EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of April 1, 1998, is between
Imation Corp., a Delaware corporation (the "Company") and Xxxxxx X. Xxxxxxx (the
"Employee").
WHEREAS, the Company and the Employee desire to enter into an
employment agreement;
NOW, THEREFORE, in consideration of the premise and the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
1. Term; Position and Responsibilities.
(a) Term of Employment. Unless the Employee's employment shall
terminate sooner pursuant to Section 7 hereof, the Company shall employ
the Employee for a term commencing on April 6, 1998 and ending on March
31, 2000 (the "Employment Term"), and the Employee's employment shall
continue thereafter at will.
(b) Position and Responsibilities. During the Employment Term,
the Employee will serve as Senior Vice President - Strategy, Planning
and Chief Financial Officer of the Company and shall have the duties,
responsibilities and authority customarily associated with such
positions, subject to the supervisory powers of the Board of Directors
of the Company (the "Board"). During the Employment Term, the Employee
will devote all of his skill, knowledge and working time (except for
reasonable vacation time and absence for sickness or similar
disability) to the conscientious performance of his duties. Anything
herein to the contrary notwithstanding, subject to Section 8 hereof,
nothing shall preclude the Employee from (i) serving on the boards of
directors of a reasonable number of other corporations or the boards of
a reasonable number of trade associations and/or charitable
organizations, (ii) engaging in charitable activities community affairs
and (iii) managing his personal investments and affairs, provided that
such activities do not interfere with the proper performance of his
duties and responsibilities hereunder. The Employee represents that he
is entering into this Agreement voluntarily and that his employment
hereunder and compliance by him with the terms and conditions of this
Agreement will not conflict with or result in the breach of any
agreement to which he is a party or by which he may be bound. The
Employee further represents that he has provided a copy to the Company
of any employment agreement or arrangement that he has signed with a
previous employer.
2. Base Salary. As compensation for the services to be performed by the
Employee hereunder, the Company will pay the
Employee an annual base salary of $250,000 during the Employment Term. The
Compensation Committee of the Board will review the Employee's base salary from
time to time during the Employment Term and, in the discretion of such
Committee, may increase such base salary from time to time based upon the
performance of the Employee, the financial condition of the Company, prevailing
industry salary scales or such other factors as such Committee, in its
discretion, may consider relevant. (The annual base salary payable to the
Employee under this Section 2, as the same may be increased as described above,
shall hereinafter be referred to as "Base Salary".) The Base Salary payable
under this Section 2 shall be reduced to the extent that the Employee elects to
defer such Base Salary under the terms of any savings plan maintained or
established by the Company, provided that any such reduction in the Base Salary
shall not be taken into account for purposes of calculating the amount of the
Bonus Award (as defined in Section 3 below). The Company shall pay the Employee
the Base Salary in accordance with the Company's standard payroll practices as
in effect from time to time.
3. Incentive Compensation. During the Employment Term, the Employee
shall be eligible to participate in the Company's Success Sharing Plan under
which he may receive such annual incentive compensation in such amount and on
such terms and conditions as shall be determined from time to time by the
Compensation Committee of the Board (the "Bonus Award"). The target amount of
the Employee's Bonus Award shall be approximately $175,000 and the actual amount
of the Bonus Award will vary depending on the economic profit improvement or
financial performance of the Company or other standards established by the
Compensation Committee in its discretion. For fiscal year 1998, the Company will
guarantee the payment to the Employee of a Bonus Award in the amount of $175,000
based on an employment start date of April 6, 1998.
4. Stock Options. Pursuant to the provisions of the Company's 1996
Employee Stock Incentive Program or any successor plan (the "Stock Plan"), the
Compensation Committee of the Board will grant to the Employee in 1998 an option
to purchase 100,000 shares of common stock of the Company at an exercise price
per share of $18.00, the Fair Market Value (as defined in the Stock Plan) of a
share of common stock of the Company on March 13, 1998. The option will not be
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. The option will vest in installments over a
five-year period as follows: 25% after two years, 50% after three years, 75%
after four years and 100% after five years from the date of grant; provided,
however, that such option shall become fully exercisable in the event of the
Employee's termination of employment during the Employment Term Without Cause or
for Good Reason, as described in Section 7 below. The option will have a term of
10 years from the date of grant.
5. Employee Benefits. During the Employment Term, employee benefits,
including life, medical, dental, disability and officer's
liability insurance, will be provided to the Employee in accordance with
programs of the Company then available to executive employees. The Employee
shall also be eligible to participate in the Company's retirement and savings
plans, as the same may be amended and in effect from time to time, at levels and
having interests commensurate with the Employee's then current period of
service, compensation and position.
6. Expenses.
(a) General. During the Employment Term, the Company shall
reimburse the Employee for all reasonable business expenses upon the
presentation of records of such expenses, in accordance with the
applicable policies and procedures of the Company then in effect.
(b) Relocation Expenses. The Company shall reimburse the
Employee for his expenses associated with his relocation to the Twin
Cities metropolitan area.
7. Termination of Employment.
(a) Termination Due to Death or Disability. In the event that
the Employee's employment terminates during the Employment Term due to
death or is terminated by the Company due to the Employee's Disability
(as defined below), no termination benefits shall be payable to or in
respect of the Employee except as provided in Section 7(g)(ii). For
purposes of this Agreement, "Disability" shall mean the inability of
the Employee to perform the duties and responsibilities of his
employment hereunder by reason of his illness or other physical or
mental impairment or condition, if such inability continues for an
uninterrupted period of six months or longer. A period of inability
shall be "uninterrupted" unless and until the Employee returns to
full-time work for a continuous period of at least 30 days.
(b) Termination by the Company for Cause. The Employee may be
terminated for Cause by the Company. "Cause" shall mean: (i) the
Employee's continued and willful failure to perform his duties and
responsibilities, which failure is not remedied by him within 30 days
after the Employee's receipt of written notice from the Company of such
failure, (ii) an act or acts of dishonesty undertaken by the Employee
and intended to result in gain or personal enrichment of the Employee
at the expense of the Company, (iii) unlawful conduct or gross
misconduct that is willful on the Employee's part and that is
demonstrably and materially injurious to the Company, (iv) the
conviction of the Employee of a felony or (v) the existence of any
court order prohibiting the Employee's continued employment with the
Company.
(c) Termination by the Company Without Cause. The Employee may
be terminated Without Cause by the Company. A termination "Without
Cause" shall mean a termination of employment by the Company other than
due to Disability as defined in Section 7(a) or for Cause as defined in
Section 7(b).
(d) Termination by the Employee For Good Reason. The Employee
may terminate his employment with the Company for Good reason. "Good
Reason" shall mean termination of employment by the Employee within 30
days following (i) the assignment to the Employee of any duties or
responsibilities that are significantly different from, and result in a
substantial diminution of, the duties and responsibilities of the
Senior Vice President Strategy, Planning and Chief Financial Officer of
the Company, (ii) the failure by the Company to obtain the assumption
in writing of this Agreement by any successor as contemplated by
Section 9 hereof or (iii) a material breach by the Company of this
Agreement.
(e) Notice of Termination. Any termination by the Company
pursuant to Section 7(a), 7(b) or 7(c) or a termination by the Employee
pursuant to section 7(d) shall be communicated by a written "Notice of
Termination" addressed to the other party. A "Notice of Termination"
shall mean a notice (i) stating that the Employee's employment
hereunder has been or will be terminated, (ii) setting forth the date
of such termination and (iii) indicating the termination provision in
this Agreement under which the Company is terminating the Employee's
employment and setting forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of
the Employee' employment under the provision so indicated. A " Notice
of Termination" from the employee shall mean a notice stating that the
Employee is termination his employment with the Company on the
Termination Date (as defined below) and indicating the termination
provision in Section 7(d) of this Agreement under which he is
terminating his employment.
(f) Termination Date. The "Termination Date" shall be (i) the
date of the Employee's death if the Employee's employment is terminated
by his death, (ii)the date on which Notice of Termination is given as
contemplated by Section 7(e) if the Employee's employment is terminated
for Cause, (iii) 30 days after the date on which Notice of Termination
is given as contemplated by Section 7(e) (or, if no such Notice is
given, 30 days after the date of termination of employment) if the
Employee's employment is terminated due to Disability or Without Cause,
and (iv) 30 days after the date on which Notice of termination is given
as contemplated by Section 7(e) if the Employee terminates his
employment for Good reason.
(g) Payments Upon Certain Terminations.
(i) In the event of a termination of the Employee's
employment Without Cause or by the Employee for Good Reason
prior to April 1, 1999, the Company shall pay to the Employee
an amount equal to the sum of (A) two times the Employee's
annual Base Salary as of the Termination Date multiplied by a
fraction of which (x) the numerator shall be the number of
months remaining in the Employment term (including the month
in which the termination date occurs) and (y) the denominator
shall be 24, (B) $175.000, but only to the extent such amount
has not been paid pursuant to Section 3 hereof (C) the target
amount of the Employee's Bonus Award for fiscal year 1999. The
Company shall pay the Employee such amount in equal monthly
installments for the remainder of the original Employment
Term. In the event of a termination of the Employee's
employment Without Cause or by the Employee for Good Reason
during the Employment term but on or after April 1, 1999, the
Company shall pay to the Employee in 12 equal monthly
installments after the Termination Date an amount equal to the
sum of (A) one times the Employee's annual Base Salary as of
the Termination date,(B)$175.000, but only to the extent such
amount has been paid pursuant to Section 3 hereof and (C) the
target amount of the Employee's Bonus obligations to the
Employee under this Agreement, except to the extent otherwise
provided in the applicable benefit plans and programs referred
to Section 5 hereof.
(ii) In the event that Employee's employment
terminates upon his death or Disability or the Company
terminates the Employee's employment for Cause, or the
Employee terminates his employment with the Company without
Good Reason during the Employment Term, the Company shall pay
the Employee his Base Salary through the date of such
termination and the Company shall have no additional
obligations to the Employee under this Agreement, except to
the extent otherwise provided in the applicable benefit plans
and programs referred to in Section 5 hereof.
(h) Acceleration of Vesting of Stock Options Upon Certain
Terminations. In the event of a termination of the Employee's
employment Without cause or by the Employee for Good reason during the
Employment term, stock options granted to the Employee pursuant to
Section 4 hereof or otherwise shall become fully exercisable on the
date on which the Notice of termination is given and such options shall
expire on the 31st day following the termination Date.
(i) Condition to Payments. The Company's obligation to make
any payments under Section 7(g)(i) and the acceleration of the vesting
of stock options
pursuant to Section 7(h) shall be conditioned upon the Company's
receipt of an appropriately signed "Settlement and Release of Claims"
in form and substance satisfactory to the Company.
8. Confidential Information; Removal of Documents; Non-
Competition, Non-Solicitation and Non-Disparagement.
(a) Confidential Information; Removal of Documents;
Non-Competition. As a condition to Employee's employment with the
Company the Employee shall be required to sign an employee agreement in
the form attached as Exhibit A hereto (the "Employee Agreement");
provided, however, that the two-year period referenced in Section F of
the Employee Agreement shall be changed to a one-year period.
(b) Non-Solicitation and Non-Disparagement. During the
Employee's employment with the Company and for a period of one year
after any termination of employment with the Company, the Employee
(i)shall not solicit or encourage any officer, employee or consultant
of the Company to leave the employ of the Company for employment by or
with any other employer; (ii) shall not divert any customer of the
Company to any business(a "competitive business") which is in
competition with the information processing, medical and photo imaging
application or information processor service application businesses of
the Company; and (iii) shall not disparage the Company or any employee,
director or officer of the Company. For a period of one year after any
termination of the Employee's employment with the Company, the Company
agrees that its directors and officers shall not disparage the
Employee. If, at any time the provisions of this Section 8(b) shall be
determined to be invalid of unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section
8(b) shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be
determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter, and the Employee agrees that this
Section 8(b) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
(c) Remedies. In the event of a breach or threatened breach of
this Section 8, the Employee agrees that the Company shall be entitled
to injunctive relief in a court of appropriate jurisdiction to remedy
any such breach or threatened breach, the Employee acknowledging that
damages would be inadequate and insufficient.
(d) Continuing Operation. Any termination of the Employee's
employment or of this Agreement shall have no effect on the continuing
operation of this Section 8.
9. Successors; Binding Agreement.
(a) Company's Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the
Company except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which the Company
is not the continuing entity, or the sale or liquidation of all or
substantially all of the business and/or assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the business and/or assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties
of the Company, as contained in this Agreement, either contractually or
as a matter of law. The Company will require any such successor to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of this
Agreement or by operation of law.
(b) Employee's Successors. The rights and obligations of the
Employee under this Agreement may not be assigned, transferred or
delegated, in whole or in part, by the Employee.
10. Conditions to the Agreement. This Agreement is conditioned upon the
receipt by the Company of (a) acceptable results of the pre-employment screening
process of a reference check, background check and medical evaluation which
includes a drug/alcohol screening and (b) an Employment Eligibility Form
(Department of Justice Form I-9) executed by the Employee along with one or more
documents that identify the Employee and certify that he is authorized to work
in the United States.
11. Entire Agreement. This Agreement and the Employee Agreement
constitutes the entire agreement between the Company and the Employee with
respect to the subject matter hereof and supersedes all agreements, promises,
representations, understandings, arrangements and communications, whether oral
or written, relating to such subject matter (including those made to or with the
Employee by any other person or entity).
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
interpreted and construed in accordance with the laws of the State of
Minnesota, without giving effect to the conflict of laws principles
thereof.
(b) Tax Withholding. Any payments made under this Agreement
shall be paid net of any applicable withholding requirements under
federal, state and local laws or regulations.
(c) Amendments; Waiver. No provision of this Agreement may be
amended, altered, modified, waived or discharged in any way whatsoever
except by written agreement executed by the Employee and such officer
of the Company as may be specifically designated for the Company by the
Board. No delay or failure of either party to insist, in any one or
more instances, upon performance of any of the terms and conditions of
this Agreement or to exercise any rights or remedies hereunder shall
constitute a waiver or a relinquishment of such rights or remedies or
any other rights or remedies hereunder.
(d) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not be affected
thereby.
(e) Notices. Any notice or other communication required or
permitted to be delivered under this Agreement shall be (i)in writing,
(ii)delivered personally, by courier service or by certified or
registered mail, first-class postage prepaid and return receipt
requested, (iii)deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, and (iv)addressed
as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
if to the Company:
Imation Corp.
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
if to the Employee:
Xxxxxx X. Xxxxxxx
000 Xxx Xxxxxx Xxxx
Xxxxxxx Xxxxx Xxxxxxxxxx 00000
(f) Survival. Sections 8 and 12(a) shall survive the
termination of this Agreement and the termination of the Employee's
employment with the Company.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and both of
which together shall constitute one and the same instrument.
(h) Headings. The section and other headings contained in this
Agreement are for the convenience of the parties only and are not
intended to be a part hereof or to affect the meaning or interpretation
hereof.
IN WITNESS WHEREOF, the Company has duly executed this Agreement by its
authorized representative and the Employee has hereunto set his hand, in each
case effective as of the date first above written.
IMATION CORP.
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx
