AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AMENDED AND
RESTATED SEVERANCE AGREEMENT (this “Agreement”) is made
as of the ___ day of
, 20___, between Imation Corp., a Delaware corporation, with its
principal offices at One Imation Place, Oakdale, Minnesota 55128
(the “Company”) and
.
WHEREAS, this
Agreement is intended to specify the financial arrangements that
the Company will provide to you upon your separation from
employment with the Company and all of its Affiliates under any of
the circumstances described herein; and
WHEREAS, this
Agreement is entered into by the Company in the belief that it is
in the best interests of the Company and its shareholders to help
assure that the Company will have your continued dedication during
your employment with the Company, by providing for certain
severance benefits under certain circumstances in connection with
your employment with the Company or any of its Affiliates, thereby
enhancing the Company’s ability to attract and retain highly
qualified people; and
WHEREAS, this
Agreement hereby amends and restates in its entirety any previous
Severance Agreement between the Company and you.
NOW THEREFORE, to
assure the Company that it will have your continued dedication, and
to induce you to remain in the employ of the Company or any of its
Affiliates, and for other good and valuable consideration, the
Company and you agree as follows:
1. Term
of Agreement . The term of this Agreement shall commence on the
date of this Agreement (the “Effective Date”) and shall
continue in effect until the first anniversary of the Effective
Date, and shall thereafter be automatically renewed for successive
one-year terms provided that you are employed by the Company or any
of its Affiliates on each anniversary of the Effective Date (the
“Covered Period”), unless the Company, upon
authorization by its Board of Directors gives notice to you that
the Company does not wish to extend this Agreement, and provided
further , that, notwithstanding any such notice by the Company
not to extend, the Covered Period and this Agreement shall continue
in effect for a period of 12 months from the date of the
notice in the event the notice is not given following a Change of
Control, or for a period of 24 months following the date of a
Change of Control in the event the notice is given following such
Change of Control.
2.
Definitions . When the following terms are used in this
Agreement with initial capital letters, they shall have the
following meanings.
(i)
“Affiliate” means any entity that, together with the
Company, is treated as a single employer under Code section 414(b)
or (c). For purposes of determining whether a Termination of
Employment has occurred, the term Affiliate will be determined by
applying Code section 1563(a)((1), (2) and (3) for
purposes of determining a controlled group of corporations under
Code section 414(b) and in applying Treas. Reg.
Section 1.414(c)-2 for purposes of determining trades or
businesses that are under common control for purposes of Code
section 414(c), the phrase “at least 50 percent”
will be used instead of “at least 80 percent” each
place it appears.
(ii)
“Cause” shall mean termination by the Company or an
Affiliate of your employment based upon:
(a) your gross
incompetence or substantial failure to perform your duties;
or
(b) misconduct by
you that causes or is likely to cause harm to the Company or an
Affiliate or that causes or is likely to cause harm to the
Company’s or an Affiliate’s reputation, as determined
by the Company’s or Affiliate’s Board of Directors in
its sole and absolute discretion (such misconduct may include,
without limitation, insobriety at the workplace during working
hours or the use of illegal drugs); or
(c) failure to
follow directions of the Company’s or Affiliate’s Board
of Directors that are consistent with your duties; or
(d) your
conviction of, or entry of a pleading of guilty or nolo contendere
to, any crime involving moral turpitude, or the entry of an order
duly issued by any federal or state regulatory agency having
jurisdiction in the matter permanently prohibiting you from
participating in the conduct of the affairs of the Company or an
Affiliate.
(iii) “Good
Reason” shall mean the occurrence of any of the following
events, except for occurrence of such an event in connection with
the termination of your employment or reassignment by the Company
or an Affiliate for Cause, for disability or for death, provided
you have given the Company written notice within ninety
(90) days of the initial existence of the Good Reason event
and the Company has not cured such event within thirty
(30) days of the receipt of such notice:
(a) a material
diminution, either prior to or following a Change of Control, of
your authority, duties or responsibilities from your authority,
duties or responsibilities as of the date of this Agreement;
or
(b) a material
diminution, either prior to or following a Change of Control, in
your base compensation (specifically excluding any long-term
incentive compensation for which you are eligible), excluding any
reduction caused by a restructuring by management of benefits for
the employees of the company as a whole that affects you in a
manner comparable to other senior executives of the Company;
or
(c) a material
change in the geographic location at which you perform your
services following a Change of Control (but in no event including a
relocation that does not increase the actual distance required for
you to commute from your home to the new place of business by more
than 10 miles).
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(iv) “Change
of Control” means any one of the following events:
(a) the
consummation of a transaction or series of related transactions in
which a person, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), other than the
Company or a subsidiary of the Company, or any employee benefit
plan of the Company or a subsidiary of the Company, acquires
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the
Company’s then outstanding shares of common stock or the
combined voting power of the Company’s then outstanding
voting securities (other than in connection with a Business
Combination in which clauses (1), (2) and (3) of
paragraph (iii)(c) apply); or
(b) individuals
who, as of the Effective Date hereof, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board of
Directors of the Company; provided, however, that any individual
becoming a director subsequent to the Effective Date hereof whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than a
nomination of an individual whose initial assumption of office is
in connection with a solicitation with respect to the election or
removal of directors of the Company in opposition to the
solicitation by the Board of Directors of the Company) shall be
deemed to be a member of the Incumbent Board; or
(c) the
consummation of a reorganization, merger, statutory share exchange,
consolidation or similar transaction involving the Company, a sale
or other disposition in a transaction or series of related
transactions of all or substantially all of the Company’s
assets or the issuance by the Company of its stock in connection
with the acquisition of assets or stock of another entity (each, a
“Business Combination”) in each case unless, following
such Business Combination, (1) all or substantially all of the
individuals and entities that were the beneficial owners of the
Company’s outstanding common stock and the Company’s
outstanding voting securities immediately prior to such Business
Combination beneficially own immediately after the transaction or
transactions, directly or indirectly, more than 50% of the then
outstanding shares of common stock and more than 50% of the
combined voting power of the then outstanding voting securities (or
comparable equity interests) of the entity resulting from such
Business Combination (including an entity that, as a result of such
transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one of more
subsidiaries) in substantially the same proportions as their
ownership of the Company’s common stock and voting securities
immediately prior to such Business Combination, (2) no person,
entity or group (other than a direct or indirect parent entity of
the Company that, after giving effect to the Business Combination,
beneficially owns 100% of the outstanding voting securities (or
comparable equity interests) of the entity resulting from the
Business Combination) beneficially owns, directly or indirectly,
35% or more of the outstanding shares of common stock or the
combined voting power of the then outstanding voting securities (or
comparable equity interests) of the entity resulting from such
Business Combination and (3) at least a majority of the
members of the board of directors (or similar governing body) of
the entity resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board of Directors of the Company
providing for such Business Combination; or
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(d) approval by
the stockholders of the dissolution of the Company.
(v) “Date of
Termination” shall mean the date specified in the Notice of
Termination (except in the case of your death, in which case Date
of Termination shall be the date of death); provided the Date of
Termination is consistent with your Termination of
Employment.
(vi) “Notice
of Termination” shall mean a written notice which sets forth
the Date of Termination and, in reasonable detail, the facts and
circumstances claimed to provide a basis, if any, for your
Termination of Employment.
(vii)
“Termination of Employment” means a termination of your
employment relationship with the Company and all Affiliates or such
other change in your relationship with the Company and all
Affiliates that would be considered a “separation from
service” under Section 409A of the Code. Your employment
relationship will be treated as remaining intact while you are on a
military leave, a sick leave or other bona fide leave of absence
(pursuant to which there is a reasonable expectation that you will
return to perform services for the Company or an Affiliate) but
only if the period of such leave does not exceed six
(6) months, or if longer, so long as you retain a right to
reemployment by the Company or an Affiliate under applicable
statute or by contract, provided, however, where your leave is due
to any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a
continuous period of not less than six (6) months and such
impairment causes you to be unable to perform the duties of your
position of employment or any substantially similar position of
employment, a twenty-nine (29) month period of absence may be
substituted for such six (6) month period of absence. In all
cases, the Executive’s Termination of Employment must
constitute a “separation from service” under
Section 409A of the Code and any “separation under
service” under Section 409A of the Code shall be treated
as a Termination of Employment.
3.
Termination Procedures . Any purported Termination of
Employment by the Company or an Affiliate or you (other than by
reason of your death) during the Covered Period shall be
communicated by a Notice of Termination in accordance with
Section 9 hereof. No purported Termination of Employment by
the Company or an Affiliate during the Covered Period shall be
effective if it is not pursuant to a Notice of Termination. Failure
by you to provide Notice of Termination shall not limit any of your
rights under this Agreement except to the extent the Company can
demonstrate that it suffered actual damages by reason of such
failure.
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4.
Qualification for Severance Benefits . You shall be eligible
for severance benefits pursuant to the terms of this Agreement on
account of your Termination of Employment if the Date of
Termination occurs during the Covered Period in either of the
following circumstances:
(i) Termination of
Employment by the Company or an Affiliate of your employment with
the Company and its Affiliates for any reason other than Cause;
or
(ii) Termination
of Employment by you for Good Reason within the twenty-four
(24) month period following the initial existence of the Good
Reason event and, in the event of a Change in Control, only on or
after the 120 th day following the Change in Control;
provided , however , that you shall not begin
receiving any payments or benefits under this Agreement unless and
until you execute a general release of all claims against the
Company and its Affiliates, including non-competition and
non-solicitation covenants, in the form attached hereto as
Exhibit A and you have not rescinded such release within the
permitted time period for rescission under Section 3.J
therein; and provided further , that in such case,
failure to execute such release within 21 days of your Date of
Termination shall result in the loss of any rights to receive
payments or benefits under this Agreement. No severance benefits
become payable pursuant to this Agreement in the event of
Termination of Employment upon your death or disability.
5.
Compensation Upon Termination.
(i) Amounts
. Upon qualification for severance benefits pursuant to this
Agreement, you shall be entitled to the benefits, to be funded from
the general assets of the Company, provided below:
(a) The Company
shall pay to you (1) the full base salary earned by you and
unpaid through the Date of Termination, at the rate in effect on
the date of the Notice of Termination, (2) any amount earned
by you as a bonus with respect to the fiscal year of the Company
immediately preceding the Date of Termination if such bonus has not
theretofore been paid to you, and (3) an amount representing
credit for any paid time off earned or accrued by you but not taken
during the current “paid time off year”;
(b) In lieu of any
further base salary payments to you for periods subsequent to the
Date of Termination, the Company shall pay to you:
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(I) If the Date of
Termination for a Termination of Employment by the Company other
than for Cause, or the event giving rise to Termination of
Employment by you for Good Reason, occurs prior to a Change of
Control (other than as described in the proviso in clause
(II) below) (a “Non-Change-of-Control
Termination”), the sum of an amount equal to the target bonus
under the applicable annual bonus plan for the fiscal year in which
the Date of Termination occurs (specifically excluding any
long-term incentive compensation for which you are eligible) plus
an amount equal to your annual base salary for the fiscal year in
which the Date of Termination occurs (but disregarding any decrease
thereof that constituted “Good Reason”); or
(II) If the Date
of Termination for a Termination of Employment by the Company other
than for Cause, or the event giving rise to Termination of
Employment by you for Good Reason, occurs after a Change of Control
(a “Change-of-Control Termination”), the sum
of:
(A) if the Date of
Termination occurs one year or less after the Change of Control, an
amount equal to two (2) times the average of the sum of the
actual annual bonuses paid to you for the two years prior to the
fiscal year in which the Date of Termination occurs provided that
if you are an employee for more than one year and less than two
years prior to the fiscal year in which the termination occurs,
such amount will be equal to two (2) times the last
year’s actual bonus paid, or if you are employed less than
one year, such amount shall be equal to two (2) times the
target amount for that year as determined by the Compensation
Committee (specifically excluding any long-term incentive
compensation for which you are eligible) plus an amount equal to
two (2) times your annual base salary for the fiscal year in
which the Date of Termination occurs (but disregarding any decrease
thereof that constituted “Good Reason”); or
(B) if the Date of
Termination occurs more than one year, but within two years, after
the Change of Control, an amount equal to one (1) times the
average of the sum of the actual annual bonuses paid to you for the
two years prior to the fiscal year in which the Date of Termination
occurs provided that if you are an employee for more than one year
and less than two years prior to the fiscal year in which the
termination occurs, such amount will be equal to the last
year’s actual bonus paid, or if you are employed less than
one year, such amount shall be equal to the target amount for that
year as determined by the Compensation Committee (specifically
excluding any long-term incentive compensation for which you are
eligible) plus an amount equal to one (1) times your annual
base salary for the fiscal year in which the Date of Termination
occurs (but disregarding any decrease thereof that constituted
“Good Reason”).
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(c) The Company
shall provide you a lump sum payment equal to the aggregate amount
of the employer portion of COBRA premiums (and excluding any
administration fees) that would be incurred for continuation under
the Company’s employee group medical and dental Plan based on
coverage and COBRA continuation premiums in effect immediately
prior to the Date of Termination, (1) equal to twelve
(12) months of continuation coverage following the Date of
Termination in the case of a Non-Change-of-Control Termination, or
(2) equal to twenty-four (24) months of continuation
coverage following the Date of Termination in the case of a
Change-of-Control Termination.
(d) Intentionally
deleted.
(ii) No
Disability or Life Insurance Benefits . The Company shall not
be required to continue to provide disability or life insurance
benefits (group or individual) following your Date of Termination
other than with respect to benefits to which you became entitled
prior to the Date of Termination and which are required to be paid
following such Date of Termination in accordance with the terms of
applicable disability or life insurance plans or policies in effect
prior to such Date of Termination.
(iii) Time and
Form of Cash Payments.
(a) In the case of
a Non-Change-of-Control Termination, the cash payments provided for
in Section 5(i) above shall be paid by the Company in a single lump
sum payment as promptly as practicable after the Date of
Termination (but not later than the earlier of 90 days after
the Date of Termination or March 15 of the calendar year
following the calendar in which the Date of Termination occurred,
in either case subject to the provisions of Section 4 of this
Agreement relating to execution of a release in the form of
Exhibit A and provided you have not rescinded such release
within the permitted time period for rescission under
Section 3.J thereof). All severance payments are subject to
any required withholding.
(b) In the case of
a Change-of-
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