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TRANSFER AND DISTRIBUTION AGREEMENT
Dated as of June 18, 1996
between
MINNESOTA MINING AND MANUFACTURING COMPANY
and
IMATION CORP.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 General.............................................................................. 2
ARTICLE II
REORGANIZATION AND RELATED TRANSACTIONS
Section 2.1 The Reorganization................................................................... 13
Section 2.2 Assumption of Parent Liabilities..................................................... 15
Section 2.3 Foreign Transfers.................................................................... 15
Section 2.4 3M Approval.......................................................................... 22
ARTICLE III
ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities.................................................................. 22
Section 3.2 Retained Liabilities................................................................. 23
ARTICLE IV
THE DISTRIBUTION
Section 4.1 The Distribution..................................................................... 23
Section 4.2 Fractional Shares.................................................................... 23
Section 4.3 3M Board Action...................................................................... 24
ARTICLE V
INDEMNIFICATION, CLAIMS AND OTHER MATTERS
Section 5.1 Indemnification...................................................................... 24
Section 5.2 Procedure for Indemnification........................................................ 27
Section 5.3 Other Claims by Indemnified Parties Against
Indemnifying Parties................................................................. 30
Section 5.4 Indemnifiable Losses under Sections
5.1(a)(ii) and 5.1(b)(ii)............................................................ 31
Section 5.5 No Beneficiaries..................................................................... 31
Section 5.6 Special Provision Relating to Nishika Case........................................... 32
Section 5.7 Named Parties........................................................................ 32
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
Section 6.1 Conveyancing and Assumption Instruments.............................................. 33
Section 6.2 No Representations or Warranties; Exceptions......................................... 33
Section 6.3 Further Assurances; Subsequent Transfers............................................. 34
Section 6.4 Imation Officers and Directors....................................................... 36
Section 6.5 Resignations......................................................................... 37
Section 6.6 Certain Intercompany Arrangements.................................................... 37
Section 6.7 Related Agreements................................................................... 37
Section 6.8 Sales and Transfer Taxes............................................................. 37
Section 6.9 Signs; Use of 3M Name................................................................ 38
Section 6.10 Supplies and Documents............................................................... 38
Section 6.11 Plant Closings and Layoffs........................................................... 38
Section 6.12 Shared Facility Arrangements......................................................... 39
Section 6.13 Leased Employees..................................................................... 40
Section 6.14 Other Leased/Shared Properties....................................................... 41
Section 6.15 Domestic Receivables and Payables.................................................... 41
Section 6.16 Diskette Anti-Dumping Duty Exemption................................................. 43
Section 6.17 Repayment of Italian Debt............................................................ 43
Section 6.18 GECC Financing Agreements............................................................ 44
Section 6.19 Letters of Credit.................................................................... 50
Section 6.20 Industrial Revenue Bonds............................................................. 50
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
Section 7.1 Provision of Corporate Records....................................................... 51
Section 7.2 Access to Information................................................................ 51
Section 7.3 Production of Witnesses and Individuals.............................................. 51
Section 7.4 Retention of Records................................................................. 52
Section 7.5 Confidentiality...................................................................... 52
Section 7.6 Privileged Matters................................................................... 55
Section 7.7 Mail and Other Communications........................................................ 56
ARTICLE VIII
EMPLOYEE MATTERS AND BENEFITS.......................................................... 57
Section 8.1 Employment........................................................................... 57
Section 8.2 Qualified and NonQualified Retirement and
Benefit Plans........................................................................ 57
Section 8.3 Welfare Plans........................................................................ 62
Section 8.4 Assumption of Certain Employee Related
Obligations.......................................................................... 66
Section 8.5 Other Liabilities and Obligations.................................................... 67
Section 8.6 Preservation of Rights to Amend or Terminate
Plans................................................................................ 67
Section 8.7 Reimbursement; Indemnification....................................................... 67
Section 8.8 Stock Plans.......................................................................... 68
Section 8.9 Limitation on Enforcement............................................................ 70
Section 8.10 Employment Following the Distribution Date........................................... 70
Section 8.11 Foreign Service Employee and O.U.S. Transferred
Employee Obligations................................................................. 71
ARTICLE IX
INSURANCE
Section 9.1 General.............................................................................. 71
Section 9.2 Imation's Insurance.................................................................. 71
Section 9.3 Access to 3M's Insurance Program..................................................... 71
Section 9.4 Insurance Recoveries................................................................. 73
Section 9.5 Assignment........................................................................... 74
ARTICLE X
DISPUTE RESOLUTION
Section 10.1 Mediation and Binding Arbitration.................................................... 74
Section 10.2 Initiation........................................................................... 74
Section 10.3 Submission to Mediation.............................................................. 74
Section 10.4 Selection of Mediator................................................................ 75
Section 10.5 Mediation and Arbitration............................................................ 75
Section 10.6 Selection of Arbitrator.............................................................. 75
Section 10.7 Cost of Arbitration.................................................................. 76
Section 10.8 Arbitration Period................................................................... 76
Section 10.9 Treatment of Negotiation and Mediation............................................... 76
Section 10.10 Confidentiality...................................................................... 76
Section 10.11 Equitable Relief..................................................................... 77
Section 10.12 Notices.............................................................................. 77
Section 10.13 Consolidation........................................................................ 77
ARTICLE XI
MISCELLANEOUS
Section 11.1 Complete Agreement................................................................... 77
Section 11.2 Expenses............................................................................. 77
Section 11.3 Governing Law........................................................................ 78
Section 11.4 Notices.............................................................................. 78
Section 11.5 Amendment and Modification........................................................... 79
Section 11.6 Termination.......................................................................... 79
Section 11.7 Successors and Assigns............................................................... 79
Section 11.8 No Third Party Beneficiaries......................................................... 80
Section 11.9 Counterparts......................................................................... 80
Section 11.10 Interpretation....................................................................... 80
Section 11.11 Annexes, Etc......................................................................... 80
Section 11.12 Construction of Agreements........................................................... 81
Section 11.13 Legal Enforceability................................................................. 81
Section 11.14 Survival............................................................................. 81
Section 11.15 Guaranty............................................................................. 81
Annexes:
ANNEX I - Assumed Liabilities
ANNEX II - Retained Liabilities
ANNEX III - Transferred Assets
ANNEX IV - Enterprise Liabilities
ANNEX V - Enterprise Assets
Exhibits:
Exhibit A - Corporate Services Transition Agreement
Exhibit B - Environmental Matters Agreement
Exhibit C - Intellectual Property Agreement
Exhibit D - Joint Defense Agreement
Exhibit E - Joint Representation and Defense Agreement
Exhibit F - Tax Sharing Agreement
Exhibit G - Services Agreements
Exhibit H - Supply Agreements
Exhibit I - Sales Agency Agreements
Exhibit J - Redistribution Agreement
Exhibit K - Contract Manufacturing Agreements
Exhibit L - Reorganization Agreement for Italian Operations
Exhibit M - Form of Foreign Asset Transfer Agreements
Exhibit N - Contribution Agreement for French Operations
Exhibit O - Minutes of Shareholders Meeting relating to
Argentinean Operations
Exhibit P - Minutes of Quotaholders Meeting relating to Brazil-
ian Operations
Exhibit Q - Shared Facility Agreements
Exhibit R - Leased Employee Agreement
Schedules:
Schedule 1.1A - Transferred Businesses
Schedule 1.1B - Business Units Excluded from Transferred
Businesses
Schedule 1.1C - Imation Employees
Schedule 1.1D - Pilot Plant Assets
Schedule 1.1E - 3M Center Assets
Schedule 1.1F - Human Resources Codes
Schedule 5.1(a) - 3M Information in Information Statement
Schedule 6.12(a) - Domestic Shared Facilities
Schedule 6.14(a) - Assigned Third Party Leases
Schedule 6.14(b) - 3M Leased Properties
Schedule 6.15(a) - Trade Receivables/Payables Settlement Schedule
Schedule 8.11 - Foreign Service Employee Obligations
Schedule 9.3 - Pre-Distribution Date Insurance Claims
TRANSFER AND DISTRIBUTION AGREEMENT
TRANSFER AND DISTRIBUTION AGREEMENT, dated as of June 18,
1996, by and between Minnesota Mining and Manufacturing Company, a Delaware
corporation ("3M"), and Imation Corp., a Delaware corporation and a wholly owned
subsidiary of 3M ("Imation").
WHEREAS, 3M has, among other endeavors, been engaged in the
research, manufacturing and marketing of products in its Imaging Systems Group
(the "Imaging Systems Group") and Memory Technologies Group (collectively,
including the business units and plants set forth on Schedule 1.1A hereto, but
not including the business units and plants set forth on Schedule 1.1B hereto,
the "Transferred Businesses");
WHEREAS, the Board of Directors of 3M has determined that the
interests of 3M's businesses and shareholders would be best served by separating
its businesses into two separate companies, one consisting of the Transferred
Businesses and the other consisting of 3M's core businesses (the "Core
Businesses");
WHEREAS, in furtherance of the foregoing, 3M wishes to
transfer and assign to Imation substantially all of the assets and properties of
the Transferred Businesses specified in this Agreement in exchange for (i) the
assumption by Imation of substantially all of the liabilities and obligations
relating to the Transferred Businesses specified in this Agreement and (ii) the
issuance to 3M by Imation of shares of its common stock, par value $.01 per
share (the "Imation Common Stock");
WHEREAS, Imation is willing to assume such liabilities and
obligations and to issue such shares of Imation Common Stock to 3M in exchange
for such assets and properties;
WHEREAS, 3M intends to distribute all of the outstanding
shares of Imation Common Stock, on a pro rata basis, to the holders of the
common stock of 3M, without par value (the "3M Common Stock") (such distribution
hereinafter referred to as the "Distribution");
WHEREAS, 3M and Imation have determined that it is necessary
and desirable to set forth the principal corporate transactions required to
effect the Distribution and to set forth other agreements that will govern
certain other matters in connection with the Distribution.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and intending to be legally
bound hereby, 3M and Imation hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General. As used in this Agreement, capitalized
terms defined immediately after their use shall have the respective meanings
thereby provided and the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
Accrued Benefits: shall have the meaning set forth in Section
8.2(e)(ii) hereof.
Action: any action, claim, suit, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative agency or
commission or any arbitration tribunal.
Affiliate: with respect to any specified person, a person
that, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such specified person;
provided, however, that 3M and Imation shall not be deemed to be Affiliates of
each other for purposes of this Agreement.
Agent: Norwest Bank Minnesota, N.A., the distribution agent
appointed by 3M to distribute shares of Imation Common Stock pursuant to the
Distribution.
Asset and Liability Transfer: shall have the meaning set forth
in Section 2.1(b) hereof.
Assumed Liabilities: collectively, all of the Liabilities and
other obligations of 3M listed on Annex I hereto which are to be assumed by
Imation or its Affiliates as part of the transaction.
Bids, Quotations and Proposals: the bids, quotations or
proposals which have been submitted or made by the Transferred Businesses or 3M
on behalf of the Transferred Businesses which are outstanding as of the
Distribution Date.
Books and Records: the books and records of 3M (or true and
complete copies thereof), including all computerized books and records owned by
3M, which relate principally to the Transferred Businesses and are necessary for
Imation to operate the Transferred Businesses, including, without limitation,
all such books and records relating to Transferred Employees, the purchase of
materials, supplies and services, the manufacture and sale of products by the
Transferred Businesses or dealings with customers of the Transferred Businesses
and all files relating to any Action being assumed by Imation as part of the
Assumed Liabilities.
COBRA: shall have the meaning set forth in Section 8.4(a)(ii)
hereof.
Code: the Internal Revenue Code of 1986, as amended.
Contract Manufacturing Agreements: the Contract Manufacturing
Agreements, in the form of the agreements attached as Exhibit K hereto, pursuant
to which 3M will manufacture certain products for Imation and Imation will
manufacture certain products for 3M.
Conveyancing and Assumption Instruments: collectively, the
various agreements, instruments and other documents to be entered into in order
to effect the transfer to Imation of Transferred Assets, and the assumption by
Imation of the Assumed Liabilities in the manner contemplated by this Agreement.
Core Businesses: shall have the meaning set forth in the
second WHEREAS clause hereof.
Corporate Services Transition Agreement: the Corporate
Services Transition Agreement, substantially in the form set forth as Exhibit A
hereto, pursuant to which 3M will provide to Imation certain corporate services
specified therein.
Debt Available for Foreign Purchase Transactions: shall have
the meaning set forth in Section 2.3(xiii) hereof.
Defend: address or respond in any manner to any Action
brought, asserted, commenced or pursued by any person or entity that is not a
party to this Agreement.
Defense: the plan for or state of defending.
Dispute: shall have the meaning set forth in Section 10.1
hereof.
Distribution: the distribution as a dividend to holders of 3M
Common Stock of Imation Common Stock on the basis provided in Section 4.1
hereof, which shall be effective on the date specified for the dividend by the
3M Board of Directors.
Distribution Date: the date as of which the Distribution shall
be effected as determined by the 3M Board of Directors.
EBTA: shall have the meaning set forth in Section 8.3(a)(ii)
hereof.
Enterprise Assets: collectively, all of the assets of 3M
identified on Annex V hereto which are to be transferred to Imation Enterprises
in connection with the Distribution.
Enterprise Liabilities: collectively, all of the Liabilities
and other obligations of 3M identified on Annex IV hereto which are to be
assumed by Imation Enterprises in connection with the Distribution.
Enterprise Operations: collectively, the operations conducted
by 3M at the manufacturing facilities of 3M's Imaging Systems Group or at the
manufacturing facilities located at Weatherford, Oklahoma or Menomonie,
Wisconsin, all sales and field logistic operations and the operations
conducted by 3M's HESD Field Service and Customer Support department, in all
instances to the extent part of the domestic operations of the Transferred
Businesses.
Environmental Matters Agreement: the agreement,
substantially in the form of Exhibit B hereto, pursuant to which 3M and Imation
have provided for certain environmental matters.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
ESOP Transfer: shall have the meaning set forth in Section
8.2(b) hereof.
ESOP Transfer Date: shall have the meaning set forth in
Section 8.2(b) hereof.
Exchange Act: the Securities Exchange Act of 1934, as amended.
First Party: shall have the meaning set forth in Section
7.5(b) hereof.
Foreign Asset Transfer Agreements: the Foreign Asset Transfer
Agreements, substantially in the form of the agreements attached as Exhibit M
hereto, pursuant to which certain assets will be sold between respective
Affiliates of 3M and Imation.
Form 10: the registration statement on Form 10 filed by
Imation with the SEC to effect the registration of the Imation Common Stock
pursuant to the Exchange Act.
Grandfathered Employees: shall have the meaning set forth in
Section 8.2(h)(ii) hereof.
Imaging Systems Group: shall have the meaning set forth in the
first WHEREAS clause hereof.
Imation Common Stock: shall have the meaning set forth in the
third WHEREAS clause hereof.
Imation Defined Benefit Plans: shall have the meaning set
forth in Section 8.2(a)(i) hereof.
Imation Defined Contribution Plan: shall have the meaning set
forth in Section 8.2(a)(i) hereof.
Imation Employee Stock Incentive Plan: shall have the meaning
set forth in Section 8.8(c) hereof.
Imation Enterprises: Imation Enterprises Corp., a Delaware
corporation and, as of the date of this Agreement, a wholly owned subsidiary of
3M.
Imation Flexible Benefits Program: shall have the meaning set
forth in Section 8.3(c)(ii) hereof.
Imation Nonqualified Pension Plan: shall have the meaning set
forth in Section 8.2(a)(iii) hereof.
Imation Party: shall have the meaning set forth in Section 5.4
hereof.
Imation Pension Plans: shall have the meaning set forth in
Section 8.2(a)(i) hereof.
Imation Shared Facilities: shall have the meaning set forth in
Section 6.12(a) hereof.
Imation Stock Options: shall have the meaning set forth in
Section 8.8(c) hereof.
Imation VEBA: shall have the meaning set forth in Section
8.3(a)(i) hereof.
Indemnifiable Loss Deduction: shall have the meaning set forth
in Section 5.1(d)(i) hereof.
Indemnifiable Losses: with respect to any claim by an
Indemnified Party for indemnification authorized pursuant to Article V hereof,
any and all losses, liabilities, claims, damages, obligations, payments, costs
and expenses (including, without limitation, the costs and expenses of any and
all Actions, demands, assessments, judgments, settlements and compromises
relating thereto and reasonable attorneys' fees and expenses in connection
therewith) suffered by such Indemnified Party with respect to such claim.
Indemnification Claimant: shall have the meaning set forth in
Section 5.2(c) hereof.
Indemnified Party: any party who is entitled to receive
payment from an Indemnifying Party pursuant to Article V hereof.
Indemnifying Party: any party who is required to pay any other
person pursuant to Article V hereof.
Indemnity Payment: the amount an Indemnifying Party is
required to pay an Indemnified Party pursuant to Article V hereof.
Indemnity Return: shall have the meaning set forth in Section
5.1(d)(i) hereof.
Information: shall have the meaning set forth in Section 7.2
hereof.
Information Statement: the information statement to be sent
to the holders of 3M Common Stock in connection with the Distribution.
Insurance Program: collectively, the series of policies
pursuant to which various insurance carriers provide insurance coverage to 3M
and its Affiliates in respect of claims or occurrences relating to, without
limitation, property damage, manufacturer's output, business interruption,
transit, fire, extended coverage, fiduciary, fidelity, environmental impairment,
employee crime, general liability, products' liability, automobile liability and
employer's liability, excluding risks assumed by Seaside without the benefit of
reinsurance.
Intellectual Property Agreement: the Intellectual Property
Rights Agreement, substantially in the form of Exhibit C hereto, pursuant to
which 3M and Imation are providing for certain matters involving intellectual
property.
Joint Defense Agreement: any agreement, substantially in the
form of Exhibit D hereto, which may be entered into by 3M and Imation with
respect to their defense of certain matters.
Joint Representation and Defense Agreement: any agreement,
substantially in the form of Exhibit E hereto, which may be entered into by 3M
and Imation with respect to representation and defense of certain matters.
Leased Employees: As provided in the Leased Employee
Agreement, all hourly and salaried employees of 3M at 3M's Rochester, New York
facility, all hourly employees in the CD Rom section of 3M's Menomonie,
Wisconsin facility, and all other 3M employees listed on attachments to the
Leased Employee Agreement who are leased to Imation and/or its Affiliates for
various periods as provided in the Leased Employee Agreement.
Leased Employee Agreement: The Leased Employee Agreement,
substantially in the form of Exhibit R hereto, pursuant to which Imation and/or
Imation Enterprises will lease the Leased Employees from 3M.
Liabilities: any and all debts, liabilities and obligations,
whether accrued, contingent (known or unknown) or reflected on a balance sheet,
including, without limitation, those arising under any law, rule, regulation,
Action, order or consent decree of any governmental entity or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Minnesota Research: shall have the meaning set forth in
Section 2.3(viii) hereof.
1996 Grants: shall have the meaning set forth in Section
8.8(c) hereof.
Non-Permitted Names: shall have the meaning set forth in
Section 6.9 hereof.
Option: an option to purchase shares of 3M Common Stock under
any of the Stock Option Plans.
O.U.S. Transferred Employees: shall have the meaning set forth
in Section 8.1 hereof.
Parent Assets: shall have the meaning set forth in Section
2.1(a) hereof.
Parent Liabilities: shall have the meaning set forth in
Section 2.1(a) hereof.
Pilot Plant Assets: the assets utilized by the Transferred
Businesses relating to the pilot plants located in buildings 235 and 236 of 3M
Center which are set forth on Schedule 1.1D hereto.
Privilege(s): shall have the meaning set forth in Section
7.6(a) hereof.
Privileged Information: shall have the meaning set forth in
Section 7.6(a) hereof
Progressive Stock Options: shall have the meaning set forth in
Section 8.8(a) hereof.
PUP: shall have the meaning set forth in Section 8.4(a)(iv)
hereof.
Record Date: the date determined by the Board of Directors of
3M as the record date for the Distribution.
Recovery: the amount obtained pursuant to a claim under an
insurance policy in the Insurance Program.
Redistribution Agreement: the Redistribution Agreement, in the
form of Exhibit J hereto, pursuant to which 3M will distribute certain products
on behalf of Imation.
Related Agreements: the Conveyancing and Assumption
Instruments, Corporate Services Transition Agreement, Environmental Matters
Agreement, Intellectual Property Agreement, Tax Sharing Agreement, Services
Agreements, Supply Agreements, Sales Agency Agreements, Redistribution
Agreement, Contract Manufacturing Agreements, Shared Facility Agreements, the
Leased Employee Agreement, the foreign transfer agreements, and the various
service, supply and other agreements to be entered into between 3M and its
subsidiaries, on the one hand, and Imation and its subsidiaries on the other
hand in connection with the Distribution and the other transactions contemplated
hereby.
Retained Liabilities: collectively, all of the Liabilities and
obligations of 3M listed on Annex II hereto.
Sales Agency Agreements: the Sales Agency Agreements, in the
form of the agreements attached as Exhibit I hereto, pursuant to which 3M will
provide certain sales services to Imation and Imation will provide certain sales
services to 3M, as the case may be.
SEC: the Securities and Exchange Commission.
Services Agreements: the Services Agreements, in the form of
the agreements attached as Exhibit G hereto, pursuant to which 3M will provide
certain services to Imation or Imation will provide certain services to 3M, as
the case may be.
Shared Facility Agreements: the Shared Facilities Lease
Agreements, in the form of the agreements attached as Exhibit Q, pursuant to
which 3M or Imation will lease to the other a portion of a facility and provide
certain services in connection therewith.
Shared Facility Arrangements: shall have the meaning set forth
in Section 6.12(a)hereof.
Shared Facility Term: with respect to a specific Shared
Facility Agreement, the term set forth in such agreement, as such term may be
extended or shortened in accordance with the terms of such agreement.
Special Retirement Benefits: shall mean the 3M Special
Retirement Benefits and the Imation Special Retirement Benefits as defined in
Sections 8.2(e)(iv) and 8.2(h)(ii) hereof.
Stock Option Plans: 3M's 1987 and 1992 Management Stock
Ownership Programs.
Supply Agreements: the Supply Agreements, in the form of the
agreements attached as Exhibit H hereto, pursuant to which 3M and Imation will
provide certain materials to each other.
Tax Saving Amount: shall have the meaning set forth in Section
5.1(d)(ii) hereof.
Tax Sharing Agreement: the Tax Sharing and Indemnification
Agreement, in the form of Exhibit F hereto, pursuant to which 3M and Imation
have provided for certain tax matters.
Third Party Claim: shall have the meaning set forth in Section
5.2(a) hereof.
3M Center Assets: the assets located at 3M Center which are
principally utilized by the Transferred Businesses and are to be transferred to
Imation or Imation Enterprises pursuant to Section 2.1 hereof, as identified on
Schedule 1.1E hereof.
3M Common Stock: shall have the meaning set forth in the fifth
WHEREAS clause hereof.
3M Defined Benefit Plans: shall have the meaning set forth
in Section 8.2(e) hereof.
3M 401(K)/ESOP: shall have the meaning set forth in Section
8.2(b) hereof.
3M Nonqualified Pension Plans: shall have the meaning set
forth in Section 8.2(e) hereof.
3M Options: shall have the meaning set forth in Section 8.8(a)
hereof.
3M Party: shall have the meaning set forth in Section 5.4
hereof.
3M Pension Plans: shall have the meaning set forth in Section
8.2(e) hereof.
3M Post Retirement Medical Plans: shall have the meaning set
forth in Section 8.3(a)(iii) hereof.
3M Qualified Pension Plans: shall have the meaning set forth
in Section 8.2(e) hereof.
3M Shared Facility: shall have the meaning set forth in
Section 6.12(a) hereof.
3M Survivor Program: shall have the meaning set forth in
Section 8.2(a) hereof.
3M VEBA: shall have the meaning set forth in Section 8.3(a)(i)
hereof.
Transaction Taxes: shall have the meaning set forth in Section
6.8 hereof.
Transferred Assets: collectively, all of the assets and
properties of 3M and its Affiliates identified on Annex III hereto.
Transferred Businesses: the businesses referred to as such in
the first WHEREAS clause of this Agreement, including any businesses (such as
Dynacolor, the Data Cartridge Drive Business and Comtal) or products of 3M that
were discontinued or otherwise terminated by 3M prior to the Distribution Date,
to the extent, but only to the extent, that such businesses were conducted or
products were sold as part of the business units (irrespective of the name of
any such unit at the time) referred to as part of the Transferred Businesses in
such WHEREAS clause.
Transferred Employee: any employee of 3M who is employed by
the business units, or at the plants listed on Schedule 1.1A, any 3M employee
from the 3M staff organizations, such as engineering, controllers, human
resources or Legal Affairs, who is assigned full-time to one of such business
units or plants as of the Distribution Date or who is listed on Schedule 1.1C,
domestic employees of 3M who are on the Distribution Date assigned Inactive
Status Codes 20, 21, 22, 23, 24, 32 and 34, or Special Status Codes 30, 40 and
41 (a copy of 3M's human resources codes is attached as Schedule 1.1F) and who
last worked for the business units or at the plants listed on Schedule 1.1A, any
foreign employee identified on schedules to, or otherwise contemplated by, the
various foreign transfer agreements, and any employee of 3M who has volunteered
to be employed by Imation as of the Distribution Date, but excluding 3M
employees who, as of the Distribution Date, are: Leased Employees, 3M employees
on Pre-Retirement Leave Status, 3M employees on 3M's Unassigned List or 3M
employees in those portions of Imation's facilities leased by 3M from Imation
and, further, excluding 3M employees who have accepted on or prior to the
Distribution Date voluntary separation plans offered prior to the Distribution
Date by the business units or at the plants listed on Schedule 1.1A.
U.S. Transferred Employees: shall have the meaning set forth
in Section 8.1 hereof.
WARN Act: shall have the meaning set forth in Section 6.10
hereof.
ARTICLE II
REORGANIZATION AND RELATED TRANSACTIONS
Section 2.1 The Reorganization.
(a) Subject to the terms and conditions of this Agreement, 3M
and Imation shall cause, on the Distribution Date, (i) all of 3M's right, title
and interest in and to the Transferred Assets (other than the Enterprise Assets)
(the "Parent Assets") to be conveyed, assigned, transferred and delivered to
Imation (or the appropriate Imation Affiliate), free and clear of all liens or
encumbrances in favor of 3M, (ii) all of 3M's duties, obligations and
responsibilities under the Assumed Liabilities (other than the Enterprise
Liabilities) (the "Parent Liabilities") to be assumed by Imation (or the
appropriate Imation Affiliate), and (iii) all of 3M's right, title and interest
in and to all capital stock of Imation Enterprises to be conveyed, assigned,
transferred and delivered to Imation, free and clear of all liens or
encumbrances in favor of 3M.
(b) Subject to the terms and conditions of this Agreement, 3M
and Imation shall cause, immediately prior to the transfer and assumption
contemplated by Section 2.1(a) hereof, (i) all of 3M's right, title and interest
in and to the Enterprise Assets to be conveyed, assigned, transferred and
delivered to Imation Enterprises, free and clear of all liens or encumbrances in
favor of 3M, and (ii) all of 3M's duties, obligations and responsibilities under
the Enterprise Liabilities to be assumed by Imation Enterprises (the transfers
set forth in subsections (a) and (b) hereof, the "Asset and Liability
Transfer").
(c) Subject to Section 6.3 hereof, to the extent that any such
conveyances, assignments, transfers and deliveries shall not have been so
consummated on the Distribution Date, 3M and Imation shall cooperate to effect
such consummation as promptly thereafter as shall be practicable, it nonetheless
being understood and agreed by 3M and Imation that neither shall be liable in
any manner to any person who is not a party to this Agreement for any failure of
any of the transfers contemplated by this Article II to be consummated on or
subsequent to the Distribution Date. Whether or not all of the Parent Assets or
the Parent Liabilities shall have been legally transferred to Imation or all of
the Enterprise Assets or the Enterprise Liabilities shall have been legally
transferred to Imation Enterprises as of the Distribution Date, 3M and Imation
agree that, as of the Distribution Date, Imation and Imation Enterprises shall
have, and shall be deemed to have acquired, complete and sole beneficial
ownership over all of the Parent Assets and Enterprise Assets, respectively,
except as described herein with respect to assets which are non-assignable,
together with all of 3M's rights, powers and privileges (except as provided in
Section 7.6 hereto) incident thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Parent Liabilities and
Enterprise Liabilities, respectively, and all of 3M's duties, obligations and
responsibilities incident thereto.
(d) In furtherance of the transfers and assumptions
contemplated by the foregoing Sections 2.1(a) and (b), Imation and 3M, as
between the two of them, acknowledge and agree as follows: (a) 3M and its
Affiliates shall have no obligation or liability of any kind to Imation or its
Affiliates for any condition existing at or prior to the Distribution Date or
for any conduct, act or omission by or on behalf of 3M, its Affiliates or any
other person on, or at any time prior, to the Distribution Date; and Imation and
its Affiliates shall have no claims, or right to bring a claim or Action,
against 3M or its Affiliates with respect thereto, including (without
limitation) any claim or Action arising out of (i) the operation of the
Transferred Businesses on or before the Distribution Date, (ii) any advice,
rights, products or services made available to the Transferred Businesses, on or
before the Distribution Date, by 3M, its Affiliates or any other person, (iii)
the Assumed Liabilities or (iv) the formation of Imation; except for, and to the
extent of, any responsibilities specifically retained by 3M or any of its
Affiliates pursuant to the terms of this Agreement or any of the Related
Agreements; and (b) Imation and its Affiliates shall have no obligation or
liability of any kind to 3M or its Affiliates for any condition existing at or
prior to the Distribution Date or for any conduct, act or omission by or on
behalf of Imation, its Affiliates or any other person on, or at any time prior
to, the Distribution Date; and 3M and its Affiliates shall have no claims, or
right to bring a claim or Action, against Imation or its Affiliates with respect
thereof, including (without limitation) any claim or Action arising out of (i)
the operations of 3M other than the Transferred Businesses on or before the
Distribution Date, (ii) any advice, rights, products or services made available
to 3M or its Affiliates, on or before the Distribution Date, by the Transferred
Businesses or any other person or (iii) the Retained Liabilities; except for,
and to the extent of, any responsibilities specifically assumed by Imation or
any of its Affiliates pursuant to the terms of this Agreement or any of the
Related Agreements.
(e) Representatives of 3M and Imation have prepared schedules
to identify equipment located at various domestic manufacturing facilities which
is not to be retained by the party retaining the respective facilities. These
schedules, which have been initialled by the respective heads of manufacturing
for 3M and Imation, shall be binding on the parties so as to resolve any
questions as to the allocation of equipment at such facilities.
Section 2.2 Assumption of Parent Liabilities. In consideration
for the conveyance, assignment, transfer and delivery of the Parent Assets and
Enterprise Assets being made pursuant to Section 2.1 hereof, Imation agrees to
assume the Parent Liabilities and to issue and deliver to the Agent for delivery
to stockholders of 3M as of the Record Date certificates representing the number
of shares of Imation Common Stock provided for in Section 4.1 hereof and to
cause Imation Enterprises to assume, pay, perform and discharge in due course
any and all Enterprise Liabilities.
Section 2.3 Foreign Transfers. The foregoing notwithstanding,
3M and Imation shall cause the assets and liabilities related to the Transferred
Businesses which are located outside the United States to be transferred in
accordance with the following provisions:
(i) Italy. On or prior to the Distribution Date,
the operations of 3M in Italy shall be reorganized pursuant to the agreements
set forth as Exhibit L hereto, which reorganization shall effectively separate
the respective operations of the Transferred Businesses and the Core Businesses
in Italy. As a result of the reorganization, the operations of the Transferred
Businesses shall be conducted by Imation Finanziaria S.p.A. (including its
direct and indirect subsidiaries), the stock of which will be transferred to
Imation on or prior to the Distribution Date.
(ii) France. On or prior to the Distribution Date,
(i) the assets and liabilities of 3M in France related to the Transferred
Businesses (other than certain trade receivables and payables) will be
transferred to a newly formed subsidiary of the 3M subsidiary incorporated under
the laws of such country and (ii) the stock of such subsidiary will be
distributed to 3M and, thereafter, contributed to the capital of Imation, all as
more fully described in the contribution agreement attached as Exhibit N hereto
(the "French Contribution Agreement").
(iii) Argentina. On or prior to the Distribution
Date, (i) the assets and liabilities of 3M in Argentina related to the
Transferred Businesses will be transferred to a newly formed corporation
incorporated under the laws of such country and (ii) the stock of such
corporation will be contributed by 3M to the capital of Imation, all as more
fully described in the minutes of a special shareholders meeting attached as
Exhibit O hereto. Following the Distribution, Imation shall, or shall cause its
Affiliate in Argentina to, indemnify and hold harmless 3M and its Affiliates
against any and all liabilities arising as a result of any reduction in the
workforce or closure of any facilities effected by Imation's Affiliate in
Argentina following the Distribution Date.
(iv) Brazil. On or prior to the Distribution Date,
(i) the assets and liabilities of 3M in Brazil related to the Transferred
Businesses will be transferred to a newly formed corporation incorporated under
the laws of such country and (ii) the stock of such corporation will be
contributed by 3M to the capital of Imation, all as more fully described in the
minutes of a special quotaholders meeting attached as Exhibit P hereto.
(v) India. Birla 3M Ltd. shall retain all assets and
liabilities (including those relating to the Transferred Businesses) owned by it
as of the Distribution Date. In addition, it is the present intention of the
parties that, following the Distribution Date and subject to the receipt of any
required approvals, Birla 3M Ltd. will act as a non-exclusive sales agent of
Imation. At the time of the Distribution, Birla 3M Ltd. may transfer the
inventory related to the Transferred Businesses to distributors designated by
Imation and, in such event, Imation will, if requested, guarantee the payments
to be made by the distributors.
(vi) Netherlands. On or prior to the Distribution
Date, 3M shall cause to be assigned and transferred to Imation all of the
outstanding interests of CD-Rom Services C.V.
(vii) Belgium. On or prior to the Distribution
Date, 3M shall cause to be assigned and transferred to Imation all of the
outstanding shares of CD-Rom Sales S.A.
(viii) United Kingdom. The transfer of operations of
the Transferred Businesses in the United Kingdom shall be effected as follows:
* 3M agrees that if as at the date of this Agreement, 3M is
the beneficial owner of the building known as Building 2, 3M
House, Bracknell, England, it shall transfer the said Building
2 to Imation in accordance with Section 2.1 hereof or if 3M
is not the beneficial owner of the said Building 2 as at the
date of this Agreement, 3M shall cause its Affiliate in the
United Kingdom to agree to sell to 3M the said Building 2
and 3M shall procure the transfer of the said Building 2 to
Imation in accordance with Section 2.1. Any such transfers
shall be subject to (and with the benefit of) any leases of
parts of the said Building 2 previously granted by any
Affiliate of 3M in the United Kingdom or otherwise agreed to
be granted to an Affiliate of 3M in the United Kingdom.
* As of the Distribution Date, the outstanding stock of
Minnesota 3M Research Limited ("Minnesota Research") shall be
transferred to Imation in the following manner: (a) the 80%
interest owned by 3M UK Holdings PLC and 3M (Holdings)
Limited shall be sold, assigned and transferred to 3M, and (b)
the 100% interest then owned by 3M shall be transferred to
Imation in accordance with the provisions of Section 2.1
hereof.
* The other assets and/or liabilities of the Transferred
Businesses owned by Affiliates of 3M in the United Kingdom
shall be transferred to an Affiliate(s) of Imation in a manner
consistent with subparagraph (xii) below.
(ix) Japan. It is the intention of the parties,
subject to the receipt of any required approvals, to transfer the Transferred
Businesses in Japan to an Affiliate of Imation in Japan in a manner consistent
with subparagraph (xii) below, although the parties recognize that the HESD
businesses relating to the Core Businesses will not be transferred and that
certain fixed assets may be leased, rather than sold.
(x) Korea. It is the intention of the parties,
subject to the receipt of any required approvals, to transfer the Transferred
Businesses in Korea to an Affiliate of Imation in Korea in a manner consistent
with subparagraph (xii) below. Imation agrees that it will not establish for a
period commencing on the Distribution Date and ending on the earlier of (a)
consummation of the transfer contemplated by the preceding sentence or (b) the
six month anniversary of the Distribution Date any independent operations in
Korea.
(xi) China. It is the intention of the parties to
transfer the Transferred Businesses in China to an Affiliate of Imation in China
in a manner consistent with subparagraph (xii) below, although the parties
recognize that the HESD businesses may not be transferred unless and until the
Imation Affiliate in China obtains an appropriate license from the appropriate
authorities in China.
(xii) Other Countries. On or prior to the
Distribution Date, 3M shall use its best efforts to cause its Affiliate in each
other country located outside the United States (in addition to those countries
referred to in subparagraphs (viii)-(xi) above, as described therein) to sell to
the Affiliate of Imation designated by Imation, and Imation shall use its best
efforts to cause its respective Affiliate(s) to purchase from the appropriate 3M
Affiliate, the inventory, property, plant and equipment and other assets of the
Transferred Businesses owned by such 3M Affiliate, in consideration for a cash
payment by the respective Imation Affiliate(s) to the respective 3M Affiliate
equal to the value of the assets so transferred (net of assumed liabilities)
which is reflected on the books of 3M at the time of the transfer, all as more
fully set forth in the respective Foreign Asset Transfer Agreements (which shall
be amended, as appropriate, to include deferred receivables under financing
contracts). In the event that it is not feasible to effect the transfers
contemplated by the preceding sentence on or prior to the Distribution Date in
any particular country, 3M and Imation will continue, following the Distribution
Date, their respective efforts to have such transfers and payments effected as
promptly as practicable following the Distribution Date or, if Imation and 3M
determine that such transfers are not capable of being effected on a timely
basis (not to exceed 6 months), enter into such other arrangements as are
mutually agreed upon which are intended to enable Imation to operate in such
country on a basis similar to that being conducted by 3M with respect to the
Transferred Businesses. Pending consummation of any such transfers or the
entering into of other arrangements as contemplated by the preceding sentence,
Imation and 3M shall enter into such arrangements as may be necessary to enable
3M and its Affiliates to continue to conduct the Transferred Businesses,
including with respect to the supply of inventory. Following completion of each
such transfer (or, if earlier, six months), either 3M shall pay to Imation an
amount equal to any operating income after taxes and minority interests realized
by 3M after the Distribution Date with respect to these operations or Imation
shall pay to 3M an amount equal to any operating losses after taxes and minority
interests realized by 3M after the Distribution Date with respect to these
operations, as the case may be.
(xiii) Additional Cash Payments. (a) In connection
with the Distribution, 3M shall contribute to the capital of Imation an amount
in cash equal to the total amount to be paid by the respective Imation
Affiliates pursuant to the preceding subparagraphs (viii)-(xii) (net of any
V.A.T. or other similar taxes which are recoverable by the respective Imation
Affiliates) less an amount equal to the Debt Available for Foreign Purchase
Transactions. For purposes of the preceding sentence, the Debt Available for
Foreign Purchase Transactions shall be an amount equal to $200 million less the
sum, without duplication, of (x) any debt presently outstanding (including
accrued interest) to 3M from its Affiliates in Italy which is being assumed by
an Affiliate of Imation and repaid with funds advanced by Imation or one of its
Affiliates, (y) $23 million, and (z) an amount equal to the vacation pay of the
U. S. Transferred Employees, which is accrued on the books of 3M as of the
Distribution Date. 3M shall make an estimated payment at the time of the
Distribution (to reflect (x) payments actually made by Imation or its Affiliates
at the time of the Distribution with respect to foreign transfers consummated at
the time of the Distribution and (y) the estimated amounts utilized to determine
the Debt Available for Foreign Purchase Transactions), which payment shall be
adjusted from time to time by 3M and Imation to reflect (A) all payments
contemplated by subparagraphs (viii) through (xii) above, including payments
made with respect to delayed closings or as post-closing adjustments to the
purchase prices paid at the time of the Distribution for foreign transfers
effected as of t he Distribution Date, and (B) the final amounts utilized to
determine the Debt Available for Foreign Purchase Transactions. The amounts to
be contributed by 3M pursuant to this Section 2.3(xiii)(a) shall be reduced by
the amount of the cash balances, if any, as of the Distribution Date in the
Imation Affiliates in Italy, France, Argentina and Brazil.
(b) Unless specifically provided otherwise, it is the intent of the
parties that, for federal income tax purposes, all payments made pursuant to
this Agreement shall be treated as adjustments (whether increases or decreases)
to the amount of cash contributed to the capital of Imation pursuant to Section
2.3(xiii)(a) hereof, and, to the extent any such payments decrease the amount of
such cash contributed (as adjusted by this Section 2.3(xiii)(b)) to zero, any
additional payments shall be treated as otherwise relating back to the transfers
made pursuant to Section 2.1(a) hereof.
(xiv) Certain Foreign Receivables/Payables.
Notwithstanding anything contained herein to the contrary, the respective
Affiliates of 3M in the countries a portion of whose businesses are being
transferred in accordance with the provisions of subparagraphs (viii) through
(xii) above and in France shall retain all trade receivables and all trade
payables relating to the Transferred Businesses (except as otherwise provided in
a specific Foreign Asset Transfer Agreement or the French Contribution
Agreement) and, in connection therewith, 3M agrees to remit to Imation an amount
equal to (a) such trade receivables (net of doubtful accounts determined in the
ordinary course consistent with past practice) less trade payables, in each
instance as reflected on the books of 3M as of Distribution Date, less (b) the
amount by which intercompany trade receivables transferred to Affiliates of
Imation exceed intercompany payables assumed by Affiliates of Imation. The
amount payable pursuant to the preceding sentence shall be in U.S. dollars and
paid in the following installments: one-third within 30 days of the Distribution
Date, one-third within 60 days of the Distribution Date and the remainder within
90 days of the Distribution Date. Following the Distribution Date, the
responsibility for such receivables and payables shall be entirely with 3M.
(xv) Foreign Exchange Rates. Except as agreed upon by
3M and Imation or as otherwise provided in this Agreement, all payments to each
other shall be in U.S. dollars and all amounts represented on the books of 3M or
Imation as a foreign currency obligation shall be converted into U.S. dollars
based on the exchange rate quoted in The Wall Street Journal on the last
business day preceding the Distribution Date (or as of such other day as may be
agreed to by Imation and 3M) or, with respect to payments to be made with
respect to a date other than the Distribution Date, the last business day
preceding the respective applicable date (or as of such other day as may be
agreed to by Imation and 3M). 3M and Imation acknowledge that neither party is
intended to benefit from any changes in exchange rates following the
Distribution Date and that 3M and Imation will cooperate with each other to
facilitate the prompt transfer of funds so as to minimize the potential effect
of any changes in exchange rates.
(xvi) Structure. 3M and Imation recognize that the
form of the transaction to effect the transfer of assets and liabilities in a
particular country may change between the date of this Agreement and the
Distribution Date, provided that any such change shall not adversely effect the
rights or obligations being transferred to, or assumed by, Imation and its
Affiliates. In such event, the provisions of this Section 2.3 shall be deemed to
be amended appropriately to reflect the form of such transaction.
(xvii) Delayed Spinoff Transactions. 3M and Imation
agree that the provisions set forth in the last three sentences of subparagraph
(xii) shall also apply to the transactions contemplated in subparagraphs (iii)
and (iv) should either of the transactions contemplated in such subparagraphs
not be effected on the Distribution Date.
Section 2.4 3M Approval. 3M shall cooperate with Imation in
effecting, and if so requested by Imation, 3M shall, as the sole stockholder of
Imation and Imation Enterprises, ratify any actions which are reasonably
necessary or desirable to be taken by Imation and Imation Enterprises to
effectuate the transactions contemplated by this Agreement in a manner
consistent with the terms of this Agreement, including, without limitation, the
election or appointment of directors and officers of Imation to serve in such
capacities following the Distribution Date (if not so appointed by the Board of
Directors of Imation).
ARTICLE III
ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities. Upon the terms and subject to
the conditions set forth in this Agreement and in addition to any other
Liabilities otherwise expressly assumed by Imation pursuant to this Agreement,
the Related Agreements or any other agreement contemplated by this Agreement,
Imation hereby agrees with 3M to assume, pay, perform and discharge (or to cause
the appropriate Affiliate of Imation to pay, perform and discharge) in due
course any and all Assumed Liabilities (other than the Enterprise Liabilities)
and cause Imation Enterprises to assume, pay, perform and discharge in due
course any and all Enterprise Liabilities.
Section 3.2 Retained Liabilities. Upon the terms and subject
to the conditions set forth in this Agreement and in addition to any other
Liabilities otherwise expressly retained by 3M pursuant to this Agreement, the
Related Agreements or any other agreement contemplated by this Agreement, 3M
hereby agrees with Imation that 3M shall pay, perform and discharge in due
course any and all Retained Liabilities.
ARTICLE IV
THE DISTRIBUTION
Section 4.1 The Distribution. On or prior to the Distribution
Date, 3M shall deliver to the Agent the certificate for 100 shares of Imation
Common Stock which were owned by 3M prior to the Distribution. Upon receipt from
3M of a certificate as to the number of shares of 3M Common Stock outstanding on
the Record Date, Imation shall deliver to the Agent, for the benefit of holders
of record of 3M Common Stock on the Record Date, a stock certificate
representing, in the aggregate (and rounded down to the nearest whole share), a
number of shares representing one share of Imation Common Stock for every 10
shares of 3M Common Stock outstanding on the Record Date (less the 100 shares of
Imation Common Stock owned prior to the Distribution by 3M), and shall instruct
the Agent to distribute as promptly as practicable following the Distribution
Date to holders of record of 3M Common Stock on the Record Date one share of
Imation Common Stock for every 10 shares of 3M Common Stock and cash in lieu of
fractional shares of Imation Common Stock obtained in the manner provided in
Section 4.2 hereof. Imation agrees to provide to the Agent sufficient
certificates in such denominations as the Agent may request in order to effect
the Distribution. All of the shares of Imation Common Stock issued in the
Distribution shall be fully paid, nonassessable and free of preemptive rights.
Section 4.2 Fractional Shares. No certificate or scrip
representing fractional shares of Imation Common Stock shall be issued as part
of the Distribution and in lieu of receiving fractional shares, each holder of
3M Common Stock who would otherwise be entitled to receive a fractional share of
Imation Common Stock pursuant to the Distribution will receive cash for such
fractional share. 3M and Imation agree that 3M shall instruct the Agent to
determine the number of whole shares and fractional shares of Imation Common
Stock allocable to each holder of record of 3M Common Stock as of the Record
Date, to aggregate all such fractional shares into whole shares and sell the
whole shares obtained thereby in the open market at then prevailing prices on
behalf of holders who otherwise would be entitled to receive fractional share
interests and to distribute to each such holder such holder's ratable share of
the total proceeds of such sales (net of any commissions incurred in connection
with such sales), net of any amount required to be withheld under applicable
law.
Section 4.3 3M Board Action.
(a) This Agreement and the Related Agreement have been
approved by the Board of Directors of 3M, subject to the declaration of the
Distribution by the Board of Directors of 3M, and the consummation of the
transactions provided for herein or therein shall only be effected after the
Distribution has been declared by the Board of Directors of 3M.
(b) The Board of Directors of 3M, in its discretion, shall
establish the Record Date and the Distribution Date and all appropriate
procedures in connection with the Distribution.
ARTICLE V
INDEMNIFICATION, CLAIMS
AND OTHER MATTERS
Section 5.1 Indemnification.
(a) 3M shall indemnify, defend and hold harmless Imation and
each of its directors, officers, employees, agents and Affiliates from and
against any and all Indemnifiable Losses of Imation or any of its Affiliates
arising out of or due to, directly or indirectly, (i) any Third Party Claims (as
defined in Section 5.2) in connection with any of the Retained Liabilities, (ii)
Third Party Claims that the information included in the Information Statement or
the Form 10 under the captions set forth on Schedule 5.1(a) hereto is false or
misleading with respect to any material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (iii) Third Party Claims that 3M or its Affiliates failed to
perform, or violated, any provision of this Agreement which is to be performed
or complied with by 3M or its Affiliates, (iv) breaches of this Agreement by 3M
or its Affiliates or (v) any guarantees which may be granted, either before or
after the Distribution Date, by Imation or one of its Affiliates on behalf of 3M
or one of its Affiliates.
(b) Imation shall indemnify, defend and hold harmless 3M and
each of its directors, officers, employees, agents and Affiliates from and
against any and all Indemnifiable Losses of 3M or any of its Affiliates arising
out of or due to, directly or indirectly, (i) Third Party Claims in connection
with any of the Assumed Liabilities, (ii) Third Party Claims that the
information included in the Information Statement or the Form 10, other than
under the captions set forth on Schedule 5.1(a) hereto, or the information
provided, or statements made, in connection with the investor roadshow held in
connection with the Distribution, is false or misleading with respect to any
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, (iii) Third Party
Claims that Imation or its Affiliates failed to perform, or violated, any
provision of this Agreement which is to be performed or complied with by Imation
or its Affiliates or (iv) breaches of this Agreement by Imation or its
Affiliates or (v) any guarantees which may be granted, either before or after
the Distribution Date, by 3M or one of its Affiliates on behalf of Imation or
one of its Affiliates, including without limitation with respect to any third
party leases assumed or undertaken by Imation or any of its Affiliates in
Australia or otherwise.
(c) Amounts required to be paid pursuant to this Article V are
hereafter sometimes collectively called "Indemnity Payments" and are
individually called an "Indemnity Payment." The amount which any party (an
"Indemnifying Party") is required to pay to any other party (an "Indemnified
Party") pursuant to Section 5.1(a) or Section 5.1(b) shall be reduced
(including, without limitation, retroactively) by any insurance proceeds and
other amounts actually recovered by such Indemnified Party in reduction of the
related Indemnifiable Loss. If an Indemnified Party shall have received an
Indemnity Payment in respect of an Indemnifiable Loss and shall subsequently
actually receive insurance proceeds or other amounts (such as settlement
amounts) in respect of such Indemnifiable Loss, then such Indemnified Party
shall immediately pay to such Indemnifying Party a sum equal to the lesser of
the amount of such insurance proceeds or other amounts actually received or the
net amount of Indemnity Payments actually received previously. The foregoing
notwithstanding, nothing in this Section 5.1(c) shall grant to Imation or its
Affiliates any direct or indirect rights or benefits to insurance coverage with
respect to which Imation is not otherwise entitled under Article IX hereof nor
require 3M or its Affiliates to make any claim for insurance coverage unless and
to the extent that Imation would otherwise be entitled to have 3M make a claim
under Article IX hereof.
(d) (i) For purposes of this Section 5.1(d), an
Indemnified Party shall be deemed to have received a tax saving with respect to
an Indemnifiable Loss if, upon the filing of a Federal or foreign income tax
return for a taxable year ending on or after the Distribution Date (the
"Indemnity Return"), an amount attributable to an Indemnifiable Loss (the
"Indemnifiable Loss Deduction") is deductible by the Indemnified Party or any of
its wholly owned subsidiaries and an amount attributable to the Indemnity
Payment is not includable in gross income by the Indemnified Party or any of its
wholly owned subsidiaries. The foregoing notwithstanding, if the Indemnifying
Party may deduct the amount attributable to the Indemnity Payment, the
Indemnified Party shall be deemed to have not received a tax saving with respect
to an Indemnifiable Loss.
(ii) In the event that an Indemnified Party is deemed
to have received a tax saving by reason of an Indemnifiable Loss, such
Indemnified Party shall pay the Indemnifying Party within thirty (30) days after
the filing of an Indemnity Return by an Indemnified Party which results in a
reduction in the tax liability of the Indemnified Party that is attributable to
such Indemnifiable Loss, a sum equal to the Indemnifiable Loss Deduction
multiplied by an amount equal to A + ((l - A) x .06), where A equals the highest
marginal corporate Federal income tax rate applicable to corporations taxable
under Subchapter C of the Code on the date the Indemnity Return is filed (the
"Tax Saving Amount").
(iii) In the event that any such Indemnifiable Loss
is deductible outside the United States, the provisions of Section 5.1(d)(ii)
shall be appropriately adjusted to reflect the tax structure of the appropriate
foreign jurisdiction.
(iv) Any payment made pursuant to this Section 5.1(d)
shall be treated as a reduction of the Indemnity Payment to which it relates.
(e) 3M'S AND IMATION'S RESPECTIVE OBLIGATIONS PURSUANT TO
SECTION 5.1(A)(IV) AND (B)(IV) SHALL BE LIMITED TO DIRECT AND ACTUAL DAMAGES, TO
THE EXCLUSION OF INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES. PARAGRAPH 5.1(E)
SHALL NOT APPLY TO (I) ANY FAILURE BY IMATION OR ITS AFFILIATES TO ASSUME, PAY,
PERFORM AND DISCHARGE (OR CAUSE THE APPROPRIATE AFFILIATE OF IMATION TO ASSUME,
PAY, PERFORM AND DISCHARGE) ANY AND ALL ASSUMED LIABILITIES, OR (II) ANY FAILURE
BY 3M OR ITS AFFILIATES TO ASSUME, PAY, PERFORM AND DISCHARGE (OR CAUSE THE
APPROPRIATE AFFILIATE OF 3M TO ASSUME, PAY, PERFORM AND DISCHARGE) ANY AND ALL
RETAINED LIABILITIES, OR (III) EXCEPT AS PROVIDED IN SECTION 6.18, ANY BREACH BY
3M OR IMATION OF THEIR RESPECTIVE INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT,
INCLUDING THE INDEMNITY OBLIGATIONS SET FORTH IN ARTICLE V.
(f) Indemnification obligations contained elsewhere in this
Agreement shall be subject to the provisions of this Article V.
Section 5.2 Procedure for Indemnification.
(a) If either party shall receive notice of any claim or
Action brought, asserted, commenced or pursued by any person or entity not a
party to this Agreement (hereinafter a "Third Party Claim"), with respect to
which the other Party is or may be obligated to make an Indemnity Payment, it
shall give such other Party prompt notice thereof (including any pleadings
relating thereto) after becoming aware of such Third Party Claim, specifying in
such reasonable detail as is known to it, the nature of such Third Party Claim
and the amount or estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim); provided,
however, that the failure of a Party to give notice as provided in this Section
5.2 shall not relieve the other Party of its indemnification obligations under
this Article V, except to the extent that such other Party is actually
prejudiced by such failure to give notice.
(b) For any Third Party Claim concerning which notice is
required to be given, and, in fact, given, under subparagraph (a) of this
Section 5.2, the Indemnifying Party shall defend in a timely manner, to the
extent permitted by law, such Third Party Claim through counsel appointed by the
Indemnifying Party and reasonably acceptable to the Indemnified Party. Once an
Indemnifying Party has commenced its defense of an Indemnified Party, it cannot
withdraw from such defense until conclusion of the matter, unless the
Indemnified Party agrees to the withdrawal or the Indemnified Party is also
defending the claim. The Indemnified Party shall have the right to participate
in the defense of the Third Party Claim by employing separate counsel at its own
expense, provided that the parties enter into a Joint Defense Agreement or Joint
Representation and Defense Agreement, substantially in the form of Exhibit D or
E to this Agreement, as appropriate.
(c) If a party responds to a notice of a Third Party Claim by
denying its obligation to indemnify the person or entity claiming a right of
defense and indemnification under this Agreement ("Indemnification Claimant"),
or if the Indemnifying Party fails to defend in a timely manner, the Indemnified
Party shall be entitled to defend such Third Party Claim through counsel
appointed by it. In addition, if it is later determined, through procedures
referenced in Article X of this Agreement, or agreement of the parties, that
said party wrongfully denied such claim, or the Indemnifying Party failed to
timely defend, then the Indemnifying Party shall (1) reimburse the Indemnified
Party for all costs and expenses (other than salaries of officers and employees)
incurred reasonably by the Indemnified Party in connection with its defense of
such Third Party Claim and (2) be estopped from challenging a judgment, order,
settlement, compromise, or consent judgment resolving the Third Party Claim
entered into in good faith by the Indemnified Party (if such claim has been
resolved prior to the conclusion of the proceeding between the Indemnified Party
and Indemnifying Party). An Indemnifying Party, after initially rejecting a
claim for defense or indemnification by an Indemnification Claimant, may defend
and indemnify the Indemnification Claimant, at any time prior to the resolution
of said Third Party Claim, for such claim, provided that (x) the Indemnifying
Party reimburses the Indemnified Party for all costs and expenses (other than
salaries of officers and employees) incurred reasonably by the Indemnified Party
in connection with its defense of such Third Party Claim up to the time the
Indemnifying Party assumes control of the defense of such claim (including costs
incurred in the transition of the defense from the Indemnified Party to the
Indemnifying Party) and (y) the assumption of the defense of the Third Party
Claim will not prejudice or cause harm to the Indemnified Party.
(d) With respect to any Third Party Claim relating to any
matter subject to a claim for indemnification hereunder, no party shall enter
into any compromise or settlement or consent to the entry of any judgment which
(i) does not include as a term thereof the giving by the third party of a
release to the Indemnified Party from all further liability concerning such
Third Party Claim on terms no less favorable than those obtained by the party
entering into such compromise, settlement or consent or (ii) imposes any
obligation on the Indemnified Party without said Indemnified Party's written
consent (such consent not to be unreasonably withheld), except an obligation to
pay money which the Indemnifying Party has agreed to pay on behalf of the
Indemnified Party. In the event that an Indemnified Party enters into any such
compromise, settlement or consent without the written consent of the
Indemnifying Party (other than as contemplated by Section 5.2(c)), the entry of
such compromise, settlement or consent shall relieve the Indemnifying Party of
its indemnification obligation related to the claims underlying such compromise,
settlement or consent.
(e) Upon final judgment, determination, settlement or
compromise of any Third Party Claim, and unless otherwise agreed by the parties
in writing, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, or to the Indemnified Party in reimbursement of any amount
theretofore required to be paid by it, the amount so determined by final
judgment, determination, settlement or compromise. Upon the payment in full by
the Indemnifying Party of such amount, the Indemnifying Party shall succeed to
the rights of such Indemnified Party to the extent not waived in settlement,
against the third party who made such Third Party Claim and any other person who
may have been liable to the Indemnified Party with respect to the indemnified
matter.
(f) In connection with defending against Third Party Claims,
the parties shall cooperate with and assist each other by making available all
employees, books, records, communications, documents, items and matters within
their knowledge, possession or control that are necessary, appropriate or
reasonably deemed relevant with respect to defense of such claims; provided,
however, that nothing in this subparagraph (f) shall be deemed to require the
waiver of any privilege, including the attorney-client privilege, or protection
afforded by the attorney work product doctrine. In addition, regardless of the
party actually defending a Third Party Claim for which there is an indemnity
obligation under Section 5.1 of this Agreement, the parties shall give each
other regular status reports relating to such action with detail sufficient to
permit the other party to assert and protect its rights and obligations under
this Agreement.
(g) The provisions of this Section 5.2 shall survive in
perpetuity and shall be the exclusive procedures for any claims subject to the
provisions of Section 5.1(a) or (b) hereof.
Section 5.3 Other Claims by Indemnified Parties Against
Indemnifying Parties. Any claim on account of an Indemnifiable Loss which does
not result from a Third Party Claim shall be asserted by written notice from the
Indemnified Party to the Indemnifying Party within sixty (60) days of first
learning of the breach under Section 5.1(a)(iv) or 5.1(b)(iv). All such claims
that are not timely asserted pursuant to this Section shall be deemed to be
forever waived. The Indemnified Party's written notice shall contain such
information as the Indemnified Party has regarding the alleged breach. Such
Indemnifying Party shall have a period of sixty (60) days (or such shorter time
period as may be required by law as indicated by the Indemnified Party in the
written notice) within which to respond thereto. If such Indemnifying Party does
not respond within such 60-day (or lesser period) such Indemnifying Party shall
be deemed to have accepted responsibility to make payment for the amount of the
Indemnifiable Loss and shall have no further right to contest the validity of
such claim. If such Indemnifying Party does respond within such 60-day (or
lesser) period and rejects such claim in whole or in part, such Indemnified
Party shall be free to pursue resolution as provided in Article X hereof.
Section 5.4 Indemnifiable Losses under Sections 5.1(a)(ii) and
5.1(b)(ii). If the indemnification provided for in this Article V is unavailable
to an Indemnified Party in respect of any Indemnifiable Loss arising out of or
related to information contained in the Information Statement the Form 10 or the
roadshow, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Indemnifiable Loss, in such proportion as is appropriate to
reflect the relative fault of Imation, each of its directors, each of its
officers who has signed any registration statement and each Affiliate of Imation
(an "Imation Party") on the one hand and 3M and each Affiliate of 3M (a "3M
Party") on the other hand in connection with the statements or omissions which
resulted in such Indemnifiable Loss. The relative fault of an Imation Party on
the one hand and of a 3M Party on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by an Imation Party on the one hand or a 3M
Party on the other hand.
Section 5.5 No Beneficiaries. Except to the extent expressly
provided otherwise in this Article V, the indemnification provided for by this
Article V shall not inure to the benefit of any third party or parties and shall
not relieve any insurer who would otherwise be obligated to pay any claim of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, provide any subrogation rights with respect thereto and each
party agrees to waive such rights against the other to the fullest extent
permitted.
Section 5.6 Special Provision Relating to Nishika Case. 3M
agrees to accept as Retained Liabilities the obligations relating to or arising
from the lawsuit entitled Minnesota Mining and Manufacturing Company v. Nishika,
Ltd., et al. (Supreme Court of Texas; Case No. 94-1124). In return, Imation
agrees that in the event the case is retried, it will use its best efforts to
make available on a priority basis, and for as long as is needed by 3M, any
Imation employee witnesses requested by 3M. In such connection, it is
anticipated that 3M will need, and Imation agrees to use its best efforts to
make available, Roger Lorenzini, for as long as he is an Imation employee or
under contract to provide any service to Imation, for extended periods prior to
any retrial in connection with this case and, if requested by 3M, for the entire
duration of any retrial. 3M shall reimburse Imation's out-of-pocket expenses,
but not salaries, in connection with any such employee witnesses.
Notwithstanding any other provisions of this Agreement, in the event Imation
fails to use its best efforts to provide such witnesses, and if such failure has
a material adverse impact on the outcome of the retrial, then all Liabilities
and obligations relating to such case will be deemed to be Assumed Liabilities
under this Agreement and Imation shall indemnify, defend and hold harmless 3M
from and against all Indemnifiable Losses arising out of or due to, directly or
indirectly, such case, whether incurred prior to the Distribution Date or
incurred on or after the Distribution Date. For purposes of this Section 5.6,
Imation shall be deemed to have satisfied its best efforts obligations to the
extent, but only to the extent, that it exercises a degree of care and effort
which is no less diligent than that which Imation would be expected to exercise
had it retained responsibility for the foregoing lawsuit.
Section 5.7 Named Parties. The parties hereto acknowledge that
it may not be feasible to substitute Imation (or one of its Affiliates) for 3M
(or one of its Affiliates) as a named party in Actions, whether domestic or
foreign, constituting Assumed Liabilities. In such event, 3M (or one of its
Affiliates) shall remain as a named party, but, following the Distribution Date,
Imation (or one of its Affiliates) shall assume the defense of any such Action
in accordance with the provisions of Section 5.2 hereof and 3M and its
Affiliates shall cooperate with Imation as contemplated by such Section 5.2 and
Article VII hereof.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
Section 6.1 Conveyancing and Assumption Instruments. In
connection with the transfer, conveyance, assignment and delivery of the
Transferred Assets and the assumption of Assumed Liabilities contemplated by
this Agreement, 3M and Imation agree to execute or cause to be executed by the
appropriate parties and to deliver to each other, as appropriate, the
Conveyancing and Assumption Instruments.
Section 6.2 No Representations or Warranties; Exceptions.
Except as provided in Section 2.1 hereof, Imation understands and agrees that 3M
is not in this Agreement or in any other agreement or document contemplated by
this Agreement, representing or warranting in any way (a) as to the value or
freedom from encumbrance of, or any other matter concerning, any Transferred
Assets or (b) as to the legal sufficiency to convey title to any Transferred
Assets of the execution, delivery and filing of the Conveyancing Instruments, IT
BEING AGREED AND UNDERSTOOD THAT ALL SUCH ASSETS AND THE ASSUMED LIABILITIES ARE
BEING TRANSFERRED "AS IS, WHERE IS" and without any representation or warranty
of any kind (express or implied) and that Imation shall bear the economic and
legal risk that any conveyances of such assets shall prove to be insufficient or
that Imation's title to any such assets shall be other than good and marketable
and free from encumbrances. Similarly, Imation understands and agrees that 3M is
not in this Agreement or in any other agreement or document contemplated by this
Agreement, representing or warranting in any way that the obtaining of the
consents or approvals, the execution and delivery of any amendatory agreements
and the making of the filings and applications contemplated by this Agreement
shall satisfy the provisions of all applicable agreements or the requirements of
all applicable laws or judgments, it being understood and agreed that, subject
to Section 6.3 hereof, Imation shall bear the economic and legal risk that any
necessary consents or approvals are not obtained or that any requirements of law
or judgments are not complied with. The foregoing, however, shall not limit any
responsibilities which 3M may have to use its commercially reasonable efforts to
effect transfers under the other provisions of this Agreement.
Section 6.3 Further Assurances; Subsequent Transfers.
(a) Each of 3M and Imation will execute and deliver such
further instruments of conveyance, transfer and assignment and will take such
other actions as each of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and to carry out the terms hereof.
Without limiting the generality of the foregoing, at any time and from time to
time after the Distribution Date, at the request of Imation and without further
consideration, 3M will execute and deliver to Imation such other instruments of
transfer, conveyance, assignment and confirmation and take such action as
Imation may reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign to Imation and to confirm Imation's title to all of
the Transferred Assets, to put Imation in actual possession and operating
control thereof and to permit Imation to exercise all rights with respect
thereto (including, without limitation, rights under contracts and other
arrangements as to which the consent of any third party to the transfer thereof
shall not have previously been obtained) and Imation will execute and deliver to
3M all instruments, undertakings or other documents and take such other action
as 3M may reasonably deem necessary or desirable in order to have Imation fully
assume and discharge the Assumed Liabilities and relieve 3M of any Liability or
obligations with respect thereto and evidence the same to third parties.
Notwithstanding the foregoing, 3M and Imation shall not be obligated, in
connection with the foregoing, to expend monies other than reasonable
out-of-pocket expenses and attorneys' fees.
(b) 3M and Imation will use their commercially reasonable
efforts to obtain any consent, approval or amendment required to novate and/or
assign all agreements, leases, licenses and other rights of any nature
whatsoever relating to the Transferred Assets to Imation or Affiliates of
Imation; provided, however, that 3M and its Affiliates shall not be obligated to
pay any consideration therefor (except for filing fees and other administrative
charges and except as otherwise specifically provided herein) to the third party
from whom such consents, approvals and amendments are requested. In the event
and to the extent that 3M is unable to obtain any such required consent,
approval or amendment (i) 3M shall continue to be bound thereby and (ii) unless
not permitted by law or the terms thereof, Imation shall pay, perform and
discharge fully all the obligations of 3M thereunder from and after the
Distribution Date and indemnify 3M for all Indemnifiable Losses arising out of
such performance by Imation or any claims by third parties thereunder. 3M shall,
without further consideration therefor, pay and remit to Imation promptly all
monies, rights and other considerations received in respect of such performance.
3M shall exercise or exploit its rights and options under all such agreements,
leases, licenses and other rights and commitments referred to in this Section
6.3(b) only as reasonably directed by Imation and at Imation's expense. If and
when any such consent shall be obtained or such agreement, lease, license or
other right shall otherwise become assignable or able to be novated, 3M shall
promptly assign and novate all its rights and obligations thereunder to Imation
without payment of further consideration and Imation shall, without the payment
of any further consideration therefor, assume such rights and obligations. To
the extent that the assignment of any contract or agreement (or their proceeds)
pursuant to this Section 6.3 is prohibited by law, the assignment provisions of
this Section shall operate to create a subcontract with Imation to perform each
relevant unassignable 3M contract or agreement at a subcontract price equal to
the monies, rights and other considerations received by 3M with respect to the
performance by Imation under such subcontract.
(c) All Bids, Quotations and Proposals included in the
Transferred Assets shall be transferred to Imation or Imation Enterprises to the
extent permitted by law. 3M and Imation shall work together and use their best
efforts to preserve such Bids, Quotations and Proposals and facilitate the award
of contracts pursuant thereto consistent with applicable laws and regulations.
Any contracts awarded pursuant to an outstanding Bid, Quotation or Proposal
shall be considered an agreement and treated in the same manner as provided for
in the last two sentences of Section 6.3(b) hereof.
(d) 3M and Imation acknowledge that the following governmental
programs shall remain with 3M through their respective terms: the Advanced Tape
Systems Program, the Optical Storage Program, the National Media Lab Program and
the Factory Support Program. With respect to the Advanced Tape Systems Program
and the Optical Storage Program, 3M shall use its commercially reasonable
efforts to have Imation added as another consortium member. With respect to the
other programs and subject to the receipt of any required governmental
approvals, 3M and Imation shall enter into a subcontracting agreement (as
contemplated by subsection (b) above) to the extent necessary to allow Imation
to perform any services required to be performed by it and to enable Imation to
receive any benefits of the particular program relating to those services. 3M
and Imation further acknowledge that the Mapping Contract shall remain with 3M,
which shall have the sole responsibility of performing thereunder.
(e) With respect to any governmental commercial supply
contracts relating to the Transferred Businesses, 3M and Imation shall use their
respective commercially reasonable efforts to execute one or more novation
agreements with the appropriate governmental authority so as to effectively
substitute Imation for 3M under all such contracts.
(f) From and after the Distribution Date, 3M shall have no
responsibility to take any action with respect to any UCC filings made prior to
the Distribution Date relating to equipment sold by, or on behalf of, the
Transferred Businesses, including, without limitation, any action which may be
necessary to renew any such filings. The foregoing notwithstanding, at the
request of Imation, 3M shall assist Imation in effecting the transfer of any
such filings into the name of Imation.
(g) All references in this Section 6.3 to Imation shall
include Imation Enterprises as and to the extent appropriate.
Section 6.4 Imation Officers and Directors. Imation and 3M
shall take all actions which may be required to elect or otherwise appoint, as
of the Distribution Date, those individuals designated in the Information
Statement to be directors or officers of Imation.
Section 6.5 Resignations. On or prior to the Distribution
Date, 3M shall cause all directors and officers of 3M who are not designated in
the Information Statement to be directors and officers of Imation following the
Distribution Date to resign from their positions as directors or officers of
Imation.
Section 6.6 Certain Intercompany Arrangements.
(a) Following the Distribution Date, the parties shall discuss
in good faith the provision of any services and products to be provided by the
other, but which inadvertently were not the subject of a written agreement.
Nothing in this Section 6.6, however, shall require or authorize 3M or Imation
to provide and charge each other for any services other than on the terms and
conditions specified in the Corporate Services Transition Agreement or the other
Related Agreements.
(b) In connection with the Distribution, 3M and Imation shall
effect the transfer of intercompany receivables and payables relating to
products of the Transferred Businesses which are in-transit as of the
Distribution Date to achieve an appropriate matching of such receivables and
payables (i.e., both the receivables and payables relating to a product
in-transit shall be held by one party and its Affiliate following the
Distribution).
Section 6.7 Related Agreements. As of the Distribution Date,
3M and Imation shall enter, and shall cause Imation Enterprises and their
respective Affiliates to enter (if applicable), into the Related Agreements.
Section 6.8 Sales and Transfer Taxes. Imation and 3M agree to
cooperate to determine the amount of sales, transfer or other taxes or fees
(including, without limitation, all real estate, patent, copyright and trademark
transfer taxes and recording fees) payable in connection with the transactions
contemplated by this Agreement (the "Transaction Taxes"). 3M agrees to file
promptly and timely the returns for such Transaction Taxes with the appropriate
taxing authorities and remit payment of the Transaction Taxes and Imation will
join in the execution of any such tax returns or other documentation. Payment of
all such Transaction Taxes shall be the responsibility of 3M, except as
otherwise provided in Section 11.2 hereof, the foreign transfer agreements or
the Tax Sharing Agreement. The foregoing notwithstanding, Imation shall be
responsible for sales taxes payable upon the transfer of motor vehicles and for
mortgage recording taxes which by statute are the primary responsibility of
Imation.
Section 6.9 Signs; Use of 3M Name. Within 90 days after the
Distribution Date, Imation, at its own expense, shall remove (or, if necessary,
cover up) any and all exterior and interior signs and identifiers which refer or
pertain to 3M at the Transferred Businesses. After such 90-day period, Imation
shall not use or display the name "3M" or other trademarks, trade names or their
identifiers owned by or licensed to 3M except to the extent such marks, names
and identifiers have been assigned or licensed to Imation or Imation Enterprises
pursuant to the Intellectual Property Agreement ("NonPermitted Names"), without
the prior written consent of 3M.
Section 6.10 Supplies and Documents. For a period of time
following the Distribution Date (as contemplated in the Intellectual Property
Agreement), Imation shall have the right to use existing supplies and documents
(including, but not limited to forms, labels, shipping materials, packaging
materials, catalogues, sales brochures, operating manuals, instructional
documents and similar materials, and advertising material) being transferred to
it pursuant to this Agreement which have imprinted thereon the name "3M" or
trademarks, logotypes or variations comprising the name "3M" as and to the
extent contemplated by the Intellectual Property Agreement. At the end of such
time period, Imation shall destroy all such remaining supplies and documents. In
addition, Imation will cause the name of any of its subsidiaries or Affiliates
containing the phrase "3M" to be changed to delete any such reference.
Section 6.11 Plant Closings and Layoffs. Imation agrees that
it shall not, at any time during the 90-day period following the Distribution
Date, effectuate (i) a "plant closing" as defined in the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act") affecting any site of
employment or operating units within any site of employment of the Transferred
Businesses or (ii) take any action to precipitate a "mass layoff" as defined in
the WARN Act affecting any site of employment of the Transferred Businesses,
except, in either case, after complying fully with the notice and other
requirements of the WARN Act. Imation agrees to indemnify 3M and to defend and
hold 3M harmless from and against any and all claims, losses, damages, expenses,
obligations and liabilities (including attorney's fees and other costs of
defense) which 3M may incur in connection with any suit or claim of violation
brought against 3M under the WARN Act, which relate, in whole or in part, to
actions taken by Imation with regard to any site of employment of Imation or
operating units within any site of employment of the Transferred Businesses.
Section 6.12 Shared Facility Arrangements.
(a) 3M and Imation agree that, subsequent to the Distribution
Date, the facilities located in Menomonie, Wisconsin and at 3M Center (the "3M
Shared Facility") shall be owned by 3M, but shared by the parties for the
concurrent operations of certain of the Core Businesses and Transferred
Businesses in accordance with the terms set forth in this Section 6.12. 3M and
Imation further agree that subsequent to the Distribution Date, the facilities
located in Middleway, West Virginia, Vadnais Heights, Minnesota, Camarillo,
California and Pine City, Minnesota (the "Imation Shared Facilities") shall be
owned by Imation (or Imation Enterprises) or leased by Imation (or Imation
Enterprises) from third parties (as the case may be), but shared by the parties
for the concurrent operations of certain of the Core Businesses and Transferred
Businesses in accordance with the terms set forth in this Section 6.12. (All
such arrangements are collectively referred to as the "Shared Facility
Arrangements" and are more fully described on Schedule 6.12(a)).
(b) During the applicable Shared Facility Term, the parties
agree that Imation shall lease from 3M a portion of the 3M Shared Facility for
the purpose of conducting operations relating to the Transferred Businesses to
the extent and in a manner substantially consistent with the operations
conducted at such facilities in connection with the Transferred Businesses
immediately prior to the Distribution Date. In furtherance thereof, 3M and
Imation shall, on or prior to the Distribution Date, enter into a Shared
Facility Agreement, with respect to each such facility, which shall set forth
(i) the portion of the building to be made available and the services to be
provided by 3M to Imation at each of the 3M Shared Facilities, (ii) the payments
to be paid by Imation to 3M in consideration therefor and (iii) such further
arrangements as the parties deem appropriate with respect to the 3M Shared
Facilities. In addition, Affiliates of Imation shall continue following the
Distribution Date to lease from Affiliates of 3M (x) a portion of 3M's facility
at Breda, Netherlands pursuant to the lease which is in effect on the
Distribution Date and (y) a portion of 3M's facility in London, Ontario, Canada
pursuant to the terms of the Transition Agreement being entered into between 3M
Canada, Inc. and Imation Canada, Inc.
(c) During the applicable Shared Facility Term, the parties
agree that 3M shall lease (or sublease, as the case may be) from Imation a
portion of each of the Imation Shared Facilities for the purpose of conducting
operations relating to the Core Businesses to the extent and in a manner
substantially consistent with the operations conducted at such facilities in
connection with the Core Businesses immediately prior to the Distribution Date.
In furtherance thereof, 3M and Imation shall, on or prior to the Distribution
Date, enter into a Shared Facility Agreement with respect to each such facility,
which shall set forth (i) the portion of the building to be made available and
services to be provided by Imation to 3M at each of the Imation Shared
Facilities, (ii) the payments to be made by 3M to Imation in consideration
therefor and (iii) such further arrangements as the parties deem appropriate
with respect to the Imation Shared Facilities.
(d) Upon the termination by either party of any of the Shared
Facility Arrangements with respect to a particular facility in accordance with
the respective Shared Facility Agreement, Imation or 3M, as the case may be,
shall promptly remove all of its personnel, equipment, materials and other
property from such facility.
Section 6.13 Leased Employees. Following the Distribution
Date, Imation shall lease from 3M the Leased Employees in accordance with the
terms of the Leased Employee Agreement.
Section 6.14 Other Leased/Shared Properties.
(a) In connection with the Distribution, 3M shall assign to
Imation or Imation Enterprises (as the case may be), and Imation or Imation
Enterprises (as the case may be) shall accept responsibility for the third party
leases relating to real property and/or the facilities set forth on Schedule
6.14(a).
(b) In connection with the Distribution, Imation or Imation
Enterprises (as the case may be) shall assume responsibility with respect to
certain lease agreements relating to the Transferred Businesses, including those
which are set forth on Schedule 6.14(b), pursuant to which 3M presently leases a
portion of its facilities to unaffiliated third parties.
(c) 3M shall retain all distribution centers. Any distribution
center services to be provided by 3M to Imation shall be provided pursuant to
the terms of the Corporate Services Agreement.
Section 6.15 Domestic Receivables and Payables.
(a) Following the Distribution Date and through December 31,
1996 (or such earlier date as 3M and Imation shall mutually agree), 3M, on
behalf of Imation and Imation Enterprises, shall collect all domestic trade
receivables of the Transferred Businesses outstanding as of the Distribution
Date which constitute shared accounts (i.e., a portion of such receivables
relate to each of the Core Businesses and the Transferred Businesses,
respectively) and pay all domestic payables of the Transferred Businesses
outstanding as of such date (irrespective of whether such payables constitute
shared payables or are payables solely for the account of the Transferred
Businesses). 3M will diligently pursue the collection of such receivables and
the payment of payables, with the same degree of care and effort as 3M performs
such services with respect to its own receivables and payables; it being
understood, however, that subject to the provisions of this sentence, any risk
of non-collection of Imation's portion of the shared receivables shall remain
with Imation. Pending a final reconciliation, 3M will remit to Imation, per a
mutually agreed schedule which is set forth on Schedule 6.15(a), an estimate of
the amount, if any, by which collections with respect to shared and non-shared
(net of the items specified on Schedule 6.15(a)) are expected to exceed
payments, and Imation will remit to 3M the amount, if any, by which payments are
expected to exceed collections (net of the items specified on Schedule 6.15(a)).
The remittances schedule shall be reviewed on a monthly basis by 3M and Imation
and shall be adjusted in good faith by mutual agreement of the parties to the
extent necessary to reflect more accurately the actual schedule of collections
and payments. If 3M receives a payment with respect to a receivable of which a
portion relates to the Transferred Businesses and a portion relates to the Core
Businesses, 3M shall allocate the payments as directed by the customer and, in
the absence of any such direction, in a manner corresponding to the relative
amounts of the specific invoices in question outstanding with respect to the
Transferred Businesses and the Core Businesses.
(b) Promptly following December 31, 1996 (or such earlier date
as 3M and Imation shall mutually agree upon), 3M shall prepare a final
reconciliation of cash collected from domestic trade receivables (net of the
items specified on Schedule 6.15(a)) and cash paid for all domestic payables, in
either instance relating to the Transferred Businesses and outstanding on the
Distribution Date. Upon completion of the final reconciliation, 3M shall remit
to Imation, or Imation shall remit to 3M, as the case may be, any funds required
so that the total amount of funds remitted by 3M to Imation (net of any funds
remitted by Imation to 3M) pursuant to Sections 6.15(a) and (b) shall equal the
actual amount by which collections (net of the items set forth on Schedule
6.15(a)) exceed payments.
(c) The foregoing notwithstanding, commencing with the
Distribution Date, Imation shall assume responsibility for the collection of all
trade receivables of the Transferred Businesses which are not "shared" accounts,
and be entitled to any amounts so collected; although the funds relating to
pre-Distribution Date receivables may be deposited in 3M lock boxes and remitted
to Imation in accordance with Schedule 6.15(a). The risk of non-collection of
the trade receivables referred to in the preceding sentence shall remain with
Imation. In addition, after December 31, 1996 (or such earlier date as 3M and
Imation shall mutually agree upon), Imation shall assume responsibility for the
collection of all domestic trade receivables and the payment of all trade
payables, in either instance relating to the Transferred Businesses; although 3M
may continue to provide services with respect to trade payables in accordance
with the terms of the Corporate Services Transition Agreement. Accordingly,
should 3M or Imation inadvertently receive payment with respect to any trade
receivables the collection of which is the responsibility of the other party, it
will remit payment to the appropriate party of any amounts so received at the
time of the final reconciliation or at such other time as the improper payment
is identified.
Section 6.16 Diskette Anti-Dumping Duty Exemption. 3M is
presently entitled to certain exemptions from anti-dumping duties which respect
to the importation of diskettes into the European Union. 3M and Imation shall
use their respective commercially reasonable efforts to have Imation substituted
for 3M with respect to such exemption with an effective date of July 1, 1996 or
as soon as possible thereafter. 3M and Imation agree to cooperate with each
other in good faith to minimize any obligation to pay anti-dumping duties should
the parties be unable to effect such substitution and/or have such substitution
effective as of July 1, 1996, including to the extent permitted by applicable
law by having 3M import on behalf of Imation (it being understood that Imation
would reimburse 3M for all its costs and expenses so involved). In the event
that Affiliates of 3M in Europe shall receive diskettes following the foregoing
substitution of Imation, 3M and Imation shall cooperate with each other in good
faith to minimize any obligation to pay anti-dumping duties with respect to such
diskettes; it being understood, however, that Imation shall be responsible for
any duties which may be payable and any other costs which may be incurred in
handling such diskettes.
Section 6.17 Repayment of Italian Debt. In connection with the
Distribution, Imation shall, or shall cause one of its Affiliates, to repay
certain indebtedness which is presently outstanding and owing to 3M from its
Affiliates in Italy and which is being assumed by an Affiliate of Imation
pursuant to Section 2.3 hereof.
Section 6.18 GECC Financing Agreements. The respective rights
and obligations of 3M and Imation under the Portfolio Purchase Agreement and the
Operating Agreement entered into by 3M with GECC in December 1995 with respect
to financing transactions entered into with customers to enable those customers
to purchase equipment sold by the Transferred Businesses or used in connection
with products of the Transferred Businesses are as set forth below:
(a) respective rights and obligations of 3M and Imation under
the Portfolio Purchase Agreement and the Operating Agreement entered into by 3M
with respect to the Imation Contracts and other obligations described therein
shall be as follows:
(i) With respect to the Portfolio Purchase Agreement:
(1) So long as Imation is not in material default of its obligations
pursuant to this Section 6.18 and to the extent 3M is entitled to
certain rights with respect to Imation Contracts pursuant to the
Portfolio Purchase Agreement, including without limitation, the right
to receive notice in certain cases, the right to make cure payments on
behalf of customers, and the right to remarket Property, Imation shall
have all such rights from and after the Distribution Date and, subject
to GECC's consent, shall have the right to exercise such rights
directly to GECC;
(2) To the extent amounts are owed or become due to GECC resulting from
the breach of a representation or warranty relating to Lease Contracts
or the Property related thereto which are Imation Contracts pursuant to
Section 3.4, 3.7, 3.8, 3.10 or 3.11 thereof, Imation shall pay those
amounts to GECC;
(3) To the extent amounts are owed or become due to GECC pursuant to
Article V thereof, Imation shall pay those amounts to GECC which result
from Lease Contract Defaults that are related to Imation Contracts;
(4) To the extent any Recoveries or Remarketing Proceeds are owed or
become due to GECC pursuant to Section 5.5 or Section 6.7 thereof,
Imation shall pay those amounts to GECC which relate to any Property
that is subject to Imation Contracts and if Imation pays any such
amounts to GECC then 3M shall direct that GECC transfer such Imation
Contracts directly to Imation;
(5) To the extent that any Recoveries or Remarketing Proceeds have been
paid to 3M pursuant to Section 5.5 or Section 6.7 thereof, 3M shall pay
to Imation any portion of such amounts attributable to Imation
Contracts (except to the extent 3M has previously paid to GECC any
amounts with respect to such Imation Contracts);
(6) On the Distribution Date, 3M shall transfer to Imation all of its
rights and interests in and to all Administered Accounts that relate to
Imation Contracts; and, to the extent that any Recoveries or
Remarketing Proceeds are paid to 3M with respect to any Administered
Account, 3M shall promptly pay to Imation any portion of such amounts
to Imation which result from those Administered Accounts relating to
Imation Contracts and any amounts paid from GECC to 3M on each such
Imation Contract will be promptly paid to Imation;
(7) To the extent amounts are owed or become due to GECC with respect
to any Administered Account pursuant to Section 7.4 thereof, Imation
shall pay those amounts to GECC which result from those Administered
Accounts relating to Imation Contracts;
(8) To the extent amounts are owed or become due to GECC under any
Service and Maintenance Contract pursuant to Article VIII thereof,
Imation shall pay those amounts to GECC which result from those Service
and Maintenance Contracts relating to Property that is subject to
Imation Contracts and if Imation pays any such amounts to GECC then 3M
shall direct GECC to transfer such Imation Contracts directly to
Imation;
(9) To the extent amounts are owed or become due to GECC under any
Dealer Enhancement pursuant to Article VIII thereof, Imation shall
pay those amounts to GECC which result from those Dealer Enhancements
relating to Imation Contracts and if Imation pays any such amounts to
GECC then 3M shall direct GECC to transfer such Imation Contracts
directly to Imation;
(10) To the extent that remarketing obligations are required to be
performed pursuant to Section 8.3 thereof with respect to Imation
Contracts, Imation shall perform such obligations;
(11) To the extent amounts are owed or become due to GECC under any
Recourse Contract pursuant to Article VIII thereof, Imation shall pay
those amounts to GECC which result from those Recourse Contracts
relating to Imation Contracts and if Imation pays any such amounts to
GECC then 3M shall direct GECC to transfer such Imation Contracts
directly to Imation;
(12) To the extent any Damages are owed or become due to GECC pursuant
to Section 9.2(a)(other than clause (iii) therein) or 9.2(b) thereof,
Imation shall pay those amounts to GECC which are attributable to, or
arise out of, Imation's actions or failure to act, or relate to Imation
Contracts or the Property related thereto;
(13) 3M shall endeavor in good faith to enter into an amendment thereto
with GECC which provides that, with respect to Imation Contracts,
Imation shall be entitled to all rights of 3M pursuant to the Portfolio
Purchase Agreement and, subject to GECC's consent, GECC shall
thereafter fulfill its obligations relating to Imation Contracts
directly to Imation and 3M shall, upon request, be entitled to receive
copies of all such reports relating to Imation Contracts, and all
notices, letters and other forms of communication provided by GECC to
Imation pursuant to the Portfolio Purchase Agreement from time to time
during the term of such Agreement; and
(14) On the Distribution Date, 3M shall transfer to Imation a non-cash
accrual in the amount of sixty percent (60%) of the remaining balance
in 3M's General Ledger Account 9030 Project DIVESTGECC as of the
Distribution Date as a reserve against future liabilities relating to
Imation Contracts. This is a transfer of the asset reserve account only
and does not include any current or future transfer of cash from 3M to
Imation.
(ii) With respect to the Operating Agreement:
(1) 3M shall transfer to Imation the right to receive all amounts to be
received from GECC, if any, for funding Imation Contracts which have
not been funded as of the Distribution Date;
(2) 3M and Imation shall use all reasonable efforts to enter into an
assignment and assumption agreement with GECC pursuant to which 3M
shall assign its rights and obligations under the Operating Agreement
with respect to Imation Contracts to Imation. Imation shall assume such
rights and obligations, and GECC shall consent to such assignment and
assumption.
(3) In the event the parties do not enter into such an assignment and
assumption agreement, the following provisions shall apply:
(A) To the extent amounts are owed or become due to GECC
resulting from the breach of a representation, warranty or
covenant in Section 12 thereof, Imation shall pay those
amounts to GECC that relate to any such breach that is
attributable to Imation Contracts or the Equipment related
thereto and will perform the covenants shown in such Section
12 to the extent that such covenants relate to Imation
Contracts or the Equipment related thereto;
(B) To the extent amounts are owed or become due to GECC
pursuant to Section 15 thereof, Imation shall pay those
amounts to GECC which result from Lease Contract Defaults that
relate to Imation Contracts;
(C) To the extent any Recoveries or Remarketing Proceeds are
owed or become due to GECC pursuant to Section 15(d) or
Section 16(g) thereof, Imation shall pay those amounts to GECC
which relate to Property that is subject to Imation Contracts;
(D) To the extent that any Recoveries or Remarketing Proceeds
are paid to 3M pursuant to Section 15(d) or Section 16(g)
thereof, 3M shall pay to Imation the portion of such amounts
attributable to Imation Contracts;
(E) To the extent amounts are owed or become due to GECC under
any Service Transaction pursuant to Section 17 thereof,
Imation shall pay those amounts to GECC which result from
those Service Transactions relating to any Property that is
subject to Imation Contracts and if Imation pays any such
amounts to GECC then 3M shall direct GECC to transfer such
Imation Contracts directly to Imation;
(F) To the extent amounts are owed or become due to GECC under
any Recourse Transactions pursuant to Section 17 thereof,
Imation shall pay those amounts to GECC which result from
those Recourse Transactions that are related to Imation
Contracts and if Imation pays any such amounts to GECC then 3M
shall direct GECC to transfer such Imation Contracts directly
to Imation;
(G) To the extent amounts are owed or become due to GECC
resulting from municipal contract terminations for
non-appropriation pursuant to Section 18 thereof, Imation
shall pay those amounts to GECC which are related to Imation
Contracts;
(H) To the extent that obligations are required to be
performed or amounts are owed or become due to GECC pursuant
to Section 18 with respect to Imation Contracts, Imation shall
perform such obligations or pay such amounts;
(I) To the extent any Damages are owed or become due to GECC
pursuant to Section 22(a) thereof, Imation shall pay those
amounts to GECC which are attributable to Imation, or arise
out of, Imation's actions or failure to act, or relate to
Imation Contracts or the Equipment related thereto;
(J) To the extent amounts are owed or become due to GECC
pursuant to Section 26 thereof and Imation has not generated
Transaction volume in an amount at least equal to $90,000,000
during the Term of the Program, then Imation shall pay to GECC
$10,000 for each $1,000,000 of Transaction volume (or portion
thereof) less than $90,000,000 generated during such Term (but
not more than $900,000).
(b) For the purposes of this Section 6.18, all capitalized
terms used herein shall have their respective meanings in the Portfolio Purchase
Agreement or the Operating Agreement, as the context requires, except that the
following terms shall have the following definitions:
3M Contracts: shall mean those Lease Contracts that are not Imation Contracts.
GECC: General Electric Capital Corporation, a corporation organized under the
laws of the State of Connecticut.
Imation Contracts: shall mean those Lease Contracts that were originated by the
Transferred Businesses in existence as of the Distribution Date.
Operating Agreement: shall mean that certain Operating Agreement by and between
GECC and 3M dated as of December 6, 1995.
Portfolio Purchase Agreement: shall mean that certain Portfolio Purchase
Agreement by and between GECC and 3M dated as of December 6, 1995.
All capitalized terms used in this Section 6.18 but not otherwise defined in
this Section 6.18(a) shall have the meanings set forth in this Agreement.
(c) Imation shall, from and after the Distribution Date,
indemnify and hold harmless 3M and each of its directors, officers, employees
and agents from and against any and all liabilities owed to GECC arising out
of or based upon or with respect to any (i) breach under this Section 6.18 or
(ii) any failure to perform any covenant, agreement or undertaking on the part
of Imation contained in this Section 6.18.
(d) 3M shall, from and after the Distribution Date, indemnify
and hold harmless Imation and each of its directors, officers, employees and
agents from and against any and all liabilities owed to GECC arising out of or
based upon or with respect to any (i) breach under this Section 6.18; (ii) any
failure to perform any covenant, agreement or undertaking on the part of 3M
contained in this Section 6.18; or (iii) any breach or failure by 3M to perform
any covenant, agreement or undertaking on the part of 3M contained in the
Portfolio Purchase Agreement and the Operating Agreement other than as a result
of any action or inaction by Imation.
(e) 3M'S AND IMATION'S RESPECTIVE OBLIGATIONS PURSUANT TO
SECTION 6.18(C) AND (D) SHALL BE LIMITED TO DIRECT AND ACTUAL DAMAGES, TO THE
EXCLUSION OF INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES.
Section 6.19 Letters of Credit. Imation shall use its
commercially reasonable efforts to substitute Imation letters of credit for any
3M letters of credit outstanding on the Distribution Date with respect to
obligations of the Transferred Businesses. In addition, Imation shall reimburse
3M for any costs incurred or funds advanced by 3M following the Distribution
Date with respect to any such letters of credit.
Section 6.20 Industrial Revenue Bonds. 3M shall repay on or
prior to the Distribution Date certain industrial revenue bonds presently
outstanding with respect to the White City, Oregon facility. In connection
with the Distribution, Imation shall assume responsibility for all other
industrial revenue bonds presently outstanding with respect to the White City,
Oregon facility.
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
Section 7.1 Provision of Corporate Records. As soon as
practicable after the Distribution Date, 3M shall deliver to Imation all Books
and Records. Such Books and Records shall be the property of Imation, but shall
be retained and made available (upon reasonable notice during normal business
hours) to 3M for review and duplication until the earlier of (i) notice from 3M
that such records are no longer needed by 3M or (ii) the end of the customary
retention period under 3M's document retention policies as in effect at the
Distribution Date. The foregoing notwithstanding, technical notebooks and other
Books and Records subject to the Intellectual Property Agreement shall be
governed by the terms of such agreement.
Section 7.2 Access to Information. From and after the
Distribution Date, 3M and Imation shall afford to each other and to each other's
authorized accountants, counsel and other designated representatives reasonable
access and duplicating rights (with copying costs to be borne by the requesting
party) during normal business hours to all Books and Records and documents,
communications, items and matters (collectively, "Information") within each
other's knowledge, possession or control relating to the Transferred Assets, the
Transferred Businesses, the Assumed Liabilities, the Retained Liabilities and
the Transferred Employees, insofar as such access is reasonably required by 3M
or Imation, as the case may be (and shall use reasonable efforts to cause
persons or firms possessing relevant Information to give similar access).
Information may be requested under this Article VII for, without limitation,
audit, accounting, claims, Actions and tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations, but not for competitive
purposes.
Section 7.3 Production of Witnesses and Individuals. From and
after the Distribution Date, 3M and Imation shall use reasonable efforts to make
available to each other, upon written request, its officers, directors,
employees and agents for fact finding, consultation and interviews and as
witnesses to the extent that any such person may reasonably be required in
connection with any Actions in which the requesting party may from time to time
be involved relating to the conduct of the Transferred Businesses or the Core
Businesses (as the case may be) prior to the Distribution Date. Except as
otherwise agreed between the parties or pursuant to a Joint Representation and
Defense Agreement or Joint Defense Agreement, 3M and Imation agree to reimburse
each other for reasonable out-of-pocket expenses (but not labor charges or
salary payments) incurred by the other in connection with providing individuals
and witnesses pursuant to this Section 7.3.
Section 7.4 Retention of Records. Except when a longer
retention period is otherwise required by law or agreed to in writing, 3M and
Imation shall retain, for their retention periods customary under existing 3M
policies, all material Information relating to the Transferred Businesses.
Notwithstanding the foregoing, in lieu of retaining any specific Information, 3M
or Imation may offer in writing to deliver such Information to the other and, if
such offer is not accepted within 90 days, the offered Information may be
destroyed or otherwise disposed of at any time. If a recipient of such offer
shall request in writing prior to the scheduled date for such destruction or
disposal that any of the Information proposed to be destroyed or disposed of be
delivered to such requesting party, the party proposing the destruction or
disposal shall promptly arrange for the delivery of such of the Information as
was requested (at the cost of the requesting party).
Section 7.5 Confidentiality.
(a) Each of 3M and Imation shall, and shall cause its
officers, employees, agents, consultants, advisors and Affiliates to, hold, in
strict confidence and not disclose to another, except as provided herein or
compelled to disclose by judicial or administrative process or, in the opinion
of its independent legal counsel, by other requirements of law, confidential
information concerning the other party.
(b) For purposes of this Section 7.5, confidential information
about a particular party (referred to herein as the "first party") shall mean
information known by the other party on the Distribution Date and reasonably
understood by the other party to be confidential and related to the first
party's business interests, or disclosed confidentially by the first party to
the other party after the Distribution Date under the terms and for purposes of
this Agreement or any of the Related Agreements except for:
(i) information learned by the other party for the first
time after the Distribution Date, but prior to any
disclosure by the first party;
(ii) information which is or becomes publicly available
through no act of the other party, from and after the
date of public availability;
(iii) information disclosed to the other party by a third
party, provided (a) under the circumstances of
disclosure the other party does not have a duty of
non-disclosure owed to such third party, (b) the
third party's disclosure is not violative of a duty
of non-disclosure owed to another, including the
first party, and (c) the disclosure by the third
party is not otherwise unlawful;
(iv) information developed by the other party independent
of any confidential information of the first party
which is known by the other party on the Distribution
Date and/or disclosed by the first party thereafter;
(v) information which pursuant to the terms of the
Intellectual Property Agreement or any of the other
Related Agreements is specifically excluded from the
definition of confidential information; and
(vi) information which the other party can demonstrate was
disclosed by a business of the other party to a third
party prior to November 14, 1995, and for which any
obligation of confidentiality by that third party
has expired, from and after the date such third party
obligation of confidentiality expires, and provided
that disclosure of an item of information to one
third party and a different item of information to
another third party shall not be viewed as disclosure
of information which can only be drawn from those
items of information collectively.
(c) The foregoing restrictions shall expire with respect to
business information which is confidential information five (5) years after the
date of disclosure of such information, unless and to the extent 3M and Imation
agree to a longer period for the foregoing restrictions with respect to specific
categories of business information which is confidential information of Imation
and/or 3M, in which case the foregoing restrictions shall expire with respect to
such information on the expiration of such longer period. The date of disclosure
in the case of business information which is either confidential information of
3M known by Imation or confidential information of Imation known by 3M on the
Distribution Date shall be considered to be the Distribution Date. 3M and
Imation each shall not disclose to another or use except for purposes of
fulfilling its obligations under this Agreement or the relevant Related
Agreements any business information which is confidential information of Imation
or confidential information of 3M, respectively. In addition, 3M and Imation
each shall not disclose to another or use except for purposes of fulfilling its
obligations under this Agreement or the relevant Related Agreement any technical
information which is confidential information of Imation or confidential
information of 3M, respectively. The foregoing restrictions shall not expire
until such time and to the extent that such information ceases to be
confidential information.
(d) Each party shall protect confidential information of the
other party by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized disclosure of the other party's
confidential information as the party uses to protect its own confidential
information of a like nature.
(e) Each party shall insure that its Affiliates, sublicensees
and other transferees (such as advisors, attorneys and other consultants) agree
to be bound by the same restrictions on use and disclosure of confidential
information as bind the party in advance of the disclosure of confidential
information to them.
(f) The parties recognize that confidential information
disclosed hereunder or under the Related Agreements may relate to an
Extraordinary Sensitive Technology as defined in, and contemplated by, the
Intellectual Property Agreement. Any such confidential information shall be
subject to the special treatment provided for in Paragraph 15.3 of the
Intellectual Property Agreement.
Section 7.6 Privileged Matters.
(a) Imation and 3M agree to maintain, preserve and assert all
privileges that either party may have, including without limitation, any
privilege or protection arising under or relating to any attorney-client
relationship that existed prior to the Distribution Date ("Privilege" or
"Privileges"). 3M and Imation shall be entitled in perpetuity to require the
assertion or decide whether to consent to the waiver of any and all Privileges
which, in the case of Imation, relate to the Transferred Assets and/or
Transferred Liabilities and, in the case of 3M, relate to the assets and/or
liabilities not transferred to Imation. Imation and 3M shall each use the same
degree of care as it would with respect to itself so as not to waive any
Privilege which could be asserted under applicable law without the prior written
consent of the other party. The rights and obligations created by this Section
7.6 shall apply to all Information as to which, but for the Distribution, 3M or
Imation would have been entitled to assert or did assert the protection of a
Privilege ("Privileged Information"), including but not limited to (i) all
Information generated prior to the Distribution Date but which, after the
Distribution, is in the possession of the other party or its Affiliates; (ii)
all communications subject to a Privilege occurring prior to the Distribution
Date between counsel for 3M and any person who, at the time of the
communication, was an employee of 3M, regardless of whether such employee is or
becomes an Imation employee or an employee of an Imation Affiliate; and (iii)
all Information generated, received or arising after the Distribution Date that
refers or relates to Privileged Information generated, received or arising prior
to the Distribution Date but which, after the Distribution Date, is in the
possession of the other party or its Affiliates.
(b) Upon receipt by any party or its Affiliates of any
subpoena, discovery or other request which arguably calls for the production or
disclosure of Privileged Information of the other party and whenever any party
obtains knowledge that any current or former employee of such party or its
Affiliates has received any subpoena, discovery or other request which arguably
calls for the production or disclosure of Privileged Information, such party
shall promptly notify the other party of the existence of the request and shall
provide the other party a reasonable opportunity to review the Information and
to assert any rights it may have under this Section 7.6 or otherwise to prevent
the production or disclosure of Privileged Information. Each party and its
Affiliates will not produce or disclose any Information covered by a Privilege
of the other party under this Section 7.6 unless (a) the other party has
provided its express written consent to such production or disclosure, or (b) a
court of competent jurisdiction has entered a final, non-appealable order
finding that the Information is not entitled to protection under any applicable
Privilege.
(c) 3M's transfer of Books and Records and any other
Information to Imation, and 3M's agreement to permit Imation to possess
Privileged Information occurring or generated prior to the Distribution Date,
are made in reliance on Imation's agreement, as set forth in this Section 7.6,
to maintain the confidentiality of Privileged Information and to maintain,
preserve and assert all applicable Privileges. The access to information granted
or permitted by this Agreement, the agreement to provide witnesses and
individuals pursuant to Section 7.3 hereof and transfer of Privileged
Information to Imation pursuant to this Agreement shall not be deemed a waiver
of any Privilege that has been or may be asserted under this Section 7.6 or
otherwise. Nothing in this Agreement shall operate to reduce, minimize or
condition the rights granted to either party in, or the obligations imposed upon
either party by, this Section 7.6.
Section 7.7 Mail and Other Communications. Each of 3M and
Imation agrees to forward or direct (as appropriate) to the other party any mail
or other communications of such other party which is received by it.
ARTICLE VIII
EMPLOYEE MATTERS AND BENEFITS
Section 8.1 Employment. At the Distribution Date, Imation
shall employ each Transferred Employee at an annual compensation rate no less
than such Transferred Employee's current annual compensation rate with 3M.
Transferred Employees employed in the United States or employed outside the
United States on temporary foreign assignments (including foreign service
employees, as described in Schedule 8.11 attached hereto) are referred to herein
as the "U.S. Transferred Employees;" all other Transferred Employees are
referred to herein as the "O.U.S. Transferred Employees." Imation shall continue
the status of a Transferred Employee on leave of absence or shortor long-term
disability absence, other than the leave of absence status of a Transferred
Employee on preretirement leave, and shall recall, reinstate, and/or terminate
the employment of such Transferred Employees in accordance with the leave of
absence policy applicable to the Transferred Employee that was in effect when
the Transferred Employee's leave of absence began. Notwithstanding anything to
the contrary in this Section 8.1, Imation shall not be obligated to employ any
person who declines employment with Imation and such person shall not be
considered a Transferred Employee.
Section 8.2 Qualified and NonQualified Retirement and Benefit
Plans.
(a) On or before the Distribution Date, Imation shall (i)
establish, effective as of the Distribution Date, a defined benefit plan (the
"Imation Defined Benefit Plan") and a defined contribution plan (the "Imation
Defined Contribution Plan"), in each case, intended to qualify under Section
401(a) of the Code (the Imation Defined Benefit Plan and the Imation Defined
Contribution Plan being collectively referred to as the "Imation Pension
Plans"), (ii) establish, on or before the Distribution Date, trusts under the
Imation Pension Plans intended to qualify under Section 501(a) of the Code,
(iii) establish, effective as of the Distribution Date, a nonqualified pension
benefit plan (the "Imation Nonqualified Pension Plan" and together with the
Imation Defined Benefit Plan, the "Imation Defined Benefit Plans"), and (iv)
establish, effective as of the Distribution Date, a plan similar to the 3M
Senior Executive Split Dollar Plan (the "3M Survivor Program"). The Imation
Defined Contribution Plan shall relate and apply to compensation paid on or
after the Distribution Date, and shall be (or shall have a component thereof
that consists of) an employee stock ownership plan within the meaning of
Sections 409 and 4975(e)(7) of the Code (the "Imation ESOP").
(b) On or before the Distribution Date, 3M shall direct the
Trustee of the 3M Voluntary Investment Plan and Employee Stock Ownership Plan
(the "3M 401(k)/ESOP") to transfer (the "ESOP Transfer") from the trusts
established thereunder to the trust under the Imation Defined Contribution Plan,
an amount (in the form determined by 3M unless otherwise provided herein) equal
to the sum of the account balances (including liabilities associated with
outstanding participant loans) of each Transferred Employee as of the date of
transfer (the "ESOP Transfer Date"); provided, however, that all shares of 3M
Common Stock and Imation Common Stock represented by units allocated to the
accounts of Transferred Employees shall be transferred, in kind, to the Imation
Defined Contribution Plan. Notwithstanding anything contained herein to the
contrary, no such transfer shall take place until the 31st day following the
filing of all required Forms 5310-A in connection therewith.
(c) Effective as of the ESOP Transfer Date, Imation and the
Imation Defined Contribution Plan shall assume and become solely responsible for
the satisfaction of all liabilities under the 3M 401(k)/ESOP in respect of the
Transferred Employees, and 3M and the 3M 401(k)/ESOP shall be relieved of and
shall cease to have any responsibility for the satisfaction of such liabilities,
other than for any reconciliations required after the ESOP Transfer Date.
(d) Effective as of the Distribution Date, 3M shall assign to
Imation all insurance policies assigned to 3M with respect to Transferred
Employees under the 3M Survivor Program, and all company owned life insurance
policies related thereto with respect to Transferred Employees.
(e) Effective as of the Distribution Date, 3M shall amend the
3M 401(k)/ESOP, the Employee Retirement Income Plan of Minnesota Mining and
Manufacturing Company (the "3M Defined Benefit Plan," and together with the 3M
401(k)/ESOP, the "3M Qualified Pension Plans"), the Nonqualified Pension Plan I
for Minnesota Mining and Manufacturing Company and the Nonqualified Pension Plan
II for Minnesota Mining and Manufacturing Company (collectively the "3M
Nonqualified Pension Plans," and together with the 3M Qualified Pension Plans,
the "3M Pension Plans") as follows: (i) each of the 3M Pension Plans shall be
amended to provide that no benefits shall accrue (except as provided otherwise
in this Agreement) and no contributions shall be allocated with respect to a
Transferred Employee under the 3M Pension Plans with respect to any period
commencing on or after the Distribution Date, and no forfeitures shall be
allocated after the Distribution Date with respect to a Transferred Employee
under the 3M 401(k)/ESOP; (ii) the 3M Defined Benefit Plan and the 3M
Nonqualified Pension Plans (collectively, the "3M Defined Benefit Plans") shall
be amended to provide that the accrued benefits of Transferred Employees under
the 3M Defined Benefit Plans as of the Distribution Date (the "Accrued
Benefits") shall be fully vested, and the 3M 401(k)/ESOP shall be amended to
provide that the account balances of each Transferred Employee thereunder as of
the Distribution Date shall be fully vested; (iii) the 3M Defined Benefit Plans
shall be amended to provide that, for purposes of eligibility for early
retirement subsidies attributable to each Transferred Employee's Accrued
Benefit, each such Transferred Employee's years of service with Imation shall be
recognized; and (iv) the 3M Defined Benefit Plans shall be amended to provide
the following Special Retirement Benefits (the "3M Special Retirement Benefits")
for each Grandfathered Employee (as defined in Section 8.2 (h)(ii)): For each
year of service with Imation, each Grandfathered Employee will be credited with
a benefit equal to one-half of (A) plus (B), where (A) is 4% of such
Grandfathered Employee's Accrued Benefit and (B) is 4% of any benefits
previously accrued on behalf of such Grandfathered Employee pursuant to Sections
8.2(e)(iv) and 8.2(h)(ii) hereof. 3M and the 3M Defined Benefit Plans shall
remain solely responsible for all liabilities with respect to the Accrued
Benefits and the 3M Special Retirement Benefits and Imation and the Imation
Pension Plans shall have no liability or responsibility therefor. 3M and Imation
agree that the transfer of the Transferred Employees to Imation shall not
constitute an event entitling any such Transferred Employee to a distribution
from the 3M Pension Plans.
(f) Effective as of the Distribution Date, 3M shall amend 3M's
Deferred Compensation Plan to provide that all U.S. Transferred Employees shall
no longer be eligible to make deferrals thereto. 3M shall retain sole
responsibility for, and all liabilities relating to, 3M's Deferred Compensation
Plan, and Imation shall have no liability or responsibility therefor.
(g) Imation agrees to indemnify and hold harmless 3M, its
officers, directors, employees, employee benefit plans and trusts, employee
benefit plan trustees, agents and affiliates from and against any and all costs,
damages, losses, expenses (including reasonable attorneys' fees and costs), or
other liabilities arising out of or related to the Imation Pension Plans, other
than any such costs, damages, losses, expenses or other liabilities relating to
the ESOP Transfer that are directly attributable to the acts or omissions of any
such parties prior to or on the Distribution Date, and 3M agrees to indemnify
and hold harmless Imation, its officers, directors, employees, employee benefit
plans and trusts, employee benefit plan trustees, agents and affiliates from and
against any and all costs, damages, losses, expenses (including reasonable
attorneys' fees and costs), or other liabilities relating to the ESOP Transfer
which are directly attributable to such acts or omissions.
(h) (i) The Imation Pension Plans shall provide, effective as
of the Distribution Date, that U.S. Transferred Employees shall (A) immediately
upon their becoming employees of Imation, become eligible to participate in the
Imation Pension Plans, (B) with respect to the Imation Defined Contribution
Plan, for all purposes (including vesting, eligibility for benefits and benefit
determination) receive credit for all service credited for such purposes under
the 3M 401(k)/ESOP as of the Distribution Date as if the service had been
rendered to Imation, and (C) with respect to the Imation Defined Benefit Plans,
for all purposes other than for purposes of benefit accrual, including
participation, eligibility and vesting, receive credit for all service credited
for such purposes under the 3M Defined Benefit Plans as of the Distribution Date
as if the service had been rendered to Imation.
(ii) In addition to other retirement benefits accrued
thereunder, the Imation Defined Benefit Plans shall provide the following
special retirement benefits (the "Imation Special Retirement Benefits") for each
U.S. Transferred Employee who has at least 10 years of 3M service as of the
Distribution Date, and whose combined age and years of 3M service equal 50 or
more as of the Distribution Date (the "Grandfathered Employees"). For each year
of service with Imation, each Grandfathered Employee will be credited with a
benefit equal to one-half of (A) plus (B), where (A) is 4% of such Grandfathered
Employee's Accrued Benefit and (B) is 4% of any benefits previously accrued on
behalf of such Grandfathered Employee pursuant to Sections 8.2(e)(iv) and
8.2(h)(ii). The Imation Special Retirement Benefits shall be payable in the same
form that each Grandfathered Employee's Accrued Benefits are paid under the 3M
Defined Benefit Plans, and Imation's Defined Benefit Plans shall provide that
Grandfathered Employees shall be eligible for the same subsidies for early
retirement as are applied to each Grandfathered Employee's Accrued Benefits
under the 3M Defined Benefit Plans.
(i) 3M and Imation shall provide each other such records and
information as may be necessary or appropriate to carry out their obligations
under this Section 8.2 or for the purposes of administration of the 3M Pension
Plans and the Imation Pension Plans, and they shall cooperate in the filing of
documents required by the transfer of assets and liabilities described herein.
(j) 3M shall retain sole responsibility for, and all
liabilities relating to, the 3M Nonqualified Pension Plans, and Imation shall
have no liability or responsibility therefor.
(k) Imation acknowledges that 3M, following discussions with
the management of Imation, has represented to the Internal Revenue Service in
connection with 3M's request for a private letter ruling as to the federal
income tax consequences of the Distribution, and, to effect such
representations, Imation agrees that (i) Imation will establish an employee
stock ownership plan (the "Imation ESOP") that satisfies the requirements of
Sections 401(a) and 4975(e)(7) of the Code, in which non-union domestic
employees of Imation and Imation Enterprises shall be eligible to participate,
and (ii) within five years after the Distribution a minimum of 4% of the Imation
Common Stock then outstanding will be held by the Imation ESOP for the benefit
of Imation Employees.
Section 8.3 Welfare Plans.
(a) 3M agrees that it shall take or cause to be taken all
action necessary and appropriate to:
(i) direct the trustees of each trust created under
Section 501(c)(9) of the Code for the purpose of funding the payment of benefits
under certain of the employee welfare benefit plans of 3M (individually, a "3M
VEBA"), other than the EBTA, as defined in clause (ii) below, to transfer, as
soon as practicable following the date that the required data is available, to
the trust or trusts established by Imation, which are intended to constitute
"voluntary employees' beneficiary associations" within the meaning of Section
501(c)(9) of the Code (individually an "Imation VEBA"), the actuarially
determined portion of the assets of such 3M VEBAs (as determined by the
certified actuary engaged by 3M for this purpose under generally accepted
actuarial principles) attributable to the Transferred Employees for such
benefits as are being offered by Imation under the corresponding Imation VEBA,
including assets attributable to Transferred Employees relating to employee
medical and dental benefits, and long-term disability benefits, but excluding,
for this purpose, post-retirement medical, dental and life insurance benefits;
(ii) in the case of the trust created under Section
501(c)(9) of the Code by the 3M Employees' Benefits Trust Association (the
"EBTA"), request the Board of Directors of the EBTA to direct, after the
Distribution Date, and as soon as practicable following the date that the
required data is available, the trustee of such EBTA and its insurers to
transfer to the corresponding Imation VEBA the actuarially determined portion
(as determined by such EBTA's actuary under generally accepted actuarial
principles) of the assets and premium stabilization reserve of such EBTA
attributable to the Transferred Employees;
(iii) amend its post-retirement medical benefit plans
(the "3M Post-Retirement Medical Plans") to cover each U.S. Transferred Employee
whose combined age and years of 3M service as of the Distribution Date equals 60
or more (with a minimum of 5 years of 3M service and a minimum age of 50 as of
the Distribution Date) and who retires from employment with Imation, the
benefits (if any) payable to such U.S. Transferred Employee to be based on the
provisions of the 3M Post-Retirement Medical Plans as in effect at the time such
U.S. Transferred Employee retires from employment with Imation, and as such
plans may be amended thereafter;
(iv) provide or arrange for the provision
of benefits administration services for a period of up to 24 months following
the Distribution Date, as described in the Corporate Services Transition
Agreement, with respect to the employee welfare benefit plans to be adopted by
Imation in accordance with Section 8.3(c) hereof; and
(v) pay (A) the severance costs of employees who
have accepted, on or prior to the Distribution Date, the terms of a voluntary
separation plan offered prior to the Distribution Date by any of the business
units or at the plants listed on Schedule 1.1A, (B) the severance costs, if any,
relating to Leased Employees, (C) the severance costs relating to employees at
the Beauchamp, France facility of 3M who will be performing contract
manufacturing services for Imation (except that Imation shall be responsible for
severance costs associated with up to 20% of such employees up to an aggregate
cost to Imation not to exceed $1 million) and (D) the severance and indemnity
costs incurred as a result of the transfer of O.U.S. Transferred Employees, but
only if, and to the extent that, such severance and indemnity costs are imposed
pursuant to applicable foreign law (it being understood, however, that 3M shall
not be responsible for any severance costs payable after the Distribution
Date with respect to employees at the Imation facilities in Harlow,
England; Ferrania, Italy; Sulmona, Italy; London, Ontario; and Florida,
Argentina).
(b) Imation agrees that:
(i) it shall assume and be solely responsible for
all liabilities and obligations whatsoever of 3M in connection with claims for
benefits incurred on or after the Distribution Date by or in respect of
Transferred Employees under the welfare benefit plans maintained by 3M for
employees and the workers' compensation, unemployment compensation and other
legally required employee benefits programs maintained by 3M, and 3M shall cease
to have any such liability or obligation. For purposes of this Section 8.3,
"incurred" shall mean (A) with respect to medical and dental benefits, the date
that services are performed; and (B) with respect to survivor benefits, the date
of death. With respect to disability benefits, Imation shall assume and be
solely responsible for all disability payments with respect to Transferred
Employees (including Transferred Employees who are on shortor long-term
disability absences on or prior to the Distribution Date) payable on or after
the Distribution Date;
(ii) it shall assume and be solely responsible for
all liabilities and obligations whatsoever of 3M in connection with 3M's
vacation plan for the unused vacation benefits of all Transferred Employees as
of the Distribution Date, and shall adopt a vacation plan which, among other
things, pays Transferred Employees the value of such Transferred Employees'
unused vacation benefits earned under 3M's vacation plan as of the Distribution
Date; and
(iii) it shall reimburse 3M on at least a quarterly
basis for 3M's and its Affiliates' net costs (excluding internal administration
costs) arising from their payments of workers' compensation benefits and
liabilities on or after the Distribution Date payable to or with respect to
Transferred Employees for whom 3M or its Affiliates have an obligation to make
such payments after the Distribution Date and for which 3M or its Affiliates
have not received any reimbursement either from Imation or from insurance.
(c) Imation further agrees that it shall take, or cause to be
taken all action necessary and appropriate:
(i) to establish, effective as of the Distribution
Date for a period of not less than 18 months, for the benefit of U.S.
Transferred Employees while such employees are employed by Imation, employee
welfare benefit plans (other than vacation plans) substantially similar to
those employee welfare benefit plans covering employees of the U.S. Transferred
Businesses immediately prior to the Distribution Date. Imation shall recognize
all employment service and earnings of a U.S. Transferred Employee recognized by
3M as employment service and earnings of Imation for purposes of applying the
provisions of any Imation welfare benefit plan or similar program, including any
vacation plan or program, where the U.S. Transferred Employee's benefits
thereunder are a function of the employee's employment service or earnings or a
combination thereof;
(ii) on or before the Distribution Date, to adopt as
a successor employer, on a retroactive basis from January 1, 1996, the 3M
Flexible Benefits Program, including the health care reimbursement account and
dependent daycare reimbursement account covering the Transferred Employees, as
if such Transferred Employees' employment with Imation was a continuation of
their employment with 3M (the "Imation Flexible Benefits Program"). At the same
time that Imation adopts its Flexible Benefits Program, it shall amend such
Program to provide that any unused flexible benefit credits shall be paid in
cash to the respective employees, and not invested in employer common stock, as
currently provided under the 3M Flexible Benefits Program. Imation shall effect
payment of all wage and salary deductions of participating Transferred Employees
required under such plans to 3M as Imation's agent, pursuant to the Corporate
Services Transition Agreement through December 31, 1997, for application by 3M
toward the disbursement of reimbursement benefits and medical, dental and life
insurance premium amounts to, or with respect to, such Transferred Employees on
Imation's behalf, with a final accounting of all such receipts and disbursements
by 3M on or before July 31, 1998. All liabilities relating to the Transferred
Employees' rights and benefits described in this clause (ii) shall be assumed by
Imation as of the Distribution Date, and 3M shall cease to have any such
liability or obligation therefor. As soon as practicable following the date that
the required data is available, 3M shall reduce the amount that Imation is
required to reimburse it for Imation's Flexible Benefits Program benefit
payments in accordance with the Corporate Services Transition Agreement by the
aggregate net amounts credited to the health care reimbursement accounts and the
dependent daycare reimbursement accounts of the Transferred Employees under such
Program as of June 30, 1996. Thereafter, through June 30, 1998, Imation shall
periodically, but in no event less frequently than monthly, reimburse 3M for
claims paid by 3M thereunder;
(iii) to provide the benefit coverage otherwise
necessary to assume the liabilities and obligations that are or shall become the
responsibility of Imation under this Section 8.3; and
(iv) to make legally required contributions or
payments pursuant to any law providing for workers' compensation, unemployment
compensation, disability benefits or other legally required employee benefit
programs with respect to Transferred Employees, and to retain any accounts or
reserves relative to such benefits held solely by Imation for such Transferred
Employees.
In connection with the foregoing, 3M agrees to provide Imation
or its designated insurance representative with such information as may be
reasonably requested by Imation and necessary for Imation to assume, establish
or maintain such plans, funding arrangements, and benefit coverage.
Section 8.4 Assumption of Certain Employee Related
Obligations.
(a) Effective as of the Distribution Date, Imation shall
assume and 3M shall have no further obligation or liability for:
(i) all incentives, bonus and deferred compensation
(including profit sharing and commissions, but excluding all obligations and
liabilities with respect to 3M's Deferred Compensation Plan) earned by
Transferred Employees but not paid on or before the Distribution Date, except as
otherwise provided in paragraph (b) below;
(ii) any requirements under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") to provide continuation of
health care coverage to any Transferred Employee or "qualified beneficiary", as
defined in COBRA, of a Transferred Employee who loses coverage as a result of a
"qualifying event", as defined in COBRA, that occurs after the Distribution
Date;
(iii) any and all obligations to make premium
payments due on or after the Distribution Date with respect to Transferred
Employees who participate in the Imation successor program to the 3M Survivor
Program; and
(iv) all liability under the Performance Unit Plan of
3M (the "PUP") with respect to Transferred Employees that are attributable to
the 1996 award, other than that portion of the 1996 award that was earned during
1996.
(b) 3M shall retain all liability with respect to Transferred
Employees under the PUP for all awards made prior to 1996 and that portion of
the 1996 award that was earned during 1996.
Section 8.5 Other Liabilities and Obligations. As of the
Distribution Date, Imation shall assume and be solely responsible for all
liabilities and obligations whatsoever of the Transferred Businesses with
respect to claims made by or with respect to Transferred Employees, relating to
their employment with or termination from the Transferred Businesses or 3M not
otherwise provided for in this Agreement, including, without limitation, earned
salary, wages or other compensation and accrued holidays and other termination
benefits.
Section 8.6 Preservation of Rights to Amend or Terminate
Plans. No provisions of this Agreement, including, without limitation, the
agreement of 3M or Imation that it will make a contribution or payment to or
under any plan referred to herein for any period, shall be construed as a
limitation on the right of 3M or Imation to amend such plan or terminate its
participation therein which 3M or Imation would otherwise have under the terms
of such plan or otherwise; provided, however, that no amendment shall reduce or
eliminate (i) the Transferred Employees' unused account balances under the
Flexible Benefits Program required to be adopted pursuant to Section 8.3(c)(ii)
hereof; or (ii) the Transferred Employees' unused vacation benefits as of the
Distribution Date.
Section 8.7 Reimbursement; Indemnification. Imation and 3M
acknowledge that each may incur costs and expenses (including, without
limitation, contributions to plans and the payment of insurance premiums)
pursuant to any of the employee benefit or compensation plans, program or
arrangements, which are, as set forth in this Agreement, the responsibility of
the other party. Accordingly, 3M and Imation agree to reimburse each other, as
soon as practicable but in any event within 30 days of receipt from the other
party of appropriate verification, for all such costs and expenses, as the case
may be, as an indemnitee in respect of the corresponding payment made by it, as
determined pursuant to Section 5.2(d) hereof, except to the extent that any such
payment or reimbursement would be duplicative.
Section 8.8 Stock Plans.
(a) 3M Stock Option Plans. 3M shall be solely responsible for
satisfying all option exercises by Transferred Employees under the Stock Option
Plans with respect to options to acquire shares of 3M Common Stock which are
outstanding as of the Distribution Date. 3M shall cause such Stock Option Plans
to be interpreted so that employment of the Transferred Employees with Imation
shall be treated as employment with 3M for purposes of the Stock Option Plans'
provisions causing outstanding stock options to expire upon the termination of
employment of the option holder. Notwithstanding the foregoing, no options
(including Progressive Stock Options, as defined in the Stock Option Plans)
shall be granted to Transferred Employees under the Stock Option Plans after the
Distribution Date. As soon as reasonably possible following the Distribution
Date, Options that are outstanding and unexercised under the Stock Option Plans
immediately prior to the Distribution Date (the "3M Options"), shall be adjusted
as follows:
(i) if there is an ex-dividend market for 3M Common
Stock prior to the Distribution Date, then (A) the shares subject to the 3M
Options shall be multiplied by a fraction, the numerator of which is the closing
per share price of 3M Common Stock on the last trading day immediately preceding
the ex-dividend date, and the denominator of which is the closing price per
share of 3M Common Stock on the ex-dividend date, with the resulting number of
shares rounded downward to the nearest share, and (B) the exercise price of each
such share shall be divided by the fraction set forth in clause (A) above, with
the resulting price rounded upward to the nearest cent; and
(ii) if there is no ex-dividend market for 3M Common
Stock prior to the Distribution Date, then (A) the shares subject to the 3M
Options shall be multiplied by a fraction, the numerator of which is the closing
price per share of 3M Common Stock on the last trading day immediately preceding
the date on which 3M Common Stock begins trading without the Imation dividend
(i.e., without due bills) and the denominator of which is the closing price per
share of 3M Common Stock on the first trading day that 3M Common Stock begins
trading without the Imation dividend (i.e., without due bills), with the
resulting number of shares rounded downward to the nearest share, and (B) the
exercise price of each such share shall be divided by the fraction set forth in
clause (A) above, with the resulting price rounded upward to the nearest cent.
Imation agrees to promptly notify 3M of the death or
termination of employment for any reason of each Transferred Employee for 3M's
use in administering its Stock Option Plans with respect to outstanding stock
options held by such Transferred Employees.
This Section 8.8(a) shall be interpreted and applied in the
discretion of the 3M Compensation Committee, whose interpretation and
application shall be binding upon all optionees under the Stock Option Plans.
(b) 3M Stock Purchase Plan. As soon as possible following the
Distribution Date, each option to purchase 3M Common Stock that is outstanding
and unexercised under the 3M 1992 General Employees Stock Purchase Plan shall be
adjusted in a manner similar to the manner that the 3M Options are adjusted
pursuant to paragraph (a) above.
(c) Imation Stock Options. On or prior to the Distribution
Date, Imation shall adopt a stock option plan (the "Imation Employee Stock
Incentive Plan") enabling Imation to grant options to Transferred Employees, and
3M, as the sole stockholder of Imation, shall approve the Imation Employee Stock
Incentive Plan. Imation agrees to take all actions necessary or appropriate to
grant, effective as of a date not later than 60 days following the Distribution
Date, stock options to purchase Imation Common Stock (the "Imation Stock
Options") under the Imation Employee Stock Incentive Plan. The Imation Stock
Options shall have an exercise price equal to the fair market value of Imation
Common Stock as of the date of grant and shall be granted to those Transferred
Employees designated by 3M, who would otherwise have been granted options in May
1996, to purchase shares of 3M Common Stock under the 3M Stock Option Plans (the
"1996 Grants"). The aggregate number of shares for which Imation Stock Options
shall be granted pursuant to this Section 8.8(c) shall be equal to the product
of (A) multiplied by (B), where (A) is the aggregate number of shares of 3M
Common Stock for which options would have been granted to such Transferred
Employees in May, 1996, but for the Distribution (as disclosed to Imation by 3M)
and (B) is 1.5. The Imation Stock Options shall be granted to the Transferred
Employees in the same proportion as the 1996 Grants would have been granted to
such Transferred Employees. The vesting schedule and other material terms and
conditions of such Imation Stock Options shall be no less favorable to the
applicable Transferred Employees than the vesting schedule and other terms and
conditions that would have been provided under the 1996 Grants.
Section 8.9 Limitation on Enforcement. This Article VIII is an
agreement solely between 3M and Imation. Nothing in this Agreement or any
Related Agreement, whether express or implied, confers upon any employee of
3M or Imation, any Transferred Employee, any former employee of 3M, any
beneficiary of a Transferred Employee or former employee of 3M or any other
person, any rights or remedies, including, but not limited to (i) any right to
employment or recall, (ii) any right to continued employment for any specified
period or (iii) any right to claim any particular compensation, benefit or
aggregation of benefits, of any kind or nature whatsoever, as a result of this
Article VIII.
Section 8.10 Employment Following the Distribution Date. For a
period of 24 months following the Distribution Date, 3M shall not employ any
Transferred Employee without the consent of Imation's Chief Executive Officer
and 3M's Vice President, Human Resources. For a period of 60 months following
the Distribution Date, Imation shall not hire any employee of 3M who is on
preretirement leave from 3M. For a period of 36 months following their last day
of employment with 3M, Imation shall not hire any former employee of 3M who has
signed a release which includes an agreement not to apply for employment with 3M
or Imation.
Section 8.11 Foreign Service Employee and O.U.S. Transferred
Employee Obligations.
(a) Imation shall assume all obligations of 3M with respect to
any U.S. Transferred Employee who immediately prior to the Distribution Date
served as a foreign service employee, including the obligations described in
Schedule 8.11 attached hereto.
(b) All rights, obligations, terms and conditions relating to
O.U.S. Transferred Employees shall be subject to, and governed by, the terms of
the Foreign Asset Transfer Agreements.
ARTICLE IX
INSURANCE
Section 9.1 General. Except as provided in this Article, 3M
shall keep in effect all policies under its Insurance Program in effect as of
the date hereof insuring the Transferred Assets and operations of the
Transferred Businesses until 12:00 midnight on the Distribution Date, unless
Imation shall have earlier obtained appropriate coverage and notified 3M in
writing to that effect. Beginning at 12:01 a.m. on the day following the
Distribution Date, Imation will cease to be a named insured on a world-wide
basis under all policies in 3M's Insurance Program. Imation understands that the
effect of these actions will be to eliminate insurance coverage not only for
future occurrences but also for prior occurrences which might have given or may
give rise to liabilities for which Imation and its Affiliates would be
responsible.
Section 9.2 Imation's Insurance.
(a) Imation will purchase and pay for the types and amounts of
insurance coverage that it deems appropriate for the period beginning on and
continuing after May 1, 1986, including Broad Form Contractual Liability
insurance coverage as to Imation's indemnity obligations set forth in the
Distribution Agreement and in the Related Agreements.
(b) 3M, for and on behalf of Imation, will purchase and pay
for on a one-time basis certain Products and Completed Operations Insurance
Coverage covering certain periods prior to the Distribution Date and with such
limits as shall be determined by 3M.
(c) Imation agrees that 3M has made no warranty, expressed or
implied, and no representation that the insurance described in Section 9.1,
9.2(a) or (b) above is or will be adequate or sufficient to meet Imation's
current or future insurance needs.
Section 9.3 Access to 3M's Insurance Program.
(a) Except as provided in Section 9.3(b) hereof, Imation and
its Affiliates shall have access through 3M after the Distribution Date to such
coverages and limits as may be available under 3M's pre-Distribution Date
Insurance Program for covered claims occurring prior to the Distribution Date
and listed on Schedule 9.3. Imation understands that no coverage will be
available under 3M's Insurance Program unless the claim is listed on Schedule
9.3. Such access shall be subject to available coverage and to all of the terms,
conditions, exclusions, retentions and limits of such policies.
(b) Imation's and its Affiliates' access to 3M's Insurance
Program as provided in Section 9.3(a) hereof shall be limited as described in
this Section 9.3(b):
(i) Product Liability Insurance. Imation, for itself
and its Affiliates, understands and agrees that it will have no access to any
insurance provided by 3M's "Products and Completed Operations Insurance
Coverage" policies for all years prior to May 1, 1986. Imation and its
Affiliates will have access to 3M's claims made products liability coverage for
the period May 1, 1986 to the Distribution Date, but such access shall be
limited to covered claims 3M has reported to its carriers or underwriters as of
the Distribution Date, as listed on Schedule 9.3.
(ii) Environmental Pollution Insurance. Imation
understands and agrees that 3M has made no warranty or representation of any
insurance recovery or insurance coverage from 3M's Insurance Program with
respect to Imation's Assumed Environmental Liabilities. If, in the future, 3M
should receive an insurance recovery relating to an Imation Assumed
Environmental Liability, 3M shall follow the procedures set forth in Section 9.4
hereof.
(iii) All Other Insurance. Imation, for itself and
its Affiliates, understands and agrees that they will have no access to other
insurance coverage in 3M's Insurance Program other than as provided in Section
9.3(b)(i) and (ii) above, unless the claim arose prior to the Distribution Date
and, in the case of product liability claims, unless the claims are listed on
Schedule 9.3.
Section 9.4 Insurance Recoveries. Subject to Sections 9.1 and
9.3 hereof, 3M shall use its reasonable efforts to obtain recoveries for Imation
and its Affiliates from 3M's insurance carriers for coverage available under
Section 9.3 hereof and will keep Imation reasonably informed of 3M's efforts
under this Section 9.4. 3M will reimburse Imation for any recovery obtained by
it pursuant to such claims; provided, however, that notwithstanding the
foregoing, if 3M has made a claim or claims under an insurance policy which is
not to be paid to Imation pursuant to Section 9.3 and a claim or claims which
are to be paid to Imation pursuant to this Article and the amount of the
Recovery for such claims is limited by the amount of coverage provided by such
policy, 3M may use its reasonable discretion in resolving and allocating the
Recovery between it and Imation for such claims. Imation shall pay all costs
incurred by 3M after the Distribution Date in making any claim pursuant to this
Section 9.4, including the salaries of 3M's officers and employees based on the
portion of time spent on such claims and such costs incurred in pursuing a claim
may be deducted from any Recovery for such claim. Imation agrees to make
available to 3M such of its employees as 3M may reasonably request as witnesses
or deponents in connection with 3M's management of claims, at Imation's sole
cost and expense. Imation agrees that, if 3M has paid a Recovery to it for such
a claim and Imation receives proceeds from any other person with respect to such
claim, it will pay over to 3M the amount of proceeds it has received.
Section 9.5 Assignment. Nothing in this Agreement shall be
deemed to constitute (or to reflect) an assignment of any insurance policy or
insurance benefit.
Section 9.6 Conflicts Between Article IX and 3M's Insurance
Program. Any provision of this Agreement that conflicts with any term or
provision of applicable 3M insurance policies shall be void.
ARTICLE X
DISPUTE RESOLUTION
Section 10.1 Mediation and Binding Arbitration. Except with
respect to matters involving Section 7.6 hereof (Privileged Matters) and except
as may be expressly provided in any other agreement between the parties entered
into pursuant hereto, if a dispute, controversy or claim (collectively, a
"Dispute") between 3M and Imation or any of their respective Affiliates arises
out of or relates to this Agreement, the Related Agreements or any other
agreement entered into pursuant hereto or thereto, including, without
limitation, the breach, interpretation or validity of any such agreement or any
matter involving an Indemnifiable Loss, 3M and Imation agree to use the
following procedures, in lieu of either party pursuing other available remedies
and as the sole remedy (except as provided in Section 10.5(b) below), to resolve
the Dispute.
Section 10.2 Initiation. A party seeking to initiate the
procedures shall give written notice to the other party, describing briefly the
nature of the Dispute. A meeting shall be held between the parties within 10
days of the receipt of such notice, attended by individuals with decision-making
authority regarding the Dispute, to attempt in good faith to negotiate a
resolution of the Dispute.
Section 10.3 Submission to Mediation. If, within 30 days after
such meeting, the parties have not succeeded in negotiating a resolution of the
Dispute, they agree to submit the Dispute at the earliest possible date to
mediation in accordance with the Center for Public Resources Model ADR Procedure
- - Mediation of Business Disputes, as modified herein, and to bear equally the
costs of the mediation.
Section 10.4 Selection of Mediator. The parties will jointly
appoint a mutually acceptable mediator. If they are unable to agree upon such
appointment within 20 days from the conclusion of the negotiation period, either
party may request the Center for Public Resources or another mutually
agreed-upon organization to appoint the mediator.
Section 10.5 Mediation and Arbitration.
(a) The parties agree to participate in good faith in the
mediation and negotiations related thereto for a period of 30 days or such
longer period as they may mutually agree following the initial mediation
session, provided, however, that in the event that one party fails to
participate in mediation, the Dispute may be referred immediately to arbitration
and the time of such failure shall constitute the end of the mediation period.
If the parties are not successful in resolving the Dispute through mediation by
the end of such period, then the parties agree to submit the matter to binding
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, as modified herein, by a sole
arbitrator selected in accordance with the provisions of Section 10.6 hereof.
The arbitration shall be in Minnesota and governed by the Minnesota equivalent
of the Federal Arbitration Act, 9 U.S.C. ss. 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof.
(b) Except as may be expressly provided in any other agreement
between the parties, the parties obligation under this Article X to submit
disputes to binding arbitration in lieu of seeking judicial resolution of their
disputes shall expire on July 1, 2001 with respect to disputes of which the
party seeking to be indemnified first becomes aware of after such date.
Section 10.6 Selection of Arbitrator. The parties shall have
10 days from the end of the mediation period to agree upon a mutually acceptable
person to act as arbitrator. The arbitrator shall be a neutral person (i.e., a
person not affiliated with either of the parties). If no arbitrator has been
selected within such time, the parties agree jointly to request the Center for
Public Resources or another mutually agreed-upon organization to supply within
10 days of such request a list of potential arbitrators with qualifications as
specified by the parties in the joint request. Within five days of receipt of
the list, the parties shall independently rank the proposed candidates, shall
simultaneously exchange rankings, and shall be deemed to have selected as the
arbitrator the individual receiving the highest combined ranking who is
available to serve. If there is a tie, then the tie shall be broken by putting
the names on slips of paper, mixing them up and having one party draw one slip
of paper. If one party shall not cooperate in the selection of the arbitrator,
the other party may solely select the arbitrator utilizing the procedures set
forth in this Section 10.6.
Section 10.7 Cost of Arbitration. The costs of arbitration
shall be apportioned between 3M and Imation as determined by the arbitrator in
such manner as the arbitrator deems reasonable taking into account the
circumstances of the case, the conduct of the parties during the proceeding, and
the result of the arbitration.
Section 10.8 Arbitration Period. Any arbitration proceeding
shall be concluded in a maximum of one (1) year from written notice from one
party to the other party initiating the procedures under this Article X and
requesting arbitration after having participated, to the extent contemplated
herein, in negotiation and mediation under this Article X.
Section 10.9 Treatment of Negotiation and Mediation. All
negotiations and mediations pursuant to this Article X shall be treated as
compromise and settlement negotiations for purposes of Rule 408 of the Federal
Rules of Evidence and comparable Minnesota Rules of Evidence.
Section 10.10 Confidentiality. All negotiation, mediation and
arbitration proceedings under this Article X shall be treated as confidential
information in accordance with the provisions of Section 7.5 hereof. Any
mediator or arbitrator shall be bound by an agreement containing confidentiality
provisions at least as restrictive as those contained in Section 7.5 hereof.
Section 10.11 Equitable Relief. Nothing herein shall preclude
either party from seeking equitable relief to prevent any immediate, irreparable
harm to its interests, including multiple breaches of this Agreement or the
relevant Related Agreement by the other party. Otherwise, these procedures are
exclusive and shall be fully exhausted prior to the initiation of any
litigation. Either party may seek specific enforcement of any arbitrator's
decision under this Article X. The other party's only defense to such a request
for specific enforcement shall be fraud by or on the arbitrator.
Section 10.12 Notices. All notices by one party to the other
party in connection with the dispute resolution provisions set forth in this
Article X shall be in accordance with the provisions of Section 11.4 hereof
[except that no notice may be transmitted by facsimile].
Section 10.13 Consolidation. The arbitrator may consolidate an
arbitration under this Agreement with any arbitration arising under or relating
to the Related Agreements or any other agreement between the parties entered
into pursuant hereto, as the case may be, if the subject of the Disputes
thereunder arise out of or relate essentially to the same set of facts or
transactions. Such consolidated arbitration shall be determined by the
arbitrator appointed for the arbitration proceeding that was commenced first in
time.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Complete Agreement. This Agreement, including the
Schedules, Annexes and Exhibits and the agreements and other documents referred
to herein, shall constitute the entire agreement between 3M and Imation with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
Section 11.2 Expenses. Except as otherwise provided in this
Agreement, any Related Agreement or any other agreement being entered into by 3M
and Imation pursuant to this Agreement, 3M or Imation shall each pay its own
costs and expenses incurred in connection with the Distribution (whether or not
payable as of the Distribution Date) and with the consummation of the
transactions contemplated by this Agreement. In furtherance of the foregoing, it
is agreed and acknowledged that 3M will be responsible for all fees of Skadden,
Arps, Slate, Meagher & Flom and Morgan Stanley & Co., Incorporated and the costs
of printing and mailing the Information Statement and the Imation stock
certificates, and Imation shall be responsible for all costs and fees relating
to the credit facility being established by Imation at the time of the
Distribution and the registration and transfer of intellectual property and
regulatory permits.
Section 11.3 Governing Law. This Agreement, the Related
Agreements and any other agreement entered into in connection with this
transaction and any questions, claims, disputes, remedies or procedural matters
shall be governed exclusively by the laws of the State of Minnesota, without
regard to the principles of conflicts of law, as to all matters, including,
without limitation, matters of validity, construction, effect, performance and
remedies. The parties agree that Minnesota has a substantial relationship to
this transaction, and each Party consents to personal jurisdiction in the courts
of Minnesota and further agrees that all such matters shall be heard in the
federal and state courts in Minnesota.
Section 11.4 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is given, (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, provided telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(iii) on the business day after delivery to an overnight courier service or the
Express mail service maintained by the United States Postal Service, provided
receipt of delivery has been confirmed, or (iv) on the fifth day after mailing,
provided receipt of delivery is confirmed, if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
properly addressed and return-receipt requested, to the party as follows:
If to 3M: Minnesota Mining and
Manufacturing Company
3M Center
St. Paul, Minnesota 55144
Attn: General Counsel
Telecopy: (612) 736-7859
If to Imation: Imation Corp.
1 Imation Place
Oakdale, Minnesota 55128
Attn: General Counsel
Telecopy: (612) 736-2185
Any party may change its address by giving the other party written notice of its
new address in the manner set forth above.
Section 11.5 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the parties.
Section 11.6 Termination. This Agreement may be terminated and
the Distribution abandoned at any time prior to the Distribution Date by and in
the sole discretion of 3M without the approval of Imation. In the event of such
termination, no party shall have any liability of any kind to any other party.
Section 11.7 Successors and Assigns. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.
The obligations under Articles V, VI and VII of this Agreement
of Imation and 3M shall survive the sale or other transfer by either of them of
any assets or businesses or the assignment by either of them of any Liabilities.
To the extent that 3M transfers to a party other than a subsidiary of 3M any of
its Retained Liabilities (except for such amounts of Retained Liabilities which
are not material individually or in the aggregate), 3M will cause the transferee
of such Retained Liabilities to assume specifically its obligations with respect
thereto under this Agreement and will cause such transferee to fulfill its
obligations related to such Retained Liabilities. To the extent Imation or
Imation Enterprises transfers to another party other than a subsidiary of
Imation any of the Assumed Liabilities (except for such amounts of Assumed
Liabilities which are not material individually or in the aggregate), Imation
will cause the transferee of such Assumed Liabilities to assume specifically its
obligations with respect thereto under this Agreement and will cause such
transferee to fulfill its obligations related to such Assumed Liabilities. In
the event the transferee of the Retained Liabilities or Assumed Liabilities does
not fulfill its obligations with respect thereto, 3M and Imation, respectively,
shall fulfill their obligations with respect thereto.
Section 11.8 No Third Party Beneficiaries. Except as provided
in Section 5.1(a) and 5.1((b), this Agreement is solely for the benefit of the
parties hereto and is not intended to confer upon any other person except the
parties hereto any rights or remedies hereunder.
Section 11.9 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 11.10 Interpretation. The Article, Section and
subparagraph headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement. As used in this
Agreement, the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof. Whenever any
words are used herein in the masculine gender, they shall be construed as though
they were also used in the feminine gender in all cases where they would so
apply.
Section 11.11 Annexes, Etc. The Annexes, Schedules and
Exhibits shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
Section 11.12 Construction of Agreements. Notwithstanding any
other provisions in this Agreement to the contrary, in the event and to the
extent that there shall be a conflict between the provisions of this Agreement
(or any Conveyancing and Assumption Instrument or other instrument of
assumption) and the provisions of any other agreement entered into by 3M or
Imation pursuant to this Agreement (including, without limitation, the Related
Agreements), the provisions of such other agreement shall control (unless such
other agreement provides otherwise).
Section 11.13 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 11.14 Survival. All covenants and agreements of the
parties contained in this Agreement shall survive the Distribution Date.
Section 11.15 Guaranty. Each Party guarantees the performance
of all obligations of its Affiliates under this Agreement, all Related
Agreements and all other agreements to be entered into in connection with this
transaction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the day and year first above
written.
MINNESOTA MINING AND
MANUFACTURING COMPANY
By:
Name:
Title:
IMATION CORP.
By:
Name:
Title:
ANNEX I
ASSUMED LIABILITIES
Assumed Liabilities: all Liabilities and obligations
relating to or arising from the operation of the Transferred Businesses (other
than Retained Liabilities), whether before or after the Distribution Date,
including but not limited to:
(a) all Liabilities and obligations which should be
set forth, reflected, disclosed or reserved for on a balance sheet for Imation
as of the Distribution Date prepared in the same manner as the March 31, 1996
balance sheet of Imation included in the Information Statement (after giving
effect to any pro forma adjustments reflected in the Information Statement);
(b) all Liabilities and obligations of 3M pursuant
to, under or relating to all agreements, contracts and leases, whether written
or oral, of 3M relating to, but only to the extent that they relate to, the
Transferred Businesses, including, without limitation, the leases set forth on
Schedule 6.14(a) to the Agreement and acquisition or divestiture agreements
entered into on behalf of the Transferred Businesses on or prior to the
Distribution Date;
(c) outstanding Bids, Quotations and Proposals
pertaining to the Transferred Businesses to the extent that such Bids,
Quotations and Proposals can be transferred or assigned without extinguishment;
and all contracts awarded to 3M before or after the Distribution Date pertaining
to the Transferred Businesses, as (i) assignee if those contracts are assignable
and assigned or transferred by operation of law, or (ii) subcontractor if
assignment of those contracts and/or the proceeds therefrom is prohibited by
law;
(d) all warranty, performance and similar obligations
entered into or made in the course of business of the Transferred Businesses
with respect to its products;
(e) all Liabilities and obligations to or with
respect to Transferred Employees not specifically retained by 3M pursuant to the
Agreement or the Related Agreements, including but not limited to withholding,
payroll and employment taxes pursuant to Article VIII of the Agreement;
(f) the Liabilities and obligations being assumed by
or agreed to be performed by Imation pursuant to any other agreement being
entered into in connection with the Agreement, including, without limitation,
the Related Agreements;
(g) all Liabilities and obligations relating to all
Actions related to or arising out of the operations of the Transferred
Businesses, other than those specified as Retained Liabilities;
(h) all Liabilities and obligations arising with
respect to the Transferred Businesses under laws, rules or regulations relating
to the registration or regulation of the sale or use of products in commerce,
including, but not limited to, the Federal Food, Drug and Cosmetic Act, 21
U.S.C. ss. 301 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act,
7 U.S.C. ss. 136 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601
et seq. (except that provisions of the Toxic Substances Control Act and the
regulations promulgated thereunder related to the regulation of polychlorinated
biphenyls shall be deemed to be Environmental Laws for purposes of the
Environmental Matters Agreement, and Liabilities related to the management,
transportation, disposal and remediation of polychlorinated biphenyls shall be
governed by the terms of the Environmental Matters Agreement); and similar state
and local laws; and
(i) all Liabilities and obligations under corporate
credit cards which had been issued by 3M to Transferred Employees.
ANNEX II
RETAINED LIABILITIES
Retained Liabilities: the following Liabilities and
obligations as of the Distribution Date:
(a) all Liabilities and obligations with respect to
Transferred Employees provided in Article VIII of the Agreement as being
Liabilities and obligations of 3M;
(b) all Liabilities and obligations under the Related
Agreements which are Liabilities or obligations of 3M;
(c) all Liabilities related to non-United States
operations which pursuant to Section 2.3 of this Agreement or the agreements
contemplated thereby are not to be assumed by Imation or its Affiliates;
(d) subject to the provisions of Section 5.6 of this
Agreement, all Liabilities and obligations arising out of the litigation
entitled Minnesota Mining & Manufacturing Company v. Nishika, Ltd., et al.
(Supreme Court of Texas; Case No. 94-1124);
(e) all Liabilities and obligations arising out of
checks which have been mailed, but not presented for payment, prior to the
Distribution Date; and
(f) all Liabilities with respect to trade payables
relating to the operations of the Transferred Businesses outside the United
States which are being retained by 3M or its Affiliates pursuant to the terms of
this Agreement.
ANNEX III
TRANSFERRED ASSETS
Transferred Assets: All assets and properties of 3M used
principally in the Transferred Businesses as of the Distribution Date (other
than Excluded Assets), including but not limited to:
(a) All assets and properties which should be set
forth or reflected on a balance sheet for Imation as of the Distribution Date
prepared in the same manner as the March 31, 1996 balance sheet of Imation
included in the Information Statement (after giving effect to any pro forma
adjustments reflected in the Information Statement)
(b) the real properties owned by 3M and used in the
Transferred Businesses which are set forth on Exhibit A hereto, including
buildings, structures and improvements (including construction in progress)
located thereon, fixtures contained therein and appurtenances thereto;
(c) all of 3M's right and interest in, to and under
all leases for real property relating to the Transferred Businesses, which are
set forth on Exhibit B hereto;
(d) all of 3M's right and interest in, to and under
all outstanding Bids, Quotations and Proposals pertaining to the Transferred
Businesses to the extent that such Bids, Quotations and Proposals can be
transferred or assigned without extinguishment; all of 3M's right and interest
in, to and under all contracts and agreements awarded to 3M before or after the
Distribution Date pertaining to the Transferred Businesses, as assignee if those
contracts are assignable and assigned or transferred by operation of law;
payment of a subcontract price equal to the monies, rights and other
considerations received by 3M under contracts and agreements awarded to 3M
before or after the Distribution Date pertaining to the Transferred Businesses
if assignment of those contracts and/or agreement and/or the proceeds therefrom
is prohibited by law;
(e) all machinery, equipment and other items of
tangible personal property (including construction in progress) owned by 3M
which are utilized principally in the Transferred Businesses (including any such
assets located at the 3M facilities in Menomonie, Wisconsin, or Breda,
Netherlands);
(f) all of 3M's rights with respect to trade
receivables relating to the Transferred Businesses, except as otherwise provided
in Section 2.3 of this Agreement or the foreign transfer agreements entered into
by Affiliates of 3M and Imation pursuant to such Section 2.3;
(g) all rights and interests of 3M in, to and with
respect to the intellectual property rights concerning the Transferred
Businesses to the extent, but only to the extent, such rights are being licensed
and assigned to Imation pursuant to, and in accordance with, the Intellectual
Property Agreement;
(h) all of the Books and Records (except as otherwise
provided in the Intellectual Property Agreement);
(i) inventories of raw materials, work-in-process,
finished products, supplies and spare parts which at the Distribution Date are
owned by 3M and relate principally to the Transferred Businesses and any
property under bailment relating to the Transferred Businesses;
(j) all permits and licenses held by 3M which are
transferable and which relate principally to the Transferred Businesses;
(k) all intangible assets, other than intellectual
property rights, of 3M used solely in the Transferred Businesses;
(l) employee receivables, temporary and permanent
travel advances and funds advanced for travel not yet taken relating to
Transferred Employees and all petty cash funds in the possession of Transferred
Businesses and all prepayments and deposits;
(m) all supplies, forms, labels, shipping material,
catalogues, sales brochures, operating manuals, instructional documents and
advertising material held for use by the Transferred Businesses;
(n) all shares of capital stock of Imation
Enterprises, CD-Rom B.V./C.V., CD-Rom Services (A), Inc., CD-Rom Services (B),
Inc., Imation Finanziaria S.p.A., Minnesota 3M Research, Limited, Imation France
S.A., Imation Argentina S.A. and Imation do Brasil Ltda. owned by 3M immediately
prior to the Distribution;
(o) all of 3M's rights with respect to the following
investments: CEMEX/ICON, Inc., Printware, Inc., Software Architects, Inc.,
Hummer Winblad Equity Partners, L.P., and Hummer Winblad Equity Partners II
L.P.;
(p) all trucks, automobiles and other vehicles which
are owned by 3M and used principally in the Transferred Businesses;
(q) all of 3M's right relating to all Actions related
to or arising out of the Transferred Business (other than with respect to
Actions specifically retained by 3M pursuant to this Agreement), including,
without limitation, the Action entitled Minnesota Mining & Manufacturing Company
v. Appleton Papers, Inc. (U.S.D.C., District of Minnesota; Civil File No. 4-95-
786);
(r) the Pilot Plant Assets; and
(s) duty drawbacks relating to the Transferred
Businesses which were filed by 3M on or prior to the Distribution Date.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS ANNEX II OR THE
AGREEMENT, TRANSFERRED ASSETS SHALL NOT INCLUDE THE FOLLOWING ASSETS AND
PROPERTIES (THE "EXCLUDED ASSETS"), WHICH SHALL BE RETAINED BY 3M:
(a) cash and cash equivalents, including cash on hand
or in bank accounts, certificates of deposit, commercial paper and other similar
securities in the possession of the Transferred Businesses, except (i) petty
cash funds in the possession of the Transferred Businesses, (ii) any cash to be
contributed to the capital of Imation pursuant to the terms of this Agreement,
and (iii) any cash advanced by 3M prior to the Distribution Date to capitalize
foreign corporations being formed by Imation to facilitate the Distribution;
(b) any Books and Records which 3M is required by
law to retain in its possession;
(c) except as may otherwise be provided in the Tax
Sharing Agreement, any right, title or interest of 3M in any Federal, state or
local tax refund (including any income with respect thereto) relating to the
operations of the Transferred Businesses prior to the Distribution Date;
(d) all machinery and equipment at the 3M facility in
New Ulm, Minnesota, other than laboratory test equipment utilized by the
Transferred Businesses prior to the Distribution Date;
(e) all machinery, equipment and other items of
personal property, including construction in process, which are located at the
Pine City, Minnesota facility relating to 3M's Traffic Control Materials and
Commercial Office Supply Divisions, the White City, Oregon facility relating to
3M's Electrical Specialties Division, the Middleway, West Virginia facility
relating to 3M's Metalmatrix Program, the Vadnais Heights, Minnesota facility
relating to 3M's Corporate Metrology Laboratory, the Wahpeton, North Dakota
facility relating to 3M's Medical Device Division, OH&ES Division and
Professional Video and Audio Products Division, and the Camarillo, California
facility relating to 3M's Telecom Systems Division;
(f) all assets located outside the United States
which pursuant to Section 2.3 of this Agreement or the agreements contemplated
thereby are not to be transferred to Imation or one of its Affiliates; and
(g) all rights with respect to trade receivables
relating to the operations of the Transferred Businesses outside the United
States which are being retained by 3M or its Affiliates pursuant to the terms of
this Agreement.
ANNEX IV
ENTERPRISE LIABILITIES
Enterprise Liabilities: all Assumed Liabilities and
obligations relating to or arising from the Enterprise Operations, whether
before or after the Distribution Date, including but not limited to:
(a) all Liabilities and obligations of 3M pursuant
to, under or relating to, but only to the extent that they relate to, all
agreements, contracts and leases of 3M relating to the Enterprise Operations;
(b) outstanding Bids, Quotations and Proposals
pertaining to the Enterprise Operations to the extent that such Bids, Quotations
and Proposals can be transferred or assigned without extinguishment; and all
contracts awarded to 3M before or after the Distribution Date pertaining to the
Enterprise Operations, as (i) assignee if those contracts are assignable and
assigned or transferred by operation of law, or (ii) subcontractor if assignment
of those contracts and/or the proceeds therefrom is prohibited by law;
(c) all warranty, performance and similar obligations
entered into or made in the course of business of the Enterprise Operations with
respect to their products and services;
(d) the Liabilities and obligations to or with
respect to Transferred Employees of the Enterprise Operations being assumed by
Imation, including but not limited to withholding, payroll and employment taxes
pursuant to Article VIII of the Agreement;
(e) the Liabilities and obligations relating to the
Enterprise Operations being assumed by or agreed to be performed by Imation
Enterprises pursuant to any other agreement being entered into in connection
with the Agreement, including, without limitation, the Related Agreements;
(f) the Liabilities and obligations relating to all
Actions related to or arising out of the Enterprise Operations, other than those
specified as Retained Liabilities;
(g) all Liabilities and obligations under any
industrial development bond relating to the facility located in White City,
Oregon which is outstanding as of the Distribution Date; and
(h) all Liabilities and obligations under corporate
credit cards which had been issued by 3M to Transferred Employees employed by
the Enterprise Operations.
ANNEX V
ENTERPRISE ASSETS
Enterprise Assets: All Transferred Assets used principally in
the Enterprise Operations as of the Distribution Date, including but not
limited to:
(a) the real properties owned by 3M and identified on
Exhibit A hereto as being transferred to Imation Enterprises, including
buildings, structures and improvements (including construction in progress)
located thereon, fixtures contained therein and appurtenances thereto;
(b) all of 3M's right and interest in, to and under
all leases for real property relating to the Enterprise Operations, which are
identified on Exhibit B hereto as being assigned to Imation Enterprises;
(c) all of 3M's right and interest in, to and under
all outstanding Bids, Quotations and Proposals pertaining to the Enterprise
Operations, to the extent that such Bids, Quotations and Proposals can be
transferred or assigned without extinguishment; all of 3M's right and interest
in, to and under all contracts and agreements awarded to 3M before or after the
Distribution Date pertaining to the Enterprise Operations, as assignee if those
contracts are assignable and assigned or transferred by operation of law;
payment of a subcontract price equal to the monies, rights and other
considerations received by 3M under contracts and agreements awarded to 3M
before or after the Distribution Date pertaining to the Enterprise Operations,
if assignment of those contracts and/or agreement and/or the proceeds therefrom
is prohibited by law;
(d) all machinery, equipment and other items of
tangible personal property (including construction in progress) owned by 3M
which are utilized principally in the Enterprise Operations;
(e) all of 3M's rights with respect to domestic trade
receivables relating to the Transferred Businesses;
(f) all of the Books and Records relating to the
Enterprise Operations (except as otherwise provided in the Intellectual
Property Agreement);
(g) inventories of raw materials, work-in-process,
finished products, supplies and spare parts which at the Distribution Date are
owned by 3M and relate principally to the Enterprise Operations and any property
under bailment relating to the Enterprise Operations;
(h) all permits and licenses held by 3M which are
transferable and which relate principally to the Enterprise Operations;
(i) all intangible assets, other than intellectual
property rights, of 3M used solely in the Enterprise Operations;
(j) employee receivables, temporary and permanent
travel advances and funds advanced for travel not yet taken relating to
Transferred Employees of the Enterprise Operations and all petty cash funds in
the possession of the Enterprise Operations and all prepayments and deposits;
(k) all supplies, forms, labels, shipping material,
catalogues, sales brochures, operating manuals, instructional documents and
advertising material held for use by the Enterprise Operations;
(l) all trucks, automobiles and other vehicles which
are owned by 3M and used principally in the Enterprise Operations; and
(m) the Pilot Plants Assets.
Exhibit A
to ANNEX III and ANNEX V
Owned Properties to be Transferred
United States
Properties of Imation
Camarillo, California
Wahpeton, North Dakota
Tucson, Arizona
Oakdale, Minnesota*
Properties of Imation Enterprises
Weatherford, Oklahoma
Pine City, Minnesota
Rochester, New York
White City, Oregon
Middleway, W. Virginia
Nekoosa, Wisconsin
Outside the United States
Ferrania, Italy
Harlow, England**
Sulmona, Italy
Florida, Argentina
Bracknell, England***
London, Ontario, Canada****
- --------
* Includes Lot 1 and 2, Block 1; and Outlot A, all a part of "Oakdale
Farm" Plat, Washington County, Minnesota.
** Includes an indirect transfer of facility owned by
Minnesota 3M Research Limited.
*** Includes Building #2 only.
**** Includes Service Support Centre only.
Exhibit B
to ANNEX III and ANNEX V
Leased Properties to be Transferred
I Manufacturing Facilities in United States
Leased Properties of Imation
Fremont, California (two locations)
Vadnais Heights, Minnesota
Leased Properties of Imation Enterprises
None
II Other Leases
The leases set forth on Schedule 6.14(a) of the Agreement or identified
in connection with the various foreign transfer agreements are incorporated
herein by reference.
Schedule 1.1A
Transferred Businesses
Imation Business Units:
Data Storage Diskette Technology Division
Data Storage Markets Division
Data Storage Optical Technology Division
Data Storage Tape Technology Division
Medical Imaging Systems Division
Photo Color Systems Division
Printing and Publishing Systems Division
Hardgoods and Electronic Support Department
HESD Field Service and Customer Support
Dry Silver Technology Center
Graphic Research Lab(1)
Aurora Project of HESD
Harlow Laboratory
Storage Laboratory Lab of Advanced Technology Lab
Electronic Imaging Center(1)
European Business Centers corresponding to the
businesses above
Imation Plants:
Camarillo, California
Wahpeton, North Dakota
Weatherford, Oklahoma
Tucson, Arizona
Fremont, California
Pine City, Minnesota
Vadnais Heights, Minnesota
Rochester, New York
White City, Oregon
Middleway, W. Virginia
Nekoosa, Wisconsin
Ferrania, Italy
Sulmona, Italy
Florida, Argentina
- --------
(1) Other than as related to certain projects the employees responsible
for which are not Transferred Employees.
Schedule 1.1B
Business Units Excluded from Transferred Businesses
Audio and Video Products Division
HESD Laboratory
HESD Manufacturing-New Ulm
HESD Product Information Center
HESD Incompany Service
National Media Lab
Photogard
Any Part of the Advanced Technology Lab not relating
to Imaging or Memory Technology
Schedule 1.1C
Imation Employees(2)
- --------
(2) To be updated by mutual agreement of 3M and Imation.
Schedule 1.1D
Pilot Plant Assets(3)
- --------
(3) To be updated by mutual agreement of 3M and Imation.
Schedule 1.1E
3M Center Assets(4)
- --------
(4) To be updated by mutual agreement of 3M and Imation.
Schedule 1.1F
Human Resources Codes
Schedule 5.1(a)
3M Information in Information Statement
"Summary - Distributing Corporation,"
"Summary - Principal Businesses to be Retained by
3M,"
"Summary - Primary Purpose of the Distribution,"
"Introduction,"
"The Distribution - Reasons for the Distribution,"
"The Distribution - Opinion of Financial Advisor,"
"The Distribution - Manner of Effecting the
Distribution,"
"The Distribution - Certain Federal Income Tax
Consequences," and
"Security Ownership of Certain Beneficial Owners".
Schedule 6.12(a)
Domestic Shared Facilities
3M WILL LEASE SPACE IN IMATION CORP. FACILITIES AT:
Camarillo, CA
Vadnais Heights, MN (Sublease)
3M WILL LEASE SPACE IN IMATION ENTERPRISES FACILITIES AT:
Middleway, WV
Pine City, MN
IMATION CORP. WILL LEASE SPACE IN 3M FACILITIES AT:
3M Center, Buildings 201, 209, 223, 235, 236 and 302 (Currell Blvd.)
IMATION ENTERPRISES WILL LEASE (OR SUBLEASE) SPACE IN 3M FACILITIES AT:
3M Center, Building 42 (Bush Avenue)
Menomonie, WI
1927 Case Avenue
St. Paul, MN
Schedule 6.14(a)
Assigned Third Party Leases
To Imation
Tucson, AZ - 7900 E. Tanque Verde
Tucson, AZ - Rita Rd. (Not a lease, but an agreement
for payment of zoning fee)
Fremont, CA - 2933 Bayview Dr.
Fremont, CA - Bayside Business Park (Pending new lease)
To Imation Enterprises
Pine City, MN - 230 E. Third Ave.
Vadnais Heights, MN - 1185 Wolters Blvd.
Woodbury, MN - 6043 Hudson Road - Suites 105D, 201,
230, 245, 295, 300, 360
Woodbury, MN - 6053 Hudson Road - Suites 199, 210,
255, 265, 275, 295
Woodbury, MN - 6063 Hudson Road
Woodbury, MN - 1687 Century Circle
Rochester, NY - 1545 Mount Read Blvd.
Weatherford, OK - 217 S. Eighth St. (mini-storage)
White City, OR - 675 Antelope Road
To Imation Affiliates -- O.U.S.
As provided in various foreign transfer agreements.
Schedule 6.14(b)
Assigned Properties Leased To Third Parties
Imation
Camarillo, CA - Lease to Michael Brucker
Wahpeton, ND - Lease to Barry Pausch
Imation Enterprises
Woodbury, MN - Sublease to Century Design, 6063
Hudson Road
Weatherford, OK - Oil and Gas lease to Arkansas Lousiana Gas Co.
Weatherford, OK - Lease to James L. Tanner
Weatherford, OK - License to Deer Creek Conservation Dist.
White City, OR - Sublease to Sterling Business Forms
Middleway, WV - Lease to Jesse E. Frye
Middleway, WV - Lease to William S. Friend
Schedule 6.15(a)
Trade Receivables/Payables Settlement Schedule
Schedule 8.11
Foreign Service Employee Obligations
Schedule 9.3
Pre-Distribution Date Insurance Claims(5)
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(5) To be updated to reflect additional claims reported prior to the
Distribution Date.