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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
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Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
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
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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