8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): August 31, 2006

Rimage Corporation

(Exact name of Registrant as Specified in its Charter)

Minnesota

(State Or Other Jurisdiction Of Incorporation)

000-00619	41-1577970
(Commission File Number)	(I.R.S. Employer Identification No.)
7725 Washington Avenue South Minneapolis, MN	55439
(Address Of Principal Executive Offices)	(Zip Code)

(952) 944-8144

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items under Sections 2 through 8 are not applicable and therefore omitted.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On August 31, 2006, Rimage Corporation (the “Company”) entered into a letter agreement with Kenneth J. Klinck (the “Agreement”) regarding the termination without cause of Mr. Klinck’s employment with the Company. Mr. Klinck is the Company’s Sr. Vice President of Sales. Effective February 24, 2005, the Company’s Board of Directors determined that Mr. Klinck is not an “executive officer” within the meaning of Item 401(b) of Regulation S-K under the Securities Act of 1933, as amended, however, Mr. Klinck is a “Named Executive Officer” identified in the Company’s proxy statement for its 2006 Annual Meeting of Shareholders. Mr. Klinck and the Company are also a party to a letter agreement dated November 5, 2004 relating to employment and severance matters (the “November Agreement”).

Under the Agreement, Mr. Klinck will continue to serve as an employee of the Company through December 29, 2006. From January 1, 2007 through December 31, 2007, the Company will provide Mr. Klinck with severance of base salary and bonus, as described in the November Agreement. In connection with the Agreement, the Company and Mr. Klinck amended the November Agreement such that the Company will continue to provide Mr. Klinck with severance benefits through December 31, 2007, even if Mr. Klinck obtains other employment so long as such employment is not considered competitive to the Company’s business. The Company will also continue to pay the employer portion of health and certain other insurance coverage from January 1, 2007 to December 31, 2007. On January 4, 2008, the Company will also make a one-time lump sum bonus payment to Mr. Klinck of $50,000, less required withholding, which payment is intended to help defray the cost of Mr. Klinck’s insurance premiums after his continuing coverage eligibility expires. In addition, the Company has agreed to extend the exercise period of Mr. Klinck’s vested stock options to December 31, 2007. All stock options held by Mr. Klinck will continue to vest according to their respective terms until December 29, 2006.

In exchange for these severance benefits, Mr. Klinck has provided the Company with a general release from liability. Mr. Klinck has also agreed to abide by the terms and conditions of a Nondisclosure and Noncompetition Agreement with the Company dated November 12, 2004. The Company has the right, in addition to other remedies, to withhold payments due to Mr. Klinck under the Agreement for violation of the Nondisclosure and Noncompetition Agreement.

The above summary of the Agreement is subject to and qualified in its entirety by reference to the text of the Agreement, which is included as Exhibit 10.1 to this filing and is incorporated by reference into this Item 1.01.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
10.1	Letter Agreement dated August 31, 2006 by and between Rimage Corporation and Kenneth J. Klinck.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RIMAGE CORPORATION
By:	/s/ Robert M. Wolf
	Robert M. Wolf Chief Financial Officer

Date: September 6, 2006

EX-10.1

Exhibit 10.1

August 31, 2006

Mr. Kenneth J. Klinck

17141 Bainbridge Drive

Eden Prairie, MN 55347

Dear Ken:

This letter describes our agreement regarding the termination of your employment with Rimage Corporation without cause. You have made valuable and lasting contributions to Rimage during your tenure as Sr. Vice President of Sales, and you will be greatly missed.

1. Your last day as an employee of Rimage will be December 29, 2006. We will provide you with severance payments from January 1, 2007 through December 31, 2007, as outlined in Section 1a of the Letter Agreement between you and Rimage, dated November 5, 2004 (see attached). This will include base salary payments (1.a.i.) and bonus amounts (1.a.ii). The November 5, 2004 Letter Agreement is hereby amended such that we will honor this agreement through December 31, 2007, even if you obtain other employment so long as it is not considered competitive to Rimage’s business.

2. You may continue health and certain other insurance coverages, according to state and federal law (COBRA), beginning January 1, 2007. Per section 1.a.iii of the Letter Agreement, Rimage will continue to pay the employer portion of the premium and you will continue to pay the employee portion of the premium from January 1, 2007 to December 31, 2007. You will be responsible for the payment of your premiums thereafter, as long as you remain eligible under COBRA. You will receive a notice detailing your rights to continue insurance coverage under COBRA.

3. Once your COBRA eligibility expires, you will have the option of exercising your “Individual Conversion Right” to move onto an individual plan with our health plan provider, or you may apply for Minnesota Care, which provides coverage to those who cannot obtain it through private insurance. Rimage will make a one-time lump sum bonus payment to you with your final payroll on January 4, 2008 of $50,000, less required withholding, intended to help defray the cost of your insurance premiums. This will be considered taxable income to you.

4. All of your options will discontinue vesting after December 29, 2006. You may exercise your vested stock options at any time before 12/31/07. NOTE: Your option agreements must be amended in order to do this. Please note that the extension of your exercise time period (from 90 days post-separation to 12 months post-separation) requires that all options become non-qualified options vs. Incentive Stock Options. Contact Rob Wolf at 952-946-4557 for questions regarding this change.

In consideration for these benefits:

1. You hereby release, agree not to sue, and forever discharge Rimage, its affiliated entities, and their present officers, directors, agents, employees, successors and assigns (collectively the “Releasees”), from any and all manner of claims, demands, actions, causes of action, administrative claims, liability, damages, claims for punitive or liquidated damages, claims for attorneys’ fees, costs and disbursements, individual or class action claims, or demands of any kind whatsoever, you have or might have against them or any of them, whether known or unknown, in law or equity, contract or tort, arising out of or in connection with your employment with Rimage, or the separation of that employment, or otherwise, and however originating or existing, from the beginning of time through the date of your signing this Agreement. This release includes any claims you may have for wages, bonuses, deferred compensation, vacation pay, separation pay and/or benefits, defamation, improper discharge (based on contract, common law, or statute, including any federal, state or local statute or ordinance prohibiting discrimination or retaliation in employment), the Minnesota Human Rights Act, Title VII of the Civil Rights Act of 1964 as amended, the Americans with Disabilities Act, the Older Workers Benefit Protection Act and the Age Discrimination in Employment Act, and any claim for discrimination or retaliation based on a protected class under state or federal law. You hereby waive any and all relief not provided for in this Agreement. You affirm that you have not caused or permitted, and to the full extent permitted by law will not cause or permit to be filed (to the extent that you are able to control such filing), any charge, complaint, or action of any nature or type against the Releasees, including but not limited to any action or proceeding raising claims arising in tort or contract, or any claims arising under federal, state or local laws, including discrimination law.

2. You agree to abide by the terms and conditions of the Nondisclosure and Noncompetition Agreement you signed on 11/12/04, and agree that Rimage may, in addition to other remedies provided under that agreement, withhold payments due to you under this agreement for violation of the Nondisclosure and Noncompetition Agreement.

3. You agree that you will not disclose confidential or proprietary information of Rimage, or any subsidiaries or affiliates following your resignation. This includes, but is not limited to, information regarding clients or customers, information about the personal or business affairs of Rimage, or its affiliated entities, directors, officers, or employees.

4. You agree that you will not disclose the terms of this Agreement to anyone except your immediate family members, or your legal or tax advisors unless compelled by law.

You may review this Agreement with an attorney of your choice. You have twenty-one (21) days from the date you receive this Agreement to consider whether you wish to sign it. You acknowledge that if you sign this agreement before the end of the 21-day period, it is your voluntary decision to do so, and you waive the remainder of the 21-day period.

You understand that you may rescind this Agreement within seven (7) calendar days after signing it to reinstate claims under the Age Discrimination in Employment Act and fifteen (15) calendar days after signing it to reinstate claims arising under the Minnesota Human Rights Act. In order to be effective, the rescission must (a) be in writing; and (b) delivered to Pamela V. Lampert, Vice President, Human Resources, 7725 Washington Avenue South, Minneapolis, MN, 55439, by hand or by mail within the required period; and (c) if delivered by mail, the rescission must be postmarked within the required period, properly addressed to Pamela V. Lampert and sent by certified mail, return receipt requested. This Agreement will be effective upon the expiration of the required period without rescission. You understand that if you rescind this Agreement you will not continue to receive the benefits described above.

Except as expressly amended by this letter, the November 5, 2004 Letter Agreement shall remain in full force and effect.

If this letter accurately reflects our understanding and agreement, please sign the original and copy and return the original to me.

Sincerely,

Rimage Corporation

/s/  Pamela V. Lampert

By: Pamela V. Lampert

Vice President, Human Resources

Read and agreed to, this 31st day of August, 2006.

/s/  Kenneth J. Klinck

Kenneth J. Klinck