Document:

<PAGE>   1
                                                                    Exhibit 10.7

                                                                  EXECUTION COPY

                                     SECOND
                                    AMENDMENT
                                       TO
                              AMENDED AND RESTATED
                         RECEIVABLES PURCHASE AGREEMENT

                  THIS SECOND AMENDMENT dated as of October 25, 1999 (the
"Amendment") to the Amended and Restated Receivables Purchase Agreement, dated
as of March 31, 1998 and amended as of November 30, 1998 (the "Agreement") among
LEXMARK INTERNATIONAL, INC., as servicer (the "Servicer"), LEXMARK RECEIVABLES
CORPORATION, as seller (the "Seller"), DELAWARE FUNDING CORPORATION, as buyer
(the "Buyer") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as administrative
agent (the "Administrative Agent"), is by and among the parties listed above.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Agreement.

                                    RECITALS

                  WHEREAS, the Administrative Agent, the Servicer, the Seller
and the Buyer wish to amend the Agreement in certain respects as provided below,
and the APA Purchasers are willing to consent to such amendments upon the terms
provided for herein;

                  WHEREAS, pursuant to Section 9.06 of the Agreement, the
Administrative Agent, the Servicer, the Seller and the Buyer may, from time to
time, enter into agreements amending, modifying or supplementing the Agreement;

                  NOW THEREFORE, in consideration of the premises and the
agreements contained herein, the parties hereto agree as follows:

                  SECTION 1.  AMENDMENTS  TO SECTION 1.01 OF THE  AGREEMENT.
The definitions of "Concentration Factor," "Default Reserve," "Expiration Date,"
"Maximum Net Investment" and "Loss Percentage" in Section 1.01 of the Agreement
are hereby deleted in their entirety and replaced with the following:

                  "Concentration Factor" shall mean (i) for any Group A Obligor
and its Subsidiaries, 12.5% of an amount equal to the Outstanding Balances of
all Eligible Receivables, (ii) for any Group B Obligor and its Subsidiaries,
5.5% of an amount equal to the Outstanding Balances of all Eligible Receivables,
(iii) for any Group C Obligor and its Subsidiaries, 3.57% of an amount equal to
the Outstanding Balances of all Eligible Receivables, (iv) for any Group D
Obligor and its Subsidiaries, 3.125% of an amount equal to the Outstanding
Balances of all Eligible Receivables and (v) for any Obligor and its
Subsidiaries and Affiliates listed on Exhibit F hereto of an amount equal to the
Outstanding Balances of all Eligible Receivables; provided, however, that if
Compaq Computer Corporation ceases to be a Special Obligor as provided on
Exhibit F hereto, then the Concentration Factors specified in (ii) and (iii)
above shall be 6.25% and 4.167%, respectively.
<PAGE>   2

                  "Default Reserve" shall be determined at the end of each
calendar month for the immediately succeeding calendar month and shall be a
percentage equal to the following:

                                DR = 2.00 x a x b

where:

DR  =    Default Reserve;

a = The highest average of the Default Ratios for any three consecutive calendar
months that occurred during the period of twelve consecutive calendar months
ending on the last day of such calendar month of determination; and

b = A fraction, (i) the numerator of which is equal to the aggregate Outstanding
Balance of all Receivables generated during the period of the three consecutive
calendar months ending on the last day of the month as of which the Default
Reserve is determined (or such other period as the Administrative Agent may
reasonably determine with the consent of the Seller (which consent shall not be
unreasonably withheld)) and (ii) the denominator of which is equal to the Net
Receivables Balance on the last day of the month as of which the Default Reserve
is determined.

                  "Expiration Date" shall mean the earliest of (i) October 20,
2000 as such date may be extended in the sole discretion of the Buyer pursuant
to the terms hereof, (ii) the date of termination of the commitment of the
Program LOC Bank under the Program Letter of Credit Reimbursement Agreement,
(iii) the date of termination of the commitment of the APA Lending Banks under
the APA Credit Agreement, (iv) the date of termination of the commitment of any
APA Purchaser under the Asset Purchase Agreement (unless other APA Purchaser(s)
or a replacement APA Purchaser accepts such terminating APA Purchaser's
commitment or unless the Maximum Purchase Commitment and the Net Investment (if
necessary) are reduced in an amount equal to the terminated commitment), and (v)
the day on which the Buyer delivers a Notice of Termination pursuant to Section
7.02 hereof or a Termination Event described in Section 7.01(j) hereof occurs.

                  "Loss Percentage" shall mean, at any time, the greater of (i)
12.5% and (ii) the Default Reserve.

                  "Maximum Net Investment" shall mean $150,000,000, unless
otherwise increased with the consent of the Buyer or reduced as provided for in
Section 2.11(a) hereof; provided, however, that at all times on and after the
Expiration Date, the "Maximum Net Investment" shall mean the Net Investment.

                   SECTION 2.  AMENDMENT  TO EXHIBIT F OF THE  AGREEMENT.  In
connection with the amendments provided for by this Amendment, the attached List
of Special Obligors set forth on Exhibit F hereto shall supersede the Exhibit F
that is part of the Agreement, and from and after the date of this Amendment all
references to such Exhibit F shall refer to the Exhibit F attached to this
Amendment.

                   SECTION 3. AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.
Except as specifically amended or waived hereby, all of the terms and conditions
of the Agreement shall remain in full force and effect. All references to the
Agreement in any other document or instrument shall be deemed to mean such
Agreement as amended by this Amendment. This Amendment shall not constitute a
novation of the Agreement, but shall constitute an amendment thereof. The
parties hereto agree to be bound by the terms and obligations of the Agreement,
as amended by this Amendment, as though the terms and obligations of the
Agreement were set forth herein.

                   SECTION 4.  EFFECTIVENESS.  The amendments  provided for by
this Amendment shall become effective as of the date hereof, upon receipt by the
Administrative Agent of (i) counterparts of this Amendment, duly executed by
each of the parties hereto, (ii) an officer's certificate for each of the Seller
and the Servicer dated the date hereof in form and substance satisfactory to the
Administrative Agent, (iii) an opinion of counsel to the Seller and Servicer in
form and substance satisfactory to the Administrative Agent and (iv) an Amended
and Restated Subordinated Note dated October 25, 1999, executed by the Seller
and the Servicer, providing for an extension of the Stated Maturity of such
Note.

                   SECTION  5.  COUNTERPARTS.  This  Amendment  may be
executed in any number of counterparts and by separate parties hereto on
separate counterparts, each of which when executed shall be deemed an original,
but all such counterparts taken together shall constitute one and the same
instrument.

                    SECTION 6.  GOVERNING LAW.  THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

<PAGE>   3

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to the Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

                                       DELAWARE FUNDING CORPORATION

                                       By:    Morgan Guaranty Trust Company of
                                              New York, as attorney-in-fact for
                                              Delaware Funding Corporation

                                       By:    /s/ Janine D. Marsini
                                             ---------------------------------
                                              Authorized Signatory

                                              Vice President
                                             ---------------------------------
                                              Title

                                       MORGAN GUARANTY TRUST COMPANY
                                       OF NEW YORK, as Administrative Agent

                                       By:    /s/ Janine D. Marsini
                                             ---------------------------------
                                              Authorized Signatory

                                              Vice President
                                             ---------------------------------
                                              Title

                                       LEXMARK RECEIVABLES CORPORATION

                                       By:    /s/ Gary E. Morin
                                             ---------------------------------
                                              Authorized Signatory

                                              President
                                             ---------------------------------
                                              Title

                                       LEXMARK INTERNATIONAL, INC.

                                       By:    /s/ Gary E. Morin
                                             ---------------------------------
                                              Authorized Signatory

                                              Vice President and Chief
                                                Financial Officer
                                             ---------------------------------
                                              Title

<PAGE>   4
                                                                       EXHIBIT F
                                                                              to
                                                            Amended and Restated
                                                  Receivables Purchase Agreement

                            List of Special Obligors

         Obligor                                          Concentration Factor

         All Government Obligors, in                          3.0%
         the aggregate

         Compaq Computer Corporation 1                        7.0%

--------
1 If its unsecured short-term debt rating either (i) ceases to be rated "A-2" by
S&P or "P-2" by Moody's or (ii) is withdrawn by S&P or Moody's, Compaq Computer
Corporation shall no longer be a Special Obligor for purposes of this Agreement.<PAGE>   1
                                                                   Exhibit 10.26

                              EMPLOYMENT AGREEMENT
                              --------------------

         EMPLOYMENT  AGREEMENT,  dated  as of  April  30,  1998,  among  Lexmark
International,   Inc.,  a  Delaware   corporation  (the   "Employer"),   Lexmark
International Group, Inc., a Delaware corporation ("Group"), and Bernard V.
Masson (the "Employee").

                              W I T N E S S E T H:
                              --------------------

         WHEREAS, Employer, Group and Employee desire to enter into an
employment 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; POSITION AND RESPONSIBILITIES.

         (a) TERM OF EMPLOYMENT.  Unless the Employee's  employment shall sooner
terminate  pursuant to Section 6, the  Employer  shall employ the Employee for a
term  commencing on April 30, 1998 and ending on February 28, 2001 (the "Initial
Term"), and the Employee's employment shall continue thereafter at will.

         (b) POSITION  AND  RESPONSIBILITIES.  The  Employee  will serve as Vice
President and President - Consumer Printer  Division and in such other executive
capacity or capacities  as may be  determined  from time to time by or under the
authority of the Board of Directors of the Employer  ("Employer's  Board"),  and
the Employee  will devote all of his skill,  knowledge  and working time (except
for reasonable  vacation time and absence for sickness or similar disability) to
the conscientious  performance of his duties. The Employee represents that he is
entering into this Agreement  voluntarily and that his employment  hereunder and
compliance  by him with the  terms and  conditions  of this  Agreement  will not
conflict with or result in the breach of any agreement to which he is a party or
by which he may be bound.

         2. BASE SALARY. As compensation for the services to be performed by the
Employee hereunder,  the Employer will pay the Employee an annual base salary of
$250,000  (increased to $300,000  effective November 9, 1998) during the term of
his employment hereunder. The Employer will review the Employee's base salary
from time to time during the period of his  employment  hereunder  and, in the
discretion  of the Employer,  may  increase  such  base  salary  from time to
time  based  upon the performance of the Employee, the financial condition of
the Employer, prevailing industry  salary  scales and such other factors as the
Employer  shall  consider relevant.  (The annual base salary payable to the
Employee under this Section 2, as the same may be increased from time to time,
shall hereinafter be referred to as the "Base  Salary".)  The Base Salary
payable  under this Section 2 shall be reduced to the extent that the  Employee
elects to defer such Base Salary under the terms of any deferred compensation or
savings plan maintained or established by the Employer or Group, PROVIDED

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<PAGE>   2

that any such  reduction of the Base Salary shall not be taken into account for
purposes of calculating  the Base Amount (as defined in Section 3). The
Employer  shall pay the  Employee the Base Salary in biweekly  installments,
or in such other installments as may be mutually agreed upon by the Employer
and the Employee.

         3.  SHORT-TERM  INCENTIVE  COMPENSATION.  The Employee shall receive an
annual  incentive bonus award (the "Annual Bonus") for each calendar year ending
during the term of the Employee's employment hereunder equal to:

                  (a) if the Operating  Result (as defined  below) for such year
         is equal to or greater  than the Maximum  Operating  Target (as defined
         below) for such year,  125% of the amount of the Employee's Base Salary
         paid to the Employee  during the calendar  year for which such bonus is
         payable (such amount is hereinafter referred to as the "Base Amount");

                  (b) if the Operating  Result for such year is greater than the
         Operating  Target but less than the Maximum  Operating  Target for such
         year,  65% of the Base Amount  plus,  for each  increase of 1/25 of the
         difference  between  the  Operating  Target and the  Maximum  Operating
         Target, an additional 2.40% of the Base Amount;

                  (c) if the Operating  Result for such year is equal to 100% of
         the Operating Target for such year, 65% of the Base Amount;

                  (d) if the Operating  Result for such year is greater than the
         Minimum Operating Target (as defined below) but less than the Operating
         Target for such year, 30% of the Base Amount plus, for each increase of
         1/20 of the  difference  between the Minimum  Operating  Target and the
         Operating Target (100%), an additional 1.75% of the Base Amount; and

                  (e) if the  Operating  Result  for  such  year is equal to the
         Minimum Operating Target for such year, 30% of the Base Amount.

Notwithstanding the foregoing,  the Employer may increase or decrease the amount
of the Annual Bonus based upon the  Employer's  judgment of  Employee's  overall
contribution to the Employer's business results.

No Annual Bonus shall be paid if the  Operating  Result is less than the Minimum
Operating Target for such year. The "Operating  Target",  the "Maximum Operating
Target"  and the  "Minimum  Operating  Target"  in any  year  shall  be  jointly
established by the Chief Executive Officer of the Employer and Employer's Board.
The  "Operating  Result"  for any year  shall be equal to the  annual  financial
results for the components  that make up the Operating  Target as of December 31
in such year,  using United  States  generally  accepted  accounting  principles
consistently  applied  and taking  into  account  such  other  factors as may be
approved by Employer's Board. The Annual Bonus, if any, shall be paid as soon as

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practicable  after the close of the year for which the Annual  Bonus is payable,
unless the Employee elects to defer such amounts under the terms of any deferred
compensation or savings plan maintained or established by the Employer or Group.

         4.  EMPLOYEE  BENEFITS.  During the term of the  Employee's  employment
hereunder,  employee  benefits,  including,  but not limited to, life,  medical,
dental and disability insurance,  will be provided to the Employee in accordance
with  programs at the  Employer  then  available  to  executive  employees.  The
Employee  shall also be  entitled to  participate  in all of  Employer's  profit
sharing,  pension,  retirement,  deferred compensation and savings plans, as the
same may be  amended  and in effect  from time to time,  at  levels  and  having
interests  commensurate  with the  Employee's  then  current  period of service,
compensation and position.

         5. PERQUISITES AND EXPENSES.

                  (a)  GENERAL.  During  the term of the  Employee's  employment
hereunder,  the Employee shall be entitled to participate in any special benefit
or perquisite program available from time to time to executive  employees of the
Employer on the terms and conditions then prevailing under such program.

                  (b)  BUSINESS  TRAVEL,   LODGING,   ETC.  The  Employer  shall
reimburse the Employee for reasonable travel, lodging and meal expenses incurred
by him in connection with his performance of services  hereunder upon submission
of evidence, satisfactory to the Employer, of the incurrence and purpose of each
such expense.

         6. TERMINATION OF EMPLOYMENT.

                  (a) TERMINATION DUE TO DEATH OR DISABILITY.  In the event that
the Employee's  employment hereunder terminates due to death or is terminated by
the Employer due to the Employee's Disability (as defined below), no termination
benefits shall be payable to or in respect of the Employee except as provided in
Section  6(f)(ii).  For purposes of this  Agreement,  "Disability"  shall mean a
physical or mental  disability  that prevents the performance by the Employee of
his duties  hereunder  lasting (or likely to last,  based on  competent  medical
evidence presented to Employer's Board) for a continuous period of six months or
longer.  The  reasoned  and good faith  judgment of  Employer's  Board as to the
Employee's  Disability  shall be  final  and  shall  be based on such  competent
medical evidence as shall be presented to it by the Employee or by any physician
or group of  physicians  or other  competent  medical  experts  employed  by the
Employee or the Employer to advise Employer's Board.

                  (b) TERMINATION BY THE EMPLOYER FOR CAUSE. The Employee may be
terminated for Cause by the Employer. "Cause" shall mean (i) the willful failure
of the Employee  substantially  to perform his duties  hereunder (other than any
such failure due to physical or mental  illness) after a demand for  substantial
performance  is delivered to the Employee by the executive to which the Employee
reports or by Employer's Board, which notice identifies the manner in which such
executive or Employer's  Board,  as the case may be,  believes that the Employee

                                       3
<PAGE>   4

has not  substantially  performed his duties,  (ii) the  Employee's  engaging in
willful and serious  misconduct that is injurious to Group or Employer or any of
their subsidiaries, (iii) the Employee's regularly making a substantial, abusive
use of alcohol,  drug, or similar  substances,  and such abuse in the Employer's
judgment  has  affected his ability to conduct the business of the Employer in a
proper and prudent manner, (iv) the Employee's conviction of, or entering a plea
of nolo contendere to, a crime that constitutes a felony, or (v) the willful and
material  breach by the  Employee of any of his  obligations  hereunder,  or the
willful and material breach by the Employee of any written covenant or agreement
with the  Employer  or any of its  affiliates  not to disclose  any  information
pertaining  to  the  Employer  or any of its  affiliates  or not to compete  or
interfere with the Employer or any of its affiliates.

                  (c)  TERMINATION BY THE EMPLOYER  WITHOUT CAUSE.  The Employee
may be terminated Without Cause by the Employer.  A termination  "Without Cause"
shall mean a termination  of employment by the Employer  other than due to death
or Disability as defined in Section 6(a) or Cause as defined in Section 6(b).

                  (d)  TERMINATION  BY THE EMPLOYEE.  The Employee may terminate
his  employment  for "Good  Reason".  "Good Reason" shall mean a termination  of
employment by the Employee  within 30 days  following (i) any  assignment to the
Employee of any duties,  functions or  responsibilities  that are  significantly
different from, and result in a substantial diminution of, the duties, functions
or responsibilities that the Employee has on the date hereof or (ii) the failure
of the Employer to obtain the  assumption of this  Agreement by any successor as
contemplated by Section 12.

                  (e)  NOTICE OF TERMINATION.  Any  termination  by the Employer
pursuant to Section 6(a),  6(b) or 6(c), or by the Employee  pursuant to Section
6(d),  shall be communicated  by a written "Notice of Termination"  addressed to
the other  parties to this  Agreement.  A "Notice of  Termination"  shall mean a
notice  stating that the  Employee's  employment  hereunder  has been or will be
terminated,  indicating  the specific  termination  provisions in this Agreement
relied upon and setting forth in reasonable  detail the facts and  circumstances
claimed to provide a basis for such termination of employment.

                  (f) PAYMENTS UPON CERTAIN TERMINATIONS.

                           (i) In the event of a termination  of the  Employee's
         employment  Without  Cause  or a  termination  by the  Employee  of his
         employment for Good Reason,  the Employer shall pay to the Employee (A)
         (1) the greater of (x) his Base Salary, if any, for the period from the
         Date of  Termination  (as  defined  below)  through the last day of the
         Initial  Term,  provided  that  Employer  may, at any time,  pay to the
         Employee  in a single  lump  sum an  amount  equal  to the Base  Salary
         remaining  to be paid to the  Employee  as of the date of such lump sum
         payment and (y) an amount equal to one year's Base Salary, less (2) any
         amounts  paid or to be paid to the  Employee  under  the  terms  of any
         severance plan or program of Employer, if any, as in effect on the Date
         of Termination, (B) the Annual Bonus with respect to a completed fiscal

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<PAGE>   5

         year to the extent not theretofore paid to the Employee and (C) a Pro
         Rata Share of the Annual Bonus (as defined below) for the fiscal year
         in which the Date of Termination occurred.

                   (ii) If the Employee's employment shall terminate upon his
         death or Disability or if Employer shall terminate the Employee's
         employment for Cause, Employer shall pay the Employee his full Base
         Salary through the Date of Termination, plus, in the case of
         termination upon the Employee's death or Disability, a Pro Rata Share
         of the Annual Bonus. Any benefits payable to or in respect of the
         Employee under any otherwise applicable plans, policies and practices
         of the Employer shall not be limited by this provision.

                  (iii) For  purposes of this  Section 6, the "Pro Rata Share of
         the Annual  Bonus"  shall be  calculated  and paid as  follows.  If the
         Employee is terminated  prior to July 1 of any year, the Pro Rata Share
         of the Annual  Bonus (A) will be equal to the product of (1) the Annual
         Bonus,  calculated  assuming  that  100%  of the  Operating  Target  is
         achieved in such year,  and (2) a fraction  equal to the number of full
         months in such year prior to the Date of  Termination  over 12, and (B)
         will  be  paid  to the  Employee  within  30  days  after  the  Date of
         Termination.  If the Employee is  terminated  on or after July 1 of any
         year,  the Pro Rata Share of the Annual  Bonus (A) will be equal to the
         product  of (1)  the  Annual  Bonus,  calculated  based  on the  actual
         Operating  Result for such year, and (2) a fraction equal to the number
         of full months in such year prior to the Date of  Termination  over 12,
         and (B) will be paid to the Employee  within 90 days after the close of
         the year in respect of which the Pro Rata Share of the Annual  Bonus is
         payable.

                  (g) DATE OF TERMINATION.  As used in this Agreement,  the term
"Date of Termination" shall mean (i) if the Employee's  employment is terminated
by his  death,  the date of his  death,  (ii) if the  Employee's  employment  is
terminated  for  Cause,  the date on which  Notice  of  Termination  is given as
contemplated  by  Section  6(e),  and  (iii)  if the  Employee's  employment  is
terminated  Without Cause,  due to the Employee's  Disability or by the Employee
for Good Reason,  30 days after the date on which Notice of Termination is given
as  contemplated  by Section 6(d) or, if no such Notice is given,  30 days after
the date of termination of employment.

                  (h) CONDITION TO PAYMENTS.  The Employer's  obligation to make
any payments  hereunder shall be conditioned  upon the Employer's  receipt of an
appropriately  signed  "General  Release  and  Covenant  Not to Sue" in form and

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<PAGE>   6
substance satisfactory to the Employer.

         7. UNAUTHORIZED DISCLOSURE. During and after the term of his employment
hereunder,  the Employee  shall not,  without the written  consent of Employer's
Board,  the General Counsel of the Employer,  or the Chief Executive  Officer of
the Employer,  disclose to any person (other than an employee or director of the
Employer  or its  affiliates,  or a  person  to whom  disclosure  is  reasonably
necessary or appropriate in connection  with the  performance by the Employee of
his duties as an executive of the  Employer)  any  confidential  or  proprietary
information, knowledge or data that is not theretofore publicly known and in the
public  domain  obtained by him while in the employ of the Employer with respect
to the Employer 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  the  Employer  or  any  of  its   subsidiaries  or  affiliates
(collectively,  "Proprietary Information"),  except as may be required by law or
in connection with any judicial or administrative proceedings or inquiry.

         8. NON-COMPETITION.  During the period of the Employee's employment and
thereafter  for a period equal to the number of months  providing  the basis for
calculating  any  termination  payments to the Employee  under Section 6, if any
such  payments  are  required,  but in any  event  for at least 12  months,  the
Employee 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 the Employer and its
subsidiaries  and which is then engaged in such  competition in any geographical
area in which the  Employer or any of its  subsidiaries  is then engaged in such
business without first obtaining  written  approval from the Employer,  provided
                                                                        --------
that the  Employee'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 the  Employer.  The Employer may
grant or deny such approval in its sole discretion.

         9. NON-INTERFERENCE. During the period of the Employee's employment and
thereafter  for a period equal to the number of months  providing  the basis for
calculating  any  termination  payments to the Employee  under Section 6, if any
such  payments  are  required,  but in any  event  for at least 36  months,  the
Employee 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 the
Employer is engaged on the date of such  termination,  or solicit or endeavor to
entice away from the Employer,  or otherwise  intentionally  interfere  with the
Employer's  relationship  with, any person or entity who or which is at the time
employed by or  otherwise  engaged to perform  services  for the Employer or (b)
intentionally  interfere  with the  Employer'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 the Employer.

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<PAGE>   7

         10.  RETURN  OF  DOCUMENTS.  In the  event  of the  termination  of the
Employee's  employment for any reason, the Employee will deliver to the Employer
all  non-personal  documents and data of any nature  pertaining to his work with
the  Employer,  and he 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.

         11. FORFEITURE OF REALIZED AND UNREALIZED GAINS ON INCENTIVE AWARDS FOR
BREACH OF THIS AGREEMENT.  If the Employee violates any provision of Sections 7,
8, 9 or 10 of this  Agreement,  and the  Employee  is no longer  employed by the
Employer,  whether  or not the  termination  of  employment  occurs  prior to or
subsequent to such violation, then (1) all Incentive Awards held by the Employee
shall  terminate  effective the date on which Employee  violates this Agreement,
unless terminated sooner by operation of another term or condition of the SIP or
the Award  Agreement  (as defined in the SIP),  and (2) any gain  realized  upon
receipt of an Incentive  Award,  or exercise of an Incentive Award 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,  or  options
exercised,  without regard to any subsequent  market price decrease or increase;
in each case within 18 months prior to termination  of employment  with Employer
and violation of Sections 7, 8, 9 or 10 of this Agreement,  shall be paid by the
Employee to the Employer. The Employee agrees that the Employer has the right to
deduct from any  amounts the  Employer  may owe the  Employee  from time to time
(including amounts owed to the Employee as wages or other  compensation,  fringe
benefits,  or vacation pay, as well as any other amounts owed to the Employee by
the Employer), the amounts the Employee owes the Employer or Group.

         12.  ASSUMPTION OF  AGREEMENT.  The Employer will require any successor
(by purchase, merger, consolidation or otherwise) to all or substantially all of
the business  and/or assets of the Employer,  by agreement in form and substance
reasonably  satisfactory  to the  Employee,  to  expressly  assume  and agree to
perform  this  Agreement  in the same  manner  and to the same  extent  that the
Employer would be required to perform it if no such  succession had taken place.
Failure of the Employer to obtain such agreement prior to the  effectiveness  of
any such  succession  shall be a breach of this  Agreement and shall entitle the
Employee to the greater of (x) compensation from the Employer in the same amount
and on the  same  terms  as the  Employee  would be  entitled  hereunder  if the
Employer  terminated his employment  Without Cause as  contemplated by Section 6
and (y) amounts  required to be paid to the  Employee  pursuant to the Change of
Control  Agreement by and among Group,  Employer and Employee  dated as of April
30, 1998 (the "CIC  Agreement").  For  purposes of  implementing  the  foregoing
clause (x), the date on which any such  succession  becomes  effective  shall be
deemed to be the Date of Termination,  and for purposes of  implementing  clause
(y),  the  timing  and  amount  of any  payments  required  pursuant  to the CIC

                                       7
<PAGE>   8

Agreement shall be determined in accordance with the CIC Agreement.

         13. ENTIRE AGREEMENT.  Except as otherwise  expressly  provided herein,
this  Agreement,  the CIC Agreement and the  Indemnification  Agreement made and
entered into as of the 30th day of April, 1998 by and among Employer,  Group and
Employee (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
such subject matter  (including  those made to or with the Employee by any other
person  or  entity)  are  merged  herein,  in  the  CIC  Agreement  and  in  the
Indemnification  Agreement and superseded hereby and thereby. 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 of payments  required
to be made pursuant to the CIC Agreement and/or the  Indemnification  Agreement,
the Employee  shall be entitled to the most favorable  benefits  provided to the
Employee under the provisions of any such agreements.

         14.  INDEMNIFICATION.  The Employer  agrees that it shall indemnify and
hold  harmless the Employee to the fullest  extent (a) permitted by Delaware law
from and against any and all liabilities, costs, claims and expenses arising out
of the employment of the Employee hereunder, except to the extent arising out of
or based upon the gross negligence or willful misconduct of the Employee and (b)
provided by the Indemnification Agreement.

         15. NO  MITIGATION.  The Employee shall not be required to mitigate the
amount of any payment that the Employer becomes  obligated to make in connection
with this  Agreement,  the CIC Agreement or the  Indemnification  Agreement,  by
seeking other employment or otherwise.

         16. MISCELLANEOUS.

                  (a) BINDING  EFFECT.  This  Agreement  shall be binding on and
inure to the benefit of the Employer and its successors  and permitted  assigns.
This Agreement shall also be binding on and inure to the benefit of the Employee
and his heirs, executors, administrators and legal representatives.

                  (b)  GOVERNING  LAW. 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.  The Employer may withhold  from any payments  made
under the Agreement all federal, state, city or other applicable taxes or social
security governmental regulation or ruling.

                  (d)  AMENDMENTS.  No  provisions  of  this  Agreement  may  be
modified, waived or discharged unless such modification,  waiver or discharge is
approved by Employer's Board or General Counsel of the Employer and is agreed to

                                       8

<PAGE>   9

in writing by the Employee and General Counsel of the Employer. 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)  REFORMATION;  SEVERABILITY.  If  any  provision  of  this
Agreement  is held by a court  or  arbitrator  to be  unreasonable  in  scope or
duration or otherwise, the court or arbitrator shall, to the extent permitted by
law, reform such provision so that it is enforceable, and enforce the applicable
provision  as so  reformed.  Reformation  of any  provision  of  this  Agreement
pursuant to this  subsection  (e) shall not affect any other  provision  of this
Agreement or render this Agreement unenforceable or void.

                  (f)  NOTICES.  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,  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 the Employer or Group, to it at:

                                    One Lexmark Centre Drive
                                    740 West New Circle Road
                                    Lexington, Kentucky 40550
                                    ATTENTION:  General Counsel

                           (B)      if to the Employee, to him at the address
listed on the signature page hereof.

                  (g)  SURVIVAL.  Sections  7,  8,  9,10  and  11  and,  if  the
Employee's  employment  terminates  in a manner  giving rise to a payment  under
Section 6(f),  Section 6(f) shall survive the  termination  of the employment of
the Employee hereunder.

                  (h)   COUNTERPARTS.   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.

                                       9
<PAGE>   10

                  (i) HEADINGS. 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.

         IN WITNESS  WHEREOF,  the  Employer and Group have duly  executed  this
Agreement by their authorized  representatives and the Employee has hereunto set
his hand, in each case effective as of the date first above written.

                                       LEXMARK INTERNATIONAL, INC.

                                       By:  /s/ Paul J. Curlander
                                           ------------------------------
                                           Paul J. Curlander
                                           President and
                                              Chief Executive Officer

                                       LEXMARK INTERNATIONAL GROUP, INC.

                                       By:  /s/ Paul J. Curlander
                                           ------------------------------
                                           Paul J. Curlander
                                           President and
                                              Chief Executive Officer

                                  THE EMPLOYEE:

                                             /s/ Bernard V. Masson
                                            -----------------------------------

                                    Address:

                                             1071 Watson Ct.
                                             Lexington, KY  40511

                                       10

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