exv10w2



 






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.



 









 






     (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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