Document:

OPTION TO PURCHASE REAL ESTATE

 

 

                1.             For and in consideration of the sum

of One Dollar and no/100 ($1.00), the receipt and sufficiency of which is

acknowledged, the undersigned James H. Jibben and Judith A. Jibben,

(“Sellers”), give and grant to Great Plains Ethanol, LLC, a limited

liability company, with an address of P.O. Box 217, Lennox, South Dakota 57039, its

successors and assigns (“Grantee”) for a term of twelve (12) months from the

date of this Option, the exclusive and irrevocable right and option to purchase

the following described real estate, or any portion thereof:

 

A parcel of land,

approximately 5.45 acres in size, located in the

Northeast Quarter (NE) of Section 26, Township 99 North, Range 52 West of the

Fifth P.M., Turner County, South Dakota, together with all easements, rights,

and appurtenances attached thereto (the “Parcel”) Specifically, the Parcel is

the area north of the 50 foot

right-of-way of the South Dakota Central Railroad extending to a line between

the following points; (1) Approximately 569.8 feet north of the Center Section

Post; (2) Approximately 1,289.4 feet east of the Center Section Post

 

The Parcel is depicted in a drawing contained in the attached Exhibit A

and is incorporated hereto,

 

                2.             The purchase price for the Parcel

shall be $2,400.00 per acre, as determined by future survey (not including, for

purposes only of computing the purchase price, any portions of the Parcel which

lie within public highways, rights-of-way, streets, roads and roadways).

 

                3.             Grantee may exercise this

option by sending via certified mail written notice of such exercise to the

following:

 

	

   

  	

   

  	

  James and. Judith Jibben

  
	

   

  	

   

  	

  46285 277th

  Street

  
	

   

  	

   

  	

  Chancellor, SD 51015

  
	

   

  	

   

  	

   

  

within or prior to twelve (12) months from the date of

this option or prior to the expiration of any extended period as Sellers shall

grant. The written notice of exercise shall identify the number of acres that

Grantee or its assignee desires to purchase.

 

                4.             After execution of this agreement

by Sellers, and either before or after the exercise of this option by Grantee,

Grantee may enter upon the Parcel and do and perform all surveying, zoning,

platting, engineering, soil borings and other tests and acts deemed necessary

by Grantee to satisfy Grantee that the Parcel is suitable for the uses and

purposes intended by Grantee. Any such tests and acts shall be at Grantee’s

cost and expense.

 

                5.             If

Grantee fails to exercise this option at any time herein permitted, Sellers

shall retain all sums paid by Grantee to Sellers for this option and any

extension and this agreement shall terminate with neither party having any

further rights or obligations hereunder.

 

                6.             During the option period, Sellers

shall not sell, encumber, or otherwise transfer or dispose of the Parcel to any

individual or entity other than the Grantee.

 

                7.             Grantee’s obligation to purchase

the Parcel after the exercise of the option is subject to the satisfaction, or

written waiver by Grantee of the following conditions precedent:

 

                a.             Sellers’ title to the Parcel must be

good, merchantable and marketable fee simple title, free and clear of any liens

or encumbrances.

 

                b.             The Parcel must be finally and

unconditionally zoned for Grantee’s intended uses and purposes, with all

necessary classifications, variances, permissions, conditional uses and

exceptions required for Grantee’s intended development, improvement and use of

the Parcel. Sellers shall cooperate fully with Grantee and assist Grantee in

obtaining any necessary rezoning, variances or conditional use permits. Grantee

shall be responsible for paying all costs associated with obtaining such

approvals. If any applications for rezoning, conditional use permits or

variances are filed during the term of this option or any extension, this

option shall be automatically extended to a date which is 30 days after such

rezoning, variance or conditional use permit is finally granted and all time

for appeals or a referendum has expired. If such rezoning, conditional use

permit or variance is denied, this option shall terminate.

 

                c.             The Parcel must be surveyed and

platted.

 

 

                8.             Within 15 days following the

receipt of Grantee’s notice of the exercise of the option, Sellers will deliver

to the Grantee for examination a commitment for title insurance issued by a

qualified title insurer. Grantee shall have 15 days following receipt of the

commitment for title insurance to identify and disclose to Sellers any title

defect or encumbrance which is not acceptable to Grantee. Sellers shall then

attempt to resolve any title defect or encumbrance by the closing date. Grantee

or its assignee shall receive on the closing date a policy of title insurance

insuring marketable title in the Grantee as purchaser of the property. Grantee

shall pay the cost of the title insurance.

 

                9.             Sellers shall convey the Parcel to

Grantee in fee simple, free and clear of all liens and encumbrances, by good

and sufficient deed of conveyance, in the usual form of a warranty deed,

subject to all restrictions and easements of record, if any. Sellers shall pay

the real estate transfer fee imposed by SDCL § 43-4-21.

Grantee shall pay the recording fee and all closing fees. Each party shall pay

their respective attorneys’ fees.

 

                10.           Closing shall occur no later than 60

days following the later of (i) the date that Grantee gives notice of exercise

of the option to purchase, (ii) the date that Sellers have corrected any legal

and valid objections to title, (iii) the date that Grantee has obtained a plat

of the Parcel

 

or (iv) the date that Grantee has obtained all final and non-appealable

zoning, variances and conditional use permits identified in paragraph 7(b).

 

                11.           The purchase price shall be paid in

cash at closing.

 

                12.           Sellers shall pay all unpaid real

estate taxes and assessments, if any, for the year 2001 due in 2002 and for

prior years. The real estate taxes and assessments, if any, which are assessed

in 2002 shall paid by Grantee.

 

                13.           Grantee may freely assign its

rights under this option to a third party, without the prior consent of

Sellers.

 

                14.           This Option shall be binding upon and

inure to the benefit of the parties and their respective heirs, personal

representatives, successors and assigns.

 

                15.           This Option shall be executed in

recordable form, and, if Grantee elects, may be recorded at its expense with

the Turner County, South Dakota, Register of Deeds.

 

                16.           This Option shall be governed by the

laws of the State of South Dakota. The parties consent to the jurisdiction of

the courts of the State of South Dakota and agree that any action arising out of

or to enforce this option must be brought and maintained in the circuit court

sitting in Turner County, South Dakota.

 

                17.           Grantee will fence with 4 Barb Fence.

 

Dated this 12th,

day of April, 2002.

	

   

  	

   

  
	

  GREAT PLAINS ETHANOL, LLC

  	

   

  
	

   

  	

   

  
	

  By

  	

  /s/ Darrin Ihnen

  
	

  Its

  	

  President

  
	

   

  	

   

  
	

  /s/

  James H. Jibben

  
	

  James H. Jibben

  
	

   

  	

   

  
	

  /s/

  Judith A. Jibben

  
	

  Judith A. Jibben

  
			

 

 

 

 

 

	

  STATE OF SOUTH DAKOTA

  	

  )

  
	

   

  	

  :

  
	

  COUNTY OF TURNER

  	

  )

  

 

 

On this the 12th day of April,  2002, before

me, the undersigned officer, personally appeared Darrin Ihnen  known to me to

be the President of Great Plains Ethanol, LLC, a limited liability company,

that is described in and that executed the within instrument and acknowledged

to me that such corporation executed the same.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  /s/ Danelle Luden

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Notary Public - South Dakota

  	

   

  

 

 

My Commission Expires: November 7, 2002

 

 

 

 

	

  STATE OF SOUTH DAKOTA

  	

  )

  
	

   

  	

  :SS

  
	

  COUNTY OF TURNER

  	

  )

  

 

On this the 12th day of April, 2002, before me personally appeared

James H. Jibben and Judith A. Jibben, known to me to be the persons who are described in, and who

executed the within instrument and acknowledged to me that they executed the same.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  /s/ Danelle Luden

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Notary Public - South Dakota

  	

   

  

 

 

My Commission Expires: November 7, 2002

 

EXHIBIT A

 

[DIAGRAM OF

OPTIONED PARCEL]

 

 

AMENDMENT TO

OPTION TO PURCHASE

REAL ESTATE

 

                This

Amendment to Option to Purchase Real Estate is made on this 30th day

of May, 2002, by and between James H. Jibben and Judith A. Jibben (“Jibben”)

and Great Plains Ethanol, LLC, a South Dakota limited liability company (“Great

Plains.”)

 

RECITALS:

 

A.                                   In accordance with the terms and conditions of an Option to

Purchase Real Estate dated the 12th day of April, 2002 (the

“Option”), Jibbens granted to Great Plains an option to purchase the following

described real property:

 

                                                A parcel of land, approximately 5.45 acres in size, located in the

Northeast Quarter (NE1⁄4) of Section 26, Township 99 North, Range 52 West of the

Fifth P.M., Turner County, South Dakota, together with all easements, rights,

and appurtenances attached thereto (the “Parcel”).  Specifically, the Parcel is the area north of the 50 ft.

right-of-way of the South Dakota Central Railroad extending to a line between

the following points: (1) approximately 569.8 ft. north of the center section

post; and (2) approximately 1,289.4 ft. east of the center section post.

 

B.                                     Under the terms of the Option, the purchase price for the Parcel

is $2,400.00 per acre to be paid in cash at the time of closing.

 

C.                                     For the benefit of Jibbens, the parties now desire to exchange the

Parcel for another piece of real property identical in acreage to the Parcel,

which will allow Jibbens to execute a tax-free, like-kind exchange pursuant to

Internal Revenue Code § 1031, instead of receiving cash at closing.

 

                NOW,

THEREFORE, the parties agree as follows:

 

1.                                       Upon the exercise of the Option, Great Plains shall convey to

Jibbens the following described real property as payment for the Parcel:

 

                                                A parcel of land approximately 5.45 acres in size, located in the

Southeast Quarter (SE1⁄4) of Section 26, Township 99 North, Range 52 West of the

Fifth P.M., Turner County, South Dakota, together with all easements, rights

and appurtenances attached thereto (the “Exchange Parcel”).  Specifically, the Exchange Parcel is located

within a portion of the area north of the 50 ft. right-of-way of the South Dakota

Central Railroad which intersects the quarter.

 

                                                The Exchange Parcel is depicted in a drawing contained in the

attached Exhibit A and is incorporated herein by reference.

 

	

  2.

  	

  Great Plains shall convey to Jibbens the

  Exchange Parcel in fee simple, free and clear of all liens and encumbrances,

  by good and sufficient deed of conveyance, in the usual form of a warranty

  deed, subject to all restrictions and easements of record, if any.

  
	

   

  	

   

  
	

  3.

  	

  All other terms and conditions of the

  Option shall remain in full force and effect except as modified in this

  Amendment.

  

 

 

	

  JIBBENS:

  
	

   

  
	

  /s/ James H. Jibben

  
	

  James H. Jibben

  
	

   

  
	

  /s/ Judith A. Jibben

  
	

  Judith A. Jibben

  
	

   

  
	

  GREAT PLAINS ETHANOL, LLC

  
	

   

  
	

  By:

  	

  /s/ Brian Minish

  
	

   

  
	

  Its:

  	

  CEO

  

 

 

	

  STATE OF SOUTH DAKOTA

  	

  )

  
	

   

  	

  ) :ss

  
	

  COUNTY OF MINNEHAHA

  	

  )

  

 

                On

this the 5th day of June, 2002, before me, the undersigned officer,

personally appeared Brian Minish, known to me to be the CEO of Great Plains

Ethanol, LLC, a limited liability company, that is described in and that

executed the within instrument and acknowledged to me that such corporation

executed the same.

 

                IN

WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  /s/ James M. Wiederrich

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Notary Public - South Dakota

  	

   

  

 

 

My Commission Expires: June 12, 2004

 

 

	

  STATE OF SOUTH DAKOTA

  	

  )

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ) :ss

  	

   

  	

   

  	

   

  	

   

  
	

  COUNTY OF TURNER

  	

  )

  	

   

  	

   

  	

   

  	

   

  

 

 

 

                On

this the 30th day of May, 2002, before me personally appeared James

H. Jibben and Judith A. Jibben, known to me to be the persons who are described

in, and who executed the within instrument and acknowledged to me that they

executed the same.

 

                IN

WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  /s/ M.J. Sommervold

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Notary Public - South Dakota

  	

   

  

 

 

 

My Commission Expires:  October 27, 2008

SECOND AMENDMENT TO

OPTION

TO PURCHASE REAL

ESTATE

 

 

                This

Second Amendment to Option to Purchase Real Estate is made on this 19th

day of June, 2002, by and between James H. Jibben and Judith A. Jibben

(“Jibbens”) and Great Plains Ethanol, LLC, a South Dakota limited liability

company (“Great Plains”).

 

 

WITNESSETH:

 

                WHEREAS,

in accordance with the terms and conditions of an Option to Purchase Real

Estate dated the 12th day of April, 2002 (the “Option”), Jibbens

granted to Great Plains an option to purchase the following described real

property:

 

Tract One (1) in the Northeast

Quarter (NE1⁄4) of Section 26, Township 99 North, Range 52 West of the Fifth

P.M., Turner County, South Dakota, together with all easements, rights and

appurtenances attached thereto (the “Jibben Parcel”).

 

                WHEREAS,

the parties agreed to modify the terms of the Option by entering into an

Amendment to Option to Purchase Real Estate dated the 30th day of May, 2002,

(the “Amendment”), which granted Great Plains the right to exchange the

following described property for the Jibben Parcel, instead of paying cash at

closing:

 

Tract Two (2) in the Southeast

Quarter (SE1⁄4) of Section 26, Township 99 North, Range 52 West of the Fifth

P.M., Turner County, South Dakota, together with all easements, rights and

appurtenances attached thereto (the “Great Plains Parcel”).

 

                WHEREAS,

for the benefit of Jibbens, the parties have agreed to modify the terms of both

the Option and the Amendment in accordance with the terms provided below;

 

                NOW,

THEREFORE, it is agreed as follows:

 

1.                                       Upon the exercise of the Option, Great Plains agrees to install a

fence which extends along the entire south border of the Great Plains Parcel in

addition to the fence that Great Plains shall install along the north border of

the Jibben Parcel.  Construction of such

fence shall be completed by December 31, 2002, and Great Plains shall be

responsible for all costs for materials and installation. The specifications of

the fence shall be mutually agreed upon by the parties prior to closing.

 

2.                                       All of the provisions of the Option and the Amendment shall remain

in full force and effect, except as modified in this Second Amendment.

 

	

  JIBBENS:

  
	

   

  
	

  /s/ James H. Jibben

  
	

  James H. Jibben

  
	

   

  
	

  /s/ Judith A. Jibben

  
	

  Judith A. Jibben

  
	

   

  
	

  GREAT PLAINS ETHANOL, LLC

  
	

   

  
	

  By:

  	

  /s/ Brian Minish

  
	

   

  
	

  Its:

  	

  CEOExhibit 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.

 

 

(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.

 

2

 

(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.

 

3

 

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”).

 

4

 

(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).

 

 

5

 

 

(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.

 

6

 

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.

 

7

 

(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

 

8

 

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.

 

9

 

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.

 

10

 

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.

 

11

 

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.

 

12

 

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%

 

13

 

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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