Exhibit 10.2
AMENDED AND RESTATED
SEVERANCE AGREEMENT
     THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”) is made as
of the            day of                      2006, between Imation Corp., a
Delaware corporation, with its principal offices at One Imation Place, Oakdale,
Minnesota 55125 (the “Company”) and                                         
residing at                                         .
     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 subsidiaries 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
subsidiaries, 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 subsidiaries, 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 subsidiaries 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.

 

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     (i) “Cause” shall mean termination by the Company or a subsidiary of the
Company 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(i), 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.
     (ii) “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 a subsidiary of
the Company for Cause, for disability or for death:
     (a) the assignment to you, either prior to or following a Change of
Control, of employment duties, functions or responsibilities that are
significantly different from, and result in a substantial diminution of, your
duties, functions or responsibilities as of the date of this Agreement; or
     (b) (1) a significant reduction by the Company or a subsidiary of the
Company in your base salary, annual bonus opportunity (specifically excluding
any long-term incentive compensation for which you are eligible), or benefits as
in effect as of the date of this Agreement (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 (2) following a Change of Control, a reduction in your total cash
compensation opportunity (i.e., base salary plus annual bonus opportunity
specifically excluding any long-term incentive compensation) at target
compensation, a reduction in base salary that results in your base salary
constituting less than 50% of your total cash compensation opportunity at your
target compensation level), or a reduction in the aggregate value of your
benefits, in each case compared to your base salary, bonus opportunity and
aggregate benefits as in effect on the date of this Agreement; or
     (c) a relocation following a Change of Control of your place of business by
more than 50 miles from Oakdale, Minnesota, unless such relocation 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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     (iii) “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

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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
     (d) approval by the stockholders of the dissolution of the Company.
     (iv) “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, that in the case of a termination by you
for Good Reason following a Change of Control as defined in subsection (a) of
“Good Reason,” the Date of Termination may not be before the 120th day following
the Change of Control.
     (v) “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 termination of your employment.
     3. Termination Procedures. Any purported termination of your employment by
the Company or a subsidiary of the Company 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 8 hereof. No purported termination by the
Company or a subsidiary of the Company of your employment in 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 (a) that the Company shall be permitted to cure any
purported event if specified in Section 2 (ii) and (b) 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 if your employment
with the Company and all of its subsidiaries is terminated and the Date of
Termination occurs during the Covered Period in either of the following
circumstances:
     (i) termination by the Company or a subsidiary of the Company of your
employment with the Company and its subsidiaries for any reason other than
Cause; or
     (ii) termination of employment by you for Good Reason;

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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 vacation earned or accrued by you but not taken during the
current “vacation 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 by the Company other than
for Cause, or the event giving rise to your termination of your employment 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

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     (II) If the Date of Termination for a termination by the Company other than
for Cause, or the event giving rise to your termination of your employment 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 the Company’s standard employee medical and
dental insurance coverages, as elected by you and in effect immediately prior to
the Date of Termination, (1) for twelve (12) months following the Date of
Termination in the case of a Non-Change-of-Control Termination, or (2) for
twenty-four (24) months following the Date of Termination in the case of a
Change-of-Control Termination.
     (d) Notwithstanding any other agreement in existence between the Company
and you, if you are eligible for severance benefits under this Agreement, at the
Date of Termination all shares of restricted stock owned or held by you or
promised to you by the Company shall be immediately vested in you without
further restriction and you shall be treated at that time as the unrestricted
owner of such Company stock, subject to applicable constraints under federal and
state securities laws.
     (ii) No Disability Benefits. The Company shall not be required to continue
to provide disability 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
plans or policies in effect prior to such Date of Termination.

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     (iii) Time and Form of Cash Payments.
     (a) In the case of a Non-Change-of-Control Termination, the cash payments
provided for in Sections 5(i)(a) and 5(i)(b) above shall be paid at regular
payroll intervals beginning forty-five (45) days after your Date of Termination
(subject to the provisions of Section 4 of this Agreement relating to execution
of a release in the form of Exhibit A) or, at the election of the Company, in a
single lump sum payment thirty (30) days after the Date of Termination. If
severance is paid at regular payroll periods, you shall receive the same amount
of base salary each pay-day that you were receiving before termination (plus an
amount equal to the pro rata portion of your target bonus, if not otherwise
included in such pre-termination amount) until the total amount of severance pay
that is due under this agreement has been paid. 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 Sections 5(i)(a) and 5(i)(b) above shall be paid by the Company
in a single lump sum payment as promptly as practicable after the Date of
Termination (subject to the provisions of Section 4 of this Agreement relating
to execution of a release in the Form of Exhibit A 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.
     (iv) Effect of Reemployment. If you are re-employed by the Company or a
subsidiary of the Company after severance payments have been scheduled to be
made but before the final severance payment is made, all remaining severance
payments shall be suspended and shall automatically terminate as of the date of
re-employment. If you have received severance payments in a single lump sum and
are re-employed before the date the final severance payment would have been made
if payments had been made at regular payroll intervals, you will be required to
refund to the Company: (a) that portion of the lump sum payment representing
severance payments you would have received after the date of re-employment minus
(b) an amount equal to any taxes paid or payable on such portion of the lump sum
payment.
     (v) No Mitigation. You shall not be required to mitigate the amount of any
payment provided for in this Section 5 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 5 be reduced by
any compensation earned by you as the result of employment by another employer
after the Date of Termination, or otherwise, except as set forth in
Section 5(iv) hereof.

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     6. 280G Provision.
          (i) In the event that any payment or benefit received or to be
received by you (whether payable pursuant to the terms of this Agreement or
otherwise (collectively, the “Total Payments”)) would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”) or any interest, penalties or additions to tax with respect to such
excise tax (such excise tax, together with any such interest, penalties or
additions to tax, are collectively referred to as the “Excise Tax”), then you
shall be entitled to receive from the Company an additional cash payment (a
“Gross-Up Payment”) within thirty business days of such determination in an
amount such that after payment by you of all taxes (including such interest,
penalties or additions to tax imposed with respect to such taxes), including any
Excise Tax, imposed upon, the Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
Notwithstanding the foregoing provisions of this Section 6(a)(i), if it shall be
determined that you are entitled to the Gross-Up Payment, but that the Parachute
Value of all Payments do not exceed 110 % of the Safe Harbor Amount, then no
Gross-Up Payment shall be made to you and the amounts payable under this
Agreement shall be reduced so that the Parachute Value of all Payments, in the
aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the payments under
Section 5(i)(b), unless you elect an alternative method of reduction, and in any
event shall be made in such a manner as to maximize the Value of all Payments
actually made to you. For purposes of reducing the Payments to the Safe Harbor
Amount, only amounts payable under this Agreement (and no other Payments) shall
be reduced. If the reduction of the amount payable under this Agreement would
not result in a reduction of the Parachute Value of all Payments to the Safe
Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant
to this Section 6(a). All determinations required to be made under this
Section 6, including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by an independent accounting firm retained
by the Company (the “Accounting Firm”), which shall provide detailed supporting
calculations both to the Company and you within a reasonable period of time as
requested by the Company. If the Accounting Firm determines that no Excise Tax
is payable by you, it shall furnish you with an opinion that you have
substantial authority not to report any Excise Tax on your federal income tax
return. For purposes of this Agreement, the following terms have the meanings
set forth below:
“Parachute Value” of a Payment shall mean the present value as of the date of
the change of control for purposes of Section 280G of the Code of the portion of
such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as
determined by the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.
“Payment” shall mean any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for your benefit,
whether paid or payable pursuant to this Agreement or otherwise.

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“Safe Harbor Amount” means 2.99 times your “base amount,” within the meaning of
Section 280G(b)(3) of the Code.
“Value” of a Payment shall mean the economic present value of a Payment as of
the date of the change of control for purposes of Section 280G of the Code, as
determined by the Accounting, Firm using the discount rate required by Section
280G(d)(4) of the Code.
     (ii) Any uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder shall be
resolved in favor of you. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that at a later time there will be a
determination that the Gross-Up Payments made by the Company were less than the
Gross-Up Payments that should have been made by the Company (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that you are required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment, if any, that has occurred and
any such Underpayment shall be promptly paid by the Company to you or for your
benefit. If, after you receive any Gross-Up Payment, you become entitled to
receive any refund with respect to such claim, you shall promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto).
     (iii) Any determination by the Accounting Firm as to the amount of any
Gross-Up Payment, including the amount of any Underpayment, shall be binding
upon the Company and you.
     (iv) Notwithstanding any other provision of this Section 6, the Company
may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for your benefit, all or any
portion of any Gross-Up Payment, and you hereby consent to such withholding.
     7. Conformance with Section 409A of the Code. This Agreement is intended to
satisfy the requirements of Section 409A(a)(2), (3) and (4) of the Code
(including current and future guidance issued by the Department of Treasury or
Internal Revenue Service). To the extent that any provision of this Agreement
fails to satisfy those requirements, the provision shall automatically be
modified in a manner that, in the good-faith opinion of the Company, brings the
provisions into compliance with those requirements while preserving as closely
as possible the original intent of the provision and this Agreement. Such
modifications may include, but are not necessarily limited to, providing that if
you are a “specified employee” under Section 409A(a)(2)(B) of the Code, then any
payment under this Agreement that is treated as deferred compensation under
Section 409A of the Code shall be deferred for six months following termination
of your employment with the Company (without interest or earnings).

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     8. Successors.
     (i) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
     (ii) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees, and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement, to your devisee, legatee or other designee or, if there
is no such designee, to your estate or, if no estate, in accordance with
applicable law.
     (iii) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise to all or substantially all of
the business and/or assets of the Company), by agreement in form and substance
satisfactory to you, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms as you would be entitled
hereunder if you terminated your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, “Company” shall mean the Company and any successor to its business
and/or assets which executes and delivers the agreement provided for in this
Section 7 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
     9. Notice. All notices, requests, demands and all other communications
required or permitted by either party to the other party by this Agreement
(including, without limitation, any Notice of Termination) shall be in writing
and shall be deemed to have been duly given when delivered personally or
received by certified or registered mail, return receipt requested, postage
prepaid, at the address of the other party as follows:

     
If to the Company:
  Imation Corp.
 
  Attention: General Counsel
 
  One Imation Place
 
  Oakdale, Minnesota 55128
 
   
If to you:
   
 
   
 
   
 
   
 
   
 
   

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Either party to this Agreement may change its address for purposes of this
Section 8 by giving fifteen (15) days’ prior written notice to the other party
hereto.
     10. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and the Company. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws of
the State of Minnesota without regard to its conflicts of law principles.
     11. Effect of Agreement; Entire Agreement. This agreement supersedes any
and all other oral or written agreements or policies made relating to the
subject matter hereof and constitutes the entire agreement of the parties
relating to the subject matter hereof.
     12. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
     13. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
     14. Employment. This Agreement does not constitute a contract of employment
or impose on the Company or any subsidiaries of the Company any obligation to
retain you as an employee, to continue your current employment status or to
change any employment policies of the Company or any subsidiary of the Company,
including but not limited to the Company’s Employee Agreement.

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If this letter sets forth our agreement on the subject matter hereof, please
sign and return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.

      IMATION CORP.
 
   
By:
   
 
   
 
  Its:
 
    EXECUTIVE:
 
      (executive name)

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