Exhibit 10.1
NON-QUALIFIED STOCK OPTION
AGREEMENT
pursuant to
LEXMARK INTERNATIONAL,
INC.
STOCK INCENTIVE
PLAN
This NON-QUALIFIED STOCK OPTION AGREEMENT (the
"Agreement" ) between Lexmark International, Inc., a
Delaware corporation (the "Company" ), and [Name of
Optionee] (the "Optionee" ) is entered into as of
[Grant Date] pursuant to the Lexmark International, Inc. Stock
Incentive Plan, as the same may be amended from time to time (the
"Plan" ).
WHEREAS, the
Optionee is regarded as a key employee of the Company or one of the
Subsidiaries and the Committee 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 the
Subsidiaries over the long-term and as an incentive to the Optionee
to devote his or her best efforts and dedication to the performance
of such services and to maximize shareholder value; and
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:
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Grant of
Option; Exercise Price .
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Grant of
Option; Exercise Price. The Company hereby grants to the
Optionee, effective as of [Grant Date] (the "Grant
Date" ) and on the terms and conditions herein, an option
(the "Option" ) to purchase [Number of Options]
shares (the "Option Shares" ) of Class A Common
Stock, par value $.01 per share (the “Common
Stock” ), at an exercise price per Option Share equal
to the Fair Market Value on the Grant Date of [Exercise Price]. The
Option is not intended to be an incentive stock option under the
United States Internal Revenue Code of 1986, as amended.
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Stock Incentive
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 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.
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Terms used in
this Agreement with initial capital letters, but not defined
herein, shall have the meanings assigned to them under the
Plan.
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Vesting;
Period of Exercise of Option .
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Vesting. Subject to the provisions of
Section 4, the Option shall become vested and exercisable in three
approximately equal installments on each of the second, fourth and
sixth anniversaries (34% on the second anniversary and 33% on each
of the fourth and sixth anniversaries, in each case resulting in a
fractional Option Share, rounded to a whole Option Share, but not
exceeding the total set forth in Section 1(a) above) of the Grant
Date or, with respect to each installment, on the date the
Performance Condition (as defined below) is satisfied, if later,
and subject in the case of each such installment to the continuous
employment of the Optionee with the Company or a Subsidiary from
the date hereof to the applicable vesting date. For
purposes of this Agreement, Performance Condition shall mean the
attainment by the Company of [Intentionally Omitted] of free cash
flow, on a rolling four quarter basis, commencing with the first
quarter of 2009. If the Performance
Condition has been satisfied and the Optionee’s employment
with the Company and its Subsidiaries is terminated due to the
Optionee’s death, Disability, or Retirement, as such terms
are defined in Section 4(k) of this Agreement, then any unvested
portion of the Option shall become 100% vested and exercisable as
of the date of termination of employment due to the
Optionee’s death, Disability, or Retirement.
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Termination of
Employment. If the Optionee's employment with the
Company and its Subsidiaries terminates for any reason, other than
a termination by the Company or a Subsidiary for Cause (as defined
below) or a termination of the Optionee’s employment due to
death, Disability, or Retirement after the Performance Conditions
has been satisfied, any portion of the Option which is not then
exercisable shall immediately terminate and be canceled effective
upon such termination of employment and the remaining portion of
the Option, if any, shall thereafter remain exercisable for the
period provided in Section 4. In the event of the
termination of the Optionee's employment by the Company or a
Subsidiary for Cause, the Option shall immediately terminate and be
canceled in full effective upon the date of such termination of
employment.
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In accepting
this Option, the Optionee acknowledges that the Option has been
granted as an incentive to the Optionee to remain employed by the
Company or any Subsidiary and to exert his or her best efforts to
enhance the value of the Company or any Subsidiary over the
long-term. Accordingly, the Optionee agrees that if he
or she (a) within 12 months following termination of employment
with the Company or any
Subsidiary
accepts employment with a competitor of the Company or any
Subsidiary or otherwise engages in competition with the Company or
any Subsidiary, or (b) within 36 months following termination of
employment with the Company or any Subsidiary, directly or
indirectly, disrupts, damages, interferes or otherwise acts against
the interests of the Company or any Subsidiary, including, but not
limited to, recruiting, soliciting or employing, or encouraging or
assisting his or her new employer or any other person or entity to
recruit, solicit or employ, any employee of the Company or any
Subsidiary without the Company’s prior written consent, which
may be withheld in its sole discretion, (c) within 36 months
following termination of employment with the Company, or any
Subsidiary, disparages, criticizes, or otherwise makes derogatory
statements regarding the Company or any Subsidiary or their
directors, officers or employees, or (d) discloses or otherwise
misuses confidential information or material of the Company or any
Subsidiary, each of these constituting a harmful action, then (i)
any unexercised portion of this Option shall be canceled
immediately (unless canceled earlier by operation of another term
of this Agreement) and (ii) the Optionee shall immediately repay to
the Company an amount equal to the Option gains (represented by the
closing market price on the date of exercise over the exercise
price, multiplied by the number of options exercised, without
regard to any subsequent market price decrease or increase)
realized by the Optionee from the exercise of all or a portion of
this Option within 18 months preceding the earlier of (w) the
commitment of any such harmful action and (x) the Optionee's
termination of employment with the Company and its Subsidiaries;
and through the later of (y) 18 months following the commitment of
any such harmful action and (z) such period as it takes the Company
to discover such harmful action. In addition, the
Optionee acknowledges that, if he or she is a “Covered
Employee” subject to the Company’s Executive
Compensation Recovery Policy (the “Recovery
Policy” ) and engages in “Prohibited
Activity,” that any unvested and vested Options shall
be canceled immediately and the Optionee shall immediately repay
the “Equity Gains” realized by the
Optionee during the “Recovery Period,” as
such terms are defined in the Recovery Policy. The
Optionee agrees that the Company or any of its Subsidiaries has the
right to deduct from any amounts the Company or any of its
Subsidiaries may owe the Optionee from time to time (including
amounts owed to the Optionee as wages or other compensation, fringe
benefits or vacation pay, as well as any other amounts owed to the
Optionee by the Company or any of its Subsidiaries), the amounts
the Optionee owes the Company or any of its
Subsidiaries. The Committee shall have the right, in its
sole discretion, not to enforce the provisions of this paragraph
with respect to the Optionee.
Optionee agrees
to be fully liable for any breach of this above described covenant,
promise and agreement. Optionee agrees to reimburse
the
Company for all
costs and expenses, including attorneys’ fees, incurred by
the Company in enforcing the obligations of
Optionee. This entire provision shall survive the
termination of the Agreement and, in no manner, shall the remedies
described herein be considered as the Company’s exclusive or
entire remedy for Optionee’s breach, non-compliance or
violation of any other agreement that Optionee may have entered
into with the Company.
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Acceleration. The Committee may, in
its discretion, accelerate the date or dates as of which all or any
portion of the Option shall become vested and exercisable and may
establish accelerated times for vesting based upon the attainment
of performance goals or such other factors as the Committee may
from time to time determine.
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Term of Option
Exercise Period. Except to the extent that the Option or
any portion thereof shall sooner terminate in accordance with
Section 2 or 4 hereof, 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" ).
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Method of
Exercise and Payment; Certain Restrictions on Resale
.
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Exercise and
Payment. Once vested and exercisable, the Option, or any
vested portion thereof, may be exercised by the Optionee (or his or
her beneficiary or estate) by delivery 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 Committee, specifying the
number of Option Shares the Optionee then desires to purchase and
the aggregate exercise price 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 5.
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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 provided the Committee approves the delivery of such
shares to pay the Option Exercise Price, and (ii) either (x) have
been owned by the Optionee without certain restrictions for a
continuous period of at least six months (or such greater or lesser
period as the Committee shall determine) or (y) were purchased by
the Optionee on a U.S. national securities exchange.
The Committee
may also permit the Optionee to arrange for the payment of all or
any portion of the Option Exercise Price and other amounts required
to be paid pursuant to Section 5 by directing a securities broker
approved for such purpose by the Committee to deliver to the
Company, on behalf of the Optionee, the proceeds of the sale on the
Option Exercise Date of a number of the Option Shares then being
purchased by the Optionee having aggregate sales proceeds on the
Exercise Date equal to the sum of all or the applicable portion of
the Option Exercise Price and the amounts required to be paid
pursuant to Section 5 that the Optionee elects to satisfy by using
the proceeds of the sale of the Option Shares (the "Cashless
Exercise Procedure" ).
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 5, 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 (reduced, if
applicable, by the number of Option Shares sold on the Option
Exercise Date pursuant to the Cashless Exercise Procedure)
purchased by the Optionee, registered in the name of the
Optionee. In the event that the Company or the
Committee, 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.
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Restrictions on
Sale upon Public Offering. The Optionee hereby agrees
that, during th
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