Document:

exv10w34

 

EXHIBIT 10.34.

               Consulting agreement between the Company and Kathleen Stafford, the Company’s Principal
Financial Officer

CONSULTING AGREEMENT FOR INDEPENDENT CONTRACTORS

               This Agreement is made by IntraBiotics Pharmaceuticals, Inc., (“IntraBiotics”) and
Kathleen Stafford (“Contractor”), effective this 1st day of January, 2005 (the
“Effective Date”) through June 10, 2005, for the purpose of setting forth the exclusive terms and
conditions by which IntraBiotics will acquire Contractor’s services.

               In consideration of the mutual obligations specified in this Agreement, and any compensation
paid to Contractor for his or her services, the parties agree to the following:

	 	1.  	Engagement of Services.
	 
	 	   	Contractor, pursuant to the terms of this Agreement, is retained by IntraBiotics to provide
the services as described in Exhibit A.
	 
	 	   	IntraBiotics is not obligated to issue any additional orders for work by Contractor under
this Agreement. Contractor shall not commence services under this Agreement until this
Agreement is signed and delivered by an authorized representative of IntraBiotics.
	 
	 	2.  	Payment for Services.
	 
	 	   	IntraBiotics shall pay Contractor, on account of services provided pursuant hereto, a fee of
$10,000 per month. If IntraBiotics enters into a strategic transaction, additional
compensation will be mutually agreed upon. Travel and out-of-pocket expenses will be billed
separately at cost (original receipts required). Payment shall be made within 15 days upon
presentation of invoice by Contractor.
	 
	 	3.  	Nondisclosure And Trade Secrets.
	 
	 	   	During the term of this Agreement and in the course of Contractor’s performance hereunder,
Contractor may receive and otherwise be exposed to confidential and proprietary information
owned by IntraBiotics or received by IntraBiotics from third parties pursuant to an
obligation of confidentiality with respect thereto, relating to IntraBiotics’ business
practices, strategies and technologies. Such confidential and proprietary information may
include, but not be limited to, any compound, extract, media, vector, cell, cell line,
formulation or sample; any procedure, discovery, invention, formula, data, results, idea or
technique; any trade secret, trade dress, copyright, patent or other intellectual property
right or registration or application therefor or materials relating thereto;
and any information relating to the foregoing or to any research, development,
manufacturing, engineering, marketing, servicing, sales, financing, legal or other business

 

 

	 	   	activities or to any present or future products, prices, plans, forecasts, suppliers,
clients, customers, employees, consultants or investors; whether in oral, written, graphic
or electronic form (collectively referred to as “Information”).
	 
	 	   	Contractor acknowledges the confidential and secret character of the Information, and agrees
that the Information is the extremely valuable property of IntraBiotics or of the third
party from which IntraBiotics received such Information. Accordingly, Contractor agrees not
to reproduce any of the Information in any format, not to use the Information except in the
performance of the work described in this Agreement, and not to disclose all or any part of
the Information in any form to any third party, in each case either during the term of this
Agreement or for ten (10) years thereafter, except with the prior written consent of
IntraBiotics. Upon termination of this Agreement for any reason, including expiration of
the term of this Agreement, Contractor agrees to cease using and to return to IntraBiotics
all whole and partial copies and derivatives of the Information, whether in Contractor’s
possession or under Contractor’s direct or indirect control.
	 
	 	   	Contractor shall not disclose or otherwise make available to IntraBiotics in any manner any
confidential information of Contractor or received by Contractor from third parties, unless
IntraBiotics first agrees in writing to receive such information.
	 
	 	4.  	Ownership of Work Product. Contractor shall specifically describe and identify in
Exhibit B to this Agreement any and all technology, including without limitation
information, materials and related intellectual property rights, which (a) Contractor
intends to use in performing under this Agreement, (b) is either owned solely by Contractor
or controlled by Contractor such that Contractor possesses the right to grant a license or
sublicense thereunder, and (c) is in existence prior to the effective date of this
Agreement (“Background Technology”).
	 
	 	   	Contractor agrees that any and all ideas, developments, discoveries, improvements,
inventions and works of authorship (collectively, “Technology”) conceived, written, created
or first reduced to practice in the performance of work under this Agreement, together with
all intellectual property rights relating thereto (“Work Product”) shall be the sole and
exclusive property of IntraBiotics. Contractor hereby assigns to IntraBiotics all its
right, title and interest in and to any and all such Work Product, and shall not take any
action or permit any inaction that would encumber the Work Product or make it subject to any
liens, claims or demands of third parties, or otherwise adversely affect or interfere with
IntraBiotics’ ownership of the Work Product. Contractor hereby agrees not to use any
Technology or intellectual property rights that are owned or controlled by any third party
or are otherwise not available for use by Contractor or IntraBiotics in the course of
performing services pursuant to this Agreement unless Contractor first notifies IntraBiotics
of such intended use in advance and Contractor is free to use such Technology and
intellectual property to perform such services, and IntraBiotics agrees to permit such use.
	 
	 	   	Contractor further agrees that, except for Contractor’s rights in any Background Technology,
IntraBiotics possesses and shall retain all right, title and interest in all

2.

 

	 	   	Contractor’s Work Product under this Agreement. Contractor hereby grants to IntraBiotics a
non-exclusive, royalty-free and worldwide right to use and sublicense the use of any
Background Technology for the purpose of developing and marketing IntraBiotics products, but
not for the purpose of marketing any Background Technology separate from IntraBiotics
products.
	 
	 	   	Contractor further agrees to execute all papers, including without limitation all patent
applications, invention assignments and copyright assignments, and otherwise assist
IntraBiotics as reasonably required to perfect IntraBiotics’ right, title and interest in
Contractor’s Work Product as expressly granted to IntraBiotics under this Agreement. Such
assistance shall include but not be limited to providing affidavits or testimony in
connection with patent interference, validity or infringement proceedings and participating
in other legal proceedings. Reasonable costs related to such assistance, if required, shall
be paid by IntraBiotics. Contractor’s obligation to assist IntraBiotics as described above
in this paragraph shall continue beyond the termination of this Agreement. If IntraBiotics
is unable, after reasonable effort, to secure Contractor’s signature on any document as
provided in this Paragraph 4, Contractor hereby designates and appoints IntraBiotics and its
duly authorized officers and agents as its agent and attorney in fact to execute, verify and
file applications, and to do all other lawfully permitted acts necessary to achieve the
intent of this Paragraph 4 with the same legal force and effect as if executed by
Contractor.
	 
	 	5.  	Conflicting Engagements. Contractor will notify IntraBiotics in writing prior to
entering into any employment or consulting arrangement with one or more third parties which
involves subject matter substantially similar to services Contractor is to provide
hereunder or which is provided for the benefit of third parties who are competitors of
IntraBiotics. During the term of this Agreement, Contractor shall not accept any
employment or consulting work which conflicts with Contractor’s obligations to IntraBiotics
hereunder or which may involve use or disclosure of Information other than as permitted
hereunder.
	 
	 	6.  	Legal And Equitable Remedies. Contractor hereby acknowledges and agrees that in the
event of any breach of this Agreement by Contractor, including, without limitation, the
actual or threatened disclosure of Information without the prior express written consent of
IntraBiotics, IntraBiotics will suffer an irreparable injury, such that no remedy at law
will afford it adequate protection against, or appropriate compensation for, such injury.
Accordingly, Contractor hereby agrees that IntraBiotics shall be entitled to specific
performance of Contractor’s obligations under this Agreement, as well as such further
relief as may be granted by a court of competent jurisdiction.
	 
	 	7.  	Warranty; Indemnification. Contractor warrants that he or she has good and marketable
title to all of Contractor’s Work Product and that all material supplied and work performed
under this Agreement shall be in compliance with all applicable laws and regulations.
Contractor further warrants that the Work Product shall be free and clear of
all liens, claims, encumbrances or demands of third parties, including any claims by any
such third parties with respect to such third parties’ intellectual property rights in the

3.

 

	 	   	Work Product. Contractor shall indemnify, defend and hold harmless IntraBiotics and its
officers, agents, directors, employees, and customers from and against any claim, liability,
loss, judgment or expense (including reasonable attorneys’ and expert witnesses’ fees and
costs) resulting from or arising out of any such claims by any third parties which are based
upon or are the result of any breach of such warranty.
	 
	 	8.  	Term; Termination. Either IntraBiotics or Contractor may terminate this Agreement upon
thirty (30) days prior written notice to the other. In the event this Agreement is
terminated, Contractor shall promptly upon termination return all Information (including
all copies thereof) as provided in Section 3, deliver all Work Product and related
documentation to IntraBiotics, and provide IntraBiotics with an invoice for any work
provided by Contractor for which compensation has not already been paid. If compensation
has been advanced to Contractor, Contractor shall reimburse any amounts for which work has
not been performed prior to the date of the notice of termination. Sections 3, 4, 5, 6, 7,
9 and 11 shall survive the termination of this Agreement for any reason, including
expiration of the term of this Agreement.
	 
	 	9.  	Compliance with Applicable Laws. Contractor warrants that all material supplied and
work performed under this Agreement shall be in compliance with all applicable laws and
regulations.
	 
	 	10.  	Independent Contractor. Contractor is an independent contractor, is not an agent or
employee of IntraBiotics and is not authorized to act on behalf of IntraBiotics.
Contractor will not be eligible for any employee benefits, nor will IntraBiotics make
deductions from any amounts payable to Contractor for taxes. Payment of all taxes due on
any amounts paid to Contractor hereunder shall be the sole responsibility of Contractor.
	 
	 	11.  	General. The parties’ rights and obligations under this Agreement will bind and inure
to the benefit of their respective successors and assigns, except that Contractor may not
delegate or assign any of his or her obligations or rights under this Agreement without
IntraBiotics’ prior written consent. This Agreement and Exhibits A and B, attached hereto
and hereby incorporated herein, constitute the parties’ final, exclusive and complete
understanding and agreement with respect to the subject matter hereof, and supersede all
prior and contemporaneous understandings and agreements relating to its subject matter.
This Agreement may not be waived, modified or amended unless mutually agreed upon in
writing by both parties. In the event any provision of this Agreement is found to be
legally unenforceable, such provision shall be deemed deleted from the Agreement and such
unenforceability shall not prevent enforcement of any other provision of the Agreement.
This Agreement shall be governed by the laws of the State of California, excluding its
conflicts of laws principles. Any notices required or permitted hereunder shall be given
to the appropriate party at the address specified below or at such other address as the
party shall specify in writing. Such notice shall be deemed
given either upon personal delivery, one (1) day after being sent by overnight delivery
service, three (3) days after the date of mailing if sent by certified or registered mail,

4.

 

	 	   	postage prepaid, or on the day of transmission by facsimile, provided that the notifying
party confirms receipt of such transmission with the other party by telephone. This
Agreement may be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute a single instrument.

               In Witness Whereof, the parties hereto have executed this Agreement as of the
Effective Date.

	 	 	 	 	 	 	 
	

	 	INTRABIOTICS
	 	 	 	CONTRACTOR
	 
	 	 	 	 	 	 
	Signature:

	 	/s/ Henry J. Fuchs
	 	Signature:
	 	/s/ Kathleen Stafford
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	1/1/2005
	 	Date:
	 	1/3/2005
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Henry J. Fuchs
	 	Name:
	 	Kathleen Stafford
	Title:

	 	President & CEO
	 	Title:	 	 
	Address:

	 	2483 E. Bayshore Road
	 	Address:	 	 
	

	 	Suite 100	 	 	 	 
	

	 	Palo Alto, CA 94303	 	 	 	 
	Telephone:

	 	650-526-6800
	 	Telephone:	 	 

5.

 

AMENDMENT TO CONSULTING AGREEMENT BETWEEN INTRABIOTICS

PHARMACEUTICALS, INC. AND KATHLEEN STAFFORD

     This Amendment to the Consulting Agreement Between IntraBiotics Pharmaceuticals, Inc. and
KATHLEEN STAFFORD (the “Amendment”) is made and entered into effective as of February 1, 2005
(the “Amendment Effective Date”), by and between IntraBiotics, Inc., a Delaware
corporation (“IntraBiotics”) having its principal place of business at 2483 E. Bayshore
Road, Suite 100, Palo Alto, CA 94303 and KATHLEEN STAFFORD at 10 Blair Avenue, Piedmont, CA 94611
(the “Consultant”).

     Whereas, IntraBiotics and Consultant entered into a consulting agreement, made
effective between such parties as of January 1, 2005, (the “Agreement”) regarding general financial
and business development consulting services; and

     Whereas, IntraBiotics and Consultant desire to amend Section 2 of the Agreement as
set forth below.

     Now Therefore, in consideration of the premises and of the covenants contained herein
and in the Agreement, the Parties hereto mutually agree as follows:

1. Amendment of the Agreement

The Parties hereby agree to amend the terms of the Agreement as provided below, effective as of the
Amendment Effective Date. To the extent that the Agreement is explicitly amended by this
Amendment, the terms of the Amendment will control where the terms of the Agreement are contrary to
or conflict with the following provisions. Where the Agreement is not explicitly amended, the
terms of the Agreement will remain in force. Capitalized terms used in this Amendment that are not
otherwise defined herein shall have the same meanings as such terms are defined in the Agreement.

1.1 Amendment of Section 2 of the Agreement. Section 2 of the Agreement is hereby deleted and
replaced in its entirety with the following:

“ 2. Payment for Services”. Effective February 1, 2005, IntraBiotics shall pay Consultant, on
account of services provided pursuant hereto, a fee of $150.00 per hour, prorated as appropriate,
up to a maximum of $10,000 per month. Travel and out-of-pocket expenses will be billed separately
at cost. Payment shall be made on a monthly basis within fifteen (15) days upon presentation of
invoice from Consultant.

2. Miscellaneous

     2.1 Full Force and Effect. This Amendment amends the terms of the Agreement and is deemed
incorporated into, and governed by all other terms of, the

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Agreement. The provisions of the Agreement, as amended by this Amendment, remain in full force and
effect.

     2.2 Counterparts. This Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     In Witness Whereof, the Parties hereto have duly executed this Amendment by their
authorized officers as of the date and year first above written.

	 	 	 
	INTRABIOTICS

	 	CONTRACTOR
	By: /s/ Henry J. Fuchs

	 	By: /s/ Henry J. Fuchs
	 
	 	 
	Name: Henry J. Fuchs, MD

	 	Name: Kathleen Stafford
	Date: March 9, 2005

	 	Date: March 9, 2005
	Title: President and CEO

	 	Title: Financial Consultant

2exv10w16

 

EXHIBIT 10.16

IMATION CORP. 2000 STOCK INCENTIVE PLAN,

AS AMENDED FEBRUARY 6, 2003

STOCK OPTION AGREEMENT

     
This STOCK OPTION AGREEMENT (the “Agreement”)
effective as of May 13, 2004 is between Imation Corp., a
Delaware corporation (the “Company”), and Frank P.
Russomanno, an employee of the Company or one of its Affiliates
(the “Participant”), pursuant to and subject to the
terms and conditions of the Imation Corp. 2000 Stock Incentive
Plan, as Amended February 6, 2003 (the “Plan”).

     
The Company desires to provide the Participant with an
opportunity to purchase shares of the Company’s common
stock, par value $.01 per share (the “Common
Stock”), as provided in this Agreement in order to carry
out the purpose of the Plan. The purpose of this Agreement is to
evidence the terms and conditions of a Non-Qualified Stock
Option granted to the Participant under the Plan.

     
Accordingly, for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and
the Participant hereby agree as follows:

     
1. Grant of Non-qualified Stock Option.
Effective May 13, 2004 (the “Effective Date”),
the Company granted to the Participant the right and option to
purchase all or any part of an aggregate of fifty thousand
(50,000) shares of Common Stock on the terms and conditions set
forth in this Agreement and in accordance with the terms of the
Plan (the “Option”). The Option is not intended to be
an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the
“Code”).

     
2. Purchase Price. The purchase price of the
shares of Common Stock subject to the Option shall be
$40.26 per share.

     
3. Term of the Option. The term of the Option
(the “Option Period”) shall be for a period of seven
(7) years from the Effective Date, terminating at the close
of business on the seventh anniversary of the Effective Date
(the “Expiration Date”) or such shorter period as
provided in Sections 4 and 7 hereof.

     
4. Vesting of the Option.

		
	 	     
    (a) Subject to Sections 5 and 7 hereof, the Option may
    be exercised at any time or from time to time, as to any part or
    all of the shares covered by the Option, on or after
    May 13, 2008 and prior to the Expiration Date, if the
    Company achieves a ten percent (10%) or greater compounded
    average annual growth in operating income for the period
    beginning on January 1, 2004 and ending on
    December 31, 2007, as compared to the December 31,
    2003 full fiscal year operating income; provided,
    however, if it is determined after December 31, 2007
    that the Company did not achieve this objective, the Option
    shall be deemed to have expired on December 31, 2007.
	 
	 	     
    (b) The Committee shall make the determination whether the
    objective described in this Section 4 was achieved. Such
    determination shall be made as promptly as practicable after
    December 31, 2007, shall be based on the Company’s
    audited financial statements for the applicable periods, and
    shall be final and conclusive with respect to the achievement of
    the objectives. For purposes of determining whether the
    operating income objective has been achieved under this
    Agreement, the Committee shall exclude the effect of expensing
    options.
	 
	 	     
    (c) If the Option is exercisable pursuant to the terms set
    forth in this Section 4, the Option shall expire on the
    Expiration Date if not exercised prior to that date.

     
5. Limited Acceleration upon Certain Events.

		
	 	     
    (a) If prior to December 31, 2007 (i) the Company
    terminates the Participant’s employment with the Company
    and all its Affiliates without Cause, (ii) the Company
    terminates the Participant’s employment with the Company
    and all its Affiliates and such termination is within one
    (1) year after a Change of Control for any reason other
    than Cause or the Participant’s death or Disability, or
    (iii) the Participant terminates his employment with the
    Company and all its Affiliates for Company Breach (any of the
    termination events described in these Sections 5(a)(i),
    (ii) and (iii) being referred to herein as an
    “Acceleration Termination Event”), then a portion of
    the

 

		
	 	
    Option shall immediately vest and become exercisable (subject to
    the time periods for exercise set forth in other provisions of
    this Agreement), if (and only if) the Company had achieved the
    required level of growth in operating income for the applicable
    period ending on the December 31 immediately prior to the
    date of such Acceleration Termination Event, in accordance with
    Section 4. Such Option shall accelerate (if at all) only in
    an amount equal to the number of shares of Common Stock
    determined by multiplying fifty thousand (50,000) shares by the
    ratio of (i) the portion of the applicable measurement
    period set forth in Section 4 (expressed in full fiscal
    years) through the December 31 immediately prior to the
    date of such Acceleration Termination Event, divided by
    (ii) four (4).
	 
	 	     
    (b) If an Acceleration Termination Event occurs on or after
    January 1, 2008 and on or before December 31, 2010,
    then no portion of any forfeited Option described in
    Section 4 above that did not vest in accordance with
    Section 4 in accordance with its terms shall be reinstated
    or accelerated.
	 
	 	     
    (c) Except as specifically provided in Section 5(a)
    hereof, there shall not be any acceleration of vesting of the
    Option or any portion thereof. Without limiting the foregoing, a
    voluntary resignation or retirement by the Participant shall not
    be an Acceleration Termination Event.
	 
	 	     
    (d) For the avoidance of doubt, the following is an example
    of the limited acceleration described in this Section 5:

		
	 	
    If an Acceleration Termination Event occurred during July 2006,
    then the Option described in Section 4 would accelerate as
    to 25,000 shares, if (but only if) the Company had achieved
    a ten percent (10%) or greater compounded average annual growth
    in operating income for the two year period ended
    December 31, 2005, as compared to the December 31,
    2003 full fiscal year operating income. (Note that this growth
    might be achieved even if the Company’s operating income
    grew at a rate less than ten percent (10%) in either such year,
    so long as the combined compounded growth in operating income
    for such two year period was at least ten percent (10%)). The
    25,000 shares that would accelerate under this example
    would be determined by multiplying 50,000 shares by the
    ratio of 2 (the number of full fiscal years elapsed under
    Section 4), divided by 4 (the total number of full fiscal
    years as set forth in Section 4). The remaining
    25,000 shares of the Option (50,000 shares minus
    25,000 shares) would be forfeited upon the
    Participant’s termination. Exercise of such vested
    25,000 share Option would be subject to the exercise
    provisions of this Agreement.

     
6. Transferability. The Option may not be
assigned, transferred (other than by will or the laws of descent
and distribution), pledged, hypothecated (whether by operation
of law or otherwise) or otherwise conveyed or encumbered, and
shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the
provisions of the Plan or this Agreement, or the levy of any
execution, attachment or similar process upon the Option, shall
be void and unenforceable against the Company and shall
constitute an immediate cancellation of the Option.

     
7. Effect of Termination of Employment.

		
	 	     
    (a) In the event the Participant shall cease to be employed
    by the Company or an Affiliate for any reason other than
    termination for Cause, Retirement, death or Disability, the
    Participant may exercise the Option to the extent of (but only
    to the extent of) the number of vested shares the Participant
    was entitled to purchase under the Option on the date of such
    termination of employment (including the shares, if any, that
    vested pursuant to Section 5 hereof if an Acceleration
    Termination Event has occurred), and the exercise of the Option
    to that limited extent may be effected at any time within ninety
    (90) days after the date of such termination of employment
    (or within six (6) months after such termination of
    employment if such termination is for any reason following a
    Change of Control) but not thereafter; provided,
    however, that the Option may not be exercised after the
    Expiration Date.
	 
	 	     
    (b) In the event the Participant shall cease to be employed
    by the Company or an Affiliate upon termination for Cause, the
    Option shall be terminated as of the date of such termination.
	 
	 	     
    (c) Except as otherwise provided in Sections 7(b) and
    7(d), in the event the Participant shall cease to be employed by
    the Company or an Affiliate because of Retirement, the Option,
    to the extent not previously exercised or forfeited, shall be
    exercisable to the extent of (but only to the extent of) the
    number of vested shares the Participant was entitled to purchase
    under the Option on the date of the Participant’s
    Retirement, and the exercise

2

 

		
	 	
    of the Option to that limited extent may be effected at any time
    within three (3) years after the date of the
    Participant’s Retirement but not thereafter; provided,
    however, that the Option may not be exercised after the
    Expiration Date. If a Participant who has thus retired dies
    within three (3) years after the date of the
    Participant’s Retirement and prior to the Expiration Date,
    the exercise of the Option to the limited extent provided for in
    the first sentence of this Section 7(c) may be effected by
    the Participant’s estate or by any Person or Persons to
    whom the Option has been transferred by will or the applicable
    laws of descent and distribution at any time within two
    (2) years after the date of the Participant’s death,
    but not after the Expiration Date.
	 
	 	     
    (d) In the event the Participant dies or is deemed to
    suffer a Disability while employed by the Company or an
    Affiliate, the Option, to the extent not previously exercised or
    forfeited, shall be exercisable to the extent of (but only to
    the extent of) the number of vested shares the Participant was
    entitled to purchase under the Option on the date of the
    Participant’s death or Disability. In the event of
    Participant’s death, the exercise of the Option to the
    limited extent provided for in the first sentence of this
    Section 7(d) may be effected by the Participant’s
    estate or by any Person or Persons to whom the Option has been
    transferred by will or the applicable laws of descent and
    distribution at any time within two (2) years after the
    date of the Participant’s death, but not after the
    Expiration Date. In the event of the Participant’s
    Disability, the exercise of the Option to the limited extent
    provided for in the first sentence of this Section 7(d) may
    be effected by the Participant at any time within two
    (2) years after the date of the Participant’s
    Disability, but not after the Expiration Date.

     
8. Anti-Dilution Adjustments. In the event
that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, shares of Common
Stock, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or
exchange of shares or other securities of the Company, issuance
of warrants or other rights to purchase shares of Common Stock
or other securities of the Company or other similar corporate
transaction or event affects the shares of Common Stock covered
by the Option such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under this Agreement, then the Committee shall,
in such manner as it may deem equitable, in its sole discretion,
adjust any or all of the number and type of the shares covered
by the Option and the exercise price of the Option.

     
9. Manner of Exercise. Subject to the terms
and conditions of this Agreement, the Option may be exercised by
delivering written notice to the Stock Plan Administrator
pursuant to procedures prescribed by the Company from time to
time. Such notice shall state the election to exercise the
Option and the number of shares in respect of which it is being
exercised and shall be signed by the Participant or such other
Person entitled to exercise the Option. Such notice shall be
accompanied by payment of the full purchase price of such shares
and applicable federal, state, local and foreign withholding
taxes, if any. The Participant shall deliver to the Company
consideration with a value equal to such purchase price and
applicable withholding taxes, if any, payable in whole or in
part as follows: (a) cash, check, bank draft, money order
or wire transfer payable to the order of the Company,
(b) shares of Common Stock owned by the Participant at the
time of exercise and/or (c) in any other form of valid
consideration that is acceptable to the Committee in its sole
discretion. The value of any share of Common Stock delivered in
payment of all or part of the purchase price or applicable
withholding taxes upon the exercise of the Option shall be the
last sale price of a share of Common Stock on the New York Stock
Exchange on the date the Option shall be exercised or, if such
date is not a day on which trading occurs generally on the New
York Stock Exchange, on the immediately preceding date on which
such trading occurred. In the event that the Option shall be
exercised pursuant to Section 7(c) or 7(d) hereof by any
Person or Persons other than the Participant, such notice shall
be accompanied by appropriate proof of the right of such Person
or Persons to exercise the Option. If the Participant fails to
pay the full purchase price of such shares or applicable
withholding taxes, then the Option, and right to purchase such
shares, may be forfeited by the Participant, in the sole
discretion of the Committee. The Option may be exercised in
whole or in part to the extent the Option is exercisable in
accordance with the terms of this Agreement, but only with
respect to full shares of Common Stock. No fractional shares of
Common Stock shall be issued upon exercise of the Option, but
the Company will pay, in lieu thereof, the Fair Market Value of
such fractional share.

     
10. Issuance of Shares. Upon exercise of all
or any portion of the Option, the Company will cause to be
issued to the Participant the shares of Common Stock purchased.
Notwithstanding anything to the contrary in this Agreement, the
Company’s obligation to issue shares of Common Stock shall
be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as
may be required, including, without limitation, the

3

 

effectiveness of a registration statement under the Securities
Act of 1933, as amended, and (ii) the condition that such
shares shall have been duly listed on the New York Stock
Exchange. The Participant shall not have any of the rights and
privileges of a shareholder of the Company with respect to the
shares of Common Stock subject to this Option unless and until
such shares are issued to the Participant upon due exercise of
the Option.

     
11. Taxes. The Participant acknowledges that
the Participant will consult with the Participant’s
personal tax adviser regarding the income tax consequences of
exercising the Option or any other matters related to this
Agreement. In order to comply with all applicable federal,
state, local or foreign income tax laws or regulations, the
Company may take such action as it deems appropriate to ensure
that all applicable federal, state, local or foreign payroll,
withholding, income or other taxes, which are the
Participant’s sole and absolute responsibility, are
withheld or collected from the Participant.

     
12. Definitions. Terms not defined in this
Agreement shall have the meanings given to them in the Plan, and
the following terms shall have the following meanings when used
in this Agreement:

		
	 	     
    (a) “Cause” means termination of
    Participant’s employment with the Company or an Affiliate
    for the following acts: (i) the Participant’s gross
    incompetence or substantial failure to perform his duties,
    (ii) misconduct by the Participant that causes or is likely
    to cause harm to the Company or that causes or is likely to
    cause harm to the Company’s reputation, as determined by
    the Company’s Board of Directors in its sole and absolute
    discretion (such misconduct may include, without limitation,
    insobriety at the workplace during working hours or the use of
    illegal drugs), (iii) failure to follow directions of the
    Company’s Board of Directors that are consistent with the
    Participant’s duties, (iv) the Participant’s
    conviction of, or entry of a pleading of guilty or nolo
    contendre to, any crime involving moral turpitude, or the entry
    of an order duly issued by any federal or state regulatory
    agency having jurisdiction in the matter permanently prohibiting
    the Participant from participating in the conduct of the affairs
    of the Company or (v) any breach of this Agreement that is
    not remedied within thirty (30) days after receipt of
    written notice from the Company specifying such breach in
    reasonable detail.
	 
	 	     
    (b) “Change of Control” means any of the
    following events:

		
	 	     
    (i) the acquisition by any person, entity or
    “group,” within the meaning of Section 13(d)(3)
    or 14(d)(2) of the Securities Exchange Act of 1934, as amended
    (the “Exchange Act”), other than the Company or an
    Affiliate, or any employee benefit plan of the Company or an
    Affiliate, of beneficial ownership (within the meaning of
    Rule 13d-3 promulgated under the Exchange Act) of thirty
    percent (30%) or more of either the then outstanding Common
    Stock or the combined voting power of the Company’s then
    outstanding voting securities in a transaction or series of
    transactions not approved in advance by a vote of a majority of
    the Continuing Directors (as hereinafter defined); or
	 
	 	     
    (ii) individuals who, as of the Effective Date, constitute
    the Board of Directors of the Company (generally the
    “Directors” and as of the Effective Date the
    “Continuing Directors”) cease for any reason to
    constitute at least a majority thereof, provided that any person
    becoming a Director subsequent to the Effective Date whose
    nomination for election was approved in advance by a vote of a
    majority of the Continuing Directors (other than a nomination of
    an individual whose initial assumption of office is in
    connection with an actual or threatened solicitation with
    respect to the election or removal of the Directors of the
    Company, as such terms are used in Regulation 14A under the
    Exchange Act) shall be deemed to be a Continuing
    Director; or
	 
	 	     
    (iii) the approval by the shareholders of the Company of a
    reorganization, merger, consolidation, liquidation or
    dissolution of the Company or of the sale (in one transaction or
    a series of related transactions) of all or substantially all of
    the assets of the Company other than a reorganization, merger,
    consolidation, liquidation, dissolution or sale approved in
    advance by a vote of a majority of the Continuing
    Directors; or
	 
	 	     
    (iv) the first purchase under any tender offer or exchange
    offer (other than an offer by the Company or an Affiliate)
    pursuant to which Common Stock is purchased.

		
	 	     
    (c) “Committee” means the Compensation Committee
    of the Board of Directors of the Company or such other committee
    of Directors designated by the Board of Directors to administer
    the Plan.
	 
	 	     
    (d) “Company Breach” means: (i) a change in
    the Participant’s duties or responsibilities with the
    Company (A) that represents a substantial reduction of the
    duties or responsibilities as in effect immediately prior
    thereto and

4

 

		
	 	
    (B) that is reasonably likely to subject the Participant to
    professional embarrassment or ridicule; (ii) a change by
    the Board of Directors of the Company in the duties or
    responsibilities of other senior executive officers of the
    Company that has the effect of precluding the Participant from
    effectively performing his duties and responsibilities;
    (iii) a material reduction in the Participant’s base
    compensation that is not substantially proportionate to any
    reduction in the base compensation of other senior executives of
    the Company; or (iv) any material breach by the Company of
    any provision of the Severance Agreement between the Participant
    and the Company that is not remedied within thirty
    (30) days after receipt of written notice from the
    Participant specifying such breach in reasonable detail.
	 
	 	     
    (e) “Disability” shall be as defined under the
    Imation Corp. Long Term Disability Income Protection Plan.
	 
	 	     
    (f) “Retirement” means retirement as defined
    under the Imation Corp. Cash Balance Pension Plan.
	 
	 	     
    (g) “Stock Plan Administrator” means the
    Committee or any Director, officer or agent of the Company
    designated by the Committee from time to time.

     
13. Governing Law. The internal law, and not
the law of conflicts, of the State of Delaware will govern all
questions concerning the validity, construction and effect of
this Agreement.

     
14. Plan Provisions. This Agreement is made
under and subject to the provisions of the Plan, and all of the
provisions of the Plan are also provisions of this Agreement. If
there is a difference or conflict between the provisions of this
Agreement and the provisions of the Plan, the provisions of the
Plan will govern. By accepting this Option, the Participant
confirms that the Participant has received a copy of the Plan
and represents that the Participant is familiar with the terms
and provisions thereof, and hereby accepts this Option subject
to all the terms and provisions of the Plan.

     
15. No Right to Continue Service or
Employment. Nothing herein shall be construed as giving
the Participant the right to continue in the employ or to
provide services to the Company or any Affiliate, whether as an
employee or as a consultant or otherwise, or interfere with or
restrict in any way the right of the Company or any Affiliate to
discharge the Participant, whether as an employee or consultant
or otherwise, at any time, with or without cause. In addition,
the Company or any Affiliate may discharge the Participant free
from any liability or claim under this Agreement, unless
otherwise expressly provide herein.

     
16. Entire Agreement. Except as specifically
provided herein, (i) this Agreement together with the Plan
supersede any and all other prior understandings and agreements,
either oral or in writing, between the parties with respect to
the subject matter hereof and constitute the sole and only
agreements between the parties with respect to said subject
matter; (ii) all prior negotiations and agreements between
the parties with respect to the subject matter hereof are merged
into this Agreement; and (iii) each party to this Agreement
acknowledges that no representations, inducements, promises or
agreements, orally or otherwise, have been made by any party or
by anyone acting on behalf of any party, which are not embodied
in this Agreement or the Plan and that any agreement, statement
or promise that is not contained in this Agreement or the Plan
shall not be valid or binding or of any force or effect.

     
17. Modification. No change or modification
of this Agreement shall be valid or binding upon the parties
unless the change or modification is in writing and signed by
the parties. Notwithstanding the preceding sentence, the Plan,
this Agreement and the Option may be amended, altered,
suspended, discontinued or terminated to the extent permitted by
the Plan.

     
18. Shares Subject to Agreement. The shares
covered by the Option shall be subject to the terms and
conditions of this Agreement. Except as otherwise provided in
Section 8, no adjustment shall be made for dividends or
other rights for which the record date is prior to the issuance
of such shares. The Company shall at all times during the Option
Term reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of this
Agreement.

     
19. Severability. In the event that any
provision that is contained in the Plan or this Agreement is or
becomes invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or this Agreement for any reason and
under any law as deemed applicable by the Committee, the
invalid, illegal or unenforceable provision shall be construed
or deemed amended to conform to applicable laws, or if it cannot
be so construed or deemed amended without materially altering
the purpose and intent of the Plan or this Agreement in the
discretion of the Committee, such

5

 

provision shall be stricken as to such jurisdiction or Option,
and the remainder of the Plan or this Agreement shall remain in
full force and effect.

     
20. Headings. Headings are given to the
sections and subsections of this Agreement solely as a
convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of this Agreement or any provision hereof.

     
21. Participant’s Acknowledgments. The
Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee or the
Board of Directors of the Company, as appropriate, upon any
questions arising under the Plan or this Agreement.
Notwithstanding any of the provisions hereof, the Participant
hereby agrees that the Participant will not exercise the Option
granted hereby, and that the Company will not be obligated to
issue any shares to the Participant hereunder, if the exercise
thereof or the issuance of such shares shall constitute a
violation by the Participant or the Company of any provision of
any law or regulation of any governmental authority. Any
determination in this connection by the Company, including the
Board of Directors of the Company or the Committee, shall be
final, binding and conclusive. The obligations of the Company
and the rights of the Participant are subject to all applicable
laws, rules and regulations.

     
22. Parties Bound. The terms, provisions, and
agreements that are contained in this Agreement shall apply to,
be binding upon, and inure to the benefit of the parties and
their respective heirs, executors, administrators, legal
representatives and permitted successors and assigns, subject to
the limitation on assignment expressly set forth herein. This
Agreement shall have no force or effect unless it is duly
executed and delivered by the Company.

     
The Company has caused this Agreement to be signed and delivered
as of the date set forth above.

		
	 	
    IMATION CORP.
	 
	 	
    /s/ Bruce A. Henderson
	 	
     

	 	
    Name:  Bruce A. Henderson

			
	 	Title:	
    Chairman and Chief Executive Officer

6

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