NON-QUALIFIED STOCK OPTION AGREEMENT pursuant to LEXMARK INTERNATIONAL, INC.
Exhibit
10.3
pursuant
to
LEXMARK
INTERNATIONAL, INC.
2005
NONEMPLOYEE DIRECTOR STOCK PLAN
This
NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") between Lexmark
International, Inc., a Delaware corporation (the "Company"), and the person
specified on the signature page hereof (the "Optionee") is entered into as
of
the ___ day of ____, ____ pursuant to the Lexmark International, Inc.
2005 Nonemployee Director Stock Plan, 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 officer or 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
or her
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)
2005
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 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
1
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.
The
Option shall become vested and exercisable in three approximately equal
installments on each of the first three anniversaries (34% on the first
anniversary and 33% on each of the second and third anniversaries, in each
case
resulting in a fractional Option Share, rounded up to the next whole Option
Share, but not exceeding the total set forth in Section 1(a) above) 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 (3) Years of Board Service or less as of
the
date of such termination, any portion of the Option (x)
which
is then outstanding, vested and exercisable on the date of termination may
be
exercised by the Optionee or, if applicable, his or her 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 term 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; or
(ii)
if
such Optionee has completed more than three (3) Years of Board Service as
of the
date of such termination, any portion of the Option (x)
which
is then outstanding, vested and exercisable on the date of termination may
be
exercised by the Optionee or, if applicable, his or her 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 then outstanding but not vested and exercisable on the date of termination,
shall thereafter vest and become exercisable by the Optionee or, if applicable,
his or her beneficiary at the time or times indicated in Section 2(a) for
a
period of three (3) years following the Optionee’s termination of service and,
once exercisable, will remain exercisable for a period of three (3) years
following the date of the Optionee's termination of service, but in no event
later than the expiration date of the term 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").
2
3.
Method
of Exercise and Payment; 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 or her 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 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, or (iii)
were
purchased by the Optionee on a national securities exchange.
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)
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 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 are 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,
except as provided in the Plan, 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.
4
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 sole 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.
No
Right to Serve as a Director.
Neither
the Plan nor this Agreement imposes any obligation on the Company to retain
any
Optionee as a director or any obligation on any Optionee to remain as a director
of the Company.
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):
5
|
(i)
|
if
to the Company, to it at:
|
One
Lexmark Centre Drive
▇▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Secretary
|
(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 and excluding any conflict or choice of law rule or
principle that may otherwise refer construction or interpretation of the
Plan or
this Agreement to the substantive law of another jurisdiction.
(e)
Jurisdiction.
The
Optionee hereby irrevocably and unconditionally submits to the jurisdiction
and
venue of the state courts of the Commonwealth of Kentucky and of the United
States District Court of the Eastern District of Kentucky located in Fayette
County, Kentucky, and any appellate court from any thereof, in any
6
action
or
proceeding arising out of or relating to this Agreement, or for recognition
or
enforcement of any judgment, and each of the parties hereby irrevocably
agree
that all claims in respect of any such action or proceeding may be heard
and
determined in such Kentucky state or United States federal courts located
in
such jurisdiction. Each of the parties hereto agrees that a final judgment
in
any such action or proceeding shall be conclusive and may be enforced in
other
jurisdictions by suit on the judgment or in any other manner provided by
law.
The parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying
of venue of any such proceeding brought in such a court and any claim that
any
such proceeding brought in such a court has been brought in an inconvenient
forum. Optionee further agrees that any action related to, or arising out
of,
this Agreement shall only be brought by Optionee exclusively in the federal
and
state courts located in Fayette County, Kentucky. Nothing in this Agreement
shall affect any right that the Company may otherwise have to bring any
action
or proceeding relating to this Agreement in the courts of any
jurisdiction.
(f)
Severability.
If any
provision of this Agreement or the Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions
of
this Agreement or the Plan, and the Agreement and the Plan shall be construed
and enforced as if such provision had not been included.
(g)
Internal
Revenue Code Section 409A.
The
Company intends for this Agreement to comply with the provisions of Section
409A
of the Code and the guidance issued thereunder. Notwithstanding Section
9
hereof, the Company intends to amend this Agreement, and hereby reserves
the
right to do so without the Optionee’s consent, in the future as required to
conform to the provisions of Section 409A of the Code with respect to amounts
subject to Section 409A of the Code.
(h)
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.
(i)
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.
(j)
Pronouns.
Use of
the masculine pronoun shall be deemed to include usage of the feminine
pronoun
where appropriate.
7
IN
WITNESS WHEREOF, the Company and the Optionee have executed this Agreement
as of
the date first above written.
LEXMARK
INTERNATIONAL, INC.
By:
_______________________________
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice
President of Human Resources
OPTIONEE:
By:
_______________________________
Name: __________________________
Title: Director
Address
of Optionee:
_____________________________________
_____________________________________
_____________________________________