OAKDALE, Minn. (March 10, 1997) -- Imation Corp. (NYSE: IMN), the new imaging and information company recently spun off from 3M, today announced a joint development and business agreement with TeraStor Corporation (San Jose, Calif.) to develop media for a new class of rewritable mass storage based on TeraStor's breakthrough Near Field Recording technology.

The agreement provides Imation with a semi-exclusive and long-term license to manufacture based on the new technology. The first products using this technology are expected to feature user capacities of approximately 20 GB with performance comparable to hard disk drives. Product introduction is targeted for the first half of 1998.

According to Imation officials, Near Field Recording technology creates a new category of multi-purpose mass storage technology, leveraging a unique combination of hard disk and optical technologies.

This new class of storage technology should provide end users with significant improvements in performance, a sustainable 10-fold capacity advantage, and a lower cost-per-gigabyte than current storage options -- including hard disk, magnetic tape, and optical disc solutions, company officials added.

TeraStor first disclosed its development of Near Field Recording technology in an announcement on March 3.

"The unique design and performance characteristics of Near Field Recording technology truly make it a new category of mass data storage technology," said Phil Devin, vice president and chief storage analyst, Dataquest. "If the companies behind this implementation can rapidly commercialize Near Field Recording technology, they could change the landscape of the storage industry."

"From day one, Imation's strategy has been to deliver high-value customer solutions that leverage our core competencies in imaging and information storage technology," said Bill Monahan, chairman and chief executive officer, Imation Corp. "As a result of our participation in the development and commercialization of Near Field Recording technology, we are well positioned to develop and market globally a total solution that enhances our customers' ability to create, transmit, manage and store digital content."

According to Monahan, the anticipated capacity and performance characteristics of Near Field Recording technology would make it the ideal solution for business customers who manage local area and enterprise networks connecting end users of PCs and workstations. At the same time, the technology should be competitive with other solutions for the desktop user.

Imation expects to announce more details about Near Field Recording media later this year.

"Imation's position as a worldwide leader in the development and marketing of removable data storage media makes it a natural partner for this revolutionary implementation," said Jim McCoy, founder and chief executive officer, TeraStor Corporation. "In addition to its research and manufacturing capability, both parties are expected to benefit from Imation's relationships with OEMs, value added resellers and systems integrators for media, drives and automated solutions."

According to McCoy, Near Field Recording technology will become the new benchmark for rewritable storage because of its high capacity and hard disk-like performance. This technology advantage would be sustainable and benefit from known improvements in Near Field Recording, as well as from developments in standard component technologies such as magnetic heads and lasers, McCoy added.

Leveraging Imaging and Information Storage Competencies, Market Position

According to Michael Stevens, director, Imation Optical Storage Solutions, Imation's imaging customers in the printing, publishing, graphic arts, medical imaging and photographic markets -- as well as its traditional end user customer base of IT professionals and data center managers -- stand to benefit from this new technology.

"Near Field Recording technology offers Imation an opportunity to meet the storage, archiving and image management needs of a broader range of customers than ever before," said Stevens. "In each of our imaging businesses, the explosion in networked computing and use of color has dramatically increased the need for high-capacity removable digital storage media. Imation's intent is to develop a total, integrated solution that addresses a broad application range of customer needs worldwide."

About Near Field Recording Technology

TeraStor engineers have combined a significant patent portfolio of technology advancements that result in its Near Field Recording architecture, including:

• Flying Head: A modified version of the flying read/write head normally found in conventional hard disk drives. The TeraStor flying head is modified to include optical elements as well as a magnetic coil. The head flies at a controlled distance over the recording media, thus eliminating the cost of a servo system for focus.
  
• Solid Immersion Lens (SIL): The SIL is the optical element in the flying head that is closest to the recording media. The SIL significantly reduces the magnetic bit cell size as compared to conventional technologies, thus enabling increased recording density.
  
• First Surface Recording: This refers to the placement of the hardened magnetic recording material on the surface of the substrate, and then recording on that "first" surface. It enables the use of lower cost substrates and the achievement of higher areal densities.
  

TeraStor Background

TeraStor was founded in December 1995 by industry veterans Jim McCoy, co-founder of Quantum, Maxtor and Maxoptix, Gordon Knight, co-founder of Maxoptix and Optimen, and Bill Dobbin, Maxtor's founding chief financial officer.

To date, the company has raised more than $30 million in venture funding from a group of investors that include Vulcan Northwest (the investment firm of Microsoft co-founder Paul Allen), Information Technology Ventures, Charter Venture Capital, Venture Law Group, Quantum Corporation and TeraStor founders.

Imation Corp. supplies a variety of products and services worldwide for the imaging and information industry, and is the world's leading manufacturer and marketer of branded removable data storage media for computing applications. The company generated revenues of approximately $2.3 billion in 1996. Imation employs 9,400 people and is based in Oakdale, Minn.

Copyright 1996 Imation. All rights reserved.