Exhibit 10.1
IMATION CORP.
INVESTOR RIGHTS AGREEMENT
     This INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of July 31,
2007, by and between Imation Corp., a Delaware corporation (the “Company”), and
TDK Corporation, a Japanese corporation (the “Investor”).
RECITALS
     WHEREAS, the Investor and the Company are parties to an Acquisition
Agreement, dated as of April 19, 2007 (the “Acquisition Agreement”), providing
for the issuance and sale of certain shares of common stock of the Company, par
value $.01 per share (“Common Stock”), in consideration of the Investor’s
transfer to the Company of certain assets relating to the sale, service and
support of optical, magnetic tape and flash memory recordable media products, as
more fully described in the Acquisition Agreement;
     WHEREAS, the obligations of the Company and the Investor under the
Acquisition Agreement are conditioned, among other things, upon the execution
and delivery of this Agreement by the Investor and the Company;
     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
ARTICLE I
BOARD REPRESENTATION
     1.1 Investor Nominee Appointment Right. Until such time as ninety (90) days
have elapsed after the occurrence of a Nomination Forfeiture Event without cure
by the Investor of such event (the “Forfeiture Date”), the Investor shall have
the right to designate one employee or director of TDK or any Affiliate of TDK
as a nominee to stand for election as a director of the Company (the “Investor
Nominee”). Promptly after TDK has designated an Investor Nominee and the
Investor Nominee has been approved by the Company’s board of directors (the
“Board”) as provided below, the Company shall increase the size of the Board by
one member and fill the resulting vacancy in accordance with the Company’s
bylaws by designating the Investor Nominee as a director of the Class whose term
will expire at the next annual meeting of stockholders. Thereafter, the Board
shall recommend to the Company’s stockholders to vote to elect the Investor
Nominee at the next stockholders’ meeting and at each subsequent stockholders’
meeting at which directors of that Class are elected. The foregoing nomination
right will be subject to the Company’s generally applicable policies with
respect to the qualification of Board nominees under the Company’s Corporate
Governance Guidelines, as may be amended from time to time (the “Board
Qualifications”); provided, that (i) in the event that a proposed Investor
Nominee is rejected by the Board’s Nominating and Governance Committee, (A) the
Board will not nominate any person not designated by the Investor to stand for
election in place of the rejected Investor Nominee and (B) the Investor shall
have the right to nominate a replacement candidate, until such time as an
Investor Nominee that meets the Board Qualifications is put forward by the
Investor, and (ii) the Company shall not revise or amend the Board
Qualifications or the qualifications and procedures set forth in the Company’s
Corporate Governance Guidelines in a manner that has the intent or effect of
materially adversely affecting the Investor’s ability to designate the Investor
Nominee (by for instance, adding requirements that all directors meet
citizenship or independence requirements that would disqualify the Investor’s
most probable nominees). Any Investor Nominee included within the slate of
director nominees presented to the stockholders for election shall remain
subject to the required affirmative vote of the Company’s stockholders in
accordance with the Company’s bylaws, as may be amended from time to time.

 

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     1.2 Responsibilities of Investor Nominee. Any Investor Nominee duly elected
to the Board shall be subject to the Company’s bylaws, charters, guidelines,
codes of conduct, policies and procedures and the laws of the State of Delaware
governing the fiduciary responsibilities of directors to the same degree as
other members of the Board, and may be removed for cause under applicable law.
Any Investor Nominee duly elected to the Board shall be treated the same as an
“employee director” for purposes of director compensation.
     1.3 Vacancies. At any time prior to a Nomination Forfeiture Event, if an
Investor Nominee who has been duly elected to the Board resigns from the Board,
is removed for cause under applicable law, dies or otherwise cannot or is not
willing to stand for reelection or to continue to serve as a member of the
Board, the remaining members of the Board shall take all commercially reasonable
actions to cause the vacancy to be filled, prior to or concurrent with any
further meeting or action by the Board, by a new Investor Nominee.
     1.4 Nomination Forfeiture Event. A “Nomination Forfeiture Event” shall
occur when:
          (a) as a result of voluntary sales of Common Stock by the Investor,
the number of shares of Common Stock held by the Investor drops below
seventy-five percent (75%) of the Initial Share Number;
          (b) as a result of the Investor’s failure to exercise its Preemptive
Rights and any voluntary sales by the Investor of Common Stock, the number of
Issued Shares held by the Investor drops below ten percent (10%) of the total
number of issued and outstanding shares of Common Stock;
          (c) that certain Trademark License Agreement, dated as of the date
hereof between the Company and the Investor (the “Trademark License”), is
terminated for any reason; or
          (d) as a result of a breach by Investor of Section 4.3 or 4.4 of this
Agreement; provided, that a breach of Section 4.3 of this Agreement shall not
constitute a Nomination Forfeiture Event unless either (i) the Investor shall
have affirmatively voted its voting Securities in contravention of the
provisions of that Section or (ii) the Investor, having been given express
written notice by the Company in the form of attached Exhibit B (an “Express
Notice”) and in accordance with the applicable terms of Section 6.19, shall have
failed to vote its voting Securities with respect to a proposal as to which it
is required to vote under Section 4.3 and, in the case of a proposal described
in Section 4.3(a) but not otherwise, such failure to vote shall have adversely
affected the outcome of the stockholder vote on such proposal from the Company’s
perspective (i.e., caused a proposal as to which the Board recommended a vote
“against” to succeed, or a proposal as to which the Board recommended a vote
“for” to fail).

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Notwithstanding anything to the contrary in Section 1.1, if a Nomination
Forfeiture Event occurs as a result of clause (c) or (d) above, Investor’s right
to nominate an Investor Nominee shall terminate immediately, and Investor shall
cause any Investor Nominee who has been duly elected and is then serving as a
director of the Company to submit his resignation as a director of the Company
with immediate effect. For purposes of this Section 1.4, the number of Shares of
Common Stock held by the Investor shall include all shares of Common Stock
issued to the Investor and its Affiliates at Closing.
     1.5 Information Rights.
          (a) For so long as the Investor has a duly elected representative
serving on the Board, the Company shall be required to provide such director
with all information made available to other Board members, as and when it is
made available to other Board members; provided, however, the Company shall not
be obligated to provide such director with information that is only made
available to members of a duly constituted committee of the Board of which such
director is not a member.
          (b) Notwithstanding the occurrence of an uncured Nomination Forfeiture
Event other than pursuant to Section 1.4(d), for so long as the Trademark
License remains in effect, and subject to the provisions of Section 6.3 of this
Agreement, the Company shall provide the Investor (i) reasonable notice of, and
reasonably detailed information regarding, any discussions, negotiations, or
correspondence regarding any proposed transaction that could be expected to
result in a Change of Control of the Company (a “Proposed Transaction”),
including any material changes to terms previously notified to Investor, and
(ii) a reasonable opportunity to propose alternatives thereto to the Board for
the Board’s consideration. In addition, in the event that the Company or its
advisors conducts (i) any form of “market check” process in connection with
exploration of or discussion, negotiations or correspondence regarding a
Proposed Transaction, or (ii) any form of formal or informal auction process,
then, in either case, the Company agrees that the Investor will be one of the
parties contacted in the first instance. The rights of the Investor under this
Section 1.5(b) shall terminate immediately in the event of a Nomination
Forfeiture Event described in Section 1.4(d).
          (c) For the purposes of Section 1.5(b), a “Change of Control” with
respect to the Company means any of the following transactions as a result of
which the Company is under the direct or indirect control of any Person, whether
singly or as a part of a 13D Group:
               (i) the acquisition by any Person, as a result of one transaction
or a series of transactions over time, of voting Securities representing,
directly or indirectly, more than fifty percent (50%) of the aggregate voting
rights of the Company; or
               (ii) the Company’s consolidation with or merger with or into
another Person, whether or not the Company is the surviving entity in such
transaction, unless, immediately after such consolidation or merger,
shareholders of the Company prior to the transaction continue to own voting
securities representing, directly or indirectly, more than fifty percent (50%)
of the aggregate voting rights of such new or surviving entity.

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ARTICLE II
PREEMPTIVE RIGHTS
     2.1 Preemptive Rights.
          (a) If the Company proposes to sell any Common Stock or any other
Securities, however described or whether voting or non-voting, other than
Exempted Securities (“Additional Securities”), whether in a private placement, a
public offering, or as part of an acquisition, share exchange or otherwise, the
Company shall, at least thirty (30) days prior to issuing such Additional
Securities, notify the Investor in writing of such proposed issuance specifying,
to the extent practicable, the purchase price or a range for the purchase price,
if any, for, and the terms and conditions of, such Additional Securities and
shall offer to sell such Additional Securities to the Investor in the amounts
set forth in Section 2.1(c), upon the terms and conditions set forth in the
notice and at the Purchase Price as provided in Section 2.1(d) (the “Preemptive
Rights”); provided, that, if the purchase price for, or any of the other
material terms and conditions of, the proposed issuance are not known at the
time of the initial written notice, the Company shall provide such notice
without specifying the price or other such terms and conditions, and shall
provide a supplemental notice, adding the missing terms, to the Investor as soon
as they are known to the Company, and in no event later than ten (10) Business
Days prior to such issuance. For purposes of calculating the number of
Additional Securities issued pursuant to this Section 2.1(a), such calculation
shall include the maximum number of shares of Common Stock and other Securities
issuable upon the conversion or exercise of any convertible or exchangeable
Securities.
          (b) If the Investor wishes to subscribe for a number of Additional
Securities less than the number to which it is entitled under this Section 2.1,
the Investor may do so and shall, in the notice of exercise of the offer,
specify the number of Additional Securities that it wishes to purchase.
          (c) The Company shall offer the Investor all, or any portion specified
by the Investor in accordance with Section 2.1(b), of an amount of such
Additional Securities such that, after giving effect to the proposed issuance
(including the issuance to the Investor pursuant to the Preemptive Rights and
including any related issuance resulting from the exercise of preemptive or
similar rights by any unrelated Person with respect to the same issuance that
gave rise to the exercise of the Preemptive Rights by the Investor), the
Investor’s Equity Interest after such issuance would equal the Investor’s Equity
Interest immediately prior to such issuance, such number of Additional
Securities to constitute the “Preemptive Share Amount”. If, at the time of the
determination of any Preemptive Share Amount under this Section 2.1(c), any
other Person has preemptive or other equity purchase rights similar to the
Preemptive Rights, such Preemptive Share Amount shall be recalculated to take
into account the amount of Additional Securities such Persons have committed to
purchase, rounding up such Preemptive Share Amount to the nearest whole
Additional Security.

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          (d) The “Purchase Price” for the Additional Securities to be issued
pursuant to the exercise of Preemptive Rights shall be payable only in cash
(unless otherwise agreed by the Company and the Investor) and, except as
otherwise set forth below, shall equal per Additional Security the per Security
issuance price for the Additional Securities giving rise to such Preemptive
Right. In the case of any issuance of Additional Securities other than solely
for cash, the Company and the Investor shall in good faith seek to agree upon
the value of the non-cash consideration; provided, that the value of any
publicly traded securities shall be deemed to be the closing price of such
securities on the applicable national securities exchange as of the trading date
immediately prior to the consummation of such issuance. If the Company and the
Investor fail to agree on such value during the period contemplated by the first
sentence of Section 2.2, then the Company will refer the items in dispute to a
nationally recognized investment banking firm that is selected by the Board and
reasonably acceptable to the Investor and that shall be instructed to make a
final and binding determination of the fair market value of such items within
ten (10) Business Days. If such a determination is required, the deadline for
the Investor’s exercise of its Preemptive Rights with respect to such issuance
pursuant to Section 2.1(b) shall be extended until the fifth (5th) Business Day
following the date of such determination. Whichever of the Company or the
Investor whose last estimate differed the most from that finally determined by
the investment banking firm shall be responsible for and pay all of the fees and
expenses of such investment banking firm. All determinations made by such
investment banking firm shall be final and binding on the Company and the
Investor.
     2.2 Exercise Period. The Preemptive Rights set forth in Section 2.1 must be
exercised by acceptance in writing of an offer referred to in Section 2.1(a),
(i) if not in connection with a registered offering, within thirty (30) days of
receiving notice from the Company of its intention to sell Additional
Securities, or (ii) in connection with any registered offering, at least five
(5) Business Days prior to the printing of the preliminary prospectus in
connection with such offering. The closing of any purchase of Additional
Securities pursuant to the exercise by the Investor of Preemptive Rights
hereunder shall occur on the later of (i) the closing of the transaction
triggering such Preemptive Rights, subject to the receipt of any necessary
Governmental Approvals to which the issuance of Additional Securities is
subject, and (ii) should either the Company or the Investor so elect, an agreed
date within thirty (30) days after such closing.
     2.3 Survival of Rights. The Investor’s rights set forth in Section 2.1
shall terminate when:
          (a) as a result of voluntary sales of Common Stock by the Investor,
the number of shares of Common Stock held by the Investor drops below
seventy-five percent (75%) of the Initial Share Number;
          (b) as a result of the Investor’s failure to exercise its Preemptive
Rights and any voluntary sales by the Investor of Common Stock, the number of
Issued Shares held by the Investor drops below ten percent (10%) of the total
number of issued and outstanding shares of Common Stock; or
          (c) the Trademark License is terminated for any reason.

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ARTICLE III
REGISTRATION RIGHTS
     3.1 Registration Rights.
          (a) Demand Rights.
               (i) At any time after the end of the Lock-Up Period, the Investor
shall have the right to request the Company to file a registration statement
under the Securities Act for a public offering of all or part of the Issued
Shares and any additional shares of Common Stock issued or distributed by way of
a dividend, stock split or other distribution, or acquired by way of any rights
offering or similar offering made, in respect of the Issued Shares (the
“Registrable Securities”), by delivering written notice thereof to the Company
specifying (x) the number of Registrable Securities to be included in such
registration, and (y) the intended method of distribution thereof (the “Demand
Registration Request”). Thereupon the Company shall, as expeditiously as
possible, use its commercially reasonable efforts to effect the registration
under the Securities Act of the Registrable Securities which the Company has
been so requested to register in the Demand Registration Request. The Investor
may require the Company to file such registration statement with the SEC in
accordance with and pursuant to Rule 415 promulgated under the Securities Act
(or any successor rule then in effect) (a “Shelf Registration”). The demand
registration rights granted in this Section 3.1(a)(i) are subject to the
following limitations:
                    (1) The aggregate offering price (net of known or estimated
underwriting discounts and commissions) for the shares of Registrable Securities
to be included in such registration shall be at least ten million Dollars
($10,000,000) based on the current market price of the Common Stock at the time
of such initial filing;
                    (2) The Company shall not be obligated to effect any
registrations pursuant to this Section 3.1(a)(i) within nine (9) months of the
effective date of any other registration under the Securities Act, other than a
registration on Form S-8 under the Securities Act;
                    (3) The Company shall not, under any circumstances, be
obligated to effect more than two (2) registrations pursuant to this
Section 3.1(a), no more than one of which may be exercised in any twelve
(12)-month period; and
                    (4) The Company may postpone for up to ninety (90) days the
filing or the effectiveness of a registration statement for a Demand
Registration Request if the Company furnishes to the Investor a certificate
signed by the Chief Financial Officer of the Company stating that the
disclosures that would be required in such registration statement would
reasonably be expected to have a material adverse effect on, or require the
public disclosure of, any proposal or plan by the Company to engage in a
significant financing or acquisition of assets (other than in the ordinary
course of business), or any merger, consolidation, tender offer, or
reorganization; provided, that, in such event, the Investor shall be entitled to
withdraw such Demand Registration Request and, if such request is withdrawn,
such request shall not count as one of the permitted Demand Registration
Requests hereunder.

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          (ii) If the Investor intends to distribute the Registrable Securities
covered by the Demand Registration Request by means of an underwriting, the
Investor shall so advise the Company in the Demand Registration Request, and in
such event, the Investor shall negotiate in good faith with an underwriter or
underwriters selected by the Company to act as the managing underwriter in
connection with such underwriting; provided, however, that if the Investor has
not agreed with such underwriter or underwriters as to the terms and conditions
of such underwriting within twenty (20) days following commencement of such
negotiations, then the Company may select an underwriter or underwriters of its
choice to be the managing underwriter, which choice shall be subject to the
approval of the Investor (such approval not to be unreasonably withheld or
delayed). The Company and the Investor shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting (it being understood that all indemnification obligations
which are customarily those of the issuer of securities under such underwriting
agreement shall be the obligations of the Company).
          (iii) If the Investor intends to distribute the Registrable Securities
covered by the Demand Registration Request by means of an underwriting and the
managing underwriters advise the Company in writing, with a copy to be delivered
to the Investor, that, in their opinion, the number of Registrable Securities
requested to be included in such offering exceeds the number of securities which
can be sold therein without materially adversely affecting the marketability of
the offering and within a price range acceptable to the Investor, the Company
shall include in such registration the Registrable Securities requested to be
included which in the opinion of such underwriters can be sold without
materially adversely affecting the marketability of the offering; provided,
that, in the event that the number of Registrable Securities included in such
registration is so reduced, such registration shall not count as one of the
permitted Demand Registration Requests hereunder.
     (b) Piggyback Rights.
          (i) If at any time and from time to time after the end of the Lock-Up
Period the Company proposes to effect a registration of any of its securities
under the Securities Act (other than any registration of Securities on Forms S-4
or S-8 or any successor forms), for its own account, or for the account of one
or more shareholders (other than pursuant to a Demand Registration Request) (the
“Proposed Registration”), the Company shall give prompt written notice to the
Investor of the Company’s intention to do so. If the Investor’s Registrable
Securities have not been included in the Proposed Registration, and within
thirty (30) days of the receipt of any such notice, Investor delivers to the
Company a written notice requesting to have any or all of the Registrable
Securities included in the Proposed Registration (such notice to include the
number of Registrable Securities that the Investor wishes to be included in the
Proposed Registration), the Company will use its commercially reasonable efforts
to cause such shares to be registered as requested in such notice.
Notwithstanding any other provision of this Section 3.1(b), if the Proposed
Registration is an underwritten registration and the managing underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the Company may limit the number of shares of Registrable
Securities to be included in the Proposed Registration without requiring any
limitation in the number of shares to be registered on behalf of the Company;
provided, however, that the number of Registrable Securities included in the
Proposed Registration pursuant to this Section 3.1(b) may not be reduced to less
than thirty percent (30%) of the total amount of shares subject to the offering;
provided, further, that nothing herein shall prevent the Company from canceling
or withdrawing any Proposed Registration prior to the filing or effectiveness
thereof.

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          (ii) If underwriters are appointed to conduct an offering of the
Company’s securities, including Registrable Securities, with respect to the
Proposed Registration, no Registrable Securities shall be registered unless the
Investor accepts the terms of the underwriting as approved by the Company for
the offering; provided, that the Investor may independently negotiate with the
underwriters for the offering any representations and warranties that the
Investor will give to such underwriters in connection with the offering. In the
event that the Investor is unable to agree with such underwriters on such
representations and warranties or does not accept the terms of such
underwriting, then the Company may proceed with the Proposed Registration
without the participation of the Investor or the inclusion of any Registrable
Securities; provided, further, that such non-participation of the Investor shall
not in any way affect its rights under this Section 3.1 with respect to
subsequent demands for registration of any Registrable Securities.
     3.2 Holdback Agreements. Investor shall not effect any public sale or
distribution (including sales pursuant to Rule 144) of Securities of the Company
or engage in any hedging transactions relating to the same, during the thirty
(30) days prior to and the 90-day period beginning on the effective date of any
underwritten registration pursuant to a Demand Registration Request or any
underwritten Proposed Registration, in each case pursuant to which Investor’s
Registrable Securities are included, unless the underwriters managing the
registered public offering agree otherwise.
     3.3 Effectiveness of Registration Statement. The Company shall notify
Investor of the effectiveness of each registration statement filed hereunder and
prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than one hundred twenty (120) days (or until the distribution described in the
registration statement has been completed) (or, in the case of a Shelf
Registration, a period ending on the earlier of (i) the date on which all
Registrable Securities have been sold pursuant to the Shelf Registration or have
otherwise ceased to be Registrable Securities, and (ii) the 24-month anniversary
of the effective date of such Shelf Registration) and comply with the provisions
of the Securities Act with respect to the disposition of securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement; provided, however, that at any time, upon written notice to Investor
and for a period not to exceed sixty (60) days thereafter (the “Suspension
Period”), the Company may suspend the use or effectiveness of any registration
statement (and the Investor agrees not to offer or sell any Registrable
Securities pursuant to such registration statement during the Suspension Period)
if the Company reasonably believes that the Company may, in the absence of such
suspension hereunder, be required under state or federal securities laws to
disclose any corporate development the disclosure of which could reasonably be
expected to have a material adverse effect upon the Company, its stockholders, a
potentially significant transaction or event involving the Company, or any
negotiations, discussions, or proposals directly relating thereto. No more than
two (2) such Suspension Periods shall occur in any twelve (12) month period. In
the event that the Company shall exercise its rights hereunder, the applicable
time period during which the registration statement is to remain effective shall
be extended by a period of time equal to the duration of the Suspension Period.
The Company may extend the Suspension Period for an additional consecutive
thirty (30) days with the written consent of the Investor. If so directed by the
Company, Investor shall use its commercially reasonable efforts to deliver to
the Company (at the Company’s expense) all copies, other than permanent file
copies then in Investor’s possession, of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. Investor
agrees to comply with any prospectus delivery and/or notice requirements under
the Securities Act then in effect, and agrees to not use any “free-writing”
prospectus in connection with the sale of any Registrable Securities.

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     3.4 Registration Expenses. The Company shall pay the expenses associated
with registrations pursuant to this Article III (including all registration,
filing, qualification fees, printing expenses, fees and expenses of the
Company’s counsel and of one counsel to the Investor and auditing expenses) and
all related offering expenses (including printing expenses, road show costs and
other marketing expenses). The Investor shall bear the cost of any underwriting
discounts or commissions for the offering and sale of the Investor’s Registrable
Securities.
     3.5 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may at times permit the sale of
Registrable Securities to the public in the United States without registration
after the Lock-Up Period, the Company agrees to use its commercially reasonable
efforts to:
          (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
          (b) File, as and when applicable, with the SEC in a timely manner all
reports and other documents required of the Company under the Exchange Act; and
          (c) Furnish to the Investor forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of Rule 144
and the Exchange Act, a copy of the most recent annual or quarterly (or other
periodic) report of the Company, and such other reports of the Company as the
Investor may reasonably request in availing itself of any rule or regulation of
the SEC allowing the Investor to sell any such securities without registration.
ARTICLE IV
OTHER AGREEMENTS
     4.1 Standstill.
          (a) From the date hereof through the date when (i) as a result of
voluntary sales of Common Stock by the Investor, the number of shares of Common
Stock held by the Investor drops below seventy-five percent (75%) of the Initial
Share Number or (ii) as a result of the Investor’s failure to exercise its
Preemptive Rights and any voluntary sales by the Investor of Common Stock, the
number of Issued Shares held by the Investor drops below ten percent (10%) of
the total number of issued and outstanding shares of Common Stock (the
“Standstill Period”), the Investor agrees that it will not, without the prior
written consent of the Company, directly or indirectly, alone or in concert with
any other Person, acquire, offer to acquire, or agree to acquire, by purchase,
gift, business combination or otherwise, beneficial ownership of any Common
Stock in excess of twenty-one percent (21%) (the “Standstill Threshold”) of the
Common Stock then outstanding; provided, however, that the Company shall, as
soon as reasonably practicable, inform the Investor of any change in the number
of outstanding shares of Common Stock since the last Public Disclosure of the
total issued and outstanding Common Stock of the Company in excess of one
quarter of one percent (0.25%). .

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          (b) Notwithstanding any provision of Section 4.1(a), the Investor
shall not be in breach of that section if, solely as a result of repurchases by
the Company of its outstanding Common Stock, the Investor becomes the Beneficial
Owner of shares of Common Stock in excess of the Standstill Threshold, provided
that it does not retain beneficial ownership of shares representing in the
aggregate more than twenty-two percent (22%) of the Common Stock then
outstanding (the “Investor Threshold”).
          (c) If Investor should become the Beneficial Owner of Common Stock in
violation of either Section 4.1(a) or Section 4.1(b), Investor shall, as soon as
it becomes aware of any such violation, give prompt notice to the Company of
such violation. Immediately upon its giving of any such notice, or upon its
receipt of any notice of such violation from the Company, the Investor shall,
and shall cause its Affiliates to, refrain from acquiring beneficial ownership
of any additional shares of Common Stock and within ten (10) Business Days after
its giving or receipt of such notice shall, and shall cause its Affiliates to,
dispose of Common Stock such that Investor shall not beneficially own Common
Stock in excess of the Standstill Threshold; provided, however, that any sales
required hereunder will not be taken into account for a period of five (5) years
thereafter in determining whether a Nomination Forfeiture Event shall have
occurred.
          (d) Prior to the Closing of the transactions contemplated by the
Acquisition Agreement, the Company has amended Section 1(a) of the Rights
Agreement dated June 21, 2006 (the “ Share Rights Plan”) to read in its entirety
as set out in the First Amendment to Rights Agreement annexed as Schedule 3
hereto (the “Rights Plan Amendment”). The Company agrees that changes effected
by the Rights Plan Amendment will be maintained in effect, and the Share Rights
Plan shall not without the prior written consent of the Investor be further
amended or revised to change the Standstill Threshold or the Investor Threshold
or affect the ability of the Investor to maintain its level of investment in the
Company until the end of the Standstill Period.
     4.2 Lock-Up.
          (a) The Investor shall not sell, transfer, pledge, encumber or
otherwise dispose of any Issued Shares for three (3) years following the
Effective Date (the “Lock-Up Period”), excluding any sale or other transfer
(i) to an Affiliate (by the Investor or another Affiliate of the Investor) that
agrees in writing to be bound by the terms of this Agreement, including without
limitation this Section 4.2, or (ii) for the purposes of complying with the
terms of this Agreement, unless (x) such transaction is approved in advance by a
majority of the Company’s independent directors and (y) such third Person agrees
in writing to be bound by the terms of this Agreement, including without
limitation this Section 4.2; provided, that, subject to the Investor’s
compliance with the terms of Section 4.1, the foregoing shall not apply to any
direct or indirect transfer of Issued Shares to the Investor by an Affiliate of
the Investor. Any stock certificates representing the Issued Shares shall bear a
legend substantially in the form below:

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“The securities represented by this certificate may only be transferred pursuant
to the provisions of an Investor Rights Agreement, dated as of July 31, 2007, as
amended from time to time, between the issuer and TDK, copies of which are on
file at the principal office of the issuer.”
          (b) Prior to any sale by the Investor of any of Issued Shares during
the Standstill Period, Investor shall give the Company at least ten (10) days’
advance notice in writing, and the Investor and the Company shall negotiate in
good faith and agree on limitations on the volume of any such sales on the open
market; provided, however, that such limitations shall be no greater than is
necessary to maintain an orderly market for the Company’s Common Stock;
provided, further, that any limitation shall not apply in the case of Investor’s
exercise of any of the Investor’s registration rights set forth in Article III.
          (c) Any sale, transfer or other disposition made in violation of
Section 4.2(a) shall be null and void, and the Company shall not register any
such sale, transfer or other disposition in its books and records.
     4.3 Agreement to Vote.
          (a) At each annual or special stockholders’ meeting held or otherwise
conducted at any time prior to the end of the Standstill Period, Investor shall
vote (or cause to be voted), in person or by proxy, all voting Securities that
Investor or any of its Affiliates owns or has the right to vote:
               (i) in favor of the election of each director nominee included on
the slate of director nominees proposed, recommended or otherwise supported by
the Board;
               (ii) against any slate of directors or nominees for director that
shall be proposed in opposition or as an alternative to the slate of director
nominees proposed, recommended or otherwise supported by the Board;
               (iii) in favor of any equity compensation plan or amendment
thereof proposed or recommended by the Board;
               (iv) in favor of any recapitalization of the Company for the
purpose of forming a holding company or to effect a change in the Company’s
state of incorporation if proposed or recommended by the Board; and

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               (v) in accordance with the recommendation of the Board as to
proposals submitted to the vote of stockholders of the Company with respect to
the compensation or benefits of directors, officers or employees of the Company,
concerning federal or state statutes relating to business combinations, fair
price or control share acquisitions, or concerning the adoption, amendment or
termination of a share rights plan.
          (b) The Investor may vote (or cause to be voted), in person or by
proxy, any voting Securities owned by it or any of its Affiliates (or that any
of them have the right to vote) as it determines in its sole discretion with
respect to any of the following matters which are presented at a meeting of
stockholders of the Company for approval: (i) any transaction which could result
in a Change of Control with respect to the Company; (ii) any disposition by the
Company of all or substantially all of its assets; (iii) any matters relating to
or concerning the continued publicly traded nature of the Company; (iv) any
recapitalization of the Company (other than a recapitalization for the purpose
of forming a holding company or to effect a change in the Company’s state of
incorporation proposed or recommended by the Board); (v) any liquidation of, or
consolidation involving, the Company; (vi) any increase in the Company’s
authorized shares or other amendment to the Certificate of Incorporation or
Bylaws of the Company; or (vii) any transaction not otherwise provided for in
this paragraph (b) that could reasonably be expected to have a material effect
on Investor’s investment in the Company. Notwithstanding the foregoing, the
Investor shall vote (or cause to be voted), in person or by proxy, all such
voting Securities owned by it or any of its Affiliates (or that any of them have
the right to vote) against any matters submitted to the stockholders of the
Company (A) which relate to the matters set forth in items (i) through
(vii) above, and (B) with respect to which the Board has recommended against
approval.
          (c) The Investor shall be present, in person or by proxy, and without
further action hereby agrees that it shall be deemed to be present, at all
meetings of stockholders of the Company so that all voting Securities
beneficially owned by Investor shall be counted for purposes of determining the
presence of a quorum at such meetings.
     4.4 No Instigation or Support of Proxy Contest or Stockholder Proposals.
During the Standstill Period, and prior to receiving notice of a Proposed
Transaction that the Board intends to recommend to the Company’s stockholders,
Investor shall not, directly or indirectly, through one or more intermediaries
acting on its behalf, singly or as part of a 13D Group, and shall cause each of
its Affiliates not to, directly or indirectly:
          (a) instigate, support or in any way participate in any proxy contest
or otherwise engage in the “solicitation” of “proxies” (as such terms are
defined in Rule 14a-1 under the Exchange Act, whether or not such solicitation
is exempt under Rule 14a-2 under the Exchange Act) with respect to any matter
from holders of voting Securities (including by the execution of actions by
written consent) in opposition to proposals or matters proposed, recommended or
otherwise supported by the Board;
          (b) become a “participant” in any “election contest” (as such terms
are defined or used in Rule 14-11 under the Exchange Act) with respect to the
Company or solicit any consent or communicate with or seek to advise, encourage
or influence any Person with respect to the voting of any voting Securities;
provided, however, that Investor shall not be prevented hereunder from being a
“participant” in support of the management of the Company by reason of the
membership of Investor’s designee on the Company’s Board or the inclusion of
Investor’s designee on the slate of nominees for election to the Board proposed
by the Company;

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          (c) initiate or participate in the solicitation of, or otherwise
solicit, stockholders for the approval of one or more stockholder proposals with
respect to the Company as described in Rule 14a-8 under the Exchange Act or
induce or attempt to induce any other Person to initiate any stockholder
proposal relating to the Company;
          (d) form, join, encourage the formation of, negotiate with,
intentionally provide any information to, or in any way participate in a 13D
Group of Persons acquiring, holding, voting or disposing of any voting
Securities which would be required under Section 13(d) of the Exchange Act and
the rules and regulations thereunder to file a statement on Schedule 13D with
the SEC as a “person” within the meaning of Section 13(d)(3) of the Exchange Act
(or any successor statute or regulation);
          (e) form, join, encourage the formation of, negotiate with,
intentionally provide any information to, or in any way participate in, any
Person or group which owns or seeks or offers to acquire beneficial ownership of
securities of the Company or rights to acquire such securities or for the
purpose of circumventing any provision of this Agreement;
          (f) except as otherwise provided in Section 1.5(b), make any proposal,
filing under the Exchange Act, or publicly announce its intention to make any
proposal, to the Company or any stockholder of the Company with respect to a
transaction which, in and of itself, and without regard to the Company’s
response, would reasonably be expected to require that (i) the Company publicly
announce its receipt of such proposal, or (ii) the Board consider alternative
strategic transactions;
          (g) seek the removal of any of the directors other than the Investor
Nominee;
          (h) call or seek to have called any meeting of the stockholders of the
Company; or
          (i) assist, instigate or encourage any third party to take any of the
actions enumerated in this Section 4.4.
ARTICLE V
TERM
     This Agreement shall become effective and enforceable immediately upon the
closing of the transactions set forth in the Acquisition Agreement (the
“Closing”), which shall be the date set forth above (the “Effective Date”).
Except as otherwise provided with respect to specific sections of this
Agreement, this Agreement shall terminate only upon the mutual agreement of the
Company and Investor. If this Agreement is terminated pursuant to this
Article V, all further obligations of each party hereto shall terminate without
further liability or obligation of such party to the other, including liability
for damages; provided, however, that no such termination shall relieve either
party hereto from any liability for any breach of this Agreement arising prior
to the termination date; provided, further, that the confidentiality provisions
set forth in Section 6.3 shall survive any termination of this Agreement.

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ARTICLE VI
MISCELLANEOUS
     6.1 Certain Definitions. Capitalized terms used in this Agreement have the
respective meanings set forth in Schedule 1.
     6.2 Interpretation. Unless otherwise indicated to the contrary in this
Agreement by the context or use thereof: (a) the words, “herein,” “hereto,”
“hereof” and words of similar import refer to this Agreement as a whole and not
to any particular Section, Article or paragraph hereof; (b) references in this
Agreement to Sections, Articles or paragraphs refer to sections, articles or
paragraphs of this Agreement; (c) headings of Sections are provided for
convenience only and shall not affect the construction or interpretation of this
Agreement; (d) words importing the masculine gender shall also include the
feminine and neutral genders, and vice versa; (e) words importing the singular
shall also include the plural, and vice versa; (f) the words “include”,
“includes” and “including” shall be deemed to be followed in each case by the
phrase “without limitation”; (g) any reference to a statute refers to the
statute, any amendments or successor legislation, and all regulations
promulgated under or implementing the statute, as in effect from time to time;
(h) any reference to an agreement, contract or other document as of a given date
means the agreement, contract or other document as amended, supplemented and
modified from time to time through such date; (i) “$” and “Dollars” mean the
lawful currency of the United States of America and any threshold set in Dollars
herein shall be deemed to refer to the equivalent amount in any other currency,
as the context may require; and (j) “or” shall include the meanings “either” or
“both.”
     6.3 Confidentiality. The Investor and the Company acknowledge that, in
connection with the operation of the Company and the performance of obligations
under this Agreement, each of the Investor and the Company (each, in such
capacity, a “Receiving Party”) has and will receive Confidential Information
from the other (each, in such capacity, a “Disclosing Party”). For purposes of
this Agreement, “Confidential Information” means (a) proprietary information
(whether owned by the Disclosing Party or a third party to whom the Disclosing
Party owes a non-disclosure obligation) or material non-public information
regarding the Disclosing Party’s business; and (b) information which is marked
as confidential at the time of disclosure to the Receiving Party or, if in oral
form, is identified as confidential at the time of oral disclosure and reduced
in writing or other tangible (including electronic) form including a prominent
confidentiality notice and delivered to the Receiving Party within thirty
(30) days of disclosure. Notwithstanding the foregoing, Confidential Information
shall not include information which: (i) was known to the Receiving Party, other
than through prior receipt from the Disclosing Party, at the time of the
disclosure by the Disclosing Party; (ii) has become publicly known through no
wrongful act of the Receiving Party; (iii) has rightfully been received by the
Receiving Party from a third party without a duty of nondisclosure; or (iv) has
been independently developed by the Receiving Party. The Receiving Party agrees
not to disclose any such Confidential Information, except (A) to its employees
who are reasonably required to have the Confidential Information in connection
with the business of the Company or this Agreement; (B) to its agents,
representatives, lawyers and other advisers that have a need to know such
Confidential Information; and (C) pursuant to, and to the extent of, a request
or order by a Governmental Authority or as required by the rules of any
applicable securities exchange (the Persons to whom such disclosure is
permissible pursuant to clauses (A) and (B) being collectively referred to
herein as the “Representatives”); provided, that the Receiving Party’s
Representatives (i) are informed of the confidential and proprietary nature of
the information and (ii) agree to be bound by and perform under the terms of
this Section 6.3 or are otherwise so bound by applicable rules of professional
conduct. Each Receiving Party agrees to take all reasonable measures to protect
the secrecy and confidentiality of, and avoid disclosure or unauthorized use of,
each Disclosing Party’s Confidential Information. The Receiving Party agrees to
be responsible for any breach of this Section 6.3 by its Representatives. The
Company acknowledges and agrees that the foregoing undertakings are sufficient
to permit the Company to make the disclosures required to be made to the
Investor pursuant to Section 1.5(b).

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     6.4 Affiliates. During the Standstill Period, Investor shall cause its
Affiliates to comply with the terms of Sections 4.1 and 4.4 of this Agreement.
During the Standstill Period, at any time that an Affiliate of Investor becomes
a stockholder of the Company, such Affiliate shall agree in writing to be bound
by the terms of this Agreement and, thereafter, Investor shall cause such
Affiliate to comply with all other terms set forth in this Agreement.
     6.5 No Inconsistent Agreements. During the Standstill Period, Investor
agrees not to grant any proxies or enter into any voting agreement or
arrangement with any Person that would be inconsistent with the provisions of
this Agreement or that would result in any voting Securities attributable to
Investor being voted in any manner inconsistent with the provisions of this
Agreement. Nothing contained herein shall be deemed to limit or otherwise affect
any obligations of the Company or Investor under the Acquisition Agreement.
     6.6 Representations and Warranties of Investor. Investor represents and
warrants to the Company as follows:
          (a) Investor is a corporation duly organized and validly existing
under the laws of Japan.
          (b) Investor has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated to be performed by it hereby. The execution, delivery and
performance by Investor of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Investor. No approval of Investor’s stockholders
is required in connection with Investor’s execution, delivery and performance of
this Agreement and the consummation by Investor of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Investor and,
assuming the due authorization, execution and delivery of this Agreement by the
Company, constitutes the legal, valid and binding agreement of Investor
enforceable against it in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application which may affect the enforcement of creditors’
rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

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          (c) The execution and delivery of this Agreement by Investor do not
conflict with any agreement, order or other instrument binding upon it, nor
require any regulatory filing or approval.
     6.7 Representations and Warranties of the Company. The Company represents
and warrants to Investor as follows:
          (a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
          (b) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated to be performed by it hereby. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Investor, constitutes the legal,
valid and binding agreement of the Company enforceable against it in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application which
may affect the enforcement of creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
          (c) The execution and delivery of this Agreement by the Company do not
conflict with any agreement, order or other instrument binding upon it, nor
require any regulatory filing or approval.
     6.8 Further Assurances. Each party hereto shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of its obligations under this Agreement. Without limiting the generality of the
foregoing, neither party hereto shall enter into any agreement or arrangement
(or alter, amend or terminate any existing agreement or arrangement) if such
action would materially impair the ability of such party to effectuate, carry
out or comply with all the terms of this Agreement.
     6.9 No Assignment or Transfer. Neither party shall, or shall have the right
to, assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, by operation of law or otherwise, this Agreement
or any of its rights or obligations under this Agreement without the prior
written consent of the other party; provided, that Investor may assign its
registration rights under Article III hereof in connection with any permitted
transfer of Issued Shares. Except as expressly provided herein, any purported
assignment, sale, transfer, sublicense, delegation or other disposition by
either party shall be null and void.
     6.10 Injunctive Relief. Each party hereto acknowledges that its breach of
its obligations under this Agreement would cause the other party irreparable
damage. Accordingly, the parties agree that in the event of such breach or
threatened breach, in addition to remedies at law, the non-breaching party shall
have the right to injunctive or other equitable relief, including specific
performance of the terms and provisions hereof, without the necessity of posting
any bond or other security, to prevent the other party’s violations of its
obligations hereunder.

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     6.11 Severability. If any provision of this Agreement, or the application
thereof to any Person, place or circumstance, are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, such provision
shall be enforced to the maximum extent possible so as to effect the intent of
the parties, or, if incapable of such enforcement, shall be deemed to be deleted
from this Agreement, and the remainder of this Agreement and such provisions as
applied to other Persons, places and circumstances shall remain in full force
and effect and, in such event, the parties shall negotiate in good faith in an
attempt to agree to another provision (in lieu of the term or application held
to be invalid or unenforceable) that will be valid and enforceable and will
carry out the parties’ intentions hereunder.
     6.12 Waivers. The waiver by a party of a breach of or a default under any
provision of this Agreement, shall not be effective unless such waiver is in
writing, expressly states that is a waiver hereunder, and identifies the breach
or default to be waived. No waiver hereunder shall, in any event, be construed
as a waiver of any subsequent breach of, or default under, the same or any other
provision of this Agreement, nor shall any delay or omission on the part of a
party in exercising or availing itself of any right or remedy, or any course of
dealing hereunder, operate as a waiver of any right or remedy.
     6.13 Amendments. This Agreement may be amended only by written document,
expressly stating that it is an amendment to this Agreement, identifying the
provisions of this Agreement to be amended, and duly executed on behalf of each
of the parties hereto. No delay or omission on the part of a party in exercising
or availing itself of any right or remedy, or any course of dealing hereunder,
operate as an amendment with respect to any provision hereof.
     6.14 Governing Law. This Agreement is to be construed in accordance with
and governed by the internal laws of the State of Delaware without giving effect
to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of Delaware to the rights
and duties of the parties.
     6.15 Consent to Jurisdiction.
          (a) The Investor and the Company irrevocably submit, to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware, for the purposes
of any suit, action or other proceeding arising out of this Agreement (and each
agrees that no such action, suit or proceeding relating to this Agreement shall
be brought by it or any of its affiliates except in such courts). The Investor
and the Company irrevocably and unconditionally waive (and agrees not to plead
or claim) any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement in such courts or that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
          (b) The Investor and the Company further agree that service of any
process, summons, notice or document by U.S. registered mail to such person’s
respective address set forth above shall be effective service of process for any
action, suit or proceeding in the state and federal courts located in the State
of Delaware, with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding clause (a). In
addition, the Investor and the Company irrevocably and unconditionally waive
application of the procedures for service of process pursuant to the Hague
Convention for Service Abroad of Judicial and Extrajudicial Documents in Civil
or Commercial Matters.

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          (c) EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
     6.16 Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney’s fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
     6.17 Independent Contractors. Each party is an independent contractor and
neither party’s personnel are employees or agents of the other party for
federal, state or other taxes or any other purposes whatsoever, and are not
entitled to compensation or benefits of the other. Except for the specific
obligations set forth in this Agreement, nothing hereunder shall be deemed to
constitute, create, give effect to or otherwise recognize a joint venture,
partnership or business entity of any kind, nor shall anything in this Agreement
be deemed to constitute either party the agent or representative of the other.
     6.18 No Third-Party Beneficiaries. Nothing expressed or referred to in this
Agreement confers any rights or remedies upon any Person that is not a party or
permitted assign of a party to this Agreement.
     6.19 Notices. All notices and other communications under this Agreement
(including notice of, and any stockholder communications relating to, any annual
or special stockholders’ meeting held or otherwise conducted to which
Section 4.3 applies, which notice and communications Imation shall deliver to
the Investor at the address set forth below) shall be in writing and shall be
deemed given (i) when delivered by hand or upon confirmed receipt of a facsimile
transmission, (ii) when received if sent by an internationally recognized
overnight courier service (receipt requested), or (iii) ten (10) Business Days
after mailing, postage prepaid, by register or certified mail, return receipt
requested, to the below address or such other addresses as a party shall specify
in a written notice to the other provided as contemplated herein.

     
To the Company:
  To the Investor:
 
   
Imation Corp.
  TDK Corporation
1 Imation Place
  13-1 Nihonbashi 1-chome
Oakdale, Minnesota 55128
  Chuo-ku, Tokyo 103-8272
USA
  Japan
Attn: General Counsel
  Attn: Seiji Osaka
Fax: (651) 704-4412
  Fax: (813) 5201-7114

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With a copy (which shall not
constitute notice) to:
  With a copy (which shall not
constitute notice) to:
 
   
Dorsey & Whitney
  Morrison Foerster
3008 One Pacific Place
  AIG Building, 11/F
88 Queensway
  1-3, Marunouchi 1-chome
Hong Kong SAR, China
  Chiyoda-ku, Tokyo 100-0005
 
  Japan
Attn: Steven C. Nelson, Esq.
  Attn: Ken Siegel, Esq.
Fax: (852) 2524 3000
  Fax: (81) 3 3214- 6512

Any Express Notice sent by the Company to the Investor shall be in the form of
attached Schedule 2 and shall be sent, separately from any other notice of, and
any other stockholder communications relating to, any annual or special
stockholders’ meeting as described above, to the Investor at the below address
or such other addresses as the Investor may specify from time to time in a
written notice to the Company provided as contemplated herein.

     
To the Investor:
  With a copy (which shall not constitute
notice) to:
 
   
TDK Corporation
  Morrison Foerster
General Manager, Legal Department
  AIG Building, 11/F
13-1 Nihonbashi 1-chome
  1-3, Marunouchi 1-chome
Chuo-ku, Tokyo 103-8272
  Chiyoda-ku, Tokyo 100-0005
Japan
  Japan
Attn: Eiichi Shimomura
  Attn: Ken Siegel, Esq.
Fax: (81) 3 5201-7110
  Fax: (81) 3 3214- 6512

     6.20 Entire Agreement. This Agreement (including the Exhibits attached
hereto, which are incorporated herein by reference) constitutes the entire
agreement of the parties hereto with respect to its subject matter. This
Agreement supersedes all previous, contemporaneous and inconsistent agreements,
negotiations, representations and promises between the parties, written or oral,
regarding the subject matter hereunder. There are no oral or written collateral
representations, agreements or understandings except as provided herein.
     6.21 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of page left intentionally blank.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

            COMPANY:

Imation Corp.
      By:   /s/ John L. Sullivan         Name:   John L. Sullivan       
Title:   Senior Vice President, General Counsel and Corporate Secretary       
INVESTOR:

TDK Corporation
      By:   /s/ Shiro Nomi         Name:   Shiro Nomi        Title:   Senior
Vice President     

Signature page to the
Investor Rights Agreement

 

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SCHEDULE 1
DEFINITIONS
     “13D Group” means any partnership, syndicate or other group, as those terms
are used within the meaning of Section 13(d)(3) of the Exchange Act.
     “Acquisition Agreement” has the meaning set forth in the Recitals.
     “Additional Securities” has the meaning set forth in Section 2.1(a).
     “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the ability
to elect the majority of the members of the board of directors or other
governing body of a Person, and the terms “controlled” and “controlling” have
correlative meanings.
     “Agreement” has the meaning set forth in the Recitals.
     “Associate” has the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
     “Beneficial Owner” or “beneficial ownership” shall have the meaning set
forth in the Share Rights Plan.
     “Board” has the meaning set forth in Section 1.1.
     “Board Qualifications” has the meaning set forth in Section 1.1.
     “Business Day” means any day, other than weekends, on which commercial
banks in both New York City and Tokyo, Japan are open for business.
     “Change of Control” has the meaning set forth in Section 1.5(c).
     “Closing” has the meaning set forth in Article V.
     “Common Stock” has the meaning set forth in the Recitals.
     “Company” has the meaning set forth in the Recitals.
     “Confidential Information” has the meaning set forth in Section 6.3.
     “Consent” means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, certificate, exemption, order,
registration, declaration, filing, report or notice of, with or to any Person.
     “Demand Registration Request” has the meaning set forth in
Section 3.1(a)(i).

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     “Disclosing Party” has the meaning set forth in Section 6.3.
     “Effective Date” has the meaning set forth in Article V.
     “Equity Interest” means, as to the Investor, a percentage represented by
the fraction, (a) the numerator of which is the sum of (i) the number of shares
of Common Stock then held by the Investor and (ii) the number of shares of
Common Stock that the Investor would hold upon the conversion or exercise of all
Securities held by the Investor, and (b) the denominator of which is the number
of shares of Common Stock outstanding on a Fully Diluted Basis.
     “Exchange Act” shall mean the United States Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement.
     “Exempted Securities” means the (i) issuance of Securities pursuant to any
equity compensation plan or employee stock purchase plan adopted by the Company
from time to time, and as may be amended from time to time, and the issuance of
shares of Common Stock underlying any such Securities; (ii) issuance of shares
of Common Stock upon exercise of any option, rights, warrants or other
convertible instruments which either existed as of the Closing or the issuance
of which was previously subject to preemptive rights; (iii) issuance of shares
of Common Stock in connection with a share dividend, share split or similar
event made or paid pro rata on all, and solely with respect to, shares of Common
Stock; and (iv) issuance of shares of Series A Junior Participating Preferred
Stock in accordance with the terms of the Share Rights Plan.
     “Forfeiture Date” has the meaning set forth in Section 1.1.
     “Fully Diluted Basis” means the sum of (i) the number of issued and
outstanding shares of Common Stock at the relevant time, plus (ii) the number of
shares of Common Stock to be issued or acquired upon exercise or conversion of
any Securities convertible into shares of Common Stock on the then-effective
terms and conditions.
     “Governmental Approval” means any Consent of any Governmental Authority.
     “Governmental Authority” means any nation or government, any state or other
political subdivision thereof; any entity, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any government authority, agency,
department, board, commission or instrumentality of any nation or any political
subdivision thereof; any court, tribunal or arbitrator; and any self-regulatory
organization; and any securities exchange or quotation system.
     “Initial Share Number” means the aggregate number of Initial Shares.
     “Initial Shares” means (a) the Issued Shares and (b) any shares of Common
Stock acquired by the Investor in open-market purchases prior to and held at
Closing or during the 180-day period following the Closing.
     “Investor” has the meaning set forth in the Recitals.

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     “Investor Nominee” has the meaning set forth in Section 1.1.
     “Investor Threshold” has the meaning set forth in Section 4.1(b).
     “Issued Shares” means the shares of Common Stock issued by Imation to TDK
or an Affiliate of TDK at the Closing.
     “Lock-Up Period” has the meaning set forth in Section 4.2(a).
     “Nomination Forfeiture Event” has the meaning set forth in Section 1.4.
     “Person” means any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Authority or other
entity.
     “Preemptive Rights” has the meaning set forth in Section 2.1(a).
     “Preemptive Share Amount” has the meaning set forth in Section 2.1(c).
     “Proposed Registration” has the meaning set forth in Section 3.1(b)(i).
     “Proposed Transaction” has the meaning set forth in Section 1.5.
     “Public Disclosure” means disclosure in an annual report on Form 10-K, a
quarterly report on Form 10-Q, or any securities registration statement, in each
case publicly filed with the SEC and available on the SEC’s EDGAR database.
     “Purchase Price” has the meaning set forth in Section 2.1(d).
     “Receiving Party” has the meaning set forth in Section 6.1.
     “Registrable Securities” has the meaning set forth in Section 3.1(a)(i). As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) they have been distributed to the public
pursuant to an offering registered under the Securities Act, (ii) they have been
sold to the public through a broker, dealer or market maker in compliance with
Rule 144 under the Securities Act (or any similar rule then in force) or
(iii) at the time of any Demand Registration Request or Proposed Registration
they, together with all other Registrable Securities held by the holder thereof,
have satisfied the two-year holding period required by paragraph (k) of Rule 144
under the Securities Act and are legally permitted to be publicly sold without
registration with the SEC pursuant to paragraph (k) of Rule 144.
     “Revised Proposal” has the meaning set forth in Section 1.5.
     “Rights Plan Amendment” has the meaning set forth in Section 4.1(d).
     “SEC” means the United States Securities and Exchange Commission.
     “Securities” means, as to the Company, any shares of Common Stock or
preferred stock and any securities which are convertible into, or any option or
right to subscribe for or acquire, any shares of Common Stock or preferred stock
of the Company.

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     “Securities Act” means the United States Securities Act of 1933.
     “Share Rights Plan” means the Rights Agreement, dated as of June 21, 2006,
between the Company and The Bank of New York, a New York banking association,
including the exhibits thereto.
     “Standstill Period” has the meaning set forth in Section 4.1.
     “Standstill Threshold” has the meaning set forth in Section 4.1(a).
     “Trademark License” has the meaning set forth in Section 1.4(c).

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SCHEDULE 2
FORM OF EXPRESS NOTICE
[Imation Letterhead]
URGENT
TDK Corporation
Legal Department
13-1 Nihonbashi 1-chome
Chuo-ku, Tokyo 103-8272
Japan
Attn: Eiichi Shimomura

Re:   Notice of Required Vote of Securities of Imation Corp. in Accordance With
the Investor Rights Agreement between Imation and TDK

Dear Sirs,
Pursuant to Sections 1.4(d) and 6.19 of the Investor Rights Agreement (the
“IRA”), dated July 31, 2007, by and between TDK Corporation (“TDK”) and Imation
Corp. (“Imation”), this letter is to inform TDK that certain important matters
will be voted on in Imation’s upcoming [special][annual] stockholders’ meeting
scheduled to be conducted on                     , 2                    .
A proxy statement, proxy card, and a description of the measures in question
will be sent under separate cover for your review.
The specific proposals which Imation’s board of directors requests your vote in
accordance with the board’s recommendations are as follows:

                      Proposal:       Imation board of directors                
recommendation    
1.
               
 
 
 
     
 
   
 
               
2.
               
 
 
 
     
 
   

Note that you are contractually required by the IRA to vote in accordance with
the Imation board recommendations above, and TDK may lose important rights if
you fail to do so.
If you have any questions in regards to this matter, please contact the General
Counsel of Imation at (                    )
                    -                    .

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SCHEDULE 3
RIGHTS PLAN AMENDMENT

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FIRST AMENDMENT TO RIGHTS AGREEMENT
     This Amendment (this “Amendment”) is made as of ___, 2007 between Imation
Corp., a Delaware corporation (the “Company”), and The Bank of New York, a New
York banking corporation, as rights agent (the “Rights Agent”), to the Rights
Agreement dated as of June 21, 2006 between the Company and the Rights Agent
(the “Original Agreement”).
     WHEREAS, the Company and the Rights Agent have entered into the Original
Agreement; and
     WHEREAS, the Board of Directors of the Company has determined to amend the
Original Agreement in accordance with Section 27 thereof and hereby directs the
Rights Agent to execute this Amendment.
     Accordingly, the parties hereby agree as follows:
     1. Section 1(a) of the Original Agreement is hereby amended in its entirety
to read as follows:
     (a) “Acquiring Person” shall mean any Person (as such term is defined in
this Agreement) who or which, together with all Affiliates and Associates (as
such terms are defined in this Agreement) of such Person, shall be the
Beneficial Owner (as such term is defined in this Agreement) of fifteen percent
(15%) or more of the shares of Common Stock then outstanding, but shall not
include:
     (i) the Company,
     (ii) any Subsidiary of the Company,
     (iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the terms of any
such plan,
     (iv) any Person who, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of fifteen percent (15%) or more of the
shares of Common Stock then outstanding as a result of a reduction in the number
of shares of Common Stock outstanding due to the repurchase of shares of Common
Stock by the Company unless and until such Person, after becoming aware that
such Person has become the Beneficial Owner of fifteen percent (15%) or more of
the then outstanding shares of Common Stock, acquires beneficial ownership of
any additional shares of Common Stock which would render such Person, together
with all Affiliates and Associates of such Person, the Beneficial Owner of
fifteen percent (15%) or more of the shares of Common Stock then outstanding,
     (v) any Person who, on or prior to the Rights Dividend Declaration Date,
has disclosed in a Schedule 13D or Schedule 13G statement on file with the
Securities and Exchange Commission as of the Rights Dividend Declaration Date
that such Person, together with all Affiliates

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and Associates of such Person, is the Beneficial Owner of fifteen percent (15%)
or more of the shares of Common Stock then outstanding, unless such Person
acquires beneficial ownership of shares of Common Stock in addition to those
disclosed in such Schedule 13D or Schedule 13G statement which would render such
Person, together with all Affiliates and Associates of such Person, the
Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock
then outstanding,
     (vi) any Person who becomes the Beneficial Owner of fifteen percent (15%)
or more of the shares of Common Stock of the Company then outstanding as a
result of the direct or indirect acquisition, by way of merger, stock purchase,
asset purchase or otherwise, of another Person or Persons who “beneficially
owns” shares of Common Stock, provided the Common Stock of the Company is not
the primary asset of such other Person or Persons, such acquisition is made
without any intention of changing or influencing control of the Company, and the
Person, after becoming aware that such Person has become the “beneficial owner”
of fifteen percent (15%) or more of the then outstanding shares of Common Stock,
does not acquire “beneficial ownership” of any additional shares of Common Stock
which would render such Person, together with all Affiliates and Associates of
such Person, the Beneficial Owner of fifteen percent (15%) or more of the shares
of Common Stock then outstanding, or
     (vii) TDK Corporation (“TDK”) and its Affiliates at any time during the
period (the “TDK Standstill Period”) beginning at the time, if any, at which the
Company shall have issued to TDK and its Affiliates shares of Common Stock
representing in the aggregate fifteen percent (15%) or more of the shares of
Common Stock outstanding immediately following such initial issuance and ending
at the time, if any, at which TDK and its Affiliates shall have (A) ceased, as a
result of voluntary sales of shares of Common Stock by any of them, to be the
holders of record, in the aggregate, of at least that number of shares of Common
Stock that shall be equal to seventy-five percent (75%) of the sum of (1) the
number of shares of Common Stock so issued plus (2) any additional shares of
Common Stock acquired by TDK and its Affiliates prior to and held at the date of
such initial issuance or acquired during the 180-day period following the date
of such initial issuance, or (B) ceased, as a result of the subsequent issuance
by the Company of additional shares of Common Stock, to be the holders of record
of at least ten percent (10%) of the Common Stock outstanding immediately
following such subsequent issuance if, but only if, TDK and its Affiliates would
have continued to hold at least ten percent (10%) of the outstanding Common
Stock following such subsequent issuance but for a failure of TDK to exercise
any rights it may have had to subscribe for any of such additional shares;
provided, that, if TDK shall, at any time during the said TDK Standstill Period,
have become the Beneficial Owner either (x) of more than twenty-one percent
(21%) of the Common Stock then outstanding other than as a result of a reduction
in the number of shares of Common Stock outstanding due to the repurchase of
shares of Common Stock by the Company, or (y) of more than twenty-two percent
(22%) of the Common Stock then outstanding as a result of a reduction in the
number of shares of Common Stock outstanding due to the repurchase of shares of
Common Stock by the Company, then, in either such event, TDK and its Affiliates
shall have refrained, from and after becoming aware

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that the applicable percentage has been surpassed, from acquiring beneficial
ownership of any additional shares of Common Stock and, within ten (10) Business
Days after becoming aware that the applicable percentage has been surpassed,
shall have disposed of a sufficient number of shares of Common Stock such that
TDK shall be the Beneficial Owner of no more than twenty-one percent (21%) of
the shares of Common Stock then outstanding.
A Person other than the Company or any Subsidiary of the Company holding shares
of Common Stock for or pursuant to the terms of an employee benefit plan of the
Company or of any Subsidiary of the Company and in addition being the Beneficial
Owner of shares of Common Stock that are not held for or pursuant to the terms
of any such plan shall be deemed to constitute an Acquiring Person,
notwithstanding anything herein stated, if, but only if, it, together with its
Affiliates and Associates, shall be the Beneficial Owner of fifteen percent
(15%) or more, exclusive of those shares of Common Stock held by it for or
pursuant to the terms of any such plan, of the shares of Common Stock then
outstanding.
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be deemed an
“Acquiring Person” pursuant to the foregoing provisions of this paragraph
(a) has become such inadvertently (including, without limitation, because
(A) such Person was unaware that it beneficially owned a percentage of the
shares of Common Stock that would otherwise cause such Person to be an
“Acquiring Person” or (B) such Person was aware of the extent of its Beneficial
Ownership but had no actual knowledge of the consequences of such Beneficial
Ownership under this Agreement), and without any intention of changing or
influencing control of the Company, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be deemed an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an “Acquiring Person” for any purposes of this Agreement.
     2. Section 18 of the Original Agreement is hereby amended by adding the
following sentence at the end of that Section:
“Anything to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, punitive, indirect, consequential or incidental loss or
damage of any kind whatsoever (including but no limited to lost profits), even
if the Rights Agent has been advised of the likelihood of such loss or damage.”
     3. By its execution and delivery hereof, the Company states that this
Amendment is in compliance with the terms of Section 27 of the Original
Agreement and directs the Rights Agent to execute this Amendment.
     4. The Original Agreement shall remain in full force and effect without
amendment, except for this Amendment and any other amendment made in accordance
with Section 27 of the Original Agreement. All terms used in this Amendment that
are defined in the Original Agreement but are not defined herein shall have the
meanings ascribed to them in the Original Agreement. The Summary of Rights
contained in Exhibit C

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to the Original Agreement is a summary of the Original Agreement without regard
to this Amendment and does not limit or affect this Amendment in any way. All
references in the Original Agreement to “this Agreement,” “the Agreement,” or
“hereof” and all references in this Amendment to the Agreement shall hereafter
be deemed to be references to the Original Agreement as amended by this
Amendment and any other amendment made in accordance with Section 27 of the
Original Agreement.
     5. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State; provided, however, that the rights,
obligations and duties of the Rights Agent hereunder shall be governed by and
construed in accordance with the laws of the State of New York.
     IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first written above.

                  IMATION CORP.    
 
           
 
  By        
 
           
 
  Its        
 
           
 
                THE BANK OF NEW YORK    
 
           
 
  By        
 
           
 
  Its        
 
           

S3-5