Document:

exhibit101.htm

 

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Exhibit 10.1

 

Execution Version

 

Lexmark International, Inc.

One Lexmark Centre Drive

740 West New Circle Road

Lexington, KY  40550

  August 28, 2012

Re: Accelerated Share Repurchase

Ladies and Gentlemen:

This letter (the “Letter Agreement”) sets forth the agreement we have reached with respect to a transaction between Citibank, N.A. (“Citibank”), and Lexmark International, Inc (the “Company”) in relation to shares of the Company’s common stock, par value USD 0.01 (the “Common Stock”).

I.  Definitions

As used in this Letter Agreement, the following terms shall have the following meanings:

 

 

“Bankruptcy Code” has the meaning specified in Section XV.

“Cash Tender Termination” has the meaning specified in Section VIII(a).

“Corporate Event Termination” has the meaning specified in Section VIII(b).

“Defaulting Party” has the meaning specified in Section IX.

“Delisting Termination” has the meaning specified in Section VIII(c).

“Discount Per Share” means an amount in U.S. dollars specified in Schedule I.

 

“Disrupted Day” means a Trading Day on which a Market Disruption Event occurs.

“Dividend Event Termination” has the meaning specified in Section VII(b).

“Exchange” means New York Stock Exchange or any successor exchange.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expected Dividend Amount” has the meaning specified in Section VII(a).

“Indemnified Party” has the meaning specified in Section XIV.

“Initial Pricing Period Termination Date” means the date specified in Schedule I.

“Initial Settlement Date” has the meaning specified in Section II(b).

“Initial Share Price” has the meaning specified in Section II(a).

“Loss” has the meaning specified in Section X(a).

 

 

  

  

  

 

“Loss Notice” has the meaning specified in Section X(a).

“Loss of Borrow Termination” has the meaning specified in Section VI(b).

“Market Disruption Event” means any (i) suspension of or limitation imposed on trading by any exchange or market on which the Common Stock is listed for trading, (ii) event that disrupts or impairs (in the reasonable business judgment of Citibank) the ability of market participants in general to effect transaction in, or obtain market values for, the shares of Common Stock or futures or options contracts relating to the Common Stock or (iii) material decrease, on any Trading Day, in the trading volume for the Common Stock such that in the reasonable business judgment of Citibank it cannot purchase the contemplated number of shares for such Trading Day.

“Maximum Borrow Cost” means 50 basis points per annum based on the closing price per share of Common Stock on the Trading Day immediately preceding the relevant day.

“Non-Defaulting Party” has the meaning specified in Section IX.

“Number of Initial Shares” has the meaning specified in Section II(b).

“Number of Shares” has the meaning specified in Section II(a).

“Payment Amount” has the meaning specified in Section III(b).

“Pricing Period” means the period of consecutive Trading Days commencing on the Pricing Period Commencement Date and ending on the Pricing Period Termination Date; provided that the Pricing Period may be extended by Citibank upon the occurrence of a Market Disruption Event.

“Pricing Period Commencement Date” means August 29, 2012.

“Pricing Period Termination Date” means the earlier of (a) the Scheduled Pricing Period Termination Date, or (b) any Trading Day occurring on or following the Initial Pricing Period Termination Date and immediately preceding any Trading Day, on which Citibank shall notify the Company, prior to the close of regular trading on the Exchange on such Trading Day, of its intention to terminate the Pricing Period; provided that, for the avoidance of doubt, any date relating to the termination of the Transaction and designated as such pursuant to Section X of this Letter Agreement shall not be deemed the Pricing Period Termination Date and accordingly the settlement of the Transaction shall be governed by such Section X and not by provisions of Section III of this Letter Agreement.

“Private Placement Agreement” has the meaning set forth in Annex B hereto.

“Private Placement Price” has the meaning set forth in Annex B hereto.

“Private Placement Settlement” has the meaning set forth in Section  III(b).

“Private Securities” has the meaning set forth in Annex B hereto.

“Prospectus” has the meaning specified in Annex A hereto.

“Purchase Date” has the meaning specified in Section II(a).

“Purchase Price” has the meaning specified in Section II(a).

“Registered Settlement” has the meaning set forth in Section  III(b).

“Registration Statement” has the meaning specified in Annex A hereto.

 

 

  

  

  

 

 

“Regulation M” means Regulation M under the Exchange Act.

“Remaining Share Amount” for any Trading Day equals (i) the Number of Initial Shares, minus (ii) the cumulative number of shares of Common Stock that Citibank has repurchased to cover its short position in respect of this Transaction.  For the avoidance of doubt, such shares shall be considered repurchased by Citibank as of the Trading Day on which such transactions settle.

“Rule 10b-18” means Rule 10b-18 under the Exchange Act.

“Rule 10b-18 VWAP” means, for any Trading Day, the volume-weighted average price at which the Common Stock trades as reported in the composite transactions for the principal U.S. securities exchange on which such Common Stock is then listed on such Trading Day, excluding (i) trades that do not settle regular way, (ii) opening (regular way) reported trades in the consolidated system on such Trading Day, (iii) trades that occur in the last ten minutes before the scheduled close of trading on the Exchange on such Trading Day and ten minutes before the scheduled close of the primary trading in the market where the trade is effected, and (iv) trades on such Trading Day that do not satisfy the requirements of Rule 10b-18(b)(3) of the Exchange Act, as determined in good faith by Citibank.  The Company acknowledges that Citibank may refer to the Bloomberg Page “LXK.N <Equity> AQR SEC” (or any successor thereto), in its judgment, for such Trading Day to determine the Rule 10b-18 VWAP.

“SEC” has the meaning specified in Annex A hereto.

“Scheduled Pricing Period Termination Date” means the date specified in Schedule I; provided that, the Scheduled Pricing Period Termination Date may be postponed by Citibank upon the occurrence of a Market Disruption Event on any scheduled Trading Day during the Pricing Period.

“Securities Act” means the Securities Act of 1933, as amended.

“Settlement Date” means the fourth Trading Day immediately following the last day of the Pricing Period.

“Settlement Number” means (a) the Purchase Price divided by the Settlement Price, minus (b) the Number of Initial Shares.

“Settlement Price” means (i) the average of the Rule 10b-18 VWAP prices for all Trading Days during the Pricing Period minus (ii) the Discount Per Share.

“Share Cap” means, as of any date of determination, ten (10) times the Number of Initial Shares minus the number of shares of Common Stock delivered by the Company to Citibank on or prior to such date hereunder (in each case subject to adjustment pursuant to Section VI(b) and VIII).

“Trading Day” means any day (i) other than a Saturday, a Sunday or a Disrupted Day, and (ii) on which the Exchange is open for trading during its regular trading session, notwithstanding the Exchange closing prior to its scheduled closing time.

“Transaction” means the transaction contemplated by this Letter Agreement.

“Transfer Agreement” has the meaning specified in Annex A hereto.

“Valuation Period” means a period commencing on the first Trading Day immediately following the last Trading Day of the Pricing Period and ending on the Trading Day on which Citibank completes its purchase of a number of shares of Common Stock equal to the Settlement Number, pursuant to Section III(b), and as determined in good faith by Citibank in consultation with the Company.

  

  

  

 

 

II.  Initial Shares

(a)           Purchase.  Subject to the terms and conditions of this Letter Agreement, the Company agrees to purchase from Citibank, and Citibank will sell to the Company, on the date hereof or on such other Trading Day as the Company and Citibank shall otherwise agree (the “Purchase Date”), for a single aggregate price of $100,000,000 (the “Purchase Price”), 4,625,347 shares of Common Stock (“Number of Shares”) and, if the Settlement Number is greater than zero, additional number of shares of Common Stock equal to such Settlement Number.  Citibank will hedge this Transaction by entering into a short sale with respect to the Number of Initial Shares effected at the closing price per share of Common Stock on the Purchase Date (the “Initial Share Price”).  Such purchase, sale and hedge shall be effected in accordance with Citibank’s customary procedures.

(b)           Initial Settlement.  On the third Trading Day immediately following the Purchase Date (the “Initial Settlement Date”), Citibank shall deliver to the Company, a number of Shares equal to the product of (i) 85% and (ii) the Number of Shares (the “Number of Initial Shares”), upon payment by the Company of the Purchase Price in U.S. dollars.

III.  Settlement

(a)           Citibank Settlement Obligation.  If, following the expiration of the Pricing Period, the Settlement Number is greater than zero, on the Settlement Date, Citibank shall transfer to the Company through its agent, for no additional consideration, a number of shares of Common Stock equal to the Settlement Number.

(b)           Company Settlement Obligation.  If, following the expiration of the Pricing Period, the Settlement Number is less than zero, on the Settlement Date, (i) the Company shall, in accordance with the provisions of this paragraph (b), transfer to Citibank through its agent, for no additional consideration, a number of shares of Common Stock equal to the absolute value of the Settlement Number or, (ii) if the Company so elects pursuant to this paragraph, in lieu of such share delivery, the Company shall make a cash payment to Citibank in an amount equal to the absolute value of the Settlement Number multiplied by the weighted average purchase price at which Citibank purchases shares of Common Stock equal to the Settlement Number during the Valuation Period (the “Payment Amount”), to be paid on the Trading Day immediately following the last day of the Valuation Period; provided that, for the avoidance of doubt, in accordance with the calculation of the Settlement Number, in calculating any corresponding settlement obligations of the parties, Citibank shall take into consideration the actual payments and deliveries made by the parties on the Initial Settlement Date for the Transaction.  The Company shall notify Citibank in writing of its election (i) to pay the absolute value of the Settlement Number in cash or, (ii) to effect the delivery of the Settlement Number of shares in accordance with Annex A (“Registered Settlement”) or Annex B (“Private Placement Settlement”) to this Letter Agreement; provided that (A) the failure to make an election and notify Citibank in accordance with the preceding sentence with respect to matters described in clause (i), shall constitute an irrevocable election by the Company to deliver shares, and, (B) the failure to make an election and notify Citibank with respect to matters described in clause (ii), shall constitute an election of “Private Placement Settlement”.

(c)           Delivery Limitation.  Notwithstanding anything to the contrary in this Letter Agreement, the Company acknowledges and agrees that, on any day, Citibank (or its agent or affiliate) shall not be obligated to deliver or receive any shares of Common Stock to or from the Company and the Company shall not be entitled to receive any shares of Common Stock if such receipt or delivery would result in Citibank directly or indirectly beneficially owning (as such term is defined for purposes of Section 13(d) of the Exchange Act) at any time in excess of 4.9% of the outstanding shares of Common Stock.  Any purported receipt or delivery of shares of Common Stock shall be void and have no effect to the extent (but only to the extent) that any receipt or delivery of such shares of Common Stock would result in Citibank directly or indirectly so beneficially owning in excess of 4.9% of the outstanding shares of Common Stock.  If, on any day, any delivery or receipt of shares of Common Stock by Citibank (or its agent or affiliate) is not effected, in whole or in part, as a result of this provision, Citibank’s and the Company’s respective obligations to make or accept such receipt or delivery shall not be extinguished and such receipt or delivery 

 

  

  

  

 

 

shall be effected over time as promptly as Citibank reasonably determines that such receipt or delivery would not result in Citibank directly or indirectly beneficially owning in excess of 4.9% of the outstanding shares of Common Stock.

(d)           Company Settlement Representations.  The Company represents and warrants, as of the Pricing Period Termination Date, that each of its filings under the Securities Act, the Exchange Act or other applicable securities laws that are required to be filed have been filed and that, as of the date of this representation, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements therein not misleading in the circumstances under which they were made.

IV.  Citibank Purchases

(a)           Manner of Purchases.  During the Pricing Period or, if applicable, the Valuation Period, Citibank (or its agent or affiliate) may purchase shares of Common Stock in connection with this Transaction.  The timing of such purchases by Citibank, the price paid per share of Common Stock pursuant to such purchases and the manner in which such purchases are made, including without limitation whether such purchases are made on any securities exchange or privately, shall be within the sole judgment of Citibank; provided that, during the Valuation Period, Citibank will use good faith efforts to make all purchases of Common Stock in connection with this Transaction in a manner that would comply with the limitations set forth in clauses (b)(2), (b)(3), (b)(4) and (c) of Rule 10b 18 as if such rule were applicable to such purchases.

(b)           10b5-1 Plan.  The Company acknowledges and agrees that (i) all purchases pursuant to this Section IV hereunder shall be made in Citibank’s sole discretion and for Citibank’s own account and (ii) the Company does not have, and shall not attempt to exercise, any influence over how, when or whether to make such purchases, including, without limitation, the price paid per share of Common Stock pursuant to such purchases whether such purchases are made on any securities exchange or privately.  It is the intent of the Company and Citibank that this Transaction comply with the requirements of Rule 10b5-1(c) of the Exchange Act and that this Letter Agreement shall be interpreted to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) and Citibank shall take no action that results in the transaction not so complying with such requirements.

(c)           Regulatory Suspension.  In the event that Citibank reasonably concludes in good faith, that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Citibank), or due to any Market Disruption Event, for it to refrain from purchasing Common Stock on any Trading Day during the Pricing Period, the Pricing Period shall be suspended for such day.  Citibank shall promptly notify the Company upon exercising its rights pursuant to this Section IV(c) and shall subsequently notify the Company in writing on the day Citibank believes that it may resume purchasing Common Stock.  Citibank shall not be required to communicate to the Company the reason for Citibank’s exercise of its rights pursuant to this Section IV(c) if Citibank reasonably determines in good faith that disclosing such reason may result in a violation of any legal, regulatory, or self-regulatory requirements or related policies and procedures.

V.  Company Purchases

The Company (including its “affiliated purchasers”, as defined in Rule 10b-18) shall not, without a prior written consent of Citibank, purchase any shares of Common Stock (or an equivalent interest, or any security convertible into or exchangeable for such shares) on the open market, or enter into any accelerated share repurchase program, or any derivative share repurchase transaction, or other similar transaction, during the Pricing Period and thereafter until all payments or deliveries of shares pursuant to Section III have been made.  During such time, any purchases of Common Stock by the Company shall be made through Citibank or its affiliates, subject to such reasonable conditions as Citibank or such affiliate shall impose, and in compliance with Rule 10b-18 or otherwise in a manner that the Company and Citibank believe is in compliance with applicable requirements.

  

  

  

 

 

 

 

VI.  Borrow Events

(a)           Borrow Cost Increase.  If at any time during this Transaction, Citibank does not, after using commercially reasonable efforts, successfully borrow Common Stock (up to a number equal to the Remaining Share Amount) on terms that require Citibank to pay or bear costs in connection with such borrow in an amount less than or equal to the Maximum Borrow Cost, then Citibank will act in good faith and in a commercially reasonable manner to (a) make the corresponding adjustment(s), if any, as Citibank determines appropriate (and in consultation with the Company) to account for any excess borrowing costs and (b) determine the effective date(s) of the adjustment(s).

(b)           Loss of Borrow Termination.  On any Trading Day, Citibank may elect to terminate (“Loss of Borrow Termination”) this Transaction, in whole or in part, as the case may be, in the event and pro rata to the extent it is no longer able, after commercially reasonable efforts, to borrow (or maintain a borrowing of), including at a cost that may exceed the Maximum Borrow Cost, shares of Common Stock in an amount equal to the Remaining Share Amount.  Upon the occurrence of a Loss of Borrow Termination, an Event of Default shall be deemed to have occurred with the Company deemed the Defaulting Party and Citibank, the Non-Defaulting Party.

VII.  Dividend Event

(a)           Dividend Amount. If 100% of the aggregate gross cash dividends per share of Common Stock (including any cash extraordinary dividends) declared by the Company and for which the ex-date occurs at any time during the Pricing Period exceeds $0.30 per share of Common Stock (subject to adjustment in accordance with Section VIII) (the “Expected Dividend Amount”) per calendar quarter, a Dividend Event shall be deemed to have occurred.

(b)           Dividend Event Termination.  Upon the occurrence of a Dividend Event, on any Trading Day on or after the occurrence of such Dividend Event, Citibank may terminate this Transaction (a “Dividend Event Termination”).  Upon the occurrence of a Dividend Event Termination, an Event of Default shall be deemed to have occurred with the Company deemed the Defaulting Party and Citibank, the Non-Defaulting Party.

VIII.  Extraordinary Events

(a)            Tender Offers.  In the event an offer is made to the holders of Common Stock to tender in excess of 15% of the outstanding shares of Common Stock for cash, Citibank may, in its reasonable discretion, (i) adjust the terms of this Transaction, so that (x) the final day of the Pricing Period shall be the earlier of the scheduled final Trading Day of the Pricing Period and the date the tender offer is consummated and (y) for each of the Trading Days in the Pricing Period following the date on which the offer is made, the price used in computing the Settlement Price shall equal the price per share of Common Stock at which the tender offer is to be consummated, where Citibank shall notify the Company in writing as to the terms of any adjustment made pursuant to this Section VIII(a) no later than 5 days after the tender offer is made or (ii) elect to terminate this Transaction (a “Cash Tender Termination”).  Upon the occurrence of a Cash Tender Termination, an Event of Default shall be deemed to have occurred with the Company deemed the Defaulting Party and Citibank, the Non-Defaulting Party.

(b)            Corporate Events.  In the event of any corporate event involving the Company or the Common Stock not specifically addressed in subsection (a) of this Section VIII (including, without limitation, the announcement of a non-cash dividend, stock split, reorganization, merger, offer to tender Common Stock for consideration other than cash, rights offering, recapitalization or spin-off) or in the event that Citibank, in its reasonable good faith judgment, determines that the adjustments described in subsection (a) of this Section VIII will not result in an equitable adjustment of the terms of this Transaction, Citibank may (i) adjust the terms of this Transaction (including, without limitation, with respect to the Expected Dividend Amount and the number of Trading Days in the Pricing Period) as in the exercise of its good faith judgment it deems appropriate under the circumstances or (ii) elect to terminate this Transaction

 

  

  

  

 

 (a “Corporate Event Termination”).  Upon the occurrence of a Corporate Event Termination, an Event of Default shall be deemed to have occurred with the Company deemed the Defaulting Party and Citibank, the Non-Defaulting Party.

(c)           Delisting.  In the event that the Exchange announces that pursuant to the rules of such Exchange, the Common Stock ceases (or will cease) to be listed, traded or publicly quoted on the Exchange for any reason (other than the occurrence of an event addressed in subsections (a) or (b) of this Section VIII) and are not immediately re-listed, re-traded or re-quoted on an exchange or quotation system located in the same country as the Exchange (or, where the Exchange is within the European Union, in any member state of the European Union), Citibank may (i) adjust the terms of this Transaction or (ii) elect to terminate this Transaction (a “Delisting Termination”).  Upon the occurrence of a Delisting Termination, an Event of Default shall be deemed to have occurred with the Company deemed the Defaulting Party and Citibank, the Non-Defaulting Party.

IX.  Events of Default

In addition to events contemplated by Sections VI(b), VII(b) and VIII, the occurrence of any of the following events with respect to a party (such party, the “Defaulting Party” with respect to such event, and the other party, the “Non-Defaulting Party”) shall be an Event of Default:

(a)           Payment.  The failure to make any payment or any delivery of shares pursuant to the terms of the Letter Agreement.

(b)           Breach.  Any representation or warranty made in this Letter Agreement shall prove to have been false in any material respect at the time it was made, given or reaffirmed.

(c)           Performance.  The failure to perform or comply in any material respect with any other obligation in this Letter Agreement which failure shall continue for 5 business days after written notice of such failure has been sent to the Defaulting Party.

(d)           Insolvency.  (A) The initiation of any case, proceeding or other action (1) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to have itself adjudicated as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution or composition or other relief under bankruptcy or insolvency law with respect to it or its debts or (2) which seeks appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets; (B) a general assignment for the benefit of its creditors; (C) the initiation of any case, proceeding or other action of a nature referred to in clause (A) hereof which (1) results in the entry of an order for relief or any such adjudication or appointment with respect to the party or any of its assets or (2) is not dismissed, stayed, discharged or bonded for a period of 5 days; (D) the initiation of any case, proceeding or other action seeking issuance of a warrant of attachment, execution, or similar process against all or any substantial part of its assets, which case, proceeding or other action results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 30 days from the entry thereof; (E) a party shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clauses (A) - (D) hereof; or (F) either party shall generally not, or shall admit in writing its inability to, pay its debts as they become due.

(e)           Cross-Default.  Any loan or other obligation in respect of borrowed money (whether present or future, contingent or otherwise, as principal or surety or otherwise) of a party in an amount, in excess of $100,000,000 shall have become payable before the due date thereof as a result of acceleration of maturity caused by the occurrence of any event of default thereunder or if any other such loan or obligation shall not be repaid when due, as extended by any applicable grace period specified in the contracts or agreements constituting such loan or obligation.

 

 

  

  

  

 

(f)           Merger, Consolidation.  Any consolidation or amalgamation or merger with or into, or any transfer of all or substantially all its assets (i) to another entity by a party, resulting in the creditworthiness of the surviving or transferee entity being materially weaker than that of the party immediately prior to such action, or (ii) into any person unless the surviving person is the Company or another person formed under the laws of a State of the United States of America and such entity assumes or is responsible, by operation of law, for all obligations of the Company hereunder.

X.  Remedies

(a)           Settlement Loss Determination.  Upon the occurrence and the continuance of an Event of Default, notwithstanding any other provision to the contrary in this Letter Agreement, the Non-Defaulting Party, upon notice to the Defaulting Party, may, in its sole discretion, immediately terminate this Transaction and, if applicable, purchasing the number of Shares equal to the Remaining Share Amount to cover its short position or adjusting any other term hereof, and may sell, liquidate, offset or take any other action with respect to any short position established or maintained by it in connection with this Transaction.  The Non-Defaulting Party shall act in good faith and in a commercially reasonable manner to determine the amount that such party reasonably in good faith believes to be its total unreimbursed net losses and costs (which may be positive or negative) incurred in connection with the termination of this Letter Agreement (the “Loss”) and upon completion of such determination shall deliver to the Defaulting Party a written notice indicating the amount of such Loss (a “Loss Notice”).  Such computation shall include any out-of-pocket losses (which may include but not be limited to the difference between the Initial Share Price and the average price at which the shares are purchased during the term of this Transaction (as this Transaction may be terminated early as a result of the operation of this Section X(a)) and any actual or anticipated loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position.  In addition to the foregoing, the Non-Defaulting Party may include in its determination of its Loss hereunder such losses and costs (or gains) in respect of any payment or delivery required to have been made on or before the relevant termination date.  In determining Loss, the Non-Defaulting Party may consider any relevant information, including, without limitation, one or more of the following types of information: (i) quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that may take into account the creditworthiness of the Non-Defaulting Party at the time the quotation is provided and the terms of any relevant documentation, including credit support documentation, between the Non-Defaulting Party and the third party providing the quotation; (ii) information consisting of relevant market data in the relevant market supplied by one or more third parties including, without limitation, relevant rates, prices, yields, yield curves, volatilities, spreads, correlations or other relevant market data in the relevant market; or (iii) information of the types described in clause (i) or (ii) above from internal sources (including any of the Non-Defaulting Party’s affiliates) if that information is of the same type used by the Non-Defaulting Party in the regular course of its business for the valuation of similar transactions.  The Non-Defaulting Party will consider, taking into account the standards and procedures described in this paragraph, quotations pursuant to clause (i) above or relevant market data pursuant to clause (ii) above unless the Non-Defaulting Party reasonably believes in good faith that such quotations or relevant market data are not readily available or would produce a result that would not satisfy those standards.  When considering information described in clause (i), (ii) or (iii) above, the Non-Defaulting Party may include costs of funding, to the extent costs of funding are not and would not be a component of the other information being utilized.  Third parties supplying quotations pursuant to clause (i) above or market data pursuant to clause (ii) above may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors, brokers and other sources of market information.  Notwithstanding the foregoing, and without affecting the respective parties’ obligations to make payments in accordance with Section X(b), upon reasonable written request by the Defaulting Party, the Non-Defaulting Party shall provide a written explanation of any calculation or adjustment made by it in connection with calculation of the Loss, including, where applicable, a reasonable description of the methodology and the basis for such calculation or adjustment in reasonable detail and shall consult with the Defaulting Party with respect to the amount of such Loss, it being understood that the Non-Defaulting Party shall not be obligated to disclose any proprietary models used by it for such calculation.

 

 

(b)           Payments.  Upon receipt of a Loss Notice from the Non-Defaulting Party, (i) if the amount determined in accordance with paragraph (a) above is a positive number, then the Defaulting Party 

 

  

  

  

 

shall promptly pay to the Non-Defaulting Party, the amount of such Loss in cash or (ii) if the amount determined in accordance with paragraph (a) above is a negative number, then the Non-Defaulting Party shall promptly pay to the Defaulting Party, the absolute value of the amount of such Loss in cash; provided that, in the event the Company is the party owing the Loss amount, then this paragraph (b) shall be subject to the terms of paragraphs (c) and (d) below.

(c)           Loss Settlement Election.  If the Company is the owing party in accordance with paragraph (b) above, upon receipt of a Loss Notice from Citibank as the Non-Defaulting Party, the Company may, in addition to its option to promptly pay to Citibank the amount of such Loss in cash, elect to deliver to Citibank within two Trading Days a number of shares of Common Stock equal to (i) the amount of such Loss divided by (ii) the closing price of the Common Stock on the Exchange for the day upon which the Company receives such Loss Notice, rounded up to the nearest whole share.  Such share delivery is subject to the provisions of the last sentence of Section III(b); provided that, for the avoidance of doubt, in calculating any settlement obligations of the parties in accordance with this Section X, Citibank shall take into consideration the actual payments and deliveries made by the parties on the Initial Settlement Date for the Transaction; provided, further that in no event shall the Company be required to deliver a number of shares of Common Stock that exceeds the then applicable Share Cap.

(d)           Costs and Expenses.  In addition to the payments set forth in subsections (b) and (c) above, the Defaulting Party agrees to indemnify the Non-Defaulting Party from and against any reasonable expenses (including reasonable external counsel fees and other expenses of collection) it may incur as a result of any default by such party.

XI.  Representations of the Parties

Each party represents to the other party that:

(a)           Status.  It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing;

(b)           Powers.  It has the corporate or other organizational power to execute and deliver this Letter Agreement and to perform its obligations under this Letter Agreement and has taken all necessary action to authorize such execution, delivery and performance;

(c)           No Violation or Conflict.  Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;

(d)           Consents.  All governmental and other consents that are required to have been obtained by it with respect to this Letter Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with;

(e)           Obligations Binding.  Its obligations under this Letter Agreement constitute its legal, valid and binding obligations, enforceable in accordance with its respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)); and

(f)           Absence of Certain Events.  No Event of Default (as defined in the Agreement) or event that, with the giving of notice or the passage of time or both, would constitute an Event of Default has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Letter Agreement.

 

 

 

  

  

  

 

 

 

XII.  Representations of the Company

The Company additionally hereby represents on the Purchase Date to Citibank that:

(a)           Liquidity.  Its financial condition is such that it has no need for liquidity with respect to its investment in the transactions contemplated by this Letter Agreement and no need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or indebtedness.  Its investments in and liabilities in respect of such transactions, which it understands are not readily marketable, is not disproportionate to its net worth;

(b)           Private Placement.  It acknowledges that the offer and sale of this Transaction to it is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof.  Accordingly, the Company represents and warrants to Citibank that (i) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (ii) it is entering into this Transaction for its own account and without a view to the distribution or resale thereof, and it understands that Citibank has no obligation or intention to register the transactions contemplated by this Letter Agreement under the Securities Act or any state securities law or other applicable federal securities law;

(c)           No Deposit Insurance.  It understands that no obligations of Citibank to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Citibank or any governmental agency;

(d)           Assumption of Risk.  IT UNDERSTANDS THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE SUBJECT TO COMPLEX RISKS THAT MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS;

(e)           Compliance with Filing Requirements.  Each of its filings under the Securities Act, the Exchange Act, or other applicable securities laws that are required to be filed have been filed and that, as of the respective dates thereof, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements therein not misleading

(f)           Material Non-Public Information.  It is not entering into this Letter Agreement on the basis of, and is not aware of, any material non-public information with respect to the Common Stock or in anticipation of, in connection with, or to facilitate, a distribution of its securities, a self tender offer or a third-party tender offer;

(g)           No Manipulation.  It is not entering into any transaction to create, and will not engage in any other securities or derivatives transactions to create, actual or apparent trading activity in the Common Stock (or any security convertible into or exchangeable for Common Stock) or to raise or depress or to manipulate the price of the Common Stock (or any security convertible into or exchangeable for Common Stock);

(h)           Compliance with Securities Laws.  It has not and will not directly or indirectly violate any applicable law, rule or regulation (including, without limitation, the Securities Act and the Exchange Act) in connection with the transactions contemplated by this Letter Agreement;

(i)           Required Company Approvals.  The transactions contemplated by this Letter Agreement and any repurchase of Common Stock by the Company in connection with such transactions are pursuant to a publicly announced share repurchase program that has been approved by its Board of Directors and any such repurchase has been or will when so required be publicly disclosed in its periodic filings under the Exchange Act and its financial statements and notes thereto and, at the time of making this representation, such transactions are not subject to any internal policy or procedure of the Company which would prohibit the Company from effecting any transactions in the shares of Common Stock at such time;

 

 

 

  

  

  

 

 

(j)           Regulation M.  The Company is not on the date hereof, and will not be during the term of the transactions contemplated by this Letter Agreement, engaged in a distribution, as such term is used in Regulation M under the Exchange Act, that would preclude purchases by the Company of the Common Stock or cause the Company to violate any law, rule or regulation with respect to such purchases;

(k)           Non-Reliance.  It is not relying, and has not relied upon, Citibank or any of its affiliates with respect to the legal, accounting, tax or other implications of this Letter Agreement and that it has conducted its own analyses of the legal, accounting, tax and other implications of this Letter Agreement.  Further, it acknowledges and agrees that neither Citibank nor any affiliate of Citibank has acted as its advisor in any capacity in connection with this Letter Agreement or the transactions contemplated hereby.  The Company is entering into this Letter Agreement with a full understanding of all of the terms and risks hereof (economic and otherwise), has adequate expertise in financial matters to evaluate those terms and risks and is capable of assuming (financially and otherwise) those risks; and

(l)           Acknowledgement of Citibank Activity.  It understands and acknowledges that Citibank and its affiliates may from time to time effect transactions for their own account or the account of customers and hold positions in securities or options on securities of the Company and that Citibank and its affiliates may continue to conduct such transactions during the Pricing Period and the Valuation Period.

XIII.  Agreements of the Company

(a)           Authorized Shares.  The Company agrees that while this Letter Agreement is in effect, it shall cause (i) the number of authorized shares of Common Stock minus (ii) the number of outstanding shares of Common Stock minus (iii) the number of shares of Common Stock reserved for other purposes minus (iv) without duplication of clause (iii), the aggregate maximum number of shares of Common Stock deliverable under warrants, options, swaps, forwards, convertible or exchangeable securities or other similar transactions, agreements or instruments issued by the Company or to which the Company is a party that provide for physical or net share settlement or otherwise may require the issuance of shares of Common Stock by the Company, to exceed the then applicable Share Cap.  At the conclusion of the Pricing Period, the Company will have a sufficient number of treasury shares or duly authorized but unissued shares of Common Stock available to satisfy its obligations with respect to this Transaction, such shares of Common Stock to be fully paid and nonassessable and free of preemptive and other rights.  The Company agrees that a failure by the Company to comply with the preceding sentence shall be an Event of Default hereunder with respect to the Company without regard to any grace period that would otherwise be applicable.

(b)           Nature of Rights.  The Company acknowledges and agrees that this Letter Agreement is not intended to convey to Citibank rights against the Company hereunder that are senior to the claims of common stockholders in any U.S. bankruptcy proceedings of the Company; provided, however, that nothing herein shall limit or shall be deemed to limit Citibank’s right to pursue remedies in the event of a breach by the Company of its obligations and agreements with respect to this Letter Agreement; and provided further that in pursuing a claim against the Company in the event of a bankruptcy, insolvency or dissolution with respect to Company, Citibank’s rights hereunder shall rank on a parity with the rights of a holder of shares of Common Stock enforcing similar rights under a contract involving shares of Common Stock.

(c)           Disclosure.  The Company agrees that the material terms of this Transaction (and any other similar transactions), and the consequences of such transactions on the financial condition and results of operations of the Company, will be disclosed by the Company in accordance with all rules, regulations, accounting principles (including EITF Issue No. 00-19) and laws applicable to the Company in its periodic filings under the Exchange Act and its financial statements and notes thereto.

(d)           Corporate Event Notification.  During the Pricing Period, the Company shall (i) notify Citibank prior to the opening of trading in the Common Stock on any day on which the Company makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization relating to the Company (other than 

 

 

  

  

  

 

any such transaction in which the consideration consists solely of cash and there is no valuation period), (ii) promptly notify Citibank following any such announcement that such announcement has been made, and (iii) promptly deliver to Citibank following the making of any such announcement a certificate indicating (A) the Company’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of the announcement of such transaction and (B) the Company’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of the announcement of such transaction.  In addition, the Company shall promptly notify Citibank of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.  The Company acknowledges that any such public announcement may cause the Pricing Period to be suspended pursuant to Section IV(c).  Accordingly, the Company acknowledges that its actions in relation to any such announcement or transaction must comply with the standards set forth in Section IV(a).

XIV.  Indemnification

The Company agrees to indemnify and hold harmless Citibank, its affiliates and its assignees and their respective directors, officers, employees, agents and controlling persons (Citibank and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject, and relating to or arising out of the transactions contemplated by this Letter Agreement, and will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of the Company.  The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a nonappealable judgment by a court of competent jurisdiction to have resulted from Citibank’s breach of a material term of this Letter Agreement, willful misconduct or negligence.  If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then the Company shall contribute, to the maximum extent permitted by law (but only to the extent that such harm was not caused by Citibank’s breach of a material term of this Letter Agreement, willful misconduct or negligence), to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.  The Company also agrees that no Indemnified Party shall have any liability to the Company or any person asserting claims on behalf of or in right of the Company in connection with or as a result of any matter referred to in this Letter Agreement except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Company result from the breach of a material term of this Letter Agreement, or the Indemnified Party’s negligence or willful misconduct.  The provisions of this Section XIV shall survive completion of the transactions contemplated by this Letter Agreement and shall inure to the benefit of any permitted assignee of Citibank.

XV.  Miscellaneous

(a)           No Collateral.  Notwithstanding any provision of this Letter Agreement, or any other agreement between the parties, to the contrary, the obligations of the Company under this Letter Agreement are not secured by any collateral.

(b)           Waiver of Trial by Jury.  EACH OF THE COMPANY AND CITIBANK HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE ACTIONS OF CITIBANK OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

  

  

  

 

(c)           Governing Law.  THIS LETTER AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW RULES THEREOF.

(d)           Submission to Jurisdiction.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

(e)           Non-Confidentiality.  Notwithstanding anything to the contrary herein, (i) Citibank acknowledges that this Letter Agreement may be intended to produce U.S. federal income tax benefits for the Company and (ii) the Company and Citibank hereby agree that (A) the Company is not obligated to Citibank to keep confidential from any and all persons or otherwise limit the use of any aspect of this Letter Agreement relating to the structure or tax aspects thereof, and (B) Citibank does not assert any claim of proprietary ownership in respect of any such aspect of this Letter Agreement.

(f)           Bankruptcy Code.  The parties hereto intend for (i) the Transaction hereunder to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto are entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362(o), 546, 555, 560 and 561 of the Bankruptcy Code; (ii) a party’s right to liquidate, terminate or accelerate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default, a Loss of Borrow Termination, a Dividend Event Termination, a Cash Tender Termination, a Corporate Event Termination or a Delisting Termination under this Letter Agreement with respect to the other party to constitute a “contractual right” within the meaning of the Bankruptcy Code; (iii) all transfers of cash, securities or other property under or in connection with the Transaction are “transfers” made “by or to (or for the benefit of)” a “master netting agreement participant”, a “financial institution”, a “financial participant”, a “forward contract merchant” or a “swap participant”, (each as defined in the Bankruptcy Code) within the meaning of Sections 546(e), 546(f), 546(g) and 546(j) of the Bankruptcy Code; (iv) all obligations under or in connection with the Transaction represent obligations in respect of “termination values”, “payment amounts” or “other transfer obligations” within the meaning of Section 362, 560 and 561 of the Bankruptcy Code; and (v) each of the parties hereto to be a “swap participant” and “financial participant” within the meaning of Sections 101(53C) and 101(22A) of the Bankruptcy Code.

(g)           Assignment and Transfer.  The rights and duties under this Letter Agreement may not be assigned or transferred by either party hereto without the prior written consent of the other party hereto; provided, however, that Citibank may assign its obligation to deliver or receive delivery of Common Stock hereunder to any of its affiliates without the prior written consent of the Company.  Upon any such assignment Citibank shall indemnify the Company from and against any loss, cost or expense relating to the failure of such affiliate to perform its delivery obligation.

(h)           Calculations.  To the extent any calculation, adjustment or determination is required to be made by Citibank hereunder, Citibank shall make any such calculation, adjustment, or determination in good faith.

(i)           Notices.  Unless otherwise specified, notices under this Letter Agreement may be made by telephone, to be confirmed in writing to the address below.  Changes to the Notices must be made in writing.

(i)           If to the Company:

Lexmark International, Inc.

One Lexmark Centre Drive

740 West New Circle Road

Lexington, KY  40550

 

 

  

  

  

 

 

Attn:  Bruce Frost

Telephone:  (859) 232-5108

Facsimile:  (859) 232-5137

(ii)           If to Citibank:

Citibank, N.A.

390 Greenwich Street, 3rd Floor

New York, NY 10013

Attn:  Equity Derivatives

Telephone: (212) 723-7623

Facsimile: (212) 723-8328

 

 

 

 

  

  

  

 

Please confirm your agreement to the foregoing by signing and returning to us the enclosed duplicate of this Letter Agreement.

Very truly yours,

CITIBANK, N.A.

By: /s/ James Heathcote                                                      

Name: James Heathcote

Authorized Representative

Acknowledged and agreed to as of

the date first above written,

LEXMARK INTERNATIONAL, INC.

By: /s/ Bruce J. Frost                                                                

Name: Bruce J. Frost

Title:    Treasurer

 

 

  

  

  

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

SCHEDULE I

Discount Per Share:                                                                         [***]

Initial Pricing Period Termination Date:                                                                         [***]

Schedule Pricing Period Termination Date:                                                                   [***]

 

 

Note: Confidential treatment has been requested with respect to the information contained within the [***] marking.  Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

  

  

  

 

 

ANNEX A

REGISTRATION PROCEDURES

In accordance with Section III(b) or X of the Letter Agreement, if the Company elects “Registered Settlement”, then the Company shall effect such delivery in compliance with the following:

(a)  The Company agrees to take all actions within its control, including, without limitation, the procedures set forth in subsection (f) below, to make available to Citibank and its affiliates an effective registration statement under the Securities Act and one or more prospectuses as necessary to allow Citibank and its affiliates to comply with the applicable prospectus delivery requirements (the “Prospectus”) for the resale by Citibank and its affiliates of the shares of Common Stock delivered by the Company hereunder (the “Registration Statement”), such Registration Statement to be effective and Prospectus to be current on each Trading Day in any Valuation Period and until all such resales by Citibank (or its affiliates) have been settled.  It is understood that the Registration Statement and Prospectus may cover a number of shares of Common Stock equal to all shares to be delivered by the Company hereunder (the “Shares”).  Citibank shall provide, by a reasonable time in advance, such information regarding Citibank and its affiliates as shall be required to be included in the Prospectus.  The Company shall pay the applicable registration fee and all costs in connection with the preparation of the Registration Statement and the Prospectus including, without limitation, the cost of printing the Prospectus.  In addition, the Company agrees to take all actions reasonably requested by Citibank to facilitate the disposition of the Shares, including all actions set forth in subsection (f) below.

(b)  The Company represents, on each day described in subsection (a), that each of its filings under the Securities Act, the Exchange Act or other applicable securities laws that are required to be filed have been filed and that, as of the date of this representation and as supplemented by any information provided by the Company to Citibank in connection with sales on a private placement basis pursuant to subsection (e) below, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements therein not misleading.

 

(c)  The Company agrees to provide to Citibank and its affiliates on (or, if requested by Citibank, reasonably in advance of) the final Trading Day of the Pricing Period or other date the number of shares of Common Stock to be delivered is determined, opinions of counsel, comfort letters, officers’ certificates and such other documents as may be reasonably requested by Citibank.  The Company also agrees that Citibank and its affiliates shall be entitled to perform such diligence as Citibank may reasonably request in advance of such date and the results thereof must be reasonably satisfactory to Citibank.  The Company agrees to reimburse Citibank for all reasonable out-of-pocket expenses it incurs in connection with such diligence and otherwise in connection with the preparation of the Registration Statement and Prospectus (or any offering document for sales on a private placement basis pursuant to subsection (e) below), including, without limitation, the reasonable fees and expenses of one outside counsel to Citibank incurred in connection therewith.

(d)  The Company shall, prior to the start of the applicable Valuation Period, enter into an agreement (the “Transfer Agreement”) with Citibank in connection with the public resale of the Shares by Citibank or its affiliates substantially similar to underwriting agreements entered into by Citibank with respect to equity securities; the Transfer Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating to the indemnification of, and contribution in connection with the liability of, Citibank and its affiliates.

(e)  If on any date during the period referred to in subsection (a) the requirements of subsection (a), (c) or (d) are not satisfied (determined without regard to whether the cause is  within the control of the Company) or the representations and warranties contained herein with respect to the Company (including, without limitation, in subsection (b)) are not true and correct,

(i)           the Company shall immediately notify Citibank thereof;

 

 

  

 

  

 

 

 

	
  

	
(ii)

	
(A) Citibank shall be entitled to cease selling shares of Common Stock pursuant to the Registration Statement; and (B) if the Registration Statement is not effective on such date or a stop order suspending the effectiveness of the Registration Statement has been issued or proceedings for that purpose have been instituted or threatened, or if the representations and warranties contained in subsection (b) are not true and correct, and in any such case the Company so requests, Citibank shall cease selling shares of Common Stock pursuant to the Registration Statement; and

	
  

	
(iii)

	
if Citibank ceases selling shares of Common Stock pursuant to clause (ii), the Company shall, at its election, (A) purchase from Citibank any shares of Common Stock delivered to Citibank hereunder that remain unsold for an amount in the aggregate that equals the number of shares that remain unsold multiplied by the weighted average purchase price of such number of shares in the open market during a number of subsequent Trading Days as determined by Citibank in good faith and in consultation with the Company; or (B) direct Citibank and its affiliates, in a commercially reasonable manner (or absent any such election by the Company, Citibank and its affiliates shall be entitled) to sell Shares received from the Company hereunder as otherwise provided hereunder on a private placement basis in compliance with the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder; provided that if clause (B) applies, the Company shall perform its obligations under subsection (c) and Annex B hereto and shall cause its representations in subsection (b) to be true and correct.

	
  

	
(iv)

	
if shares are so sold, the Company shall deliver, promptly upon request from Citibank, the number of additional shares of Common Stock that, together with shares of Common Stock already delivered to Citibank hereunder, Citibank determines in a commercially reasonable manner is adequate to realize aggregate actual proceeds (net of brokerage costs) equal to the Payment Amount and the Company’s obligation to deliver Shares under Section X of the Letter Agreement shall be a continuing one until Citibank or its affiliates have received actual net proceeds equal to Payment Amount; provided, however, that in no event shall the Company be required to deliver a number of shares of Common Stock that exceeds the Share Cap.  Citibank and its affiliates shall be entitled to disclose any material non-public information regarding the Company in their possession to prospective purchasers in such a private placement, provided that any such purchaser agrees with Citibank to maintain such information on a confidential basis.

(f)           The procedures for registration are as follows:

	
(i)

	
The Company shall use commercially reasonable efforts to cause that the Registration Statement be effective for the period set forth in subsection (a).  If filed after the date hereof and relating to the Shares, the Company shall furnish to Citibank a copy of the Registration Statement and each amendment or supplement thereto prior to their filing with the SEC, shall provide Citibank the opportunity to participate in the preparation thereof and shall consider such comments as Citibank and its affiliates may propose.

(ii)           The Company will immediately notify Citibank:

	
  

	
(A)

	
when the Registration Statement or any amendment or post-effective amendment thereto shall have become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed;

	
  

	
(B)

	
of any request by the SEC (or any other federal or state governmental authority) to amend the Registration Statement or amend or supplement the Prospectus or for additional information after the Registration Statement shall have become effective;

 

 

 

  

  

 

 

 

	
  

	
(C)

	
of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, or of any order preventing or suspending the use of any preliminary or final Prospectus, or the institution or threat of any proceedings for any such purposes; and

	
  

	
(D)

	
of the existence of any fact or circumstance that results in the Registration Statement, the Prospectus or any document incorporated therein by reference containing a misstatement of material fact or omitting to state a material fact required to be stated therein or necessary to make any statement therein not misleading.

	
(iii)

	
The Company will use commercially reasonable efforts to prevent the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus and, if any such order is issued, to obtain the lifting thereof as soon thereafter as is reasonably possible.  If the Registration Statement, the Prospectus or any document incorporated therein by reference contains a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make any statement therein not misleading, the Company will as promptly as reasonably practicable file any required document and prepare and furnish to Citibank a reasonable number of copies of such supplement or amendment thereto as may be necessary so that the Prospectus, as thereafter delivered to the purchasers in connection with resales of shares of Common Stock hereunder, will not contain any misstatement of a material fact or omit to state a material fact required to be stated therein or necessary to make any statement therein not misleading.

	
(iv)

	
The Company will furnish to Citibank and its affiliates, without charge, as many signed copies of the Registration Statement (as originally filed) and of all amendments thereto, whether filed before or after the Registration Statement becomes effective, copies of all exhibits and documents filed therewith, including documents incorporated by reference into the Prospectus, prospectus supplements, and signed copies of all consents and certificates of experts, as Citibank may reasonably request.  The Company will deliver to Citibank and its affiliates, without charge, as many copies of each preliminary prospectus as Citibank may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act.  The Company will deliver to Citibank and its affiliates, without charge, from time to time during the period during which the Prospectus is required to be delivered under the Securities Act in connection with resales of Common Stock hereunder, such number of copies of the Prospectus (as supplemented or amended) as Citibank may reasonably request.

	
(v)

	
The Company will take all actions within its control so that all shares of Common Stock covered by the Registration Statement are eligible for sale on the Exchange.

	
(vi)

	
The Company will use commercially reasonable efforts to qualify Common Stock for offering and sale under the applicable securities laws of such states and other jurisdictions as Citibank may designate; provided, however, that the Company shall not be obligated under this provision to qualify Common Stock for offering and sale under the applicable securities laws of such states and other jurisdictions where the Company would be required to file any general consent to service of process or to qualify as a foreign corporation or as a broker or dealer in securities in any jurisdiction where the Company is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.  The Company will file such statements and reports as may be required by the laws of each jurisdiction in which Common Stock has been qualified as above provided.  The Company will immediately notify Citibank of the suspension of the qualification of Common Stock for offering or sale in any jurisdiction, or of the institution or threat of any proceedings for such purpose.

  

  

  

 

	
(vii)

	
The Company will enter into such customary agreements, including a customary underwriting or agency agreement with Citibank, its affiliates and other underwriters or agents, if any, selected by Citibank and reasonably satisfactory to the Company in order to expedite or facilitate the disposition of Common Stock and will comply with such agreements.

	
(viii)

	
The Company will cooperate with Citibank, its affiliates and each such underwriter or agent participating in the disposition of such Common Stock and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc or the Exchange.

	
(ix)

	
The Company will comply with the Securities Act and the Exchange Act so as to permit the completion of the distribution of Common Stock in accordance with the intended method or methods of distribution contemplated in the Prospectus, as indicated by Citibank.  The Company will use commercially reasonable efforts to make generally available to its security holders, as soon as reasonably practicable (but not more than fifteen months) after the effective date of the Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder.

 

 

  

  

  

 

ANNEX B

PRIVATE PLACEMENT PROCEDURES

In accordance with Section III(b) or X of the Letter Agreement, if the Company elects “Private Placement Settlement”, then the Company shall effect such delivery in compliance with the following:

(a)           The Company shall afford Citibank (the “Private Securities”) a reasonable opportunity to conduct a due diligence investigation with respect to the Company customary in scope for private offerings of such type of securities (including, without limitation, the availability of senior management to respond to questions regarding the business and financial condition of the Company and the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them).

(b)           Prior to or contemporaneously with the determination of the Private Placement Price (as described below), the Company shall enter into an agreement (a “Private Placement Agreement”) with Citibank (or any affiliate of Citibank designated by Citibank) providing for the purchase and resale by Citibank (or such affiliate) in a private placement (or other transaction exempt from registration under the Securities Act) of the Private Securities, which agreement shall be on commercially reasonable terms and in form and substance reasonably satisfactory to Citibank (or such affiliate) and (without limitation of the foregoing) shall:

	
  

	
(i)

	
contain customary conditions, and customary undertakings, representations and warranties (to Citibank or such affiliate, and if requested by Citibank or such affiliate, to potential purchasers of the Private Securities);

	
  

	
(ii)

	
contain indemnification and contribution provisions in connection with the potential liability of Citibank and its affiliates relating to the resale by Citibank (or such affiliate) of the Private Securities;

	
  

	
(iii)

	
provide for the delivery of related certificates and representations, warranties and agreements of the Company, including those necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for Citibank and resales of the Private Securities by Citibank (or such affiliate); and

	
  

	
(iv)

	
provide for the delivery to Citibank (or such affiliate) of customary opinions (including, without limitation, opinions relating to the due authorization, valid issuance and fully paid and non-assessable nature of the Private Securities, the availability of an exemption from the Securities Act for Citibank and resales of the Private Securities by Citibank (or such affiliate), and the lack of material misstatements and omissions in the Company’s filings under the Exchange Act).

 

(c)           Citibank shall determine the private placement price (the “Private Placement Price”) in its judgment by commercially reasonable means, which may include (without limitation):

	
  

	
(i)

	
taking into account any factors that are customary in pricing private sales and any and all risks and costs in connection with the resale of the Private Securities by Citibank (or any affiliate of Citibank designated by Citibank), including, without limitation, a reasonable placement fee or spread to be retained by Citibank (or such affiliate); and

	
  

	
(ii)

	
providing for the payment by the Company of all fees and expenses in connection with such sale and resale, including all fees and expenses of counsel for Citibank or such affiliate.

 

 

 

  

  

  

 

 

 

(d)           Citibank shall notify the Company of the number of Private Securities required to be delivered by the Company and the Private Placement Price by 6:00 p.m. on the day such price is determined.

(e)           The Company agrees not to take or cause to be taken any action that would make unavailable either (i) the exemption set forth in Section 4(2) of the Securities Act, for the sale of any Private Securities by the Company to Citibank or (ii) an exemption from the registration requirements of the Securities Act reasonably acceptable to Citibank for resales of Private Securities by Citibank.

(f)           The Company expressly agrees and acknowledges that the public disclosure of all material information relating to the Company is within the Company’s control and that the Company shall promptly so disclose all such material information during the period from the first Trading Day in the Valuation Period to and including the final Settlement Date.

(g)           The Company agrees to use its best efforts to make any filings required to be made by it with the SEC, any securities exchange or any other regulatory body with respect to the transaction contemplated hereby and the issuance of the Private Securities.exhibit102.htm

 

 

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the "Agreement"), dated as of [DATE], between Lexmark International, Inc., a Delaware corporation, with its principal place of business in Fayette County, Kentucky (the "Employer"), and [NAME] (the "Employee").

W I T N E S S E T H:

WHEREAS, the Employer and the Employee desire to enter into an employment agreement and terminate the Employment Agreement entered into by the parties on [DATE], each thereby relinquishing all rights and benefits and terminating all duties and obligation of each party thereunder.

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 the day hereof and ending on [DATE] (the "Term") and the Employee's employment shall continue thereafter at will.

(b)           Position and Responsibilities.  The Employee will serve as [TITLE] 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 acknowledges that, as a result of his position with the Employer, he has responsibility for the operation and worldwide competitive positioning of the Employer.  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 $[BASE SALARY] 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 unfettered 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, provided that any such reduction of the Base Salary shall not be taken into account for purposes of calculating the Annual Bonus (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 determined by the Employer in its sole discretion, but not less frequently than monthly.

3. Short-term Incentive Compensation.  The Employee shall receive an annual incentive bonus award opportunity (the "Annual Bonus") of up to [IC MAX]% of the Employee’s Base Salary paid to the Employee during each calendar year during the term of the Employee's employment hereunder.  Such Annual Bonus may be awarded pursuant to the terms of the Employer’s Senior Executive Incentive Compensation Plan (the “SEICP”) if the Employee is a participant in such plan, or the Employer’s annual Incentive Compensation Plan, if the Employee is not a participant in the SEICP.  The Annual Bonus shall be determined by the Employer based on annual objectives established by the Employer and approved by the Compensation and Pension Committee of Employer’s Board (the “Annual Objectives”).  If all Annual Objectives are achieved, the Annual Bonus shall be [IC TARGET]% of the Employee’s Base Salary paid to the Employee during each calendar year during the term of the Employee's employment hereunder (the “Target Bonus”).  Notwithstanding the foregoing, the Employer may increase or decrease the amount of the Annual Bonus (including providing no bonus) based upon the Employer’s judgment of Employee’s overall contribution to the Employer’s business results.  In any event, the Employee’s Annual Bonus shall not exceed the Maximum Award as set forth in the SEICP.  To the extent that the Employee is a participant in the SEICP at the relevant time, the terms of the SEICP, as amended from time to time, are incorporated into and made a part of this Agreement.  In the event of a conflict, the terms of the SEICP shall control.  The Annual Bonus shall be paid to the Employee within the first 2-1/2 months of the calendar year immediately following the end of the performance period.

4.           Employee Benefits.  During the term of the Employee's employment hereunder, employee benefits, including, but not limited to, life, medical, dental, vision 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 the 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

  

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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.  Any reimbursement in accordance with this Section 5(b) shall be made promptly as incurred, and in no event later than December 31 of the year following the year in which such expenses were incurred, and the amount of such expenses eligible for payment or reimbursement in any year shall not affect the amount of such expenses eligible for payment or reimbursement in any other year.

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), after any reasonable accommodation obligations are satisfied, 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 has not substantially performed his duties, (ii) the Employee's engaging in willful and serious misconduct that is injurious to the Employer or any of its subsidiaries, (iii) the Employee's making a substantial, abusive use of alcohol, drugs, 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.

  

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(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, 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 90 days following (i) any assignment to the Employee of any duties, functions or responsibilities that are significantly different from, and result in a substantial and material 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 14.  The Employee’s termination shall be contingent upon the Employer’s failure to cure the event triggering the Employee’s termination for Good Reason within 30 days following the receipt of the Employee’s written Notice of Termination pursuant to Section 6(e).

(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 "Notice of Termination" addressed to the other party to this Agreement.  A "Notice of Termination" shall mean a written notice stating that the Employee's employment hereunder has been or will be terminated, indicating the specific termination provision 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.  A Notice of Termination by the Employee pursuant to Section 6(d) must be provided to the Employer within 90 days of the date the Employee has actual knowledge of the occurrence of the event or circumstances described in the definition of Good Reason.

(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) 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 Term or (y) an amount equal to one year's Base Salary, (B) the Annual Bonus with respect to a completed fiscal 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.  Amounts payable under (A) above will be paid to the Employee in a lump sum in cash as soon as reasonably practicable after the Date of Termination, provided that, with respect to any portion of the payment at such time that is neither a “short-term deferral” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), nor otherwise exempt from the provisions of Code Section 409A, such portion of the payment shall be made on the 60th day after the Date of Termination; provided further that, if the Employee is a “specified

  

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employee” under Code Section 409A, such portion of the payment shall be delayed until the earlier to occur of the Employee’s death or the date that is six months and one day following the Employee’s Date of Termination.  The Annual Bonus payable to the Employee under (B) above will be paid to the Employee within the first 2 1⁄2 months after the close of the calendar year to which the Annual Bonus applies, and the Pro Rata Share of the Annual Bonus under (C) above shall be payable as described in Section 6(f)(iii) below.

(ii)           If the Employee's employment shall terminate upon his death or Disability or if the Employer shall terminate the Employee's employment for Cause, the 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, the Annual Bonus as set forth in Section 6(f)(i)(B) above and a Pro Rata Share of the Annual Bonus (as defined below) for the fiscal year in which death or Disability occurs.  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.  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 achievement, as certified by the Compensation and Pension Committee of Employer’s Board, of the Annual Objectives, 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 the first 2-1/2 months after the close of calendar year in which the Date of Termination occurs.

(iv)           Notwithstanding anything to the contrary in Section 6(f)(i) above, if the Employee becomes entitled to receive severance pay under the Change in Control Agreement by and between the Employer and the Employee (the “CIC Agreement”), including but not limited to severance pay payable as a result of the Employer’s failure to obtain the assumption of this Agreement by any successor as contemplated by Section 14 hereof, such severance pay under the CIC Agreement shall be in lieu of the severance pay to which the Employee would otherwise have been entitled to under clauses (A), (B) and (C) of Section 6(f)(i) above.

(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 by the Employer for Cause, the date on which Notice of Termination is received, (iii) if the Employee's employment is terminated Without Cause or due to the Employee's Disability, 30 days after the date on which Notice of Termination is received or, if no such Notice is given, 30 days after the date of termination of employment, and (iv) if the Employee’s employment is terminated by the Employee for Good Reason, 31 days after the date on which Notice of Termination is received, provided that the Employee does not terminate his employment for Good Reason until he has given the Employer at least 30 days in

  

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 which to cure the event or circumstances set forth in the Notice of Termination and such event or circumstance is not cured by the 30th day.

(h)           Condition to Payments.  The Employer's obligation to make any payments hereunder shall be conditioned upon the Employee’s continued compliance with the terms of this Agreement and the Employer's receipt, within 45 days following the Employee’s Date of Termination, of an appropriately signed "General Release and Covenant Not to Sue" in form and substance satisfactory to the Employer.  Payments made under this Agreement shall immediately cease and the Employee shall repay within 60 days of the violation all amounts previously paid pursuant to Section 6(f) in the event that the Employee violates the terms of the "General Release and Covenant Not to Sue" or the Employee violates any of the covenants contained in Sections 7, 8, 9 and 10 of this Agreement prior to the Date of Termination or thereafter.

(i)           Exclusive Right to Payments.  Notwithstanding the foregoing, if the Employee becomes entitled to receive payments under Section 6(f) hereof, such payments shall be in lieu of any severance pay under any other contract or agreement, or any severance or separation plan, program or policy of the Company or any of its Subsidiaries to which the Employee would otherwise have been entitled on the Date of Termination.

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 or its subsidiaries 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 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 from the Date of Termination, the Employee, regardless of whether such termination is at the insistence of the Employer or 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 (including any

  

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 product or service offering of such business) that represents 5% or more of the aggregate gross revenues of the Employer and its subsidiaries, or competes with Employer’s solution services or software business, 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 from the Date of Termination, the Employee, regardless of whether such termination is at the insistence of the Employer or the Employee, shall not, directly or indirectly, for his own account or the account of any other person or entity: (a) disparage, criticize, or otherwise make any derogatory statements regarding the products and services of the Employer or its subsidiaries or Employer’s Board, officers or employees; (b) solicit, recruit, induce, employ or hire, or attempt to solicit, recruit, induce, employ or hire, directly or by assisting others (including, but not limited to, any new employer, any employee of the Employer or its subsidiaries, or any former employee of the Employer or its subsidiaries who within six months of that time has been employed by the Employer or its subsidiaries) any person or entity who or which is at the time, or within six months of that time has been, employed by or otherwise engaged to perform services for the Employer or its subsidiaries; or (c) solicit, interfere with, or otherwise entice or attempt to entice away any person or entity who or which is a customer or prospective customer of the Employer or its subsidiaries (including a person or entity who or which is a customer or prospective customer by either direct contract or relationship with the Employer or its subsidiaries or who or which has purchased, leased, or otherwise acquired the Employer’s or its subsidiaries’ products or service from the Employer’s or its subsidiaries’ distributors, parties for whom Employer is an original equipment manufacturer, dealers or resellers), a supplier to the Employer or its subsidiaries, or has, within the previous 36 months, been a customer of or supplier to the Employer or its subsidiaries.

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 memoranda, notes, records, drawings, manuals, or other documents, and all copies thereof including any electronic information (e.g., e-mails and spreadsheets) or copies, that are in the possession of the Employee, whether made or compiled by the Employee or furnished to the Employee by the Employer.

11.           Forfeiture.

  

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(a)           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 or its subsidiaries, whether or not the termination of employment occurs prior to or subsequent to such violation, then (1) all stock incentive awards, including but not limited to stock options, restricted stock awards and any deferred stock units, held by the Employee shall terminate effective as of the date on which the Employee violates this Agreement, unless terminated sooner by operation of another term or condition of the Employee’s stock incentive award agreement or the plan pursuant to which such award has been issued, and (2) any gain realized by the Employee on the vesting of restricted stock or deferred stock units, and 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 Employee from exercising all or a portion of the Employee’s options, within 18 months preceding the earlier of (a) the violation of Section 7, 8, 9, or 10 and (b) the Employee’s Date of Termination; and through the later of (c) 18 months following the violation of Section 7, 8, 9, or 10 and (d) such period of time as it takes the Employer to discover such violation, shall be paid promptly by the Employee to the Employer.  The Employee agrees that the Employer has the right to withhold the amount owed to it from any amounts that the Employer may owe the Employee from time to time (including, but not limited to, wages or other compensation, fringe benefits, or vacation pay); provided, however, if any amounts that the Employer is required to pay to the Employee are subject to Code Section 409A, any such withholding by the Employer from those amounts shall comply with Code Section 409A to the extent applicable thereto.  The Employee and the Employer agree that this forfeiture provision does not waive any other rights at law that the Employer may have, including but not limited to, equitable rights which would include injunctive relief.

(b)           Forfeiture under the Employer’s Executive Compensation Recovery Policy.  The Employee acknowledges and agrees that he is subject to the terms and conditions of the Employer’s Executive Compensation Recovery Policy (including any successor policy that may be adopted by the Employer to comply with Section 10D of the Securities Exchange Act of 1934, as amended, and the Rules promulgated thereunder), and that all or any portion of the Employee’s Annual Bonus, other incentive compensation, and equity compensation may be subject to forfeiture and previously paid amounts may be subject to recovery by the Employer in accordance with the Executive Compensation Recovery Policy.

12.           Waiver of Defenses; Enforceability of Covenants.  The Employee acknowledges and agrees that the covenants contained in Sections 7, 8, 9 and 10 of this Agreement (as well as each subsection of such Sections) shall be construed as agreements independent of each other and of any provision of this or any other contract between the parties hereto, and that the existence of any claim or cause of action by the Employee against the Employer, whether predicated upon this or any other contract, shall not constitute a defense to the enforcement by the Employer of said covenants.  The Employee further agrees that the term of the covenants contained in Sections 7, 8,

  

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9 and 10 of this Agreement (as well as each subsection of such Sections) and the geographic limitations are reasonable limits within the context of the Employee’s current or former activities for the Employer.  The Employee therefore waives any defense to enforcement of these covenants on the grounds that these covenants are not valid or that the terms of these covenants are not reasonable, but the Employee expressly does not waive the right to seek a construction of the covenants themselves.  In the event that any provisions relating to these covenants shall be declared by a court of competent jurisdiction to exceed the maximum time periods and/or areas of restriction deemed reasonable and enforceable, the time period and/or areas of restriction deemed reasonable and enforceable by such court shall become and thereafter be the maximum time period and/or areas.

13.           Employer’s Right to Obtain an Injunction.  The Employee acknowledges that the Proprietary Information and the covenants contained in Sections 7, 8, 9 and 10 of this Agreement are extremely valuable to the Employer, and the Employee recognizes and agrees that the injury the Employer will suffer in the event of the Employee’s breach of this Agreement cannot be compensated by monetary damages alone, including pursuant to Section 11, and the Employee therefore agrees that the Employer, in addition to and without limiting any other remedies or rights that it may have, either under this Agreement or otherwise, shall have the right to obtain an injunction against the Employee (including but not limited to, a temporary restraining order or a preliminary or permanent injunction), without the posting of any bond and without proof of actual damages, to prevent breaches or threatened breaches of this Agreement and/or to compel specific performance of this Agreement from a court of competent jurisdiction, enjoining any such breach.

14.           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 entitling the Employee to receive severance pay under the CIC Agreement upon a termination of employment by Employee for “Good Reason” as defined in the CIC Agreement.  As used in this Agreement, "Employer" shall mean the Employer as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

15.           Entire Agreement.  Except as otherwise expressly provided herein, this Agreement, the CIC Agreement and any Indemnification Agreement made and entered into by and between Employer and Employee or any Indemnification Agreement by and among Lexmark International Group, Inc. and/or the Employer and the Employee (the “Indemnification Agreement”) constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and all promises, representations,

 

 

  

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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.  In the avoidance of any doubt, this Agreement does not alter, modify or otherwise amend or supersede any agreement or understandings between the Employer and the Employee as to the Lexmark Agreement Regarding Confidential Information and Intellectual Property, any stock option plan/agreements, sales commission plans/agreements, bonus plans/agreements, incentive compensation plans/agreements or restricted stock unit plans/agreements that may be offered to the Employee by the Employer, from time to time.

16.           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.

17.           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.

	
                18.  

	
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 and Venue.  If a dispute arises between the parties, including disputes that may arise out of or relate to this Agreement or the breach, termination, or validity thereof, or the compensation, promotion, demotion, discipline, discharge, or terms and conditions of employment of the Employee (hereinafter, a “Dispute”), and if a Dispute cannot be settled through direct discussions, the parties agree that a federal or state court located in Fayette County, in the Commonwealth of Kentucky, is an appropriate forum and the parties hereby consent to the legal jurisdiction of such courts.  AS SUCH, ANY AND ALL ACTIONS, SUITS, OR OTHER LEGAL PROCEEDINGS ARISING FROM OR REGARDING THIS AGREEMENT AND ANY DISPUTE BETWEEN THE PARTIES (INCLUDING ANY ACTION BY THE EMPLOYEE AGAINST ANOTHER EMPLOYEE OR AGENT OF THE EMPLOYER) SHALL BE BROUGHT EXCLUSIVELY IN A STATE OR FEDERAL COURT SITUATED WITHIN FAYETTE COUNTY IN THE COMMONWEALTH OF KENTUCKY.  THE PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH PROCEEDING IN FAYETTE COUNTY, THE LOCATION OF THE PRINCIPAL OFFICE OF THE EMPLOYER; provided, however,

 

 

  

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that an action or ancillary proceeding to enforce injunctive relief or a judgment obtained by a party in said Fayette County court may be in any appropriate forum.  This Agreement shall be deemed to have been entered into in the Commonwealth of Kentucky; this Agreement is a contract performable wholly or partly within the Commonwealth of Kentucky; and this Agreement as well as any Dispute shall be governed by, enforced and interpreted in accordance with the laws of the Commonwealth of Kentucky, notwithstanding its conflict of law provisions.  In any action by the Employer against the Employee in any forum, the Employee waives personal service of any summons, complaint or other process and agrees that the service thereof may be made personally or by registered or certified mail directed to the Employee at his home address.  THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR OTHER LEGAL PROCEEDING.

(c)           Internal Revenue Code Section 409A.  For purposes of this Agreement, the terms “terminate,” “terminated” or “termination of employment,” and variations thereof, are intended to mean a separation from service or termination of employment that constitutes a “separation from service” under Code Section 409A.  The time or schedule of any payment or amount scheduled to be paid pursuant to the terms of this Agreement that is subject to Code Section 409A may not be accelerated except as otherwise permitted under Code Section 409A and the guidance and Treasury Department regulations issued thereunder.  The parties intend that this Agreement be interpreted and construed in compliance with Section 409A of the Code and Treasury Department regulations and other interpretive guidance issued thereunder to the extent applicable.  Notwithstanding the foregoing, the Employer shall not be required to assume any increased economic burden in connection therewith.

(d)           Taxes.  The Employer may withhold from any payments made under this Agreement all federal, state, city or other applicable taxes.

(e)           Amendments.  No provision of this Agreement may be modified, waived or discharged unless such modification is approved by Employer’s Board or such waiver or discharge is approved by Employer's Board or Chief Executive Officer, and is agreed upon in writing by the Employee and the Chief Executive Officer, or in the case of the Chief Executive Officer, the Chair of the Compensation and Pension Committee.  Notwithstanding the foregoing, any modification, waiver or amendment required by law may be made, or be deemed to be made, by a duly authorized officer of the Employer without the express approval of Employer’s Board and without the Employee’s consent.

(f)           Reformation; Severability.  If any provision of this Agreement is held by a court to be unreasonable in scope or duration or otherwise, the court 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 shall not affect any other provision of this Agreement or render this Agreement unenforceable or void.

 

 

  

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(g)           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, 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 his last

known address in the Company’s records.

(h)           Survival.  Sections 7, 8, 9,10, 11, 12, 13, 16, 17 and 18 and, if the Employee's employment terminates in a manner giving rise to a payment under Section 6(f), Section 6(f) and 14 shall survive the termination of the employment of the Employee hereunder as well as the termination of this Agreement.

(i)           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.

(j)           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.

(k)           Pronouns.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

(l)           Termination of Existing Agreement.  Upon the execution of this Agreement by a representative of the Employer and the Employee, the Employment Agreement entered into by the parties on [DATE] is hereby terminated, and each party to this Agreement hereby relinquishes all rights and benefits and terminates all duties and obligations pursuant to such agreement.

(m)           Employee Acknowledgment.  The Employee represents and confirms that the Employee has been, and is hereby, advised by the Employer to consult (at the Employee’s expense) with an attorney and otherwise seek financial and legal advice prior to executing this Agreement, has thoroughly discussed all aspects of this Agreement with such advisors as the Employee has determined appropriate, has 

 

 

 

  

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carefully read and fully understands all of the provisions of this Agreement, is not relying on any statements made by any representative, attorney, employee, officer or member of the Board of Directors of the Employer, is voluntarily entering into this Agreement, and has had a reasonable period of time to consider this Agreement.

{Signature Page Follows}

  

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IN WITNESS WHEREOF, the Employer has duly executed this Agreement by its 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: _______________________________

 

 

 

 

THE EMPLOYEE:  [NAME]

___________________________________

 

 

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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00209-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00209-of-00352.parquet"}]]