resolution of the Board of
Directors of Group, or if a Change in Control (as defined in the CIC Agreement
(as defined below)) has occurred, by the members of the Board of Directors of
Group immediately prior to such Change in Control, then: (1) all unexercised
options, deferred stock units, restricted stock units and performance units (and
the right to receive cash compensation in connection with such performance
units) (collectively, "Incentive Awards") held by Retiree shall terminate and be
forfeited by Retiree, effective the date on which Retiree violates this
Agreement, unless terminated sooner by operation of another term or condition of
the Option Plan, the Plan, award agreement or this Agreement; and (2) any gain
realized upon receipt of an Incentive Award, or exercise of an Incentive Award
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that does not require the payment of an exercise price, which gain shall be
represented by the closing market price on the date of receipt of such Incentive
Award, or in the case of an Incentive Award that requires the payment of an
exercise price, the gain represented by the closing market price on the date of
exercise over the exercise price multiplied by the number of Incentive Awards,
without regard to any subsequent market price decrease or increase; in each case
within 18 months prior to Retiree's violation of this Agreement, shall be
forfeited and paid by Retiree to LII.
13. Other Payments and Benefits.
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Retiree acknowledges and agrees that no other payments or
benefits are owing or are to be paid or given to Retiree by LII, Group and/or
any of their subsidiaries or affiliates, other than (i) as specifically set
forth herein, (ii) as specifically set forth in the Employment Agreement as
extending beyond the term of employment, (iii) as specifically set forth in the
Change in Control Agreement among Group, LII and Retiree dated as of April 30,
1998 (the "CIC Agreement") as extending beyond the term of employment, (iv) as
specifically set forth in the Indemnification Agreement among Group, LII and
Retiree dated as of April 30, 1998 (the "Indemnification Agreement") as
extending beyond the term of employment and (v) such benefits, and payments
under pension and benefits plans as Retiree in the ordinary course as a retiree
of LII would be entitled to receive.
14. Assumption of Agreement.
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LII and Group will require any successor (by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of LII or Group, by agreement in form and substance reasonably
satisfactory to the Retiree, to expressly assume and agree to perform this
Agreement, the Employment Agreement, the CIC Agreement and the Indemnification
Agreement in the same manner and to the same extent that LII and Group would be
required to perform it if no such succession had taken place. Failure of LII and
Group to obtain such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Retiree to payment in
the form of a lump sum equal to the full value of all future payments due under
this Agreement, and all other benefits to which he otherwise would have been
entitled under this Agreement, the Employment Agreement, the CIC Agreement and
the Indemnification Agreement as if no succession had taken place; provided,
however, that Retiree shall not be required to perform any services after such
breach. With respect to the Incentive Awards, the Change of Control provisions
set forth in Section 9 of the Plan shall continue to be effective
notwithstanding Retiree's retirement. LII and Group hereby agree that Retiree
shall continue at all times to be entitled to the benefits provided by Sections
9(a), (b), (c) and (d) and 12 (a) of the CIC Agreement, and that those
provisions may not be amended to affect the Retiree without the prior written
consent of the Retiree.
15. Entire Agreement.
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Except as otherwise expressly provided herein, this Agreement,
the Employment Agreement, the Incentive Award agreements, the CIC Agreement and
the Indemnification Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements and prior agreements relating to
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such subject matter (including those made to or with Retiree by any other person
or entity) are superseded hereby.
16. Miscellaneous.
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(a) Binding Effect.
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This Agreement shall be binding on and inure to the benefit of
LII, Group and their successors and assigns, subject to Section 14 above. This
Agreement shall also be binding on and inure to the benefit of Retiree and his
heirs, executors, administrators and legal representatives.
(b) Governing Law.
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This Agreement shall be governed by and constructed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws.
(c) Taxes.
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LII may, in its discretion, withhold monies from any payments
made under the Agreement for purposes of U.S. federal, state, city or other
applicable taxes or social security insurance or governmental regulation or
ruling.
(d) Amendments.
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No provisions of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is approved by LII's
and Group's Board and/or Chief Executive Officer and is agreed to in writing by
the Retiree. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.
(e) Severability.
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In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
(f) Notices.
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Any notice or other communication required or permitted to be
delivered under this Agreement shall be (i) in writing, (ii) delivered
personally, by courier service or by certified or registered mail, first-class
postage prepaid and return receipt requested, (iii) deemed to have been received
on the date of delivery or on the third business day after the mailing thereof,
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and (iv) addressed as follows (or to such other address as the party entitled to
notice shall hereafter designate in accordance with the terms hereof):
(A) if to LII or Group, to it at:
One Lexmark Centre Drive
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
(B) if to the Retiree, to him at the address listed on the
signature page hereof.
(g) Counterparts.
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This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
(h) Headings.
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The section and other headings contained in this Agreement are
for the convenience of the parties only and are not intended to be a part hereof
or to affect the meaning or interpretation hereof.
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IN WITNESS WHEREOF, LII and Group have duly executed this Agreement by
their authorized representatives and the Retiree has hereunto set his hand, in
each case effective as of the date first above written.
LEXMARK INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
President and Chief Executive Officer
LEXMARK INTERNATIONAL GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
President and Chief Executive Officer
RETIREE
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Address:
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