EXHIBIT 10.4
FORM OF KEY MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into on the day of _____, 1997, but
effective at the Effective Time (as set forth below), by and between , an
individual resident of the State of ("Executive"), and Cemax-Icon, Inc., a
Delaware corporation (the "Company").
WHEREAS, Executive has heretofore been employed as an executive
officer of the Company; and
WHEREAS, Company, Imation Corp., a Delaware corporation ("Imation"),
and CI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
Imation ("Merger Subsidiary"), have agreed that Merger Subsidiary shall be
merged (the "Merger") with and into the Company, in accordance with the terms
and conditions of that certain Agreement and Plan of Merger among the Company,
Imation and Merger Subsidiary dated as of the date hereof (the "Merger
Agreement"), pursuant to which the Company will be the surviving corporation and
a wholly owned subsidiary of Imation;
WHEREAS, Imation has conditioned the execution of the Merger
Agreement on the execution of this Agreement; and
WHEREAS, the Company, as the surviving corporation in the Merger,
desires to retain the services of Executive subsequent to such Merger, and
Executive desires to be employed by the Company, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the respective
undertakings of the Company and Executive set forth below, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and as an inducement to Imation to complete the Merger pursuant to
the terms and conditions of the Merger Agreement, the Company and Executive
agree as follows:
1. Employment. The Company hereby agrees to employ Executive, and
Executive accepts such employment and agrees to perform services for the
Company, for the period after the Effective Time (as defined in the Merger
Agreement) and upon the other terms and conditions set forth in this Agreement.
2. Term.
2.01 Initial Term. Unless terminated at an earlier date in
accordance with Section 6 of this Agreement, the term of Executive's employment
hereunder shall commence at the Effective Time of the Merger and shall extend
for a period of months after the Effective Time (the "Initial Term"). The term
of this Agreement may be extended thereafter only by mutual agreement of the
Company and Executive.
2.02 Extension or Expiration of Initial Term. No later than six
months prior to the expiration of the Initial Term, the Company and Executive
will discuss the possible continued employment of Executive by the Company
beyond the Initial Term.
(a) In the event the Company provides written notice of
its intention not to continue the employment of Executive prior to
or on the expiration date of the Initial Term (other than for any of
the reasons set forth in Section 6.02(a), (b) or (c)), the
termination of Executive's employment shall be considered a
termination by the Company without "cause" pursuant to Section
6.01(d), AS OF THE DATE THE COMPANY PROVIDES THE WRITTEN NOTICE OF
ITS INTENTION NOT TO CONTINUE THE EMPLOYMENT OF EXECUTIVE, for the
purposes of Sections 4.05 (Substitute Option) and 6.06 (Wage
Continuation).
(b) In the event that the Company does not provide
written notice of its intention not to continue the employment of
Executive prior to expiration of the Initial Term and the Company
terminates its employment of Executive (other than for any of the
reasons set forth in Section 6.02(a), (b) or (c)) within the first
six months after the expiration of the Initial Term, the termination
of Executive's employment shall be considered a termination by the
Company without "cause" pursuant to Section 6.01(d), AS OF THE DATE
OF TERMINATION OF EMPLOYMENT, for the purposes of Sections 4.05
(Substitute Option) and 6.06 (Wage Continuation).
3. Position and Duties.
3.01 Service with Company; Relocation. During the term of this
Agreement, Executive agrees that Executive shall perform such reasonable
employment duties as the Board of Directors of the Company shall assign to him
substantially consistent with such Executive's duties and responsibilities
immediately prior to the Effective Time. Following the Effective Time, the
Executive shall initially have reporting responsibilities substantially
consistent with Executive's reporting responsibilities immediately prior to the
Effective Time.
In the event that employment of Executive is terminated by the
Company or Executive because the Company requires Executive to move his personal
residence from the State of California at any time prior to the expiration of
the Initial Term, such termination shall be considered a termination by the
Company without "cause" pursuant to Section 6.01(d), AS OF THE DATE OF
TERMINATION OF EMPLOYMENT, for the purposes of Sections 4.05 (Substitute Option)
and 6.06 (Wage Continuation).
3.02 Performance of Duties. Executive agrees to serve the Company
faithfully and to the best of his ability and to devote his full business time,
attention and efforts to the business and affairs of the Company during the term
of this Agreement. Executive represents to the Company that he is under no
contractual commitments inconsistent with his obligations set forth in this
Agreement, and that during the term of this Agreement, he will not render or
perform services for any other corporation, firm, entity or person which are
inconsistent with the provisions of this Agreement.
4. Compensation.
4.01 Base Salary. As base compensation for all services to be
rendered by Executive under this Agreement during the first year of the term of
this Agreement, the Company shall pay to Executive a base salary of $____, which
salary shall be paid on a twice-monthly basis in accordance with the Company's
normal payroll procedures and policies. The salary payable to Executive during
each subsequent year during the term of this Agreement shall be established by
the Company's Board of Directors following an annual performance review, but in
no event shall the salary for any subsequent year be less than the salary in
effect for the prior year.
4.02 Incentive Compensation. In addition to the base salary
described in Section 4.01, Executive shall be entitled to continued
participation in the Cemax-Icon incentive pay plan (the "Incentive Plan"),
subject to the following modifications:
(a) For the initial six months of this Agreement, the
payment and targets for incentive compensation shall be
based on the Cemax- Icon Baseline Sales Plan and the
amount of the payment shall be calculated as set forth
on the attached Exhibit A;
(b) During the succeeding six months of this Agreement,
quarterly payments and targets for incentive
compensation shall be based on the Imation Low Synergy
Sales Plan and the amounts of the payment shall be
calculated as set forth on the attached Exhibit A; and
(c) During the remaining months of this Agreement, quarterly
payments and targets shall be based on the Imation Low
Synergy Sales and Profits Plan and the amounts of the
payment shall be calculated as set forth on the attached
Exhibit A.
4.03 Participation in Benefit Plans. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided to the
Company's other Executive level employees from time to time to the extent that
Executive's age, position or other factors qualify him for such fringe benefits.
4.04 Expenses. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's normal policies for
expense verification.
4.05 Substitute Options. At the Effective Time, an option to
purchase shares of the Company's common stock held by the Executive ("Current
Option") will be converted into options to purchase shares of Imation's common
stock ("Substitute Option") pursuant to Section 2.02 of the Merger Agreement.
Notwithstanding anything in the Merger Agreement or the terms of the Current
Option to the contrary, however, the Substitute Option will:
(a) Become fully vested and exercisable for a period of two
years after termination of employment (but in no event
after expiration of the term of the Substitute Option)
upon termination of employment pursuant to Section
6.01(a);
(b) Become fully vested and exercisable for the remaining
term of the Substitute Option upon termination of
employment pursuant to Section 6.01(b);
(c) Upon termination of employment for the reasons set forth
in Section 6.01(c) or Section 6.01(e) (whether such
termination is before or after the term of this
Agreement), (i) be forfeited and terminate immediately
as to the portion of such Substitute Option not vested
as of the date of termination, and (ii) be exercisable
for a period of five (5) business days after termination
of employment (but in no event after expiration of the
term of the Substitute Option) as to the portion of such
Substitute Option vested as of the date of termination;
or
(d) Become fully vested and exercisable for a period of 45
days after termination of employment (but in no event
after expiration of the term of the Substitute Option)
upon termination of employment pursuant to Section
6.01(d) or upon termination of employment after the term
of this Agreement other than for the reasons set forth
in Section 6.01(c) or Section 6.01(e).
5. Employee Agreement. As a material inducement to the Company to
enter into this Agreement and to perform its obligations hereunder, and as a
material inducement to Imation to enter into the Merger Agreement and to perform
its obligations thereunder, Executive is entering into the Employee Agreement
with the Company in the form attached hereto as Exhibit B (the "Employee
Agreement"), which Employee Agreement shall become effective as of the Effective
Time and shall survive the termination of this Agreement in accordance with its
terms.
6. Termination.
6.01 Grounds for Termination. This Agreement shall terminate prior
to the expiration of the initial term set forth in Section 2 or any extension
thereof in the event that at any time during such initial term or any extension
thereof:
(a) Executive dies, or
(b) Executive becomes disabled (as defined below), so that
he cannot perform the essential functions of his
position with or without reasonable accommodation, or
(c) The Board of Directors of the Company elects to
terminate this Agreement for "cause" and notifies
Executive in writing of such election, or
(d) The Board of Directors of the Company elects to
terminate this Agreement without "cause" and notifies
Executive in writing of such election, or
(e) Executive elects to terminate this Agreement.
If this Agreement is terminated pursuant to subsection (a), (b) or
(c) of this Section 6.01, such termination shall be effective immediately. If
this Agreement is terminated pursuant to subsection (d) or (e) of this Section
6.01, such termination shall be effective thirty (30) days after delivery of the
notice of termination.
6.02 "Cause" Defined.
(a) Executive has breached any provision of the Employee
Agreement in any material respect and has failed to
"cure" such breach within thirty (30) days after receipt
of written notice of default from the Company, or
(b) Executive has engaged in willful and material
misconduct, including willful and material failure to
perform Executive's duties as an officer or employee of
the Company and has failed to "cure" such default within
thirty (30) days after receipt of written notice of
default from the Company, or
(c) Executive has committed fraud, misappropriation or
embezzlement in connection with the Company's business,
or
(d) Executive has been convicted or has pleaded nolo
contendere to felony criminal misconduct, or
(e) Executive's use of narcotics, liquor or an illicit drug
has or has had a detrimental effect on the performance
of his employment responsibilities, as determined by the
Company's Board of Directors.
In the event that the Company terminates Executive's employment for
"cause" pursuant to Section 6.01(c) and Executive objects in writing to the
Board's determination that there was proper "cause" for such termination within
twenty (20) days after Executive is notified of such termination, the matter
shall be resolved by arbitration in accordance with the provisions of Section
7.01. If Executive fails to object to any such determination of "cause" in
writing within such twenty (20) day period, he shall be deemed to have waived
his right to object to that determination. If such arbitration determines that
there was not proper "cause" for termination, such termination shall be deemed
to be a termination pursuant to Section 6.01(d), Executive's sole remedy shall
be to receive the wage continuation benefits contemplated by Section 6.06, and
the Substitute Option and New Option shall be treated as if the Company
terminated this Agreement pursuant to Section 6.01(d) as of the date of
determination by arbitration that there was not proper "cause."
6.03 Effect of Termination Notwithstanding any termination of this
Agreement, Executive, in consideration of his employment hereunder to the date
of such termination, shall remain bound by the provisions of this Agreement
which specifically relate to periods, activities or obligations upon or
subsequent to the termination of Executive's employment.
6.04 "Disability" Defined. As used in this Agreement, the term
"disabled" means any mental or physical condition which renders Executive unable
to perform the essential functions of his position, with or without reasonable
accommodation, for a period of more than ninety (90) days.
6.05 Surrender of Records and Property. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets,
source code, confidential information, hardware, software, product development
and service tools, source code and other intellectual property of the Company,
including, but not limited to, all documents which in whole or in part contain
any trade secrets, source code or confidential information of the Company, which
in any of these cases are in his possession or under his control.
6.06 Wage Continuation. If Executive's employment by the Company is
terminated by the Company pursuant to Section 6.01(b) or 6.01(d), the Company
shall, through the later of (a) the date this Agreement would otherwise have
expired pursuant to Section 2, or (b) six months from the date of termination of
employment, but in no event later than six months after the expiration of the
Initial Term of this Agreement,
(i) continue to pay to Executive his base salary (less any
payments received by Executive from any disability
income insurance policy provided to him by the Company
or other unemployment insurance benefits); and
(ii) continue to provide health insurance, life insurance and
long- term disability insurance benefits to Executive at
a level consistent with the level of such benefits as of
the date of termination of employment.
If this Agreement is terminated pursuant to Section 6.01(a), 6.01(c) or 6.01(e),
Executive's right to base salary and health insurance, life insurance and
long-term disability insurance benefits shall immediately terminate, except as
may otherwise be required by applicable law.
If Executive's employment by the Company is terminated by the
Company pursuant to Section 6.01(b) or 6.01(d), Executive shall also be entitled
to receive any incentive compensation that would have been payable to him, when
and if such payment accrues and is payable under the Incentive Plan through the
later of (a) the date this Agreement would otherwise have expired pursuant to
Section 2, or (b) six months from the date of termination of employment, but in
no event later than six months after the expiration of the Initial Term of this
Agreement. No such compensation will be payable to Executive with respect to any
fiscal year in which the Company does not meet the performance objectives set
forth in the Incentive Plan.
Any payment pursuant to this Section 6.06 shall be conditioned upon the
delivery by Executive to the Company of a full release by Executive of any and
all claims Executive may have against the Company that in any way relate to his
employment by the Company.
No severance or other consideration from any incentive compensation
plan (including, without limitation, the Incentive Plan) shall be payable to
Executive for a termination pursuant to Section 6.01(a), 6.01(c) or 6.01(e),
except to the extent Executive is entitled to such severance or other
consideration as of the date of such termination of employment.
7. Settlement of Disputes.
7.01 Arbitration. Except as provided in Section 7.02, any and all
claims or controversies arising between Executive and the Company (or any of its
affiliated companies) related to Executive's employment with the Company or
termination thereof, including claims for breach of contract, tort, employment
discrimination (including unlawful harassment), and any violation of any state
or federal law shall be resolved by arbitration in accordance with the
applicable labor arbitration rules of the American Arbitration Association.
However, claims under applicable workers compensation law and the National Labor
Relations Act shall not be subject to arbitration. The arbitrator shall be
selected from a panel provided by the Judicial Arbitration and Mediation
Service. The arbitration shall be conducted in the State of California.
Executive and the Company shall equally share the fees and costs of the
arbitrator and shall pay their own respective costs and attorneys fees, if any.
However, if any party prevails on a statutory claim that affords the prevailing
party attorneys fees, then the arbitrator may award reasonable attorneys fees
and costs to the prevailing party. EXECUTIVE UNDERSTANDS AND AGREES THAT THIS
AGREEMENT TO ARBITRATE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO TRIAL BY
JURY OF ANY MATTERS SUBJECT TO ARBITRATION UNDER THIS AGREEMENT.
The decision of the arbitrator(s) shall be final and binding upon
both parties. Judgment of the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. In the event of submission of any
dispute to arbitration, each party shall, not later than thirty (30) days prior
to the date set for hearing, provide to the other party and to the arbitrator(s)
a copy of all exhibits upon which the party intends to rely at the hearing and a
list of all persons each party intends to call at the hearing.
7.02 Resolution of Certain Claims - Injunctive Relief. Section 7.01
shall have no application to claims by the Company asserting a violation of
Section 6.05 or seeking to enforce, by injunction or otherwise, the terms of
Section 6.05. Such claims may be maintained by the Company in a lawsuit subject
to the terms of Section 7.03. Executive agrees that, in addition to, but not to
the exclusion of any other available remedy, the Company shall have the right to
enforce the provisions of Section 6.05 by applying for and obtaining temporary
and permanent restraining orders or injunctions from a court of competent
jurisdiction without the necessity of filing a bond therefor, and the Company
shall be entitled to recover from the Executive its reasonable attorneys' fees
and costs in enforcing the provisions of Section 6.05.
7.03 Venue. Any action at law, suit in equity, or judicial
proceeding arising directly, indirectly, or otherwise in connection with, out
of, related to or from this Agreement or any provision hereof, shall be
litigated only in the courts of the state of Minnesota. Executive waives any
right the Executive may have to transfer or change the venue of any litigation
brought against Executive by the Company.
7.04 Severability. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation of
the foregoing, should the duration or geographical extent of, or business
activities covered by, any provision of this Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may validly
and enforceably be covered. Executive acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement be given the
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.
8. Miscellaneous.
8.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.
8.02 Prior Agreements. This Agreement contains the entire agreement
of the parties relating to the employment of Executive by the Company and the
ancillary matters discussed herein and supersedes all prior agreements and
understandings with respect to such matters, and the parties hereto have made no
agreements, representations or warranties relating to such employment or
ancillary matters which are not set forth herein.
8.03 Withholding Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling or any other
amount owed to the Company.
8.04 Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing and signed by both the
Executive and the Company.
8.05 No Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
8.06 Assignment. This Agreement constitutes a personal service
agreement on the part of Executive and his duties hereunder may not be assigned
or delegated to any other person without the prior written consent of the
Company. The Company may, without the consent of Executive, assign its rights
and obligations under this Agreement to Imation or to any corporation, firm or
other business entity with or into which the Company may merge or consolidate,
or to which the Company may sell or transfer all or substantially all of its
assets, or of which 50% or more of the equity investment and of the voting
control is owned, directly or indirectly, by, or is under common ownership with,
the Company.
8.07 Counterparts. This Agreement may be simultaneously executed in
any number of counterparts, and such counterparts executed and delivered, each
as an original, shall constitute but one and the same instrument.
8.08 Parties. No provision of this Agreement shall be binding on,
create any presumption of employment by, or provide any entitlement to any
benefits from Imation.
8.09 Captions and Headings. The captions and paragraph headings used
in this Agreement are for convenience of reference only, and shall not affect
the construction or interpretation of this Agreement or any of the provisions
hereof.
8.10 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and/or
facsimile numbers set forth below (or to such other addresses and/or facsimile
numbers as a party may designate by notice to the other parties):
Notices to Executive: to the most recent address on record with the
Company.
Notices to the Company: with a copy to:
Imation Corp. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Legal Affairs ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Imation Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
IN WITNESS WHEREOF, Executive and the Company have executed
this Agreement as of the date set forth in the first paragraph.
CEMAX-ICON, INC.
By
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Its
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["Executive"]
EXHIBIT A
Incentive Compensation
Time Period Award Amount Modification of Award Amount
First 6 months: $
Section 4.02(a) -------------------- 100% of Award Amount based on
achievement of Cemax-Icon
Baseline Sales Plan. 100% of
target pays 100% of Award
Amount. Below target pays zero.
Above target pays up to 130% of
Award Amount on a directly
proportional basis (e.g. if 110%
of target achieved, 110% of
Award Amount paid).
Next 6 months: $
Section 4.02(b) ------------------ 100% of Award Amount based on
achievement of Imation Low
Synergy Sales Plan. Below 75% of
target pays zero. 75% of target
pays 50% of Award Amount, 100%
of target pays 100% of Award
Amount, and between 75% and 100%
pays an Award Amount that scales
linearly from 50% to 100% of the
Award Amount. Above target pays
up to 130% of Award Amount on a
directly proportional basis
(e.g. if 110% of target
achieved, 110% of Award Amount
paid).
Remaining months $
of Initial Term: -------------------- 50% of Award Amount based on
Section 4.02 achievement of Imation Low Sales
Plan and 50% on Imation Low
Synergy Profits Plan. Each of
these to pay as follows: 100% of
target pays 100% of allocated
Award Amount. Below 75% of
target pays zero. 75% of target
pays 50% of allocated Award
Amount, 100% of target pays 100%
of allocated Award Amount, and
between 75% and 100% pays an
Award Amount that scales
linearly from 50% to 100% of the
allocated Award Amount. Above
target pays up to 130% of Award
Amount on a directly
proportional basis (e.g. if 110%
of target achieved, 110% of
allocated Award Amount paid).
