Document:

Fourth Amendment to Credit Agreement and Consent

FINAL

FOURTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT AND 
FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY
This FOURTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY (this “Amendment”), dated as of April 12, 2013, among IMATION CORP., a Delaware corporation (“Imation”), IMATION ENTERPRISES CORP., a Delaware corporation (“Enterprises”) (each of Imation and Enterprises being referred to herein as a “US Borrower” and together as the “US Borrowers”), IMATION EUROPE B.V., a company organized under the laws of the Netherlands with a corporate seat in Amsterdam, the Netherlands (the “European Borrower” and together with the US Borrowers, each a “Borrower” and collectively, the “Borrowers”), each lender from time to time party to the Credit Agreement referred to below (each, a “Lender”, and collectively, the “Lenders”), and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) and L/C Issuer.
RECITALS
A.    The Borrowers, the Lenders, and the Administrative Agent are party to the Amended and Restated Credit Agreement dated as of August 3, 2010 (as amended by the First Amendment dated as of June 28, 2011, the Second Amendment and Consent dated as of December 29, 2011, the Third Amendment dated as of May 18, 2012, and this Amendment, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Administrative Agent and the Lenders have extended certain credit facilities to the Borrowers.
B.    The US Borrowers and certain of their respective Subsidiaries have executed the Amended and Restated Guaranty dated as of August 3, 2010 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”), pursuant to which the Guarantors (as defined therein) have guaranteed, to the Guaranteed Parties (as defined therein) the payment and performance of the Obligations.
C.    The Borrowers have requested that the Administrative Agent and the Lenders (i) consent to the Memorex Divestiture (as defined below) on terms and conditions set forth in an asset purchase agreement delivered to the Administrative Agent on or prior to the Effective Date (the “Asset Purchase Agreement”) to be entered into by Imation and its Affiliates (as defined in the Asset Purchase Agreement, and together with Imation, the “Seller”) and (ii) agree to certain amendments with respect to the Credit Agreement and the Guaranty, and, subject to the terms and conditions set forth herein, the Administrative Agent and each of the Lenders party hereto have agreed to grant such requests of the Borrowers.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.Defined Terms.  Unless otherwise defined herein, capitalized terms used herein (including, without limitation, in the introductory paragraph and the recitals hereto) shall have the meanings assigned to such terms in the Credit Agreement or the Guaranty, as applicable (in each case, as amended by this Amendment).  “Amendment Documents” means this Amendment, the Credit Agreement (as amended by this Amendment), the Guarantor Consent, the Guaranty (as amended by this Amendment) 

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and each certificate and other document executed and delivered by the Borrowers or any Guarantor pursuant to Section 5 hereof.

2.Interpretation.  The rules of interpretation set forth in Sections 1.02 - 1.10 of the Credit Agreement shall be applicable to this Amendment and are incorporated herein by this reference.

3.Consent.  Subject to the terms and conditions hereof, the Lenders party hereto consent to the Disposition by the Seller of certain assets related to the Memorex brand consumer electronics business on the terms and conditions set forth in the Asset Purchase Agreement (the “Memorex Divesture”); provided that, the aggregate amount of cash and Cash Equivalents received by the Loan Parties as consideration for the Memorex Divesture shall be not less than $12,500,000.  The Memorex Divesture shall not be included in calculations of the aggregate amount of Dispositions made pursuant to Section 7.05(k) of the Credit Agreement.

4.Credit Agreement Amendments.  The Credit Agreement is hereby amended as follows:
(i)The definition of “Bank Product” is hereby amended by (x) inserting in the introductory clause the words “(and in the cases of clauses (a) and (c) below, to any Subsidiary thereof)” immediately following the words “products, services or facilities” and inserting in clause (i) the words “(or Subsidiary thereof, if applicable)” immediately following the words “Bank Product Provider and Loan Party” and (y) deleting in clause (i) the words “Third Amendment”.

(ii)The definition of “Bank Product Debt” is hereby amended by inserting (x) in the first sentence the words “(or Subsidiary thereof, if applicable)” immediately following the words “of a Loan Party” and (y) in the second sentence the words “(or Subsidiary thereof, if applicable)” immediately following the words “and the Loan Party”.

(iii)The definition of “European Obligations” is hereby amended by inserting the words “(including all advances to, and debts, liabilities, obligations, covenants and duties of, any Subsidiary of the European Borrower constituting Bank Product Debt)” immediately following the words “or Bank Product Debt”.

(iv)The definition of “US Obligations” is hereby amended by inserting the words “(including all advances to, and debts, liabilities, obligations, covenants and duties of, any Subsidiary of any US Loan Party constituting Bank Product Debt)” immediately following the words “or Bank Product Debt”.

(v)Section 8.03(a) of the Credit Agreement is hereby amended by inserting (x) in clause Seventh thereof the words “extended to any Loan Party” immediately following the words “to payment of other Bank Product Debt” and (y) in clause Tenth thereof the words “extended to any Loan Party” immediately following the words “to payment of other Bank Product Debt”.

(vi)Section 8.03(a) of the Credit Agreement is hereby amended by inserting new clauses Thirteenth and Fourteenth immediately following clause Twelfth and renumbering the existing clauses Thirteenth and Fourteenth to read Fifteenth and Sixteenth, respectively, such new clauses Thirteenth and Fourteenth to read as follows:
“Thirteenth, to payment of other Bank Product Debt extended to any Subsidiary of a Loan Party constituting US Obligations other than US Obligations due and owing to Defaulting Lenders;

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Fourteenth, to payment of other Bank Product Debt extended to any Subsidiary of a Loan Party constituting European Obligations other than European Obligations due and owing to Defaulting Lenders;”
(vii)Section 8.03(b) of the Credit Agreement is hereby amended by inserting in clause Seventh thereof the words “extended to any Loan Party” immediately following the words “to payment of other Bank Product Debt”.

(viii)Section 8.03(b) of the Credit Agreement is hereby amended by inserting new clause Ninth immediately following clause Eighth and renumbering existing clause Ninth to read Tenth, and such new clause Ninth to read as follows:

“Ninth, to payment of other Bank Product Debt extended to any Subsidiary of a Loan Party constituting European Obligations other than European Obligations due and owing to Defaulting Lenders;”
Each of the Loan Parties acknowledges and agrees that its obligations under the Loan Documents are, effective as of the Effective Date, modified as necessary to accommodate the amendment of the Credit Agreement pursuant hereto.
5.Amended and Restated Guaranty Amendment.  The Guaranty is hereby amended by (x) in Section 2(a)(i), deleting the words “and performance of the” and inserting in lieu thereof the words “and performance of the US Obligations, including, without limitation, the” and (y) in Section 2(a)(ii), deleting the words “and performance of the” and inserting in lieu thereof the words “and performance of the European Obligations, including, without limitation, the”.

6.Conditions to Effectiveness.  Upon the satisfaction of each of the following conditions, this Amendment shall be deemed to be effective (the date such conditions are satisfied, the “Effective Date”):

(a)the Administrative Agent shall have received counterparts of this Amendment executed by the Administrative Agent, the Lenders and the Borrowers;

(b)the Administrative Agent shall have received counterparts of the Guarantor Consent (substantially the form attached hereto as Exhibit A) executed by each Guarantor;

(c)the Administrative Agent shall have received a copy of the Asset Purchase Agreement, substantially in the form to be executed by the Seller;

(d)the Administrative Agent shall have received a certificate of a Responsible Officer of each Borrower, certifying (i) that there has been no change to such Borrower's Organization Documents, other than as attached to the certificate, since true and complete copies of the same were delivered to the Administrative Agent on May 18, 2012 or February 28, 2013, as applicable and (ii) that there has been no change to the titles, names and signatures of each Person authorized to sign the Loan Documents since an incumbency certificate of such Borrower was delivered to the Administrative Agent on May 18, 2012 or February 28, 2013, as applicable (the Administrative Agent may conclusively rely on this certificate until it is otherwise notified by the applicable Borrower in writing);

(e)the Administrative Agent shall have received good standing certificates for each Borrower, issued by the Secretary of State or other appropriate official of such Borrower's jurisdiction of 
organization and each other jurisdiction reasonably requested by the Administrative Agent where such Borrower's conduct of business or ownership of Property necessitates qualification;

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(f)the Administrative Agent shall have received pro forma Borrowing Base Certificates in respect of each of the US Borrowing Base and the European Borrowing Base, in each case after giving effect to the Memorex Divesture and prepared as of February 28, 2013;

(g)Total Availability (after giving effect to all fees and expenses paid on the Effective Date pursuant to this Amendment, the Credit Agreement and the other Loan Documents) shall be greater than or equal to $75,000,000; and

(h)the Borrowers shall have paid all fees and expenses to be paid to the Administrative Agent pursuant to the Credit Agreement and the other Loan Documents, including without limitation, all reasonable out-of-pocket costs and expenses of the Administrative Agent incurred in connection with the development, preparation, negotiation, execution and delivery of this Amendment and the reasonable fees and expenses of Winston & Strawn LLP.

7.Effect of the Agreement.  Except as expressly provided herein, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect.  Except as expressly set forth herein, this Amendment shall not be deemed (a) to be a waiver of, or consent to, a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document, (b) to prejudice any other right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with the Borrowers or any other Person with respect to any waiver, amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of the Lenders or the Administrative Agent, or any of them, under or with respect to any such documents or (d) to be a waiver of, or consent to or a modification or amendment of, any other term or condition of any other agreement by and among the Borrowers, on the one hand, and the Administrative Agent or any other Lender, on the other hand.

8.Representations and Warranties.  Each Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows:

(a)Both before and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.

(b)The execution, delivery and performance by each Borrower of this Amendment and each other document executed in connection herewith, and by each Guarantor of the Guarantor Consent and each other document executed in connection herewith, have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable.

(c)The Amendment Documents constitute the legal, valid and binding obligation of each Borrower and each Guarantor, as applicable, and are enforceable against each Borrower and each Guarantor, as applicable, in accordance with their respective terms, without defense, counterclaim or offset.

(d)All representations and warranties of the Borrowers contained in Article V of the Credit Agreement are true and correct on and as of the Effective Date, except to the extent that any such representation and warranty specifically relates to an earlier date.

(e)Each Borrower is entering into this Amendment and each Guarantor is entering into the Guarantor Consent on the basis of its own investigation and for its own reasons, without reliance upon the Administrative Agent, the Lenders or any other Person.

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9.Miscellaneous.

(a)This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns.  No third party beneficiaries are intended in connection with this Amendment.

(b)THIS AMENDMENT IS SUBJECT TO THE PROVISIONS OF SECTIONS 10.16 AND 10.17 OF THE CREDIT AGREEMENT RELATING TO GOVERNING LAW, VENUE AND WAIVER OF RIGHT TO TRIAL BY JURY, THE PROVISIONS OF WHICH ARE BY THIS REFERENCE INCORPORATED HEREIN IN FULL.

(c)This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Transmission of signatures of any party by facsimile shall for all purposes be deemed the delivery of original, executed counterparts thereof and the Administrative Agent is hereby authorized to make sufficient photocopies thereof to assemble complete counterparty documents.
(d)This Amendment, together with the other Amendment Documents, the Credit Agreement and the Guaranty, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein.  This Amendment supersedes all prior drafts and communications with respect thereto.  This Amendment may not be amended except in accordance with the provisions of Section 10.01 of the Credit Agreement.

(e)If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement or the Guaranty, respectively.

(f)Each Borrower covenants to pay to or reimburse the Administrative Agent, upon demand, for all reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation, negotiation, execution and delivery of this Amendment.

(g)This Amendment shall constitute a “Loan Document” under and as defined in the Credit Agreement.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
IMATION CORP., as a Borrower

By:_______________________________________                    
Name:    Paul R. Zeller
Title:     Senior Vice President and Chief Financial
Officer

IMATION ENTERPRISES CORP., as a Borrower

By:________________________________________                        
Name:    Paul R. Zeller
Title:     Senior Vice President and Chief Financial
Officer

IMATION EUROPE B.V., as a Borrower

By:_________________________________________                        
Name:_______________________________________            
Title:________________________________________                        

[Fourth Amendment and Consent to Credit Agreement – Imation]

BANK OF AMERICA, N.A., as Administrative Agent

By:_______________________________________                         
Name:    Jason Riley
Title:     Senior Vice President - Business Capital

BANK OF AMERICA, N.A., as L/C Issuer and as a
Lender

By:_______________________________________                         
Name:    Jason Riley
Title:     Senior Vice President - Business Capital

[Fourth Amendment and Consent to Credit Agreement – Imation]

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

By:_____________________________________                        
Name:___________________________________                
Title:____________________________________                        

[Fourth Amendment and Consent to Credit Agreement – Imation]

JPMORGAN CHASE BANK, N.A., as a Lender

By:____________________________________                        
Name:__________________________________                
Title:___________________________________                        

[Fourth Amendment and Consent to Credit Agreement – Imation]

Exhibit A to FOURTH AMENDMENT
Guarantor Consent
Each of the undersigned, in its capacity as a Guarantor, acknowledges that its consent to the foregoing Amendment is not required, but each of the undersigned nevertheless does hereby consent to the foregoing Amendment (together with all prior amendments) and to the documents and agreements referred to therein.  Nothing herein shall in any way limit any of the terms or provisions of the Guaranty of the undersigned or the Collateral Documents executed by the undersigned in the Administrative Agent's and the Lenders' favor, or any other Loan Document executed by the undersigned (as the same may be amended from time to time), all of which are hereby ratified and affirmed in all respects.
IMATION FUNDING CORP., as a Guarantor

By:_______________________________________                        
Name:    Paul R. Zeller
Title:    Treasurer

IMATION LATIN AMERICA CORP., as a Guarantor

By:_______________________________________                        
Name:    Paul R. Zeller
Title:    President

MEMOREX PRODUCTS, INC., as a Guarantor

By:_______________________________________                        
Name:    Paul R. Zeller
		
	Title:
	Senior Vice President and Chief Financial

Officer

IMN DATA STORAGE LLC, as a Guarantor

By:______________________________________                        
Name:    Paul R. Zeller
Title:    Senior Vice President and Chief Financial
Officer

[Fourth Amendment and Consent to Credit Agreement – Imation]

IMATION HOLDING B.V., as the European Holdco

By:___________________________________                        
Name:_________________________________                
Title:__________________________________                        

NEXSAN CORPORATION, as a Guarantor

By:___________________________________                        
Name:    John P. Breedlove
Title:    Vice President and Corporate Secretary

NEXSAN TECHNOLOGIES INCORPORATED, as a Guarantor

By:__________________________________                        
Name:    John P. Breedlove
Title:    Vice President and Corporate Secretary

[Fourth Amendment and Consent to Credit Agreement – Imation]2013 Directors Compensation Plan

IMATION CORP.

DIRECTORS COMPENSATION PROGRAM
EFFECTIVE MAY 4, 2005
(As amended effective January 1, 2013)

SECTION 1. PURPOSE

(a)    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. 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. 

(b)    The Program is also intended to comply in form and operation with the requirements of Section 409A of the Code, or an exception thereto. 

SECTION 2. DEFINITIONS 

The following words and phrases have the meaning indicated below, unless the context clearly indicates otherwise. 

(a)    “Affiliate” means any entity that, together with the Company, is treated as a single employer under Code section 414(b) or (c).  For purposes of determining whether a Termination of Employment has occurred, the term Affiliate will be determined by applying Code section 1563(a)((1), (2) and (3) for purposes of determining a controlled group of corporations under Code section 414(b) and in applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or businesses that are under common control for purposes of Code section 414(c), the phrase “at least 50 percent” will be used instead of “at least 80 percent” each place it appears.
(b)    “Accounting Date” means the first business day following the annual meeting of stockholders of the Company, or, if no annual meeting is held during a calendar year, it means December 31. 

(c)    “Basic Fee” means the annual retainer payable to an Eligible Director at the annual rate in effect on the Accounting Date for such Eligible Director's services on the Board (exclusive of any Chairperson Fee, Non-Executive Chairman Fee or Meeting Fees.) 

(d)    “Board” means the Board of Directors of the Company. 

(e)    “Chairperson Fee” means the annual retainer payable to an Eligible Director at the annual rate in effect on the Accounting Date for such Eligible Director's services as the chairperson of any committee of the Board.

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(f)    “Change in Control” has the meaning given it in Section 8(b) to the extent it is consistent with and satisfies the definition of “Change of Control” under Code section 409A. 

(g)    “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 and (ii) the Fair Market Value of the Common Stock as of the last trading day preceding the date of the Change in Control. 

(h)    “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations or binding rules promulgated thereunder. 

(i)    “Committee” means the Compensation Committee of the Board. 

(j)    “Common Stock” means the common stock, par value $.01 per share, of the Company. 

(k)    “Company” means Imation Corp. 

(l)    “Dividend Equivalent Credit” has the meaning given it in Section 7(b). 

(m)    “Election Form” means the Election Form attached as Exhibit B hereto or such other form as may be deemed acceptable by the Secretary of the Company from time to time. 

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

(o)    “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

(p)    “Fair Market Value” as of any date means, the fair market value as defined under the Stock Plan. 

(q)    “Meeting Fees” means the amounts payable to an Eligible Director in arrears on any Quarterly Payment Date for attendance at meetings or participation in teleconferences of the Board or any committee of the Board (exclusive of any Basic Fee, Chairperson Fee or Non-Executive Chairman Fee). 

(r)    “Non-Executive Chairman Fee” means the annual retainer payable to the Eligible Director who is selected to be the Non-Executive Chairman at the annual rate in effect on the Accounting Date for such Eligible Director's services as the Non-Executive Chairman. 

(s)    “Program” means the Company's Directors Compensation Program, as amended from time to time. 

(t)    “Proration Fraction” means 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” means 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 calendar quarter, provided such date shall not be later than the fifteenth day of the third month following the end of such calendar quarter. 

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

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

(x)    “Separation from Service” means the individual has ceased to be a member of the Board and has ceased to provide services as an independent contractor (including as a member of any board of directors) of the Company and all Affiliates, or such other change in status that constitutes a “separation from service” under Code section 409A.

(x)    “Stock Plan” means the then current stock incentive plan of the Company used to grant stock based awards to Eligible Directors. 

SECTION 3. ADMINISTRATION 

(a)    The Program shall be administered by the Committee. 

(b)    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: 

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

(ii)    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; 

(iii)    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

(iv)    Grant stock-based awards under the Program, as provided in Section 5 hereof. 

(c)    Unless otherwise expressly provided in the Program, all designations, determinations, interpretations and other decisions under or with respect to the Program or any award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Eligible Director or beneficiary, and any employee of the Company. 

SECTION 4. FEES/EXPENSES 

(a)    Each Eligible Director who is first elected to the Board at, or who continues to serve on the Board immediately following an annual meeting of stockholders, is entitled to receive a Basic Fee and a Chairperson Fee for serving as chairperson of a committee of the Board (as applicable). 

(b)    Any Eligible Director who is designated as the Non-Executive Chairman is entitled to receive a Non-Executive Chairman Fee for services as the Non-Executive Chairman. 

(c)    Each Eligible Director who joins the Board or becomes a chairperson of a committee of the Board or Non-Executive Chairman after the annual meeting of stockholders is entitled to receive a Basic Fee, Chairperson Fee or Non-Executive Chairman Fee (as applicable) multiplied by the Proration Fraction, as of the date such Eligible Director first becomes an Eligible Director, chairperson of a committee of the Board or Non-Executive Chairman. 

(d)    Each Eligible Director is entitled to receive a Meeting Fee for attendance at a meeting of the Board or a Committee of the Board or participation in a teleconference in lieu of such meeting. The Meeting Fees are payable in arrears on the Quarterly Payment Date. Any member of the Board who interviews a Board candidate shall be entitled to receive compensation in an amount equal to the Meeting Fee for an in person Board meeting for each such interview. 

(e)    The current rate of the Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and Meeting Fees are set forth on the attached Exhibit A, and may be amended from time to time by the Board or any committee given responsibility for determining Board of Director compensation. 

(f)    Each Eligible Director is entitled to reimbursement for reasonable travel costs of attending Board and committee meetings and interviews of Board candidates. Such reimbursement shall be payable in cash after receipt of documentation by the Company from such Eligible Director, provided reimbursement is made no later than the end of the calendar year following the calendar year in which the expense was incurred.

SECTION 5. ANNUAL GRANT OF STOCK BASED AWARD 

(a)    Each Eligible Director who is first elected to the Board at, continues to serve on the Board or is serving as the Non-Executive Chairman of the Board immediately following an annual meeting of stockholders shall be granted a stock based award (i.e., options, restricted stock, etc.) as of the date of such meeting in type, proportion and amount to be determined by the Committee and under, and in accordance with, the terms of the Stock Plan. 
(b)    Each Eligible Director who joins the Board after an annual meeting of stockholders, shall be granted a stock based award pursuant to this Section 5 as of the date such Eligible Director first becomes an Eligible Director based on the dollar value of the grant made at the time of the immediately preceding annual meeting of stockholders (“Grant”), multiplied by the Proration Fraction and allocated in the same manner as the Grant. An Eligible Director who is appointed the Non-Executive Chairman of the Board after an annual meeting of stockholders, shall be granted a stock based award pursuant to this Section 5 as of the date such Eligible Director first becomes the Non-Executive Chairman of the Board based on dollar value of the grant made at the time of the immediately preceding annual meeting of stockholders (Non-Executive Grant”), multiplied by the Proration Fraction and allocated in the same manner as the Non-Executive Grant.
(c)    Terms and conditions of stock based awards (such as grant price, vesting schedule, etc.) shall be as determined by the Committee and under, and in accordance with, the terms of the Stock Plan. 
(d)    The amount and composition of the current annual stock based award are set forth on the attached Exhibit A, which may be amended from time to time by the Board or any committee given responsibility for determining Board of Director compensation. 

SECTION 6. MATCHING GIFT PROGRAM 

Each Eligible Director is entitled to a matching gift from the Company of up to $7,500 per calendar year to qualifying charitable institutions, prorated for any calendar year that Eligible Director joins the Board. Each Eligible Director must submit evidence of such gift to the Company and the Company will send the matching contribution directly to the qualifying charitable institution on behalf of the Eligible Director. 

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

(a)    Elections. 

(i)    Common Stock. Each Eligible Director who is not covered by clause (iii) below, may elect to receive, in lieu of a cash payment for his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees (or a portion thereof, as elected by the Eligible Director), a number of shares of Common Stock (excluding fractional shares, which shall be paid in cash (or carried over to the next payment if an Eligible Director elects to be paid all in Common Stock)), which is calculated by dividing his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees (or a portion thereof), by the Fair Market Value of one share of Common Stock on the Accounting Date or Quarterly Payment Date, as applicable. 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 relevant Accounting Date or Quarterly Payment Date, as applicable.

(ii)    Restricted Stock Units.  Each Eligible Director who is not covered by clause (iii) below, may elect to receive, in lieu of cash payment for his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees, Restricted Stock Units (including fractional Restricted Stock Units) calculated by dividing his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees (or a portion thereof, as elected by the Eligible Director) for services to be performed in the following the calendar year by the Fair Market Value of one share of Common Stock on the Accounting Date or Quarterly Payment Date, as applicable. To be effective, any such election relating to the Basic Fee, Chairperson Fee, Non-Executive Chairman Fee or Meeting Fees shall be made by submitting a completed and executed Election Form to the Secretary of the Company prior to the calendar year in which the Eligible Director wishes the election to be in effect and such election shall be irrevocable for such calendar year. 
 
(iii)    New Directors. Each Eligible Director who during the preceding twenty-four (24) months has not participated in any deferred compensation arrangement of the Company or any Affiliate that would be treated as a single plan with this Plan under Treas. Reg. Sec. 1.409A-1(c)(2)(i) and who joins the Board between annual meetings of stockholders may elect prior to first becoming an Eligible Director to receive, in lieu of cash payment for his or her Basic Fee, Chairperson Fee and/or Non-Executive Chairman Fee, a number of shares of Common Stock (excluding fractional shares, which shall be paid in cash (or carried over to the next payment if an Eligible Director elects to be paid all in Common Stock)) and/or Restricted Stock Units (including fractional Restricted Stock Units) up to the number which is calculated by (A) multiplying the sum of his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee (or a portion thereof, as elected by the Eligible Director) payable with respect to the time prior to the next annual meeting of stockholders 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 becomes an Eligible Director. Each Eligible 

Director may also elect to receive, in lieu of cash payment for his or her Meeting Fees (or a portion thereof, as elected by the Eligible Director), Common Stock (excluding fractional shares, which shall be paid in cash (or carried over to the next payment if an Eligible Director elects to be paid all in Common Stock)) Restricted Stock Units (including fractional Restricted Stock Units) calculated by dividing his or her Meeting Fees (or portion thereof) by the Fair Market Value of one share of Common Stock on the 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 date that the Eligible Director becomes a Director, and such Election Form shall be irrevocable on the date he or she first becomes an Eligible Director for that calendar year with respect to any election (or lack of election) to receive Restricted Stock Units.

(b)    Restricted Stock Units. 

(i)    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.  A Restricted Stock Unit shall be treated as granted on the corresponding Accounting Date or last day of the calendar quarter relating to the fees for which the Restricted Stock Units are determined.  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 Credits. An Eligible Director's account shall be credited with Dividend Equivalent Credits equivalent to the amount of dividends paid by the Company to holders of outstanding shares of Common Stock based on the number of Restricted Stock Units credited to the Eligible Director's account on the dividend record date for shares of Common Stock. Such Dividend Equivalent Credit shall be converted into an equivalent number of Restricted Stock Units (including fractional Restricted Stock Units) based on the fair market value of one share of Common Stock on the related dividend payment date and such Restricted Stock Units shall be subject to the same distribution timing as the underlying Restricted Stock Units to which the Dividend Equivalent Credits related. 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

in which “A” equals the number of Restricted Stock Units held by the Eligible Director on the dividend record 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 Credits 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 record date, had such shares been owned by the Eligible Director 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 but not more than ninety (90) days following the earlier of (A) the Eligible Director's death (B) the occurrence of a Change in Control, and (C) the specific date (including upon the Eligible Director's Separation from Service) the Eligible Director has elected to receive payment pursuant to the applicable Election Form pursuant to which such Eligible Director elected to receive such Restricted Stock Units in lieu of cash.  If distribution is to be made upon a Separation from Service and the individual is a “specified employee,” as defined 

under Code section 409A, on the date of such Separation from Service, then no distribution will be made before the date that is six (6) months after the date of the individual's Separation from Services, or if earlier, upon his or her death.

(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 be made in cash in an amount equal the Change in Control Price multiplied by the number of Restricted Stock Units (including fractional units). 

(c)    Stock Plan. 

All shares of Common Stock and all Restricted Stock Units awarded pursuant to this Section 7 shall be awarded under, and in accordance with, the terms of the Stock Plan. Restricted Stock Units awarded hereunder shall be considered Other Stock-Based Awards under the Plan. 

SECTION 8. CHANGE IN CONTROL 

(a)    For purposes of this Section 8, “Act” shall mean the Securities Exchange Act of 1934. 

(b)    For purposes of the Program, a “Change in Control” of the Company shall be deemed to have occurred if any one of the following events shall occur:

(i)    the consummation of a transaction or series of related transactions during a 12-month period in which a person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Act) that owns (after application of the attribution rules of Section 318 of the Code) less than 35% of the combined voting power of the Company's outstanding voting stock prior to such transaction or the first of such series of related transactions), 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 ownership (after application of the attribution rules of Section 318 of the Code) of 35% or more of the combined voting power of the Company's then outstanding voting stock (other than in connection with a Business Combination in which clauses (1) and (2) of Section 8(b) (iii) apply); or

(ii)    a majority of the members of the Company's Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board of Directors prior to the date of the election or appointment; or 

(iii)    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 within a 12-month period 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 owners of the Company's outstanding voting stock immediately prior to such Business Combination own (after application of the attribution rules of Section 318 of the Code) immediately after the transaction or transactions more than 50% of the combined voting power of the then outstanding voting stock (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), and (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) has acquired, during a 12-month period, ownership (after application of the attribution rules of Section 318 of the Code) of 35% or more of the combined voting power of the then outstanding voting stock (or comparable equity interests) of the entity resulting from such Business Combination.

Notwithstanding anything herein stated, no Change in Control shall be deemed to occur unless such event constitutes a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets, of a business under Code section 409A.

SECTION 9. 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 10. 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 11. 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. Except as otherwise provided by the Committee, Restricted Stock Units under this Program shall not be transferable by an Eligible Director other than by the laws of descent and distribution. 

(d)    No Acceleration of Distribution of Restricted Stock Units. The distribution of Restricted Stock Units may not be accelerated, including upon termination of the Program, if such acceleration would cause the distribution to become subject to tax under Code Section 409A. 

SECTION 12. WITHHOLDING 

The Company may defer making payments or delivering shares of Common Stock under the Program for up to 30 days to ensure that satisfactory arrangements have been made for the payment of any federal, state or local income or employment taxes that the Company reasonably determines in its sole discretion are required to be withheld with respect to such payment or delivery. 

SECTION 13. GOVERNING LAW 

The Program and all rights hereunder shall be construed in accordance with and governed by the internal law, and not the law of conflicts, of the State of Delaware. 

SECTION 14. UNFUNDED PROGRAM 

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 15. 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.

EXHIBIT A
FEES
(as of January 1, 2013)

	
		
	Basic Fee
	$50,000

	Non-Executive Chairman
	$ 87,500, in addition to the Basic Fee for service as a member of the Board of Directors.

	Committee Chair
	Audit & Finance: $10,000
Compensation:  $10,000
Nominating & Governance: $7,500

	Board Meetings/Teleconferences
	$ 1,500/$1,000

	Audit & Finance
Meetings/Teleconferences
	$ 1,500/$1,000

	Compensation Committee
Meetings/Teleconferences
	$ 1,500/$1,000

	Nomination & Governance
Meetings/Teleconferences
	$ 1,500/$1,000

	Annual Stock Based Grants
	All Eligible Directors: Dollar value $175,000 in restricted stock
Non-Executive Chairman: $87,500 in restricted stock, in addition to the Annual Stock Based Grant for service as a member of the Board of Directors

EXHIBIT B

IMATION CORP.
DIRECTORS COMPENSATION PROGRAM
ELECTION FORM

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

WHEREAS, Imation Corp., a Delaware corporation (the “Company”) has a director compensation program (the “Program”); 

WHEREAS, the Eligible Director has the option under the Program to receive Common Stock and/or Restricted Stock Units 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, Chairperson Fee and Non-Executive Chairman Fee (“Annual Grant”) 

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

** Special Tax Rules Relating to Election to Receive Restricted Stock Units 

Due to Internal Revenue Code Section 409A relating to the taxation of deferred compensation, an election to receive Restricted Stock Units under the Program can only be made for services performed and payments to be received following the calendar year in which the election is made (e.g., an election made in 2013 is not effective until January 1, 2014). Also, the election must remain in effect for the ENTIRE calendar year. Any change in or termination of the election can only be made the year before it is to go in effect (e.g., a change for 2014 must be made before the end of 2013.)

Subject to the terms and conditions of the Program, the Eligible Director hereby elects to receive the Basic Fee, the Chairperson and Non-Executive Chairman 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 
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 
Total:            100 %    
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 in lieu of Cash 

___ %   Election to receive Restricted Stock Units in lieu of Cash** 

___ %   Election to receive Cash 
Total:            100 %    

NON-EXECUTIVE CHAIRMAN 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 

Total:            100 %    

DISTRIBUTION ELECTION FOR RESTRICTED STOCK UNITS: (Must be completed if Eligible Director has made an Election to Receive Restricted Stock Units.) 

The Eligible Director hereby elects to receive payment of his or her Restricted Stock Units on the earlier to occur of a Change in Control, his or her death or the following date: 

___    ___-year anniversary of the grant date (please specify)
___    The date the Eligible Director incurs a “separation from service” with Company (within the meaning of Section 409A of the Internal Revenue Code). 
 
___    Other (please specify date only): ___________________________ 

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. Note: A change or termination of an Election to receive Restricted Stock Units will not become effective until January 1 of the calendar year following the calendar year the change or termination is filed with the Secretary of the Company.

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:

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