EXHIBIT 10.25
Employment Agreement
John C. Mitchell
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of April 30, 1998, among Lexmark
International, Inc., a Delaware corporation (the "Employer"), Lexmark
International Group, Inc., a Delaware corporation ("Group"), and John C.
Mitchell (the "Employee").
W I T N E S S E T H:
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WHEREAS, Employer, Group and Employee desire to enter into an
employment agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the parties hereto hereby agree as follows:
1. Term; Position and Responsibilities.
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(a) Term of Employment. Unless the Employee's employment shall sooner
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terminate pursuant to Section 6, the Employer shall employ the Employee for a
term commencing on April 30, 1998 and ending on February 28, 2001 (the "Initial
Term"), and the Employee's employment shall continue thereafter at will.
(b) Position and Responsibilities. The Employee will serve as Vice
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President and President Business Printer Division and in such other executive
capacity or capacities as may be determined from time to time by or under the
authority of the Board of Directors of the Employer ("Employer's Board"), and
the Employee will devote all of his skill, knowledge and working time (except
for reasonable vacation time and absence for sickness or similar disability) to
the conscientious performance of his duties. The Employee represents that he is
entering into this Agreement voluntarily and that his employment hereunder and
compliance by him with the terms and conditions of this Agreement will not
conflict with or result in the breach of any agreement to which he is a party or
by which he may be bound.
2. Base Salary. As compensation for the services to be performed by the
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Employee hereunder, the Employer will pay the Employee an annual base salary of
$285,000 ($300,000 effective August 3, 1998) during the term of his employment
hereunder. The Employer will review the Employee's base salary from time to time
during the period of his employment hereunder and, in the discretion of the
Employer, may increase such base salary from time to time based upon the
performance of the Employee, the financial condition of the Employer, prevailing
industry salary scales and such other factors as the Employer shall consider
relevant. (The annual base salary payable to the Employee under this Section 2,
as the same may be increased from time to time, shall hereinafter be referred to
as the "Base Salary".) The Base Salary payable under this Section 2 shall be
reduced to the extent that the Employee elects to defer such Base Salary under
the terms of any deferred compensation or savings plan maintained or established
by the Employer or Group, provided that any such reduction of the Base Salary
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shall not be taken into account for purposes of calculating the Base Amount (as
defined in Section 3). The Employer shall pay the Employee the Base Salary in
biweekly installments, or in such other installments as may be mutually agreed
upon by the Employer and the Employee.
3. Short-term Incentive Compensation. The Employee shall receive an
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annual incentive bonus award (the "Annual Bonus") for each calendar year ending
during the term of the Employee's employment hereunder equal to:
(a) if the Operating Result (as defined below) for such year
is equal to or greater than the Maximum Operating Target (as defined
below) for such year, 125% of the amount of the Employee's Base Salary
paid to the Employee during the calendar year for which such bonus is
payable (such amount is hereinafter referred to as the "Base Amount");
(b) if the Operating Result for such year is greater than the
Operating Target but less than the Maximum Operating Target for such
year, 65% of the Base Amount plus, for each increase of 1/25 of the
difference between the Operating Target and the Maximum Operating
Target, an additional 2.40% of the Base Amount;
(c) if the Operating Result for such year is equal to 100% of
the Operating Target for such year, 65% of the Base Amount;
(d) if the Operating Result for such year is greater than the
Minimum Operating Target (as defined below) but less than the Operating
Target for such year, 30% of the Base Amount plus, for each increase of
1/20 of the difference between the Minimum Operating Target and the
Operating Target (100%), an additional 1.75% of the Base Amount; and
(e) if the Operating Result for such year is equal to the
Minimum Operating Target for such year, 30% of the Base Amount.
Notwithstanding the foregoing, the Employer may increase or decrease the amount
of the Annual Bonus based upon the Employer's judgment of Employee's overall
contribution to the Employer's business results.
No Annual Bonus shall be paid if the Operating Result is less than the Minimum
Operating Target for such year. The "Operating Target", the "Maximum Operating
Target" and the "Minimum Operating Target" in any year shall be jointly
established by the Chief Executive Officer of the Employer and Employer's Board.
The "Operating Result" for any year shall be equal to the annual financial
results for the components that make up the Operating Target as of December 31
in such year, using United States generally accepted accounting principles
consistently applied and taking into account such other factors as may be
approved by Employer's Board. The Annual Bonus, if any, shall be paid as soon as
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practicable after the close of the year for which the Annual Bonus is payable,
unless the Employee elects to defer such amounts under the terms of any deferred
compensation or savings plan maintained or established by the Employer or Group.
4. Employee Benefits. During the term of the Employee's employment
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hereunder, employee benefits, including, but not limited to, life, medical,
dental and disability insurance, will be provided to the Employee in accordance
with programs at the Employer then available to executive employees. The
Employee shall also be entitled to participate in all of Employer's profit
sharing, pension, retirement, deferred compensation and savings plans, as the
same may be amended and in effect from time to time, at levels and having
interests commensurate with the Employee's then current period of service,
compensation and position.
5. Perquisites and Expenses.
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(a) General. During the term of the Employee's employment
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hereunder, the Employee shall be entitled to participate in any special benefit
or perquisite program available from time to time to executive employees of the
Employer on the terms and conditions then prevailing under such program.
(b) Business Travel, Lodging, etc. The Employer shall
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reimburse the Employee for reasonable travel, lodging and meal expenses incurred
by him in connection with his performance of services hereunder upon submission
of evidence, satisfactory to the Employer, of the incurrence and purpose of each
such expense.
6. Termination of Employment.
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(a) Termination Due to Death or Disability. In the event that
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the Employee's employment hereunder terminates due to death or is terminated by
the Employer due to the Employee's Disability (as defined below), no termination
benefits shall be payable to or in respect of the Employee except as provided in
Section 6(f)(ii). For purposes of this Agreement, "Disability" shall mean a
physical or mental disability that prevents the performance by the Employee of
his duties hereunder lasting (or likely to last, based on competent medical
evidence presented to Employer's Board) for a continuous period of six months or
longer. The reasoned and good faith judgment of Employer's Board as to the
Employee's Disability shall be final and shall be based on such competent
medical evidence as shall be presented to it by the Employee or by any physician
or group of physicians or other competent medical experts employed by the
Employee or the Employer to advise Employer's Board.
(b) Termination by the Employer for Cause. The Employee may be
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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
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has not substantially performed his duties, (ii) the Employee's engaging in
willful and serious misconduct that is injurious to Group or Employer or any of
their subsidiaries, (iii) the Employee's regularly making a substantial, abusive
use of alcohol, drug, or similar substances, and such abuse in the Employer's
judgment has affected his ability to conduct the business of the Employer in a
proper and prudent manner, (iv) the Employee's conviction of, or entering a plea
of nolo contendere to, a crime that constitutes a felony, or (v) the willful and
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material breach by the Employee of any of his obligations hereunder, or the
willful and material breach by the Employee of any written covenant or agreement
with the Employer or any of its affiliates not to disclose any information
pertaining to the Employer or any of its affiliates or not to compete or
interfere with the Employer or any of its affiliates.
(c) Termination by the Employer Without Cause. The Employee
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may be terminated Without Cause by the Employer. A termination "Without Cause"
shall mean a termination of employment by the Employer other than due to death
or Disability as defined in Section 6(a) or Cause as defined in Section 6(b).
(d) Termination by the Employee. The Employee may terminate
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his employment for "Good Reason". "Good Reason" shall mean a termination of
employment by the Employee within 30 days following (i) any assignment to the
Employee of any duties, functions or responsibilities that are significantly
different from, and result in a substantial diminution of, the duties, functions
or responsibilities that the Employee has on the date hereof or (ii) the failure
of the Employer to obtain the assumption of this Agreement by any successor as
contemplated by Section 12.
(e) Notice of Termination. Any termination by the Employer
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pursuant to Section 6(a), 6(b) or 6(c), or by the Employee pursuant to Section
6(d), shall be communicated by a written "Notice of Termination" addressed to
the other parties to this Agreement. A "Notice of Termination" shall mean a
notice stating that the Employee's employment hereunder has been or will be
terminated, indicating the specific termination provisions in this Agreement
relied upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination of employment.
(f) Payments Upon Certain Terminations.
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(i) In the event of a termination of the Employee's
employment Without Cause or a termination by the Employee of his
employment for Good Reason, the Employer shall pay to the Employee (A)
(1) the greater of (x) his Base Salary, if any, for the period from the
Date of Termination (as defined below) through the last day of the
Initial Term, provided that Employer may, at any time, pay to the
Employee in a single lump sum an amount equal to the Base Salary
remaining to be paid to the Employee as of the date of such lump sum
payment and (y) an amount equal to one year's Base Salary, less (2) any
amounts paid or to be paid to the Employee under the terms of any
severance plan or program of Employer, if any, as in effect on the Date
of Termination, (B) the Annual Bonus with respect to a completed fiscal
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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.
Employer shall also provide, in addition to the continuation of Base
Salary, continued employee benefits and vesting of Incentive Awards (as
defined under Group's Stock Incentive Plan, amended and restated April
30, 1998, as the same may be amended from time to time, the "SIP")
through the Initial Term. Any benefits payable to the Employee under
any otherwise applicable plans, policies and practices of Employer
shall not be limited by this provision.
(ii) If the Employee's employment shall terminate upon his
death or Disability or if Employer shall terminate the Employee's
employment for Cause, Employer shall pay the Employee his full Base
Salary through the Date of Termination, plus, in the case of
termination upon the Employee's death or Disability, a Pro Rata Share
of the Annual Bonus. Any benefits payable to or in respect of the
Employee under any otherwise applicable plans, policies and practices
of the Employer shall not be limited by this provision.
(iii) For purposes of this Section 6, the "Pro Rata Share of
the Annual Bonus" shall be calculated and paid as follows. If the
Employee is terminated prior to July 1 of any year, the Pro Rata Share
of the Annual Bonus (A) will be equal to the product of (1) the Annual
Bonus, calculated assuming that 100% of the Operating Target is
achieved in such year, and (2) a fraction equal to the number of full
months in such year prior to the Date of Termination over 12, and (B)
will be paid to the Employee within 30 days after the Date of
Termination. If the Employee is terminated on or after July 1 of any
year, the Pro Rata Share of the Annual Bonus (A) will be equal to the
product of (1) the Annual Bonus, calculated based on the actual
Operating Result for such year, and (2) a fraction equal to the number
of full months in such year prior to the Date of Termination over 12,
and (B) will be paid to the Employee within 90 days after the close of
the year in respect of which the Pro Rata Share of the Annual Bonus is
payable.
(g) Date of Termination. As used in this Agreement, the term
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"Date of Termination" shall mean (i) if the Employee's employment is terminated
by his death, the date of his death, (ii) if the Employee's employment is
terminated for Cause, the date on which Notice of Termination is given as
contemplated by Section 6(e), and (iii) if the Employee's employment is
terminated Without Cause, due to the Employee's Disability or by the Employee
for Good Reason, 30 days after the date on which Notice of Termination is given
as contemplated by Section 6(d) or, if no such Notice is given, 30 days after
the date of termination of employment.
(h) Condition to Payments. The Employer's obligation to make
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any payments hereunder shall be conditioned upon the Employer's receipt of an
appropriately signed "General Release and Covenant Not to Sue" in form and
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substance satisfactory to the Employer.
7. Unauthorized Disclosure. During and after the term of his employment
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hereunder, the Employee shall not, without the written consent of Employer's
Board, the General Counsel of the Employer, or the Chief Executive Officer of
the Employer, disclose to any person (other than an employee or director of the
Employer or its affiliates, or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Employee of
his duties as an executive of the Employer) any confidential or proprietary
information, knowledge or data that is not theretofore publicly known and in the
public domain obtained by him while in the employ of the Employer with respect
to the Employer or any of its subsidiaries or affiliates or with respect to any
products, improvements, formulas, recipes, designs, processes, customers,
methods of sales, distribution, operation or manufacture, sales, prices,
profits, costs, contracts, suppliers, business prospects, business methods,
techniques, research, plans, strategies, personnel, organization, trade secrets
or know-how of the Employer or any of its subsidiaries or affiliates
(collectively, "Proprietary Information"), except as may be required by law or
in connection with any judicial or administrative proceedings or inquiry.
8. Non-Competition. During the period of the Employee's employment and
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thereafter for a period equal to the number of months providing the basis for
calculating any termination payments to the Employee under Section 6, if any
such payments are required, but in any event for at least 12 months, the
Employee shall not engage directly or indirectly in, become employed by, serve
as an agent or consultant to, or become a partner, principal or stockholder of,
any partnership, corporation or other entity which competes with a business that
represents 5% or more of the aggregate gross revenues of the Employer and its
subsidiaries and which is then engaged in such competition in any geographical
area in which the Employer or any of its subsidiaries is then engaged in such
business without first obtaining written approval from the Employer, provided
that the Employee's ownership of less than 1% of the issued and outstanding
stock of any corporation whose stock is traded on an established securities
market shall not constitute competition with the Employer. The Employer may
grant or deny such approval in its sole discretion.
9. Non-Interference. During the period of the Employee's employment and
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thereafter for a period equal to the number of months providing the basis for
calculating any termination payments to the Employee under Section 6, if any
such payments are required, but in any event for at least 36 months, the
Employee will not, directly or indirectly, for his own account or the account of
any other person or entity, (a) employ in a business of the kind in which the
Employer is engaged on the date of such termination, or solicit or endeavor to
entice away from the Employer, or otherwise intentionally interfere with the
Employer's relationship with, any person or entity who or which is at the time
employed by or otherwise engaged to perform services for the Employer or (b)
intentionally interfere with the Employer's relationship with any person or
entity who or which is, or has been within the previous 36 months, a customer,
client or supplier of the Employer.
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10. Return of Documents. In the event of the termination of the
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Employee's employment for any reason, the Employee will deliver to the Employer
all non-personal documents and data of any nature pertaining to his work with
the Employer, and he will not take with him any documents or data of any
description or any reproduction thereof, or any documents containing or
pertaining to any Proprietary Information.
11. Forfeiture of Realized and Unrealized Gains on Incentive Awards for
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Breach of this Agreement. If the Employee violates any provision of Sections 7,
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8, 9 or 10 of this Agreement, and the Employee is no longer employed by the
Employer, whether or not the termination of employment occurs prior to or
subsequent to such violation, then (1) all Incentive Awards held by the Employee
shall terminate effective the date on which Employee violates this Agreement,
unless terminated sooner by operation of another term or condition of the SIP or
the Award Agreement (as defined in the SIP), and (2) any gain realized upon
receipt of an Incentive Award, or exercise of an Incentive Award that does not
require the payment of an exercise price, which gain shall be represented by the
closing market price on the date of receipt of such Incentive Award, or in the
case of an Incentive Award that requires the payment of an exercise price, the
gain represented by the closing market price on the date of exercise over the
exercise price, multiplied by the number of Incentive Awards, or options
exercised, without regard to any subsequent market price decrease or increase;
in each case within 18 months prior to termination of employment with Employer
and violation of Sections 7, 8, 9 or 10 of this Agreement, shall be paid by the
Employee to the Employer. The Employee agrees that the Employer has the right to
deduct from any amounts the Employer may owe the Employee from time to time
(including amounts owed to the Employee as wages or other compensation, fringe
benefits, or vacation pay, as well as any other amounts owed to the Employee by
the Employer), the amounts the Employee owes the Employer or Group.
12. Assumption of Agreement. The Employer will require any successor
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(by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Employer, by agreement in form and substance
reasonably satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place.
Failure of the Employer to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Employee to the greater of (x) compensation from the Employer in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employer terminated his employment Without Cause as contemplated by Section 6
and (y) amounts required to be paid to the Employee pursuant to the Change of
Control Agreement by and among Group, Employer and Employee dated as of April
30, 1998 (the "CIC Agreement"). For purposes of implementing the foregoing
clause (x), the date on which any such succession becomes effective shall be
deemed to be the Date of Termination, and for purposes of implementing clause
(y), the timing and amount of any payments required pursuant to the CIC
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Agreement shall be determined in accordance with the CIC Agreement.
13. Entire Agreement. Except as otherwise expressly provided herein,
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this Agreement, the CIC Agreement and the Indemnification Agreement made and
entered into as of the 30th day of April, 1998 by and among Employer, Group and
Employee (the "Indemnification Agreement") constitute the entire agreement among
the parties hereto with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements and prior agreements relating to
such subject matter (including those made to or with the Employee by any other
person or entity) are merged herein, in the CIC Agreement and in the
Indemnification Agreement and superseded hereby and thereby. To the extent that
the amount and timing of payments required to be made under this Agreement are
inconsistent with or different from the amount and timing of payments required
to be made pursuant to the CIC Agreement and/or the Indemnification Agreement,
the Employee shall be entitled to the most favorable benefits provided to the
Employee under the provisions of any such agreements.
14. Indemnification. The Employer agrees that it shall indemnify and
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hold harmless the Employee to the fullest extent (a) permitted by Delaware law
from and against any and all liabilities, costs, claims and expenses arising out
of the employment of the Employee hereunder, except to the extent arising out of
or based upon the gross negligence or willful misconduct of the Employee and (b)
provided by the Indemnification Agreement.
15. No Mitigation. The Employee shall not be required to mitigate the
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amount of any payment that the Employer becomes obligated to make in connection
with this Agreement, the CIC Agreement or the Indemnification Agreement, by
seeking other employment or otherwise.
16. Miscellaneous.
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(a) Binding Effect. This Agreement shall be binding on and
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inure to the benefit of the Employer and its successors and permitted assigns.
This Agreement shall also be binding on and inure to the benefit of the Employee
and his heirs, executors, administrators and legal representatives.
(b) Governing Law. This Agreement shall be governed by and
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constructed in accordance with the laws of the State of Delaware without
reference to principles of conflict of laws.
(c) Taxes. The Employer may withhold from any payments made
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under the Agreement all federal, state, city or other applicable taxes or social
security governmental regulation or ruling.
(d) Amendments. No provisions of this Agreement may be
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modified, waived or discharged unless such modification, waiver or discharge is
approved by Employer's Board or General Counsel of the Employer and is agreed to
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in writing by the Employee and General Counsel of the Employer. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No waiver of any
provision of this Agreement shall be implied from any course of dealing between
or among the parties hereto or from any failure by any party hereto to assert
its rights hereunder on any occasion or series of occasions.
(e) Reformation; Severability. If any provision of this
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Agreement is held by a court or arbitrator to be unreasonable in scope or
duration or otherwise, the court or arbitrator shall, to the extent permitted by
law, reform such provision so that it is enforceable, and enforce the applicable
provision as so reformed. Reformation of any provision of this Agreement
pursuant to this subsection (e) shall not affect any other provision of this
Agreement or render this Agreement unenforceable or void.
(f) Notices. Any notice or other communication required or
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permitted to be delivered under this Agreement shall be (i) in writing, (ii)
delivered personally, by courier service or by certified or registered mail,
first-class postage prepaid and return receipt requested, (iii) deemed to have
been received on the date of delivery or on the third business day after the
mailing thereof, and (iv) addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance with the terms
hereof):
(A) if to the Employer or Group, to it at:
One Lexmark Centre Drive
740 West New Circle Road
Lexington, Kentucky 40550
Attention: General Counsel
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(B) if to the Employee, to him at the address
listed on the signature page hereof.
(g) Survival. Sections 7, 8, 9,10 and 11 and, if the
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Employee's employment terminates in a manner giving rise to a payment under
Section 6(f), Section 6(f) shall survive the termination of the employment of
the Employee hereunder.
(h) Counterparts. This Agreement may be executed in
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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(i) Headings. The section and other headings contained in this
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Agreement are for the convenience of the parties only and are not intended to be
a part hereof or to affect the meaning or interpretation hereof.
IN WITNESS WHEREOF, the Employer and Group have duly executed this
Agreement by their authorized representatives and the Employee has hereunto set
his hand, in each case effective as of the date first above written.
LEXMARK INTERNATIONAL, INC.
By: /s/ Paul J. Curlander
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Paul J. Curlander
President and
Chief Executive Officer
LEXMARK INTERNATIONAL GROUP, INC.
By: /s/ Paul J. Curlander
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Paul J. Curlander
President and
Chief Executive Officer
THE EMPLOYEE:
/s/ John C. Mitchell
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Address:
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