Imation Corp. 2000 Stock Incentive Plan, as Amended February 6, 2003 Amendment to Stock Option Agreement
EXHIBIT 10.4
Imation Corp. 2000 Stock Incentive Plan,
as Amended February 6, 2003
as Amended February 6, 2003
Amendment to Stock Option Agreement
This STOCK OPTION AGREEMENT AMENDMENT effective as of , 2006, is entered into
between Imation Corp., a Delaware corporation (the “Company”) and Xxxxx X. Xxxxxxxxxx, an employee
of the Company (the “Participant”), pursuant and subject to the terms and conditions of the Imation
Corp. 2000 Stock Incentive Plan, as Amended February 6, 2003 (the “Plan”).
WHEREAS, pursuant to a certain Stock Option Agreement effective as of May 13, 2004 (the
“Agreement”), the Company granted the Participant under the Plan the right and option (the
“Option”) to purchase from the Company shares of the Company’s common stock, par value $.01 per
share, on the terms and conditions set forth in the Agreement.
WHEREAS, the Agreement provides that the Option will become exercisable upon the achievement
of certain performance objectives.
WHEREAS, pursuant to Section 3 of the Plan, the Compensation Committee has authority to amend
the terms and conditions of the Agreement and the Committee has determined to amend the Agreement
in the manner set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Participant hereby agree to amend the Agreement as
follows:
1. Subsection (a) of Section 5 of the Agreement is hereby amended in its entirety to
read as follows:
(a) If prior to December 31, 2007 (i) the Company or a subsidiary of the Company terminates
the Participant’s employment with the Company and all its subsidiaries without Cause, (ii) the
Company or a subsidiary of the Company terminates the Participant’s employment with the Company and
all its subsidiaries and such termination is within two years 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 subsidiaries for Company Breach (any of the
termination events described in these Sections 5(a)(i), (ii) and (iii) and any declaration pursuant
to Section 8(b)(ii) hereof 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).
2. Subsection (c) of Section 5 of the Agreement is hereby amended in its entirety to
read as follows:
(c) Except as specifically provided in Section 5(a) or Section 8(b)(ii) 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.
3. Subsection (a) of Section 7 of the Agreement is hereby amended in its entirety to
read as follows:
(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 that would also have constituted a Change of Control prior to the
amendment dated , 2006 to this Agreement (the “2006 Amendment”), which definition prior
to the 2006 Amendment is set forth in Exhibit A to the 2006 Amendment) but not thereafter;
provided, however, that the Option may not be exercised after the Expiration Date.
4. Section 8 of the Agreement is hereby amended in its entirety to read as follows:
8. Anti-Dilution and Fundamental Change Adjustments.
(a) 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.
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(b) In the event of a proposed Fundamental Change, the Committee may, but shall not be
obligated to:
(i) with respect to a Fundamental Change that involves a merger or
consolidation, make appropriate provision for the protection of the Option by the
substitution of options and appropriate voting common stock of the corporation
surviving any such merger or consolidation or, if appropriate, the “parent
corporation” (as defined in Section 424(e) of the Code, or any successor provision)
of the Company or such surviving corporation, in lieu of the Option and shares of
Common Stock of the Company, provided that nothing stated herein shall limit the
obligations of the Committee under Section 8(a), or
(ii) with respect to any Fundamental Change, including, without limitation, a
merger or consolidation, declare, prior to the occurrence of the Fundamental Change,
and provide written notice to the holder of the Option of the declaration, that the
Option, whether or not then exercisable, shall be canceled at the time of, or
immediately prior to the occurrence of, the Fundamental Change in exchange for
payment to the holder of the Option, within 20 days after the Fundamental Change, of
cash (or, if the Committee so elects in lieu of solely cash, of such form(s) of
consideration, including cash and/or property, singly or in such combination as the
Committee shall determine, that the holder of the Option would have received as a
result of the Fundamental Change if the holder of the Option had exercised the
Option immediately prior to the Fundamental Change) equal to, for each share of
Common Stock covered by the canceled Option with respect to which the Option is
exercisable at the time of such cancellation (including shares with respect to which
the Option becomes exercisable pursuant to the following provisions of this Section
8(b)(ii)), the amount, if any, by which the Fair Market Value (as defined in this
Section 8(b)(ii)) per share of Common Stock with respect to which the Option is then
exercisable exceeds the exercise price per share of Common Stock covered by the
Option with respect to which the Option is then exercisable. At the time of the
declaration provided for in the immediately preceding sentence, an Acceleration
Termination Event shall be deemed to have occurred and the Option, to the extent it
has not previously become exercisable in full or expired, shall immediately become
exercisable, to the extent set forth in the next sentence, 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
declaration. In such event, the Option shall accelerate only to the extent provided
in the last sentence of Section 5(a), for which purpose the Acceleration Termination
Event shall be deemed to have occurred on the date of the declaration. Following the
declaration, the holder of the Option shall have the right, during the period
preceding the time of cancellation of the Option, to exercise the Option as to all
or any part of the shares of Common Stock covered
thereby for which the Option is exercisable (including as a result of the
Acceleration Termination Event resulting from the declaration pursuant to this
Section 8(a)(ii) but not with respect to the Common Shares for which the Option
has
not become exercisable). In the event of a declaration pursuant to this Section
8(b), the
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Option, to the extent that it shall not have
been exercised prior to the
Fundamental Change, shall be canceled at the time of, or immediately prior to, the
Fundamental Change, as provided in the declaration, notwithstanding anything to the
contrary provided in this Agreement. Notwithstanding the foregoing, the holder of
the Option shall not be entitled to the payment provided for in this Section 8(b) if
such Option shall have expired or been forfeited. For purposes of this Section 8(b)
only, “Fair Market Value” per share of Common Stock means the fair market value, as
determined in good faith by the Committee, of the consideration to be received per
share of Common Stock by the shareholders of the Company upon the occurrence of the
Fundamental Change, notwithstanding anything to the contrary provided in this
Agreement.
5. Section 12 of the Agreement is hereby amended in its entirety to read as follows:
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 one of the following events:
(i) the consummation of a transaction or series of related transactions in
which a 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 a subsidiary of the Company, or any employee benefit plan of the
Company or a subsidiary of the Company, acquires beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the
Company’s then outstanding shares of Common Stock
or the combined voting power of the Company’s then outstanding voting securities
(other than in connection with a Business Combination in which clauses (1), (2) and
(3) of paragraph (b)(iii) apply); or
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(ii) individuals who, as of the Effective Date hereof, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board of Directors of the Company; provided, however,
that any individual becoming a director subsequent to the Effective Date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than a nomination of an individual whose initial assumption
of office is in connection with a solicitation with respect to the election or
removal of directors of the Company in opposition to the solicitation by the Board
of Directors of the Company) shall be deemed to be a member of the Incumbent Board;
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 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
beneficial owners of the Company’s outstanding Common Stock and the Company’s
outstanding voting securities immediately prior to such Business Combination
beneficially own immediately after the transaction or transactions, directly or
indirectly, more than 50% of the then outstanding shares of common stock and more
than 50% of the combined voting power of the then outstanding voting securities (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) in substantially the same proportions as their ownership of the
Company’s Common Stock and voting securities immediately prior to such Business
Combination, (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) beneficially owns,
directly or indirectly, 35% or more of the outstanding shares of common stock or the
combined voting power of the then outstanding voting securities (or comparable
equity interests) of the entity resulting from such Business Combination and (3) at
least a majority of the members of the board of directors (or similar governing
body) of the entity resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board of Directors of the Company providing for such Business
Combination; or
(iv) approval by the stockholders of the dissolution of the Company.
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(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 (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) “Fundamental Change” means a dissolution or liquidation of the Company, a sale of
substantially all of the assets of the Company, or a merger or consolidation of the Company with or
into any other corporation, regardless of whether the Company is the surviving corporation.
(g) “Retirement” means retirement as defined under the Imation Corp. Cash Balance Pension
Plan.
(h) “Stock Plan Administrator” means the Committee or any Director, officer or agent of the
Company designated by the Committee from time to time.
No other terms or conditions of the Agreement are amended hereby, and all such terms and
conditions of the Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the Company and the Participant have executed this Stock Option Agreement
Amendment as of the date and year first written above.
| IMATION CORP. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| PARTICIPANT | ||||
| Xxxxx X. Xxxxxxxxxx | ||||
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Exhibit A
Definition of Change of Control in Agreement Prior to the 2006 Amendment
(This definition has been replaced by the 2006 Amendment)
(This definition has been replaced by the 2006 Amendment)
Under the Agreement prior to the 2006 Amendment, “Change of Control” meant any one 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.
