Document:

exv10w01

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made this 6th day of May, 2009, and is effective as
of the 15th day of May 2009 (the “Effective Date”), by and among Midwest Banc Holdings, Inc.
(“Midwest”) and Midwest Bank and Trust Company (“Midwest Bank”) (collectively Midwest and Midwest
Bank are referred to herein as the “Employer”), and Roberto R. Herencia (“Executive”).

RECITALS

     A. Employer desires to employ Executive as President and Chief Executive Officer of Midwest,
and President and Chief Executive Officer of Midwest Bank, and Executive desires to become employed
by Employer on the terms and conditions set forth in this Agreement; and

     B. In the course of employment with Employer, Executive will have access to certain
confidential information that relates to or will relate to the business of Employer, and Executive
will be introduced to important business contacts. Therefore, Executive has agreed to be bound by
certain covenants concerning the protection of such confidential information.

     NOW THEREFORE, in consideration of the above premises and the following mutual covenants and
conditions, the parties agree as follows:

     1. Employment and Duties. Each of Midwest and Midwest Bank shall employ Executive as
its President and Chief Executive Officer as of the Effective Date. Executive shall, during the
term of this Agreement and subject to the provisions of this Paragraph and Paragraph 2 below,
devote his full time and effort to his duties under this Agreement. Executive shall perform those
duties identified in the position description for the President and Chief Executive Officer, as
stated in the Bylaws of the Employer as assigned to the President and Chief Executive Officer,
subject to the direction of the Board of Directors. Executive shall report to the Board.
Executive may serve on corporate, industry, civic, religious or charitable boards or committees, so
long as such duties do not conflict with Executive’s duties hereunder.

     2. Executive Loyalty and Compliance with Policies. During the term of this Agreement,
and except as permitted above in Paragraph 1, Executive shall not engage, directly or indirectly,
as a shareholder, member, partner, officer, director, manager, contractor, agent, employee, or in
any other capacity, in any other business without the prior written approval of the Board of
Directors. Executive shall comply with the terms of all Employer policies, including but not
limited to, Employer’s conflict of interest policy, Employer’s policies concerning or relating to
disclosure of business relationships with clients and with applicable provisions of the American
Recovery and Reinvestment Act of 2009 (“ARRA”), the Emergency Economic Stabilization Act of 2008
(“EESA”) and related rules to which the Employer may be subject due to its participation in EESA’s
Troubled Asset Relief Program (“TARP”). Nothing in this Agreement shall be construed to prevent
Executive from (a) owning less than a two percent (2%) interest in any publicly held corporation,
provided, however, the corporation is not involved in the banking or financial services industry;
(b) investing in any privately-held corporation, partnership or other entity that is not involved
in providing banking or financial services and that does not have any contractual or other
relationship with the Employer; or (c)

 

holding a board of director position for a non-profit or charitable organization, provided
that obligation does not prevent Executive from performing his full-time duties to the Employer and
further provided the business purposes and mission of the entity do not conflict with or are
competitive to those of the Employer.

     3. Indefinite Term. The term of Executive’s employment will be indefinite, and
Executive shall serve at the pleasure of the Board of Directors of the Employer, which can
terminate Executive’s employment at any time, subject to the provisions of Paragraphs 7 and 8
below.

     4. Compensation.

     A. Salary. Employer shall pay Executive an annual base salary of $500,000, subject to
increase (but not decrease) from time to time by the Employer (as adjusted, the “Base Salary”),
payable in substantially equal installments in accordance with Employer’s regular payroll
practices. Executive’s salary shall be subject to any payroll or other deductions as may be
required by law, government order, or by agreement with Executive.

     B. Annual Bonus. Beginning January 1, 2010, the Executive shall be eligible to earn
an annual bonus under the Employer’s Management Incentive Compensation Plan, or such annual bonus
plan as in effect from time to time (the “Bonus Plan”). To the extent that the Employer continues
to be subject to the compensation limitations contained under Section 111(b)(3)(D) of EESA as
amended by Section 7001 of ARRA and the rules and regulations to be promulgated thereunder (the
“TARP Compensation Limitations”), Executive shall be eligible to earn under the Bonus Plan an
annual bonus in such amount, payable in such form, and subject to such vesting provisions as will
provide the Executive with the maximum permissible incentive compensation under such TARP
Compensation Limitations. Once the Employer is no longer subject to the TARP Compensation
Limitations, the Executive shall be eligible to earn under the Bonus Plan a market competitive
annual bonus award.

     C. Other Benefits. Executive shall be entitled to participate in those vacation (with
a minimum of four (4) weeks of vacation annually) and other benefit plans as are available to all
other employees of Employer. In addition, Executive shall be entitled to participate in the
Employer’s executive perquisite program and the Employer’s Supplemental Executive Retirement Plan,
in accordance with its terms and as modified from time to time by the Employer, provided such
modifications apply to all covered executives. Nothing contained herein shall be deemed a
limitation on the ability of Employer to discontinue, modify, supplement or amend its employee
benefit plans or the scope of benefits it provides to its employees.

     D. Restricted Stock. Executive shall be entitled to participate in the Employer’s
Stock and Incentive Plan, in accordance with its terms and as modified from time to time by
Employer (the “Plan”), a copy of which has been provided to Executive. In addition, on the
Effective Date, Employer shall grant to Executive a restricted stock award under the Plan with a
fair market value (as calculated under the Plan) as of the Effective Date of $250,000 (the “RSA
Award”), either under the Plan or as an inducement award. The RSA Award shall vest on December 31,
2009 or such later date as may be required in order to comply with

2

 

Section 111(b)(3)(D) of EESA as amended by Section 7001 of ARRA and the rules and regulations to be
promulgated thereunder. In addition, the RSA Award (and any other equity award received by the
Executive) shall vest (and any options shall immediately become exercisable) upon a Change of
Control (as defined in the Plan) provided that such early vesting shall only be permitted while the
Employer remains subject to the TARP Compensation Limitations if such vesting is permitted by such
TARP Compensation Limitations. Once the Employer is no longer subject to the TARP Compensation
Limitations, the Executive shall be eligible to earn a market competitive annual long-term
incentive award.

     E. Board Positions. Employer shall appoint Executive to the Board of Directors of
each of Midwest and Midwest Bank as of the date of the execution of this Agreement. Executive shall
resign as a director of Midwest and Midwest Bank upon the termination of his employment as provided
in Paragraph 7.

     5. Expenses. Employer will reimburse Executive for all necessary and reasonable
out-of-pocket expenses he incurs which are related to Executive’s responsibilities under this
Agreement; provided that any expenditure in excess of the expense policies and budgets adopted from
time to time by Employer’s Board of Directors must be approved in writing in advance by the
Chairman of the Board of Directors. Employer will reimburse Executive for the reasonable attorneys
fees incurred by him relating to the negotiation and documentation of this Agreement and related
documents.

     6. Termination. Notwithstanding anything in Paragraph 3 of this Agreement to the
contrary, Executive’s employment shall terminate upon the first to occur of the following events:

     A. Upon Executive’s date of death, or the date Executive is given written notice that Employer
has determined that Executive is permanently disabled. For purposes of this Agreement, Executive
shall be deemed to be permanently disabled if Executive, as a result of illness or incapacity,
shall be unable to perform substantially all of his required duties for a period of three (3)
consecutive months or for any aggregate period of six (6) months in any twelve (12) month period.
A termination of Executive’s employment by Employer for disability shall be communicated to
Executive by written notice and shall be effective on the tenth (10th) business day after receipt
of such notice by Executive.

     B. On the date Employer provides Executive with written notice that his employment is being
terminated for “cause.” For purposes of this Agreement, “cause” shall be defined as:

(1) the willful and continued (for a period of not less than 10 business days after
written notice thereof during which the Executive may remedy such failure if capable
of remedy) failure to perform substantially the duties of the Executive’s employment
(other than as a result of physical or mental incapacity, or while on vacation or
other approved absence) which are within the Executive’s control (mere inability to
achieve financial or other performance targets or objectives, alone, shall not
constitute such a willful and continued failure);

(2) the commission of any felony involving fraud, theft, misappropriation,
dishonesty, or embezzlement or involving a crime of moral turpitude;

3

 

(3) the willful violation of any written Employer policies or procedures which
materially damages the economic interests or reputation of Employer;

(4) the Executive is prohibited from engaging in the business of banking by any
governmental regulatory agency having jurisdiction over Midwest or Midwest Bank;

(5) the deliberate breach by Executive of Section 5 of his Resignation and
Transition Agreement, dated November 6, 2008, by and between Executive and his
former employer, which materially damages the economic interests or reputation of
Employer; or

(6) the willful breach by Executive of the restrictive covenants in Paragraphs 8D
(confidentiality), 8G (customer non-solicitation) or 8H (employee non-solicitation)
of this Agreement;

provided, however, that no act or failure to act, on the Executive’s part, shall be considered
“willful” unless it is done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that Executive’s action or omission was in the best interests of Midwest or
Midwest Bank.

     C. On the date Employer terminates Executive’s employment for any reason, other than a reason
set forth in Paragraphs 7A. or 7B., provided that Employer shall give Executive thirty (30) days
written notice prior to such date of its intention to terminate Executive’s employment.

     D. On the date Executive terminates his employment for “Good Reason”. For purposes of this
Agreement, “Good Reason” shall mean the occurrence, other than in connection with a discharge, of
any of the following without the Executive’s consent: (A) a reduction in the Executive’s Base
Salary, annual bonus opportunity (other than a proportionate reduction applicable to all executives
of the Employer), or (B) the Executive being required to be based at an office or location which is
more than 50 miles from his then current office, (C) a diminution of Executive’s duties and
authorities as set forth in Paragraph 1, (D) a diminution in the Executive’s reporting
responsibilities following which the Executive does not report directly to the Board, (E) the
Executive’s removal or failure to be reelected as a member of the Board, or (F) the failure of a
successor to assume the obligations of the Employer under this Agreement (to the extent not
otherwise assumed by operation of law). The Executive must provide written notice to the Employer
of the existence of Good Reason no later than ninety (90) days after its initial existence, and the
Employer shall have a period of thirty (30) days following its receipt of such written notice
during which it may remedy in all material respects the Good Reason condition identified in such
written notice.

     E. On the date Executive voluntarily terminates his employment for other than Good Reason,
provided that Executive shall give Employer thirty (30) days written notice prior to such date of
his intention to voluntarily terminate Executive’s employment for other than Good Reason.

4

 

     7. Compensation Upon Termination.

     A. If Executive’s services are terminated pursuant to Paragraphs 7A., 7B. or 7E., Executive
shall be entitled to (i) payment of any earned but unpaid Base Salary accrued through and including
the date of termination; (ii) payment of any earned but unpaid annual bonus from a prior fiscal
year, (iii) payment of accrued paid time off; (iv) reimbursement of any unreimbursed business
expenses, incurred prior to the date of termination, plus (v) any vested benefits accrued under the
Employer’s employee benefits through the date of termination (collectively (i), (ii), (iii), (iv)
and (v) being the “Accrued Compensation”).

     B. If Executive’s employment is terminated pursuant to Paragraphs 7C or 7D., Executive shall,
in addition to his Accrued Compensation, be entitled to his Base Salary for a period of twelve (12)
months following the date of termination, plus continuation of medical, dental and vision coverage
at active employee rates for that same period. In addition, the Executive shall become fully
vested in his RSA Award. To the extent that Section 111 of EESA and the rules and regulations
promulgated thereunder as amended by Section 7001 of ARRA and the rules and regulations to be
promulgated thereunder limit the Employer’s ability to pay such payments and benefits or to allow
the vesting of the RSA Award, such payments and benefits will be paid and/or provided (and the RSA
Award shall vest) at such time as they are permitted under EESA and ARRA.

     8. Protective Covenants. Executive acknowledges and agrees that, by virtue of his
employment with Employer, he has acquired and will acquire “Confidential Information,” as
hereinafter defined, as well as special knowledge of Employer’s relationships with its customers
and business associates, and that, but for his association with Employer, Executive would not or
will not have had access to said Confidential Information or knowledge of said relationships.
Executive further acknowledges and agrees (i) that Employer has relationships with its customers
and key advisors to customers which have been and will continue to be developed at great expense;
(ii) that many of Employer’s relationships with its customers and key advisors to its customers are
permanent or near permanent in nature, and will continue to be valuable, special and unique assets
of Employer; and (iii) that the foregoing are legitimate and protectible interests which are
critical to its competitive advantage in the banking and financial services industry. In return
for the consideration described in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and as a condition precedent to Employer
entering into this Agreement, and as an inducement to Employer to do so, Executive hereby
represents, warrants, and covenants as follows:

     A. Executive has executed and delivered this Agreement as his free and voluntary act, after
having determined that the provisions contained herein are of a material benefit to him, and that
the duties and obligations imposed on him hereunder are fair and reasonable and will not prevent
him from earning a comparable livelihood following the termination of his employment with Employer;

     B. Executive has read and fully understands the terms and conditions set forth herein, has had
time to reflect on and consider the benefits and consequences of entering into this Agreement, and
has had the opportunity to review the terms hereof with an attorney or other representative, if he
so chooses;

5

 

     C. The execution and delivery of this Agreement by Executive does not conflict with, or will
result in a breach of, or will constitute a default under, any agreement or contract, whether oral
or written, to which Executive is a party or by which Executive may be bound;

     D. Executive agrees that, both during his employment and for a period of two (2) years
thereafter, Executive will not, for any reason whatsoever, use for himself or disclose to any
person not employed by Employer any “Confidential Information” of Employer acquired by Executive
during his relationship with Employer. Executive further agrees to use Confidential Information
solely for the purpose of performing duties with Employer and further agrees not to use
Confidential Information for his own private use or commercial purposes or in any way detrimental
to Employer. Executive agrees that “Confidential Information” includes but is not limited to: (1)
any financial, business, planning, operations, services, potential services, products, potential
products, technical information and/or know-how, formulas, purchasing, marketing, sales, personnel,
customer, supplier, or other information of Employer or any affiliate or subsidiary of Employer;
(2) any papers, data, records, processes, methods, techniques, systems, samples, compilations,
invoices, customer lists, or documents of Employer or any affiliate or subsidiary of Employer; and
(3) any confidential information or trade secrets of any third party provided to Employer or any
affiliate or subsidiary of Employer in confidence or subject to other use or disclosure
restrictions or limitations. Employer acknowledges and agrees that Confidential Information does
not include: (1) information properly in the public domain or properly available to Executive from
other sources, or (2) information in Executive’s possession prior to the date of his employment
with Employer;

     E. Upon termination of his employment with Employer, all documents, records, files, notebooks,
correspondence, computer printouts, computer programs, computer software, price lists, microfilm,
or other similar documents containing Confidential Information, including copies thereof, whether
prepared by Executive or others, including summaries or copies thereof, then in Executive’s
possession, shall be returned to Employer immediately.

     F. Executive acknowledges and agrees that all Employer customer lists, and customer
information, including, without limitation, addresses and telephone numbers, are and shall remain
the exclusive property of Employer, regardless of whether such information was developed,
purchased, acquired, or otherwise obtained by Employer, or any subsidiary or affiliate of Employer.
Executive agrees to furnish to Employer on demand at any time during the term of this Agreement,
and upon termination of this Agreement, his complete list of the correct names and places of
business and telephone numbers of all of its customers served by him. Executive further agrees to
immediately notify Employer of the name and address of any new customer, and report all changes of
location of old customers, so that upon the termination of this Agreement, Employer will have a
complete list of the correct names and addresses of all of its customers with which Executive has
had dealings. Executive also agrees to furnish to Employer on demand at any time during the term
of this Agreement, and upon the termination of this Agreement, any other records, notes, computer
printouts, computer programs, computer software, price lists, microfilm, or any other documents
related to the business of Employer or any of its affiliates or subsidiaries, including originals
and copies thereof;

     G. Executive agrees that, for a period of one (1) year following any termination of this
Agreement, Executive will not, directly or indirectly, on behalf of himself or on behalf of

6

 

any third party, as an employee, consultant, contractor or in any other capacity, provide
Services (as hereinafter defined) to any Customer (as hereinafter defined) of the Employer, solicit
any Customer of the Employer for purposes of providing services or encourage or solicit any
Customer of Employer to cease doing business with Employer or materially change its business
relationship with Employer. For purposes of this Section H, “Services” shall mean any banking or
financial services which are competitive to those services or products offered by the Employer at
the time of the termination of Executive’s employment. For purposes of this Paragraph H,
“Customer” shall mean any individual or entity which had a banking or financial services
relationship at any time during the final year of Executive’s employment; and

     H. Executive further agrees that, for a period of one (1) year following any termination of
this Agreement, Executive will not, directly or indirectly, on behalf of himself or on behalf of
any third party, as an employee, consultant, contractor, or in any other capacity, employ, contract
with or otherwise engage any individual who, at the time of Executive’s termination from Employer
was an “Employed Individual” of the Employer. Executive also agrees that, during the same time
period, Executive will not, directly or indirectly, on behalf of himself or on behalf of any third
party, as an employee, consultant, contractor or in any other capacity, solicit any “Employed
Individual” to terminate his or her employment with Employer or to materially change his or her
relationship with Employer. For purposes of this Section I, “Employed Individual” shall mean any
individual or entity employed by Employer or serving as a Director at any time during the final
year of Executive’s employment; and

     It is agreed that any breach or anticipated or threatened breach of any of Executive’s
covenants contained in this Paragraph 8 will result in irreparable harm and continuing damages to
Employer and its business and that Employer’s remedy at law for any such breach or anticipated or
threatened breach will be inadequate and, accordingly, in addition to any and all other remedies
that may be available to Employer at law or in equity in such event, any court of competent
jurisdiction may issue a decree of specific performance or issue a temporary and permanent
injunction, without the necessity of Employer posting bond or furnishing other security and without
proving special damages or irreparable injury, enjoining and restricting the breach, or threatened
breach, of any such covenant, including, but not limited to, any injunction restraining Executive
from disclosing, in whole or part, any Confidential Information, or from providing services to or
soliciting customers of the Employer in violation of Paragraph 8G. or 8H. above. The parties also
agree that the prevailing party shall be entitled to reimbursement for costs and expenses,
including reasonable attorneys’ and accountants’ fees, incurred in successfully enforcing or
defending, as the case may be, such covenants.

     9. Notice. Any and all notices required in connection with this Agreement shall be
deemed adequately given only if in writing and (a) personally delivered, or sent by first class,
registered or certified mail, postage prepaid, return receipt requested, or by recognized overnight
courier, (b) sent by facsimile, provided a hard copy is mailed on that date to the party for whom
such notices are intended, or (c) sent by other means at least as fast and reliable as first class
mail. A written notice shall be deemed to have been given to the recipient party on the earlier of
(a) the date it shall be delivered to the address required by the Agreement; (b) the date delivery
shall have been refused at the address required by this Agreement; (c) with respect to notices sent
by mail or overnight courier, the date as of which the Postal Service or overnight courier, as the
case may be, shall have indicated such notice to be undeliverable at the address required by this

7

 

Agreement; or (d) with respect to a facsimile, the date on which the facsimile is sent and
receipt of which is confirmed. Any and all notices referred to in this Agreement, or which either
party desires to give to the other, shall be addressed to his residence in the case of Executive,
or to its principal office in the case of Employer.

     10. Section 409A. This Agreement is intended to comply with the requirements of
Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (“Section
409A”) so as not to subject the Executive to the payment of interest or any additional tax under
Section 409A. In furtherance thereof, if payment or provision of any amount or benefit hereunder
that is subject to Section 409A at the time specified in this Agreement would subject such amount
or benefit to any additional tax under Section 409A, the payment or provision of such amount or
benefit shall be accelerated or postponed, as the case may be, to the date on which the payment or
the provision of such amount or benefit could be made without incurring such additional tax. In
addition, to the extent applicable, the Executive and the Company agree to interpret this Agreement
in a manner consistent with Section 409A to prevent the Executive being subject to the payment of
interest or any additional tax under Section 409A.

     11. EESA and ARRA Compliance.A. Executive acknowledges that the U.S. Treasury
purchased $85.5 million of preferred stock from Midwest on December 5, 2008. One of the conditions
of such purchase was the agreement by the Senior Executive Officers of Midwest (as defined in EESA)
to comply with Section 111 of EESA and the rules and regulations promulgated thereunder as of
December 5, 2008. Executive further acknowledges that he will be a Senior Executive Officer of
Midwest as of the Effective Date.

     B. Executive hereby agrees that all compensation arrangements, bonus plans, stock option,
restricted stock, or other equity based compensation plans, any deferred compensation plan or
severance plan, and all incentive and other benefit plans, arrangements and agreements, including
this Agreement and Supplement Executive Retirement Plan in which he participates while employed by
the Employer (the “Compensation Arrangements”), to the extent necessary, will be amended as of the
Effective Date to comply with Section 111 of EESA and the rules and regulations promulgated
thereunder as of December 5, 2008.

     C. Executive acknowledges that each of the Compensation Arrangements may have to be amended
due to the amendment of Section 111 of EESA affected by Section 7001 of ARRA and the rules and
regulations to be promulgated thereunder. Executive agrees that his Compensation Arrangements shall
be amended to comply with Section 111 of EESA as amended by Section 7001 of ARRA once the rules and
regulations relating to Section 111 of EESA have been promulgated as required by Section 7001 of
ARRA.

     12. Waiver. No delay on the part of either party in the exercise of any right, power
or remedy hereunder (including without limitation, rights, powers and remedies for breach by
Executive hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise by
the party of any right, power or remedy preclude other or further exercise thereof, or the exercise
of any other right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement, shall in any event be effective against either party
unless the same shall be in writing and acknowledged by such party, and then any such

8

 

amendment, modification, waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

     13. Assignment. Executive acknowledges that the services to be rendered by him are
unique and personal. Accordingly, while employed by Employer, Executive may not assign any of his
rights or delegate any of his duties or obligations under this Agreement without the prior written
consent of Employer. Employer may assign its rights, and delegate its obligations, hereunder to any
subsidiary or affiliate of the Employer, or any successor by operation of law to the Employer.
Employer may not, without the written consent of the Executive, assign this Agreement to a
purchaser or transferee of substantially all of the assets of Employer. This Agreement is intended
to bind and inure to the benefit of and be enforceable by Executive and Employer and, subject to
the foregoing and if an assignment has been made, by their respective heirs, successors and
assigns.

     14. Entire Agreement. This Agreement sets forth the entire and final agreement and
understanding of the parties and contains all of the agreements made between the parties with
respect to the subject matter hereof. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto, with respect to the subject matter hereof.
No change or modification of this Agreement shall be valid unless in writing and signed by Employer
and Executive.

     15. Severability. If any provision of this Agreement shall be found invalid or
unenforceable for any reason, in whole or in part, then such provision shall be deemed modified,
restricted, or reformulated to the extent and in the manner necessary to render the same valid and
enforceable, or shall be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified, restricted, or reformulated or as
if such provision had not been originally incorporated herein, as the case may be. The parties
further agree to seek a lawful substitute for any provision found to be unlawful; provided, that,
if the parties are unable to agree upon a lawful substitute, the parties desire and request that a
court or other authority called upon to decide the enforceability of this Agreement modify those
restrictions in this Agreement that, once modified, will result in an agreement that is enforceable
to the maximum extent permitted by the law in existence at the time of the requested enforcement.

     16. Headings. The headings in this Agreement are inserted for convenience only and
are not to be considered a construction of the provisions hereof.

     17. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be considered on original, but which when taken together, shall constitute one
agreement.

     18. Recitals. The recitals to this Agreement are incorporated herein as an integral
part hereof and shall be considered as substantive and not precatory language.

     IN WITNESS HEREOF, the parties have set their hand and seal as of the date first set forth
above.

9

 

[SIGNATURE BLOCK TO FOLLOW ON NEXT PAGE]

10

 

	 	 	 	 	 	 	 	 	 
	Midwest Banc Holdings, Inc.	 	 	 	 	 	 
	/s/
J.J. Fritz
	 	 	 	/s/ Roberto R. Herencia	 
	 	 	 	 	 	 	 
	Its

	 	President	 	 	 	Roberto R. Herencia	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Midwest Bank and Trust Company	 	 	 	 	 	 
	/s/
J.J. Fritz
	 	 	 	 	 
	 	 	 	 	 	 	 
	Its
	 	President	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

11EX-10.2

Exhibit 10.2

IMATION CORP.

DIRECTORS COMPENSATION PROGRAM

EFFECTIVE MAY 4, 2005

(As amended May 6, 2009)

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.

 

 

     (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 number of whole shares of Common Stock equal to the
number granted other Eligible Directors at the time of the immediately preceding annual meeting of
stockholders, multiplied by the Proration Fraction. 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 the number of whole shares of Common Stock that
were granted at the time of the immediately preceding annual meeting of stockholders, multiplied by
the Proration Fraction.

     (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 $15,000 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 May 2009)

	 	 	 
	Basic Fee
	 	$50,000
	 
	 	 
	Non-Executive Chairman	 	1.2 times the Basic Fee provided to each
Eligible Director, in addition to the Basic
Fee for service as a member of the Board of
Directors.
	 
	 	 
	Committee Chair
	 	Audit & Finance: $10,000

	 
	 	Compensation:  $7,500

	 
	 	Nominating & Governance: $5,000
	 
	 	 
	Board Meetings/Teleconferences
	 	$1,500/$1,000
	 
	 	 
	Audit & Finance Meetings/Teleconferences
	 	$1,500/$1,000
	 
	 	 
	Compensation Committee
Meetings/Teleconferences
	 	$1,000/$1,000
	 
	 	 
	Nomination & Governance
Meetings/Teleconferences
	 	$1,000/$1,000
	 
	 	 
	Annual Stock Based Grants	 	All Eligible Directors: Dollar value
$105,000 in options and restricted stock,
with 75% as options and 25% as restricted
stock (calculated using Black-Scholes
model)
	 
	 	 
	 	 	Non-Executive Chairman: 1.2 times the
Annual Stock Based Grant provided to each
Eligible Director, with the same division
as between options and 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 2007 is not effective until January 1, 2008). 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 2008 must be made before the
end of 2007.)

 

 

     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:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]