Exhibit 10.1

 

IMATION CORP.

 

1996 DIRECTORS STOCK COMPENSATION PROGRAM

(As Amended - May 8, 2002)

 

SECTION 1.  PURPOSE

 

The purpose of the Program is to attract and retain well-qualified persons for
service as nonemployee directors of the Company and to promote identity of
interest between directors and stockholders of the Company.  It is intended that
the 1996 Directors Stock Compensation Program will provide for the granting to
participants of stock options, restricted stock, restricted stock units, common
stock and/or other stock-based awards.

 

The Program is designed and intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, as such Rule may be amended from
time to time, and shall be interpreted in a manner consistent with the
requirements thereof, as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.

 

SECTION 2.  DEFINITIONS

 

(a)           “Accounting Date” shall mean the first business day following the
annual meeting of stockholders of the Company; provided, that for the Plan Year
that begins on the Effective Date, Accounting Date shall mean the Effective
Date.

 

(b)           “Basic Fee” shall mean the annual retainer payable to an Eligible
Director with respect to each Plan Year (at the annual rate in effect on the
Accounting Date of such Plan Year) for such Eligible Director’s services on the
Board, excluding any retainer as the chairperson of any committee of the Board
(exclusive of any Meeting Fees).

 

(c)           “Board” shall mean the Board of Directors of the Company.

 

(d)           “Chairperson Fee” shall mean the annual retainer payable to an
Eligible Director with respect to each Plan Year (at the annual rate in effect
on the Accounting Date of such Plan Year) for such Eligible Director’s services
as the chairperson of any committee of the Board.

 

(e)           “Change in Control Price” of the Common Stock shall equal the
higher of (i) if applicable, the price paid for the Common Stock in the
transaction constituting a Change in Control (as defined in Section 10) and (ii)
the Fair Market Value of the Common Stock as of the last trading day preceding
the date of the Change in Control.

 

(f)            “Committee” shall mean the Compensation and Corporate
Organization Committee of the Board.

 

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(g)           “Common Stock” shall mean the common stock, par value $.01 per
share, of the Company.

 

(h)           “Company” shall mean Imation Corp.

 

(i)            “Distribution” shall mean the distribution by Minnesota Mining
and Manufacturing Company to its stockholders of shares of Common Stock of the
Company.

 

(j)            “Dividend Equivalent Right” shall mean a right, described in
Section 7(b) hereof, of a holder of Restricted Stock Units with respect to
certain dividends paid on outstanding shares of Common Stock.

 

(k)           “Effective Date” shall mean the effective date of the
Distribution.

 

(l)            “Election Form” shall mean the Election Form attached as Exhibit
A hereto or such other form as may be deemed acceptable by the Secretary of the
Company from time to time.

 

(m)          “Eligible Director” shall mean each member of the Board who is not
at the time of reference an employee of the Company or any of its subsidiaries.

 

(n)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

 

(o)           “Fair Market Value” as of any date shall mean the average of the
high and low prices for Common Stock on such date, as reported on the New York
Stock Exchange Composite Transactions, rounded upwards to the nearest $0.05;
provided, however that the Fair Market Value as of the Effective Date shall mean
the average of the daily averages of the high and low prices for Common Stock,
as reported on the New York Stock Exchange Composite Transactions, on each day
during the five consecutive trading days commencing on the Effective Date,
rounded upwards to the nearest $0.05.

 

(p)           “Meeting Fees” shall mean the amounts payable to an Eligible
Director in arrears on any Quarterly Payment Date with respect to attendance at
meetings of the Board or any committee of the Board (exclusive of any Basic
Fee).

 

(q)           “Options” shall mean the stock options issued pursuant to Section
5 or 8 hereof.

 

(r)            “Plan Year” shall mean the twelve-month period commencing on the
Accounting Date; provided, that the first Plan Year of the Program shall
commence on the Effective Date and end on the date of the first annual meeting
of stockholders of the Company.

 

(s)           “Program” shall mean the Company’s 1996 Directors Stock
Compensation Program, as amended from time to time.

 

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(t)            “Proration Fraction” shall mean a fraction, the numerator of
which is the number of days from the date an Eligible Director first becomes an
Eligible Director to the date of the next succeeding annual meeting of
stockholders and the denominator of which is 365.

 

(u)           “Quarterly Payment Date” shall mean the date established by the
Company from time to time for payment, in arrears, of all Meeting Fees earned by
Eligible Directors during the preceding three-month period.

 

(v)           “Restricted Stock Unit” shall mean a right to receive payment of
the Fair Market Value of one share of Common Stock in accordance with the
conditions set forth in Section 7 hereof or conditions established by the
Committee pursuant to Section 8 hereof.

 

(w)          “Restricted Stock” shall mean Common Stock subject to the
restrictions set forth in Section 6 hereof or restrictions established by the
Committee pursuant to Section 8 hereof.

 

(x)            “Rule 16b-3” shall mean Rule 16b-3 under the Exchange Act, as
such Rule may be amended from time to time.

 

SECTION 3.  ADMINISTRATION

 

The Program shall be administered by the Committee.  In administering the
Program, it will be necessary to follow various laws and regulations.  It may be
necessary from time to time to change or waive requirements of the Program to
conform with the law, to meet special circumstances not anticipated or covered
in the Program, or to carry on successful operation of the Program, and in
connection therewith, the Committee shall have the full power and authority to:

 

(a)           Prescribe, amend, and rescind rules and regulations relating to
the Program, establish procedures deemed appropriate for its administration, and
make any and all other determinations not herein specifically authorized which
may be necessary or advisable for its effective administration;

 

(b)           Make any amendments to or modifications of the Program which may
be required or necessary to make the Program set forth herein comply with the
provisions of any laws, federal or state, or any regulations issued thereunder,
and to cause the Company at its expense to take any action related to the
Program which may be required under such laws or regulations;

 

(c)           Contest on behalf of the Eligible Directors or the Company, at the
sole discretion of the Committee and at the expense of the Company, any ruling
or decision on any issue related to the Program, and conduct any such contest
and any resulting litigation to a final determination, ruling, or decision; and

 

(d)           Grant other stock-based awards under the Program, as provided in
Section 8 hereof.

 

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SECTION 4.  SHARES SUBJECT TO THE PROGRAM

 

(a)           No more than 800,000 shares of Common Stock, subject to adjustment
pursuant to Section 9 hereof, shall be available for issuance under the Program.

 

(b)           Shares of Common Stock issued under the Program may consist in
whole or in part of authorized and unissued shares or of treasury shares, and no
fractional shares shall be issued under the Program.  Cash shall be paid in lieu
of any fractional shares issuable under the Program.

 

SECTION 5.  ANNUAL GRANT OF OPTIONS

 

(a)           Annual Grant.

 

(i)            As of the Effective Date, each Eligible Director shall
automatically be granted an Option pursuant to the Program to purchase 10,000
shares of Common Stock.

 

(ii)           Following the Effective Date, each new Eligible Director (one who
has not previously been granted Options under this Section 5) shall
automatically be granted an Option pursuant to this Section 5 to purchase the
number of whole shares of Common Stock equal to 10,000 multiplied by the
Proration Fraction, as of the date such Eligible Director first becomes an
Eligible Director.

 

(iii)          Following the Effective Date, each Eligible Director who
continues to serve on the Board immediately following an annual meeting of
stockholders shall be granted an Option to purchase 10,000 shares of Common
Stock as of the date of such meeting.

 

(iv)          All Options granted under this Section 5 shall be granted at an
option price equal to the Fair Market Value of the Common Stock on the date of
grant.

 

 

(b)           Terms and Conditions of Options.

 

(i)            Subject to paragraph (ii) below, each Option granted under this
Section 5 shall vest and become exercisable as to all shares of Common Stock
underlying such Option on the date of the annual meeting of stockholders next
succeeding the date of grant.

 

(ii)           Notwithstanding paragraph (i) above, all outstanding and
previously unvested Options of an Eligible Director granted under this Section 5
shall immediately vest and become fully exercisable upon the Eligible Director’s
death or disability or upon a Change of Control (as defined in Section 10).  If
an Eligible Director otherwise terminates service as an Eligible Director, any
Options granted under this Section 5 that have not become exercisable shall be
forfeited as of the date of such termination of service.  Subject to the
foregoing, each Option shall expire on the date that is ten years following the
date of grant (the “Expiration Date”).

 

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(iii)          Options shall be exercised by written notice to the Secretary of
the Company in such form as is from time to time prescribed by the Committee and
by the payment in full, in cash or previously owned shares of Common Stock, of
the aggregate option price of the shares of Common Stock for which the Option is
being exercised.  To the extent that an Option is not exercised by an optionee
when it becomes initially exercisable, it shall not expire but shall be carried
forward and shall be exercisable until the Expiration Date.  Partial exercise
shall be permitted from time to time, provided that partial exercises shall be
in multiples of one hundred shares of Common Stock.

 

(iv)          If for any reason during the term of a vested, unexercised and
unexpired Option, the Eligible Director shall cease to be a member of the Board,
such Option may be exercised, to the extent exercisable at the time of such
termination of service, by the Eligible Director (or, in the event of such
Eligible Director’s death, such Eligible Director’s estate) until the earlier of
(A) the second anniversary of the date that the Eligible Director ceases to be a
member of the Board and (B) the Expiration Date.

 

SECTION 6.  ANNUAL GRANT OF RESTRICTED STOCK

 

(a)           Annual Grant.

 

(i)            As of each Accounting Date commencing with the Effective Date,
each Eligible Director shall automatically be granted a number of shares of
Restricted Stock (excluding fractional shares, which shall be paid in cash), the
number of which shall be calculated by dividing 30% of his or her Basic Fee and
25% of his or her Chairperson Fee payable with respect to the Plan Year that
commences on such Accounting Date by the Fair Market Value of one share of
Common Stock on such Accounting Date.

 

(ii)           Each new Eligible Director who is first elected to the Board
between annual meetings of stockholders shall automatically be granted a number
of shares of Restricted Stock (excluding fractional shares, which shall be paid
in cash), the number of which shall be calculated by (A) multiplying the sum of
30% of his or her Basic Fee and 25% of his or her Chairperson Fee payable with
respect to the Plan Year in which the Eligible Director is first elected to the
Board by the Proration Fraction and (B) dividing the product resulting from
clause (A) by the Fair Market Value of one share of Common Stock on the date
that the Eligible Director is first elected to the Board.

 

(b)           Terms and Conditions of Restricted Stock.

 

(i)            Vesting.  Each share of Restricted Stock granted under this
Section 6 shall vest in full on the third anniversary of the date of grant;
provided, however, that all outstanding and previously unvested shares of
Restricted Stock of an Eligible Director granted under this Section 6 shall
immediately vest in full upon the Eligible Director’s death or disability or
upon a Change of Control (as defined in Section 10).

 

 

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(ii)           Restrictions on Transfer.  Until shares of Restricted Stock vest
in accordance with paragraph (b)(i) of this Section 6, such shares may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or
encumbered, and no attempt to transfer such shares, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such shares.

 

(iii)          Issuance and Custody of Certificate.  The Company shall cause to
be issued one or more stock certificates, registered in the name of the Eligible
Director, evidencing the shares of Restricted Stock.  Each such certificate
shall bear the following legend:

 

“The transferability of this certificate and the shares of Common Stock
represented hereby are subject to the restrictions, terms and conditions
(including restrictions against transfer) contained in the Imation Corp. 1996
Directors Stock Compensation Program.  Copies of such Program are on file with
the Secretary of Imation Corp. at the principal executive offices of Imation
Corp.”

 

Each certificate issued pursuant to this Section 6 shall be deposited by the
Company with the Secretary of the Company or a custodian designated by the
Secretary.  Upon request, the Secretary or such custodian shall issue a receipt
to the Eligible Director evidencing the certificate or certificates held which
are registered in the name of the Eligible Director.  After any shares of
Restricted Stock vest in accordance with paragraph (b)(i) of this Section 6, the
Company shall promptly cause to be issued a certificate or certificates
evidencing such vested shares, free of the legend provided above and shall cause
such certificate or certificates and any additional shares of Common Stock, any
securities and any other property held in custody with respect to such vested
shares pursuant to paragraph (b)(iv) of this Section 6 to be delivered to the
Eligible Director or the Eligible Director’s legal representatives,
beneficiaries or heirs.

 

(iv)          Distributions and Adjustments.  If all or any portion of the
shares of Restricted Stock vest in the Eligible Director subsequent to any
change in the number or character of the shares of Common Stock (through merger,
consolidation, reorganization, recapitalization, stock dividend or otherwise),
the Eligible Director shall then receive upon such vesting the number and type
of securities or other consideration which the Eligible Director would have
received if such shares had vested prior to the event changing the number or
character of outstanding shares of Common Stock.   Any additional shares of
Common Stock, any other securities of the Company and any other property (except
for cash dividends or other cash distributions) distributed with respect to the
shares of Restricted Stock prior to the date the shares of Restricted Stock vest
shall be subject to the same restrictions, terms and conditions as the shares of
Restricted Stock.

 

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Any cash dividends or other cash distributions payable with respect to the
shares of Restricted Stock shall be distributed to the Eligible Director at the
same time cash dividends or other cash distributions are distributed to
stockholders of the Company generally.  Any additional shares of Common Stock,
any securities and any other property (except for cash dividends or other cash
distributions) distributed with respect to the shares of Restricted Stock prior
to the date such shares vest shall be promptly deposited with the Secretary or
the custodian designated by the Secretary to be held in custody in accordance
with paragraph (b)(iii) of this Section 6.

 

(v)           Rights of Holder.  Eligible Directors shall have none of the
rights of a shareholder with respect to shares of Restricted Stock until such
shares shall have vested in the Eligible Director as provided herein, except the
rights to receive all cash dividends or other cash distributions and the right
to vote.

 

SECTION 7.  ELECTIONS TO RECEIVE COMMON STOCK OR RESTRICTED STOCK UNITS

 

(a)           Elections.

 

(i)            For the Plan Year commencing with the Effective Date, each
Eligible Director shall have the option, at his or her election, to receive as
of November 14, 1996, in lieu of cash payment therefor, a number of shares of
Common Stock (excluding fractional shares, which shall be paid in cash) and/or
Restricted Stock Units (including fractional Restricted Stock Units), up to the
number which is calculated by dividing 50% of his or her Basic Fee payable with
respect to such Plan Year by the Fair Market Value of one share of Common Stock
on November 14, 1996.  To be effective, any such election shall be made by
submitting a completed and executed Election Form to the Secretary of the
Company prior to November 14, 1996.

 

(ii)           As of each Accounting Date following the Effective Date, each
Eligible Director shall have the option, at his or her election, to receive, in
lieu of cash payment therefor, a number of shares of Common Stock (excluding
fractional shares, which shall be paid in cash) and/or Restricted Stock Units
(including fractional Restricted Stock Units) up to the number which is
calculated by dividing  the sum of (i) 70% of his or her Basic Fee and (ii) 75%
of his or her Chariperson Fee payable with respect to the Plan Year that
commences on such Accounting Date by the Fair Market Value of one share of
Common Stock on such Accounting Date. To be effective, any such election shall
be made by submitting a completed and executed Election Form to the Secretary of
the Company prior to such Accounting Date.

 

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(iii)          Each new Eligible Director who is first elected to the Board
between annual meetings of stockholders shall have the option, at his or her
election, to receive, in lieu of cash payment therefor, a number of shares of
Common Stock (excluding fractional shares, which shall be paid in cash) and/or
Restricted Stock Units (including fractional Restricted Stock Units) up to the
number which is calculated by (A) multiplying the sum of (i) 70% of his or her
Basic Fee and (ii) 75% of his or her Chariperson Fee payable with respect to the
Plan Year in which the Eligible Director is first elected to the Board by the
Proration Fraction and (B) dividing the product resulting from clause (A) by the
Fair Market Value of one share of Common Stock on the date that the Eligible
Director is first elected to the Board.  To be effective, any such election
shall be made by submitting a completed and executed Election Form to the
Secretary of the Company prior to the date that the Eligible Director is first
elected to the Board.

 

(iv)          As of each Quarterly Payment Date following November 14, 1996,
each Eligible Director shall have the option, at his or her election, to
receive, in lieu of cash payment therefor, a number of shares of Common Stock
(excluding fractional shares, which shall be paid in cash) and/or Restricted
Stock Units (including fractional Restricted Stock Units) up to the number which
is calculated by dividing the amount of his or her Meeting Fees payable on such
Quarterly Payment Date by the Fair Market Value of one share of Common Stock on
such Quarterly Payment Date.  To be effective, any such election shall be made
by submitting a completed and executed Election Form to the Secretary of the
Company prior to the immediately preceding Quarterly Payment Date or, in the
case of the first Quarterly Payment Date following November 14, 1996, prior to
November 14, 1996.

 

(b)           Terms and Conditions of Restricted Stock Units.

 

(i)            Restricted Stock Unit Account.  Upon the grant of Restricted
Stock Units to an Eligible Director, such units shall be credited to an account
established for such Eligible Director. Each Eligible Director shall receive an
annual statement showing the number of Restricted Stock Units that have been
credited to the Eligible Director’s account under the Program.

 

(ii)           Dividend Equivalent Rights.  Outstanding Restricted Stock Units
shall be credited with Dividend Equivalent Rights based upon dividends paid on
outstanding shares of Common Stock from the date such Restricted Stock Units are
granted to the date of payment in respect of such Restricted Stock Units.  Such
Dividend Equivalent Rights, once credited, shall be converted into an equivalent
number of Restricted Stock Units (including fractional Restricted Stock Units). 
If a dividend is paid in cash, each Eligible Director shall be credited, as of
each applicable dividend payment date, in accordance with the following formula:

 

(A x B) / C

 

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in which “A” equals the number of Restricted Stock Units held by the Eligible
Director on the dividend payment date, “B” equals the cash dividend per share
and “C” equals the Fair Market Value per share of Common Stock on the dividend
payment date.  If a dividend is paid in property other than cash, Dividend
Equivalent Rights shall be credited, as of the applicable dividend payment date,
in accordance with the formula set forth above, except that “B” shall equal the
fair market value per share of the property that the Eligible Director would
have received in respect of the number of shares of Common Stock equal to the
number of Restricted Stock Units held by the Eligible Director as of the
dividend payment date, had such shares been owned as of the record date for such
dividend.

 

(iii)          Time of Payment.  All payments in respect of an Eligible
Director’s Restricted Stock Units shall be made as soon as practicable following
the earlier of (A) the date the Eligible Director has elected to receive payment
pursuant to the applicable Election Form and (B) the occurrence of a Change in
Control.

 

(iv)          Form of Payment.  Payment in respect of Restricted Stock Units
shall be made in one lump sum payment in the form of shares of Common Stock. 
For purposes of the preceding sentence, any payment made upon the occurrence of
a Change in Control in full or partial payment of Restricted Stock Units shall
equal the Change in Control Price multiplied by the number of shares (including
fractional shares) of Common Stock relating to the Restricted Stock Units with
respect to which such cash payment is being made.

 

SECTION 8.  OTHER STOCK-BASED AWARDS

 

The Committee is hereby authorized to grant Eligible Directors such other awards
under the Program that are denominated or payable in, valued in whole or in part
by reference to, or otherwise based on or related to, shares of Common Stock, as
are deemed by the Committee to be consistent with the purpose of the Program
(including, without limitation, Options, Restricted Stock or Restricted Stock
Units in lieu of or in addition to those granted pursuant to Sections 5, 6 and 7
hereof, respectively); provided, however, that such grants must comply with Rule
16b-3 and applicable law.  Subject to the terms of the Program and any
applicable award agreement, the Committee shall determine the terms and
conditions of any such awards.

 

SECTION 9.  EFFECTS OF CERTAIN CHANGES IN CAPITALIZATION

 

In the event of any recapitalization, stock split, reverse stock split, stock
dividend, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event
affecting the Common Stock, the maximum number or class of shares available
under the Program, the number or class of shares, and exercise price, of Common
Stock subject to outstanding Options, the number or class of shares of Common
Stock to be subject to Options automatically granted to Eligible Directors, the
number or class of shares of Restricted Stock or Restricted Stock Units to be
granted, delivered or credited hereunder, and the number or class of shares and
the terms of any other outstanding stock-based awards granted hereunder, as the
case may be, shall be adjusted by the Committee to reflect any such event.

 

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SECTION 10.  CHANGE IN CONTROL

 

(a)           For purposes of this Section 10, the following words and phrases
shall have the meanings indicated below, unless the context clearly indicates
otherwise:

 

(i)            “Person” shall have the meaning associated with that term as it
is used in Sections 13(d) and 14(d) of the Act.

 

(ii)           “Affiliates and Associates” shall have the meanings assigned to
such terms in Rule 12b-2 promulgated under Section 12 of the Act.

 

(iii)          “Act” shall mean the Securities Exchange Act of 1934.

 

(iv)          “Continuing Directors” shall have the meaning assigned to such
term in Article Thirteenth of the Company’s Restated Certificate of
Incorporation.

 

(v)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(b)           For purposes of the Program, a Change in Control of the Company
shall be deemed to have occurred if:

 

(i)            any Person (together with its Affiliates and Associates), other
than a trustee or other fiduciary holding securities under an employee benefit
plan of the Company, is or becomes the “beneficial owner” (as that term is
defined in Rule 13d-3 promulgated under the Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Company’s then outstanding securities, unless a
majority of the Continuing Directors of the Company’s Board of Directors prior
to that time have determined in their sole discretion that, for purposes of this
Program, a Change in Control of the Company has not occurred; or

 

(ii)           the Continuing Directors of the Company’s Board of Directors
shall at any time fail to constitute a majority of the members of such Board of
Directors.

 

SECTION 11.  TERM OF PROGRAM

 

The Program was approved by Minnesota Mining and Manufacturing Company, as sole
stockholder of the Company, and shall become effective as of the Effective
Date.  This Program shall remain in effect until all authorized shares have been
issued, unless sooner terminated by the Board.

 

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SECTION 12.  AMENDMENT; TERMINATION

 

The Board may at any time and from time to time alter, amend, suspend, or
terminate the Program in whole or in part; provided, however, that no amendment
which requires stockholder approval in order for the exemptions available under
Rule 16b-3 to be applicable to the Program and the Eligible Directors shall be
effective unless the same shall be approved by the stockholders of the Company
entitled to vote thereon.

 

SECTION 13.  RIGHTS OF ELIGIBLE DIRECTORS

 

Nothing contained in the Program or with respect to any grant shall interfere
with or limit in any way the right of the stockholders of the Company to remove
any Eligible Director from the Board pursuant to the bylaws of the Company, nor
confer upon any Eligible Director any right to continue in the service of the
Company as a director.

 

SECTION 14.  GENERAL RESTRICTIONS

 

(a)           Investment Representations.  The Company may require any Eligible
Director to whom Common Stock is issued, as a condition of receiving such Common
Stock, to give written assurances in substance and form satisfactory to the
Company and its counsel to the effect that such person is acquiring the Common
Stock for his or her own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
federal and applicable state securities laws.

 

(b)           Compliance with Securities Laws.  Each issuance shall be subject
to the requirement that, if at any time counsel to the Company shall determine
that the listing, registration or qualification of the shares upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance of shares thereunder, such issuance may not
be accepted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee.  Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.

 

(c)           Nontransferability.  Unless otherwise determined by the Committee,
awards under this Program shall not be transferable by an Eligible Director
other than by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code, or Title I of ERISA, or the
rules thereunder.

 

SECTION 15.  WITHHOLDING

 

The Company may defer making payments or delivering shares of Common Stock under
the Program until satisfactory arrangements have been made for the payment of
any federal, state or local income or employment taxes required to be withheld
with respect to such payment or delivery.

 

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SECTION 16.  GOVERNING LAW

 

The Program and all rights hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

SECTION 17.  UNFUNDED PROGRAM

 

Unless otherwise determined by the Committee, the Program shall be unfunded and
shall not create (or be construed to create) a trust or a separate fund or
funds.  The Program shall not establish any fiduciary relationship between the
Company and any Eligible Director or other person.  To the extent any person
holds any rights by virtue of a grant under the Program, such right shall be no
greater than the right of an unsecured general creditor of the Company.

 

SECTION 18.  HEADINGS

 

The headings of sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Program.

 

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EXHIBIT A

IMATION CORP.

1996 DIRECTORS STOCK COMPENSATION PROGRAM

ELECTION FORM

(As Amended — Effective May 8, 2002)

 

THIS ELECTION is made by                                     (the “Eligible
Director”), as of the                                    day
of                                   , 200             .

 

WHEREAS, Imation Corp., a Delaware corporation (the “Company”) has adopted the
Imation Corp. 1996 Directors Stock Compensation Program (As Amended) (the
“Program”);

 

WHEREAS, the Eligible Director has the option under the Program to receive
Common Stock and/or Restricted Stock Units (as defined in the Program) in lieu
of payment of certain cash compensation for service as a director of the
Company;

 

NOW, THEREFORE, in accordance with the terms and conditions of the Program, the
Eligible Director hereby agrees as follows:

 

The Program

 

This Election is entered into pursuant to the Program, which is incorporated
herein by reference and made a part hereof.  The Eligible Director hereby
acknowledges receipt of a copy of the Program.  All capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Program.

 

Basic Fee and Chairperson Fee (“Annual Grant”)

 

The prorated Basic Fee and Chairperson Fee is payable on the date first elected
to the Board of Directors (if other than at an annual meeting of stockholders). 
Thereafter, the Basic Fee and Chairperson Fee is payable on each Accounting Date
following the Annual Meeting of Stockholders.

 

Subject to the terms and conditions of the Program, the Eligible Director hereby
elects to receive the Basic Fee compensation and the Chairperson Fee, if
applicable in the following manner:

BASIC FEE:

_____%   Election to receive Common Stock in lieu of Cash

 

_____%   Election to receive Restricted Stock Units in lieu of Cash

 

_____%   Election to receive Cash

 

                         +      30    %   Automatically payable in Restricted
Stock

  Total:                    100%

 

 

CHAIRPERSON FEE:  (if applicable)

_____%   Election to receive Common Stock in lieu of Cash

 

_____%   Election to receive Restricted Stock Units in lieu of Cash

 

_____%   Election to receive Cash

 

                          +     25    %   Automatically payable in Restricted
Stock

  Total:                    100%

 

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Meeting Fees

 

Subject to the terms and conditions of the Program, the Eligible Director elects
to receive Meeting Fees compensation in the following manner, with such fees
payable on each Quarterly Payment Date:

 

_____%   Election to receive Common Stock

 

_____%   Election to receive Restricted Stock Units

 

_____%   Election to receive Cash

  Total:                    100%

 

The election to receive Restricted Stock Units shall be payable as set forth in
the Program on the earlier to occur of a Change in Control or the following
date:

 

_____            _____ anniversary of the grant date (please specify)

 

_____            The date the Eligible Director’s service on the Board
terminates for any reason

 

_____            Other (please
specify):____________________________________________

 

Term of Election

 

This Election will remain in effect until terminated or changed by the Eligible
Director pursuant to written notice to the Secretary of the Company or filing of
a new Election Form.

 

 

IN WITNESS WHEREOF, the Eligible Director has entered into this Election on the
day and year first above written, and the Company has accepted this Election as
of such day and year.

 

 

ELIGIBLE DIRECTOR

 

 

 

 

 

 

 

Signature

 

 

 

Accepted and Agreed to by IMATION CORP.

 

 

 

 

 

By:

 

 

Title:

 

 

14

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