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EXHIBIT 4.1
STOCKHOLDER AGREEMENT
This Stockholder Agreement (the "Agreement") between Hyundai Electronics
America ("HEA"), Hyundai Electronics Industries Co., Ltd. ("HEI") and Maxtor
Corporation, a Delaware corporation (the "Company") is made this 25th day of
June, 1998.
WHEREAS, the Company is a majority-owned subsidiary of HEA;
WHEREAS, HEA currently owns 100% of the Company's Series A Preferred
Stock;
WHEREAS, the Company is contemplating a firm commitment, underwritten
public offering of its Common Stock (the "Public Offering") pursuant to which
HEA's Series A Preferred Stock would be converted into Common Stock;
WHEREAS, the Company, HEI and certain affiliates of HEI (the
"Purchasers") entered into a Stock Purchase Agreement dated September 10, 1994
(the "Prior Agreement") which set forth certain rights and obligations of the
Purchasers with regard to the Company and its capital stock;
WHEREAS, the Purchasers have transferred all of their shares in the
Company to HEA by a letter agreement dated January 6, 1996 and assigned all of
their rights and obligations under the Purchase Agreement by an Assignment
Agreement dated May 28, 1998;
WHEREAS, the parties believe that it is in the best interests of HEA,
the other Hyundai Affiliates, the Company and their respective stockholders to
clarify the rights and obligations of the parties with respect to various
corporate matters;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
EXCHANGE OF INFORMATION; CONFIDENTIALITY
1.1. Agreement for Exchange of Information; Archives.
(a) Each of HEA and the Company, agrees to provide, or cause
to be provided, to each other, at any time before or after the date of the
closing of the Public Offering (the "Closing Date"), as soon as reasonably
practicable after written request therefor, any information in the possession or
under the control of such Person which the requesting party reasonably needs (i)
to comply with reporting, disclosure, filing or other requirements imposed on
the requesting party (including under applicable securities or tax laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, tax or other proceeding
or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or
other similar requirements, or (iii) to comply with its obligations under this
Agreement; provided, however, that in the event that any party determines that
any
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such provision of information could be commercially detrimental, violate any
law or agreement, or waive any attorney/client privilege, the parties shall take
all reasonable measures to permit the compliance with such obligations in a
manner that avoids any such harm or consequences.
(b) Each of the Company and HEA shall have access during
regular business hours (as in effect from time to time) to the documents and
objects of historic significance that related to the Company located on the
premises of the other party and may obtain copies of documents for bona fide
business purposes and may obtain objects for exhibition purposes for
commercially reasonable periods of time if required for bona fide business
purposes, provided that the receiving party shall cause any such objects to be
returned promptly in the same condition in which they were delivered to such
party and shall comply with any rules, procedures or other requirements, and
shall be subject to any restrictions (including prohibitions on removal of
specified objects), that are then applicable to the disclosing party. Nothing
herein shall be deemed to restrict the access of either HEA or the Company to
any such documents or objects or to impose any liability on either HEA or the
Company if any such documents or objects are not maintained or preserved.
1.2. Ownership of Information. Any information owned by HEA or the
Company that is provided to a requesting party pursuant to Section 1.1 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of licenses or otherwise in any such information.
1.3. Compensation for Proving Information. The party requesting such
information agrees to reimburse the other party for the reasonable costs, if
any, or creating, gathering and copying such information, to the extent that
such costs are incurred for the benefit of the requesting party. Except as may
be otherwise specifically provided elsewhere in this Agreement or in any other
agreement between the parties, such costs shall be computed in accordance with
the providing party's standard methodology and procedures.
1.4. Record Retention. To facilitate the possible exchange of
information pursuant to this Article I and other provisions of this Agreement
after the Closing Date, the parties agree to use their reasonable best efforts
to retain all information in their respective possession or control on the
Closing Date in accordance with the policies of such party as in effect on such
Closing Date. No party will destroy, or permit any of its subsidiaries to
destroy, any information which the other party may have the right to obtain
pursuant to this Agreement prior to the third anniversary of the date hereof
without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such information prior to such destruction; provided, however,
that in the case of any information relating to taxes or to environmental
liabilities, such period shall be extended to the expiration of the applicable
statute of limitations (giving effect to any extensions thereof).
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1.5. Production of Witnesses; Records; Cooperation. After the Closing
Date, except in the case of an adversarial action by one party against another
party (which shall be governed by such discovery rules as may be applicable),
each party hereto shall use its reasonable efforts to make available to each
other party, upon written request, the former, current and future directors,
officers, employees, other personnel and agents of such party as witnesses and
any books, records or other documents within its control or which it otherwise
has the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with any action in which the requesting party may from
time to time be involved. The requesting party shall bear all costs and expenses
(including allocated costs of in-house counsel and other personnel) in
connection therewith.
1.6. Confidentiality.
(a) Subject to Section 1.7, each of HEA and the Company agrees
to hold, and to cause its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives to hold, in strict
confidence, with at least the same degree of care that applies to the Company's
confidential and proprietary information pursuant to policies in effect as of
the Closing Date, all information concerning each such other party that is
either in its possession (including information in its possession prior to any
of the date hereof or the Closing Date) or furnished by any such party or its
respective directors, officers, employees, agents, accountants, counsel and
other advisors and representatives at any time pursuant to this Agreement, or
otherwise, and shall not use any such information other than for such purposes
as shall be expressly permitted hereunder or thereunder, except, in each case,
to the extent that such information has been (i) in the public domain through no
fault of such party or any of their respective directors, officers, employees,
agents, accountants, counsel or other advisors and representatives, (ii) later
lawfully acquired from other sources by such party which sources are not
themselves bound by a confidentiality obligation, or (iii) independently
generated without reference to any proprietary or confidential information of
the other party.
(b) Each party agrees not to release or disclose, or permit to
be released or disclosed, any such information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such information (who shall be advised of
their obligations hereunder with respect to such information), except in
compliance with Section 1.7. Without limiting the foregoing, when any
information is no longer needed for the purposed contemplated by this Agreement,
each party will promptly after request of the other party either return to the
other party all information in a tangible form (including all copies thereof and
all notes, extracts or summaries based thereon) or certify to the other party
that it has destroyed such information (and such copies thereof and such notes,
extracts or summaries based thereon).
1.7. Protective Arrangements. In the event that any party either
determines on the advice of its counsel that it is required to disclose any
information pursuant to applicable law or receives any demand under lawful
process or from any Governmental Authority to disclose or provide information of
any other party that is subject to the confidentiality provisions hereof,
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such party shall notify the other party prior to disclosing or providing such
information and shall cooperate at the expense of the requesting party in
seeking any reasonable protective arrangements requested by such other party.
Subject to the foregoing, the Person that received such request may thereafter
disclose or provide information to the extent required by such law (as so
advised by counsel) or by lawful process or such Governmental Authority.
ARTICLE II
PROVISIONS RELATING TO CERTAIN CORPORATE MATTERS
2.1. Standstill and HEA Right to Maintain Minimum Ownership.
(a) From such time on or after closing of the Public Offering
as HEA Beneficially Owns in the aggregate, less than a majority of the Company's
outstanding capital stock entitled to vote generally in the election of
directors ("Voting Stock"), Hyundai Affiliates may only purchase additional
shares of the Company's Voting Stock
(i) in the open market if a third party or group of
third parties (other than any Hyundai Affiliate or any Person with whom any
Hyundai Affiliate acts (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
securities issued by the Company) makes a tender or exchange offer for 40% or
more of the Company outstanding shares of Voting Stock, or accumulates more than
20% of the Company's Voting Stock common stock, provided that neither HEA nor
its Affiliates shall have any right to purchase Voting Stock hereunder if such
actions by any third parties are approved by a majority of the Company's
Disinterested Directors; or
(ii) at any time prior to December 31, 2000, from the
Company or in the open market as provided below to the extent required to
maintain the Hyundai Affiliates' aggregate Beneficial Ownership of the Company's
outstanding Voting Stock at 30% plus one share of Voting Stock (the "Minimum
Ownership"), to the extent the Hyundai Affiliates' Beneficial Ownership is
reduced by any issuance of shares of Voting Stock by the Company (the
"Issuance") as a result of exercise of stock options, issuance of shares of
Voting Stock under the Company's employee benefit plans or otherwise, on terms
set forth below. If the Company has prior notice of the Issuance, the Company
shall to the extent legally permissible give HEA notice of the Issuance and HEA
shall have the right, subject to compliance with the Company's trading window
policy, to purchase Common Stock on the open market prior to the Issuance only
to the extent required to maintain the Minimum Ownership immediately following
the Issuance. If the Company is unable for any reason to give notice to HEA, HEA
is prohibited from purchasing Common Stock as a result of the Company's trading
window policy, or HEA otherwise fails to purchase sufficient shares in the open
market to maintain its Minimum Ownership as of the date of the Issuance, unless
HEA otherwise instructs the Company in writing, the Company will issue to HEA
that number of shares of Voting Stock required to maintain the Minimum Ownership
no later than the date on which the Hyundai Affiliates' Beneficial Ownership
would otherwise be reduced below the Minimum Ownership (the "Closing Date"), at
a price equal to the average of
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the closing sales prices for the twenty (20) trading days immediately prior to
such Closing Date and HEA will, upon notice from the Company, wire transfer fund
equal to the aggregate purchase price to the Company no later than the day
immediately following the Closing Date. In the event the purchase by HEA under
this Section 2.1(a)(ii) results in short-swing profit liability to any Hyundai
Affiliate under Section 16(b) of the Securities Exchange Act of 1934, as amended
("Section 16(b)"), HEA agrees to cooperate with the Company to pay immediately
to the Company any profits as required under Section 16(b).
(b) Approval by the Company will be required in all other
cases for the purchase of additional shares of the Company's Voting Stock by
Hyundai Affiliates until the earlier of December 31, 2001 or such time as the
Hyundai Affiliates Beneficially Own less than 20% of the Company's Voting Stock
(the "Termination Date"). The Company will notify HEA as promptly as reasonably
feasible after it becomes aware of a tender offer, accumulation or Issuance as
described in Section 2.1. Approval by the Company hereunder shall require
approval of the Company's Board of Directors and approval by a resolution
adopted by a majority of the Company's Disinterested Directors.
2.2. No Proxy Solicitation. From such time on or after closing of the
Public Offering as HEA Beneficially Owns, less than a majority of the Company's
outstanding Voting Stock, until such time as Hyundai Affiliates Beneficially Own
in the aggregate less than 20% of the Company's outstanding shares of Voting
Stock, Hyundai Affiliates will not engage in any proxy solicitation directed to
holders of shares of the Company's Voting Stock, except in response to a proxy
contest initiated by any third party. For purposes of this Section 2.2, "proxy
solicitation" shall mean the making of any stockholder proposal or director
nomination other than as provided in Section 2.3, or any solicitation of proxies
for or against any proposal of management or regarding the election of
directors.
2.3. Nomination of Directors.
(a) So long as Hyundai Affiliates Beneficially Own at least a
majority of the Company's Voting Stock, HEA shall take such actions as are
necessary to maintain on the Company's Board of Directors at least two (2)
directors who qualify as Disinterested Directors.
(b) So long as Hyundai Affiliates Beneficially Own in the
aggregate less than a majority and at least 30% of the Company's outstanding
Voting Stock, HEA shall be entitled to designate in writing to the Nominating
Committee of the Company's Board of Directors (the "Nominating Committee") one
(1) director for nomination by the Nominating Committee for election in each of
three classes of the Company's Board of Directors and, provided that such
designee shall be reasonably satisfactory to the Nominating Committee, the
Company will use its best efforts to cause the Nominating Committee to nominate
such designee for election by the holders of record of the Company's Voting
Stock at each annual meeting of stockholders.
(c) So long as Hyundai Affiliates Beneficially Own in the
aggregate less than 30% and at least 20% of the Company's outstanding Voting
Stock, HEA shall be entitled to designate in writing to the Nominating Committee
one (1) director for nomination by the Company's Nominating Committee for
election in each of two (2) of the three (3) classes of the
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Company's Board of Directors, provided that the two classes as to which HEA
shall have the right to designate a director for nomination shall be the last
two classes to be elected following the reduction in HEA's Beneficial Ownership
below 30% of the Company's outstanding Voting Stock, and provided that such
designee shall be reasonably satisfactory to the Nominating Committee, the
Company will use its best efforts to cause the Nominating Committee to nominate
such designee for election by the holders of record of the Company's Voting
Stock at each such annual meeting. Thereafter, so long as HEA has the right to
designate under this Section 2.3(c), HEA's right hereunder shall apply solely to
the classes determined as set forth above in this Section 2.3(c).
(d) So long as Hyundai Affiliates Beneficially Own in the
aggregate less than 20% and at least 10% of the Company's outstanding Voting
Stock, HEA shall be entitled to designate in writing to the Nominating Committee
one (1) director for nomination by the Nominating Committee as provided below,
and provided such designee is reasonably satisfactory to the Nominating
Committee, the Company will use its best efforts to cause the Nominating
Committee to nominate such designee for election by the holders of record of the
Company's Voting Stock at the annual meeting specified below. If at the time the
aggregate outstanding Voting Stock of the Company Beneficially Owned by Hyundai
Affiliates is reduced to less than 20% (i) HEA has designated more than one
director serving on the Board of Directors at such time, HEA's right to
designate shall apply to the last class to be elected among the classes in which
any such designee(s) serves; (ii) if HEA has designated one director serving on
the Board of Directors at such time, HEA's right will apply to the annual
meeting in which such director previously designated by HEA serves; or (iii) if
no such director designated by HEA for nomination is currently serving, HEA's
right to designate a director for nomination shall apply to the class to be
elected at the annual meeting immediately following the reduction of Hyundai
Affiliates' Beneficial Ownership below 20%. Thereafter, so long as HEA has the
right to designate under this Section 2.3(c), HEA's right shall apply solely to
the class determined as set forth above.
(e) If any director designated by HEA (or serving in lieu of a
director designated by HEA because of HEA's failure to designate such director)
ceases to be a director of the Company, whether as a result of death,
resignation, retirement, disqualification, removal from office or other cause,
and HEA continues to have the right to nominate a director in the class in which
such director served, the vacancy so created shall be filled by the Board of
Directors, provided that the Company shall give HEA notice of such vacancy and
HEA shall have the right to designate in writing to the Nominating Committee a
person to be appointed to fill such vacancy, and provided such designee is
reasonably satisfactory to the Nomination Committee, the Company will use its
best efforts to cause the Board of Directors to appoint such person to fill the
vacancy.
(f) If HEA has the right to designate a person for nomination
as director and fails to designate such a person in writing within ninety (90)
days prior to the annual meeting at which the class of directors in which such
person would serve is being elected, the Board of Directors of the Company shall
be entitled to nominate a person selected by the Nominating Committee without
regard to the designation by HEA. If HEA is notified of a vacancy pursuant
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to Section 2.3(e) and fails to designate a person for appointment to fill such
vacancy within thirty (30) days after such notice, the Board of Directors shall
have the right to appoint a person selected by the Nominating Committee or the
Board of Directors to fill the vacancy without regard to the designation by HEA.
In the event HEA fails to timely designate a director for nomination or
appointment hereunder, HEA shall continue to have the rights set forth above in
Sections 2.3(b) through (e). If HEA designates a person for nomination or
appointment, HEA shall confirm in writing to the Company that such person is
willing to serve as a director of the Company.
(g) While the foregoing rights are in effect, the balance of
the nominees for directors submitted by the Corporation to its stockholders at
any annual meeting of stockholders shall be selected by the Nominating Committee
or the Board of Directors, provided that the vote in favor of such other
nominees shall include the vote of at least a majority of the Disinterested
Directors. The right of HEA to designate directors for nomination shall cease
and have no further effect at such time as Hyundai Affiliates no longer
Beneficially Own in the aggregate at least 10% of the Company's Voting Stock.
(h) At any time when HEA has the right to designate directors
for nomination pursuant to Section 2.3(a) and the Board of Directors complies
with such provision, HEA will vote, and cause Hyundai Affiliates to vote, the
Voting Stock held by them in favor of the slate of directors nominated pursuant
to Section 2.3. So long as HEA has rights under this Section 2.3 or under
Section 2.1(a) to purchase shares of the Company's Common Stock, HEA will hold,
and cause other Hyundai Affiliates to hold, the Voting Stock in its own name or
in the name of a nominee or other holder as to which any of them give advance
notice to the Company and who does not hold securities in such name for the
account of persons who are not Hyundai Affiliates.
2.4. Injunction. The parties acknowledge that irreparable damage would
occur in the event that any of the provisions of this Article II were not
performed in accordance with their specific terms or were otherwise breached.
The parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court having jurisdiction, such remedy being in addition to any
other remedy to which they may be entitled at law or equity.
ARTICLE III
REGISTRATION RIGHTS
3.1. Definitions.
(a) "Holder" shall mean HEA and any transferee permitted under
Section 3.9 hereof.
(b) "Registrable Securities" means the Common Stock of the
Company held by Holder or any transferee permitted under Section 3.9 hereof.
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3.2. Requested Registration. If at any time Holder shall request that
the Company effect the registration of shares of Common Stock held by Holder,
and the requested registration relates to an offering (i) of at least 10% of the
aggregate shares of Common Stock of the Company Beneficially Owned by HEA at the
closing of the Public Offering, and (ii) with reasonably anticipated aggregate
proceeds (net of any underwriters discount or any expenses of the offering) of
$50,000,000 or more, the Company shall use its reasonable commercial efforts to
effect the requested registration, provided that the Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 3.2 after the Company has effected five (5) such registrations pursuant
to this Section 3.2 and such registrations have been declared effective. Any
registration effected pursuant to Section 3.3 shall not reduce the number of
registrations which the Company is required to effect under this Section 3.2.
The rights granted by this Section 3.2 may be exercised from time to
time, but the Company shall not be required to make any registration effective
under this Section 3.2 more than once in any calendar year, provided that HEA,
but not any other Holder, may request additional registrations during any
calendar year which may be effected by the Company in its sole discretion.
The Company may include in the registration under this Section 3.2 any
other shares of Common Stock (including issued and outstanding shares of Common
Stock as to which the holders thereof have contracted with the Company for
"piggyback" registration rights) so long as the inclusion in such registration
of such shares will not, in the opinion of the managing underwriter, if any, or
if there is no managing underwriter, a nationally recognized investment banking
firm selected by Holder and reasonably acceptable to the Company, interfere with
the successful marketing in accordance with the intended method of sale or other
disposition of all the shares sought to be registered by Holder pursuant to this
Section 3.2. If it is determined as provided above that there will be such
interference, the other shares of Common Stock sought to be included by the
Company shall be excluded to the extent deemed appropriate by the managing
underwriter or, if there is no managing underwriter, Holder, provided that if
less than all shares proposed to be included by the Company are excluded, and
the Company is seeking to register shares of Common Stock for persons other than
the Company, the Company shall have the right to determine in its sole
discretion which such shares other than those offered by Holder(s) will be
excluded from the registration.
If the requested registration is an underwriting, the managing and other
underwriters will be selected by Holder, provided such underwriters shall be
reasonably satisfactory to the Company. If the requested registration is not a
firm commitment, underwritten offering and the Company requests that it be made
in such an offering of the same size and during the same period, Holder will
change the form of the offering to a firm commitment, underwritten offering,
provided that the managing and other underwriters and the terms of the
underwriting, including without limitation the underwriters discount, are
reasonably satisfactory to Holder.
3.3. "Piggyback" Registration. If at any time the Company proposes to
register any of its securities under the Securities Act either for its own
account or for the account of a security holder or security holders (except with
respect to registration statements filed on Form S-4 or on
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a Form S-8 relating to employee stock benefit programs or such other similar
forms then in effect under the Securities Act), it will at each such time give
written notice to Holder and, upon the written request of Holder, given within
20 days after its receipt of the Company's notice, the Company will use its
reasonable commercial efforts to cause such shares of Common Stock as to which
registration shall have been so requested, to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by Holder.
Notwithstanding any other provision of this Section 3.3, in the case of a firm
commitment, underwritten offering of shares to be issued by the Company, if the
managing underwriter determines that the marketing factors require a limitation
of the number of shares to be sold, the underwriter may exclude shares held by
Holder from such registration and underwriting to the extent deems appropriate
by the managing underwriter. In the case of a firm commitment, underwritten
offering, any request by Holder pursuant to this Section 3.3 to register shares
of Common Stock must specify that such shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such registration.
HEA and the Company acknowledge that registration of shares of Common
Stock owned by HEA, if any, pursuant to the registration statement filed with
the SEC to effect the Public Offering is pursuant to this Section 3.3 and HEA
waives notice under this Agreement. If HEA elects not to participate as Selling
Stockholder in the Public Offering and the registration statement covering
shares sold in the Public Offering is declared effective, HEA shall be deemed to
have waived its rights relating to the Public Offering under this Agreement.
3.4. Registration Procedures and Expenses. If and whenever the Company
is required by the provisions contained herein to use its reasonable commercial
efforts to effect the registration of any of the Shares under the Securities
Act, Holder will furnish in writing such information as is reasonably requested
by the Company for inclusion in the registration statement relating to such
offering and such other information and documentation as the Company shall
reasonably request, and the Company will, as expeditiously as possible:
(a) Prepare and file with the SEC a registration statement
(including a prospectus therein) with respect to such securities and use its
reasonable commercial efforts to cause such registration statement to become and
remain effective for such period as may be necessary to permit the successful
marketing of such securities but not exceeding 90 days for an offering pursuant
to Section 3.2 hereof; or, with regard to an offering pursuant to Section 3.3
hereof, for the period associated with the offering which gave rise to rights
under Section 3.3; provided that (i) if, upon receipt of a registration request
pursuant to Section 3.2, the Company is advised in writing setting forth
specific reasons (with a copy to the person requesting registration pursuant to
this Section 3.2), by a nationally recognized, independent investment banking
firm selected by the Company that, in such firm's opinion, a registration at the
time and on the terms requested would materially and adversely affect any
immediately planned underwritten public equity financing by the Company that had
been contemplated by the Company prior to receipt of notice requesting
registration pursuant to Section 3.2 (a "Transaction Blackout"), the Company
shall not be required to effect a registration pursuant to Section 3.2 until the
earliest to occur of (A) the abandonment of such financing, (B) 90 days after
the completion of such financing,
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(C) the termination of any "hold back" or "lock up" period obtained by the
underwriter(s) selected by the Company in connection with such financing from
any person requesting registration pursuant to Section 3.2 or (D) 90 days after
receipt by the Holder requesting registration of written notice of such
Transaction Blackout (together with the copy of the investment banking firm
opinion referred to above in this subsection); and (ii) if, while a registration
request is pending pursuant to Section 3.2, the Company has determined in good
faith that (A) the filing of a registration statement would require the
disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential or (B) the Company then is unable to
comply with SEC requirements, the Company shall not be required to effect a
registration pursuant to Section 3.2 until the earliest to occur of (1) the date
upon which such material information is disclosed to the public or ceases to be
material or the Company is able to so comply with SEC requirements, as the case
may be, or (2) 90 days after the Company makes such good faith determination.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act; and to keep such registration statement effective for that period of time
specified in Section 3.3(a);
(c) Furnish to Holder such number of prospectuses and
preliminary prospectuses in conformity with the requirements of the Securities
Act, and such other documents as Holder may reasonably request in order to
facilitate the public sale or other disposition of the shares being sold by
Holder;
(d) If requested by any underwriter of the offering and
permitted by applicable rules and guidelines, furnish Holder a letter from the
independent certified public accountants of the Company in the form customarily
furnished to underwriters in firm commitment, underwritten offerings, addressed
to Holder, providing substantially that such accountants are independent
certified public accountants within the meaning of the Securities Act and that
in the opinion of such accountants, the financial statements and other financial
data of the Company included in the registration statement and the prospectus,
and any amendment or supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the Securities Act. Such
letter shall additionally cover such other financial matters (including
information as of the date of such letter) with respect to the registration in
respect of which such letter is being given as Holder may reasonably request;
and
(e) Use its reasonable commercial efforts to register or
qualify the shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the selling Holder shall
reasonably request and do any and all other acts and things which may be
necessary or desirable to enable Holder to consummate the public sale or other
disposition in such jurisdiction of the shares owned by Holder.
All expenses incurred by the Company in complying with Sections
3.2, 3.3 and 3.4 hereof, including without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and
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expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company) are herein called
"Registration Expenses" and all underwriting discounts and selling commissions
applicable to the sales are herein called "Selling Expenses." The Company will
pay all Registration Expenses in connection with up to five (5) registrations
pursuant to Section 3.2. All Selling Expenses in connection with each
registration pursuant to Section 3.2 or 3.3 shall be borne by the seller of the
securities on which they are imposed. All Registration Expenses other than those
payable by the Company shall be borne by the Company, Holder and any other
selling stockholders pro rata in proportion to the securities covered thereby
being sold by them. Each Holder shall bear the fees and costs of its own
counsel.
3.5. Indemnification. In the event of a registration of any shares of
Common Stock under the Securities Act pursuant to the provisions contained
herein, the Company will hold harmless Holder and each underwriter of such
shares and each other Person, if any, who controls Holder or such underwriter
within the meaning of Section 15 of the Securities Act, and each officer,
director, employee and advisor of each of the foregoing, against any expenses,
losses, claims, damages or liabilities, joint or several ("Losses"), to which
Holder or such underwriter or controlling Person may become subject under the
Securities Act, any state securities law or otherwise, including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
insofar as such expenses, losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which such shares are registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
registration, qualification or compliance; and will reimburse Holder and each
such underwriter and each such controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such Loss or action; provided, however, that the Company will not
be liable in any such case to the extent that any such Loss arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, said preliminary
prospectus or said prospectus or said amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by Holder or such underwriter specifically for use in
the preparation thereof; and provided, further, that if any Losses arise out of
or are based upon an untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not appear in
the final prospectus, the Company shall not have any liability with respect
thereto to (i) Holder or any Person who controls such seller within the meaning
of Section 15 of the Securities Act, if Holder delivered a copy of the
preliminary prospectus to the Person alleging such Losses and failed to deliver
a copy of the final prospectus, as amended or supplemented if it has been
amended or supplemented, to such Person at or prior to the written confirmation
of the sale to such Person or (ii) any underwriter or any Person who controls
such underwriter within the meaning of
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Section 15 of the Securities Act, if such underwriter delivered a copy of the
preliminary prospectus to the Person alleging such Losses and failed to deliver
a copy of the final prospectus, as amended or supplemented if it has been
amended or supplemented, to such Person at or prior to the written confirmation
of the sale to such Person.
In the event of any registration of any shares of Common Stock
under the Securities Act pursuant to the provisions contained herein, Holder
will indemnify and hold harmless the Company and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
each officer of the Company who signs the registration statement, each director
of the Company and each underwriter and each Person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against any and all
Losses to which the Company or such other Person may become subject under the
Securities Act, any state securities law or otherwise, including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such shares are registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if the statement, alleged statement,
omission or alleged omission in respect of which such Loss is asserted was made
in reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of Holder specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, prospectus,
amendment or supplement; provided, however, that if any Losses arise out of or
are based upon an untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not appear in
the final prospectus, Holder shall not have any such liability with respect
thereto to (i) the Company, any Person who controls the Company within the
meaning of Section 15 of the Securities Act, any officer of the Company who
signed the registration statement or any director of the Company, if the Company
delivered a copy of the preliminary prospectus to the Person alleging such
Losses and failed to deliver a copy of the final prospectus, as amended or
supplemented if it has been amended or supplemented, to such Person at or prior
to the written confirmation of the sale to such Person or (ii) any underwriter
or any Person controlling such underwriter within the meaning of Section 15 of
the Securities Act, if such underwriter delivered a copy of the preliminary
prospectus to the Person alleging such Losses and failed to deliver a copy of
the final prospectus, as amended or supplemented, if it has been amended or
supplemented, to such Person at or prior to the written confirmation of the sale
to such Person.
Each party entitled to indemnification under this Section 3.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting thereon, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be withheld), and
the Indemnified Party may
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participate in such defense at its own expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 3.5 except
to the extent such failure resulted in actual detriment to the Indemnifying
Party. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
3.6. Registration Not Required. Notwithstanding anything in this Article
III, the Company shall have no obligation to register shares of Common Stock
requested to be registered hereunder if, in the opinion of counsel to the
Company, reasonably satisfactory in form and substance to counsel for Holder,
all of the shares of Common Stock requested to be registered can be sold within
a given three-month period without compliance with the registration requirements
of the Securities Act pursuant to Rule 144.
3.7. Reporting Requirements. The Company shall comply with the
reporting requirements of Section 15(d) of the Securities Exchange Act of 1934,
as amended (whether or not it shall be required to do so pursuant to the
provisions of said Section 15(d)), and shall comply with all other public
information reporting requirements required by the SEC as a condition to the
availability of an exemption, presently existing or hereafter adopted, from the
Securities Act for the sale of shares of Common Stock.
3.8. Trading Restrictions.
(a) Notwithstanding the foregoing provisions, so long as HEA
has the right to designate for nomination directors pursuant to Section 2.3 or
any employee of any Hyundai Affiliate serves on the Company's Board of
Directors, HEA and other Hyundai Affiliates shall sell shares under any
registration effected pursuant to this Article III only during the periods when
the "trading window" for Company insiders is open, which is generally a period
commencing on the third trading day after the public release by the Company of
its financial results for the prior period and ending on the last day of the
next succeeding calendar month, and HEA shall not sell any shares under such
registration when HEA has been advised by the Company that the Company's
"trading window" for corporate insiders has been closed. The Company agrees to
(i) advise HEA of the exact period comprising, and of any changes to, its
"trading window" for corporate insiders, and (ii) administrate its "trading
window" policy in a consistent manner vis-a-vis its corporate insiders and HEA.
In the event trading is suspended pursuant to this provision, the Company shall,
if requested by HEA, cause the registration statement to remain effective for an
additional number of days equal to the total number of trading days during which
trading was suspended, notwithstanding the limitation on the period the Company
is required to maintain effectiveness pursuant to Section 3.3(a).
(b) In the event that, at any time after any registration
pursuant to Sections 3.2 or 3.3 is declared effective, the Company determines in
good faith that the sale of Registrable Securities in such offering would
require disclosure of material information that the Company
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has a bona fide business purpose for preserving as confidential or that the
Company is unable to comply with SEC requirements, Holders selling Registrable
Securities in such offering shall, upon written notice of such good faith
determination, suspend sales of such Registrable Securities for a period
beginning on the date of receipt of such notice and expiring on the earlier of
(i) the date upon which such material information is disclosed to the public or
ceases to be material or the Company is able to comply with SEC requirements, as
the case may be, and (ii) 45 days after the Company initially makes such good
faith determination. In the event trading is suspended pursuant to this
provision, the Company shall, if requested by Holder, cause the registration
statement to remain effective for an additional number of days equal to the
total number of trading days during which trading was suspended, notwithstanding
the limitation on the period the Company is required to maintain effectiveness
of such registration statement pursuant to Section 3.3(a).
3.9. Transfer of Registration Rights.
(a) HEA may transfer all or any portion of its rights under
this Article III to any transferee (each, a "transferee") of an amount of
Registrable Securities owned by HEA equal to or exceeding ten percent (10%) of
the Registrable Securities owned by HEA immediately after the closing of the
Public Offering. The rights under this Article III are not otherwise
transferable. Any transfer of registration rights pursuant to this Section 3.9
shall be effective upon receipt by the Company of written notice from HEA
stating the name and address of any such transferee and identifying the amount
of Registrable Securities with respect to which the rights under this Agreement
are being transferred and the nature of the rights so transferred, and an
agreement in writing by the transferee to be bound by the provisions of Article
III and Article V of this Agreement.
(b) After any such transfer, HEA shall retain its rights under
this Agreement with respect to all other Registrable Securities owned by Holder,
provided that any rights to request registration under Section 3.2 granted to
such transferee(s) by HEA shall reduce the then remaining number of
registrations to which HEA would otherwise be entitled under Section 3.2 hereof,
and provided further that in no event shall the Company be required to effect
more than a total of five (5) registrations taken as a whole pursuant to Section
3.2 of this Agreement.
ARTICLE IV
COVENANT NOT TO COMPETE
Neither HEA nor any other Hyundai Affiliate will compete for a period of
five (5) years anywhere in the world from the closing of the Public Offering
with the Company by means of the ownership, management, operation or control of
any business engaged primarily in the design, development, manufacture,
marketing or sale of hard disk drives, provided that nothing herein shall
prohibit Hyundai Affiliates from making investments in publicly traded
corporations, regardless of the business such corporations are engaged in,
provided the aggregate ownership by Hyundai Affiliated does not exceed 3% of the
issued and outstanding capital stock of any such publicly traded corporation.
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ARTICLE V
MISCELLANEOUS
5.1 Other Agreements Superseded. This Agreement supersedes all prior
agreements or understandings written or oral (including, without limitation the
Prior Agreement), between the Company and HEA and all Hyundai Affiliates,
relating to the subject matter hereof, and incorporates the entire understanding
of the parties with respect thereto.
5.2. Amendment or Modification. This Agreement may be amended or
supplemented only by a written instrument signed by the party against whom the
amendment or supplement is sought to be enforced. The party benefited by any
condition or obligation may waive the same, but such waiver shall not be
enforceable by another party unless made by written instrument signed by the
waiving party.
5.3. Notices. Any notice or other communication under or relating to
this Agreement shall be given in writing and shall be deemed sufficiently given
and served for all purposes when personally delivered or given by telecopy with
receipt verified by printout of the transmitting machine (or otherwise confirmed
in writing, in which case the notice shall be deemed given when such written
confirmation is received):
(a) If to HEA or HEI:
Hyundai Electronics America
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Senior Vice President, Corporate Counsel and Secretary
(b) If to Maxtor:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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5.4. Law Governing; Federal Forum; Remedies.
(a) This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, as such laws are applied to
agreements entered into and to be performed entirely within Delaware between
Delaware residents.
(b) Binding Arbitration. Any controversy, claim, or action,
whether in law or at equity, whether in tort, contract, warranty, or otherwise,
arising out of, relating to, or involving this Agreement and any agreement,
undertaking, or performance that may be promised, performed, or executed to
implement this Agreement will be settled by arbitration as follows:
(i) Any arbitration proceeding shall be conducted under
the laws of the state of Delaware and the Federal Arbitration Act, and pursuant
to the Commercial Arbitration Rules of the American Arbitration Association
insofar as such Commercial Arbitration Rules do not conflict with the provisions
of this Section.
(ii) Either party may initiate arbitration by giving
notice to the other stating an intention to arbitrate, the issue to be
arbitrated, and the relief sought. The site for any arbitration proceeding and
the source of all arbitrators shall be JAMS Endispute located in San Jose,
California, if there is such, and otherwise the nearest location of JAMS
Endispute to San Jose, California.
(iii) The arbitrators shall promptly, by majority vote,
make such award and determination as is appropriate and in accordance with the
terms of this Agreement. The parties will faithfully abide by and perform any
award rendered by the arbitrators. Further, any such award and determination
shall be final and binding upon the parties and enforceable in any court of
competent jurisdiction. The arbitration proceedings and all pleadings and
written evidence shall be in the English language. Any written evidence
originally in a language other than English shall be submitted in English
translation accompanied by the original or a true copy. Notwithstanding the
above, the parties may apply to any court of competent jurisdiction for
injunctive relief without breach of this arbitration provision.
(c) If any provisions of this Agreement are breached, the
nonbreaching party shall be entitled without limiting any other remedy available
at law or equity, to an injunction, specific performance or other forms of
equitable relief. The nonbreaching party shall be entitled to recover the cost
(including attorneys' fees) of enforcing its rights and the breaching party's
obligations pursuant to this Agreement. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege.
5.5. Successors; Assignability. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any right, remedy,
obligation or liability hereunder may be assigned by either of the parties
hereto without the prior written consent of the other parties hereto, subject to
the provisions of Section 3.9 hereof.
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5.6. Counterparts. This Agreement may be executed in any number of
counterparts, and each such executed counterpart shall be deemed to be an
original instrument, but all such executed counterparts together shall
constitute one and the same instrument.
5.7. Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Person other than the parties hereto and their respective
permitted successors and assigns, nor is anything in this Agreement intended to
relieve or discharge any obligation of any third Person to any party hereto or
give any third Person any right of subrogation or action over against any party
hereto.
5.8. Headings. The headings used in this Agreement are provided for
convenience only and this Agreement shall be interpreted as though they did not
appear herein.
5.9. Transactional Expenses. Each party shall pay its own fees and
expenses incident to the negotiation, preparation, execution, delivery and
performance of this Agreement and thereof, including, without limitation, the
fees and expenses of its counsel, accountants and other advisors.
5.10. Severability. Should any provisions of this Agreement be held by
a court of law to be illegal, invalid or unenforceable, the legality, validity
and enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby.
5.11. Certain Definitions. As used in this Agreement, the following
terms have the respective meanings set forth below or in the location indicated:
(a) Affiliate shall mean any Person which controls, is
controlled by or is under common control with, another Person. For purposes of
this definition, "control" means the ability, directly or indirectly, to elect
or designate (in the absence of particular events or circumstances) a majority
of the directors (or Persons performing a similar function) of a Person.
(b) Beneficial Owner, Beneficially Own, Beneficial Ownership
and words of similar import shall have the meaning ascribed to such terms in
Rule 13d-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, or any successor rule.
(c) Disinterested Director shall mean a director of the
Company who is not and has never been an officer, employee or paid consultant of
any Hyundai Affiliate or the Company.
(d) Governmental Agency shall mean any federal, state, local
or foreign government or any political subdivision thereof (including without
limitation the executive and legislative branches thereof) or any department,
commission, board, bureau, agency, court, panel or other instrumentality of any
kind of any of the foregoing.
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(e) Hyundai Affiliate shall mean Hyundai Electronics America,
a California corporation ("HEA"), Hyundai Electronics Industries Co., Ltd.
("HEI"), all successors to HEA or HEI by way of merger, consolidation or sale of
all or substantially all its assets, and all corporations, partnerships, joint
ventures, associations and other entities that directly or indirectly, through
one or more intermediaries, are controlled by HEA or HEI, other than the Company
and all corporations, partnerships, joint ventures, associations and other
entities directly or indirectly controlled by the Company. The term "control,"
as used in the immediately preceding sentence, shall mean with respect to a
corporation or limited liability company the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to
the controlled corporation or limited liability company, and, with respect to
any individual, partnership, trust, other entity or association, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled entity.
(f) Person shall mean an individual, partnership, corporation,
trust or unincorporated organization or a Governmental Agency.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
MAXTOR CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President,
General Counsel and Secretary
HYUNDAI ELECTRONICS AMERICA
By: /s/ C.S. PARK
-------------------------------------
C.S. Park, President and Chief
Executive Officer
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
By: /s/ C.S. PARK
-------------------------------------
C.S. Park, Executive Vice President
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