Imation Corp. 2008 Stock Incentive Plan Performance-Based Stock Option Agreement
Exhibit 10.2
This PERFORMANCE-BASED STOCK OPTION AGREEMENT (the “Agreement”) effective as of «GrantDt» is
between Imation Corp., a Delaware corporation (the “Company”), and «Name», 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. 2008 Stock Incentive Plan (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 Performance-Based 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:
Section 1. Grant of Non-qualified Performance-Based Stock Option. Effective «GrantDt»
(the “Effective Date”), the Company granted to the Participant the right and option to purchase all
or any part of an aggregate of «Shares» («NbrShares») 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”).
Section 2. Purchase Price. The purchase price of the shares of Common Stock subject to
the Option shall be «Price» per share.
Section 3. Term of the Option. The term of the Option (the “Option Period”) shall be
for a period of ten (10) years from the Effective Date, terminating at the close of business on the
tenth anniversary of the Effective Date (the “Expiration Date”) or such shorter period as provided
in Section 6 hereof.
Section 4. Vesting of the Option. Subject to Section 6 hereof, the Option may be
exercised at any time or from time to time during the Option Period, as to any part or all of the
shares covered thereby in accordance with the performance criteria and vesting schedule set forth
on Exhibit A.
The Committee shall validate whether the performance criteria described Exhibit A were
achieved. Such validation shall be made at a meeting of the Committee as promptly as practicable
after , shall be based on the Company’s audited financial statements and
shall be final and conclusive with respect to the achievement of the performance criteria.
Section 5. 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.
Section 6. Effect of Termination of Employment.
(a) In the event the Participant shall cease to be employed by the Company and all
subsidiaries of the Company for any reason other than (i) Termination for Cause, (ii) Retirement,
(iii) death or Disability or (iv) termination by the Company or a subsidiary of the Participant’s
employment with the Company and its subsidiaries within two (2) years following a Change in
Control, 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, and the exercise of the Option to that limited extent may be
effected at any time within thirty (30) days after the date of such termination of employment 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 and its
subsidiaries upon Termination for Cause, the Option shall be terminated as of the date of such
termination.
(c) Except as otherwise provided in Sections 6(b), 6(d) and 6(e), in the event the Participant
shall cease to be employed by the Company and all subsidiaries of the Company 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
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 6(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 a subsidiary, 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 6(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.
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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
6(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.
(e) In the event the Company or a subsidiary terminates the Participant’s employment with the
Company and all subsidiaries of the Company for any reason other than death, Disability or
Termination for Cause within two (2) years following a Change in Control and, if (and only
if) the required performance criteria described in Exhibit A has been met such that the only
remaining criteria for vesting is the passage of time, then the entire Option shall become
immediately exercisable in full on the date of such termination of employment, and the exercise of
the Option may be effected at any time within six (6) months after the date of the Participant’s
termination of employment, but not after the Expiration Date. In the event that the provisions of
this Section 6(e) result in “payments” that are finally and conclusively determined by a court or
Internal Revenue Service proceeding to be subject to the excise tax imposed by Section 4999 of the
Code, and the Participant has not received any additional cash payment from the Company relating
thereto under the provisions of Section 6 of the Severance Agreement between the Company and the
Participant (the “Severance Agreement”), the Company shall pay to the Participant an additional
amount such that the net amount retained by the Participant following realization of all
compensation under the Plan that resulted in such “payments,” after allowing for the amount of such
excise tax and any additional federal, state and local income and employment taxes paid on the
additional amount, shall be equal to the net amount that would otherwise have been retained by the
Participant if there were no excise tax imposed by Section 4999 of the Code. If the Participant
receives any additional cash payment from the Company under Section 6 of the Severance Agreement,
the foregoing sentence shall be of no force or effect and the provisions of the Severance Agreement
shall be deemed to supersede the foregoing sentence in its entirety.
Section 7. Anti-Dilution and Fundamental Change Adjustments.
(a) In the event 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 necessary 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, adjust any or all of the number and type of the shares covered by
the Option and the exercise price of the Option.
(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, or
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(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, the amount, if any, by which the Fair
Market Value (as defined in this Section 7(b)) per share of Common Stock exceeds the
exercise price per share of Common Stock covered by the Option. At the time of the
declaration provided for in the immediately preceding sentence, the Option shall
immediately become exercisable in full and 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 in whole or in part, as the case may be. In the event of a declaration
pursuant to this Section 7(b), the 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 the foregoing, the holder of the Option shall not be entitled to the
payment provided for in this Section 7(b) if such Option shall have expired or been
forfeited. For purposes of this Section 7(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.
Section 8. Forfeiture. In the event that after the grant of the Option but prior to a
Change in Control (1) the Company issues a material restatement of an initial financial statement,
and (2) the Participant engaged in intentional misconduct that caused or contributed to the need
for such a restatement because of material noncompliance by the Company with applicable financial
reporting requirements (a “Forfeiture Event”), the Participant, at the request of the Committee
made within 90 days after the restatement, shall forfeit (and shall not be entitled to exercise)
the portion of the Option, if any, which has not been exercised prior to the Committee’s request.
If all or any portion of the Option shall have been exercised prior to the Committee’s request, the
Participant, at the request of the Committee made within 90 days after the restatement, shall
forfeit those Shares, if any, purchased by the Participant upon the exercise
of the Options that are owned by the Participant at the time of the initial financial
statement that is subsequently restated (the “Forfeitable Shares”) and promptly remit to the
Company cash equal to the Net Dividends (as hereinafter defined) received by the Participant at any
time on the Forfeitable Shares.
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If the Forfeitable Shares are not owned by the Participant at the
time of the Committee’s request, the Participant shall promptly remit to the Company the “Net
Proceeds” (as hereinafter defined) from any sale, after the issuance of an initial financial
statement that is subsequently restated, of Forfeitable Shares in lieu of the Forfeitable Shares.
“Net Dividends” or “Net Proceeds” shall mean dividends or proceeds, as the case may be net of taxes
paid or payable by the Participant as a result of the receipt of such dividends and the sale of
such Shares in an amount reasonably determined by the Committee but including interest on the
amount of cash repaid from the date of the receipt by Participant of such dividends or sale
proceeds to the date of payment of such amount to the Company at a rate reasonably determined by
the Committee. The Committee may, but shall not be required by Participant to, reduce the
forfeiture, return and/or payment obligations hereunder to the extent that the Committee, in its
sole and absolute discretion, shall deem appropriate. Nothing herein shall limit any other rights
the Company shall have by law for misconduct of the Participant that caused or contributed to the
need for such restatement.
Section 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 closing sale price of a share of Common Stock on the New York Stock Exchange as
reported on the consolidated transaction reporting system on the date the Option shall be exercised
or, if such Exchange is not open for trading on such date, on the most recent preceding date on
which such Exchange is open for trading. In the event that the Option shall be exercised pursuant
to Section 6(c) or 6(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.
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Section 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
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.
Section 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.
Section 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) “Change in 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 (a)(iii) apply);
or
(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
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(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.
(b) “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.
(c) “Disability” shall be as defined under the Imation Corp. Long Term Disability Income
Protection Plan.
(d) “Retirement” means retirement as defined under the Imation Corp. Cash Balance Pension
Plan.
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(e) “Stock Plan Administrator” means the Committee or any Director, officer or agent of the
Company designated by the Committee from time to time.
(f) “Termination for 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 or her 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.
Section 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.
Section 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.
Section 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.
Section 16. Entire Agreement. Except as specifically provided herein with regard to
the Severance Agreement, (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.
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Section 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.
Section 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 7,
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 Period reserve and keep
available such number of shares of Common Stock as will be sufficient to satisfy the requirements
of this Agreement.
Section 19. Severability. In the event that any provision that is contained in the
Plan or this Agreement is or becomes or is deemed to be 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, in the determination of the Committee, materially altering the purpose or
intent of the Plan or this Agreement, such 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.
Section 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.
Section 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.
Section 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.
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The Company has caused this Agreement to be signed (which may be by electronic signature) and
delivered and the Participant has caused this Agreement to be accepted (which may be by electronic
acceptance) as of the date set forth above.
| IMATION CORP. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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Exhibit A
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