Exhibit 10.1
FORM OF AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE
AGREEMENT (this “Agreement”) is made as of the
day of
2007, 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) the willful and continued failure
by you to substantially perform your duties and obligations (other
than any such failure resulting from incapacity due to physical or
mental illness or any such actual or anticipated failure resulting
from your termination for Good Reason);
(b) the willful engaging by you in
misconduct which is materially injurious to the Company, monetarily
or otherwise; or
(c) your conviction of, or entering a
plea of nolo contendere to, a crime that constitutes a
felony.
For purposes of this
Section 2(ii), no action or failure to act on your part shall
be considered “willful” unless done, or omitted to be
done, by you in bad faith and without reasonable belief that your
action or omission was in the best interests of the Company.
(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)
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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
(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
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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.
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:
(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
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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 (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
(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”).
(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.
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(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-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
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