Document:

EXHIBIT 10.2

 

LONG TERM INCENTIVE BONUS AGREEMENT

 

THIS LONG TERM INCENTIVE
AGREEMENT (“Agreement”) is made by and between James R. Stewart, a Minnesota resident (“Employee”) and
Rimage Corporation, a Minnesota corporation (the “Company”), and is dated as of February 21, 2013.

 

WHEREAS, the Company has
recognized Employee as a key contributor to the success of the Company and the Company wishes to provide Employee with an incentive
to continue employment with the Company through July 1, 2015, as it continues to work through a transformation that will lead the
Company towards further success; and

 

WHEREAS, the Company agrees
to provide Employee a cash bonus (“LTI Bonus”) according to the terms and conditions hereinafter set forth in return
for Employee’s continued employment;

 

NOW, THEREFORE, in consideration
of the premises and the mutual promises hereinafter contained, the parties hereto agree as follows:

 

1.             LTI Bonus

 

1.1        Plan Controls. This
Agreement sets forth the terms and conditions of an award of a Stock Incentive consisting of cash to Employee under the Section
14 of the Rimage Corporation Second Amended and Restated 2007 Stock Incentive Plan (the “Plan”) that is intended to
qualify for the Performance-Based Exception. Capitalized terms used herein and not defined shall have the meaning given such terms
in the Plan; provided that the term “Cause” shall have the meaning given in that certain Amended and
Restated Letter Agreement dated February 21, 2013 between the Company and Employee as may be further amended or amended and restated
(the “Letter Agreement”).

 

1.2        LTI Bonus Period.
The Employee will be eligible for an LTI Bonus in the amount of $590,000 at the target level, of which 50% is based on time (the
“Time Portion”) and of which 50% is based on performance (“Performance Portion”) as provided in this Agreement
with the actual amount of the Performance Portion determined by the Committee based upon performance measures approved by the Committee
for the two twelve month periods ending December 31, 2013 and 2014 (the “Performance Periods”).

 

1.3        Payment of Time
Portion. The Time Portion will be paid in lump sum installments in accordance with the following schedule, no later than the
first regular payroll date after the installment date, but only if Employee is employed by the Company on the installment date
set forth below and has been continuously so employed through such date:

 

	Installment Date	Percentage payable before taxes and other withholdings
	March 1, 2014	25% of Time Portion
	March 1, 2015	25% of Time Portion
	July 1, 2015	50% of Time Portion

 

 

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1.4        Payment of Performance
Portion. The Committee shall determine the achievement of the performance measures for each Performance Period and the corresponding
Performance Portion, if any, earned by Employee with respect to such Performance Period. The Performance Portion will be paid in
lump sum installments in accordance with the following schedule, no later than the first regular payroll date following the installment
date, but only if Employee is employed by the Company on the installment date set forth below and has been continuously so employed
through such date:

 

	Installment Date	Percentage payable before taxes/other withholdings
	March 1, 2014	25% of Performance Portion multiplied by the 2013 matrix performance factor
	March 1, 2015	25% of Performance Portion multiplied by the 2014 matrix performance factor
	July 1, 2015	50% of Performance Portion multiplied by the weighted average of 2013 and 2014 matrix performance factors

 

1.5        Upon Termination
without Cause.

 

(a)        Notwithstanding
anything in Sections 1.3 and 1.4 to the contrary, if Employee’s employment is terminated by the Company without Cause, subject
to the execution and delivery to the Company of a general release and continued compliance with the Nondisclosure and Noncompetition
Agreement with the Company as described in Section 1(c) of the Letter Agreement, the Company will pay Employee an amount equal
to:

 

(i)        the full
amount of the Time Portion; and

 

(ii)        the Performance
Portion based upon the achievement of performance measures, as determined by the Committee, for each year of the Performance Periods
completed prior to the termination or if any year of the Performance Periods is not completed, assuming the matrix performance
factors were 1.0 for that year.

 

(b)        The amounts payable
under Section 1.5(a) shall be paid in a lump sum no later than the first regular payroll date following the date of termination,
subject to applicable tax withholding.

 

(c)        For purposes of
this Agreement, “termination of employment” shall be interpreted consistent with the term “separation from service”
within the meaning of Treas. Reg. §1.409A-1(h).

 

(d)        If Employee’s
employment is terminated by the Company without Cause on the date of a Change in Control, Employee shall be entitled to the amounts
under Section 1.6 in lieu of this Section 1.5. Upon payment to Employee of amounts under either Section 1.5 or Section 1.6, Employee
shall have no further rights to the payment of the LTI Bonus and in no case shall Employee be entitled to amounts under both Section
1.5 and Section 1.6.

 

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1.6        Upon Change In
Control.

 

(a)        Notwithstanding
anything in Sections 1.3 and 1.4 to the contrary, if a Change in Control shall occur while Employee is employed by the Company,
the Company shall pay Employee an amount equal to:

 

(i)        the full
amount of the Time Portion; and

 

(ii)        the Performance
Portion based upon the achievement of performance measures during the Performance Periods, whether or not completed, as determined
by the Committee.

 

(b)        The amounts payable
under Section 1.6(a) shall be paid in a lump sum no later than the first regular payroll date following the date of the Change
in Control, subject to applicable tax withholding.

 

(c)        The payments received
by Employee or to be received by Employee under Section 1.6(a) of this Agreement shall be subject to Section 2(e) of the Letter
Agreement to the extent constituting a “parachute payment” under Section 280G of the Code.

 

2.             Closed Window. Employee agrees
that at any time during the Performance Periods during which achievement of a stock price performance measure is being determined,
Employee shall be prohibited from trading in securities of the Company under the Company’s Policy
Regarding Buying and Selling Securities and such period of time shall be a closed window period as to Employee.

 

3.             Miscellaneous.

 

3.1        Letter Agreement
Provisions. This Agreement shall be subject to the provisions of the Letter Agreement relating to arbitration (Section 3),
successors (Section 5), and delay for specific employees (Section 7), each of which are incorporated into this Agreement.

 

3.2        Section 409A.
Notwithstanding the foregoing, it is the intention of the parties that this Agreement be exempt from
Code §409A to the greatest extent possible. Accordingly, all provisions herein shall be construed and interpreted consistent
with that intent, but that, to the extent any payment constitutes nonqualified deferred compensation, the Company shall amend any
such provision pertaining to such payment to comply with Code §409A and the regulations thereunder, in the least restrictive
manner necessary without any diminution in the value of the payments to Employee.

 

3.3        Governing Law.
This Agreement shall be construed and enforced in accordance with the internal laws of the State of Minnesota, without regard to
conflicts of law provisions.

 

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3.4        Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which, when taken together, shall constitute one instrument.

 

IN WITNESS WHEREOF,
the parties have duly executed this Agreement as of the date and year first above written.

 

 

	COMPANY:	RIMAGE CORPORATION	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/  Sherman L. Black	 
	 	Its: 	Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	EMPLOYEE:	/s/  James R. Stewart	 
	 	James R. Stewart	 

 

 

 

 

 

 

 

4EXHIBIT 10.3

 

[Form of Amended and Restated Severance/Change
in Control

Letter Agreement between the Company and its executive officers]

 

February 21, 2013

 

[Name of Executive Officer]

[Address of Executive Officer]

[Address of Executive Officer]

 

Dear [Name of Executive Officer]:

 

The purpose of this Letter Agreement is to set forth our agreement
in regard to your severance arrangement. Although your employment is “at will” and may be terminated by you or Rimage
Corporation (“Rimage”) at any time for any reason, Rimage has agreed to provide you with a particular severance pay
benefit in the event Rimage terminates your employment without Cause (as defined below) or, for the specified periods identified
below following the date of this Letter Agreement or following a Change in Control (as defined below), you terminate your employment
for Good Reason (as defined below). Terms not otherwise defined in this letter (the “Letter Agreement”) shall have
the meaning given such terms on Schedule 1, which is incorporated herein by reference. Rimage’s obligation to you under
this Letter Agreement is, among the other requirements set forth below, subject to the condition that you execute a Nondisclosure
and Noncompetition Agreement in the form attached as Exhibit A, which is incorporated herein by reference.

 

Specifically, we have agreed as follows:

 

		1.	Severance.

 

		(a)	If your employment is terminated by Rimage without Cause (other than during the twelve (12) month period following a Change
in Control, including the date of the Change in Control), subject to the condition stated in Section 1(c), Rimage will:

		(i)	continue to pay your base salary in accordance with Rimage’s regular payroll practices
for a period of twelve (12) months thereafter subject to applicable tax withholding; 

		(ii)	pay you an amount equal to the average of the annual short-term incentive bonus amounts you received with respect to the three
complete calendar years prior to the date of your termination, such bonus payment, subject to applicable tax withholding, to be
made in equal installments consistent with Rimage’s regular payroll practices over a period of twelve (12) months from the
date of your termination; and

 

    	 

    	 

    

		(iii)	if you are eligible for and elect COBRA or state continuation of the Rimage health, dental and group life insurance benefits,
Rimage shall pay the portion of such COBRA premium that it pays for active employees until the earlier of: (A) twelve (12) months
from the date COBRA coverage begins; or (B) the date COBRA coverage otherwise terminates. You shall pay the remaining portion of
the premiums for such benefits during such period and, if applicable, the full premium thereafter. Payment of the COBRA premium
shall be made contemporaneous with the date the premiums are incurred and may not be exchanged for any other benefit or cash payment.
Payment of premiums in one year will not affect the payment of premiums in any other year. In the event the payment of premiums
under this paragraph would result in a discriminatory benefit under the Patient Protection and Affordable Care Act (the “Act”),
the amount of the payment shall be treated as taxable income to you, or otherwise revised to comply with the Act, preserving, to
the greatest extent possible, the economic benefit provided by such premium payment.

		(b)	If you resign (other than for Good Reason during the twelve (12) month period following a Change in Control, including the
date of the Change in Control), if Rimage terminates your employment for Cause or if your employment terminates as a result of
your death or disability, you shall be entitled to receive your base salary accrued but unpaid as of the date of termination, but
shall not be entitled to receive any salary continuation benefit thereafter.

		(c)	In case of termination without Cause, you shall be entitled to receive the amounts due you under Section 1(a) only upon
your execution and delivery to Rimage of a general release with respect to any and all claims against Rimage and its officers,
directors, employees, agents and shareholders, acceptable in form and substance to Rimage in all respects, and provided you continue
to comply with the terms of the Nondisclosure and Noncompetition Agreement with Rimage. Rimage will deliver the release to you
no later than 5 business days following your termination of employment. If you do not execute the release within the time period
set forth in the release, you will be deemed to have waived any right to payment under this Section 1. Each installment shall be
considered a separate payment for purposes of Code §409A. Any installment otherwise due prior to the execution of the release
and expiration of the right to rescind will be paid to you as part of the first payment, which will occur 60 days after your termination
of employment if the above conditions are satisfied.

		(d)	For purposes of this Agreement, “termination of employment” shall be interpreted consistent with the term “separation
from service” within the meaning of Treas. Reg. §1.409A-1(h), and for purposes of Code §409A, each payment shall
be considered a separate payment.

 

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		2.	Change in Control.

 

		(a)	If a Change in Control shall occur and if on the date of a Change in Control or within twelve
(12) months following a Change in Control, your employment is terminated by Rimage without Cause or by you for Good Reason, Rimage
shall pay you a severance payment in cash in a single sum sixty (60) days of the date of termination equal to 100% of the sum of
(i) your annual base salary, and (ii) your Target Bonus in effect on such date (without giving effect to any reduction that results
in your termination for Good Reason). For purposes of this Letter Agreement, “Target Bonus” shall mean the amount payable
in cash under all short-term annual incentive compensation plans of Rimage in which you participate, waiving any condition precedent
to the payment to you and assuming that the performance goals for the period were achieved at the 100% level. Payment shall be
made sixty (60) days from the date of termination provided that the release required under Section 2(f) has become effective during
such sixty (60)-day period following any applicable revocation period.

 

		(b)	If you are eligible for and elect COBRA or state continuation of the Rimage health, dental and
group life insurance benefits, Rimage shall pay the portion of such COBRA premium that it pays for active employees until the earlier
of: (A) twelve (12) months from the date COBRA coverage begins; or (B) the date COBRA coverage otherwise terminates. You shall
pay the remaining portion of the premiums for such benefits during such period. Payment of the COBRA premium shall be made contemporaneous
with the date the premiums are incurred and may not be exchanged for any other benefit or cash payment. Payment of premiums in
one year will not affect the payment of premiums in any other year. In the event the payment of premiums under this paragraph would
result in a discriminatory benefit under the Act, the amount of the payment shall be treated as taxable income to you, or otherwise
revised to comply with the Act, preserving, to the greatest extent possible, the economic benefit provided by such premium payment.

 

		(c)	Immediately prior to a Change in Control, you shall vest in all stock options that have been
granted to you, subject to the provisions in Rimage’s Stock Option Plan. Approval of this Agreement by the Compensation Committee
shall be deemed approval of the vesting of options as provided in the immediately preceding sentence for all purposes under Rimage’s
Stock Option Plan. 

 

		(d)	The payments under this paragraph shall be in lieu of and offset the amount of any severance
to which you are entitled under paragraph 1(a) above. Amounts paid under this paragraph 2 shall be subject to applicable tax withholding.

 

 

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		(e)	In the event the vesting of options, together with all other payments and the value of any benefit
received or to be received by you would result in all or a portion of such amount being subject to excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended, (the “Code”) then the amount Rimage shall
pay you shall be either (A) the full amount of such payments and the value of benefits received or to be received by you notwithstanding
the provisions of this Section 2(e) (the “Full Payment”) or (B) such lesser amount as determined by Rimage in accordance
with this Section 2(e) that would result in no portion of the payment being subject to excise tax under Section 4999 of the Code
(the “Excise Tax”), whichever of the foregoing amounts, taking into account the applicable Federal, state, and local
employment taxes, income taxes, and the Excise Tax, results in the receipt by you, on an after-tax basis, of the greatest amount
of the payment notwithstanding that all or some portion of the payment may be subject to the Excise Tax. Rimage shall determine
the order and amounts by which Full Payment is reduced. All determinations required to be made under this Section 2(e) shall be
made by a nationally recognized accounting firm that is Rimage’s outside auditor immediately prior to the event triggering
the payments that are subject to the Excise Tax (the “Accounting Firm”). Rimage shall cause the Accounting Firm to
provide detailed supporting calculations of its determinations to Rimage and you. Notice must be given to the Accounting Firm within
fifteen (15) business days after an event entitling you to any portion of the Full Payment and the Accounting Firm’s determination
must be made within thirty (30) days of such notice. All fees and expenses of the Accounting Firm shall be borne solely by Rimage.
The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).
The determination by the Accounting Firm shall be final and binding on you and Rimage.

 

		(f)	Notwithstanding anything herein to the contrary, you shall be entitled to receive the amounts
due you under this Section 2 only upon your execution and delivery to Rimage of a general release with respect to any and
all claims against Rimage and its officers, directors, employees, agents and shareholders, acceptable in form and substance to
Rimage in all respects, and provided you continue to comply with the terms of the Nondisclosure and Noncompetition Agreement with
Rimage. Rimage will deliver the release to you no later than 5 business days following your termination of employment. If you do
not execute the release within the time period set forth in the release, you will be deemed to have waived any right to payment
under this Section 2. Each installment shall be considered a separate payment for purposes of Code §409A. 

 

		3.	Arbitration. All disputes or claims arising out of or in any way related to this Letter Agreement, including the making
of this Letter Agreement, shall be submitted to and determined by final and binding arbitration under the American Arbitration
Association Rules for Resolution of Employment Disputes. Arbitration proceedings may be initiated by either of us upon notice to
the other and to the American Arbitration Association, and shall be conducted by one arbitrator in Minneapolis, Minnesota who has
experience in employment matters. Unless we agree to have the person to serve as arbitrator within thirty (30) days of delivery
of the list of proposed arbitrators by the American Arbitration Association, then, at the request of either of us, the single arbitrator
shall be selected at the discretion of the American Arbitration Association. The arbitrator shall provide a reasoned decision and
may award any remedy available at law or equity, including reasonable attorneys’ fees to the prevailing party. Rimage shall
pay the costs of the arbitrator. The decision of the arbitrator shall be enforceable in any court of competent jurisdiction.

 

 

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		4.	Entire Agreement. This Letter Agreement constitutes our entire agreement and supersedes all prior discussions, understandings
and agreements with respect to the severance benefits which Rimage has agreed to provide to you, including the Amended and Restated
Letter Agreement dated December 28, 2012. This Letter Agreement shall be governed and construed by the laws of the State of Minnesota
and may be amended only in writing signed by both of us.

 

		5.	Successors. This Letter Agreement shall not be assignable, in whole or in part, by you. This Letter Agreement shall
be binding upon and inure to the benefit of Rimage and its successors and assigns and upon any person acquiring, by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the assets and business of Rimage, and the successor shall be substituted
for Rimage under this Letter Agreement.

 

		6.	Amendment and Termination. Rimage reserves the authority, without your consent, to terminate or amend this Letter Agreement
at any time upon at least twelve months’ written notice specifying the date of termination or amendment; provided, however,
that if a Change in Control occurs during the term of this Letter Agreement, no termination or amendment shall be effective earlier
than the second anniversary of that Change in Control. Notwithstanding the foregoing, it is the intention of the parties that this
Agreement be exempt from Code §409A as separation pay to the greatest extent possible. Accordingly, all provisions herein
shall be construed and interpreted consistent with that intent, but that, to the extent any payment constitutes nonqualified deferred
compensation, Rimage shall amend any such provision pertaining to such payment to comply with Code §409A and the regulations
thereunder, in the least restrictive manner necessary without any diminution in the value of the payments to you.

 

		7.	Delay for Specified Employees. Notwithstanding the foregoing, if on the date of your “separation from service”
(within the meaning of Treas. Reg. §1.409A-1(h)), you are a “specified employee” within the meaning of Treas.
Reg. §1.409-1(i), then payment of any amount under this Agreement that constitutes nonqualified deferred compensation shall
be delayed until the earlier of (i) the first day of the seventh month following your separation from service or the first date
on which such payment would not be non-deductible as a result of Section 162(m) of the Code, whichever is later; or (ii) your death
and in the event any such payment is so delayed, the amount of the first payment shall be increased for interest earned on the
delayed payment based upon interest for the period of delay, compounded annually, equal to the prime rate (as published in the
Wall Street Journal) in effect as of the date the payment should otherwise have been provided.

 

 

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If this Letter Agreement accurately sets forth our agreement and
understanding in regard to these matters, will you please sign this Letter Agreement where indicated below and return the executed
letter to me for our files. A separate copy is enclosed for your records.

 

RIMAGE CORPORATION

 

 

	By: 	 	 
	Its:	 	 

 

 

READ AND AGREED:

 

	 	 

[Name of Executive Officer]

 

Dated as of February 21, 2013

 

 

 

 

 

 

 

 

 

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SCHEDULE 1

 

 

Definition of “Cause”:

 

		1.	The failure by you to use your best efforts to perform the material duties and responsibilities of your position or to comply
with any material policy or directive Rimage has in effect from time to time, provided you shall have received notice of such failure
and have failed to cure the same within thirty days of such notice.

		2.	Any act on your part which is harmful to the reputation, financial condition, business or business relationships of Rimage,
including, but not limited to, conduct which is inconsistent with federal or state law respecting harassment of, or discrimination
against, any Rimage employee or harmful to your reputation or business relationships.

		3.	A material breach of your fiduciary responsibilities to Rimage, such as embezzlement or misappropriation of Rimage funds, business
opportunities or properties, or to any customer, vendor, agent or employee of Rimage.

		4.	Your conviction of, or guilty plea or nolo contendere plea to a felony or any crime involving moral turpitude, fraud
or misrepresentation.

		5.	A material breach of your Nondisclosure and Noncompetition Agreement with Rimage.

Definition of “Change in Control”:

 

Change in Control of Rimage shall mean a change in control which
would be required to be reported in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), whether or not Rimage is then subject to such reporting requirement, including without
limitation, if:

 

		(i)	any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of Rimage representing 20%
or more of the combined voting power of Rimage’s then outstanding securities (other than an entity owned 50% or greater by
Rimage or an employee pension plan for the benefit of the employees of Rimage);

 

		(ii)	there ceases to be a majority of the Board of Directors comprised of (A) individuals who, on the date of this Letter Agreement,
constituted the Board of Directors of Rimage; and (B) any new director who subsequently was elected or nominated for election by
a majority of the directors who held such office prior to a Change in Control; or

 

		(iii)	Rimage disposes of at least 75% of its assets, other than (X) to an entity owned 50% or greater by Rimage or any of its subsidiaries,
or to an entity in which at least 50% of the voting equity securities are owned by the shareholders of Rimage immediately prior
to the disposition in substantially the same percentage or (Y) as a result of a bankruptcy proceeding, dissolution or liquidation
of Rimage.

 

 

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Definition of “Good Reason”:

 

Good Reason for the twelve month period following a Change in Control
shall mean, without your express written consent, any of the following:

 

		(i)	a material diminution of your authority, duties or responsibilities with respect to your position immediately prior to the
Change in Control, or

 

		(ii)	a material reduction in your base compensation as in effect immediately prior to the Change in Control;

 

		(iii)	a material reduction in your opportunity to earn a cash bonus under the annual short-term
incentive compensation plan of Rimage in which you participate as in effect immediately prior to the
Change in Control (for the avoidance of doubt, specifically excluding any reduction in your opportunity to earn a cash bonus under
any long-term incentive compensation plan of Rimage in which you participate);

 

		(iv)	a material reduction in the authority of the person to whom you report (or a change in your reporting directly to the Board
of Directors, if applicable);

 

		(v)	a material change in the geographic location at which you must perform services for Rimage; and

 

		(vi)	any other action or inaction that constitutes a material violation of this Agreement by Rimage;

 

provided that no such termination for Good Reason shall be effective
unless: (A) you provide written notice to the Chair of the Board of Directors of the existence of a condition specified in paragraphs
(i) through (vi) above within 90 days of the initial existence of the condition; (B) Rimage does not remedy such condition within
30 days of the date of such notice; and (C) you terminate your employment within 90 days following the last day of the remedial
period described above.

 

 

 

8

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