20
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended December 25, 1993
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 0-14016
MAXTOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 770123732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
211 River Oaks Parkway, San Jose, CA 95134
(Address of principal executive offices) (Zip Code)
(408) 432-1700
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
29,616,333 shares of Common Stock were issued and outstanding as of February
4, 1994
This quarterly report on Form 10-Q contains 112 pages of which this is page
number 1.
MAXTOR CORPORATION
FORM 10-Q
December 25, 1993
INDEX
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Income (Loss)-
Three Months and Nine Months Ended
December 25, 1993 and December 26, 1992 3
Consolidated Balance Sheets-
December 25, 1993 and March 27, 1993 4-5
Consolidated Statements of Cash Flows-
Nine Months Ended December 25, 1993
and December 26, 1992 6-7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-18
Part II. Other Information
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Stockholders 19
Item 6. Exhibits and Reports on Form 8-K 20
Signature Page 21
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
Revenue $ 318,098 $ 402,614 $ 892,218 $ 1,096,979
Cost of revenue 302,856 321,871 905,438 849,351
________ ________ ________ _________
Gross margin 15,242 80,743 (13,220) 247,628
Operating expenses:
Research and development 25,751 29,609 83,111 83,386
Selling, general and
administrative 19,849 26,472 60,086 76,825
Restructuring 88,375 - 88,375 -
________ ________ ________ _________
Total operating expenses 133,975 56,081 231,572 160,211
________ ________ ________ _________
Income (loss) from
operations (118,733) 24,662 (244,792) 87,417
Interest expense (2,228) (1,981) (8,070) (7,904)
Interest income 156 607 1,255 1,764
Minority interest in
loss of joint venture - - - 1,014
________ ________ ________ _________
Income (loss) before
income taxes (120,805) 23,288 (251,607) 82,291
Provision for income taxes 500 4,658 1,500 16,487
________ ________ ________ _________
Net income (loss) $ (121,305) $ 18,630 $(253,107) $ 65,804
======== ======== ======== =========
Net income (loss) per share
-primary $ (4.12) $ 0.61 $ (8.65) $ 2.22
======= ====== ======= ======
-fully diluted $ (4.12) $ 0.59 $ (8.65) $ 2.12
======= ====== ======= ======
Shares used in computing net
income (loss) per share
-primary 29,474 30,396 29,255 29,664
====== ====== ====== ======
-fully diluted 29,474 32,904 29,255 32,218
====== ====== ====== ======
See accompanying notes.
MAXTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec. 25, March 27,
1993 1993
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 102,097 $ 135,324
Accounts receivable, net of
allowance for doubtful accounts
of $3,280 at December 25, 1993
and $4,190 at March 27, 1993 100,924 149,397
Inventories:
Raw materials 42,832 77,039
Work-in-process 24,152 32,650
Finished goods 18,173 45,654
_______ _______
85,157 155,343
Prepaid expenses and other 9,777 10,675
_______ _______
Total current assets 297,955 450,739
Property, plant and equipment, at cost:
Buildings 21,264 8,585
Machinery and equipment 198,735 204,090
Furniture and fixtures 18,235 19,214
Leasehold improvements 18,347 17,940
_______ _______
256,581 249,829
Less accumulated depreciation and
amortization (186,705) (130,713)
_______ _______
Net property, plant and equipment 69,876 119,116
Other assets 7,965 9,258
_______ _______
$ 375,796 $ 579,113
======= =======
See accompanying notes.
MAXTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Continued)
Dec. 25, March 27,
1993 1993
(Unaudited) (Audited)
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Note payable to bank $ 40,182 $ 33,000
Accounts payable 131,755 130,192
Income taxes payable 6,904 4,664
Accrued payroll and payroll-
related expenses 14,447 16,516
Accrued warranty 22,203 16,089
Accrued restructuring 53,959 -
Accrued expenses 22,460 21,753
Long-term debt and capital lease
obligations due within one year 4,316 16,373
________ ________
Total current liabilities 296,226 238,587
Long-term debt and capital lease
obligations due after one year 108,304 119,868
Deferred tax liabilities 1,000 1,000
Minority interest - -
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $0.01 par
value, 5,000,000 shares
authorized; no shares issued
or outstanding - -
Common stock, $0.01 par value,
200,000,000 shares authorized;
issued and outstanding: Dec. 25,
1993 - 29,582,188 shares; March 27,
1993 - 28,809,277 shares 296 288
Additional paid-in capital 167,413 163,747
Retained earnings (deficit) (197,267) 55,840
________ ________
(29,558) 219,875
Less notes receivable from
stockholders (176) (217)
________ ________
Total stockholders' equity
(deficit) (29,734) 219,658
________ ________
$ 375,796 $ 579,113
======== ========
See accompanying notes.
MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Nine Months Ended
Dec. 25, Dec. 26,
1993 1992
Cash flows from operating activities:
Net income (loss) $ (253,107) $ 65,804
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 54,966 42,862
Non-cash restructuring 34,416 -
Change in non-current deferred tax
liabilities - 11,070
Minority interest in loss of joint venture - (1,023)
Loss on disposal of property, plant and
equipment 1,327 1,563
Change in current assets and liabilities:
Accounts receivable 48,473 (24,231)
Inventories 54,867 (58,966)
Prepaid expenses and other 898 (3,386)
Accounts payable 1,563 28,887
Income taxes payable 2,240 2,713
Accrued payroll and payroll-related
expenses (2,069) (279)
Accrued warranty 6,114 (386)
Accrued expenses 707 9,594
Accrued restructuring 53,959 -
_______ ______
Total adjustments 257,461 8,418
_______ ______
Net cash provided by operating activities 4,354 74,222
Cash flows from investing activities:
Proceeds from sale of subsidiary - 17,400
Net book value of certain of the assets sold
associated with sale of subsidiary, net
of costs - (12,735)
Purchase of property, plant and equipment, (26,109) (71,738)
Proceeds from disposal of property, plant
and equipment 940 1,477
Other assets 312 (4,327)
_______ _______
Net cash used in investing activities (24,857) (69,923)
Cash flows from financing activities:
Proceeds from issuance of note payable to
bank, net 7,182 -
Proceeds from issuance of debt 5,810 22,827
Principal payments of debt (28,563) (13,005)
Principal payments under capital lease
obligations (868) (1,759)
Proceeds from issuance of common stock, net of
notes receivable and stock repurchases 3,715 14,961
_______ _______
Net cash provided by (used in) financing
activities (12,724) 23,024
_______ _______
Net change in cash and cash equivalents (33,227) 27,323
Cash and cash equivalents at beginning of
period 135,324 75,859
_______ _______
Cash and cash equivalents at end of period $ 102,097 $ 103,182
======= =======
Supplemental disclosures of cash flow information:
(In thousands) Nine Months Ended
Dec. 25, Dec. 26,
1993 1992
Cash paid (received) for: (Unaudited)
Interest $ 6,771 $ 2,074
Income taxes 1,142 4,547
Income tax refunds (1,824) (185)
Supplemental information on non-cash investing and financing activities:
Capital lease obligations approximating $115,000 and $336,000 were incurred
during the nine month periods ended December 25, 1993 and December 26, 1992,
respectively.
MAXTOR CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
1. HYUNDAI INVESTMENT
The accompanying consolidated financial statements do not include the
transaction described below. The impact of this transaction, an increase of
$150 million in the Company's cash and net worth, will be recorded in the
fourth quarter of fiscal year 1994.
In August 1993, the Company signed a letter of intent for the creation of a
strategic relationship with Hyundai Electronics Industries Co., Ltd. and
several related members of the Hyundai Business Group (Hyundai). In
September 1993, the Company then signed the Stock Purchase Agreement with
Hyundai. Conclusion of the transaction was conditional upon approval of the
U.S. and Korean governments, Maxtor stockholders and a number of other
conditions. In November 1993, the U.S. government provided all necessary
approvals. In December 1993, Maxtor stockholders approved all matters
submitted to them regarding the proposed investment. At the end of January
1994, Korean government approval was granted. The transaction closed on
February 3, 1994.
Under the terms of the agreement, Hyundai invested $150 million in Maxtor and
received approximately 19.4 million shares of Series A common stock,
representing a per share price of $7.70, and constituting approximately 40%
of the Company's outstanding voting stock. The stock issued to Hyundai is a
special series of common stock, entitling Hyundai to representation on the
Company's Board of Directors proportionate to its share of ownership and
certain voting rights. In addition, the Company's Board of Directors is
required to elect as Chairman of the Board the director designated by
Hyundai. The agreement also provides that Hyundai may not acquire more than
45% of Maxtor except in a tender for all outstanding shares or in certain
other cases. These provisions could deter a third party from making a tender
or exchange offer for the stock of the Company.
2. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The consolidated
financial statements include the accounts of Maxtor Corporation (Maxtor or
the Company), its wholly-owned subsidiaries, and Maxoptix Corporation
(Maxoptix), a corporation jointly-owned by Maxtor (63%) and Kubota
Corporation of Japan (Kubota) (34%). The minority stockholder's interest in
the equity and earnings of Maxoptix are presented separately in the
accompanying financial statements. The consolidated balance sheet as of
December 25, 1993 excludes the net assets of Storage Dimensions, Inc. (SDI)
which were sold on December 26, 1992. In connection with the sale of the
assets of SDI, Maxtor acquired a 32.8% interest in the company formed for the
purpose of purchasing the net assets of SDI. Maxtor accounts for its
investment under the equity method. All significant intercompany
transactions have been eliminated in consolidation. All adjustments of a
normal recurring nature which, in the opinion of management, are necessary
for a fair statement of the results for the interim periods have been made.
It is recommended that the interim financial statements be read in
conjunction with the Company's consolidated financial statements and notes
thereto for the fiscal year ended March 27, 1993. Interim results are not
necessarily indicative of the operating results expected for later quarters
or the full fiscal year.
3. RESTRUCTURING CHARGE
The Company recorded a restructuring charge of $88.4 million for the third
quarter of fiscal year 1994. The restructuring plan primarily entails
discontinuing certain products and manufacturing activities, and
consolidating the Company's research and development function. The
restructuring charge consists of estimated costs associated with a reduction
in manufacturing capacity, termination of certain products and certain
facilities, write downs of inventory and equipment that are no longer
productive, consolidation of engineering resources, and commitments to third
parties. As part of the Company's restructuring program to streamline
operations and administration, the Company will also reduce its worldwide
headcount by approximately 500 employees. The charge of $88.4 million is
comprised of approximately $76 million of estimated facilities, equipment,
inventories and other related expenses and approximately $12 million of
estimated employee-related expenses. As of December 25, 1993, approximately
$54 million remained in accrued liabilities representing approximately $34
million related to the discontinuation of certain manufacturing activities,
approximately $12 million related to headcount reductions, and approximately
$8 million related to the consolidation of facilities.
4. LINES OF CREDIT AND DEBT
In September 1993, the Company established a secured revolving line of credit
with a new lending group providing for borrowings of up to $76.0 million over
a two-year term. This new asset-based line of credit replaced the Company's
previous outstanding borrowings of $27 million under a secured credit
facility with various bankers and $6 million of outstanding borrowings under
equipment term loans. This asset-based revolving line of credit includes
sublines for letters of credit and provides for borrowings based on eligible
receivables at various interest rates. The new financing agreement includes,
among others, covenants to maintain a minimum net worth, maximum leverage and
a maximum operating loss. The Company was in default of certain loan
covenants as of the end of the quarter ended December 25, 1993. In January
1994, the Company obtained an unconditional waiver of those defaults as of
December 25, 1993 and may, therefore, utilize the line of credit facility, if
borrowing is necessary. The availability of funds under the new line of
credit continues to be dependent upon the Company meeting borrowing base
requirements and certain financial convenants. As of December 25, 1993,
$40.2 million of borrowings and $2.3 million of letters of credit were
outstanding. As of February 4, 1994, the $40.2 million of borrowings had
been fully repaid.
5. INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS No. 109). Under SFAS No. 109, the liability method is used in
accounting for income taxes. For purposes of this method, deferred tax
assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured
by applying enacted tax rates and laws to the taxable years in which such
differences are expected to reverse. The Company adopted the provisions of
SFAS No. 109 in its financial statements effective March 28, 1993 for fiscal
year 1994. Adoption of SFAS No. 109 had no financial impact on the Company's
consolidated financial position or results of operations.
6. NET INCOME (LOSS) PER SHARE
The net loss per share computation is based upon the weighted average number
of shares of common stock outstanding during the quarter and nine months
ended December 25, 1993. Net income per share for the quarter and nine
months ended December 26, 1992 is based upon the weighted average number of
shares of common stock and common stock equivalents outstanding during these
periods. Common stock equivalents include shares issuable upon the assumed
exercise of stock options reflected under the treasury stock method.
Conversion of the convertible subordinated debentures into common shares is
also assumed in the computation of the fully diluted net income per share for
the quarter and nine months ended December 26, 1992 as the conversion has a
dilutive impact on net income per share for these periods. Accordingly,
income used in the computation of fully diluted earnings per share for the
quarter and nine months ended December 26, 1992 is $19,493,000 and
$68,393,000 respectively.
7. CONTINGENCIES
Certain patent infringement claims and litigation against the Company have
arisen in the course of its business. The Company believes the outcome of
these claims and lawsuits will not have a material adverse effect, if any, on
the Company's financial position or results of operations, and the Company
intends to defend them vigorously.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto.
(Tabular information: Dollars in millions, except per share amounts)
RESULTS OF OPERATIONS
General
Since its inception in 1982, Maxtor Corporation (Maxtor or the Company) has
been subject to the highly cyclical nature of the disk drive industry. In
fiscal year 1993, as a result of an industry-wide increase in demand and the
related stabilization in prices, the Company grew its revenues to over $1.4
billion and reported income of $46.1 million. However, from December 1992
through September 1993, the disk drive industry was experiencing intense
price competition. In the quarter ended June 26, 1993 the Company's revenues
decreased nearly 25% from the previous quarter to $260.6 million; revenues
increased to $313.5 million in the quarter ended September 25, 1993 and
increased modestly to $318.1 million in the quarter ended December 25, 1993.
In all three quarters of fiscal year 1994, revenues were below the levels in
the same quarters of the prior fiscal year. The Company incurred losses of
$19.7 million, $72.2 million, $59.6 million, and $121.3 million in the
quarters ending March 27, 1993, June 26, 1993, September 25, 1993, and
December 25, 1993, respectively. Such losses through September 1993 were
primarily the result of negative industry conditions and the Company's
inability to bring certain products to market in a timely and cost effective
manner. The negative industry conditions were primarily the result of
intense price competition and excess industry capacity. In addition, the
Company's losses were the result of insufficient differentiation between the
products of the Company and its competitors, and efforts by better financed
competitors to increase market share. The Company experienced an increase in
demand in the third quarter of fiscal year 1994, with most products in short
supply, concurrent easing of price reductions and certain price increases.
Although general industry conditions improved between October and December
1993, and most of the Company's competitors were profitable during such
quarter, the Company's financial results are not likely to be profitable
until the Company is successful in bringing new products to market in a
timely and cost effective manner. However, the Company does expect that its
results of operations for the fourth quarter of fiscal year 1994 will improve
over the prior four quarters. The Company has been less successful than its
competitors in managing product transitions, and successful new products
introduced by competitors have tended to displace older products, including
the Company's products. If the Company does not successfully manage new
product transitions in the near-term, further losses will be incurred.
The disk drive industry is subject to rapid technological change and short
product life cycles as data storage manufacturers continually strive for
smaller form factors, larger storage capacities, higher performance and lower
cost. As a result, Maxtor expects that the Company's new products will
replace the products which accounted for a majority of the Company's revenues
in fiscal year 1993 and the first nine months of fiscal year 1994. The
Company's ability to anticipate market trends and to successfully develop,
manufacture in volume and sell new products in a timely manner and at
favorable gross margins will be important factors affecting the Company's
future results and there can be no assurance that the Company will be
successful in such efforts. Shorter product life cycles also increase the
importance of the Company's ability to successfully manage product
transitions. The failure to adequately manage product transitions could
result in the loss of market opportunities, decreased sales of existing
products, cancellation of products or product lines, the accumulation of
obsolete and excess inventory and unanticipated charges related to obsolete
capital equipment. On February 3, 1994, the Company announced a major shift
in strategy which devotes Company resources primarily to the design,
manufacture and sale of its 7000 Series of inch-high, 3.5-inch disk drives
and its new family of mobile computing products, including the MobileMax
family of PCMCIA-based mobile computing data storage products. The Company
believes this shift in strategy will result in improved financial results,
however, the Company's financial results will be more dependent on the
success of these products, particularly the MobileMax family of products.
The disk drive industry is intensely competitive and significant price
erosion is typical during the life of a product. Industry participants
include both independent suppliers and large computer manufacturers that both
supply their own internal requirements and sell disk drives to third parties.
Sales by such large computer manufacturers to third parties are an
increasingly important factor in the market. Bringing new products to market
on a timely basis has become increasingly critical to competing in this
market environment. When a new product is not brought to market on a timely
basis, the selling price of older products must be reduced in order to
compete effectively with competitors' new products, which are being produced
at lower costs. If competitors introduce products which offer greater
capacity, better performance, lower prices or any combination of these
factors, or if certain customers produce more disk drives for internal use,
the Company's results of operations would be adversely affected.
As a result of volatile business conditions in the personal computer (PC)
industry, including the trend toward consolidation among PC manufacturers,
sales to the major PC manufacturers have become increasingly important to the
success of the disk drive industry participants. Although the Company
intends to continue in its efforts to increase its share of this large OEM
market, particularly in the marketing of its new products, there can be no
assurance that the Company will be successful in such efforts. Furthermore,
fluctuations in demand for computer systems, or other end-user demand, can
result, and have in the past resulted, in deferral or cancellation of orders
for the Company's products.
The Company's manufacturing process requires large volumes of high quality
components supplied by outside suppliers. The Company periodically receives
communication from vendors that they may be unable to supply required volumes
of certain key components, including vendors who are key to the production of
the Company's 7000 Series, MXT and MobileMax product lines. During the first
quarter of fiscal year 1994, the Company temporarily shut down production of
its MXT product line as a result of a quality problem related to a particular
supplier's component. Production resumed when it was determined that the
problem was limited to that particular supplier's component and that an
alternate supplier's components were not affected by the quality problem.
The Company's 25252 2.5-inch drive has also been subject to significant and
on-going production delays as a result of both design and vendor problems.
Similar problems in the future or the inability of the Company to obtain
required volumes of key components or obtain continued reduction of component
costs, or excessive rework costs associated with defective components would
adversely affect the Company's operating results.
While the Company has qualified and continues to qualify multiple sources for
many components, it is reliant on, and will continue to be reliant on, single
sources for many semi-custom and custom integrated circuits and other key
components. The Company will continue to aggressively work with its vendor
base to minimize its exposure. There can be no assurance, however, that the
Company will be successful in such efforts or that in the future the
Company's vendors will meet the Company's requirements for required volumes
of high-quality components in a timely and cost effective manner.
The Company has assessed its competitive position and after evaluating
various alternatives, has determined that the Company is unable to bring to
market successor products to certain existing products. The Company
recorded a restructuring charge of $88.4 million for the third quarter of
fiscal year 1994 as a result of its decision to discontinue certain products
and product lines and consolidate engineering. The charge includes
provisions for a reduction in manufacturing capacity, termination of certain
products and certain facilities, write downs of inventory and equipment that
are no longer productive, consolidation of engineering resources, and
commitments to third parties. The Company's research and development
activities will be consolidated at its Longmont, Colorado facilities. The
Company's research and development efforts will focus on new products
targeted at the desktop personal computing market and the emerging mobile
computing market.
Three Months Ended Nine Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
Revenue $ 318.1 $ 402.6 $ 892.2 $ 1,097.0
Gross margin $ 15.2 $ 80.7 $ (13.2) $ 247.6
As a percentage of
revenue 4.8% 20.1% (1.5%) 22.6%
Net income (loss) $ (121.3) $ 18.6 $ (253.1) $ 65.8
As a percentage of
revenue (38.1%) 4.6% (28.4%) 6.0%
Net income (loss) per share:
- Primary $ (4.12) $ 0.61 $ (8.65) $ 2.22
- Fully diluted $ (4.12) $ 0.59 $ (8.65) $ 2.12
Revenue
Revenue for the Company's third quarter of fiscal year 1994 and first nine
months of fiscal year 1994 decreased by 21% and 18.7%, respectively, from the
same periods of the prior fiscal year. Unit sales of the Company's 7000
Series disk drives, which accounted for a significant portion of the
Company's revenue during both the current fiscal year and the prior fiscal
year, increased significantly during the third quarter and first nine months
of fiscal year 1994 as compared to the same periods of the prior fiscal year.
However, these product offerings, particularly 100-200 megabyte products,
have been subject to intense price competition and excess industry capacity
during most of the first nine months of fiscal year 1994 compared to the
first nine months of fiscal year 1993, which negatively impacted per unit
revenue despite the increase in unit volumes. In addition, while there was a
significant shift in product mix from the older, lower capacity 3.5-inch and
5.25-inch product offerings to the current higher capacity 7000 Series and
MXT product offerings during the twelve-month period since the third quarter
of fiscal year 1993, average unit selling prices, in terms of megabyte per
dollar, have declined substantially during that same period. Revenue for the
first nine months of fiscal year 1994 did not include $10.0 million of non-
recurring revenue recognized in the first quarter of fiscal year 1993 related
to a royalty and licensing agreement. Revenue for the first nine months of
fiscal year 1993 included approximately $61 million generated by the
Company's wholly-owned subsidiary, Storage Dimensions, Inc. (SDI); no such
revenue was recognized in the first nine months of fiscal year 1994 due to
the sale of SDI on December 26, 1992.
During the third quarter of fiscal year 1994, the Company had one customer
which accounted for approximately 29% of the Company's revenue. This
percentage may fluctuate in future periods and the Company expects that it
will decline substantially during the last quarter of fiscal year 1994.
During the third quarter of fiscal year 1993, one customer accounted for
approximately 15% of the Company's revenue.
Given the Company's recent decision to discontinue certain product lines in
the third quarter of fiscal year 1994, the Company anticipates a decline in
revenue generated by these products in the fourth quarter of fiscal year
1994. As a result of the Company's shift in strategy, the Company will be
more dependent on the success of certain products, particularly the MobileMax
family of products. During the third quarter of fiscal year 1994, the
Company announced several new products, including additions to the MobileMax
family of PCMCIA-compatible storage products for mobile computing
applications. The Company anticipates that these new products will not
contribute significantly to revenue in the fourth quarter of fiscal year
1994. The Company's ability to increase revenues is dependent on its ability
to anticipate market trends and to successfully develop, manufacture in
volume and sell new products in a timely manner, particularly the MobileMax
family of products. There can be no assurance that the Company will be
successful in such efforts.
Gross Margin
Gross margin as a percentage of revenue decreased significantly to 4.8% for
the third quarter of fiscal year 1994 from 20.1% for the same quarter of the
prior fiscal year, and decreased to (1.5%) for the first nine months of
fiscal year 1994 compared to 22.6% for the same nine month period of the
prior fiscal year. Excluding the non-recurring revenue of $10.0 million
recognized in the first quarter of fiscal year 1993, gross margin for the
first nine months of fiscal year 1993 was 21.9%. The significant decline
during the first nine months of fiscal year 1994 is primarily attributable to
the prevailing negative business conditions in the disk drive industry,
including intense price competition and excess industry capacity, as well as
to cost and time-to-market issues with regard to the Company's new products.
Industry conditions improved during the third quarter of fiscal year 1994
relative to the preceding quarter. During the third quarter of fiscal year
1994, the Company and its competitors generally experienced an increase in
demand and concurrent easing of price reductions. Most products were in short
supply and, in certain instances, there were prices increases.
During the first nine months of fiscal year 1994, gross margin was negatively
impacted by the Company's failure to produce planned unit volumes of its MXT
product line due to a quality problem involving a particular supplier's
component plus higher costs than planned due to related design and
manufacturing issues, and failure to produce planned unit volumes of its 2.5-
inch product line due to design and component issues. A temporary shutdown
of production of the MXT product occurred during the first quarter and
resulted in an estimated loss of $25.0 million of revenue and an accompanying
negative gross margin for this product offering during that quarter. This
first quarter production shutdown of the MXT product also adversely affected
production costs in the second quarter of fiscal year 1994 until efficient
production levels were achieved. The design and component issues related to
the 2.5-inch product line resulted in a negative gross margin for this
product line during the first nine months of fiscal year 1994.
Beginning in the third quarter of fiscal year 1992, there was an industry-
wide increase in demand for disk drive products which led to a stabilization
in prices. This increase in demand, combined with a shift in the product mix
to higher capacity, higher gross margin products, led to improved gross
margin during the first eight months of fiscal year 1993. During the last
four months of fiscal year 1993 and continuing through the second quarter of
fiscal year 1994, however, gross margin declined significantly due to
increased price competition for 100-200 megabyte 3.5-inch products, price
erosion on older products as they are being phased out, and costs associated
with the startup and initial production of the Company's MXT products. Gross
margin improved between the second and third fiscal quarters of fiscal year
1994 from (3.3%) to 4.8% as a result of increased unit sales volumes of
certain products for which average unit selling prices were relatively
constant and average unit manufacturing costs declined from quarter to
quarter.
The Company believes that the reduced rate of decline in average unit selling
prices experienced in the third quarter of fiscal year 1994 may continue
through the fourth quarter of fiscal year 1994. Gross margin is expected to
improve during the fourth quarter of fiscal year 1994 as compared to the
prior quarter, but it is expected to remain in all likelihood at unacceptably
low levels. The Company will continue its efforts to reduce its average unit
manufacturing costs and to introduce and produce in volume new higher margin
products in an effort to improve gross margin during the remainder of fiscal
year 1994. However, there can be no assurance that the Company will be
successful in such efforts, and an additional loss, although less than the
previous four quarters, is anticipated for the fourth quarter of fiscal year
1994.
Operating Expenses
Three Months Ended Nine Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
Research and development $ 25.8 $ 29.6 $ 83.1 $ 83.4
As a percentage of
revenue 8.1% 7.4% 9.3% 7.6%
Selling, general and
administrative $ 19.8 $ 26.5 $ 60.1 $ 76.8
As a percentage of
revenue 6.2% 6.6% 6.7% 7.0%
Restructuring $ 88.4 $ - $ 88.4 $ -
As a percentage of
revenue 27.8% n/a 9.9% n/a
Research and Development
Research and development (R&D) expenses for the third quarter of fiscal year
1994 decreased from the same period of the prior fiscal year in absolute
dollars as planned. For the first nine months of fiscal year 1994, R&D
expenses were relatively flat in absolute dollars as compared to the same
period of the prior fiscal year. R&D increased as a percentage of revenue as
a result of the decreased revenue bases between each of the three-month and
six-month periods. While R&D spending in absolute dollars is expected to
decrease during the fourth quarter of fiscal year 1994, the Company must
continue to make substantial investments in research and development since
the timely introduction and transition to volume production of new products
is essential to its future success. In addition, R&D expenses may fluctuate
in the future resulting from the cost of acquiring rights to new
technologies.
Selling, General and Administrative
Selling, general and administrative expenses (SG&A) declined in absolute
dollars and as a percentage of revenue for the third quarter and first nine
months of fiscal year 1994 compared to the same periods of the prior fiscal
year primarily due to the sale of the assets of SDI. SG&A for the third
quarter and first nine months of fiscal year 1993 included expenses incurred
by SDI until December 1992 at which time the Company sold the assets of SDI.
This decline in SG&A expenses also reflects the Company's efforts to control
and reduce expenditures. The Company has ongoing efforts to control costs and
expenditures and reduce SG&A expenses in future quarters, however, there can
be no assurance that the Company will be successful in such efforts.
Restructuring
The Company recorded a restructuring charge of $88.4 million for the third
quarter of fiscal year 1994. The restructuring plan primarily entails
discontinuing certain products, including the MXT product line, and
manufacturing activities, and consolidating the Company's research and
development function. The restructuring charge consists of estimated costs
associated with a reduction in manufacturing capacity, termination of certain
products and certain facilities, write downs of inventory and equipment that
are no longer productive, consolidation of engineering resources and
commitments to third parties. As part of the Company's restructuring program
to streamline operations and administration, the Company will also reduce its
worldwide headcount by approximately 500 employees. The charge of $88.4
million is comprised of approximately $76 million of estimated facilities,
equipment, inventories and other related expenses and approximately $12
million of estimated employee-related expenses. As of December 25, 1993,
approximately $54 million remained in accrued liabilities representing
approximately $34 million related to the discontinuation of certain
manufacturing activities, approximately $12 million related to headcount
reductions, and approximately $8 million related to the consolidation of
facilities. The restructuring program is expected to result in future
savings of over $10 million per quarter.
Interest expense, interest income, and minority interest in loss of joint
venture
Three Months Ended Nine Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
Interest expense $ 2.2 $ 2.0 $ 8.1 $ 7.9
Interest income $ .2 $ .6 $ .3 $ 1.8
Minority interest $ - $ - $ - $ 1.0
The Company's minority interest account is related to Maxoptix Corporation
(Maxoptix), a joint venture formed in March 1989 with Kubota Corporation
(Kubota), 63% owned by Maxtor and 34% owned by Kubota, subject to certain
adjustments. All operating losses incurred by Maxoptix from March 31, 1990
through June 27, 1992 were allocated to the minority interest account and,
therefore, did not impact Maxtor's net income (loss). During the fiscal
quarter ended September 26, 1992, the minority interest account was reduced
to zero. Thereafter, all future operating losses incurred by Maxoptix were
and will continue to be fully allocated to Maxtor.
Provision for income taxes and effective tax rate
Three Months Ended Nine Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
Provision for income taxes $ .5 $ 4.7 $ 1.5 $ 16.5
Effective tax rate n/a 20.0% n/a 20.0%
The tax provision for the third quarter and first nine months of fiscal year
1994 consists primarily of foreign taxes. The Company's effective tax rate
for the third quarter and first nine months of fiscal year 1993 was 20%,
which was below the combined federal and state statutory rate due to the tax
benefits associated with the Company's Singapore operations and the benefit
of net operating loss carryforwards.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS No. 109). Under SFAS No. 109, the liability method is used in
accounting for income taxes. For purposes of this method, deferred tax
assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured
by applying enacted tax rates and laws to the taxable years in which such
differences are expected to reverse. The Company adopted the provisions of
SFAS No. 109 in its financial statements effective March 28, 1993 for fiscal
year 1994. Adoption of SFAS No. 109 had no financial impact on the Company's
consolidated financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's recent losses have also impacted its financial position by
decreasing available cash and requiring the Company to seek alternative
financing, including replacing its existing revolving line of credit and
seeking other long-term financing. As of December 25, 1993, the Company had
cash and cash equivalents of $102.1 million ($61.9 million net of $40.2
million of short-term borrowings) as compared to $135.3 million of cash and
cash equivalents as of March 27, 1993 ($102.3 million net of $33.0 of short-
term borrowings). However, the Company subsequently received $150 million
from Hyundai on February 3, 1994, pursuant to the Stock Purchase Agreement
described below.
Nine Months Ended
Dec. 25, 1993
Cash and cash equivalents $ 102.1
Net cash provided by operating activities $ 4.4
Net cash used in investing activities $ 24.9
Net cash used in financing activities $ 12.7
Of the net cash provided by operating activities during the first nine months
of fiscal year 1994, decreases in accounts receivable and inventories
accounted for approximately $103 million. This was offset in part by the
net loss less non-cash depreciation and amortization, non-cash restructuring
and accrued restructuring, which used a net $92 million. The decline in
accounts receivable primarily reflects lower sales levels in the quarter
ending December 25, 1993 than in the quarter ending March 27, 1993. Days
sales outstanding improved to 29 days at the end of the third quarter of
fiscal year 1994 from 39 days at the end of the quarter ending March 27,
1993, however, this is not intended to be indicative of future results and
days sales outstanding may change significantly in future periods.
Inventories decreased primarily because of the Company efforts to balance
production with demand and control inventory purchases. Despite the
Company's efforts to tightly control inventory levels, inventories may
increase in the future based on changes in market demand or industry-wide
production.
Net cash used in investing activities was primarily attributable to $26.1
million of capital expenditures. A significant portion of the capital
expenditure activity was related to the acquisition of manufacturing
equipment. Depending on business conditions, the Company currently expects
to make capital expenditures of approximately $30 to $35 million during
fiscal year 1994, as compared to approximately $92 million during fiscal
year 1993.
Net cash used in financing activities during the first nine months of fiscal
year 1994 primarily reflects cash used to reduce outstanding debt, offset in
part by proceeds received from short-term borrowings.
In September 1992, the Company established a $70.0 million domestic unsecured
revolving line of credit. In April 1993, in consideration of the amendment
of certain financial covenants, the Company agreed to grant the lenders a
security interest in the Company's inventories and receivables which would
automatically become effective under certain circumstances. In July 1993,
the Company obtained a waiver and second amendment of certain financial
covenants through September 27, 1993, and in connection with the waiver,
agreed to grant the lenders a security interest in the Company's inventories
and receivables and agreed to limit its borrowings to the $27.0 million of
current borrowings at that time. During fiscal year 1993, the Company
established a $48.0 million term loan facility in Singapore with several
banks. In July 1993, the Company repaid in full the outstanding borrowings
on that term loan facility and terminated the agreement.
On September 17, 1993, the Company obtained a secured, asset-based revolving
line of credit of $76.0 million. This line of credit replaced the existing
$70.0 million line of credit from different lenders, as well as $6.0 million
equipment term loans. This asset-based revolving line of credit provides for
borrowings up to $76.0 million based on eligible receivables at various
interest rates over a two year term and is secured by receivables, certain
inventories and other assets. As of December 25, 1993, $40.2 million of
borrowings and $2.3 million of letters of credit were outstanding. As of
February 4, 1993, the $40.2 million of borrowings had been fully repaid. The
Company was in default of certain loan covenants as of the end of the quarter
ended December 25, 1993. In January 1993, the Company obtained an
unconditional waiver of those defaults as of December 25, 1993 and may,
therefore, utilize the line of credit, if borrowing is necessary.
In August 1993, the Company signed a letter of intent for the creation of a
strategic relationship with Hyundai. In September 1993, the Company then
signed the Stock Purchase Agreement with Hyundai. Conclusion of the
transaction was conditional upon approval of the U.S. and Korean governments,
Maxtor stockholders and a number of other conditions. In November 1993, the
U.S. government provided all necessary approvals. In December 1993, Maxtor
stockholders approved all matters submitted to them regarding the proposed
investment. At the end of January 1994, Korean government approval was
granted. The transaction closed on February 3, 1994 and will be recorded in
the fourth quarter of fiscal year 1994.
Under the terms of the agreement, Hyundai invested $150 million in Maxtor and
received approximately 19.4 million shares of common stock, representing a
per share price of $7.70, and constituting 40% of the Company's outstanding
voting stock. The stock issued to Hyundai is a special series of common
stock, entitling Hyundai to representation on the Company's Board of
Directors proportionate to its share of ownership and certain voting rights.
In addition, the Company's Board of Directors is required to elect as
Chairman of the Board the director designated by Hyundai. The agreement also
provides that Hyundai may not acquire more than 45% of Maxtor except in a
tender for all outstanding shares or in certain other cases. These
provisions could deter a third party from making a tender or exchange offer
for the stock of the Company.
The Company believes that the $150 million of funding generated by the
Hyundai investment, and the Company's cash flow from operations, equipment
financing and available lines of credit will be sufficient to fund the
Company's working capital and capital expenditure requirements through fiscal
year 1995.
DIVIDEND POLICY
The Company has never paid cash dividends on its capital stock. It is the
present policy of the Board of Directors to retain earnings for use in the
business. The Company does not anticipate paying cash dividends in the near
future. Under the terms of the Company's line of credit, the Company may not
declare or pay any dividends without the prior consent of its lenders.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As part of the acquisition of the MiniScribe business in June 1990, the
Company was assigned a patent license agreement between MiniScribe and Rodime
plc (Rodime) covering patents related to 3.5-inch disk drives. The Company
believes that the assignment was valid; however, Rodime has taken the
position that the assignment was invalid and would not in any event cover 3.5-
inch drives manufactured and sold by the Company before the acquisition of
MiniScribe's assets. In February 1993, Maxtor commenced an action for
declaratory relief in the U.S. Bankruptcy Court in Denver, Colorado seeking a
judgment that the assignment was valid. Rodime filed a denial and
counterclaim for patent infringement. The Company intends to vigorously
pursue declaratory relief and defend against Rodime's counterclaim.
In April 1993, Harry Aine filed a petition against Maxtor and 19 other disk
drives and disk media vendors in the International Trade Commission alleging
infringement of certain U.S. patent covering certain sputtered carbon coated
disks, and seeking to prohibit Maxtor and such other vendors from importing
disk drives incorporating such disks. The matter was settled among the
complainant and the respondents including Maxtor. As part of the settlement,
Maxtor paid an immaterial amount to Mr. Aine in exchange for a full release
of all past, present and future claims which Mr. Aine may have against Maxtor
relating to the subject patents. In addition, Mr. Aine assigned the subject
patents to all the respondents.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
At a stockholders meeting on November 30, 1993, and adjourned to December 20,
1993, the Company submitted to a vote of stockholders the following matters
related to the Hyundai transaction, which received the following votes:
BROKER
"NON
For Against Abstain VOTES"
1. The issuance and sale to Hyundai
Electronics Industries Co., Ltd.,
Hyundai Heavy Industries Co., Ltd.,
Hyundai Corporation and Hyundai
Merchant Marine Co., Ltd. of
19,480,000 shares of Class A Common
Stock for an aggregate purchase price
of $149,996,000, including the terms
of the related Stock Purchase
Agreement 20,163,271 257,402 101,546 1,537,334
2. The amendment of the Certificate
of Incorporation to authorize Class
A Common Stock to be issued to the
Hyundai entities, specify the rights,
preferences and privileges relating
to the Class A Common Stock and provide
for other changes negotiated in
connection with the issuance to the
Hyundai entities 20,242,423 344,979 161,271 1,310,880
3. The amendment of the Certificate
of Incorporation to increase the
authorized number of Common Shares
from 125,000,000 to 200,000,000 20,705,279 1,092,947 261,327 -
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
b) Reports on Form 8-K:
None
c) Exhibits:
See Index to Exhibits on pages 22 to 33 hereof.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAXTOR CORPORATION
Date: February 7, 1994 By: /s/ Walter D. Amaral
Walter D. Amaral
Chief Financial Officer
INDEX TO EXHIBITS
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION Pages
3.1 (6) Certificate of Incorporation.
3.2 (8) Certificate of Amendment of Certificate of
Incorporation of Maxtor Corporation, dated
December 23, 1987.
3.3 (8) By-Laws as amended July 21, 1987.
3.4 Amended and Restated By-Laws of Maxtor Corporation,
A Delaware Corporation, effective February 3, 1994 34-45
3.5 Restated Certificate of Incorporation of Maxtor
Corporation effective February 3, 1994 46-58
4.1 (3) Form of Certificate of Shares of Registrant's Common
Stock
4.2 (7) Maxtor Corporation Rights Plan.
10.1 (1) Omnilease Corporation Master Lease Agreement
No. 300362, dated as of January 14, 1983 and addenda
thereof.
10.2 (1) Lease Agreement between Orchard Investment Company
No. 801, formerly Nelo, a California general
partnership and Registrant, dated March 23, 1984.
10.3 (1) Lease Commitment between Walter E. Heller & Company
and Registrant, dated as of March 11, 1985.
10.4 (1) Stock Purchase Agreement between Steven P. Kitrosser
and Registrant, dated May 21, 1985.
10.5 (1) Stock Purchase Agreement between James McCoy and
Registrant, dated May 21, 1985.
10.6 (1) Equipment Lease Agreement between Pacific Western
formerly Pacific Valley) Bank and Registrant, dated
June 26, 1985.
10.7 (1) Continuing Guaranty between Maxtor Singapore Limited
and Bank of America N.T. & S.A., dated July 27, 1985.
10.8 (9) Lease Agreement between John Arrillaga, Separate
Property Trust, Richard T. Perry, Separate Property
Trust and Registrant, dated August 27, 1986.
10.9 (3) Marketing and Distribution Agreement between Ricoh
Company, Ltd. and Registrant, dated October 14, 1986.
10.10 (3) Land Lease Agreement between Housing and Development
Board, Singapore and Maxtor Singapore Limited, dated
December 22, 1986.
10.11 (3) Indenture dated February 16, 1987.
10.12 (8) Stock Bonus Plan and Cash Bonus Plan between Storage
Dimensions, Inc. and Registrant dated June 15, 1987.
10.13 (8) Merger Agreement between MAXSUB II, Inc., and Storage
Dimensions, Inc. dated October 26, 1987.
10.14 (3) 1986 Outside Directors' Stock Option Plan.
10.15 (3) Commitment from Union Bank to Registrant regarding
letters of credit for the benefit of the officers and
directors of the Registrant.
10.16 (4) Agreement and Plan of Reorganization.
10.17 (9) Revised Equipment Lease Agreement between Capital
Associates International, Inc. and Registrant, dated
September 28, 1988.
10.18 (9) Credit Agreement between Bank of America National
Trust and Savings Association and Registrant, dated
October 18, 1988.
10.19 (9) Equipment Lease Agreement between Pitney Bowes
Credit Corporation and Registrant, dated November 2,
1988.
10.20 (9) Equipment Lease Agreement between Concord Leasing
(Asia) Pte Ltd. and Maxtor Singapore, Limited, dated
November 16, 1988.
10.21 (9) Lease Agreement between Maxtor Singapore, Limited and
Jurong Town Corporation, dated November 16, 1988.
10.22 (9) Lease Agreement between Greylands Business Park Phase
II and Storage Dimensions, Inc., dated December 14,
1988.
10.23 (8) Stock Purchase Agreement among Registrant, Storage
Dimensions, Inc., David A. Eeg, Gene E. Bowles, Jr.,
David P. Williams and David Lance Robinson.
10.24 (8) Fiscal 1988 Stock Option Plan.
10.25 (8) Employee Stock Purchase Plan.
10.26 (8) Dual Currency Loan Agreement between Maxtor
Singapore Limited, Maxtor Delaware, Maxtor California
and American Express Bank Limited.
10.27 (8) Amended and Restated Fiscal 1985 Stock Option Plan,
including the Immediately Exercisable Incentive Stock
Option Agreement and the Immediately Exercisable
Nonqualified Stock Option Agreement.
10.28 (9) Loan Agreement between Probo Pacific Pte Ltd. and
Maxtor Singapore Limited, dated March 20, 1989.
10.29 (9) Loan Agreement between Concord Leasing (Asia) Pte, Ltd.
and Maxtor Singapore Limited, dated April 14, 1989.
10.30 (10) Product Discontinuance Agreement between Matsushita
Communication Industrial Co., Ltd. (MCI) and
Registrant, dated August 23, 1989.
10.31 (10) Equipment Lease Agreement between Capital Associates
International, Inc. and Registrant, dated October 17,
1989.
10.32 (10) Maxoptix Corporation 1989 Stock Option Plan.
10.33 (9) Forms for Promissory Note and Amended and Restated
Promissory Note.
10.34 (10) Amended and Restated Credit Agreement between Bank
of America National Trust and Savings Association and
Registrant, dated January 31, 1990.
10.35 (10) Amendment to Lease Agreement between Orchard
Investment Company No. 801, formerly Nelo, a California
general partnership and Registrant, dated February 15,
1990.
10.36 (10) Sublease Agreement between RACAL-VADIC, a
Division of Racal Data Communications, Inc.
("Sublessor") and Storage Dimensions, Inc.
("Sublessee"), dated February 16, 1990.
10.37 (10) Collateral Sharing and Subordination Agreement between
Registrant and Standard Chartered Bank, dated April 5,
1990.
10.38 (10) Loan and Security Agreement between Registrant and
MiniScribe Corporation, dated April 5, 1990.
10.39 (11) Agreement for the Sale and Purchase of Shares in
Tratford Pte. Ltd. between the Registrant, MiniScribe
Peripherals (Pte) Ltd. and certain Individuals, dated
May 8, 1990.
10.40 (11) Agreement for the Sale and Purchase of Shares in
Silkmount Limited between MaxSub Corporation, Silkmount
Limited and certain Individuals, dated May 18, 1990.
10.41 (11) Assignment of Debt between Registrant, MiniScribe (Hong
Kong) Limited and certain Individuals, dated May 18,
1990.
10.42 (10) Asset Purchase Agreement between Registrant, MiniScribe
Corporation and Standard Chartered Bank, dated May 30,
1990.
10.43 (14) License Agreement with Rodime PLC, dated December 8,
1987 assigned to Registrant on June 29, 1990.
10.44 (14) Patent Cross License Agreement with IBM dated October
1, 1984 assigned to Registrant effective June 30, 1990.
10.45 (14) Lease Agreement between MiniScribe Corporation and 345
Partnership dated June 6, 1990, assigned to the
Registrant effective June 30, 1990.
10.46 (14) Lease Agreement between Maxtor Colorado and Pratt
Partnership (Lot 1A), dated July 5, 1990.
10.47 (14) Lease Agreement between Maxtor Colorado and Pratt
Partnership (Lot 1C), dated July 5, 1990.
10.48 (14) Lease Agreement between Maxtor Colorado and Pratt
Partnership (Lot 4), dated July 5, 1990.
10.49 (14) Agreement for the Purchase of Land and Improvements
between Registrant and Nixdorf, dated August 16, 1990.
10.50 (15) Grant Agreement dated 25 October 1990 between the
Industrial Development Authority, Maxtor Ireland
Limited and Registrant.
10.51 (12) Amendment of Agreement between Registrant, Maxtor
Colorado, Maxtor California and Standard Chartered
Bank, dated November 6, 1990.
10.52 (14) Guarantee for Dastek between Registrant, Dastek and
Silicon Valley Bank, dated November 30, 1990.
10.53 (10) Judgement, William Lubliner vs. Maxtor Corporation,
James M. McCoy, William J. Dobbin, B.J. Cassin, W.
Charles Hazel and George M. Scalise.
10.54 (10) Settlement Agreement, William Lubliner vs. Maxtor
Corporation, et al.
10.55 (10) Fiscal 1991 Profit Sharing Plan Document.
10.56 (10) Board of Director Compensation Approved for fiscal
1991.
10.57 (14) Resignation Agreement and General Release of Claims
between Alexander E. Malaccorto and the Registrant,
dated January 11, 1991.
10.58 (14) Employment Agreement between James M. McCoy and
Registrant, dated January 17, 1991.
10.59 (14) Resignation Agreement and General Release of Claims
between James N. Miler and the Registrant, dated
January 20, 1991.
10.60 (14) Letter Agreement between George Scalise and the
Registrant, dated February 22, 1991.
10.61 (14) Resignation Agreement and General Release of Claims
between Steven Strain and the Registrant, dated
February 22, 1991.
10.62 (14) Foothill Capital Credit Facility between Registrant,
certain of its subsidiaries and Foothill Capital
Corporation, dated April 22, 1981.
10.63 (14) Employment Agreement between Laurence Hootnick and
Registrant, dated May 3, 1991.
10.64 (14) Employment Agreement between Roger Nordby and
Registrant, dated May 7, 1991.
10.65 (14) Employment Agreement between Thomas F. Burniece
and the Registrant, dated May 12, 1991.
10.66 (15) Amendment of the Registrant's Continuing Guarantee
in favor of Foorhill Capital Corporation, dated July
10, 1991.
10.67 (15) Settlement, Resignation and General Release of Claims
between Registrant and Taroon C. Kamdar, dated
August 2, 1991.
10.68 (15) Amendment of Registrant's Continuing Guarantee
in favor of Foothill Capital Corporation, dated
August 9, 1991.
10.69 (15) Amendment No. 1 to Lease by and between
John Arrillaga, Trustee, and Richard T. Peery,
Trustee, and Registrant, dated August 23, 1991.
10.70 (15) Amendment of Registrant's Continuing Guarantee
in favor of Foothill Capital Corporation, dated
September 20, 1991.
10.71 (13) Amendment of Agreement between Registrant, Maxtor
Colorado, Maxtor California and Standard Chartered
Bank, dated December 27, 1990, and further amended
July 26, 1991 and October 4, 1991.
10.72 (15) Lease Agreement between Registrant and Devcon
Associates 31, dated December 6, 1991.
10.73 (15) Deed of Partial Discharge and Release between
Barclays Bank PLC and Maxtor Singapore Limited,
dated December 19, 1991.
10.74 (15) Agreement for Purchase and Sale of Assets among
Registrant, Read-Rite International, Read-Rite
Corporation and Maxtor Singapore Limited, dated
November 14, 1991, and amended December 20, 1991.
10.75 (15) Asset Purchase Agreement among Registrant,
Storage Dimensions, Inc. and USD Acquisition, Inc.,
dated December 27, 1991.
10.76 (15) Resignation Agreement and General Release of Claims
between Registrant and David S. Dury, dated January
31, 1992.
10.77 (15) Sublease between Registrant and Hauser Chemical
Research, Inc., dated March 23, 1992.
10.78 (15) First Amendment to Lease Agreement between
PCA San Jose Associates and Registrant, dated
March 25, 1992.
10.79 (15) Asset Purchase Agreement among Registrant,
Maxtor Singapore LTD., and Sequel, Inc., dated
March 12, 1992, and amended March 25, 1992.
10.80 (5) Fiscal 1992 Stock Option Plan.
10.81 (15) Form of Indemnity Agreement between the
Registrant and each of its directors and executive
officers.
10.82 (15) Maxtor/Sequel 8K/Panther Subcontract Manufacturing
and Warranty Services Agreement, dated March 23, 1992.
10.83 (15) Maxtor Corporation 1992 Employee Stock Purchase Plan.
10.84 (15) Maxtor Corporation 1991 Employee Stock Purchase Plan.
10.85 (15) Maxtor Corporation FY'93 Incentive Plan Summary.
10.86 (15) Fiscal 1992 Profit Sharing Plan Document.
10.87 (17) Security Agreement between Registrant and
Chrysler Capital Corporation, dated
April 14, 1992.
10.88 (17) Subordination, Non-Disturbance, Estoppel and
Attornment Agreement between Loma Mortgage
USA, Inc. and Registrant, dated June 4, 1992
10.89 (17) Office Lease between Cabot Associates and Registrant,
dated July 23, 1992
10.90 (17) Revolving Credit Agreement among Registrant,
Barclays Bank PLC and The First National Bank of
Boston, dated as of September 9, 1992
10.91 (17) Security Agreement between Registrant and the CIT
Group/Equipment Financing, Inc., dated
September 18, 1992
10.92 (17) Deed of Priorities among Maxtor (Hong Kong) Limited
and Registrant and General Electric Capital
Corporation, dated September 25, 1992
10.93 (17) Lease among Dares Developments (Woking) Limited,
Maxtor Europe Limited and Registrant, dated
October 1992
10.94 (16) Stock Purchase and Asset Acquisition Agreement
among David A. Eeg, Gene E. Bowles, Jr., CP
Acquisition, L.P. No. 4A, CP Acquisition, L.P. No. 4B,
Capital Partners, Inc., FGS, Inc., Registrant,
Storage Dimensions, Inc. and SDI Acquisition
Corporation, dated December 4, 1992
10.95 (17) Loan and Security Agreement between Registrant and
Household Bank, f.s.b., dated December 11, 1992
10.96 (17) Global Master Rental Agreement between Comdisco, Inc.
and Registrant, dated December 16, 1992
10.97 (17) Amendment No. 1 to Lease between Devcon
Associates 31 and Registrant, dated December 21, 1992
10.98 (17) Continuing Guaranty among Maxtor Peripherals (S)
Pte., Ltd., Barclays Bank PLC and Registrant, dated
January 26, 1993
10.99 (17) Amendment No. 2 to Lease between Devcon
Associates 31 and Registrant, dated February 1, 1993
10.100 (17) Instrument of Resignation, Appointment and
Acceptance among Registrant, The First National
Bank of Boston and Bank of America National
Trust and Savings, dated as of March 22, 1993
10.101 (17) Waiver and First Amendment to Credit Agreement
among Registrant, Barclays Bank PLC and the First
National Bank of Boston, dated as of April 16, 1993
10.102 (17) Waiver and First Amendment to Continuing Guaranty
Among Registrant, Barclays Bank PLC and the Lenders
dated as of April 19, 1993
10.103 (17) Security Agreement between Registrant and Barclays
Bank PLC, dated April 16, 1993
10.104 (17) Lease Agreement between Registrant and Pratt
Partnership, dated April 30, 1993
10.105 (17) Agreement for Stock Transfer Services between
Registrant and The First National Bank of
Boston, dated May 6, 1993
10.106 (17) Maxtor Corporation CY93 Profit Sharing Plan
10.107 (17) Maxtor Corporation Management Incentive Plan for CY93
10.108 (18) Production Agreement between International
Business Machines Corporation and Registrant,
dated July 27, 1993 (with certain information deleted
and indicated by blackout text)
10.109 (19) Letter of intent between Registrant and Hyundai
Electronics Industries Co., Ltd., dated
August 18, 1993.
10.110 (20) Financing Agreement between Registrant and
The CIT Group/Business Credit, Inc., dated
September 16, 1993
10.111 Form Letter Agreement between Registrant and all
of its named executive officers, except Laurence
Hootnick, dated November 17, 1993 59-62
10.112 Waiver to Financing Agreement among Registrant
and The CIT Group/Business Credit, Inc.,
dated January 12, 1994 63-65
10.113 Stock Purchase Agreement between Registrant
and Hyundai Electronics Industries Co., Ltd.,
Hyundai Heavy Industries Co., Ltd., Hyundai
Corporation, and Hyundai Merchant Marine Co., Ltd.,
dated September 10, 1993 66-110
11.1 Computation of Net Income (Loss) Per Share 111-112
(1) Incorporated by reference to exhibits to Registration
Statement No. 2-98568 effective August 7, 1985.
(2) Incorporated by reference to exhibits to Registration
Statement No. 33-4092 effective April 2, 1986.
(3) Incorporated by reference to exhibits to Registration
Statement No. 33-12123 effective February 26, 1987.
(4) Incorporated by reference to exhibits to Registration
Statement No. 33-12768 effective April 23, 1987.
(5) Incorporated by reference to exhibits to Registration
Statement No. 33-43172 effective October 7, 1992.
(6) Incorporated by reference to exhibits to Registration
Statement No. 33-8607 effective September 10, 1986.
(7) Incorporated by reference to exhibits to report on Form
8-K effective February 8, 1988.
(8) Incorporated by reference to exhibits to Annual Report
on Form 10-K effective June 24, 1988.
(9) Incorporated by reference to exhibits to Annual Report
on Form 10-K effective June 24, 1989.
(10) Incorporated by reference to exhibits to Annual Report
on Form 10-K effective June 1, 1990.
(11) Incorporated by reference to exhibits of Form 8-K filed
July 13, 1990.
(12) Incorporated by reference to exhibits of Form 8 filed
November 13, 1990.
(13) Incorporated by reference to exhibits of Form 8 filed
January 8, 1991.
(14) Incorporated by reference to exhibits to Annual Report
on Form 10-K effective July 15, 1991.
(15) Incorporated by reference to exhibits to Annual Report
on Form 10-K effective June 25, 1992.
(16) Incorporated by reference to exhibits of Form 8-K filed
January 8, 1993.
(17) Incorporated by reference to exhibits to Annual Report
on Form 10-K effective May 27, 1993.
(18) Incorporated by reference to exhibits of Form 10-Q
filed August 10, 1993.
(19) Incorporated by reference to exhibits of Form 8-Q
filed August 19, 1993.
(20) Incorporated by reference to exhibits of Form 10-Q filed
November 8, 1993
MAXTOR CORPORATION,
a Delaware Corporation
AMENDED AND RESTATED BY-LAWS
This document uses paragraph numbering, however you must indicate level
rather than using automatic numbering:
Level 1 I Article numbers
Level 2 1 Section numbers
Level 3 (1) Subparagraph numbers
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within thirteen months
subsequent to the last annual meeting of stockholders, or if no such meeting
has been held, the date of incorporation.
Section 2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes prescribed in the notice of the meeting, may be
called only by (I) the Board of Directors pursuant to a resolution adopted in
the manner provided in the Certificate of Incorporation of the Corporation,
or (ii) by written notice to the Board of Directors from any person or group
authorized to call such a meeting as provided in the Certificate of
Incorporation of the Corporation, and shall be held at such place, on such
date, and at such time as shall be fixed by the Board of Directors or by the
other person or group calling such meeting as specified in the written notice
to the Board of Directors calling such meeting. Business transacted at
special meetings shall be confined to the purpose or purposes stated in the
notice. In the event a special meeting is rightfully called by a person
other than the Board of Directors, the Board shall cooperate in causing the
meeting to be properly noticed and the matter as to which the meeting was
called to be properly brought before the meeting.
Section 3. Notice of Meetings. Written notice of the place, date, and
time of all meetings of the stockholders shall be given, not less than ten
(10) nor more than sixty (60) days before the date on which the meeting is to
be held, to each stockholder entitled to vote at such meeting, except as
otherwise provided herein or required by law (meaning, here and hereinafter,
as required from time to time by the Delaware General Corporation Law or the
Certificate of Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date, and time of the adjourned meeting shall be given in
conformity herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original meeting.
Section 4. Quorum. At any meeting of the stockholders, the holders of
a majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another
place, date, or time.
Section 5. Conduct of Stockholders' Meeting. Such person as the Board
of Directors may have designated or, in the absence of such a person, the
chief executive officer of the Corporation or, in his or her absence, such
person as may be chosen by the holders of a majority of the shares entitled
to vote who are present, in person or by proxy, shall call to order any
meeting of the stockholders and act as chairman of the meeting. In the
absence of the Secretary of the Corporation, the secretary of the meeting
shall be such person as the chairman appoints.
Section 6. Conduct of Business. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him or her in order. The date and time of the opening
and closing of the polls for each matter upon which the stockholders will
vote at the meeting shall be announced at the meeting.
Section 7. Notice of Stockholder Business. At an annual or special
meeting of the stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before
a meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) properly brought before the meeting by or at the direction of the Board
of Directors, or (c) properly brought before a meeting by a stockholder and
if, and only if, the notice of a special meeting provides for business to be
brought before the meeting by stockholders, properly brought before the
meeting by a stockholder. For business to be properly brought before a
meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation, provided
(notwithstanding anything in this Section 7) that any matter specified in a
written notice rightfully calling a special meeting under Article I, Section
2 shall be deemed properly and timely brought. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation (i) with respect to an annual meeting of
stockholders, not less than one hundred twenty (120) days prior to the day
and month of the prior year's proxy statement for that annual meeting, and
(ii) with respect to a special meeting where the notice of such special
meeting provides for such business to be brought before the meeting by
stockholders, the close of business on the seventh (7th) day following the
date on which notice of such meeting is first given to stockholders. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before such meeting (a) a brief description of
the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (b) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-Laws to the
contrary, no business shall be conducted at an annual or special meeting
except in accordance with the procedures set forth in this Section 7. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 7, and if he should so
determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 8. Proxies and Voting. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized
by an instrument in writing or by a transmission permitted by law filed in
accordance with the procedure established for the meeting. Any copy,
facsimile telecommunication or other reliable reproduction of the writing or
transmission created pursuant to this paragraph may be substituted or used in
lieu of the original writing or transmission for any and all purposes for
which the original writing or transmission could be used, provided that such
copy, facsimile transmission or other reproduction shall be complete
reproduction for the entire original writing or transmission.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that
upon demand therefor by a stockholder entitled to vote or his or her proxy, a
stock vote shall be taken. Every stock vote shall be taken by ballots, each
of which shall state the name of the stockholder or proxy voting and such
other information as may be required under the procedure established for the
meeting. Every vote taken by ballots shall be counted by an inspector or
inspectors appointed by the chairman of the meeting. The Corporation may,
and to the extent required by law, shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at the meeting and make a
written report thereof. The Corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting may, and to the extent required by law,
shall, appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.
Elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law or by the Certificate of Incorporation of
the Corporation, all other matters shall be determined by a majority of the
votes cast affirmatively or negatively.
Section 9. Stock List. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the
number of shares registered in his or her name, shall be open to the
examination of any such stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten (10) days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number
of shares held by each of them.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The number of directors shall be
fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), but shall not be less than five. The directors shall be divided
into three classes, as nearly equal in number as reasonably possible, with
the term of office of the first class to expire at the 1994 annual meeting of
stockholders, the term of office of the second class to expire at the 1995
annual meeting of stockholders and the term of office of the third class to
expire at the 1996 annual meeting of stockholders, provided that the term of
office of directors in office on the date these Amended and Restated By-Laws
are adopted is not affected by the adoption of these Amended and Restated By-
Laws. At each annual meeting of stockholders following such initial
classification and election, directors elected to succeed those directors
whose terms expire shall be elected for a term of office to expire at the
third succeeding annual meeting of stockholders after their election.
Section 2. Vacancies and Newly Created Directorships. Except as
provided in the Certificate of Incorporation of the Corporation, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
may be filled only by a majority vote of the directors then in office, though
less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of
any incumbent director.
Section 3. Removal. Any or all of the directors may be removed from
office at any time, but only for cause and only by the affirmative vote of
the holders of at least a majority of the Voting Stock (as defined in Article
FOURTH of the Certificate of Incorporation) of the Corporation, voting
together as a single class.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place or places, on such date or dates, and
at such time or times as shall have been established by the Board of
Directors and publicized among all directors. A notice of each regular
meeting shall not be required.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by one-third of the directors then in office (rounded
up to the nearest whole number) or by the chief executive officer and shall
be held at such place, on such date, and at such time as they or he or she
shall fix. Notice of the place, date, and time of each such special meeting
shall be given each director by whom it is not waived by mailing written
notice not less than five (5) days before the meeting or by transmitting the
same by telefacsimile not less than twenty-four (24) hours before the
meeting. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.
Section 6. Quorum. At any meeting of the Board of Directors, a
majority of the total number of authorized directors shall constitute a
quorum for all purposes. If a quorum shall fail to attend any meeting, a
majority of those present may adjourn the meeting to another place, date, or
time, without further notice or waiver thereof.
Section 7. Participation in Meetings by Conference Telephone. Members
of the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other and such participation shall constitute
presence in person at such meeting.
Section 8. Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board
may from time to time determine, and all matters shall be determined by the
vote of a majority of the directors present, except as otherwise provided
herein or required by law. Action may be taken by the Board of Directors
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
Section 9. Powers. Except for matters requiring the consent of any
stockholders of the Corporation or as required by law, the Board of Directors
may exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with
law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any officer
upon any other person for the time being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for directors, officers,
employees and agents of the Corporation and its subsidiaries as it may
determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with
these by-laws, for the management of the Corporation's business and affairs.
Section 10. Compensation of Directors. Directors, as such, may
receive, pursuant to resolution of the Board of Directors, fixed fees and
other compensation for their services as directors, including, without
limitation, their services as members of committees of the Board of
Directors.
Section 11. Nomination of Director Candidates. Except as otherwise
provided in the Certificate of Incorporation of the Corporation, nominations
for the election of Directors may be made by the Board of Directors or a
proxy committee appointed by the Board of Directors or by any stockholder
entitled to vote in the election of Directors generally. However, any
stockholder entitled to vote in the election of Directors generally may
nominate one or more persons for election as Directors at a meeting only if
timely notice of such stockholder's intent to make such nomination or
nominations has been given in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation (i)Ewith
respect to an election to be held at an annual meeting of stockholders, not
less than one hundred twenty (120) days prior to the day and month of the
prior year's proxy statement for that annual meeting as set forth in Section
7 of Article I of these By-laws, and (ii) with respect to an election to be
held at a special meeting of stockholders for the election of Directors where
the notice of such special meeting provides for such business to be brought
before the meeting by stockholders, the close of business on the seventh
(7th) day following the date on which notice of such meeting is first given
to stockholders. Each such notice shall set forth: (a) the name and address
of the stockholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote for the
election of Directors on the date of such notice and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to
be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e)the consent of
each nominee to serve as a director of the Corporation if so elected.
In the event that a person is validly designated as a nominee in
accordance with this Section 11 or the Certificate of Incorporation of the
Corporation and shall thereafter become unable or unwilling to stand for
election to the Board of Directors, the Board of Directors or the stockholder
who proposed such nominee, as the case may be, may designate a substitute
nominee upon delivery, not fewer than five days prior to the date of the
meeting for the election of such nominee of a written notice to the Secretary
setting forth such information, if any, regarding such substitute nominee as
would have been required to be delivered to the Secretary pursuant to this
Section 11 or the Certificate of Incorporation of the Corporation had such
substitute nominee been initially proposed as a nominee. Such notice shall
include a signed consent to serve as a Director of the Corporation, if
elected, of each such substitute nominee.
If the chairman of the meeting for the election of Directors determines
that a nomination of any candidate for election as a Director at such meeting
was not made in accordance with the applicable provisions of this Section 11
or the Certificate of Incorporation of the Corporation, such nomination shall
be void; provided, however, that nothing in this Section 11 shall be deemed
to limit any voting rights upon the occurrence of dividend arrearages
provided to holders of Preferred Stock pursuant to the Preferred Stock
designation for any series of Preferred Stock or any rights of the holders of
any Class A Common Stock then outstanding.
ARTICLE III
COMMITTEES
Section 1. Committees of the Board of Directors. The Board of
Directors, by a vote of a majority of the whole Board, may from time to time
designate committees of the Board, with such lawfully delegable powers and
duties as it thereby confers, to serve at the pleasure of the Board and
shall, for those committees and any others provided for herein, elect a
director or directors to serve as the member or members, designating, if it
desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the
Board of Directors to act at the meeting in the place of the absent or
disqualified member.
Section 2. Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings;
one-third of the authorized members shall constitute a quorum unless the
committee shall consist of one or two members, in which event one member
shall constitute a quorum; and all matters shall be determined by a majority
vote of the members present. Action may be taken by any committee without a
meeting if all members thereof consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of such committee.
ARTICLE IV
OFFICERS
Section 1. Generally. The officers of the Corporation shall consist of
a Chairman of the Board, a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other offices as may from time to time be
appointed by the Board of Directors. Except as otherwise provided in the
Certificate of Incorporation of the Corporation, officers shall be elected by
the Board of Directors, which shall consider that subject at its first
meeting after every annual meeting of stockholders. Each officer shall hold
office until his or her successor is elected and qualified or until his or
her earlier resignation or removal. The Chairman of the Board and the
President shall each be members of the Board of Directors. Any number of
offices may be held by the same person.
Section 2. Chairman of the Board. The Chairman of the Board shall
perform all duties and have all powers which are commonly incident to the
office of the Chairman of the Board or which are delegated to him or her by
the Board of Directors.
Section 3. President. The President shall be the chief executive
officer of the Corporation. Subject to the provisions of these by-laws and
to the direction of the Board of Directors, he or she shall have the
responsibility for the general management and control of the business and
affairs of the Corporation and shall perform all duties and have all powers
which are commonly incident to the office of chief executive or which are
delegated to him or her by the Board of Directors. He or she shall have
power to sign all stock certificates, contracts and other instruments of the
Corporation which are authorized and shall have general supervision and
direction of all of the other officers, employees and agents of the
Corporation.
Section 4. Vice President. Each Vice President shall have such powers
and duties as may be delegated to him or her by the Board of Directors. One
Vice President shall be designated by the Board to perform the duties and
exercise the powers of the President in the event of the President's absence
or disability.
Section 5. Treasurer. The Treasurer shall have the responsibility for
maintaining the financial records of the Corporation and shall have custody
of all monies and securities of the Corporation. He or she shall make such
disbursements of the funds of the Corporation as are authorized and shall
render from time to time an account of all such transactions and of the
financial condition of the Corporation. The Treasurer shall also perform
such other duties as the Board of Directors may from time to time prescribe.
Section 6. Secretary. The secretary shall issue all authorized notices
for, and shall keep minutes of, all meetings of the stockholders and the
Board of Directors. He or she shall have charge of the corporate books and
shall perform such other duties as the Board of Directors may from time to
time prescribe.
Section 7. Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other
officers or agents, notwithstanding any provision hereof.
Section 8. Removal. Except as otherwise provided in the Certificate of
Incorporation of the Corporation, any officer of the Corporation may be
removed at any time, with or without cause, by the Board of Directors.
Section 9. Action With Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to
vote and otherwise act on behalf of the Corporation, in person or by proxy,
at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such
other corporation.
ARTICLE V
STOCK
Section 1. Certificates of Stock. Each stockholder shall be entitled
to a certificate signed by, or in the name of the Corporation by, the
President or a Vice President, and by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, certifying the number
of shares owned by him or her. Any of or all the signatures on the
certificate may be facsimile.
Section 2. Transfers of Stock. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the
Corporation or by transfer agents designated to transfer shares of the stock
of the Corporation. Except where a certificate is issued in accordance with
Section 4 of Article V of these By-laws, an outstanding certificate for the
number of shares involved shall be surrendered for cancellation before a new
certificate is issued therefor.
Section 3. Record Date. The Board of Directors may fix a record date,
which shall not be more than sixty nor fewer than ten days before the date of
any meeting of stockholders, nor more than sixty days prior to the time for
the other action hereinafter described, as of which there shall be determined
the stockholders who are entitled: to notice of or to vote at any meeting of
stockholders or any adjournment thereof; to express consent to corporate
action in writing without a meeting; to receive payment of any dividend or
other distribution or allotment of any rights; or to exercise any rights with
respect to any change, conversion or exchange of stock or with respect to any
other lawful action.
Section 4. Lost, Stolen or Destroyed Certificates. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued
in its place pursuant to such regulations as the Board of Directors may
establish concerning proof of such loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE VI
NOTICES
Section 1. Notices. Except as otherwise specifically provided herein
or required by law, all notices required to be given to any stockholder,
director, officer, employee or agent shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, or by sending such notice
by telefacsimile. Any such notice shall be addressed to such stockholder,
director, officer, employee or agent at his or her last known address as the
same appears on the books of the Corporation. The time when such notice is
received by such stockholder, director, officer, employee or agent, or by any
person accepting such notice on behalf of such person, if hand delivered, or
dispatched, if delivered through the mails or by telefacsimile, shall be the
time of the giving of the notice.
Section 2. Waivers. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after
the time of the event for which notice is to be given, shall be deemed
equivalent to the notice required to be given to such stockholder, director,
officer, employee or agent. Neither the business nor the purpose of any
meeting need be specified in such a waiver.
ARTICLE VII
MISCELLANEOUS
Section 1. Facsimile Signatures. In addition to the provisions for use
of facsimile signatures elsewhere specifically authorized in these by-laws,
facsimile signatures of any officer or officers of the Corporation may be
used whenever and as authorized by the Board of Directors or a committee
thereof.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of
Directors or a committee thereof, duplicates of the seal may be kept and used
by the Treasurer or by an Assistant Secretary or Assistant Treasurer.
Section 3. Reliance Upon Books, Reports and Records. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or other records
of the Corporation, including reports made to the Corporation by any of its
officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.
Section 4. Fiscal Year. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.
Section 5. Time Periods. In applying any provision of these by-laws
which require that an act be done or not done a specified number of days
prior to an event or that an act be done during a period of a specified
number of days prior to an event, calendar days shall be used, the day of the
doing of the act shall be excluded, and the day of the event shall be
included.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person of whom he
or she is the legal representative, is or was a director, officer or employee
of the Corporation or is or was serving at the request of the Corporation as
a director, officer or employee of another corporation, or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer or employee or in any
other capacity while serving as a director, officer or employee, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by Delaware Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said Law permitted the Corporation to provide prior to such amendment)
against all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid
in settlement and amounts expended in seeking indemnification granted to such
person under applicable law, this by-law or any agreement with the
Corporation) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to the benefit
of his or her heirs, executors and administrators; provided, however, that,
except as provided in Section 2 of this Article VIII, the Corporation shall
indemnify any such person seeking indemnity in connection with an action,
suit or proceeding (or part thereof) initiated by such person only if such
action, suit or proceeding (or part thereof) was authorized by the board of
directors of the Corporation. Such right shall be a contract right and shall
include the right to be paid by the Corporation expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law then so requires, the
payment of such expenses incurred by a director or officer of the Corporation
in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director
or officer, including, without limitation, service to an employee benefit
plan) in advance of the final disposition of such proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it should be
determined ultimately that such director or officer is not entitled to be
indemnified under this Section or otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim under Section 1
is not paid in full by the Corporation within twenty (20) days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if such suit is not frivolous or brought in bad
faith, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to this Corporation) that the claimant
has not met the standards of conduct which make it permissible under the
Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
claimant has not met the applicable standard of conduct.
Section 3. Non-Exclusivity of Rights. The rights conferred on any
person in Sections 1 and 2 shall not be exclusive of any other right which
such persons may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 4. Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in this
Article VIII.
Section 5. Insurance. The Corporation shall maintain insurance to the
extent reasonably available, at its expense, to protect itself and any such
director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
Section 6. Effect of Amendment. Any amendment, repeal or modification
of any provision of this Article VIII by the stockholders and the directors
of the Corporation shall not adversely affect any right or protection of a
director or officer of the Corporation existing at the time of such
amendment, repeal or modification.
ARTICLE IX
AMENDMENTS
The Board of Directors is expressly empowered to adopt, amend or repeal
By-Laws of the Corporation. Any adoption, amendment or repeal of By-Laws of
the Corporation by the Board of Directors shall require the approval of a
majority of the total number of authorized directors. The stockholders shall
also have power to adopt, amend or repeal the By-Laws of the Corporation.
242283.010
RESTATED CERTIFICATE OF INCORPORATION
OF
MAXTOR CORPORATION
Maxtor Corporation, a corporation organized and existing under the laws
of the State of Delaware, hereby certifies that:
1. The name of the corporation is Maxtor Corporation. The
corporation's original certificate of incorporation was filed with the
Secretary of State of the State of Delaware on July 24, 1986.
2. This Restated Certificate of Incorporation restates and integrates
and further amends the provisions of the Certificate of Incorporation of this
corporation and has been duly adopted in accordance with Sections 242 and 245
of the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation of this corporation is
hereby restated and further amended to read in its entirety as follows:
FIRST: The name of the corporation is Maxtor Corporation (hereinafter
sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of the registered agent
at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of Delaware.
FOURTH:
A. Capitalized terms in this Article FOURTH, unless otherwise defined
herein, have the meaning set forth in section E of this Article FOURTH.
B. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred five million
(205,000,000), consisting of:
(1) five million (5,000,000) shares of Preferred Stock, par value
one cent ($.01) per share (the "Preferred Stock"); and
(2) two hundred million (200,000,000) shares of common stock, par
value one cent ($.01) per share, of which one hundred eighty million five
hundred twenty thousand (180,520,000) shares shall be designated as "Common
Stock" and nineteen million four hundred eighty thousand (19,480,000) shares
shall be designated as "Class A Common Stock."
C. The Board of Directors is authorized, subject to any limitations
prescribed by law, to issue the shares of Preferred Stock in one or more
series and, by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series and to fix the designation, voting powers,
preferences, and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote
of the holders of a majority in voting power of the Common Stock and Class A
Common Stock, voting together as a single class, without a vote of the
holders of the Preferred Stock, or of any series thereof, unless a vote of
the holders of any series of Preferred Stock is required pursuant to the
certificate or certificates establishing such series of Preferred Stock.
D. The rights, preferences and privileges of each share of all classes
of common stock shall be identical, except as otherwise expressly provided
herein.
(1) With respect to all matters upon which the holders of Class A
Common Stock are entitled to vote, each share of Class A Common Stock issued
and outstanding shall have the number of votes equal to the number of shares
of Common Stock into which such share of Class A Common Stock could be
converted on the record date for the vote of stockholders. The holders of
the Class A Common Stock shall be entitled to notice of each stockholders'
meeting in accordance with the By-Laws of the Corporation and shall vote
together as a single class with the holders of the Common Stock on all
matters submitted to a vote of stockholders, except those matters required by
law or by this Restated Certificate of Incorporation to be submitted to the
holders of the Class A Common Stock, the Common Stock or any one series of
Preferred Stock voting separately as a class.
(2) Subject to paragraph D(3) of this Article FOURTH, the
Corporation shall not, without first obtaining the approval of the holders of
a majority of the outstanding shares of Class A Common Stock:
(i) terminate, acquire or commence a Core Line of Products, or
terminate the operations of or sell to a party which is not a wholly-owned
Subsidiary of the Corporation all or a majority of the Corporation's interest
held on the date of filing of this Restated Certificated of Incorporation in
or the assets of Maxoptix Corporation;
(ii) incur obligations to make an aggregate of capital
expenditures in any fiscal year in excess of $80,000,000;
(iii) make any decision respecting the location or construction of
new high-volume manufacturing facilities (other than the expansion of high-
volume manufacturing facilities existing at the time of such decision) for
the manufacture of finished disk drives and/or subassemblies of disk drives;
(iv) enter into a Joint Venture in which the fair market value of
the Corporation's initial contribution, as determined by the Board in good
faith is in excess of $5,000,000;
(v) grant any Material Exclusive License;
(vi) enter into any Change in Senior Management Compensation
Arrangement Outside the Scope of the Corporation's Current Practice;
(vii) consummate a Corporate Sale prior to the fifth anniversary
of the date of initial issuance of the Class A Common Stock;
(viii) consummate a Corporate Sale on or after the fifth
anniversary of the date of initial issuance of the ClassEA Common Stock,
unless: (A) if the Corporate Sale is proposed by the Corporation in the
absence of an offer from a third party, (x) Hyundai has not provided the
Corporation, within thirty (30) days of receipt by Hyundai of notice from the
Corporation describing in reasonable detail the terms of the proposed Corpo
rate Sale (the "Proposal Notice"), notice of Hyundai's non-binding intent to
be the acquiror on substantially the same terms as set forth in the Proposal
Notice (the "Acquisition Notice"); or (y) (I) Hyundai has provided the
Corporation, within thirty days of its receipt of the Proposal Notice, with
an Acquisition Notice, but (II) Hyundai fails to negotiate in good faith in
accordance with the terms of the Proposal Notice (provided that the Corp
oration has negotiated in good faith in accordance with such terms) and (III)
the failure of Hyundai to negotiate in good faith remains uncured thirtyE(30)
or more days after its receipt from the Corporation of notice of such
failure; or (z) if a definitive agreement for such sale is not entered into
within ninety (90) days of the date of Hyundai's receipt of the Proposal
Notice (provided that the Corporation has negotiated in good faith in
accordance with the terms of the Proposal Notice); provided that any
Corporate Sale which the Corporation consummates without further notice and
approval from Hyundai after fulfilling the requirements of (x), (y) or (z)
must be on substantially the terms and conditions contained in the Proposal
Notice; or (B) if the Corporation receives an offer from a third party
proposing a Corporate Sale which the Corporation desires to accept, (x)
Hyundai is given prompt written notice from the Corporation of the initial
expression of interest by such third party and (y) Hyundai fails, within
thirty (30) days after the Corporation furnishes Hyundai a copy of the
definitive agreement which the Corporation desires to enter into with the
third party for such sale, to enter into a binding agreement with the
Corporation on substantially the same terms and conditions as set forth in
the definitive agreement so furnished to Hyundai and (z) the Corporation
enters into a binding agreement and consummates, within one hundred eighty
(180) days of furnishing of such definitive agreement, the Corporate Sale on
substantially those terms and conditions as set forth in the definitive
agreement so furnished.
(ix) create or issue any stock ranking senior to the common stock
with respect to dividends or with respect to distributions upon liquidation
or carrying any voting, consent, conversion, exchange, purchase or other
rights different from or in addition to the rights which a holder of an
equivalent number of shares of Common Stock would have or which imposes
restrictions on the Corporation which would not be imposed by an equivalent
number of shares of Common Stock, or enter into any transaction involving the
issuance of securities, or right to acquire securities, constituting (or
which upon exercise or conversion would constitute) twenty percentE(20%) or
more of the Voting Stock.
(3) The special rights of the Class A Common Stock to vote with
respect to the matters set forth in paragraph D(2) of this Article FOURTH
will immediately cease and terminate at such time as the holders of the Class
A Common Stock no longer hold, in the aggregate, either (a) at least
19,480,000 shares (less any shares, up to 80,000 in the aggregate, which one
or more holders has been required to transfer or surrender in order to comply
with any applicable statute, regulation, order or other legal requirement) of
Class A Common Stock and/or Common Stock issued upon conversion of ClassEA
Common Stock (as adjusted, in each case, for any stock split, stock dividend,
recapitalization or similar event) provided that such shares, together with
other shares of Voting Stock held by such holders constitute at least twenty
percent (20%) of the voting power of the Voting Stock, or (b) at least thirty
percent (30%) by voting power of the Voting Stock, provided that such rights
shall terminate only if and on such date as the record holders of the Class A
Common Stock have been provided with written notice by the Corporation that
the provisions of clause (a) and (b) are not satisfied, and ninety (90) days
have elapsed from the date of such notice and such provisions remain
unsatisfied at the end of such ninety (90) day period.
(4) Subject to paragraph D(6) of this Article FOURTH, the holders
of the Class A Common Stock as such, by written consent of the holder or
holders of a majority of the outstanding shares of Class A Common Stock,
shall be entitled to nominate the number of directors equal to the number
(with any fraction rounded to the nearest whole number (or, if equidistant
between two whole numbers, the next highest whole number)) obtained by
multiplying the total number of authorized directors by a fraction, the
numerator of which is the total number of shares of Voting Stock held by the
holders of the Class A Common Stock as of the record date for the annual
meeting of stockholders (or as of the effective date of any change in the
authorized number of directors) at which directors are to be elected, and the
denominator of which is the total number of shares of Voting Stock as of the
record date for the annual meeting of stockholders (or as of the effective
date of any change in the authorized number of directors) at which directors
are to be elected, provided that (A) in any case in which the foregoing
formula would entitle the holders of the Class A Common Stock to elect one-
half or more of the number of authorized directors without holding one-half
or more by voting power of the Voting Stock, the number of directors that the
holders of the Class A Common Stock is permitted to nominate will be reduced
by one and (B) the number of directors which the Class A Common Stock are
entitled to nominate shall be reduced by the number of directors previously
nominated by such holders pursuant to this paragraph 4 (or nominated pursuant
to Section 4.10 of the Stock Purchase Agreement dated SeptemberE10, 1993
among the Corporation, Hyundai Electronics Industries Co., Ltd. and certain
other purchasers (the "Hyundai Purchase Agreement")) who will continue in
office after such record date or effective date. While the foregoing
nomination rights are in effect, the balance of the nominees for directors
submitted by the Corporation to its stockholders at any annual meeting of
stockholders shall be selected by the Board of Directors, provided that the
vote in favor of such other nominees shall include the vote of at least a
majority of the directors not nominated by the Class A Common Stock pursuant
to this paragraph 4 (or such Stock Purchase Agreement). If the number of
directors which the Class A Common Stock is entitled to nominate increases
due to an increase in the total number of authorized directors and the
application of the formula set forth above in this paragraph (4), or if any
director so nominated ceases to be a director of the Corporation, whether as
a result from death, resignation, retirement, disqualification, removal from
office or other cause, the vacancy so created may be filled only by a
majority vote of the remaining directors so nominated then in office, though
less than a quorum, or, if no such directors are then in office, by the
holders of the Class A Common Stock. Notwithstanding anything else in this
Restated Certificate of Incorporation, in the event that a holder of ClassEA
Common Stock does not comply in a significant respect with the voting
provision set forth in Section 7.5 of the Hyundai Purchase Agreement, then
such shares shall not be entitled to be voted for such election without the
consent of the majority of the directors other than any directors nominated
by the holders of the Class A Common Stock under this paragraph D(4) of this
Article FOURTH.
(5) Subject to paragraph D(6) of this Article FOURTH, the Board of
Directors of the Corporation shall elect as the Chairman of the Board from
among the directors then serving such director as is designated in any
written consent of the holders of a majority of the Class A Common Stock.
(6) (i) The right of the Class A Common Stock to designate the
director to be elected as the Chairman of the Board as set forth in
paragraphED(5) of this Article FOURTH will immediately cease and terminate
permanently at such time as the holders of the ClassEA Common Stock no longer
collectively hold of record either (a) at least 15,584,000 shares of Class A
Common Stock (as adjusted) for any stock split, stock dividend,
recapitalization or similar event) or (b) at least 11,688,000 shares of the
Class A Common Stock (as adjusted for any stock split, stock dividend,
recapitalization or similar event) provided that such shares, together with
other shares of Voting Stock held by such holders, constitute at least twenty
percent (20%) by voting power of the Voting Stock, provided that such rights
shall terminate only if and on such date as the record holders of the Class A
Common Stock have been provided wit written notice by the Corporation that
the provisions of clause (a) and (b) are not satisfied, and ninety (90) days
have elapsed from the date of such notice and such provisions remain
unsatisfied at the end of such ninety (90) day period.
(ii) The right of the Class A Common Stock to nominate directors set
forth in paragraph D(4) of this Article FOURTH will be suspended and shall
have no effect during any period and for such times as the holders of the
Class A Common Stock do not hold of record either (a) at least 15,584,000
shares of Class A Common Stock and/or Common Stock issued upon conversion of
ClassEA Common Stock (as adjusted, in each case, for any stock split, stock
dividend, recapitalization or similar event) or (b) at least twenty percent
(20%) by voting power of the Voting Stock, provided that such rights shall be
suspended only if and on such date as the record holders of the Class A
Common Stock have been provided with written notice by the Corporation that
the provisions of clause (a) and (b) are not satisfied, and ninety (90) days
have elapsed from the date of such notice and such provisions remain
unsatisfied at the end of such ninety (90) day period.
(7) Holders of Class A Common Stock shall have conversion rights as
follows:
(i) Each share of Class A Common Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of
such share, at the office of the Corporation or any transfer agent for the
Class A Common Stock, into one share of Common Stock, subject to adjustment
as provided in paragraphs D(7)(iv) and (v) of this Article FOURTH.
(ii) Before any holder of Class A Common Stock shall be entitled
to convert the same into shares of Common Stock, it shall surrender the
certificate or certificates therefor at the office of the Corporation or any
transfer agent for the Class A Common Stock, and shall give written notice to
the Corporation at such office that it elects to convert the same and shall
state therein the name or names in which it wishes the certificate or
certificates to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Class A Common
Stock, or to its nominee or nominees, a certificate or certificates for the
number of shares of Common Stock to which it shall be entitled. Such
conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Class A Common
Stock to be converted, and the person or person entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on
such date.
(iii) No fractional shares of Common Stock shall be issued upon
conversion of the Class A Common Stock, and in lieu thereof the Corporation
shall pay to the holders otherwise entitled to such fraction an amount in
cash equal to such fraction multiplied by the then fair market value of one
share of Common Stock as determined by the Corporation's Board of Directors.
If more than one share of Class A Common Stock is surrendered for conversion
at any one time by the same holder, the number of full shares of Common Stock
to be issued upon conversion shall be computed on the basis of the aggregate
number of shares of Class A Common Stock so surrendered.
(iv) In case the Corporation shall at any time subdivide the
outstanding shares of Common Stock, or shall pay a dividend on its
outstanding Common Stock payable in shares of Common Stock, without an
equivalent subdivision of, or dividend on, the Class A Common Stock, the
number of shares of Common Stock into which each share of Class A Common
Stock is convertible immediately prior to such subdivision or the issuance of
such dividend shall be proportionately increased, and in case the Corporation
shall at any time combine the outstanding shares of Common Stock, without an
equivalent combination of the Class A Common Stock, the number of shares of
Common Stock into which each share of Class A Common Stock is convertible
immediately prior to such combination shall be proportionately decreased,
effective at the close of business on the date of such subdivision, dividend
or combination, as the case may be.
(v) In case, at any time after the date of issuance of the Class
A Common Stock, of any capital reorganization or any reclassification of the
stock of the Corporation (other than a change in par value or from par value
to no par value or from no par value to par value or as a result of a
dividend payable in shares of Common Stock on, or a subdivision, split-up or
combination of the Common Stock), or the consolidation or merger of the
Corporation with or into another person (other than a consolidation or merger
in which the Corporation is the continuing corporation and which does not
result in any change in the Common Stock) or of the sale or other disposition
of all or substantially all the properties and assets of the Corporation as
an entirety to any other person, proper provisions shall be made such that
each share of Class A Common Stock shall be entitled pursuant to such
reorganization, reclassification, consolidation, merger, sale, or other
disposition to receive stock with substantially the same rights as the Class
A Common Stock, and convertible into the kind and number of shares of stock
or other securities or property of the corporation resulting from such
consolidation or surviving such merger (including the Corporation, if it
survives) or to which such properties and assets shall have been sold or
otherwise disposed to which the holder of the number of shares of Common
Stock deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation, merger, sale or other disposition) upon
conversion of such shares would have been entitled upon such reorganization,
reclassification, consolidation, merger, sale or other disposition. The
provisions of this paragraph (7)(v) shall similarly apply to successive
reorganizations, reclassification, consolidations, mergers, sales or other
dispositions.
(vi) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Class A Common Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Class
A Common Stock from time to time outstanding. The Corporation shall from
time to time, in accordance with the laws of the State of Delaware, increase
the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be
sufficient to permit the conversion of all of the shares of Class A Common
Stock at the time outstanding.
(vii) Any shares of Class A Common Stock converted, purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof and may not be
reissued.
(8) Upon any Transfer of shares of Class A Common Stock, such
shares will convert automatically into shares of Common Stock in accordance
with paragraph D(7) of this Article FOURTH.
E. For the purposes of this Article FOURTH:
(1) "Affiliate" means, with respect to a person or entity, any
other person or entity which controls, is controlled by or is under common
control with, such person or entity. For purposes of this definition,
"control" means the ability, directly or indirectly, to elect or designate
(in the absence of particular events or circumstances) a majority of the
directors (or persons performing a similar function) of an entity.
(2) "Change in Senior Management Compensation Arrangement Outside
the Scope of the Corporation's Current Practice" means the entering into of
any written contract with any employee with the title of Chief Executive
Officer, President, Chief Operating Officer, Vice-President or Chief
Financial Officer of the Corporation which provides for a fixed term of
employment or requires the Corporation to pay benefits upon termination other
than those generally available to other employees of the Corporation.
(3) "Core Line of Products" means a complete form factor, such as
1.8-inch, 2.5-inch, 3.5-inch, or a line of products which are not data
storage products.
(4) "Corporate Sale" means (I) a consolidation or merger of the
Corporation with or into any other corporation, entity or person (or group of
corporations, entities or persons, acting in concert) where the Corporation
is not the surviving corporation (unless the sole purpose of the transaction
is to change the Corporation's domicile) or where the stockholders of the
Corporation own less than a majority of the voting stock of the surviving
corporation immediately following such consolidation or merger, or (ii)Ethe
sale, transfer or other disposition of all or substantially all of the assets
of the Corporation.
(5) "Material Exclusive License" means a license to make, use or
sell products incorporating any intellectual property owned by the
Corporation granted (other than in connection with a Corporate Sale) to a
party which is not a Subsidiary of the Corporation in an arms length
transaction in consideration of cash, securities or other property having a
Fair Market Value (as defined in Article EIGHTH) of at least $10,000,000,
which license precludes (or imposes restrictions or royalty obligations upon
the Corporation of such magnitude that they would effectively preclude) the
right of the Corporation to make, use or sell disk drive products
incorporating such licensed intellectual property or to license others to do
so.
(6) "Hyundai" means Hyundai Electronics Industries Co., Ltd.,
Hyundai Heavy Industries Co., Ltd., Hyundai Corporation, Hyundai Merchant
Marine Co., Ltd. and any Affiliate of any or all of them; provided that, for
purposes of giving notice or documents required to be given pursuant to this
Article FOURTH, Hyundai shall mean the person to whom notice to any Purchaser
(as defined in the Hyundai Purchase Agreement) is required to be given
pursuant to Section 9.11 of the Hyundai Purchase Agreement.
(7) "Joint Venture" means an entity in which, upon formation, the
Corporation and its Subsidiaries collectively would own, directly or
indirectly between 20% and 80% of the outstanding equity interest.
(8) "Subsidiary" shall have the meaning ascribed to it in Article
EIGHTH.
(9) "Transfer" means any sale, exchange, transfer, gift,
assignment, or other disposition, whether voluntary or involuntary, other
than to a person or entity included in the definition of "Hyundai" and shall
include any transaction or event following which an Affiliate or Affiliates
shall no longer be an Affiliate or Affiliates.
(10) "Voting Stock" means, taken together, all outstanding shares
of Common Stock, all outstanding shares of Class A Common Stock (counted on
an as-converted basis as if fully converted into Common Stock), and all
outstanding shares of Preferred Stock entitled to vote generally, without
regard to particular events or circumstances (counted, if convertible, on an
as-converted basis as if fully converted into Common Stock).
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by Statute or by this Restated
Certificate of Incorporation or the By-Laws of the Corporation, the directors
are hereby empowered to exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the By-Laws so provide.
C. Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders, provided, however, that the vote of the holders
of the Class A Common Stock required under paragraph D(2) of Article FOURTH
may be effected by a consent in writing.
D. Special meetings of stockholders of the Corporation may be called
only by (i) the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors or (ii), at any time
when the nomination right of the Class A Common Stock pursuant to paragraph
D(4) of Article FOURTH is in effect, the holder or holders of a majority of
the outstanding Class A Common Stock. As used in this Restated Certificate
of Incorporation, the "total number of authorized directors" shall mean the
number of directors which would be in office were there no vacancies nor any
unfilled newly created directorships.
SIXTH:
A. The number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any
such resolution is presented to the Board for adoption), but shall not be
less than five (5). The directors shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class to expire at the 1994 annual meeting of stockholders, the term of
office of the second class to expire at the 1995 annual meeting of
stockholders and the term of office of the third class to expire at the 1996
annual meeting of stockholders, provided that the term of office of directors
in office on the date of filing of this Restated Certificate of Incorporation
is unaffected by the filing of this Restated Certificate of Incorporation.
At each annual meeting of stockholders following such initial classification
and election, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election.
B. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
C. Any or all of the Directors may be removed from office at any time,
but only for cause and only by the affirmative vote of the holders of at
least a majority of the Voting Stock (as defined in Article FOURTH), voting
together as a single class.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend
or repeal By-laws of the Corporation. Any adoption, amendment or repeal of
By-laws of the Corporation by the Board of Directors shall require the
approval of a majority of the total number of authorized directors. The
stockholders shall also have power to adopt, amend or repeal the By-laws of
the Corporation.
EIGHTH: The stockholder vote required to approve Business Combinations
(as hereinafter defined) shall be as set forth in this Article EIGHTH.
A. (1) Except as otherwise expressly provided in section B of this
Article EIGHTH:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Shareholder (as
hereinafter defined) or (b) any other corporation (whether or not itself an
Interested Shareholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an Interested Shareholder,
except for a merger or consolidation in which the Corporation is merged into
or with another corporation that owns or controls more than 80%Eof the
outstanding Voting Stock if such ownership was obtained in an exchange or
tender offer approved the Board of Directors as provided under SectionE7.2(c)
of the Hyundai Stock Purchase Agreement and provided that the stockholders of
the Corporation receive in such merger or acquisition substantially the same
property as would have been received in such exchange or tender offer; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate of any Interested Shareholder of
any assets of the Corporation or any Subsidiary having an aggregate Fair
Market Value (as hereinafter defined) of ten percent (10%) of the total value
of the assets of the Corporation and its consolidated subsidiaries as
reflected in the most recent balance sheet of the Corporation; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Shareholder or any Affiliate
of any Interested Shareholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate Fair Market Value of
$15,000,000 or more (other than purchases of shares of capital stock of the
Corporation by Hyundai in accordance with Section 6.2 of the Hyundai Purchase
Agreement); or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any Interested
Shareholder or any Affiliate of any Interested Shareholder; or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving any
Interested Shareholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any Subsidiary which
is directly or indirectly owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require (1) the affirmative vote of the holders of at least 66-2/3
percent of the Voting Stock (as defined in Article FOURTH), voting together
as a single class (it being understood that, for purposes of this Article
EIGHTH, each share of the Voting Stock shall have the number of votes granted
to it pursuant to Article FOURTH of this Restated Certificate of
Incorporation or any designation of the rights, powers and preferences of any
class or series of Preferred Stock made pursuant to said Article FOURTH (a
"Preferred Stock Designation")) and (2) the affirmative vote of the holders
of at least a majority of the voting power of all of the then outstanding
shares of Voting Stock other than the Voting Stock of which an Interested
Shareholder or an Affiliate of an Interested Shareholder is the beneficial
owner, voting together as a single class. Such affirmative votes shall be
required notwithstanding any other provisions of this Restated Certificate of
Incorporation or any provision of law or of any agreement with any national
securities exchange which might otherwise permit a lesser vote or no vote,
but such affirmative votes shall be required in addition to any affirmative
vote of the holders of any particular class or series of the Voting Stock
required by law, this Restated Certificate of Incorporation or any Preferred
Stock Designation.
(2) The term "Business Combination" as used in this Article EIGHTH
shall mean any transaction which is referred to in any one or more of
subparagraphs (i) through (v) of paragraph (1) of this section A.
B. The provisions of section A of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law,
any other provision of this Restated Certificate of Incorporation, any
Preferred Stock Designation or any agreement with any national securities
exchange, if, in the case of a Business Combination that does not involve any
cash or other consideration being received by the stockholders of the
Corporation, solely in their respective capacities as stockholders of the
Corporation, the condition specified in the following paragraph (1) is met,
or, in the case of any other Business Combination, the conditions specified
in either of the following paragraphs (1) and (2) are met:
(1) The Business Combination shall have been approved by a majority
of the Continuing Directors (as hereinafter defined), it being understood
that this condition shall not be capable of satisfaction unless there is at
least one Continuing Director.
(2) All of the following conditions shall have been met:
(i) The consideration to be received by holders of shares of a
particular class of outstanding Voting Stock (as defined in Article FOURTH)
shall be in cash or in the same form as the Interested Shareholder has paid
for shares of such class of Voting Stock within the two-year period ending on
and including the date on which the Interested Shareholder became an
Interested Shareholder (the "Determination Date"). If, within such two-year
period, the Interested Shareholder has paid for shares of any class of Voting
Stock with varying forms of consideration, the form of consideration to be
received per share by holders of shares of such class of Voting Stock shall
be either cash or the form used to acquire the largest number of shares of
such class of Voting Stock acquired by the Interested Shareholder within such
two-year period.
(ii) The aggregate amount of (x) the cash and (y) the Fair Market
Value, as of the date (the "Consummation Date") of the consummation of the
Business Combination, of the consideration other than cash to be received per
share by holders of Common Stock in such Business Combination shall be at
least equal to the higher of the following (it being intended that the
requirements of this paragraph 2(ii) shall be required to be met with respect
to all shares of Common Stock outstanding whether or not the Interested
Shareholder has previously acquired any shares of Common Stock):
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Shareholder for any shares of Common Stock acquired by it
within the two-year period immediately prior to the date of the first public
announcement of the proposal of the Business Combination (the "Announcement
Date") or in the transaction in which it became an Interested Shareholder,
whichever is higher, plus interest compounded annually from the Determination
Date through the Consummation Date at the prime rate of interest of The Bank
of America N.T. & S.A. (or such other major bank headquartered in the State
of California as may be selected by the Continuing Directors) from time to
time in effect in the City of San Francisco, less the aggregate amount of any
cash dividends paid, and the Fair Market Value of any dividends paid in other
than cash, on each share of Common Stock from the Determination Date through
the Consummation Date in an amount up to but not exceeding the amount of
interest so payable per share of Common Stock; or
(b) the Fair Market Value per share of Common Stock on the
Announcement Date.
(iii) The aggregate amount of (x) the cash and (y) the Fair Market
Value, as of the Consummation Date, of the consideration other than cash to
be received per share by holders of shares of any class, other than Common
Stock, of Voting Stock (as defined in Article FOURTH) shall be at least equal
to the highest of the following (it being intended that the requirements of
this paragraph (2)(iii) shall be required to be met with respect to every
such class of Voting Stock, whether or not the Interested Shareholder has
previously acquired any shares of a particular class of Voting Stock):
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Shareholder for any shares of such class of Voting Stock
(as defined in Article FOURTH) acquired by it within the two-year period
immediately prior to the Announcement Date or in the transaction in which it
became an Interested Shareholder whichever is higher, plus interest
compounded annually from the Determination Date through the Consummation Date
at the prime rate of interest of The Bank of America, N.T. & S.A. (or such
other major bank headquartered in the City of San Francisco as may be
selected by the Continuing Directors) from time to time in effect in the City
of San Francisco, less the aggregate amount of any cash dividends paid, and
the Fair Market Value of any dividends paid in other than cash, on each share
of such class of Voting Stock from the Determination Date through the
Consummation Date in an amount up to but not exceeding the amount of interest
so payable per share of such class of Voting Stock; or
(b) the Fair Market Value per share of such class of Voting
Stock (as defined in Article FOURTH) on the Announcement Date; or
(c) the highest preferential amount per share to which the
holders of shares of such class of Voting Stock (as defined in Article
FOURTH) are entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
(iv) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination: (a)
except as approved by a majority of the Continuing Directors, there shall
have been no failure to declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) on any outstanding Preferred
Stock; (b) there shall have been (I) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock), except as approved by a majority of the
Continuing Directors, and (II) an increase in such annual rate of dividends
as necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction which has
the effect of reducing the number of outstanding shares of the Common Stock,
unless the failure so to increase such annual rate is approved by a majority
of the Continuing Directors; and (c) such Interested Shareholder shall have
not become the beneficial owner of any additional shares of Voting Stock (as
defined in Article FOURTH) except as part of the transaction which results in
such Interested Shareholder becoming an Interested Shareholder.
(v) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the benefit,
directly or indirectly (except proportionately, solely in such Interested
Shareholder's capacity as a stockholder of the Corporation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation, whether in
anticipation of or in connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination, complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) and setting
forth, as an exhibit thereto, the opinion of an investment banking firm
selected by a majority of the Continuing Directors, or, if there are no
Continuing Directors, an opinion of the investment banking firm most recently
retained by the Corporation before the Interested Shareholder became an
Interested Shareholder, or any successor in interest to such investment
banker, that the proposed Business Combination is fair from a financial point
of view to the stockholders of the Corporation other than the Interested
Shareholder, shall be mailed to all stockholders of the Corporation at least
30 days prior to the consummation of such Business Combination (whether or
not such proxy or information statement is required to be mailed pursuant to
such Act or subsequent provisions).
C. For the purposes of this Article EIGHTH:
(1) A "person" shall mean any individual, firm, corporation or
other entity.
(2) "Interested Shareholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of more
than twenty percent (20%) of the Voting Stock (as defined in Article FOURTH);
or
(ii) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of twenty percent (20%) or more of
the Voting Stock (as defined in Article FOURTH); or
(iii) is an assignee of or has otherwise succeeded to any shares
of Voting Stock (as defined in Article FOURTH) which were at any time within
the two-year period immediately prior to the date in question beneficially
owned by any Interested Shareholder, if such assignment or succession shall
have occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of 1933.
(3) A person shall be a "beneficial owner" of any Voting Stock (as
defined in Article FOURTH):
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock (as defined in
Article FOURTH).
(4) For the purposes of determining whether a person is an
Interested Shareholder pursuant to paragraph (2) of this section C, the
number of shares of Voting Stock (as defined in Article FOURTH) deemed to be
outstanding shall include shares deemed owned through application of
paragraph (3) of this section C but shall not include any other shares of
Voting Stock which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
(5) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on May 5, 1983.
(6) "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in paragraph (2) of this section C, the term
"Subsidiary" shall mean only a corporation of which a majority of each class
of equity security is owned, directly or indirectly, by the Corporation.
(7) "Continuing Director" means any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with the
Interested Shareholder and was a member of the Board prior to the time that
the Interested Shareholder became an Interested Shareholder, and any
successor of a Continuing Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Continuing Director by a majority
of Continuing Directors then on the Board.
(8) "Fair Market Value" means: (i) in the case of stock, the
highest closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in
use, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the Board in good
faith; and (ii) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by the
Board in good faith.
(9) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in paragraphs (2)(ii) and (2)(iii) of section B of this
Article EIGHTH shall include the shares of Common Stock and/or the shares of
any other class of Voting Stock (as defined in Article FOURTH) retained by
the holders of such shares.
D. A majority of the total number of authorized directors (whether or
not there exist any vacancies in previously authorized directorships at the
time any such determination as is hereinafter in this section D specified is
to be made by the Board) shall have the power and duty to determine, on the
basis of information known to them after reasonable inquiry, all facts
necessary to determine compliance with this Article EIGHTH, including,
without limitation, (1) whether a person is an Interested Shareholder, (2)
the number of shares of Voting Stock (as defined in Article FOURTH)
beneficially owned by any person, (3) whether a person is an Affiliate or
Associate of another, (4) whether the applicable conditions set forth in
paragraph (2) of section B have been met with respect to any Business
Combination, (5) whether the assets which are the subject of any Business
Combination referred to in paragraph (1)(ii) of section A have an aggregate
Fair Market Value of 10% of the assets of the Corporation and its
consolidated subsidiaries as reflected in the most recent balance sheet of
the Corporation, and (6) whether the consideration to be received for the
issuance or transfer of securities by the Corporation or any Subsidiary in
any Business Combination referred to in paragraph (1)(iii) of sectionEA has
an aggregate Fair Market Value of $15,000,000 or more.
E. Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
NINTH: A director of this Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a
director, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing provisions of this Article
NINTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
TENTH: The Board of Directors of the Corporation (the "Board"), when
evaluating any offer of another party, (a) to make a tender or exchange offer
for any Voting Stock (as defined in Article FOURTH) or (b) to effect a
Business Combination (as defined in Article EIGHTH), shall, in connection
with the exercise of its judgment in determining what is in the best
interests of the Corporation as a whole, be authorized to give due
consideration to such factors as the Board determines to be relevant,
including, without limitation:
(i) the interests of the Corporation's stockholders;
(ii) whether the proposed transaction might violate federal or
state laws;
(iii) not only the consideration being offered in the proposed
transaction, in relation to the then current market price for the outstanding
capital stock of the Corporation, but also to the market price for the
capital stock of the corporation over a period of years, the estimated price
that might be achieved in a negotiated sale of the Corporation as a whole or
in part or through orderly liquidation, the premiums over market price for
the securities of other corporations in similar transactions, current
political, economic and other factors bearing on securities prices and the
Corporation's financial condition and future prospects; and
(iv) the social, legal and economic effects upon employees,
suppliers, customers and others having similar relationships with the
Corporation, and the communities in which the Corporation conducts its
business.
In connection with any such evaluation, the Board is authorized to conduct
such investigations and to engage in such legal proceedings as the Board may
determine.
ELEVENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation in the
manner prescribed by the laws of the State of Delaware and all rights
conferred upon stockholders are granted subject to this reservation;
provided, however, that, notwithstanding any other provision of this Restated
Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any vote of the holders
of any class or series of the stock of this Corporation required by law or by
this Restated Certificate of Incorporation,
(1) the affirmative vote of the holders of at least 66-2/3% of the
Voting Stock (as defined in Article FOURTH), voting together as a single
class, shall be required to amend or repeal this Article ELEVENTH, sections C
or D of Article FIFTH, Article SIXTH, Article SEVENTH, Article EIGHTH or
Article NINTH; and,
(2) in addition to the vote specified in paragraph (1) of this
Article ELEVENTH, the affirmative vote of the holders of a least a majority
of the voting power of all of the then-outstanding shares of the capital
stock of the Corporation entitled to vote generally in the election of
directors, other than such capital stock of which an Interested Shareholder
is the beneficial owner, voting together as a single class, shall be required
in order to amend or repeal Article EIGHTH or Article TENTH; and
(3) in addition to the votes specified in paragraphsE(1) and (2) of
this Article ELEVENTH, the affirmative vote of the holders of a majority of
the ClassEA Common Stock at the time outstanding shall be required in order
to amend, terminate or repeal any rights of the Class A Common Stock set
forth in this Restated Certificate of Incorporation or to amend this Restated
Certificate of Incorporation to impose any restriction, condition or burden
upon the exercise of any such rights.
IN WITNESS WHEREOF, the corporation has caused this Restated Certificate
of Incorporation to be signed by its President and Chief Executive Officer
and attested to by its Secretary this ____ day of February, 1994.
Laurence R. Hootnick,
President and Chief Executive Officer
Attest:
Mark Chandler, Secretary
Term. Agmt. 11/17/93
EXHIBIT A
November , 1993
Dear :
Pursuant to our recent discussions, this letter sets
forth the sole benefits that will be payable to you in the
event of termination of your employment by Maxtor
Corporation ("Maxtor"). In exchange for the benefits
described below, you agree as follows:
1. Benefits Upon Voluntary Termination. In the
event that you voluntarily resign from your employment with
Maxtor, or in the event that your employment terminates as a
result of your death or disability, and subject to paragraph
3 below, you shall be entitled to no compensation or
benefits from Maxtor other than those earned through the
date of your termination or pursuant to any other
agreements, including stock option agreements, between you
and Maxtor.
2. At Will Employment Relationship. You agree
that your employment may be terminated by Maxtor at any
time, with or without cause.
3. Benefits Upon Other Termination. In the event of
the termination of your employment by Maxtor for the reasons
set forth below, occurring within one year of the date of
this letter agreement, you shall be entitled to the
following:
(a) Termination for Cause. If your employment
is terminated by Maxtor for cause as defined below, and
subject to paragraph 4 below, you shall be entitled to no
compensation or benefits from Maxtor other than those earned
through the date of your termination or pursuant to any
other agreements, including stock option agreements, between
you and Maxtor.
For purposes of this Agreement, a termination
"for cause" occurs if you are terminated for any of the
following reasons:
(i) theft, dishonesty, or falsification of
any employment or company records;
(ii) improper disclosure of Maxtor
confidential or proprietary information;
(iii) any intentional action by you (not
required by law or in the normal performance of your duties)
which has a significant detrimental effect on Maxtor's
reputation or business, for example, making an intentional
misrepresentation to securities analysts; or
(iv) willful refusal to perform your duties
after due notice and warning and opportunity to cure.
(b) Termination for Other Than Cause. If your
employment is terminated by Maxtor or any reason other than
cause, you shall receive, provided you have executed a
release of liability in favor of the company in a form
acceptable to the company, a lump sum payment equal to the
total of salary payments at the higher of your present or
your then current base salary rate, less applicable
withholding which you would have received over the nine-
month period following termination, not including any MIP
bonus. In addition, you shall be entitled to reimbursement
of any COBRA insurance premiums during a nine-month period
following termination. Following such benefits
reimbursement period, you shall be entitled to elect
continued insurance coverage in accordance with federal law.
You shall also immediately become fully vested as to any
unvested stock which is subject to options which you have
received from Maxtor as of the date of this letter, subject
to exercise within a six-month time period after termination
notwithstanding any other exercise time limit set forth in
your stock option agreements. For purposes of this
agreement, a change in the working location of your position
of greater than 25 miles or a diminution in your
responsibilities, title or reporting relationship, or
material change in your duties, shall be deemed a
termination without cause.
4. Maxtor's Severance Policies. Nothing contained
in this Agreement shall be deemed to limit your rights under
any Maxtor severance policy in the case of termination other
than pursuant to Paragraph 3(b) or occurring more than one
year from the date of this letter agreement.
5. Exclusive Remedy. Subject to paragraph 4 above,
we agree that the payments and/or benefits described in
paragraph 3 shall be your sole and exclusive remedy in the
event that Maxtor terminates your employment, and you shall
be entitled to no further compensation for any damage or
injury arising out of the termination of your employment by
Maxtor. Provided, however, that nothing contained in this
Agreement shall limit your right to be indemnified by Maxtor
for your actions as its officer, employee or director,
whether such right arises by operation of law, by act of its
Board of Directors, by any agreement between you and Maxtor,
or under any policies of insurance maintained by Maxtor for
such purposes.
6. Proprietary Rights Agreement. You agree that
the terms and conditions of Maxtor's standard
confidentiality and/or proprietary rights agreements shall
continue to be observed by you after any termination of
employment.
7. Dispute Resolution. In the event of any dispute
or claim relating to or arising out of our employment
relationship or this Agreement, we agree that all such
disputes shall be fully and finally resolved by binding
arbitration conducted by the American Arbitration
Association in Santa Clara County, California; provided,
however, that this arbitration provision shall not apply to
any disputes or claims relating to or arising out of the
misuse or misappropriation of Maxtor's trade secrets or
proprietary information.
8. Attorneys' Fees. The prevailing party shall be
entitled to recover from the losing party its attorneys'
fees and costs incurred in any action brought to enforce any
right arising out of this Agreement.
9. Interpretation. We agree that this Agreement
shall be interpreted in accordance with and governed by the
laws of the State of California.
10. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon Maxtor and its
successors and assigns. In view of the personal nature of
the services to be performed under this Agreement by you,
you shall not have the right to assign or transfer any of
your rights, obligations or benefits under this Agreement,
except as otherwise noted herein.
11. Entire Agreement. This Agreement constitutes
the entire agreement between you and Maxtor regarding
termination of your employment with Maxtor, with the
exception of any stock option agreements and confidentiality
and/or proprietary rights agreements. This Agreement
supersedes all prior negotiations, representations or
agreements between you and Maxtor, whether written or oral,
concerning termination of your employment with Maxtor.
12. No Representations. You acknowledge that you
are not relying, and have not relied, on any promise,
representation or statement made by or on behalf of Maxtor
which is not set forth in this Agreement.
13. Modification. This Agreement may only be
modified or amended by a supplemental written agreement
signed by you and Maxtor.
MAXTOR CORPORATION EMPLOYEE
By
January 12, 1994
Maxtor Corporation
211 River Oaks Parkway
San Jose, CA 95134
Ladies and Gentlemen:
Reference is made to the Financing Agreement between us dated September 16,
1993, as amended from time to time (the "Agreement"). Capitalized terms used
herein and not defined herein shall have the meanings ascribed to such terms
in the Agreement.
You have advised us that as of December 25, 1993, Maxtor Corporation was not
in compliance with the Working Capital, Leverage Ratio, and Net Worth
covenants as provided in Section 6 of the Agreement.
We hereby confirm to you that we hereby waive these violations of the
Agreement for the period ending on the specified date.
In consideration of our agreement to issue the foregoing waivers, and to
compensate us for processing your request for such waivers, you have agreed
to pay us an Accommodation Fee of $25,000.00, which will be due and payable
upon our execution of this letter agreement and its delivery to you. Payment
shall be by means of a charge to your loan account with us.
This letter agreement shall not constitute a waiver by us of any other
existing defaults under the Agreement, whether or not we have knowledge of
same, and shall not constitute a waiver of any other defaults whatsoever.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
(as AGENT and LENDER)
By:
Title: Vice President
BELL ATLANTIC CAPITAL CORPORATION
(Lender)
By:
Title: Senior Vice President
THE BANK OF NEW YORK COMMERCIAL
CORPORATION (Lender)
By:
Title: Vice President
Read and Agreed to:
Maxtor Corporation
By:
Title:
43
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement dated September , 1993
is entered into among HYUNDAI ELECTRONICS INDUSTRIES CO., LTD., a
Korean corporation ("HEI"), HYUNDAI HEAVY INDUSTRIES CO., LTD., a
Korean corporation, HYUNDAI CORPORATION, a Korean corporation,
and HYUNDAI MERCHANT MARINE CO., LTD., a Korean corporation,
(collectively, the "Purchasers"), and MAXTOR CORPORATION, a
Delaware corporation ("Maxtor").
Maxtor develops, manufactures and markets disk drive
products for personal computers, workstations, notebooks and
mobile computing devices. The Purchasers desire to purchase
19,480,000 shares of Class A common stock of Maxtor (the
"Shares") and Maxtor desires to sell the Shares to the Purchasers
on the terms and conditions set forth herein. Capitalized terms
used herein are defined as set forth in Section 10.
SECTION 1. PURCHASE OF THE SHARES
1.1 The Shares; Purchase Price.
The Purchasers severally agree to purchase the Shares
at a price of $7.70 per Share or $149,996,000 in the aggregate
(the "Purchase Price"). The number of Shares to be purchased by
each Purchaser, and the portion of the Purchase Price to be paid
by each, is set forth under its signature. The Shares will
represent, on a pro forma basis giving effect to the issuance of
the Shares, 39.84% of the outstanding voting stock of Maxtor as
of August 31, 1993 (not including stock options, whether vested
or unvested, or issued or unissued, or debenture conversions).
The Shares will be convertible, at the Purchasers' election, into
shares of unclassified common stock of Maxtor (the "Common
Stock"). The Purchase Price shall be paid in cash in immediately
available funds at the Closing.
1.2 Closing.
The closing of the purchase contemplated herein shall
be consummated at a closing to be held as promptly as feasible
after the satisfaction (or waiver) of all the conditions set
forth in Sections 4 and 5, subject to any prior termination
pursuant to Section 9.9. The consummation of such purchase is
herein called the "Closing" and the date on which the Closing
occurs the "Closing Date." At the Closing, no Shares will be
purchased or sold unless all Shares are purchased and sold.
1.3 Delivery of Certificates.
At the Closing, Maxtor shall deliver to each of the
Purchasers a certificate duly issued in the name of such
Purchaser representing the number of Shares set forth under its
signature.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF MAXTOR
Maxtor hereby represents and warrants to each Purchaser
that at the date hereof, except as set forth in the Disclosure
Memorandum (which constitutes a part of the representations and
warranties made in this Section 2) with reference to the Section
or Sections in this Section 2 as to which the exception applies
and except as may be waived in writing by the Purchasers:
2.1 Organization, Good Standing and Qualification.
Maxtor is a corporation duly organized, validly
existing and in good standing under the law of Delaware and has
all necessary power and authority under applicable corporate law
to own its Properties and to carry on its business as now owned
and operated by it. Maxtor is duly qualified as a foreign
corporation to do business, and is in good standing, in each of
the states listed in SCHEDULE 2.1. Any failure of Maxtor to be
qualified as a foreign corporation to do business in states other
than those so listed does not and will not, either individually
or in the aggregate, have a Material Adverse Effect on Maxtor.
2.2 Authority.
Subject to Shareholder approval of, and the
effectiveness of, the Restated Articles, Maxtor has full power,
legal capacity and authority under applicable corporate law to
enter into, perform and comply with this Agreement and all
proceedings required to be taken by Maxtor to authorize the
execution, delivery and performance of and compliance with this
Agreement have been legally and properly taken.
2.3 No Conflict, Change.
Subject to the consents and other actions referred to
in Section 2.4 having been obtained and taken, the execution and
delivery of this Agreement, and the performance of and compliance
with this Agreement, will not give rise to, accelerate the
maturity of or otherwise modify any obligation of Maxtor or any
Subsidiary, or result in a breach of or constitute a default
under or result in the creation of a lien on any of Maxtor's
Properties or the Properties of any Subsidiary that will have a
Material Adverse Effect on Maxtor or a material impact on the
transactions contemplated herein, in each case pursuant to:
(a) any Governmental Requirement applicable to Maxtor or any
Subsidiary; or (b) the charter documents or by-laws of Maxtor or
any Subsidiary; or (c) any Employee Plan, judgment, order or
decree, or any contract or other instrument or arrangement, to
which Maxtor or any Subsidiary is a party or by which Maxtor or
any Subsidiary or any Property of any of them is bound. To
Maxtor's Knowledge, as of the date hereof, no material change in
the business or business relationships of Maxtor and the
Subsidiaries taken as a whole is a likely result of the
transaction contemplated herein.
2.4 Approvals, Etc.
Except as listed in SCHEDULE 2.4, no consent, permit or
approval of, filing with or notice to any Governmental Agency or
any other Person (whether or not governmental in character) has
been or is required to be obtained, made or given by Maxtor or
any Subsidiary in order for Maxtor and the Subsidiaries without
any breach or violation, to consummate or comply with this
Agreement the absence of which will have a Material Adverse
Effect on Maxtor or a material impact on the transactions
contemplated herein.
2.5 Subsidiaries and Other Investments.
Maxtor does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any
corporation, business, association, trust or other entity, except
as set forth in SCHEDULE 2.5. Each of the corporate entities
designated as a subsidiary in SCHEDULE 2.5 (the "Subsidiaries")
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was
incorporated and has all necessary power and authority under
applicable corporate law to own its Properties and to carry on
its business as now owned and operated by it. Each Subsidiary is
duly qualified as a foreign corporation to do business in
jurisdictions where failure to so qualify has or will have a
Material Adverse Effect on Maxtor. SCHEDULE 2.5 indicates which
Subsidiaries are Major Subsidiaries.
2.6 Capital Structure.
(a) The authorized capital stock of Maxtor
(prior to the amendment described in Section 4.12) consists of
125,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock. As of August 31, 1993 there were issued and
outstanding 29,417,613 shares of Common Stock and no shares of
Preferred Stock. Since that date, Maxtor has issued no capital
shares except upon exercise of options outstanding on that date
under the Maxtor Stock Option Plans of 1985, 1988 and 1992 or
rights outstanding on that date under the Maxtor Employee Stock
Purchase Plan, or upon conversion of the Maxtor 5.75% Convertible
Subordinated Debentures due March 1, 2012 outstanding on that
date. All such issued shares are validly issued, fully paid and
non-assessable and no holder thereof is entitled to preemptive
rights. All such shares have been issued in compliance with the
registration and qualification requirements of all federal and
state securities laws, except for any possible noncompliance
that, in the aggregate, does not have and will not have a
Material Adverse Effect on Maxtor.
(b) Except as set forth in SCHEDULE 2.6, there
are no outstanding subscriptions, options, rights, warrants,
convertible securities or other contracts obligating Maxtor or
any Subsidiary to issue or to transfer from treasury any shares
of its capital stock (collectively, "Stock Rights").
(c) All of the issued and outstanding shares of
capital stock of the Subsidiaries are validly issued, fully paid
and non-assessable, have been issued in compliance with all
applicable securities and other laws. Maxtor owns, directly or
indirectly through one or more wholly-owned Subsidiaries, all the
issued and outstanding shares of capital stock of all
Subsidiaries, except that Maxtor owns 64.57% of the outstanding
voting stock of Maxoptix.
(d) The Shares, when issued and paid for in
accordance with this Agreement, will be validly issued, fully
paid and non-assessable.
(e) SCHEDULE 2.6 sets forth the names of all of
record holders of 50,000 or more shares of the outstanding Common
Stock as of August 31, 1993. To the Knowledge of Maxtor, there
is no "beneficial owner" (as that term is defined by SEC Rule
13d-3) of 5% or more of the outstanding Common Stock except as is
listed on SCHEDULE 2.6.
2.7 Financial Statements.
The financial statements audited by Ernst & Young and
contained in Maxtor's annual report on Form 10-K for the fiscal
year ended March 27, 1993 filed with the SEC (the "Annual
Financial Statements"), and the unaudited consolidated balance
sheet of Maxtor at June 26, 1993 and the related consolidated
statement of income for the fiscal quarter ended on June 26,
1993, certified by the chief financial officer of Maxtor (the
"Interim Financial Statements"), and the confidential unaudited
consolidated balance sheet of Maxtor at August 21, 1993 and the
related consolidated statement of income for the two fiscal
months ended on August 21, 1993, certified by the chief financial
officer of Maxtor, (i) have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently
applied throughout the periods indicated and in prior periods,
except, in the case of the Interim Financial Statements, for the
omission of footnotes and of normal year-end adjustments; and
(ii) fairly present the consolidated financial position of Maxtor
as of the respective dates indicated and the consolidated results
of its operations for the respective periods indicated.
2.8 Absence of Certain Changes.
Since the date of the Interim Financial Statements,
there has not been by, or with respect to, Maxtor or any
Subsidiary, any change that had, has or will have a Material
Adverse Effect on Maxtor (other than changes in Maxtor's
prospects resulting from normal industry occurrences such as
competitive product announcements, supplier financial difficulty
or inability to ship adequate quantities or quality of products,
losses of significant customers or customers' financial
difficulty and development or product introduction delays).
2.9 Material Transactions.
SCHEDULE 2.9 identifies all transactions engaged
in by Maxtor or any Subsidiary since March 27, 1993 that
(a) were, are or will be required to be described in reports on
Forms 10-K, 10-Q or 8-K or in Maxtor's proxy statement, (b) were
not and would not be required to be disclosed in such reports or
proxy statement but were not in the ordinary course of business
and involved payments by or to Maxtor or any Subsidiary of
$20,000,000 or more, or (c) constitute a liability or potential
liability that Maxtor believes could reasonably exceed
$20,000,000. SCHEDULE 2.9 identifies all business or business
relationships of Maxtor or any Subsidiary which were material to
Maxtor and its Subsidiaries taken as a whole and have been
terminated since March 31, 1993 except those terminated in the
ordinary course of business without breach or alleged breach by
any party.
2.10 Intellectual Property.
(a) SCHEDULE 2.10 lists (i) each patent issued
to, each patent application filed by, and each patent application
referred to patent counsel for prosecution by, Maxtor or any
Subsidiary; (ii) each material registered copyright, trademark,
service mark and similar registered item owned by Maxtor or any
Subsidiary; (iii) each license to Maxtor or any Subsidiary of
Intellectual Property Rights upon which Maxtor or any Subsidiary
is materially dependent and which is not generally available; and
(iv) each license of Intellectual Property Rights granted by
Maxtor or any Subsidiary other than a license granted to
customers in the ordinary course of business.
(b) Maxtor and/or the Subsidiaries own, or are
licensed or otherwise have the rights to use, all patents,
trademarks, trade names, copyrights, technology, trade secrets,
know-how and processes (collectively, "Intellectual Property
Rights") material to or necessary for the conduct of their
businesses as presently conducted. No claims are pending by any
Person against Maxtor or any Subsidiary as to the use of any
Intellectual Property Rights or challenging or questioning the
validity or effectiveness of any license or agreement regarding
Intellectual Property Rights and, to Maxtor's Knowledge, the use
by Maxtor or any Subsidiary of all Intellectual Property Rights
does not infringe on the rights of any Person. To the Knowledge
of Maxtor, no third Person is infringing on the Intellectual
Property Rights of Maxtor or any Subsidiary.
2.11 Liabilities, Debts, Etc.
As of the date of the Annual Financial Statements and
as of the date of the Interim Financial Statements, Maxtor had no
liabilities, obligations or debts, which must be accrued as
liabilities on a balance sheet, or disclosed in financial
statements, prepared under generally accepted accounting
principles, other than those reflected or disclosed in the Annual
Financial Statements and the Interim Financial Statements,
respectively.
2.12 Tax Returns and Payments.
The provisions made in the Annual Financial Statements
and the Interim Financial Statements with regard to accrued and
deferred income taxes are in accordance with GAAP. The material
income tax reporting positions of Maxtor and the Subsidiaries
have substantial support.
2.13 Compliance with Governmental Requirements, Rights of
Others.
(a) To the Knowledge of Maxtor, neither Maxtor
nor any Subsidiary is in violation of, nor has any violated, any
applicable Governmental Requirement or rights of any Person,
which violation has or will have a Material Adverse Effect on
Maxtor.
(b) Without limiting the generality of
Section 2.13(a), to the Knowledge of Maxtor, Maxtor and the
Subsidiaries hold all permits, licenses and other authorizations
required to be obtained from any Governmental Agency, other than
any permits, licenses and authorizations whose absence does not
have and will not have a Material Adverse Effect.
(c) The aggregate capital expenditures required,
to Maxtor's specific Knowledge, to be made by it and the
Subsidiaries in order to comply with any Governmental Requirement
currently applicable (whether required to be made now or in the
future) do not exceed $1,000,000 in any one case.
2.14 Proceedings, Claims.
There are no suits, arbitrations, deficiencies,
governmental proceedings or investigations, claims (except for
warranty claims in the ordinary course of business), notices of
violation or required changes, inspections or employee disputes
to which Maxtor or any Subsidiary is a party or subject or which
is, to Maxtor's Knowledge, overtly threatened. To the Knowledge
of Maxtor, there is no material claim that is likely to be
asserted against it or any Subsidiary.
2.15 Material Contracts.
SCHEDULE 2.15 sets forth a complete and accurate list
of any contract or agreement currently in effect:
(a) that was, is or will be required to be filed
with the SEC pursuant to Form 10-K, 10-Q or 8-K;
(b) that relates to the borrowing of money or a
guarantee by Maxtor or any Subsidiary or to debt securities, a
capitalized lease, a lien, a security agreement or an agreement
regarding capital expenditures under which (in each case) the
aggregate obligations of Maxtor and the Subsidiaries exceed
$10,000,000;
(c) that relates to an operating lease under
which the aggregate obligations of Maxtor and the Subsidiaries
exceed $10,000,000 in any fiscal year beginning after March 27,
1993;
(d) that constitutes a stock plan of Maxtor or
any Subsidiary, or that relates to any agreement or arrangement
(other than pursuant to a stock plan listed in SCHEDULE 2.15)
with any executive officer of Maxtor or any Subsidiary relating
to stock or stock options;
(e) that relates to a supply or customer
agreement (i) providing for a binding obligation to purchase or
sell products or components of such products with an aggregate
purchase price of $30,000,000 or more in any fiscal year or
(ii) having a term expiring later than August 31, 1995 and
providing for a binding obligation to purchase products or
components of products with an aggregate purchase price of
$10,000,000 or more after August 31, 1993;
(f) that relates to return rights of customers
given by Maxtor or any Subsidiary that differ materially from the
industry standard described in SCHEDULE 2.15 and that relates to
quantities of product sold to any single customer in excess of
$10,000,000;
(g) that relates to an employee pension, welfare
or benefit plan of Maxtor or any Major Subsidiary, or that
relates to an agreement between any present or former executive
officer of Maxtor or a Major Subsidiary, on the one hand, and
Maxtor or any Subsidiary on the other, relating to compensation;
(h) between Maxtor or any Subsidiary on the one
hand and any affiliate of Maxtor (other than a direct or indirect
wholly-owned Subsidiary) or any officer or director or Maxtor or
a Major Subsidiary or any record holder of 50,000 or more shares
(as of August 31, 1993) of the outstanding Common Stock on the
other hand that relates to an aggregate amount in excess of
$150,000;
(i) that limits the freedom of Maxtor or any
Subsidiary to enter into in any line of business in any area of
the world; and
(j) that requires Maxtor or any Subsidiary to
remediate, or indemnify or reimburse the costs of remediation of,
a specific condition existing at any real Property, whether
currently or formerly owned or operated by it or owned or
operated by any third party.
To the Knowledge of Maxtor, there is no current or
overtly threatened breach or claim of a breach by any party under
any of the contracts listed on SCHEDULE 2.15 which has or will
have a Material Adverse Effect on Maxtor.
2.16 Contamination, Etc.
(a) To the Knowledge of Maxtor, there is no
contamination of the soil underlying any real estate owned,
leased, operated or used (currently or formerly) by Maxtor or
any Subsidiary, or of any structure or other property on such
real estate or any surface or ground water on or under such real
estate, by any Regulated Material, and there is no and has been
no release or disposition of any Regulated Material from any such
real estate, which contamination, release or disposition has or
will have a Material Adverse Effect on Maxtor.
(b) SCHEDULE 2.16(b) lists all currently-pending
and past remediation actions taken or required to be taken by
Maxtor or any Subsidiary with respect to any real Property, and
any site currently or previously owned or operated by Maxtor or
any Subsidiary which, to the Knowledge of Maxtor, is or was
included in any site list of any Governmental Agency (including
without limitation any CERCLIS list, federal National Priority
List, Cortese list or abandoned site list).
2.17 Corporate Documents.
Maxtor has delivered to the Purchasers for their
examination true, correct and complete copies of the certificates
of incorporation and by-laws of Maxtor and each of the Major
Subsidiaries, each as amended and currently in effect, and of the
documents listed in the Disclosure Memorandum.
2.18 Brokerage, Etc.
Neither Maxtor nor any Subsidiary is a party to any
arrangement, or is subject to any obligation, relating to any
brokerage fee, finder's fee, compensation or other consideration
payable in respect of the transactions contemplated hereby, other
than reasonable and customary fees and expenses payable to its
legal counsel and independent accountants for work performed
relating to such transactions and a fairness opinion fee (not to
exceed $300,000) and reasonable and customary expenses of Bear
Stearns & Co., Inc.
2.19 Misstatements and Omissions.
(a) The representations and warranties made in this
Section 2 and in any certificate delivered pursuant hereto, do
not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements
contained herein and therein not misleading.
(b) Neither Maxtor's annual report on Form 10-K for
each of the fiscal years ended March 30, 1991, March 28, 1992 or
March 27, 1993 nor any of its proxy statements for the 1991, 1992
or 1993 annual shareholders meeting nor any other filing by
Maxtor with the SEC after March 27, 1993 under the Securities
Exchange Act of 1934, as amended, contained, as of the respective
dates thereof, any untrue statement of material fact or omitted
to state any material fact necessary to make the statements
contained therein, as of the respective dates thereof, not
misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to
Maxtor, with respect to itself, that at the date hereof:
3.1 Organization, Good Standing and Qualification.
Such Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the Republic of
Korea and has all necessary power and authority under applicable
corporate law to own its property and to carry on its business as
now owned and operated.
3.2 Authority
Such Purchaser has full power, legal capacity and
authority under applicable corporate law to enter into, perform
and comply with this Agreement. All proceedings required to be
taken by such Purchaser to authorize the execution, delivery and
performance of and compliance with this Agreement have been
properly taken, no action by the shareholders or directors of any
of the Purchasers (other than those, if any, already taken) being
required.
3.3 No Conflict.
Subject to the consents and other actions referred to
in Section 3.4 having been obtained and taken, the execution and
delivery of this Agreement, and the performance of and compliance
with this Agreement, will not give rise to, accelerate the
maturity of or otherwise modify any obligation of such Purchaser,
or result in a breach of or constitute a default under or result
in the creation of a lien on such Purchaser's Properties pursuant
to (a) any Governmental Requirement applicable to such Purchaser,
or (b) the charter documents or by-laws of such Purchaser, or
(c) to the Knowledge of such Purchaser, any material Employee
Plan or any material contract, judgment, order, decree or other
instrument or arrangement to which such Purchaser is a party or
by which such Purchaser is bound.
3.4 Approvals, Etc.
No consent, permit or approval of, filing with or
notice to any Governmental Agency or any other Person (whether or
not governmental in character) has been or is required to be
obtained, made or given by such Purchaser in order to consummate
this Agreement, the absence of which would have a Material
Adverse Effect on such Purchaser, except for (i) those required
by the Hart-Scott-Rodino Antitrust Improvements Act of 1976;
(ii) those required by Federal and state securities law;
(iii) those required by the Exon-Florio amendment to the Defense
Production Act of 1950; (iv) notice filing in such jurisdictions
other than the United States and the Republic of Korea as may be
applicable; (v) approval by all necessary government officials
and agencies of the Republic of Korea; and (vi) filing reports
under the International Investment and Trade in Services Act, as
amended, with the United States Commerce Department.
3.5 Securities Laws Status.
Such Purchaser is acquiring the Shares being purchased
by it solely for its own account. Such Purchaser understands
that the Shares have not been registered under the Securities Act
and that any subsequent disposition thereof must be registered
under the Securities Act or be exempt from such registration.
Such Purchaser has the ability to bear the economic risks of its
investment in the Shares and qualifies as an "accredited
investor" (as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act).
3.6 Ownership of Maxtor Stock.
Neither such Purchaser nor any Affiliate of such
Purchaser nor any Person with whom a Purchaser or any Affiliate
of a Purchaser is acting (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) as a
partnership, limited partnership, syndicate or other group for
the purpose of acquiring, holding or disposing of securities
issued by Maxtor owns any stock issued by Maxtor as of the date
of this Agreement or will, as of the Closing, own any stock
issued by of Maxtor other than the Shares to be purchased by such
Purchaser hereunder.
3.7 Brokerage, Etc.
Neither such Purchaser nor any Affiliate of such
Purchaser is a party to any arrangement, or subject to any
obligation, relating to any brokerage fee, finder's fee,
compensation or other consideration payable in respect of the
transactions contemplated hereby.
SECTION 4. CLOSING CONDITIONS OF EACH PURCHASER
The obligations of each Purchaser to be performed under
this Agreement at the Closing are subject to the satisfaction, at
or before the Closing, of all the conditions set forth in this
Section 4, unless the satisfaction of such conditions are waived
by such Purchaser in its sole discretion.
4.1 Accuracy of Representations and Warranties
All representations and warranties set forth in
Section 2 have been true as of the date hereof; and shall be true
in all material respects at and as of the Closing as though made
at and as of that time, other than any changes therein (to be
reflected in a mutually-executed amendment to the Disclosure
Memorandum) which in the good faith judgment of the Purchasers
does not have and is not reasonably likely to have a Material
Adverse Effect on Maxtor.
4.2 Maxtor's Performance.
Maxtor shall have performed, satisfied and complied
with all material covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by
it at or before the Closing.
4.3 Certification.
The Purchasers shall have received a certificate of
Maxtor, dated the date of the Closing, signed on Maxtor's behalf
by the president and the chief financial officer of Maxtor,
stating that the conditions specified in Sections 4.1 and 4.2
have been fulfilled.
4.4 Governmental Approval.
All Purchasers shall have received approval of the
transactions contemplated hereby by all necessary government
officials and agencies of the Republic of Korea and such approval
shall not impose any burdensome condition or requirement on any
Purchaser.
4.5 No Material Adverse Change.
Maxtor's financial results for the period between
August 21, 1993 and the Closing, and its progress during such
period in new product commercialization, shall not materially
adversely affect the prospects for achieving its business plan,
and no change (other than with respect to its financial results,
and new product commercialization, during such period) shall have
occurred since August 21, 1993 which has or will have a Material
Adverse Effect on Maxtor.
4.6 Suspension of Trading, Etc.
There shall not have occurred (i) any suspension of
public trading in securities in the United States or the Republic
of Korea generally, (ii) any declaration of a banking moratorium
or any suspension of payments in respect of banks in the United
States or the Republic of Korea or (iii) any commencement of a
war, armed hostilities or other international or national
calamity materially affecting the United States or the Republic
of Korea.
4.7 Litigation, Etc.
There shall be no investigation, notice, litigation,
arbitration or proceeding pending or threatened for the purpose
of enjoining or preventing the consummation of the transactions
contemplated by this Agreement or otherwise claiming that the
consummation of such transactions is illegal or improper and
(i) which is brought by a Person other than a Governmental Agency
and which, in such Purchaser's good faith judgment, may have a
material adverse effect on the transactions contemplated hereby
or a Material Adverse Effect on Maxtor or such Purchaser or
(ii) which is brought by a Governmental Agency or (iii) in which
a temporary restraining order, preliminary or permanent
injunction or other order or stay against consummation of the
transactions contemplated hereby has been entered and remains in
effect.
4.8 Transactions Out of the Ordinary Course, Etc.
There shall have been no transaction that Maxtor or any
Subsidiary has entered into or agreed to enter into since
August 18, 1993, other than any listed in SCHEDULE 2.9 or which
has been consented to in writing by the Purchasers, that is of a
character and significance to take it out of the ordinary course
of business or which would be subject to the Purchasers' approval
after the Closing in accordance with the terms of the Shares.
4.9 Rights Agreement.
Prior to the Closing, the Amendment to the Rights
Agreement attached as EXHIBIT A shall have been approved by all
necessary approvals to take effect on or before the Closing.
4.10 Appointment of Directors.
Maxtor shall have increased the authorized number of
its Directors from five to eight, and shall have appointed to its
Board of Directors three nominees selected by the Purchasers,
with one allocated to each class (as provided in paragraph A of
Article SIXTH of the Restated Articles) as designated by the
Purchasers, and such appointees shall have been offered the same
indemnity and insurance arrangements as are applicable to
Maxtor's other directors.
4.11 Appointment of Chairman.
Maxtor's board of directors shall have appointed as its
Chairman of the Board the board member so designated by the
Purchasers.
4.12 Restated Articles.
Maxtor shall have duly authorized and filed the
restated certificate of incorporation set forth in EXHIBIT B (the
"Restated Articles"), and corresponding amendments to its by-laws
shall have been adopted.
4.13 Opinion of Counsel.
Ware & Freidenrich, outside counsel to Maxtor, shall
have delivered to the Purchasers its opinion dated the Closing
Date, reasonably satisfactory in form and substance to the
Purchasers, as to: (i) the valid issuance, full payment and
nonassessability of the Shares; (ii) the due authorization and
effectiveness of the rights plan amendment set forth in EXHIBIT A
and the Restated Articles; (iii) the legality, binding nature and
enforceability of this Agreement and the Restated Articles; and
(iv) the absence, to such counsel's knowledge, of any proceeding
of the kind described in Section 4.7 (without regard, in the case
of clause (i) thereof, to material adverse effect).
4.14 Other Conditions.
All of the conditions set forth in Sections 5.4 through
5.7 shall have been satisfied.
SECTION 5. CLOSING CONDITIONS OF MAXTOR
The obligations of Maxtor to be performed under this
Agreement at the Closing are subject to the satisfaction, at or
before the Closing, of all the conditions set forth in this
Section 5, unless the satisfaction of such conditions are waived
by Maxtor.
5.1 Accuracy of Representations and Warranties.
All representations and warranties set forth in
Section 3 shall have been true as of the date hereof and shall be
true in all material respects at and as of the Closing as though
made at and as of that time.
5.2 Performance of the Purchasers.
Each of the Purchasers shall have performed, satisfied
and complied with all material covenants, agreements and
conditions required by this Agreement to be performed, satisfied
or complied with by it at or before the Closing.
5.3 Certification.
Maxtor shall have received a certificate from HEI, on
behalf of all Purchasers, dated the date of the Closing, signed
by two of its officers, stating that the conditions specified in
Sections 5.1 and 5.2 have been fulfilled.
5.4 Fairness Opinion.
Maxtor shall have received from an investment banking
firm reasonably satisfactory to Maxtor's Board of Directors an
opinion as to the fairness from a financial point of view to the
shareholders of the issuance of the Shares in form and substance
reasonably satisfactory to Maxtor's Board of Directors dated as
of the date hereof and as of the Closing Date.
5.5 U.S. Governmental Agency Matters.
The waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 shall have expired, and a
notice of determination not to investigate, or to take no action,
shall have been given under the Exon-Florio amendment to the
Defense Production Act of 1950.
5.6 Litigation, Etc.
There shall be no investigation, notice, litigation,
arbitration or proceeding pending or threatened for the purpose
of enjoining or preventing the consummation of the transactions
contemplated by this Agreement or otherwise claiming that the
consummation of such transactions is illegal or improper and
(i) which is brought by a Person other than a Governmental Agency
and which, in Maxtor's good faith judgment, may have a material
adverse effect on the transactions contemplated hereby or a
Material Adverse Effect on Maxtor, or (ii) which is brought by a
Governmental Agency or (iii) in which a temporary restraining
order, preliminary or permanent injunction or other order or stay
against consummation of the transactions contemplated hereby has
been entered and remains in effect.
5.7 Shareholder Approval.
The Shareholders shall have duly approved the
transactions contemplated by this Agreement and the Restated
Articles.
5.8 Opinion of Counsel.
McCutchen, Doyle, Brown & Enersen, outside counsel to
the Purchasers, shall have delivered to Maxtor its opinion dated
the Closing Date, reasonably satisfactory in form and substance
to Maxtor, as to: (i) the legality, binding nature and
enforceability of this Agreement; and (ii) the absence, to such
counsel's knowledge, of any proceeding of the kind described in
Section 5.6 (without regard, in the case of clause (i) thereof,
to material adverse effect).
SECTION 6. OBLIGATIONS OF MAXTOR
6.1 Pro Rata Purchase Right.
Prior to any issuance of any shares of capital stock or
any Stock Rights by Maxtor or any Subsidiary on or after the
Closing, Maxtor will notify all Purchasers of the terms thereof,
including without limitation a description of the shares or Stock
Rights to be issued, the amount to be issued and the
consideration to be received therefor. Each Purchaser may, by
notice given to Maxtor pursuant to Section 9.11 within 60 days
after such Maxtor notice (subject to extension by up to 60 days
if required for any necessary approval of any Governmental
Agency, as requested by a Purchaser and consented to by Maxtor,
which consent shall not unreasonably be withheld), elect to
purchase a number of such shares or Stock Rights up to its pro
rata share of the proposed issuance, on the same terms as, and
simultaneously with the closing of (or thereafter, promptly after
Purchaser gives such notice, if Maxtor desires to proceed with
the issuance having authorized the sale of the pro rata share to
one or more Purchasers upon its or their later election pursuant
to this Section 6.1), the balance of such issuance. Such pro
rata share shall be the fraction whose numerator is the aggregate
number of Shares and shares of Common Stock then held by such
Purchaser and whose denominator is the aggregate number of Shares
and shares of Common Stock then outstanding, which Maxtor shall
specify in its notice. If the terms of the proposed issuance are
materially changed from those stated in such notice, then it
shall be treated as a new issuance, subject again to this
Section 6.1, and any election to purchase made prior to such
change may, at the sole discretion of the electing Purchaser, be
withdrawn. The right of pro rata purchase pursuant to this
Section 6.1 shall not, however, apply to:
(i) any issuance pursuant to any stock option or purchase
right or plan exclusively for one or more employees
and/or directors of Maxtor or any Subsidiary; or
(ii) any issuance in consideration of the acquisition of a
business; or
(iii) any issuance upon conversion of Maxtor's 5.75%
Convertible Subordinated Debentures due March 1, 2012
outstanding on the date hereof;
(iv) any issuance pursuant to exercise or conversion of any
Stock Right issued after the Closing in compliance with
this Section 6.1; or
(v) any issuance at a time when the director nomination
rights set forth in paragraph D(4) of Article FOURTH of
the Restated Articles are not in effect.
6.2 Indemnification with Respect to Representations and
Warranties.
If the Closing occurs, all rights, obligations and
claims with respect to the representations and warranties made in
or pursuant to this Agreement shall be determined exclusively in
accordance with this Section 6.2. Such representations and
warranties shall survive the Closing and any investigation made
by Purchasers with respect thereto, in accordance with this
Section 6.2.
(a) Subject to Section 6.2(b), Maxtor shall
indemnify the Purchasers, against and in respect of any and all
losses, costs, claims, demands, actions, suits, proceedings,
assessments, expenses, liabilities, damages and judgments
(including interest, penalties and reasonable attorneys' fees and
reasonable out-of-pocket costs and the reasonable fees and
out-of-pocket costs of other professional advisors)
(collectively, "Losses") of any or all of the Purchasers which
arise out of, result from or relate to any breach of or
inaccuracy in any of Maxtor's representations and warranties
contained in this Agreement or in any certificate delivered by
Maxtor pursuant to this Agreement. In the case of a
representation or warranty that relates to Maxtor's business,
Properties, obligations, contracts, operations, etc., the amount
of Loss that shall be indemnified hereunder shall be calculated
by measuring the significance of the breach to the entire equity
interest in Maxtor and the Subsidiaries taken as a whole and
multiplying such amount by the aggregate percentage then held by
all Purchasers of the aggregate outstanding Shares and shares of
Common Stock. In order to take account of the impact of any
indemnity payment by Maxtor on the Purchasers in their capacity
as shareholders of Maxtor, all indemnity payments shall include
an additional amount equal to the amount otherwise owing times a
fraction, the numerator of which is the aggregate percentage then
held by all Purchasers of the aggregate outstanding Shares and
shares of Common Stock and the denominator of which is the
aggregate percentage then held by all shareholders other than the
Purchasers of the aggregate outstanding Shares and shares of
Common Stock.
(b) Limitations on Claims. No claim shall be
payable with respect to any representation or warranty unless and
until the aggregate Losses owing under this Section 6.2 in
respect of all Purchasers and all claims against Maxtor exceeds
$500,000, in which case the Purchasers shall be entitled to
indemnification from Maxtor for all Losses without regard to such
$500,000 threshold, up to but not exceeding (i) $30,000,000 with
respect to claims asserted by a Purchaser within six months of
the Closing, (ii) $15,000,000 with respect to claims asserted by
a Purchaser more than six months after the Closing but within
twelve months of the Closing and (iii) $5,000,000 with respect to
claims asserted by a Purchaser more than twelve months after the
Closing, but less than eighteen months after the Closing. No
claim shall be payable with respect to any representation or
warranty unless such claim is asserted within eighteen months
after the Closing. For purposes of this Section 6.2(b), a month
shall be deemed to elapse at 5:00 p.m. California time on the day
of the month on which the Closing occurred. (For example, if the
Closing occurs on October 29, 1993, the sixth month would be
deemed to elapse at 5:00 p.m. California time on April 29, 1994.)
(c) Notice of Claims. Any claim for
indemnification pursuant to this Section 6.2 shall be made by
written notice from a Purchaser to Maxtor in accordance with
Section 9.11. Payment of the amount of such claim will be due
within 10 days of the giving of such notice.
6.3 Third Party Claims.
Maxtor agrees to indemnify each of the Purchasers and
any of their Affiliates, officers, directors, employees and their
respective successors, assigns, heirs and personal
representatives (each a "Purchaser Party" and collectively
"Purchaser Parties") against any Losses resulting from claims
asserted against any Purchaser Party:
(i) by any security holder, creditor, contract
party, employee, director, supplier or customer of Maxtor
or any Subsidiary or a purchaser or seller (or potential
purchaser or seller) of Maxtor securities or an acquirer (or
potential acquirer) of Maxtor with respect to the
transactions contemplated herein; provided, however, that
there shall be no such indemnification for (a) claims by
Maxtor for the breach by a Purchaser of its obligations
hereunder to Maxtor and (b) any claim by a third party
alleging that any action by a Purchaser, other than actions
taken pursuant to the Letter of Intent or this Agreement,
constitutes interference with any negotiations or proposed
transaction which Maxtor would be permitted to engage in
under Section 9.2; or
(ii) asserting any matter which, if true, would
constitute a breach of any representation or warranty of
Maxtor contained in this Agreement or in any certificate
delivered by Maxtor pursuant to this Agreement.
A Purchaser Party shall give Maxtor reasonable notice
of any claim or demand asserted by third parties against it for
which indemnity may be sought under this Section 6.3, and shall
permit Maxtor to have reasonable access to relevant information
in its possession or control related to the claim or demand.
Maxtor shall have the right at its own expense to appoint counsel
to participate in the defense of such matter, but the Purchaser
Party shall have the right to prosecute, defend, compromise,
settle or pay any claim. Maxtor may, however, compromise, settle
or pay any claim if it procures from the claimant a full and
complete release not entailing any commitment of or limitation of
any kind on the Purchaser Party and satisfactory in form and
substance to the Purchaser Party and its counsel. No monetary
compromise or settlement of any such claim shall be subject to
indemnification under this Section 6.3 unless consented to by
Maxtor, which consent shall not be unreasonably withheld. Any
failure of the Purchaser Party to comply with this Section 6.3
shall reduce the amount subject to indemnification under this
Section 6.3 by the damages actually and foreseeably resulting
from such failure, but shall not release or otherwise affect
Maxtor from its obligations under this Section 6.3 or elsewhere
in this Agreement. The remedies set forth in this Section 6.3
shall be in addition to, and not in lieu of, any remedies
otherwise available.
6.4 Rights Plan Amendment.
So long as the exemption stated in Section 1(a)(2) of
the Rights Agreement (as amended by the amendment thereto
attached as EXHIBIT A) remains in effect, Maxtor will not amend,
terminate or repeal the provisions of the Rights Agreement set
forth in the amendment thereto attached as EXHIBIT A, or make any
amendment to the Rights Agreement that has the effect of
amending, repealing or terminating such provisions or of imposing
any restriction, condition or burden thereon.
6.5 Maxtor Proxy Solicitation, Etc.
At any time when the right to nominate directors
pursuant to paragraph D(4) of Article FOURTH of the Restated
Articles is in effect, Maxtor will use its best efforts to
solicit proxies, and take such other steps, in each case
consistent with its past practice, as are reasonably appropriate
to secure the election of the slate of directors nominated
pursuant to such paragraph D(4).
SECTION 7. OBLIGATIONS OF THE PURCHASERS AFTER CLOSING
7.1 Agreement Not to Sell Without Conversion.
Each of the Purchasers agrees that neither it nor any
permitted transferee of any Shares will sell or transfer any
interest in the Shares (or grant a proxy or other authorization
to vote the Shares otherwise than in compliance with this
Section 7) to a Person that is not another Purchaser or an
Affiliate of such Purchaser or another Purchaser (other than any
such Affiliate in which a substantial competitor or substantial
announced competitor of Maxtor and the Subsidiaries taken as a
whole holds an equity interest (other than an equity interest of
10% or less in a class of publicly-traded securities)) unless and
until it converts the Shares subject to the sale or transfer to
Common Stock. In any such permitted transfer to an Affiliate,
the transferee shall agree to be bound by the terms of this
Agreement. The certificates representing any securities subject
to this Agreement will so note.
7.2 Standstill Agreement.
Following the Closing, each Purchaser (and any
Affiliate of any Purchaser) may only purchase additional shares
of Maxtor capital stock:
(a) to maintain the Purchasers' collective percentage
ownership in Maxtor to the extent that it is reduced by exercise
of stock options or issuance of shares under Maxtor employee
benefit plans, or on account of any other issuance of stock by
Maxtor (including without limitation any issuance pursuant to
Section 6.1(ii) or (iii));
(b) to increase its percentage ownership share,
so long as the purchase does not cause Maxtor to lose a material
amount of the benefits available to it with respect to the net
operating loss carry-forward available to it as of the date
hereof and so long as those purchases do not provide the
Purchasers collectively with ownership of greater than 45% of
Maxtor's outstanding voting power;
(c) in the case of a tender or exchange offer
(in which the consideration offered consists solely of cash
and/or securities for which a public trading market in the United
States exists or will exist) by any or all Purchasers (or an
Affiliate of any or all Purchasers) for all of the outstanding
shares of Maxtor Common Stock (provided that the purchase price
has been approved by a majority of the disinterested members of
Maxtor's Board of Directors, following negotiations conducted in
good faith between the Purchaser(s) and disinterested members of
the Maxtor Board of Directors), and in the open market following
such a tender or exchange offer if, immediately after the closing
of such offer, the Purchasers and their Affiliates hold, in the
aggregate, at least 80% of the aggregate number of shares of
Common Stock and Class A Common Stock then outstanding; or
(d) in the open market if both (i) a third party
or group of third parties (other than any Affiliate of any
Purchaser or any Person with whom a Purchaser or any Affiliate of
a Purchaser acts (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) as a partnership,
limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities issued by Maxtor)
makes a tender or exchange offer for 40% or more of Maxtor's
outstanding shares, or accumulates more than 20% of Maxtor's
Common Stock and (ii) Maxtor's Board of Directors has redeemed
the Rights (as defined in the Rights Agreement) or amended,
supplemented or waived any provision of the Rights Agreement with
respect to such tender, exchange or accumulation (or failed to
renew it, on substantially identical terms reflecting the
amendment attached as EXHIBIT A, upon any expiration thereof)
unless such redemption, amendment, supplement or waiver is made
in connection with a "Corporate Sale" (as defined in paragraph
E(3) of Article FOURTH of the Restated Articles) made in
compliance with paragraph D(2)(vii) or (viii) of such Article
FOURTH.
Approval by the Maxtor board of directors will be required in all
other cases until August 18, 2000, or, if sooner, (i) six months
after the Purchasers cease to own collectively securities
constituting at least 20% of Maxtor's voting power, or (ii) the
occurrence of a material breach by Maxtor of its obligations in
Section 6.1 or the terms of the Shares which is not cured within
thirty days after notice of the breach from a Purchaser. Maxtor
will report to the Purchasers from time to time as reasonably
requested on changes in Maxtor's outstanding capital stock, and
will notify the Purchasers as promptly as reasonably feasible
after it becomes aware of a tender offer or accumulation as
described in Section 7.2(d).
7.3 No Proxy Solicitation.
Except in connection with an offer by a Purchaser to
acquire additional shares of Maxtor as described in Section 7.2,
or in response to a proxy contest initiated by any third party,
neither any Purchaser nor any Affiliate of a Purchaser will
engage in any proxy solicitation so long as the consent rights
stated in paragraph D(2) of Article FOURTH of the Restated
Articles remain in effect, unless at the time the Purchasers and
their Affiliates hold, in the aggregate, at least a majority of
the aggregate number of shares of Common Stock and Class A Common
Stock then outstanding and neither the Purchasers nor any of
their Affiliates have acquired any shares of Maxtor capital stock
in breach of Section 7.2.
7.4 Approval of Holders of Class A Common Stock.
(a) The Purchasers agree that they will not, and that
they will cause any permitted transferee of the Shares not to,
unreasonably withhold any approval required under paragraph D(2)
of Article FOURTH of the restated certificate of incorporation
set forth in EXHIBIT B.
(b) If any dispute arises under or relating to this
Section 7.4, such dispute shall be resolved solely by binding
arbitration pursuant to this Section 7.4(b). In the event of any
such dispute, any party thereto may refer the matter to a single
arbitrator, who shall be a person experienced in such matters
selected by mutual agreement of the parties to the dispute. If
the parties cannot agree on the arbitrator within 10 days after a
party gives notice of its desire for arbitration hereunder, the
arbitrator will be selected by, or in accordance with the
procedure specified by, the Secretariat of the Arbitration Court
of the International Chamber of Commerce. The arbitration will
be held in the location mutually agreed to by the parties to the
dispute or, in the absence of such agreement, as determined by
the arbitrator, in accordance with the commercial arbitration
rules of the American Arbitration Association, as administered by
such Association. The arbitrator will be in charge of the
schedule for such arbitration, and shall seek to complete it
within 45 days of a party's notice of desire for arbitration
hereunder. There shall be no discovery unless specifically
ordered by the arbitrator for cause. Any written submission by a
party shall not exceed 30 pages (not counting copies of this
Agreement and of documents relating to the dispute) as to an
original memorandum or 15 pages as to a single reply memorandum.
The hearing in such arbitration shall be completed within two
days unless the arbitrator determines otherwise. In the event
the arbitrator finds the consent previously requested by Maxtor
has been unreasonably withheld, the arbitrator shall have the
right to require the Purchasers to consent to such matter
promptly upon resubmission thereof by Maxtor for consent.
7.5 Voting for Directors.
At any time when the Purchasers have the right to
nominate directors pursuant to paragraph D(4) of Article FOURTH
of the Restated Articles and Maxtor complies with such paragraph
D(4), the Purchasers will vote, and cause their respective
Affiliates to vote, the Shares and shares of Common Stock held by
them in favor of the slate of directors nominated pursuant to
such paragraph D(4). The Purchasers will hold, and cause their
Affiliates to hold, the Shares and shares of Common Stock in
their own name or in the name of a nominee or other holder of
which they give advance notice to Maxtor and who does not hold
securities in such name for the account of persons who are not
Purchasers or Affiliates. In the event of any breach by the
Purchasers or such Affiliates of this Section 7.5, then, in
addition to any other remedies available under applicable law,
(i) to the extent that Shares and shares of Common Stock are not
voted in accordance with this Section 7.5, the Purchasers and
their Affiliates agree that they shall not be entitled to vote
such shares for such election without the consent of a majority
of the directors other than any directors nominated by the
Purchasers or their Affiliates, and (ii) Maxtor may require, upon
the affirmative vote of a majority of its directors other than
any directors nominated by Purchasers or their Affiliates
pursuant to paragraph D(4) of Article FOURTH of the Restated
Articles, the breaching Purchaser(s) or Affiliate(s) and all the
Affiliates of such breaching party to enter into a voting trust
agreement in customary form with respect to the Shares and shares
of Common Stock held by the breaching party and such Affiliates
under which (i) such directors from time to time will be the
voting trustees, (ii) such trustees shall vote the Shares and
shares of Common Stock at any election of directors in favor of
the slate nominated pursuant to paragraph D(4) of Article FOURTH
of the Restated Articles, (iii) the shares subject to the voting
trust will be voted as to all other matters as directed by the
beneficial holders thereof and (iv) the voting trust will
terminate at such time as the Purchasers no longer have the right
to nominate directors pursuant to paragraph D(4) of Article
FOURTH of the Restated Articles.
SECTION 8. REGISTRATION RIGHTS
8.1 Requested Registration.
If at any time one or more Purchasers shall request
that Maxtor effect the registration of shares of Common Stock
issued or issuable upon conversion of Shares, and the requested
registration relates to an offering either (i) of at least
1,400,000 shares of Common Stock held, and issuable upon
conversion of Shares held, by all Purchasers or (ii) with
anticipated aggregate proceeds (before any underwriters discount
or any expenses of the offering) of $25,000,000 or more, Maxtor
shall use its best efforts to effect the requested registration.
The rights granted by this Section 8.1 may be exercised
from time to time, but Maxtor shall not be required to make any
registration effective under this Section 8.1 more than once in
any calendar year.
Maxtor may include in the registration under this
Section 8.1 any other shares of Common Stock (including issued
and outstanding shares of Common Stock as to which the holders
thereof have contracted with Maxtor for "piggyback" registration
rights) so long as the inclusion in such registration of such
shares will not, in the opinion of the managing underwriter, if
any, or the Purchaser requesting registration, if there is no
managing underwriter, interfere with the successful marketing in
accordance with the intended method of sale or other disposition
of all the shares sought to be registered by a Purchaser pursuant
to this Section 8.1. If it is determined as provided above that
there will be such interference, the other shares of Common Stock
sought to be included shall be excluded to the extent deemed
appropriate by the managing underwriter or Purchaser, as the case
may be.
If the requested registration is an underwriting, the
managing and other underwriters will be selected by the
Purchasers requesting the registration. If the requested
registration is not a firm commitment underwritten offering and
Maxtor requests that it be made in such an offering of the same
size and during the same period, the requesting Purchaser will
change the form of the offering to a firm commitment underwritten
offering provided that the managing and other underwriters and
the terms of the underwriting, including without limitation the
underwriters discount, are reasonably satisfactory to the
requesting Purchaser(s).
8.2 "Piggyback" Registration.
If at any time Maxtor proposes to register any of its
securities under the Securities Act either for its own account or
for the account of a security holder or security holders (except
with respect to Registration Statements filed on Form S-4 or on a
Form S-8 relating to employee stock benefit programs or such
other similar forms then in effect under the Securities Act), it
will at each such time give written notice to the Purchasers and,
upon the written request of any Purchaser, given within 30 days
after its receipt of Maxtor's notice, Maxtor will use its best
efforts to cause such shares of Common Stock as to which
registration shall have been so requested, to be included in the
securities to be covered by the registration statement proposed
to be filed by Maxtor, all to the extent requisite to permit the
sale or other disposition by one or more Purchasers.
Notwithstanding any other provision of this Section 8.2, in the
case of a firm commitment underwritten offering of shares to be
issued by Maxtor, if the managing underwriter determines that the
marketing factors require a limitation of the number of shares to
be sold, the underwriter may exclude the necessary number of
shares held by security holders from such registration and
underwriting. In such event, the shares of Common Stock held by
any Purchaser shall be reduced or excluded on a pro rata basis
with shares held by other selling stockholders. In the case of a
firm commitment underwritten offering, any request by a Purchaser
pursuant to this Section 8.2 to register shares of Common Stock
must specify that such shares are to be included in the
underwriting on the same terms and conditions as the shares of
Common Stock otherwise being sold through underwriters under such
registration.
8.3 Registration Procedures and Expenses.
If and whenever Maxtor is required by the provisions
contained herein to use its best efforts to effect the
registration of any of the Shares under the Securities Act, the
selling Purchaser will furnish in writing such information as is
reasonably requested by Maxtor for inclusion in the registration
statement relating to such offering and such other information
and documentation as Maxtor shall reasonably request, and Maxtor
will, as expeditiously as possible:
(a) Prepare and file with the SEC a registration
statement (including a prospectus therein) with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for such period as may
be necessary to permit the successful marketing of such
securities but not exceeding 90 days for an offering pursuant to
Section 8.1 hereof; or, with regard to an offering pursuant to
Section 8.2 hereof, for the period associated with the offering
which gave rise to rights under Section 8.2; provided, in each
case, that the Maxtor Board of Directors may request the
Purchaser(s) requesting the registration to delay the time for
the filing of the offering for up to 90 days in the aggregate due
to material damage that would result to Maxtor from registration
without the requested delay on account of specific pending
transactions or developments designated by the Board, and the
Purchasers and Maxtor will cooperate with one another in order to
agree upon a schedule for the offering that fairly accommodates
the interests and concerns of the parties.
(b) 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
comply with the provisions of the Securities Act; and to keep
such registration statement effective for that period of time
specified in Section 8.3(a);
(c) Furnish to the selling Purchaser such number
of prospectuses and preliminary prospectuses in conformity with
the requirements of the Securities Act, and such other documents
as such Purchaser may reasonably request in order to facilitate
the public sale or other disposition of the shares being sold by
the Purchaser;
(d) If requested by any selling Purchaser,
furnish an opinion of counsel in the form customarily rendered to
underwriters in firm commitment underwritten offerings, addressed
to such Purchaser and containing substantially the following
provisions: (1) that the registration statement covering such
registration of securities has become effective under the
Securities Act; (2) that, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness thereof has
been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;
(3) that at the time the registration statement became effective,
the registration statement and the related prospectus complied as
to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the
SEC thereunder (except that such counsel need express no opinion
as to financial statements and related schedules contained
therein); (4) that while such counsel has not independently
verified the accuracy or completeness of the information
contained therein, such counsel has no reason to believe that the
registration statement at the time it became effective or the
prospectus contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (5) that
the descriptions in the registration statement and the
prospectus, and any amendments or supplements thereto, of all
legal and governmental matters and all contracts, documents and
instruments are materially correct; (6) if such offering is an
underwritten offering, that such counsel does not know of any
legal or governmental proceedings, pending or threatened,
required to be described in the registration statement or
prospectus, or any amendment or supplement thereto, which are not
described as required, nor of any contracts or document or
instruments of character required to be described in the
registration statement or prospectus, or any amendment or
supplement thereto, or to be filed as exhibits to the
registration statement which are not described or filed as
required; and (7) as to the capitalization and corporate status
of Maxtor and, to the extent requested by any underwriter, the
Subsidiaries, if any;
(e) If requested by any underwriter of the
offering and permitted by applicable rules and guidelines,
furnish such Purchaser a letter from the independent certified
public accountants of Maxtor in the form customarily furnished to
underwriters in firm commitment underwritten offerings, addressed
to such Purchaser, providing substantially that such accountants
are independent certified public accountants within the meaning
of the Securities Act and that in the opinion of such
accountants, the financial statements and other financial data of
Maxtor included in the registration statement and the prospectus,
and any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of
the Securities Act. Such letter shall additionally cover such
other financial matters (including information as of the date of
such letter) with respect to the registration in respect of which
such letter is being given as the selling Purchaser may
reasonably request; and
(f) Use its best efforts to register or qualify
the shares covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as the
selling Purchaser shall reasonably request and do any and all
other acts and things which may be necessary or desirable to
enable such Purchaser to consummate the public sale or other
disposition in such jurisdiction of the shares owned by such
Purchaser.
All expenses incurred by Maxtor in complying with
Sections 8.1, 8.2 and 8.3 hereof, including without limitation,
all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for
Maxtor, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration
(but excluding the compensation of regular employee of Maxtor
which shall be paid in any event by Maxtor) are herein called
"Registration Expenses"; and all underwriting discounts and
selling commissions applicable to the sales are herein called
"Selling Expenses." Maxtor will pay all Registration Expenses in
connection with up to 7 registrations pursuant to Sections 8.1
and, if so designated by the requesting Purchaser(s) as one of
such 7 registrations, 8.2, except as may be required to update
any registration statement kept effective for more than the
period of time required by Section 8.3(a). All Selling Expenses
in connection with each registration pursuant to Section 8.1 or
8.2 shall be borne by the seller of the securities on which they
are imposed. All Registration Expenses other than those payable
by Maxtor shall be borne by Maxtor, the selling Purchasers and
any other selling stockholders pro rata in proportion to the
securities covered thereby being sold by them. Each selling
stockholder shall bear the fees and costs of its own counsel.
In the event a Purchaser proposes to sell shares of
Common Stock in accordance with the provisions contained herein
pursuant to an underwritten offering, Maxtor shall have the right
to approve the managing underwriters for such offering, provided,
however, that such approval shall not be unreasonably withheld.
8.4 Indemnification.
In the event of a registration of any shares of Common
Stock under the Securities Act pursuant to the provisions
contained herein, Maxtor will hold harmless the Purchasers and
each underwriter of such shares and each other Person, if any,
who controls a Purchaser or such underwriter within the meaning
of Section 15 of the Securities Act, and each officer, director,
employee and advisor of each of the foregoing, against any
expenses, losses, claims, damages or liabilities, joint or
several, to which a Purchaser or such underwriter or controlling
Person may become subject under the Securities Act, any state
securities law or otherwise, including any of the foregoing
incurred in settlement of any litigation, commenced or
threatened, insofar as such expenses, losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained, on the effective date thereof, in
any registration statement under which such shares are registered
under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by Maxtor of any rule or regulation
promulgated under the Securities Act or any state securities law
applicable to Maxtor and relating to action or inaction required
of Maxtor in connection with any registration, qualification or
compliance; and will reimburse the Purchasers and each such
underwriter and each such controlling Person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that Maxtor will not be
liable in any such case to the extent that any such expense,
loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, said
preliminary prospectus or said prospectus or said amendment or
supplement in reliance upon and in conformity with written
information furnished to Maxtor through an instrument duly
executed by a Purchaser or such underwriter specifically for use
in the preparation thereof; and provided, further, that if any
expenses, losses, claims, damages or liabilities arise out of or
are based upon an untrue statement, alleged untrue statement,
omission or alleged omission contained in any preliminary
prospectus which did not appear in the final prospectus, Maxtor
shall not have any liability with respect thereto to (i) a
Purchaser or any Person who controls such seller within the
meaning of Section 15 of the Securities Act, if such Purchaser
delivered a copy of the preliminary prospectus to the Person
alleging such expenses, losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended
or supplemented if it has been amended or supplemented, to such
Person at or prior to the written confirmation of the sale to
such Person or (ii) any underwriter or any Person who controls
such underwriter within the meaning of Section 15 of the
Securities Act, if such underwriter delivered a copy of the
preliminary prospectus to the Person alleging such expenses,
losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as amended or supplemented if it
has been amended or supplemented, to such Person at or prior to
the written confirmation of the sale to such Person.
In the event of any registration of any shares of
Common Stock under the Securities Act pursuant to the provisions
contained herein, each Purchaser will indemnify and hold harmless
Maxtor and each Person, if any, who controls Maxtor within the
meaning of Section 15 of the Securities Act, each officer of
Maxtor who signs the registration statement, each director of
Maxtor and each underwriter and each Person who controls any
underwriter within the meaning of Section 15 of the Securities
Act, against any and all such expenses, losses, claims, damages
or liabilities referred to in the first paragraph of this
Section 8.4, if the statement, alleged statement, omission or
alleged omission in respect of which such expense, loss, claim,
damage or liability is asserted was made in reliance upon and in
conformity with information furnished in writing to Maxtor by or
on behalf of a Purchaser specifically for use in connection with
the preparation of such registration statement, preliminary
prospectus, prospectus, amendment or supplement; provided,
however, that if any expenses, losses, claims, damages or
liabilities arise out of or are based upon an untrue statement,
alleged untrue statement, omission or alleged omission contained
in any preliminary prospectus which did not appear in the final
prospectus, a Purchaser shall not have any such liability with
respect thereto to (i) Maxtor, any Person who controls Maxtor
within the meaning of Section 15 of the Securities Act, any
officer of Maxtor who signed the registration statement or any
director of Maxtor, if Maxtor delivered a copy of the preliminary
prospectus to the Person alleging such expenses, losses, claims,
damages or liabilities and failed to deliver a copy of the final
prospectus, as amended or supplemented if it has been amended or
supplemented, to such Person at or prior to the written
confirmation of the sale to such Person or (ii) any underwriter
or any Person controlling such underwriter within the meaning of
Section 15 of the Securities Act, if such underwriter delivered a
copy of the preliminary prospectus to the Person alleging such
expenses, losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or
supplemented, if it has been amended or supplemented, to such
Person at or prior to the written confirmation of the sale to
such Person.
Each party entitled to indemnification under this
Section 8.4 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting thereon, provided that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and
the Indemnified Party may participate in such defense at its own
expense, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8.4
except to the extent such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation.
8.5 Registration Not Required.
Notwithstanding anything in this Section 8, Maxtor shall
have no obligation to register shares of Common Stock requested
to be registered hereunder if, in the opinion of counsel to
Maxtor, reasonably satisfactory in form and substance to counsel
for the Purchasers, all of the shares of Common Stock requested
to be registered can be sold within a given three-month period
without compliance with the registration requirements of the
Securities Act pursuant to Rule 144.
8.6 Reporting Requirements.
Maxtor shall comply with the reporting requirements of
Section 15(d) of the Securities Exchange Act of 1934, as amended
(whether or not it shall be required to do so pursuant to the
provisions of said Section 15(d)), and shall comply with all
other public information reporting requirements required by the
SEC as a condition to the availability of an exemption, presently
existing or hereafter adopted, from the Securities Act for the
sale of shares of Common Stock.
8.7 Assignment.
rights of the Purchasers under this Section 8 may be
assigned to any permitted transferee of Shares, or to a
transferee of not less than 2,000,000 shares of Common Stock
issued or issuable on conversion of the Shares.
SECTION 9. MISCELLANEOUS
9.1 Transactional Expenses.
Whether or not the transactions contemplated by this
agreement are consummated, each party shall pay its own fees and
expenses incident to the negotiation, preparation, execution,
delivery and performance hereof and thereof, including, without
limitation, the fees and expenses of its counsel, accountants and
other experts.
9.2 Exclusivity.
Maxtor agrees that it will not, unless and until this
Agreement is terminated in accordance with its terms, directly or
indirectly:
(i) initiate, solicit or encourage any
discussions with any third party regarding any sale or
acquisition of Maxtor or its assets or the issuance of any
additional shares of Maxtor stock, or
(ii), subject to the fiduciary obligations of its
directors, hold any such discussions with third parties
(whether or not such discussions have heretofore been held
with such third party) or enter into any agreement with any
party other than a Purchaser
concerning any sale or acquisition of Maxtor or its assets or the
issuance of shares of Maxtor stock, other than, in each case,
issuances pursuant to employee benefit plans identified pursuant
Section 2.15.
9.3 Access; Confidentiality.
(a) Until the Closing or the termination of this
Agreement in accordance with Section 9.9, whichever first occurs,
Maxtor will (i) provide all of the Purchasers and their
employees, representatives, counsel and accountants, full access,
as reasonably requested, to the financial statements, contracts,
books, records, and other relevant information pertaining
thereto, and to the facilities, officers, legal staff, employees,
independent public accountants and legal counsel of Maxtor and
(ii) permit the Purchasers and their employees, representatives,
counsel and accountants to make copies and retain other
documentation with respect to Maxtor and the operations,
financial position, prospects and Properties of Maxtor (subject
to reasonable limitations on the copying and retention of key
nonpublic technical information).
(b) Any information disclosed by the parties pursuant
hereto or in connection with the transactions contemplated herein
shall be subject to the Nondisclosure Agreement between the
Maxtor and HEI dated as of May 1, 1993. Maxtor will use its best
efforts to mark "CONFIDENTIAL" the confidential documents given
to the Purchasers after the date hereof, but (notwithstanding the
terms of such Nondisclosure Agreement) the failure to so mark (or
to have so marked after August 18, 1993) will not prejudice
Maxtor's rights thereunder if the document was in fact
confidential.
9.4 Publicity.
Until the Closing or the termination of this Agreement
in accordance with its terms, none of the Purchasers or Maxtor
shall, directly or indirectly, issue any press release, or make
any public statement, concerning the transactions contemplated by
this Agreement without the prior written consent of all of the
Purchasers (in the case of such a release or statement by Maxtor)
or of Maxtor (in the case of such a release, statement by a
Purchaser). This Section 9.4 shall not, however, preclude any
party from making any disclosure required by applicable law,
provided that in the event any party, or any officer, director,
employee, agent or representative of a party, believes that any
press release, public statement or other disclosure is so
required, such party will notify and consult with the other
parties with respect thereto as promptly as is practicable under
the circumstances.
9.5 Cooperation On Other Matters.
(a) Subject to the Nondisclosure Agreement referred
to in Section 9.3(b), Maxtor agrees to cooperate where feasible
with the Purchasers on research and development, marketing and
manufacturing matters, including involving members of the
Purchasers' staffs in future product and manufacturing
development efforts and providing the Purchasers and their
Affiliates the opportunity to participate on a most-favored
supplier basis in supplying components for use in Maxtor
products, such as DRAMs and SRAMs and in providing subcontract
manufacturing services. Such cooperation shall include, among
other things, entering into royalty-free cross-licenses,
exchanges or similar transactions relating to patents for disk
drive components such as ASICs, heads, motors, media, printed
circuit board assemblies and mechanical parts and, subject to the
consent of Kubota Corporation, relating to magneto-optical disk
drives; and such other cooperation on technical and marketing
matters as is contemplated by this Section 9.5 and as shall be
mutually agreed upon after the Closing. Maxtor will supply disk
drives to HEI for use in its systems on a most-favored customer
basis. Maxtor will consult with the Purchasers concerning the
appropriate strategy for Maxtor's interest in Maxoptix.
(b) Maxtor and the Purchasers will each have the
opportunity to designate employees to be employed, on mutually
agreeable terms, by the other. At the Purchasers' request made
at a time when the right to nominate the Chairman of the Board in
accordance with paragraph D(5) of Article FOURTH of the Restated
Articles continues in effect, one of the directors nominated by
them will be appointed an executive officer and employee of
Maxtor, with a mutually agreed title and responsibilities, who
will be included in ongoing senior management reporting and
discussion. The Purchasers and Maxtor will mutually agree on
arrangements for ongoing reporting of Maxtor financial, business
and product information.
9.6 Shareholder Approval.
Maxtor shall promptly submit to its Shareholders for
approval both the transactions contemplated by this Agreement and
the Restated Articles, and shall furnish the Purchasers drafts of
the related proxy statement not less than 5 Business Days prior
to its filing. Subject to the fiduciary obligations of its
directors, Maxtor will use its best efforts to obtain such
approval.
9.7 Consummation of Closing.
Each party to this Agreement agrees to use its best
efforts to cause the conditions to Closing to be satisfied and
not to willfully take any action which would prevent a condition
to Closing from being satisfied, including without limitation any
action that would have the effect of making any representation or
warranty contained in this Agreement or in any document to be
delivered pursuant to this Agreement untrue. Each party will
cooperate as reasonably requested by another party in submitting
any necessary filing with an Governmental Agency or providing
information concerning such party to any Governmental Agency.
The obligations of Maxtor under this Section 9.7 will be subject
to the fiduciary obligations of its directors as stated in
Section 9.2(ii), and Maxtor will notify the Purchasers
immediately if the Maxtor board of directors takes or determines
to take any action inconsistent with this Section 9.7 (excluding
this sentence) pursuant to such fiduciary duties.
9.8 Export Controls.
Each of the Purchasers agree not to export, directly or
indirectly, (a) any technical data it has or will acquire from
Maxtor pursuant to this Agreement, or (b) any product utilizing
any such data, to any country for which any U.S. Governmental
Agency at the time of export requires an export license or other
governmental approval without first obtaining such license or
approval.
9.9 Termination.
(a) The "Last Closing Date" shall be November 24 ,
1993 or, if an extension (for up to 45 days) is requested by a
Purchaser or Maxtor to secure a required consent of a
Governmental Agency and such extension is consented to by all
other parties, which consent shall not be unreasonably withheld,
the extended date so requested. Any party shall have the right
to terminate any further obligation it has hereunder (other than
under Sections 6.3, 9.3(b) and 9.8 which shall survive any such
termination) if (i) the Closing has not occurred by the Last
Closing Date (including any such extension), and (ii) such
nonoccurrence does not proximately result from a breach hereof by
the terminating party. In addition, this Agreement and any
further obligations of the parties hereunder (other than under
Sections 6.4, 9.3(b) and 9.8, which shall survive any such
termination) may be terminated at any time prior to the Closing
Date, whether before or after Shareholder approval of the
transactions, by mutual consent of Maxtor and the Purchasers by
action taken by their respective Boards of Directors or by Maxtor
in connection with entering into another agreement pursuant to
Section 9.2(ii).
(b) If Maxtor terminates this Agreement, pursuant
to Section 9.2(ii) or 9.9(a) or otherwise, and Maxtor, prior to
January 18, 1994, consummates a transaction or enters into a
definitive agreement to consummate a transaction that involves
the sale or acquisition of Maxtor or the issuance of additional
shares of Maxtor stock (other than shares issued pursuant to the
employee benefit plans listed in SCHEDULE 2.15 or issued in a
public offering) to any party other than a Purchaser and which
has a higher value to Maxtor than the transaction contemplated
herein, then Maxtor agrees to pay the Purchasers (pro rata
according to the number of Shares to be purchased by each)
$4,000,000 simultaneously with the consummation of such
transaction; provided, however, that Maxtor shall have no
obligation to pay such amount if (i) Maxtor shall have terminated
this Agreement due to an intentional misstatement, an intentional
omission or an intentional breach by a Purchaser of one or more
representations or warranties contained in Section 3 hereof or
(ii) a Purchaser shall have willfully and materially breached a
material covenant of such Purchaser contained herein. In the
case of a termination by Maxtor pursuant to Section 9.2(ii), the
payment of such amount (together with any interest owing under
Section 9.12) shall constitute the sole compensation and remedy
owing to the Purchasers from Maxtor or any third party on account
of such termination (without prejudice to Maxtor's obligations
under this Agreement which survive such termination).
9.10 Other Agreements Superseded; Waiver and
Modification, Etc.
This Agreement supersedes all prior agreements or
understandings (including, without limitation the Letter of
Intent) written or oral, between Maxtor and any of the
Purchasers, relating to the acquisition of shares of Maxtor, and
incorporates the entire understanding of the parties with respect
thereto; provided that any and all remedies that would in the
absence of this Section 9.10 be available for any breach of
paragraph 8, 9, 11, 12, 13 or 14 of such Letter of Intent
occurring prior to the parties' entering into this Agreement
shall continue to be available and enforceable.
This Agreement may be amended or supplemented only by a
written instrument signed by the party against whom the amendment
or supplement is sought to be enforced. The party benefited by
any condition or obligation may waive the same, but such waiver
shall not be enforceable by another party unless made by written
instrument signed by the waiving party.
9.11 Notices.
Any notice or other communication under or relating to
this Agreement shall be given in writing and shall be deemed
sufficiently given and served for all purposes when personally
delivered or given by telefax with receipt verified by printout
of the transmitting machine (or otherwise confirmed in writing,
in which case the notice shall be deemed given when such written
confirmation is received):
(a) If to any Purchaser:
Hyundai Electronics Industries Co., Ltd.
66, Jeokeon-dong, Chongro-Ku
Seoul, Korea
Attn: Corporate Planning and Coordination
Office
Fax: 011-82-2-733-2145, -2146 or -2147
with a copy to:
McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attn: Bartley C. Deamer
Fax: (415) 393-2286
(b) If to Maxtor:
211 River Oaks Parkway
San Jose, CA 95134
Attn: Mark Chandler, General Counsel
Fax: (408)432-4169
with a copy to:
Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Howard Clowes
Fax: (415) 327-3699
Unless otherwise expressly stated therein, any notice given by
HEI shall be deemed to be given by all Purchasers.
9.12 Interest.
Any amounts due under Sections 6.2, 6.3, 8.4 and 9.9(b)
shall bear interest at the Agreed Rate from the time payment is
due to the time of payment.
9.13 Law Governing; Federal Forum.
(a) This Agreement shall be construed in
accordance with and governed by the laws of the State of
California.
(b) If any action is brought within the United
States under or relating to this Agreement and the federal trial
courts have jurisdiction over the subject matter of such action,
such action may be brought only in such federal courts.
9.14 Successors; Assignability.
This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any right,
remedy, obligation or liability hereunder may be assigned by
either of the parties hereto without the prior written consent of
the other parties hereto with the exception of any assignment by
one Purchaser to another Purchaser or an Affiliate of such
Purchaser or another Purchaser. (Any such assignment to another
Purchaser or such Affiliate will not, however, relieve the
assigning Purchaser of its obligations hereunder.)
9.15 Counterparts.
This Agreement may be executed in any number of
counterparts, and each such executed counterpart shall be deemed
to be an original instrument, but all such executed counterparts
together shall constitute one and the same instrument.
9.16 Parties in Interest.
Nothing in this Agreement, express or implied, is
intended to confer any rights or remedies under or by reason of
this Agreement on any Person other than the parties hereto and
their respective permitted successors and assigns, nor is
anything in this Agreement intended to relieve or discharge any
obligation of any third Person to any party hereto or give any
third Person any right of subrogation or action over against any
party hereto.
9.17 References.
Unless expressly indicated to the contrary, all
references herein to Sections and Exhibits refer to the specified
part of this Agreement and all references to Schedules refer to
the specified Schedule of the Disclosure Memorandum. All terms
such as "herein," "hereby" or "hereunder" refer to this Agreement
as a whole.
9.18 Headings.
The headings used in this Agreement are provided for
convenience only and this Agreement shall be interpreted as
though they did not appear herein.
9.19 Fair Construction.
This Agreement shall be given fair and reasonable
construction in accordance with the intention of the parties.
This Agreement shall not be construed against the party preparing
it, and shall be construed without regard to the identity of the
Person who drafted it or the party who caused it to be drafted
and shall be construed as if all parties had jointly prepared
this Agreement. It shall be deemed their joint work product, and
each and every provision of this Agreement shall be construed as
though all of the parties hereto participated equally in the
drafting hereof; and any uncertainty or ambiguity shall not be
interpreted against any one party. As a result of the foregoing,
any rule of construction that a document is to be construed
against the drafting party shall not be applicable.
9.20 Business Days.
If the date on or by which any act is required to be
performed hereunder is not a Business Day, such date shall be
extended to the next Business Day.
SECTION 10. GLOSSARY
As used in this Agreement, the following terms have the
respective meanings set forth below or in the location indicated:
Affiliate--any Person which controls, is controlled by
or is under common control with, another Person. For
purposes of this definition, "control" means the
ability, directly or indirectly, to elect or designate
(in the absence of particular events or circumstances) a
majority of the directors (or Persons performing a
similar function) of a Person.
Agreed Rate--interest rate equal to 2% per year over the
rate announced by Bank of America National Trust and
Savings Association as its then-current reference rate
or the maximum lawful rate, whichever is less.
Agreement--This Stock Purchase Agreement, including the
Exhibits hereto and the Disclosure Memorandum, as it or
they may be amended from time to time in accordance with
its terms.
Annual Financial Statements--Section 2.7.
Business Day--Any day which is not a Saturday, Sunday or
a bank holiday in the State of California or the
Republic of Korea.
Closing--Section 1.2.
Closing Date--Section 1.2.
Common Stock--Section 1.1.
Disclosure Memorandum--The disclosure memorandum of even
date herewith executed by the parties hereto, containing
the Schedules referred to in Section 2 and any
exceptions to the representations and warranties made in
Section 2.
Employee Plan--(i) each pension plan as defined in
Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), which is qualified
(or states in the plan document or any government filing
that it is qualified) under Section 401 of the Code and
which Maxtor sponsors or contributes to or with respect
to which Maxtor has or could incur any obligation or
liability; (ii) each pro plan, stock option, pension,
severance, retirement or incentive compensation plan and
any other benefit plan or program and (iii) each welfare
plan as defined in Section 3(1) of ERISA.
GAAP--Section 2.7.
Governmental Agency--Any federal, state, local or
foreign government or any political subdivision thereof
(including without limitation the executive and
legislative branches thereof) or any department,
commission, board, bureau, agency, court, panel or other
instrumentality of any kind of any of the foregoing.
Governmental Requirement--any federal, state, local or
foreign statute, law, order, judgment, decree,
regulation or permit or any requirement of any
Governmental Agency.
HEI--Introductory paragraphs.
Indemnified Parties--Section 8.4.
Indemnifying Parties--Section 8.4.
Intellectual Property Rights--Section 2.10.
Interim Financial Statements--Section 2.7.
Knowledge--Known to any executive officer or the
principal legal officer, the principal human resources
officer or the principal environmental officer of the
entity making the representation without any additional
investigation other than inquiry of key employees
reporting to such executive or other officer.
Last Closing Date--Section 9.9.
Letter of Intent--Section 6.3(i).
Losses--Section 6.3.
Major Subsidiary--Any Subsidiary with more than
50 employees as of the date of this Agreement.
Material Adverse Effect--With respect to Maxtor, a
material adverse effect, singly or cumulatively, on the
business, Properties, liabilities, financial condition,
operations or prospects of Maxtor and the Subsidiaries
taken as a whole. With respect to a Purchaser, a
material adverse effect on the business, Properties,
liabilities, financial conditions, operations or
prospects of such Purchaser.
Maxtor--Introductory paragraphs.
Person--An individual, partnership, corporation, trust
or unincorporated organization or a Governmental Agency.
Property--Any interest in any kind of property, asset or
right, whether real, personal or mixed, tangible or
intangible, and wherever located.
Purchase Price--Section 1.1.
Purchaser--Introductory paragraphs.
Purchaser Party--Section 6.3.
Registration Expenses--Section 8.3.
Regulated Material--Any substance, material or solid or
other waste that is, or whose release or disposal is,
subject to any Governmental Requirement or regulated by
any Governmental Agency with jurisdiction or whose
release or disposal is actionable under applicable law.
Restated Articles--Section 4.12.
Rights Agreement--The Rights Agreement dated as of
January 27, 1988 between Maxtor and Bank of America
National Trust and Savings Association.
SEC--United States Securities and Exchange Commission.
Securities Act--the Securities Act of 1933, as amended.
Selling Expenses--Section 8.3.
Shareholder--A shareholder of Maxtor.
Shares--Introductory paragraphs.
Stock Rights--Section 2.6.
Subsidiaries--Section 2.5.
Taxes/Tax--Any and all federal, state, county, local or
foreign taxes, charges, levies, fees, imposts or other
assessments of any nature whatsoever, including, without
limitation, income tax, profits tax, gross receipts tax,
corporation tax, capital transfer tax, stamp duty and
value added tax, payroll tax, sales tax, employment tax,
use tax, property tax, excise tax, withholding taxes,
environmental or superfund taxes, development gains tax,
national insurance and earnings-related contributions,
income tax payable by way of pay-as-you-earn deductions,
and all costs, charges, interest, penalties, surcharges
and expenses related thereto or to any disallowance of
any claim with respect thereto.
IN WITNESS WHEREOF, the parties have executed this
Stock Purchase Agreement as of the date first above written.
MAXTOR CORPORATION
By
Laurence R. Hootnick
President and Chief
Executive Officer
HYUNDAI ELECTRONICS INDUSTRIES
CO., LTD.
By
Joo Yong Kim
President and
Representative Director
Class A Common Stock to be
purchased: 5,844,000 shares
Aggregate purchase price:
$44,998,800
HYUNDAI HEAVY INDUSTRIES
CO., LTD.
By
Joo Yong Kim
Attorney-in-Fact
Class A Common Stock to be
purchased: 4,870,000 shares
Aggregate purchase price:
$37,499,000
HYUNDAI CORPORATION
By
Joo Yong Kim
Attorney-in-Fact
Class A Common Stock to be
purchased: 4,870,000 shares
Aggregate purchase price:
$37,499,000
HYUNDAI MERCHANT MARINE CO., LTD.
By
Joo Yong Kim
Attorney-in-Fact
Class A Common Stock to be
purchased: 3,896,000 shares
Aggregate purchase price:
$29,999,200
2
MAXTOR CORPORATION
EXHIBIT 11.1
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In thousands, except per share data)
Three Months Ended Nine Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
Primary
Weighted average number of
common shares outstanding
during the period 29,474 27,421 29,255
Incremental common shares
attributable to exercise of
outstanding options(assuming
proceeds would be used to
purchase treasury stock) - 2,975 -
-------- ------- -------
Total Shares 29,474 30,396 29,255 29,664
======== ======= ======= =======
Net income (loss) $(121,305) $18,630 $(253,107) $65,804
========= ======= ========= =======
Net income (loss) per share $ (4.12) $ 0.61 $ (8.65) $ 2.22
========= ======= ========= =======
Fully Diluted
Weighted average number of
common shares outstanding
during the period 29,474 27,421
Incremental common shares
attributable to exercise of
outstanding options(assuming
proceeds would be used to
purchase treasury stock) - 2,983
Incremental common shares
attributable to assumed
conversion of 5.75% convertible
subordinated debentures - 2,500
-------- -------
Total Shares 29,474 32,904 29,255 32,218
======== ======= ======= =======
Net income (loss) $(121,305) $18,630 $(253,107) $65,804
Add 5.75 convertible subordinated
debenture interest - 863 - 2,589
-------- ------- --------- -------
Adjusted net income (loss) $(121,305) $19,493 $(253,107) $68,393
======== ======= ========= =======
Net income (loss) per share $ (4.12) $ 0.59 $ (8.65) $ 2.12
======== ======= ========= =======
