MAXTOR CORP, SC 14D9/A, 1995-12-20

MAXTOR CORP
SC 14D9/A, 1995-12-20
COMPUTER STORAGE DEVICES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 4 TO

SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934

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MAXTOR CORPORATION
(Name of Subject Company)

MAXTOR CORPORATION
(Name of Person(s) Filing Statement)

COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)

577729 10 6
(CUSIP Number of Class of Securities)

DR. CHONG SUP PARK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MAXTOR CORPORATION
211 RIVER OAKS PARKWAY
SAN JOSE, CA 95134
(408) 432-1700

(Name, address and telephone number of persons
authorized to receive notice and communications
on behalf of person(s) filing statement)

COPY TO:
DIANE HOLT FRANKLE, ESQ.
GRAY CARY WARE & FREIDENRICH
A PROFESSIONAL CORPORATION
400 HAMILTON AVENUE
PALO ALTO, CA 94301-1825

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Maxtor Corporation, a Delaware corporation (the "Company") hereby amends
and supplements its Solicitation/Recommendation Statement on Schedule 14D-9
dated November 8, 1995, as amended by Amendment No. 1, Amendment No. 2 and
Amendment No. 3 to Schedule 14D-9 dated November 9, 1995, November 28, 1995 and
December 7, 1995, respectively (as amended, the "Schedule 14D-9") relating to
the tender offer by Hyundai Acquisition, Inc., a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Hyundai Electronics America, a
California Corporation (the "Parent"), to purchase any and all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of the Company
at a price of $6.70 per share, net to the sellers in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated November 8,
1995 and in the related Letter of Transmittal as disclosed in the Tender Offer
Statement on Schedule 14D-1 dated November 8, 1995, as amended by Amendment No.
1, Amendment No. 2 and Amendment No. 3 to Schedule 14D-1 dated November 28,
1995, December 7, 1995 and December 20, 1995, respectively. All capitalized
terms shall have the meanings assigned to them in the Schedule 14D-9, as amended
to date, unless otherwise indicated herein.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

(b)
Background of the Transaction; Past Contacts, Transactions and Negotiations
with Parent and the Purchaser.

The last paragraph on Page 13 and the first full paragraph on page 14 of
the Amendment No. 1 to Solicitation/Recommendation Statement on Schedule 14D-9
disseminated to the stockholders of the Company on or about November 9, 1995
(the "Amendment No. 1") under the caption "Background of the Transaction; Past
Contacts, Transactions and Negotiations with the Company" in Item 4 are hereby
amended to read as follows (changes have been italicized):

Later that day, the legal and financial advisors of Parent and the Special
Committee met again. At this meeting, representatives of Bear Stearns made a
presentation justifying a range of prices between $6.30 and $12.33 per Share
based on a variety of different valuation methodologies, which were comparable
company analysis, comparable transaction analysis and review of historical
trading data of the Company and acquisition premiums paid in public comparable
transactions, and proposed a per Share acquisition price of $10.75
"See -- 'Opinion of Financial Advisor'." Representatives of Merrill Lynch
advised the Special Committee's representatives that $10.75 was not acceptable
to the Parent and that $5.15 per Share was a full and fair price.
Representatives of Merrill Lynch also advised the Special Committee's
representative that their client was reviewing its options concerning further
negotiations.

On October 26, 1995, the Company issued a press release stating that the
Special Committee did not accept Parent's offer per Share and that the parties
were reviewing their options concerning negotiations and announcing its
quarterly financial results, including net loss of $44.5 million for the quarter
ended September 30, 1995, compared to the $13.8 million net loss reported for
the quarter ended July 1, 1995. See Section 7. On October 26, 1995, the Hyundai
Shareholders filed an amendment to their Schedule 13D disclosing that Parent had
delivered the letter described above to the Special Committee. The Special
Committee also met on October 26, 1995 to consider the status of negotiations
and concluded that it would seek to continue discussions with Parent.
Thereafter, and after discussing the matter with the Special Committee and Bear
Stearns, Mr. Gallo of the Special Committee and Mr. Y.H. Kim, President and
Chief Executive Officer of Parent, met to discuss Parent's offer. At their
meeting, Mr. Gallo indicated that the Special Committee desired a price of $8.00
per Share and Mr. Kim indicated that he believed agreement would be difficult to
reach if the Special Committee were not willing to consider a price
significantly below $8.00, but that HEI would respond to the Special Committee's
position. Mr. Kim also reiterated Parent's view that $5.15 per Share was a full
and fair price for the Shares not already owned by the Hyundai Shareholders. The
October 26, 1995 letter sent from the Special Committee to Hyundai outlined the
reasons why the Company believed a purchase price of $8 per Share was fair. The
financial information in the letter had been discussed with and reviewed by Bear
Stearns. The financial and valuation information included in the letter was
derived from a financial analysis which was later formally presented to the
Special Committee by Bear Stearns on November 1, 1995. The range of values
discussed in the October 26, 1995 letter was $6.30 to $12.33

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per Share based on the Special Committee's belief that the comparable
transaction analysis and merger premium analysis were most meaningful to the
Special Committee's negotiating posture. For strategic negotiating reasons,
lower valuation ranges which were derived from other analyses conducted by Bear
Stearns were not included in the October 26, 1995 letter.

In making the decision to go from its $10.75 counteroffer to a discussion
of an $8 price, the Special Committee considered several factors, including: (1)
the uncertainty regarding whether negotiations with Hyundai would, in fact,
continue in the event that the Special Committee insisted upon further
discussions in the $10.75 range, (2) the financial condition of the Company and
(3) the beliefs of the members of the Special Committee regarding the likely
perception in the marketplace of announcing that negotiations with Hyundai had
broken off.

The following supplements the last paragraph on page 15 of the Amendment
No. 1:

Bear Stearns took note of the range of prices presented in price negotiations on
October 25, 1995 and the oral counter proposal to Parent's $5.15 offer of $10.75
per Share, and advised that in its view the $6.70 price was fair from a
financial point of view in light of the company's current financial condition
and the high potential for value erosion due to factors previously discussed
with the Special Committee, taking into account the range of implied values for
the Company based on their analyses. The Special Committee considered the fact
that the range of prices presented by Bear Stearns included values higher as
well as lower than the proposed $6.70 price, but concluded that the $6.70 offer
was the highest price that could be negotiated with Parent, based on the
extensive arms' length negotiations with Parent in light of the high potential
for value erosion for the Company. See "-- Opinion of Financial Advisor."

Certain Litigation. The following information supplements the information
set forth in the Amendment No. 1 under the caption "Background of the
Transaction; Past Contacts, Transactions and Negotiations with the Company" in
Item 4.

The Company is also a defendant in the previously described Wacholder
Action.

On November 17, 1995, a purported class action entitled Silber v. Maxtor
Corporation, et al. C.A. No. 14708 (the "Silber Action") was filed in the Court
of Chancery of the State of Delaware in and for New Castle County (the "Delaware
Chancery Court"). The Silber Action named as defendants each of the current
members of the Board of Directors, the Company, Parent and the Purchaser. The
Silber Action alleged, among other things, that the defendants violated their
fiduciary duties in structuring the Offer to eliminate the public stockholders
of the Company from continued equity participation in the Company at a price per
Share which is grossly unfair and inadequate, that Parent, the Purchaser and the
Hyundai Shareholders dominate and control the Company and the Board of Directors
giving them access to nonpublic information relating to the true value of the
Company and preventing a truly independent evaluation of the Offer, and that the
Special Committee was not independent. The Silber Action sought relief
including, among other things, that the court preliminarily and permanently
enjoin the consummation of the Offer, order defendants to carry out their
fiduciary duties, account for and place in trust all profits realized from their
alleged actions, and award attorneys' fees and costs.

On November 20, 1995, a purported class action entitled Barrington v.
Gallo, et al. C.A. No. 14711 (the "Barrington Action") was filed in the Delaware
Chancery Court. The Barrington Action named as defendants each member of the
Board of Directors except Mr. Christ. The Company, Parent, HEI and Mr. Ryal R.
Poppa, a former director of the Company, were also named as defendants. The
Barrington Action alleged that HEI controls and dominates the directors of the
Company and that the Company directors have approved the Parent's $6.70 proposal
notwithstanding the "gross inadequacy and unfairness of the price." The
Barrington Action sought relief including, inter alia, a preliminary and
permanent injunction against the consummation of the Offer, unspecified damages
and attorneys' fees and costs.

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and Mr. Ryal R. Poppa, a former director of the Company. The Campanella Action
alleged that, because HEI controls and dominates the directors of the Company
and the Company directors approved the Parent's $6.70 proposal notwithstanding
the "gross inadequacy and unfairness of the price," the defendants committed
fraud and aided and abetted one another in violating fiduciary duties. The
Campanella Action sought relief including, inter alia, a preliminary and
permanent injunction against the consummation of the Offer, unspecified damages
and attorney's fees and costs. None of the defendants in the Campanella Action
have been served, and no defendant learned of the Campanella Action before
December 8, 1995.

On December 13, 1995, plaintiffs in the Wacholder Action, the Silber Action
and Barrington Action filed a Consolidated Amended Complaint which, in addition
to the allegations in the original complaints, alleged that defendants breached
their duties of disclosure by failing to disclose all material facts, including
(i) the bases and methodologies underlying Bear Stearns' evaluation and opinion
of the fairness of the consideration offered to the Company's stockholders, (ii)
the circumstances surrounding the negotiations for the acquisition of Shares and
why the individual defendants agreed to a price of $6.70 per Share when such
consideration was at the low end of Bear Stearns' range of values, (iii) why the
Special Committee retreated from its first proposal of $10.75 per Share to $8.00
per Share without an intervening counteroffer from Hyundai, (iv) that the terms
of Parent's Consent Rights purported to limit the Company's directors in the
exercise of their fiduciary duties to obtain the best price for the Shares and
(v) that Hyundai dictated the terms of, and negotiations for, the sale of the
Company by exercising its control over the Company's business dealings.

On December 14, 1995, the Delaware Chancery Court issued an order
consolidating the Wacholder Action, the Silber Action and the Barrington Action
under the caption, In Re Maxtor Corporation Shareholders Litigation,
Consolidated C.A. No. 14668 (the "Consolidated Action").

On December 18, 1995, counsel to the parties in the Consolidated Action and
the Campanella Action agreed to Memorandum of Understanding governing a proposed
settlement of such litigation. The Memorandum of Understanding provides for,
among other things, (i) certain disclosure to be disseminated to shareholders of
the Company as promptly as practicable (such disclosure is included in this
supplement), (ii) the Consolidated Action to be certified, conditionally and for
settlement purposes only, as a class action, (iii) such litigation to be
dismissed with prejudice and (iv) defendants' agreement not to oppose an
application by plaintiffs' counsel for an award of fees of $290,000 and expenses
not to exceed $25,000, to be paid jointly by the Company and Parent. The
Memorandum of Understanding and the proposed settlement are conditioned on,
among other things, final approval by the Delaware Chancery Court, confirmatory
discovery by plaintiffs, the purchase of Shares pursuant to the Offer and the
consummation of the Merger. The foregoing description of the Memorandum of
Understanding is qualified in its entirety by reference to the text of such
memorandum, which has been filed as an exhibit to the Schedule 14D-1. See
Section 6 of this Supplement.

Opinion of Financial Advisor

Comparable Company Analysis. The first full paragraph under the caption
"Special Factors -- Opinion of Financial Advisor -- Comparable Company Analysis"
of Item 4 in the Amendment No. 1 is hereby amended to read as follows (changes
have been italicized):

Bear Stearns compared certain actual and estimated financial data, stock
market data and multiples of income statement parameters of certain other
publicly traded companies deemed to be generally comparable to the Company. Such
companies were used in this analysis because they were deemed by Bear Stearns to
operate in the same general industry (disk drives) as the Company. The
Comparable Companies met the following criteria: (1) they were all U.S. based
companies, (2) they all do business world wide, (3) there was adequate stock
market and financial information about each of these companies from which to
derive a meaningful comparison, (4) each company derived a majority of its
revenues from its disk drive business in the last twelve months and (5) during
the last twelve months, each company had revenues exceeding $250 million. Bear
Stearns used the following five companies it considered to be generally
comparable (the "Comparable Companies"): Conner Peripherals, Inc. ("Conner"),
Micropolis Corporation, Quantum Corporation ("Quantum"), Seagate Technology,
Inc. ("Seagate") and Western Digital Corporation. Bear Stearns excluded Conner
from calculations involving valuation multiples because, in its view, Conner's
stock is no longer trading on the basis of its financial performance but is
instead trading on the basis of its pending merger

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with Seagate. Bear Stearns observed that no company used in this analysis as a
comparison is identical to the Company. In particular, such companies have
different product mixes and different proportions of original equipment
manufacturer ("OEM") and distribution sales and have different operating
histories and financial conditions.

Comparable Transaction Analysis. The first three paragraphs under the
caption "Opinion of Financial Advisor -- Comparable Transaction Analysis" of
Item 4 in the Amendment No. 1 are hereby amended to read as follows (changes
have been italicized):

Bear Stearns analyzed the multiples of various financial statistics implied
by the consideration paid in eight pending or consummated merger and acquisition
transactions since 1990 involving companies deemed to be generally comparable to
the Company. Such companies were used in this analysis because they were deemed
by Bear Stearns to operate in the same general industry sector as the Company.
The eight pending or consummated merger transactions used herein as comparables
represent the relevant transactions in the data storage industry since January
1, 1990 for companies where there was adequate stock market and/or financial
information about each of the transactions from which to derive a meaningful
comparison; and the size of the transaction exceeded $10 million. To the extent
information was publicly available for these transactions, multiples analyzed
included price per share to latest twelve months and projected earnings per
share and aggregate transaction value (defined as the total price paid for all
equity securities of a company plus debt less cash) to latest twelve months
revenues, EBITDA and EBIT. The transactions analyzed included: Conner and
Seagate; the Disk Drive Division ("Digital") of Digital Equipment Corporation
and Quantum; Sunward Technologies, Inc. and Read-Rite Corporation; Archive
Corporation and Conner Peripherals, Inc.; Colorado Memory Systems, Inc. and
Hewlett-Packard Company; Dastek, Inc. and Komag Incorporated; WangDAT, Inc. and
Rexon Incorporated; and Cipher Data Products, Inc. and Archive Corporation
(collectively, the "Comparable Transactions"). Bear Stearns observed that no
company used in this analysis as a comparison is identical to the Company. In
particular, such companies have different product offerings and market positions
than the Company and have different operating histories and financial
conditions. In performing the Comparable Transactions analyses, Bear Stearns
focused primarily on the implied equity values per share derived by applying the
harmonic mean multiples of certain income statement parameters at which the
Comparable Transactions were completed to the Company's respective income
statement parameters.

Based on the harmonic mean multiple of aggregate transaction value to
latest twelve months revenues of 0.77x for the Comparable Transactions, the
Company's implied equity value per share was $12.31. This harmonic mean multiple
compared to a range of 0.45x to 1.69x for the Comparable Transactions. Based on
the harmonic mean multiple of price per share to projected next year earnings
per share of 9.2x for the Comparable Transactions, the Company's implied equity
value per share ranged from $4.60 to $9.20. This harmonic mean multiple compared
to a range of 7.2x to 15.9x for the Comparable Transactions. A derivation of
implied value based on LTM EBITDA, LTM EBIT, LTM earnings per share or projected
current year earnings per share produced results which were not meaningful due
to the Company's operating losses during these periods. The overall range of
values indicated from the above analyses resulted in an overall range of implied
equity value per share for the Company of $4.60 to $12.31. Bear Stearns noted
that the $6.70 offer price was within this range of values.

Bear Stearns observed that two recent transactions involving disk drive
companies (i.e., Conner/Seagate and Digital/Quantum) were more comparable than
the other transactions and therefore analyzed the multiples of various financial
statistics implied by the consideration paid in each of these transactions
separately. These transactions were deemed by Bear Stearns to be more comparable
because they involved companies which derived a substantial portion of their
revenue from the manufacture and sale of hard disk drives.

Review of Historical Trading Data and Acquisition Premiums. The fourth
full paragraph under the caption "Opinion of Financial Advisor -- Review of
Historical Trading Data and Acquisition Premiums" of Item 4 in the Amendment No.
1 is hereby amended to read as follows (changes have been italicized):

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companies. Such analysis examined the premiums paid by significant shareholders
relative to the stock price of the target company one trading day prior, ten
trading days prior and thirty trading days prior to the announcement of the
transaction. The means of the premiums paid relative to the target's stock price
one trading day prior, ten trading days prior and thirty trading days prior in
acquisitions of remaining interests were 26%, 44% and 48%, respectively. Bear
Stearns does not consider average premiums paid in other transactions to be
relevant to evaluating the fairness of any proposed transaction, including the
transaction contemplated herein.

Plans of the Company after the Transaction

On November 14, 1995, the Company was informed by the Interested
Manufacturer that it was not interested in any form of joint venture or business
combination with the Company. The Interested Manufacturer indicated that it
continues to be interested in joint development of products between the
companies. Discussions with the Interested Manufacturer are expected to
continue.

ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED

Item 8 is hereby amended by addition of the following information:

Antitrust. Parent has filed with the Antitrust Division a Notification and
Report Form with respect to the Offer, the Merger and the other transactions
contemplated by the Merger Agreement. The 15 calendar day waiting period
following the filing by Parent will expire at 11:59 p.m. on December 21, 1995,
unless Parent receives a request for additional information or documentary
materials, or the Antitrust Division or the FTC terminate the waiting period
prior thereto.

Exon-Florio Provision. On November 17, 1995, the Purchaser and the Company
confirmed that no filings are required with CFIUS under the Exon-Florio
Provision with regard to the Offer, the Merger and the other transactions
contemplated by the Merger Agreement.

ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.

Item 9 is hereby amended by addition of the following:

Exhibit 22 Press Release, dated December 20, 1995 issued by Hyundai
Electronics America.

Exhibit 23 Supplement, dated December 20, 1995.

Exhibit 24 Complaint captioned Campanella v. Maxtor Corporation, et. al.,
C.A. No. 14711 filed in the Superior Court for the State of
California in the County of Santa Clara on November 1, 1995.

Exhibit 25 Consolidated Amended Complaint captioned In Re Maxtor
Corporation Shareholders Litigation, Consolidated C.A. No.
14668 filed in the Delaware Chancery Court on December 13,
1995.

Exhibit 26 Memorandum of Understanding, dated December 18, 1995.

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SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

December 20, 1995

MAXTOR CORPORATION

By /s/ GLENN H. STEVENS
Glenn H. Stevens
Vice President, General Counsel and
Secretary

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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
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<S> <C> <C>
Exhibit 1 Offer to Purchase dated November 8, 1995. .............................. *
Exhibit 2 Letter of Transmittal dated November 8, 1995. .......................... *
</TABLE>

<TABLE>
<S> <C> <C>
Exhibit 3 Agreement and Plan of Merger among Maxtor Corporation, Hyundai
Acquisition, Inc. and Hyundai Electronics America dated as of November
2, 1995. ............................................................... *
Exhibit 4 Rights Agreement dated as of January 27, 1998 between Maxtor Corporation
and The First National Bank of Boston, as Rights Agent. ................ *
Exhibit 5 Amendment to Rights Agreement dated as of September 10, 1993 between
Maxtor and The First National Bank of Boston, as Rights Agent. ......... *
Exhibit 6 Amendment No. 2 to Rights Agreement dated as of November 2, 1995 between
Maxtor Corporation and The First National Bank of Boston, as Rights
Agent. ................................................................. *
Exhibit 7 Letter to Stockholders of Maxtor Corporation dated November 9, 1995. ... *
Exhibit 8 Stock Purchase Agreement among Hyundai Electronics Industries Co., Ltd.,
Hyundai Heavy Industries Co., Ltd., Hyundai Corporation and Hyundai
Merchant Marine Co., Ltd. and Maxtor Corporation dated September 10,
1993. .................................................................. *
Exhibit 9 Restated Certificate of Incorporation of Maxtor Corporation effective
February 3, 1994. ...................................................... *
Exhibit 10 Manufacturing and Purchasing Agreement between Maxtor Corporation and
Hyundai Electronics Industries Co., Ltd. dated April 27, 1995.
(Confidential treatment has been requested for portions of this
exhibit.)............................................................... *
Exhibit 11 Guaranty and Recourse Agreement between Maxtor Corporation and Hyundai
Electronics Industries Co., Ltd. dated as of August 31, 1995. .......... *
Exhibit 12 Credit Agreement among Maxtor Corporation, as Borrower, and the Initial
Lenders Named therein and the Issuing Bank, as Initial Lenders and the
Issuing Bank, and Citibank, N.A., as Administrative Agent, dated as of
August 31, 1995. ....................................................... *
Exhibit 13 Memorandum of Understanding between Hyundai Electronics Industries Co.,
Ltd. and Maxtor Corporation dated September 19, 1995. .................. *
Exhibit 14 Opinion of Bear, Stearns & Co. Inc. dated November 1, 1995. ............ *
Exhibit 15 Forms of Indemnity Agreements between Maxtor Corporation and its
officers and directors. ................................................ *
Exhibit 16 Press Release, dated November 1, 1995 issued by Maxtor Corporation. .... *
Exhibit 17 Press Release, dated November 3, 1995 issued by Maxtor Corporation. .... *
Exhibit 18 Complaint captioned Wacholder v. Gallo, et al., C.A. No. 14668 filed in
the Delaware Chancery Court on November 1, 1995. ....................... *
Exhibit 19 Complaint captioned Silber v. Maxtor Corporation, et al., C.A. No. 14708
filed in the Delaware Chancery Court on November 17, 1995. ............. *
Exhibit 20 Complaint captioned Barrington v. Gallo, et al., C.A. No. 14711 filed in
the Delaware Chancery Court on November 20, 1995. ...................... *
Exhibit 21 Press Release, dated December 7, 1995 issued by Hyundai Electronics
America. ............................................................... *
Exhibit 22 Press Release, dated December 20, 1995 issued by Hyundai Electronics
America ................................................................
Exhibit 23 Supplement, dated December 20, 1995. ...................................
</TABLE>

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<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
- ------------ ------------------------------------------------------------------------ ------
<S> <C> <C>
Exhibit 24 Complaint captioned Campanella v. Maxtor Corporation, et al, C.A. No.
14711 filed in the Superior Court for the State of California in the
County of Santa Clara on November 1, 1995. .............................
Exhibit 25 Consolidated Amended Complaint captioned In Re Maxtor Corporation
Shareholders Litigation, Consolidated C.A. No. 14668 filed in the
Delaware Chancery Court on December 13, 1995. ..........................
Exhibit 26 Memorandum of Understanding, dated December 18, 1995. ..................
</TABLE>

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* Previously filed.

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FOR IMMEDIATE RELEASE

HYUNDAI ELECTRONICS AMERICA ANNOUNCES

EXTENSION OF MAXTOR TENDER OFFER

MILPITAS, CA, December 20, 1995 -- Hyundai Electronics America announced
today that it has extended its cash tender offer to acquire any and all
outstanding shares of common stock of Maxtor Corporation (NASDAQ:MXTR) at $6.70
per share. The tender offer and withdrawal rights will now expire at 6:00 p.m.,
New York City time, on Friday, January 5, 1996, unless further extended.

Hyundai has been informed by the Depositary that approximately 21,052,645
Maxtor common shares had been tendered as of December 19, 1995.

Contact: Y.H. Kim

President and Chief Executive Officer

Hyundai Electronics America

(408) 232-8000

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SUPPLEMENT TO THE OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MAXTOR CORPORATION
BY
HYUNDAI ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF

HYUNDAI ELECTRONICS AMERICA
AT
$6.70 NET PER SHARE

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THE OFFER HAS BEEN EXTENDED AND THE OFFER AND WITHDRAWAL RIGHTS WILL NOW
EXPIRE AT 6:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JANUARY 5, 1996,
UNLESS THE OFFER IS FURTHER EXTENDED.

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THE BOARD OF DIRECTORS OF MAXTOR CORPORATION, BASED ON THE UNANIMOUS
RECOMMENDATION OF THE SPECIAL COMMITTEE OF MAXTOR'S BOARD OF DIRECTORS, HAS
APPROVED THE OFFER, THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE
MERGER AGREEMENT, HAS DETERMINED THAT THE OFFER, THE MERGER AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO AND IN THE BEST
INTERESTS OF MAXTOR'S STOCKHOLDERS (OTHER THAN HOLDERS OF CLASS A SHARES) AND
RECOMMENDS THAT THE STOCKHOLDERS OF MAXTOR (OTHER THAN HOLDERS OF CLASS A
SHARES) ACCEPT THE OFFER AND TENDER THEIR SHARES.

------------------------

The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, conditioned on, among other things, the
obtainment of final approval of all necessary governmental officials and
agencies of the Republic of Korea to consummate the Offer, the Merger and the
other transactions contemplated by the Merger Agreement, without any conditions
reasonably deemed by Hyundai Electronics America to materially adversely affect
the intended economic benefits to it and its affiliates of the Offer, the Merger
and the other transactions contemplated by the Merger Agreement. It is not
possible to predict the amount of time necessary to obtain this governmental
approval or whether such approval can be obtained. Subject to the other
conditions of the Offer, the Purchaser intends to extend the Offer from time to
time until such approval has been received. The Offer is also subject to certain
other terms and conditions. See Sections 10 and 11 of the Offer to Purchase.

------------------------

IMPORTANT

Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the enclosed Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal or such facsimile and any other required documents to the Depositary
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 3 of the Offer to
Purchase prior to the expiration of the Offer or (ii) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
such stockholder desires to tender such Shares.

A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply with the procedures
for book-entry transfer described in this Offer to Purchase on a timely basis,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of the Offer to Purchase.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Supplement. Additional copies of this
Supplement, the Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be obtained from the
Information Agent, the Dealer Manager or from brokers, dealers, or commercial
banks and trusts.

------------------------

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.

------------------------

The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.

December 20, 1995

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TABLE OF CONTENTS

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PAGE
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<S> <C>
Introduction..........................................................................
Special Factors....................................................................... 1
Background of the Transaction; Past Contacts; Transactions and
Negotiations with the Company.................................................... 1
Opinion of Financial Advisor........................................................ 3
Plans for the Company after the Transaction......................................... 5
Financing the Transaction...........................................................
The Tender Offer...................................................................... 5
Section 1. Price Range of Shares; Dividends......................................... 5
Section 2. Certain Information Concerning the Company...............................
Section 3. Certain Information Concerning HEI.......................................
Section 4. Certain Legal Matters; Regulatory Approvals.............................. 6
Section 5. Miscellaneous............................................................ 7
</TABLE>

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To the Holders of Common Shares of
Maxtor Corporation:

The following information amends and supplements the Offer to Purchase,
dated November 8, 1995 (the "Offer to Purchase"), of Hyundai Acquisition, Inc.
(the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of
Hyundai Electronics America, a California corporation ("Parent"), pursuant to
which the Purchaser is offering to purchase any and all outstanding shares of
common stock, par value $.01 per share (the "Shares"), of Maxtor Corporation, a
Delaware corporation (the "Company"), at a price of $6.70 per Share, net to the
seller in cash (the "Offer Price"), upon the terms and subject to the conditions
set forth in this Supplement, the Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, collectively constitute the
"Offer").

This Supplement should be read in conjunction with the Offer to Purchase.
Except as otherwise set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all respects
to the Offer. Unless the context requires otherwise, terms not defined herein
have the meanings ascribed to them in the Offer to Purchase.

This Supplement, the Offer to Purchase and the Letter of Transmittal
contain important information which should be read carefully before any decision
is made with respect to the Offer.

Parent and the Company have entered into a Memorandum of Understanding with
the plaintiffs in certain litigation challenging the Offer and the Merger,
providing for the proposed settlement of such litigation. See "Special Factors
- -- Background of the Transaction; Past Contacts, Transactions and Negotiations
with the Company -- Certain Litigation".

SPECIAL FACTORS

BACKGROUND OF THE TRANSACTION; PAST CONTACTS, TRANSACTIONS AND NEGOTIATIONS WITH
THE COMPANY.

The last two paragraphs on page 10 of the Offer to Purchase under the
caption "Special Factors -- Background of the Transaction; Past Contacts,
Transactions and Negotiations with the Company" are hereby amended to read as
follows (changes have been italicized):

<PAGE> 4

that $5.15 per Share was a full and fair price for the Shares not already owned
by the Hyundai Shareholders. The October 26, 1995 letter sent from the Special
Committee to Hyundai outlined the reasons why the Company believed a purchase
price of $8 per Share was fair. The financial information in the letter had been
discussed with and reviewed by Bear Stearns. The financial and valuation
information included in the letter was derived from a financial analysis which
was later formally presented to the Special Committee by Bear Stearns on
November 1, 1995. The range of values discussed in the October 26, 1995 letter
was $6.30 to $12.33 per Share based on the Special Committee's belief that the
comparable transaction analysis and merger premium analysis were most meaningful
to the Special Committee's negotiating posture. For strategic negotiating
reasons, lower valuation ranges which were derived from other analyses conducted
by Bear Stearns were not included in the October 26, 1995 letter.

The following supplements the fourth paragraph on page 12 of the Offer to
Purchase:

Certain Litigation. The following information supplements the information
set forth in the Offer to Purchase under the caption "Background of the
Transaction; Past Contacts, Transactions and Negotiations with the Company."

The Company is also a defendant in the previously described Wacholder
Action.

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Action sought relief including, inter alia, a preliminary and permanent
injunction against the consummation of the Offer, unspecified damages and
attorneys' fees and costs.

On November 1, 1995, a purported class action entitled Campanella v. Maxtor
Corporation, et al., C.A. No. CV753578 (the "Campanella Action") was filed in
the Superior Court for the State of California in the County of Santa Clara. The
Campanella Action named as defendants each member of the current Board of
Directors except Mr. Christ. The Campanella Action also named as defendants the
Company, HEI, Parent, and Mr. Ryal R. Poppa, a former director of the Company.
The Campanella Action alleged that, because HEI controls and dominates the
directors of the Company and the Company directors approved the Parent's $6.70
proposal notwithstanding the "gross inadequacy and unfairness of the price," the
defendants committed fraud and aided and abetted one another in violating
fiduciary duties. The Campanella Action sought relief including, inter alia, a
preliminary and permanent injunction against the consummation of the Offer,
unspecified damages and attorney's fees and costs. None of the defendants in the
Campanella Action have been served, and no defendant learned of the Campanella
Action before December 8, 1995.

On December 13, 1995, plaintiffs in the Wacholder Action, the Silber Action
and the Barrington Action filed a Consolidated Amended Complaint which, in
addition to the allegations in the original complaints, alleged that defendants
breached their duties of disclosure by failing to disclose all material facts,
including (i) the bases and methodologies underlying Bear Stearns' evaluation
and opinion of the fairness of the consideration offered to the Company's
stockholders, (ii) the circumstances surrounding the negotiations for the
acquisition of Shares and why the individual defendants agreed to a price of
$6.70 per Share when such consideration was at the low end of Bear Stearns'
range of values, (iii) why the Special Committee retreated from its first
proposal of $10.75 per Share to $8.00 per Share without an intervening
counteroffer from Hyundai, (iv) that the terms of Parent's Consent Rights
purported to limit the Company's directors in the exercise of their fiduciary
duties to obtain the best price for the Shares, and (v) that Hyundai dictated
the terms of, and negotiations for, the sale of the Company by exercising its
control over the Company's business dealings.

On December 18, 1995, counsel to the parties in the Consolidated Action and
the Campanella Action agreed to a Memorandum of Understanding governing a
proposed settlement of both actions. The Memorandum of Understanding provides
for, among other things, (i) certain disclosure to be disseminated to
shareholders of the Company as promptly as practicable (such disclosure is
included in this supplement), (ii) the Consolidated Action to be certified,
conditionally and for settlement purposes only, as a class action, (iii) such
action to be dismissed with prejudice and (iv) defendants' agreement not to
oppose an application by plaintiffs' counsel for an award of fees of $290,000
and expenses not to exceed $25,000, to be paid jointly by the Company and
Parent. The Memorandum of Understanding and the proposed settlement are
conditioned on, among other things, final approval by the Delaware Chancery
Court, confirmatory discovery by plaintiffs, the purchase of Shares pursuant to
the Offer and the consummation of the Merger. The foregoing description of the
Memorandum of Understanding is qualified in its entirety by reference to the
text of such memorandum, which has been filed as an exhibit to the Schedule
14D-1. See Section 5 of this Supplement.

OPINION OF FINANCIAL ADVISOR

Comparable Company Analysis. The first full paragraph under the caption
"Special Factors -- Opinion of Financial Advisor -- Comparable Company Analysis"
in the Offer to Purchase is hereby amended to read as follows (changes have been
italicized):

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adequate stock market and financial information about each of these companies
from which to derive a meaningful comparison, (4) each company derived a
majority of its revenues from its disk drive business in the last twelve months
and (5) during the last twelve months, each company had revenues exceeding $250
million. Bear Stearns used the following five companies it considered to be
generally comparable (the "Comparable Companies"): Conner Peripherals, Inc.
("Conner"), Micropolis Corporation, Quantum Corporation ("Quantum"), Seagate
Technology, Inc. ("Seagate") and Western Digital Corporation. Bear Stearns
excluded Conner from calculations involving valuation multiples because, in its
view, Conner's stock is no longer trading on the basis of its financial
performance but is instead trading on the basis of its pending merger with
Seagate. Bear Stearns observed that no company used in this analysis as a
comparison is identical to the Company. In particular, such companies have
different product mixes and different proportions of original equipment
manufacturer ("OEM") and distribution sales and have different operating
histories and financial conditions.

Comparable Transaction Analysis. The first three paragraphs under the
caption "Special Factors -- Opinion of Financial Advisor -- Comparable
Transaction Analysis" in the Offer to Purchase are hereby amended to read as
follows (changes have been italicized):

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<PAGE> 7

companies which derived a substantial portion of their revenue from the
manufacture and sale of hard disk drives.

Review of Historical Trading Data and Acquisition Premiums. The fourth
full paragraph under the caption "Special Factors -- Opinion of Financial
Advisor -- Review of Historical Trading Data and Acquisition Premiums" in the
Offer to Purchase is hereby amended to read as follows (changes have been
italicized):

Bear Stearns also reviewed certain publicly available information relating
to thirteen completed and pending acquisitions of remaining interests greater
than 20% since January 1, 1994 involving publicly traded companies. Such
analysis examined the premiums paid by significant shareholders relative to the
stock price of the target company one trading day prior, ten trading days prior
and thirty trading days prior to the announcement of the transaction. The means
of the premiums paid relative to the target's stock price one trading day prior,
ten trading days prior and thirty trading days prior in acquisitions of
remaining interests were 26%, 44% and 48%, respectively. Bear Stearns does not
consider average premiums paid in other transactions to be relevant to
evaluating the fairness of any proposed transaction, including the transaction
contemplated herein.

PLANS OF THE COMPANY AFTER THE TRANSACTION

FINANCING THE TRANSACTION

The discussion set forth under the caption "Special Factors -- Financing
the Transaction" in the Offer to Purchase is hereby amended and supplemented as
follows:

HEI and a group of five banks have agreed in principle on a term loan of
approximately $203,000,000 to finance a portion of the funds required by
Purchaser to purchase all Shares validly tendered pursuant to the Offer, to
consummate the Merger and to pay all related costs and expenses. The banks are
Cho Hung Bank, Citicorp International Ltd., The Commercial Bank of Korea, Ltd.,
The Korea Development Bank and The Sanwa Bank, Limited. The loan will be for a
term of 5 years from the initial drawdown date with an interest ratio of
six-month LIBOR plus 47 basis points (approximately 6% as of December 18, 1995).
HEI's obligations under the loan agreement will be guaranteed by HHI. HEI
intends to repay such facility, and to provide the remaining funds required for
the above purposes to the Purchaser, from its available working capital.

THE TENDER OFFER

Section 1. Price Range of Shares; Dividends. According to published
financial sources, the high and low last reported sales quotations per Share on
the Nasdaq National Market from October 1, 1995 through December 19, 1995 were
$4 and $6 1/2. On December 19, 1995, the last full trading day prior to the date
of this Supplement, the last reported sales quotation of the Shares as reported
on the Nasdaq National Market was $6 3/8.

Stockholders are urged to obtain a current market quotation for the Shares.

SECTION 2. CERTAIN INFORMATION CONCERNING THE COMPANY

Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995
(the "Company September Form 10-Q"). More comprehensive financial information is
included in the Company September Form 10-Q, the Offer to Purchase and other
documents filed by the Company with the SEC. The financial information that
follows is qualified in its entirety by reference to the Company September Form
10-Q and

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such other documents, including the financial statements and related notes
contained therein. The Company September Form 10-Q and such other documents may
be examined and copies may be obtained from the offices of the SEC in the manner
set forth in Section 7 in the Offer to Purchase.

MAXTOR CORPORATION

SELECTED FINANCIAL DATA

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

UNAUDITED

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THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1994
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Income Statement Data:
Revenue...................................................... $ 281,406 $ 174,368
Income (loss) from operations................................ (41,286) (52,722)
Net income (loss)............................................ (44,488) (54,717)
Net income (loss) per Share.................................. (0.84) (1.09)
Shares used in computing net income (loss) per Share......... 52,866 50,256
Ratio of earnings to fixed charges........................... N.M. N.M.
</TABLE>

<TABLE>
<CAPTION>
SEPT. 30, MARCH 25,
1995 1995
--------- ---------
<S> <C> <C>
Balance Sheet Data:
Working capital.............................................. 11,058 82,444
Total assets................................................. 397,757 381,847
Long-term debt and capital lease obligations due after one
year...................................................... 100,664 101,967
Total stockholder's equity (deficit)......................... (9,228) 43,903
</TABLE>

Set forth below is certain selected consolidated financial information
regarding HEI. The financial information set forth below was prepared in
accordance with Korean generally accepted accounting principles ("Korean GAAP"),
which differ in certain respects from United States generally accepted
accounting principles ("U.S. GAAP"). For example, under Korean GAAP, property,
plant and equipment are recorded at cost, except for upward revaluation to give
accounting recognition to some extent to the loss in purchasing power of the
Korean Won. Such revaluation presents production facilities and buildings at
their depreciated replacement cost and land at the prevailing market value, as
of the effective date of the revaluation.

Investments in subsidiaries and affiliated companies are reported at cost,
except if the financial condition of the subsidiary of affiliated company has
significantly deteriorated, the investment is reduced to its estimated net
realizable value. Neither consolidation of subsidiaries nor the equity method of
accounting for minority owned companies is applied in the financial statements
of HEI.

The official accounting records of HEI are maintained in Korean Won in
accordance with the laws and regulations of the Republic of Korea. HEI considers
that it would be unreasonably burdensome to convert the financial information
presented below into a presentation in accordance with U.S. GAAP. For the
convenience of the reader, the financial data have been translated into U.S.
dollars at the rate of 788 Won per U.S. dollar, which was the prevailing rate at
December 11, 1994.

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HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.

SELECTED FINANCIAL DATA

(IN THOUSANDS)

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YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
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Income Statement:
Net Sales................................................ $2,646,004 $1,604,205 $1,342,625
========== ========== ==========
Net Income............................................... 161,009 69,630 5,428
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</TABLE>

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<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------
1995 1994 1993
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Balance Sheet:
Current Assets........................................... $1,883,778 $1,343,499 $ 793,064
Total Assets............................................. 4,657,183 4,150,174 2,781,763
Current Liabilities...................................... 1,482,229 1,492,756 1,147,189
Total Liabilities........................................ 3,737,287 3,580,049 2,371,166
Shareholders' Equity..................................... 919,896 570,125 410,597
========== ========== ==========
</TABLE>

SECTION 4. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.

SECTION 5. MISCELLANEOUS.

Parent, the Purchaser and the Hyundai Shareholders have filed with the SEC
amendments to the Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act
with respect to the Offer. Parent, the Purchaser, the Hyundai Shareholders and
the Company have filed with the SEC amendments to the Schedule 13E-3 pursuant to
Rule 13e-3 under the Exchange Act with respect to the Offer. The Company has
filed with the SEC amendments to the Schedule 14D-9 setting forth the Company's
recommendation of the Board of Directors with respect to the Offer and other
information required to be included pursuant to Rule 14d-9. Amendment No. 4 to
the Schedule 14D-9 is being mailed to stockholders of the Company herewith. Such
amendments to the Schedule 14D-1, Schedule 13E-3 and Schedule 14D-9, including
exhibits, which furnish certain additional information with respect to the
Offer, may be inspected at, and copies may be obtained from, the same places and
in the same manner as set forth in Section 7 of the Offer to Purchase (except
that they will not be available at the regional offices of the SEC).

Hyundai Acquisition, Inc.

December 20, 1995

7
<PAGE> 10

The Depositary for the Offer is:

CITIBANK, N.A.

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By Mail: By Overnight Courier: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street, 5th Floor
P.O. Box 1429 404 Sette Drive New York, New York
Paramus, New Jersey 07653 Paramus, New Jersey 07652
By Facsimile Transmission:
(For Eligible Institutions
Only)
(201) 262-3240
Confirm by Telephone:
(800) 422-2066
</TABLE>

Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of this Supplement, the Offer to Purchase,
the Letter of Transmittal or the Notice of Guaranteed Delivery may be obtained
from the Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at the Company's expense. You may also contact your local
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.

The Information Agent for the Offer is:

D.F. KING & CO., INC.

77 Water Street

New York, New York 10005

Banks and Brokers Call Collect (212) 269-5550

All Others Call Toll Free (800) 290-6428

The Dealer Manager for the Offer is:

MERRILL LYNCH & CO.

World Financial Center

North Tower

New York, New York 10281-1305

(212) 236-4565 (Call Collect)

<PAGE> 1

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LIONEL B. CLANCY #134180 (ENDORSED)
LAW OFFICES OF LIONEL B. CLANCY FILED
1299 Ocean Avenue Nov. 1 3:12 PM '95
Suite 323 ---------
Santa Monica, California 90401 COUNTY CLERK
(310) 319-3277 SANTA CLARA COUNTY
BY ------------------------------ DEPUTY
</TABLE>

PETER LINDEN
KAUFMAN, ??? KIRBY & SQUIRE
919 Third Avenue
New York, New York 10022
(212) 371-6600

SUPERIOR COURT FOR THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
- ------------------------------------

ANTHONY CAMPANELLA, JR.
Plaintiffs,

- against -

MAXTOR CORPORATION, GREGORY M.
GALLO, I.B. (.S. PARK, RYAL V.
POPPA, RICHARD D. RELANSTON, M.M.
??????, CHARLES HILL, HYUNDAI
ELECTRONICS INDUSTRIES CO. LTD. AND
HYUNDAI ELECTRONICS AMERICA) C.S.
Defendants.
- ------------------------------------

COMPLAINT

(CLASS ACTION)

Plaintiff, by her attorneys for her complaint, alleges on information and
belief, except as to paragraph 3, which is alleged upon knowledge:

1. Defendant, Maxtor Corporation ("Maxtor") is a Delaware corporation
having over 33,000,000 shares of common stock issued and outstanding.

2. The individual defendants are directors of Maxtor.

3. Plaintiff is the owner of shares of common stock of Maxtor.

4. Maxtor develops, manufacturers and markets hard disk drives for
desktop and mobile computer systems.

5. Hyundai Electronics Industries Co. Ltd. ("Hyundai") beneficially
owns over 37% of Maxtor's common stock. Hyundai Electronics America
("Hyundai America") is a subsidiary of Hyundai.

6. Through its 37% ownership of Maxtor's common stock, Hyundai
dominates and controls Maxtor and its board of directors, and effectively
has veto power over any other transaction to acquire Maxtor.
BY FACSIMILE
Civil Action No. CV753578
<PAGE> 2

7. Hyundai, through its subsidiary Hyundai America, has offered to
acquire all of the outstanding shares of Maxtor not already owned by
Hyundai for $6.70 per share. Hyundai's offer of $6.70 per share has been
unanimously approved by a special committee of the board of directors of
Maxtor.

8. (a) Plaintiff brings this action on her own behalf and on behalf of
all members of her class, namely, all owners of the common stock of Maxtor
who, like plaintiff, are threatened with being frozen out of Maxtor for
unfair and inadequate consideration offered by Hyundai.

(b) The class consists of thousands of members so that joinder of all
members is impracticable;

(d) The claims of plaintiff herein are typical of the claims of the
class;

(e) Plaintiff will fairly and adequately protect the interests of the
class;

(f) The expense of bringing individual actions would be prohibitive
for small stockholders of Maxtor and this class action is thus the most
fair and efficient method for adjudication of their claims.

9. Defendants, aiding and abetting and acting in concert with each
other, have embarked upon a fraudulent plan, scheme and conspiracy to
freeze out the public shareholders of Maxtor at a grossly inadequate price
and to acquire Maxtor's business and assets for a fraction of their true
value, namely, the asserted per share price of $6.70.

10. Prior to Hyundai's offer for the stock of Maxtor, defendants did
not (i) undertake an adequate evaluation of Maxtor's worth as a potential
merger or acquisition candidate or take adequate steps to enhance Maxtor's
value or attractiveness as a merger or acquisition candidate; (ii)
effectively attempt to dispose of Maxtor's assets; (iii) attempt to solicit
arms-length bids to acquire all or part of Maxtor's business; or (iv) act
so that the interests of the public stockholders of Maxtor were protected.

11. As a result of the foregoing, defendants herein have wilfully
participated in the perpetuation of a fraud upon the members of the class
and have engaged in, knowingly and substantially assisted in, and aided and
abetted each other in a breach of fiduciary duty to the class.

(a) That plaintiff and the class be afforded such other, further and
different relief as the Court may deem just and proper in the premises.

Dated: November 1, 1995

LAW OFFICE OF LIONEL Z. GLANCY

By: /s/ LIONEL Z. GLANCY
Lionel Z. Glancy
1299 Ocean Avenue
Suite 323
Santa Monica, CA 90401-1041
(310) 319-3277

KAUFMAN MALCHMAN KIRBY & SQUIRE, LLP
919 Third Avenue
New York, New York 10022
(212) 371-6600

Attorneys for Plaintiff

<PAGE> 1

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY
- --------------------------------------

IN RE MAXTOR CORPORATION
SHAREHOLDERS LITIGATION
- --------------------------------------

CONSOLIDATED AMENDED
CLASS ACTION COMPLAINT

INTRODUCTION

Plaintiffs bring this action individually and on behalf of the public
shareholders of Maxtor Corporation ("Maxtor" or the "Company") seeking redress
for breaches of fiduciary duties by Maxtor, the Board of Directors of Maxtor and
Hyundai (defined below) in connection with Hyundai's offer to purchase the
Maxtor shares which it does not already own for $6.70 per Maxtor share (the
"Buyout").

THE PARTIES

1. Plaintiff Elaine Wacholder owns, and since prior to the announcement of
the transaction complained of, has owned Maxtor common stock, which were
purchased prior to the Company's announcement of the Buyout.

2. Plaintiff Nathan Silber owns, and since prior to the announcement of the
transaction complained of, has owned Maxtor common stock, which were purchased
prior to the Company's announcement of the Buyout.

3. Plaintiff Cynthia Alison Barrington owns, and since prior to the
announcement of the transaction complained of, has owned Maxtor common stock,
which were purchased prior to the Company's announcement of the Buyout.

4. Defendant Maxtor is a Delaware corporation with executive offices at 211
River Oaks Parkway, San Jose, California. Maxtor manufactures, designs and
markets magnetic and optical data storage products, such as magnetic disk
drives, optical disk drives and storage subsystems. As of August 4, 1995, Maxtor
had over 52,000,000 shares of common stock outstanding held by 1,827
shareholders of record.

5. Defendant Hyundai Acquisition, Inc. (the "Purchaser"), is a Delaware
corporation and a wholly-owned subsidiary of defendant Hyundai Electronics
America. The Purchaser was formed as an acquisition vehicle in connection with
the Buyout.

6. (a) Defendant Hyundai Electronics America ("HEA") is a California
corporation with principal executive offices at 510 Cottonwood Drive, Milpitas,
California. HEA is engaged in the business of marketing semiconductors and
information systems such as personal computers and monitors.

(b) Defendant HEA is the wholly-owned subsidiary of Hyundai Electronics
Industries Co., Ltd. ("HEI"), which is engaged in the business of designing,
manufacturing, assembling and marketing semiconductors, information systems,
telecommunication equipment and other electronic equipment and instruments and
is the parent of Hyundai Heavy Industries Co., Ltd. ("HHI") which is engaged in
the business of ship building, the development and manufacture of heavy
equipment, and the design and construction of electric and nuclear power plants;
Hyundai Corporation ("HC"), a general trading company selling consumer and other
manufactured goods, textiles and raw materials; and Hyundai Merchant Marine Co.,
Ltd. ("HHM"), which is in the business of shipping and freight forwarding. HEI,
HHI, HC and HMM are collectively referred to herein as the "Hyundai
Shareholders." The term "Hyundai" as used herein refers collectively to the
Purchaser, HEA and the Hyundai Shareholders.
CONSOLIDATED
C.A. NO. 14668
<PAGE> 2

7. As of October 10, 1995, the Hyundai Shareholders reportedly owned 39.8%
of Maxtor's outstanding common stock. As such, together with Hyundai's
domination and control of the Maxtor Board of Directors, the Hyundai
Shareholders effectively control Maxtor and thus owe Maxtor and its public
shareholders fiduciary duties.

8. Defendant Mong Hun Chung ("Chung") is, and has been since February 1994,
Chairman of the Board of Directors of defendant Maxtor. Defendant Chung has also
been Chairman of the Board of Directors of HEI since January 1992.

9. Defendant Chong Sup Park ("Park") is President, Chief Executive Officer
("CEO") and a director of defendant Maxtor. He was appointed CEO and President
in February 1995, and a director in February 1994. Defendant Park has also held
various management positions with HEI. From 1990 to February 1992 he was Senior
Vice President of Sales and Marketing, and from 1985 to 1989 he was President
and CEO of HEA.

10. Defendant In Baik Jeon ("Jeon") is, and has been since February 1994, a
director of defendant Maxtor. Prior to 1994, defendant Jeon held various
management positions with Hyundai, including Vice President, Corporate Planning
of HEI from 1991 to 1994 and Senior Vice President of HEA from 1988 to 1991.

11. Defendant Gregory M. Gallo ("Gallo") is, and has been since December
1987, a director of defendant Maxtor. Defendant Gallo is also a partner with the
law firm of Gray Cary Ware & Friedenrich, the Company's chief outside counsel.

12. Defendant Richard D. Balanson ("Balanson") is, and has been since
October 1994, Executive Vice President and a director of defendant Maxtor.

13. Defendant Charles F. Christ ("Christ") is, and has been since August
1995, a director of defendant Maxtor.

14. Defendant Charles Hill ("Hill") is, and has been since March 1992, a
director of defendant Maxtor.

15. The foregoing individuals, as officers and/or directors of Maxtor
(collectively, the "Individual Defendants"), owe fiduciary duties to plaintiffs
and the other members of the Class (as defined below).

CLASS ACTION ALLEGATIONS

16. Plaintiffs bring this action pursuant to Rule 23 of the Rules of this
Court, on behalf of himself and all other shareholders of the Company (except
the defendants herein and any persons, firm, trust, corporation, or other entity
related to or affiliated with them and their successors in interest), and their
successors in interest, who are or will be threatened with injury arising from
defendants' actions, as more fully described herein (the "Class").

17. This action is properly maintainable as a class action for the
following reasons:

a. The Class is so numerous that joinder of all members is
impracticable. There are hundreds if not thousands of stockholders of
Maxtor stock who are members of the Class.

b. Members of the Class are scattered throughout the United States and
are so numerous that it is impracticable to bring them all before this
Court.

c. There are questions of law and fact that are common to the Class
and that predominate over questions affecting any individual class member.
The common questions include inter alia, the following:

(i) Whether defendants have engaged in and are continuing to engage
in conduct which unfairly benefits themselves at the expense of the
members of the Class;

(ii) Whether the individual defendants, as officers and/or
directors of the Company, and the Hyundai Shareholders, as the
controlling stockholders of Maxtor, have fulfilled and are capable of
fulfilling, their fiduciary duties to plaintiffs and the other members
of the Class;

2
<PAGE> 3

(iii) Whether plaintiffs and the other members of the Class would
be irreparably damaged were defendants not enjoined from the conduct
described herein;

(vi) Whether defendants have initiated and timed the Buyout
unfairly to benefit Hyundai at the expense of Maxtor's public
shareholders.

d. The claims of plaintiffs are typical of the claims of the other members
of the Class in that all members of the Class will be damaged by defendants'
actions.

e. Plaintiffs are committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiffs are
adequate representatives of the Class.

f. A class action is superior to any other method available for the fair
and efficient adjudication of this controversy since it would be impractical and
undesirable for each of the members of the Class, who has suffered or will
suffer damages, to bring separate actions in various parts of the country.

SUBSTANTIVE ALLEGATIONS

18. On or about November 8, 1995, HEA caused to be filed with the
Securities and Exchange Commission ("SEC") its Schedule 14D-1 tender offer
statement (the "Tender Offer"). The Tender Offer purports to explain, inter
alia, the circumstances leading to the Buyout and the reasons for the Maxtor
Board's recommendation that the Buyout be approved by Maxtor's shareholders.

19. Based on the Tender Offer's description of Hyundai's relationship with
Maxtor, it is apparent that for over two years, Hyundai has systematically
entered into agreements with Maxtor and infiltrated management and the Board of
Maxtor in an effort to gain control of Maxtor and ultimately buy out the public
shareholders of Maxtor at an unfair and inadequate price. This has been
accomplished in breach of the Hyundai Shareholders' and the Maxtor Board's
fiduciary duties owed to plaintiffs and the Class. Defendants also have breached
their duty of candor and full disclosure by agreeing to the Buyout without
disclosing to Maxtor shareholders material information, possessed by defendants,
that would allow plaintiffs and the other members of the Class to make an
informed decision as to whether to tender their shares of Maxtor common stock.

HYUNDAI GAINS CONTROL OF MAXTOR

20. As explained in the Tender Offer, in early 1993, reportedly due to
sustained losses and increased competition in the disk drive industry, the
Company sought to increase its capital base either by issuing additional equity
or selling all or part of the Company. In March 1993, the Company contacted HEI
and its affiliates to discuss a possible transaction and in May 1993, the
Company retained Bear Stearns to help explore strategic alternatives. After
several months of negotiations, Maxtor announced, on or about September 10,
1993, that it had reached a definitive agreement with HEI regarding a strategic
partnership between the companies.

21. According to the agreement, HEI was to invest $150 million in Maxtor in
exchange for approximately 19.4 million shares of Maxtor common stock
representing a per share purchase price of $7.70 and constituting approximately
40% of Maxtor's outstanding stock (the "Stock Purchase Agreement"). The stock
that was issued to the Hyundai Shareholders was a special series of common stock
entitling the Hyundai Shareholders to representation on Maxtor's Board of
Directors proportionate to their share ownership, and certain voting rights.
Almost immediately, on September 13, 1993, the Hyundai Shareholders announced
their intention to appoint a new Maxtor chairman to replace James McCoy, then
Chairman of the Company's Board of Directors.

22. On December 20, 1993, The Company's stockholders voted to approve
Hyundai's investment in the Company and to amend and restate the Company's
certificate of incorporation. Thus, on February 3, 1994, the Hyundai
Shareholders purchased 19,480,000 Class A shares of Maxtor for $149,996,000.

23. Also on February 3, 1994, the Hyundai Shareholders nominated defendants
Chung, Park and Jeon as directors of the Company. Those defendants all held
management positions with Hyundai prior to their

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<PAGE> 4

appointment to the Maxtor Board and were therefore beholden to Hyundai and were
conflicted in all dealings between Maxtor and Hyundai. On February 7, 1994, the
Maxtor Board of Directors increased the authorized number of directors from five
to eight and elected defendants Chung, Park and Jeon as directors. Also, on
February 7, 1994, the Board of Directors elected defendant Chung (HEI's
Chairman) as Chairman of the Board of Maxtor.

24. An additional immediate effect of the Stock Purchase Agreement was to
give the Hyundai Shareholders considerable influence over major strategic and
operational decisions of the Company. The Hyundai shareholders' large equity
stake in the Company and the "Consent Rights" granted to them pursuant to the
Stock Purchase Agreement created impediments to, and effectively blocked, a sale
of the Company to a third party. The Consent Rights provide that the Hyundai
Shareholders have approval rights over any corporate sale of the Company until
February 3, 1999. After 1999, the Hyundai Shareholders still retain a right of
first refusal. These Consent Rights also limit the members of Maxtor's Board of
Directors in the exercise of their fiduciary duties to plaintiffs and the Class
in a sale of the publicly held shares of Maxtor.

25. Hyundai's control became even stronger in December 1994, when Maxtor's
Board of Directors, which was now being led, for all practical purposes, by
appointees of Hyundai, began to consider expanding the relationship with HEI
from a purely financial orientation to a more strategic focus. Towards this end,
in January of 1995, the Company and HEI entered into a memorandum of
understanding concerning the creation of a manufacturing partnership.

26. Further increasing Hyundai's stranglehold on Maxtor, on February 8,
1995, then President and Chief Executive Officer Larry Smart resigned his
position and the Board of Directors of Maxtor appointed defendant Park as
President and Chief Executive Officer of the Company.

HYUNDAI PLANS TO ACQUIRE THE REMAINING SHARES OF MAXTOR

27. In July 1995, the Company's management (by that time, controlled by
defendant Park) advised the Board (whose Chairman was defendant Chung) that
management would seek out a new credit facility, but that in light of the
Company's financial condition, any such facility would need to be supported by
the guaranty of HEI. The Maxtor Board considered the advisability of engaging in
a more broad-reaching transaction, such as a sale of the Company, but could not
do so largely because of the Consent Rights granted to the Hyundai Shareholders
pursuant to the Stock Purchase Agreement. On July 17, 1995, HEI agreed to
provide an unconditional guaranty of up to $100 million of prospective
borrowings by the Company.

28. During the Summer of 1995, the Company's management developed a
strategic business plan which was intended to improve the Company's operational
facilities, with the goal of making the Company one of the top three companies
in the disk drive industry within two years. In order to make this plan a
reality, however, Maxtor required significant capital investment in
manufacturing, and management concluded that the Company lacked the financial
resources to fully execute the plan by itself.

29. The Maxtor Board considered the possibility of negotiating an
outsourcing arrangement under which the Company would sell all of its
manufacturing facilities and Hyundai would manufacture and supply the Company
with all of its disk drive requirements.

30. In order to negotiate this investment, Maxtor's full Board of Directors
formed a special committee of supposedly independent directors (the "Special
Committee") comprised of defendants Hill, Christ and Gallo. The Special
Committee in turn retained Bear Stearns as its advisor because Bear Stearns was
familiar with the Company, having represented the Company in connection with its
sale of shares to Hyundai pursuant to the Stock Purchase Agreement. Not
surprisingly, the Special Committee concluded that the universe of credible
buyers for the Company's facilities appeared to be limited, and HEI appeared to
be the most logical buyer of the Company's manufacturing assets in light of the
financial and other support previously provided to the Company by HEI and the
financial resources of HEI and its affiliates.

31. On September 19, 1995, the Company and HEI signed a non-binding
memorandum of understanding providing that HEI would acquire all the Company's
manufacturing facilities in Singapore, Hong Kong and Thailand for $100 million
and that HEI and the Company would enter into a long-term

4
<PAGE> 5

manufacturing and supply agreement under which HEI would manufacture and supply
all the Company's disk drive requirements.

32. While discussions with Hyundai were ongoing regarding the outsourcing
arrangement, Maxtor engaged in discussions with a third party interested in a
strategic alliance, but the interested party soon rejected the notion of a joint
venture or merger solely with Maxtor.

33. The interested third party did express an interest in a joint venture
or business combination with Hyundai, however. Toward that end, the third party
suggested an acquisition of Maxtor by Hyundai and a subsequent joint venture
between the two entities. Hyundai, also expressed interest in such a
transaction.

34. Shortly thereafter, defendant Chung informed defendant Park that
Hyundai was interested in acquiring the common stock of Maxtor that it did not
already own. On October 16, 1995, Merrill Lynch was retained by Hyundai to
evaluate the possibility of acquiring the remaining equity interest in the
Company.

35. On October 17, 1995, Maxtor determined that a sale of the Company was a
feasible alternative to the proposed outsourcing transaction and the Special
Committee was charged with responsibility for negotiating such a sale.

36. By October 24, 1995, HEI informed the Special Committee that it wished
to purchase the remaining Maxtor shares at $5.15 per share. Bear Stearns advised
the Special Committee that based on different models it utilized, it could
justify a range of prices between $6.30 and $12.33 per share. Bear Stearns
further advised the Special Committee that it should propose a price of $10.75
per share. On October 25, 1995, Maxtor rejected the $5.15 offer and suggested an
acquisition price of $10.75 per share.

37. Negotiations from that point saw Maxtor lower its price dramatically
and often, without similar response from Hyundai. For example, on October 25,
1995, Hyundai rejected Maxtor's $10.75 counteroffer and simply reiterated its
original $5.15 offer. Despite receiving no counteroffer from Hyundai, Maxtor,
bargaining against itself, dropped its demand by $2.75 to $8 per share on
October 26, 1995.

38. On October 27, 1995, the Special Committee was advised that management
(i.e., Hyundai) reported that several of the Company's suppliers had indicated
their intention to change the terms upon which they extended credit to the
Company. The Special Committee was also informed that these suppliers expressed
"discomfort" at the Company's reaction to Hyundai's original offer.

39. On October 29, 1995, Hyundai increased its offer to $6.15 per share.
The Special Committee immediately reduced its demand further still to $7.15 per
share. Nevertheless, by October 31, 1995, fearing repercussions from Hyundai,
including that Hyundai might have sought to renegotiate terms of the proposed
outsourcing transaction, the Special Committee agreed to accept the price of
$6.70 per share despite the fact that this price was almost $6 below Bear
Stearns' best valuation for the Company's shares and more than $4 below the
Special Committee's initial proposal. Hyundai had come up a mere $1.55 from its
original "low-ball" offer.

40. On November 1, 1995, Hyundai publicly announced that it would acquire
the 60.2% of Maxtor's common stock that it did not already own for $6.70 per
Maxtor share.

41. The Buyout offers no meaningful premium to Maxtor's shareholders.
Although the price of Maxtor stock has fallen as of late, as recently as
September 19, 1995, Maxtor stock closed at $6 per share and on June 23, 1995,
Maxtor stock closed at $7 per share. Moreover, the offering price is
substantially below what Bear Stearns initially deemed to be a fair price.

42. Because defendant Hyundai controls Maxtor and because of the Consent
Rights granted to the Hyundai Shareholders, no third party, as a practical
matter, can expect due consideration of a competing bid for Maxtor without the
consent and cooperation of Hyundai.

5
<PAGE> 6

COUNT I

BREACH OF FIDUCIARY DUTIES TO PLAINTIFFS AND THE CLASS

43. The Buyout is in furtherance of an unfair plan to take Maxtor private,
which, if not enjoined, will result in the elimination of the public
shareholders of Maxtor. More particularly, the Buyout is in violation of
defendants' fiduciary duties and has been timed and structured unfairly in that:

a. The Buyout is structured to eliminate members of the Class as
shareholders of the Company from continued equity participation in the
Company at a price per share which defendants know or should know is
grossly unfair and inadequate;

b. Hyundai, by virtue of, among other things, its voting and ownership
power, controls and dominates Maxtor and the Maxtor Board of Directors;

c. Given Hyundai's domination and control of Maxtor and its Board, the
Maxtor Board of Directors cannot be expected independently to advocate, and
protect the best interests of, and to obtain the best price for, Maxtor's
public shareholders;

d. The Special Committee was not truly independent because, among
other things, defendant Gallo's law firm, Gray, Cary, Ware & Friedenrich,
is chief legal counsel to Maxtor which is effectively controlled by
Hyundai;

e. Hyundai has unique knowledge of the Company and has access to
non-public information relating to the true value of the Company denied or
unavailable to other potential bidders;

f. Given Hyundai's domination and control, the individual defendants
cannot be expected independently and actively to advocate and negotiate in
the best interest of Maxtor's public shareholders;

g. Given Hyundai's Consent Rights, the individual defendants are
limited in the exercise of their fiduciary duties to obtain the best price
for Maxtor's shareholders by seeking third party bid for Maxtor;

h. In view of defendant Hyundai's control of Maxtor under the
circumstances, it is unfair and in violation of defendants' fiduciary
duties to consummate the Buyout without first obtaining a recommendation
and input by a truly independent representative of the Maxtor public
stockholders, obtaining the majority approval of the public shareholders,
or otherwise ensuring entire fairness;

i. The defendants unfairly timed the Buyout to take advantage of the
currently depressed stock price of Maxtor; and

j. The Buyout does not provide plaintiffs and the Class with a fair
price for their shares.

44. By reason of the foregoing acts, practices and course of conduct,
plaintiffs and the other members of the Class have been and will be damaged
because they will not receive their due proportion of the true value of Maxtor's
assets and business.

45. Unless enjoined by this Court, defendants will continue to breach
fiduciary duties owed to plaintiffs and the Class and will consummate the Buyout
to the irreparable harm of plaintiffs and the Class.

46. Plaintiffs and the other members of the Class have no adequate remedy
at law.

COUNT II

BREACH OF DUTY OF CANDOR AND FULL DISCLOSURE

47. Defendants breached their duty of candor and full disclosure by
agreeing to the Buyout without disclosing to Maxtor's shareholders material
information which defendants possessed concerning Maxtor's assets, business and
future prospects and concerning Maxtor's relationship with Hyundai and the
negotiations for Hyundai's acquisition of the publicly held shares of Maxtor.

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<PAGE> 7

48. In breach of their fiduciary duties, defendants have failed to disclose
accurately and with complete candor all facts material to the Buyout to enable
Maxtor's public shareholders to make an informed determination whether to tender
their shares of Maxtor common stock. Among other material deficiencies:

a. defendants have failed to disclose the bases and methodologies
underlying Bear Stearns' evaluation and opinion of the fairness of the
consideration proffered to Maxtor's public shareholders;

b. defendants have failed to disclose the circumstances surrounding
the negotiations for the acquisition of the publicly held shares of Maxtor
and why the individual defendants agreed to sell Maxtor for $6.70 per share
when such consideration was at the low end of Bear Stearns' range of
values;

c. defendants have failed to disclose why the Special Committee
retreated from its first proposal of $10.75 per share to an offer of $8.00
per share without an intervening counteroffer from Hyundai;

d. defendants have failed to disclose that the terms of Hyundai's
Consent Rights purported to limit Maxtor's directors in the exercise of
their fiduciary duty to obtain the best price for Maxtor's shares; and

e. defendants have failed to disclose that Hyundai dictated the terms
of, and the negotiations for, the sale of Maxtor by exercising its control
over Maxtor's business dealings.

49. By reason of the foregoing acts, practices and course of conduct,
plaintiffs and the other members of the Class have been and will be damaged.

50. Unless enjoined by this Court, defendants will continue to breach
fiduciary duties owed to plaintiffs and the Class and will consummate the Buyout
to the irreparable harm of plaintiffs and the Class.

51. Plaintiffs and the other members of the Class have no adequate remedy
at law.

WHEREFORE, plaintiffs demands judgment as follows:

a. Declaring this to be a proper class action and naming plaintiffs as
Class representatives;

b. Ordering defendants to carry out their fiduciary duties to
plaintiffs and the other members of the Class;

c. Ordering defendants to make complete disclosure of all material
facts to Maxtor's public shareholders;

d. Granting preliminary and permanent injunctive relief against the
consummation of the Buyout;

e. In the event the Buyout is consummated, rescinding the Buyout
and/or awarding rescissory damages;

f. Ordering defendants, jointly and severally, to pay to plaintiffs
and to other members of the Class all damages suffered and to be suffered
by them as the result of the conduct alleged herein;

g. Ordering defendants, jointly and severally, to account to
plaintiffs and the Class for all profits realized and to be realized by
them as a result of the conduct complained of and, pending such accounting,
to hold such profits in a constructive trust for the benefit of plaintiffs
and other members of the Class;

h. Awarding plaintiffs the costs and disbursements of the action
including allowances for plaintiffs' reasonable attorneys and experts fees;
and

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<PAGE> 8

i. Granting such other and further relief as may be just and proper in
the premises.

CHIMICLES, JACOBSEN & TIKELLIS

By: /s/ ROBERT J. KRINER JR.
Pamela S. Tikellis
Robert J. Kriner Jr.
One Rodney Square
P.O. Box 1035
Wilmington, DE 19899
(302) 656-2500

ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.

By: /s/ JOSEPH A. ROSENTHAL
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433

Attorneys for Plaintiffs

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<PAGE> 9

OF COUNSEL:

WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP
Jeffrey G. Smith
Neil L. Zola
270 Madison Avenue
New York, New York 10016
(212) 545-4600

KAUFMAN MALCHMAN KIRBY & SQUIRE, LLP
Irving Malchman
Peter S. Linden
919 Third Avenue
New York, New York 10022
(212) 371-6600

LAW OFFICES OF CURTIS V. TRINKO
Curtis V. Trinko
310 Madison Avenue
14th Floor
New York, New York 10017

LAW OFFICES OF EDELSTEIN & FAEGENBURG
Adam Edelstein
26 Court Street
Suite 1503
Brooklyn, NY 11241
(718) 625-3500

<PAGE> 1

MEMORANDUM OF UNDERSTANDING

WHEREAS, Maxtor Corporation ("Maxtor" or the "Company"), a Delaware
corporation which manufactures, designs and markets magnetic and optical data
storage products, had, as of August 4, 1995, over 52,000,000 shares of common
stock outstanding held by 1,827 shareholders of record;

WHEREAS, on November 2, 1995, Maxtor entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Hyundai Electronics America, a California
corporation ("Hyundai America" or "HEA"), and Hyundai Acquisition, Inc., a
wholly owned subsidiary of HEA ("Hyundai Acquisition"), pursuant to which
Hyundai Acquisition would commence a cash tender offer (the "Offer") to purchase
all outstanding shares of the Company's Common Stock;

WHEREAS, following the completion of the Offer, upon the terms and subject
to the conditions of the Merger Agreement, Hyundai Acquisition will merge with
and into the Company (the "Merger"), and each share of the Company's Common
Stock not purchased in the Offer (other than any shares owned by the Company or
any of its subsidiaries, Hyundai Acquisition or any of its subsidiaries and any
dissenting stockholders) will be converted into the right to receive $6.70 per
share in cash, without interest;

WHEREAS, the following putative class action lawsuits challenging the Offer
and the Merger and the independence of the Board of Directors of Maxtor were
filed by stockholders of Maxtor ("plaintiffs") in the Court of Chancery of the
State of Delaware in and for New Castle County (the "Court of Chancery") on
behalf of unspecified classes of holders of Maxtor common stock:

Wacholder v. Gallo, C.A. No. 14668 (Del. Ch.);

Barrington v. Gallo, C.A. No. 14711 (Del. Ch.); and

Silber v. Maxtor Corp., C.A. No. 14708 (Del. Ch.)

(such lawsuits being collectively referred to herein as the "Actions") and the
following lawsuit was filed in California Superior Court in the County of Santa
Clara;

Campanella v. Maxtor Corp., C.A. No. CV753578 (such lawsuit being
referred to herein as the "California Action"); and

WHEREAS, on December 13, 1995, plaintiffs filed an Amended Consolidated
Complaint in Civil Action No. 14668, challenging the Offer and the Merger, the
independence of the Board of Directors of Maxtor and the adequacy of disclosures
made in connection with the Offer and the Merger (the "Consolidated Action"),
and a proposed Order of Consolidation consolidating the Actions into the
Consolidated Action and such Order was granted on December 14, 1995;

NOW, THEREFORE, after taking certain informal discovery and engaging in
extended arm's length negotiations, the parties to the Consolidated Action and
the California Action, by their respective attorneys, have reached an agreement
in principle providing for the settlement of the Consolidated Action and the
dismissal of the California Action on the terms and subject to the conditions
set forth below (the "Settlement"):

1. In full settlement of any and all claims whatsoever which have been or
could have been made in the Consolidated Action and the California Action, all
of which claims shall be released and discharged:

a. Subject to the various conditions set forth in para. 4 hereof,
Maxtor, HEA and Hyundai Acquisition have agreed to cause to be disseminated
to the stockholders of Maxtor the additional and supplemental disclosure
substantially in the form set forth in Exhibit A hereto, such disclosure to
be mailed to stockholders as soon as practicable.

b. Counsel for plaintiffs in the Consolidated Action have stated that
in the event the Court of Chancery approves the Settlement and the
dismissal of the Consolidated Action with prejudice, counsel for plaintiffs
in the Consolidated Action intend to petition the Court of Chancery for a
total award of attorneys' fees in an amount not to exceed $290,000 plus
expenses actually and reasonably incurred in the Consolidated Action in an
amount not to exceed $25,000. Defendants will not object to plaintiffs'
<PAGE> 2

application for fees and expenses, to be paid jointly by Maxtor and HEA, if
such application does not exceed the foregoing amount. Any attorneys' fees
and expenses awarded by the Court of Chancery to plaintiffs' counsel in the
Consolidated Action shall not be final or payable until the Effective Date
(as defined in paragraph 6, below) of the Settlement, and shall be
inclusive of any attorneys' fees and expenses otherwise awardable in the
California Action which, as set forth below, shall be dismissed with
prejudice and without any application for fees or expenses being made.

2. The parties to the Consolidated Action will use their best efforts to
complete the confirmatory discovery contemplated by paragraph 4 hereof and to
agree upon, execute and present to the Court of Chancery, on or before March 1,
1996, or such later date as the parties may agree to in writing, a formal
Stipulation of Settlement and such other documents as may be necessary and
appropriate in order to obtain the prompt approval by the Court of Chancery of
the Settlement and the dismissal with prejudice of the Consolidated Action and
the California Action in the manner contemplated herein and by the Stipulation
of Settlement. Pending the negotiation and execution of the Stipulation of
Settlement, all proceedings in the Consolidated Action and the California
Action, except for settlement-related proceedings pursuant to this Memorandum of
Understanding in the Consolidated Action, shall be suspended.

3. The Stipulation of Settlement expressly will provide, inter alia:

a. for the temporary and then final certification of the Consolidated
Action, for settlement purposes only, as a class action pursuant to
Chancery Court Rules 23(b)(1) and (b)(2), consisting of all holders of
common stock of Maxtor as of the close of business on February 3, 1994
through and including the date of execution of the Stipulation of
Settlement, including their successors in interest, legal representatives,
heirs, assigns or transferees, immediate and remote, and excluding
defendants and their affiliates (the "Class");

b. for the complete discharge, settlement and release of, all claims,
rights, demands, causes of action, suits, matters and issues, whether known
of unknown (collectively, "Claims"), that have been, could have been, or in
the future might be asserted in the Consolidated Action and the California
Action or in any court or proceeding (including but not limited to any
claims arising under federal or state law relating to alleged breach of any
duty, disclosure, nondisclosure, fraud, negligence or otherwise) by any
members of the Class, including individual, class, derivative,
representative, legal, equitable or any other type based upon or relating
in any manner to the allegations, transactions, matters or occurrences,
representations or omissions, or any series thereof, involved, set forth,
referred to in any way in the Consolidated Action or the California Action,
and including without limitation, any claims in any way related to the
Offer, the Merger and the Merger Agreement against any of the defendants in
the Consolidated Action or the California Action, their families, parent
entities, affiliates, associates or subsidiaries and each of their
respective present or former officers, directors, stockholders, agents,
employees, attorneys, representatives, advisors, investment bankers,
commercial bankers, trustees, general and limited partners and
partnerships, heirs, executors, personal representatives, estates,
administrators, successors and assigns (collectively, the "Settled
Claims");

c. that defendants have denied, and continue to deny, that any of
them have committed or have threatened to commit any violations of law or
breach of duty to the plaintiffs, the Class or anyone;

d. that defendants are entering into the Stipulation of Settlement
solely because the proposed Settlement would eliminate the distraction,
burden and expense of further litigation;

e. that plaintiffs' counsel, having made a thorough investigation of
the facts, believe that the proposed settlement is fair, reasonable,
adequate and in the best interests of plaintiffs and all members of the
Proposed Class;

f. subject to the Order of the Court of Chancery, pending final
determination of whether the Settlement provided for in the Stipulation of
Settlement should be approved, that plaintiffs and all members of the
Class, or any of them, agree not to commence, prosecute, instigate or in
any way participate in the commencing or prosecution of any of the Settled
Claims against any of the defendants; and

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<PAGE> 3

g. that the plaintiff in the California Action will intervene in the
Consolidated Action prior to its dismissal and will seek the dismissal with
prejudice and without costs or attorneys' fees of the California Action
immediately upon the approval of the settlement by the Delaware Court of
Chancery.

4. The Settlement contemplated by this Memorandum of Understanding will
not be binding upon any party until, and is otherwise subject to:

a. the completion by plaintiffs in the Consolidated Action of such
documentary discovery and/or oral depositions or interviews as reasonably
are requested by them and agreed to by the respective party from whom
discovery is requested (the scope of such discovery having been discussed
generally by counsel prior to the execution of this Memorandum of
Understanding) to confirm the fairness of the proposed settlement;

b. a Stipulation of Settlement (and such other documentation as may
be required to obtain final approval by the Court of Chancery of the
Settlement) has been executed by counsel for the parties to the
Consolidated Action, which Stipulation of Settlement shall include a
provision permitting defendants to terminate the Settlement if, prior to
the Effective Date, any action is pending in any state or federal court
which raises any Settled Claims against any of the defendants in the
Consolidated Action;

c. the closing of the Offer and the Merger;

d. final approval by the Court of Chancery of the Settlement (and the
exhaustion of possible appeals, if any); the dismissal of the Consolidated
Action by the Court of Chancery with prejudice and without awarding costs
to any party (except as provided herein) having been obtained; and the
dismissal with prejudice of the California Action without the award of any
costs or fines whatsoever, and

e. plaintiffs providing a release executed by plaintiffs' counsel and
releasing all defendants in the Consolidated Action and the California
Action and releasing all Settled Claims.

5. This Memorandum of Understanding shall be null and void and of no force
and effect should any of the conditions set forth in paragraph 4 above not be
met or should plaintiffs' counsel in the Consolidated Action determine in good
faith that, based upon discovery pursuant to paragraph 4(a) hereof, the proposed
Settlement is not fair, reasonable and adequate; in such event, this Memorandum
of Understanding shall not be deemed to prejudice in any way the positions of
the parties with respect to the Consolidated Action or the California Action nor
to entitle any party to the recovery of costs and expenses incurred to implement
this Memorandum of Understanding.

6. The Effective Date of the Settlement shall be the date on which the
Order of the Court of Chancery approving the Settlement becomes final and no
longer subject to further appeal or review, whether by exhaustion of any
possible appeal, lapse of time or otherwise, except that for purposes of
determinating the date on which any Court awarded fee is due and owing to
plaintiffs' counsel (and for no other purpose), the Effective Date shall be the
later of the date the Settlement becomes final and no longer subject to further
review, five (5) days after the California Action is dismissed with prejudice
and without the award of any costs or attorneys' fees whatsoever, or five (5)
days from the date when the order of the Court of Chancery granting the
application of plaintiffs' counsel in the Consolidated Action for an award of
fees and expenses has become final and no longer subject to further appeal or
review, whether by exhaustion of any possible appeal, lapse of time or
otherwise.

7. Except as provided herein, defendants shall bear no other expenses,
costs, damages or fees alleged or incurred by any named plaintiffs, by any
member of the Class, or by any of their attorneys, experts, advisors, agents or
representatives.

8. Neither this Memorandum of Understanding nor the provisions contained
herein shall be deemed a presumption, concession or an admission by any
defendants in the Consolidated Action or the California Action of any default,
liability or wrongdoing as to any facts or claims alleged or asserted in the
Consolidated Action or the California Action, or any other actions or
proceedings, and shall not be interpreted, construed, deemed, invoked, offered,
or received in evidence or otherwise used by any person in the Consolidated
Action or the California Action or in any other action or proceeding, whether
civil, criminal or administrative.

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<PAGE> 4

9. This Memorandum of Understanding constitutes the entire agreement among
the parties with respect to the subject matter hereof, and may not be amended or
any of its provisions waived except by a writing signed by all the signatories
hereto.

10. This Memorandum of Understanding and the Settlement contemplated by it
shall be governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to conflict of laws principles.

11. This Memorandum of Understanding may be executed in counterparts by
any of the signatories hereto, and as so executed shall constitute one
agreement. Upon execution of this Memorandum of Understanding by plaintiffs and
defendants in the Consolidated Action and the California Action, such Memorandum
of Understanding shall be binding as to such parties.

12. The named plaintiffs and their counsel in the Consolidated Action and
the California Action represent and warrant that the named plaintiffs are each a
shareholder of Maxtor, and were shareholders at all times relevent hereto.

13. The named plaintiffs and their counsel in the Consolidated Action and
the California Action represent and warrant that none of plaintiffs' claims or
causes of action referred to in this Memorandum of Understanding have been
assigned, encumbered or in any manner transferred in whole or in part.

14. The named plaintiffs and their counsel in the Consolidated Action and
the California Action represent and warrant that they have not filed any other
litigation challenging any of the Settled Claims, and are not aware of any such
litigation.

15. The named plaintiffs and their counsel in the Consolidated Action and
the California Action have determined that the Delaware Court of Chancery is the
proper forum for the prosecution and settlement of this litigation.

16. This Memorandum of Understanding shall be binding upon and shall inure
to the benefit of the parties and their respective present or former parent
entities, affiliates, agents, executors, heirs and assigns.

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<PAGE> 5

17. The parties to this Memorandum of Understanding agree (a) to use their
best efforts to achieve the expedited dismissal of the Consolidated Action and
the California Action in accordance with the terms of this Memorandum of
Understanding and (b) to cause the timely occurrence of all events,
transactions, or other circumstances described herein.

OF COUNSEL: ------------------------------------------------------

Pamela S. Tikellis

Wolf Haldenstein Adler Freeman & Hartz LLP

Jeffrey G. Smith

Neil L. Zola

270 Madison Avenue

New York, New York 10016

(212) 545-4600

Chimicles Jacobsen & Tikellis

One Rodney Square

P.O. Box 1035

Wilmington, Delaware 19899

(302) 656-2500

Attorneys for Plaintiff

Nathan Silber

Law Offices of Edlestein & Fasgenburg

Adam Edelstein

26 Court Street, Suite 1503

Brooklyn, NY 11241

(718) 625-3500

OF COUNSEL: ------------------------------------------------------

Norman M. Monhait

Kaufman Malchman Kirby & Squire, LLP

919 Third Avenue

New York, New York 10022

(212) 371-6600

Law Offices of Curtis V. Trinko

310 Madison Avenue, 14th Floor

New York, New York 10017

(212) 490-9500

Rosenthal, Monhait, Gross & Goddess

First Federal Plaza

P.O. Box 1070

Wilmington, Delaware 19899

(302) 656-4433

Attorneys for Plaintiffs

Elaine Wacholder and

Cynthia Allison Barrington

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------------------------------------

Lionel Z. Glancy

Law Offices of Lionel Z. Glancy
1299 Ocean Avenue, Suite 323

Santa Monica, California 90401-1041

(310) 319-3277

Attorneys for Plaintiff

Anthony Campanella, Jr.

------------------------------------

Gregory V. Varallo

Richards, Laytton & Finger

One Rodney Square

P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Defendants
Gregory M. Gallo, Charles Hill,

Ryal R. Poppa and Charles F. Christ

------------------------------------
Steven J. Balick

Ashby & Geddes

One Rodney Square, #302

P.O. Box 1150 Wilmington, Delaware
19899

(302) 654-1888

Attorneys for Defendants

Maxtor Corporation,
I.B. Jeon, C.S. Park, Richard

P. Belanson, and M.H. Chung

OF COUNSEL: ------------------------------------------------------

Marc B. Tucker

Cathy J. Testa

McCutchen, Doyle, Brown & Enersen

Three Embarcadero Center
San Francisco, CA 94111-4066

Skadden Arps Slate Meagher & Flom

One Rodney Square
P.O. Box 636

Wilmington, Delaware 19899

Attorneys for Defendant

Hyundai Electronics Industries

Co., Ltd., Hyundai Electronics America,

and Hyundai Acquisition, Inc.

Dated: December 18, 1995

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