Exhibit 10.14
QUANTUM CORPORATION
MAXTOR CORPORATION
7% Convertible Subordinated Notes due 2004
THIRD SUPPLEMENTAL INDENTURE
Dated as of April 2, 2001
to
INDENTURE
Dated as of August 1, 1997
LASALLE BANK NATIONAL ASSOCIATION
(f/k/a LaSalle National Bank)
This Third Supplemental Trust Indenture, dated as of April 2, 2001 (the
"Supplemental Indenture"), among Quantum Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
Maxtor Corporation, a corporation duly organized and existing under the laws of
the State of Delaware ("Maxtor"), and LaSalle Bank National Association (f/k/a
Lasalle National Bank), a national banking association organized and existing
under the laws of the United States of America, as Trustee (the "Trustee"),
supplementing that certain Indenture, dated as of August 1, 1997, between the
Company and the Trustee, as supplemented by the Supplemental Indenture, dated as
of August 1, 1997 (the "First Supplemental Indenture"), as supplemented by the
Second Supplemental Indenture, dated as of August 4, 1999 (the "Second
Supplemental Indenture," and such Indenture, as supplemented by the First
Supplemental Indenture, the Second Supplemental Indenture and this Supplemental
Indenture, being referred to herein as the "Indenture").
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture heretofore executed and delivered to provide for the issuance from
time to time of its unsecured debentures, notes, or other evidences of
indebtedness to be issued in one or more series as provided for in the Indenture
heretofore executed and delivered.
B. The Company issued Securities denominated "7% Convertible Subordinated
Notes due 2004" (the "Notes") pursuant to the terms of the First Supplemental
Indenture.
C. On August 4, 1999, the Company entered into a restructuring (the
"Restructuring") of its common stock, whereby the common stock of the Company
was exchanged for two classes of tracking stock called DLT & Storage Systems
group stock and Hard Disk Drive group stock. In connection with the
Restructuring, each share of common stock was changed into one share of DLT &
Storage Systems group stock and 0.5 shares of Hard Disk Drive ("HDD") group
stock, and pursuant to Section 1409 of the Indenture, the Company and the
Trustee executed the Second Supplemental Indenture to make the Notes convertible
into both classes of tracking stock as set forth in the Second Supplemental
Indenture.
D. The Company has entered into an Amended and Restated Agreement and
Plan of Merger and Reorganization, dated as of October 3, 2000, by and among the
Company, Insula Corporation, a Delaware corporation and a wholly-owned
subsidiary of the Company ("Spinco"), Maxtor and Hawaii Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Maxtor pursuant to which
the Company will contribute and transfer to Spinco all of the assets and
liabilities associated with the HDD business, and upon the completion of such
contribution and transfer and immediately prior to and in connection with the
merger of Spinco with and into Maxtor (the "Merger"), the Company will redeem
the Hard Disk Drive group stock.
X. Xxxxxxxx to Section 1409 of the Indenture, the Company, Maxtor and
Trustee have agreed in connection with the Merger to execute this Supplemental
Indenture to make the Notes
convertible into Quantum Common Stock (as defined below) and the Maxtor Common
Stock (as defined below) as set forth herein.
ARTICLE ONE
AMENDMENTS
Section 101 Amendment to Section 101 of Indenture. Section 101 of the
Indenture, as amended by Section 101 of the Second Supplemental Indenture, is
hereby amended by deleting the definitions of DSS Common Stock and HDD Common
Stock and by adding the following definitions in appropriate alphabetical order:
"Board of Directors" means either the board of directors of the
Company or Maxtor, as the case may be, or any duly authorized committee of
that board empowered to act for it with respect to this Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or Maxtor, as the case
may be, to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to
the Trustee.
"Common Stock" shall mean the Quantum Common Stock and Maxtor Common
Stock or shares of any class or classes resulting from any reclassification
or reclassifications thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company or
Maxtor, as the case may be, and which are not subject to redemption by the
Company or Maxtor.
"Maxtor" means the corporation named as "Maxtor" in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Maxtor" shall mean such successor Person.
"Maxtor Common Stock" shall mean the Common Stock, par value $.01 per
share, of Maxtor or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary
or involuntary liquidation, dissolution or winding-up of Maxtor and which
are not subject to redemption by Maxtor; provided that if at any time there
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shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all
such reclassifications.
"Maxtor Subsidiary" means a corporation of which at least a majority
of the outstanding voting stock having the power to elect a majority of the
board of directors of such corporation is at the time owned, directly or
indirectly, by Maxtor or by one or more other subsidiaries of Maxtor, or by
Maxtor and one or more other subsidiaries of Maxtor, and
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the accounts of which are consolidated with those of Maxtor in its most
recent consolidated financial statements in accordance with generally
accepted accounting principles. For the purposes of this definition,
"voting stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President,
and by the principal financial officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company or
Maxtor, as the case may be, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 1004
shall be the principal executive, financial or accounting officer of the
Company.
"Quantum Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which are not subject to redemption by the Company; provided
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that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from
all such reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.
Section 102 Amendments to Article Fourteen of Indenture.
Article Fourteen of the Indenture, as amended by Section 102 of the Second
Supplemental Indenture, is hereby replaced in its entirety with the following:
ARTICLE FOURTEEN
CONVERSION OF SECURITIES
SECTION 1401. Applicability of Article Fourteen.
The provisions of this Article shall be applicable to the Securities
which are convertible into shares of Quantum Common Stock or Maxtor Common
Stock, as the case may be, and the issuance of such shares of Quantum
Common Stock or Maxtor Common Stock, as the case may be, upon the
conversion of such Securities, except as otherwise specified as
contemplated by Section 301 for the Securities of such series.
SECTION 1402. Exercise of Conversion Privilege.
In order to exercise a conversion privilege, the Holder of a Security
with such a privilege shall surrender such Security to the Company at the
office or agency maintained for that purpose pursuant to Section 1002,
accompanied by a duly executed conversion notice to
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the Company and Maxtor substantially in the form set forth in Section 206
stating that the Holder elects to convert such Security or a specified
portion thereof. Such notice shall also state, if different from the name
and address of such Holder, the name or names (with address) in which the
certificate or certificates for shares of Quantum Common Stock and Maxtor
Common Stock, as the case may be, which shall be issuable on such
conversion shall be issued. Securities surrendered for conversion shall (if
so required by the Company, Maxtor or the Trustee) be duly endorsed by or
accompanied by instruments of transfer in forms satisfactory to the
Company, Maxtor and the Trustee duly executed by the registered Holder or
its attorney duly authorized in writing; and Securities so surrendered for
conversion (in whole or in part) during the period from the close of
business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date (excluding Securities or portions thereof
called for redemption during the period beginning at the close of business
on a Regular Record Date and ending at the opening of business on the first
Business Day after the next succeeding Interest Payment Date, or if such
Interest Payment Date is not a Business Day, the second such Business Day)
shall also be accompanied by payment in funds acceptable to the Company of
an amount equal to the interest payable on such Interest Payment Date on
the principal amount of such Security then being converted, and such
interest shall be payable to such registered Holder notwithstanding the
conversion of such Security, subject to the provisions of Section 307
relating to the payment of Defaulted Interest by the Company. As promptly
as practicable after the receipt of such notice and of any payment required
pursuant to a Board Resolution and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto setting forth the
terms of such series of Security, and the surrender of such Security in
accordance with such reasonable regulations as the Company may prescribe,
the Company and Maxtor shall issue and shall deliver, at the office or
agency at which such Security is surrendered, to such Holder or on its
written order, a certificate or certificates for the number of full shares
of the respective Quantum Common Stock and Maxtor Common Stock issuable
upon the conversion of such Security (or specified portion thereof), in
accordance with the provisions of such Board Resolution, Officers'
Certificate or supplemental indenture, and cash as provided therein in
respect of any fractional share of such Quantum Common Stock or Maxtor
Common Stock, as the case may be, otherwise issuable upon such conversion.
Such conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which such notice and such payment, if
required, shall have been received in proper order for conversion by the
Company and Maxtor and such Security shall have been surrendered as
aforesaid (unless such Holder shall have so surrendered such Security and
shall have instructed the Company and Maxtor to effect the conversion on a
particular date following such surrender and such Holder shall be entitled
to convert such Security on such date, in which case such conversion shall
be deemed to be effected immediately prior to the close of business on such
date) and at such time the rights of the Holder of such Security as such
Security Holder shall cease and the Person or Persons in whose name or
names any certificate or certificates for shares of Quantum Common Stock
and Maxtor Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the shares
represented thereby. Except as set forth above and subject to the final
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paragraph of Section 307, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Securities (or any
part thereof) surrendered for conversion or on account of any dividends on
Quantum Common Stock or Maxtor Common Stock issued upon such conversion.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the unconverted
portion of such Security.
SECTION 1403. No Fractional Shares.
No fractional share of Quantum Common Stock or Maxtor Common Stock
shall be issued upon conversions of Securities of any series. If more than
one Security shall be surrendered for conversion at one time by the same
Holder, the number of full shares which shall be issuable upon conversion
shall be computed on the basis of the aggregate principal amount of the
Securities (or specified portions thereof to the extent permitted hereby)
so surrendered. If, except for the provisions of this Section 1403, any
Holder of a Security or Securities would be entitled to a fractional share
of Quantum Common Stock or Maxtor Common Stock upon the conversion of such
Security or Securities, or specified portions thereof, the Company or
Maxtor, as the case may be, shall pay to such Holder an amount in cash
equal to the current market value of such fractional share computed, (i) if
such Quantum Common Stock or Maxtor Common Stock, as the case may be, is
listed or admitted to unlisted trading privileges on a national securities
exchange or market, on the basis of the last reported sale price regular
way on such exchange or market on the last trading day prior to the date of
conversion upon which such a sale shall have been effected, or (ii) if such
Quantum Common Stock or Maxtor Common Stock, as the case may be, is not at
the time so listed or admitted to unlisted trading privileges on a national
securities exchange or market, on the basis of the average of the bid and
asked prices of such Quantum Common Stock or Maxtor Common Stock, as the
case may be, in the over-the-counter market, on the last trading day prior
to the date of conversion, as reported by the National Quotation Bureau,
Incorporated or similar organization if the National Quotation Bureau,
Incorporated is no longer reporting such information, or if not so
available, the fair market price as determined by the Board of Directors.
For purposes of this Section 1403, "trading day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which either
the Quantum Common Stock or Maxtor Common Stock, as the case may be, is not
traded on the Nasdaq National Market, or if the Quantum Common Stock or
Maxtor Common Stock, as the case may be, is not traded on the Nasdaq
National Market, on the principal exchange or market on which the Quantum
Common Stock or Maxtor Common Stock, as the case may be, is traded or
quoted.
SECTION 1404. Adjustment of the Quantum Conversion Price and the Maxtor
Conversion Price.
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The Quantum Conversion Price and the Maxtor Conversion Price shall be
adjusted for any stock dividends, stock splits, reclassifications,
combinations or similar transactions in accordance with the terms of the
supplemental indenture or Board Resolutions of the Company or Maxtor, as
the case may be, setting forth the terms of the Securities as set forth in
Section 105 of this Supplemental Indenture.
Whenever either the Quantum Conversion Price or the Maxtor Conversion
Price is adjusted, the Company or Maxtor, as the case may be, shall compute
the adjusted Quantum Conversion Price or Maxtor Conversion Price, as the
case may be, in accordance with terms of the applicable Board Resolution of
the Company or Maxtor, as the case may be, or supplemental indenture and
shall prepare an Officers' Certificate of either the Company or Maxtor, as
the case may be, setting forth the adjusted Quantum Conversion Price or
Maxtor Conversion Price, as the case may be, and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate
shall forthwith be filed at each office or agency maintained for the
purpose of conversion of Securities pursuant to Section 1002 and, if
different, with the Trustee. The Company shall with respect to any
adjustment to the Quantum Conversion Price forthwith cause a notice setting
forth the adjusted Quantum Conversion Price to be mailed, first class
postage prepaid, to each Holder of Securities of such series at its address
appearing on the Security Register and to any conversion agent other than
the Trustee. Maxtor shall with respect to any adjustment to the Maxtor
Conversion Price forthwith cause a notice setting forth the adjusted Maxtor
Conversion Price to be mailed, first class postage prepaid, to each Holder
of Securities of such series at its address appearing on the Security
Register and to any conversion agent other than the Trustee.
SECTION 1405. Notice of Certain Corporate Actions.
(i) In the case of the Company, if:
(1) the Company shall declare a dividend (or any other
distribution) on its Quantum Common Stock payable otherwise than in
cash out of its retained earnings (other than a dividend for which
approval of any stockholders of the Company is required) that would
require an adjustment pursuant to Section 1404; or
(2) the Company shall authorize the granting to all or
substantially all of the holders of its Quantum Common Stock of
rights, options or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights (other than any such
grant for which approval of any stockholders of the Company is
required); or
(3) any reclassification of the Quantum Common Stock (other than
a subdivision or combination of its outstanding shares of Quantum
Common Stock, or of any consolidation, merger or share exchange to
which the Company is a party and for which approval of any
stockholders of the Company is required), or of the sale of all or
substantially all of the assets of the Company shall occur; or
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(4) the voluntary or involuntary dissolution, liquidation or
winding up of the Company shall occur;
then the Company shall cause to be filed with the Trustee, and
shall cause to be mailed to all Holders at their last addresses as
they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in Clause (1) or (2) above) prior to the
applicable record date hereinafter specified, a notice stating (i) the
date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants, or, if a record
is not to be taken, the date as of which the holders of Quantum Common
Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined, or (ii) the date on which
such reclassification, consolidation, merger, share exchange, sale,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of
Quantum Common Stock of record shall be entitled to exchange their
shares of Quantum Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share
exchange, sale, dissolution, liquidation or winding up. If at any time
the Trustee shall not be the conversion agent, a copy of such notice
shall also forthwith be filed by the Company with the Trustee.
(ii) In the case of Xxxxxx, if:
(1) Maxtor shall declare a dividend (or any other distribution)
on its Maxtor Common Stock payable otherwise than in cash out of its
retained earnings (other than a dividend for which approval of any
stockholders of Maxtor is required) that would require an adjustment
pursuant to Section 1404; or
(2) Maxtor shall authorize the granting to all or substantially
all of the holders of its Maxtor Common Stock of rights, options or
warrants to subscribe for or purchase any shares of capital stock of
any class or of any other rights (other than any such grant for which
approval of any stockholders of Maxtor is required); or
(3) any reclassification of the Maxtor Common Stock (other than a
subdivision or combination of its outstanding shares of Maxtor Common
Stock, or of any consolidation, merger or share exchange to which
Maxtor is a party and for which approval of any stockholders of Maxtor
is required), or of the sale of all or substantially all of the assets
of Maxtor shall occur; or
(4) the voluntary or involuntary dissolution, liquidation or
winding up of Maxtor shall occur;
then Maxtor shall cause to be filed with the Trustee, and shall
cause to be mailed to all Holders at their last addresses as they
shall appear in the Security Register, at least 20 days (or 10 days in
any case specified in Clause (1) or (2) above) prior to the applicable
record date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such dividend,
distribution, rights,
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options or warrants, or, if a record is not to be taken, the date as
of which the holders of Maxtor Common Stock of record to be entitled
to such dividend, distribution, rights, options or warrants are to be
determined, or (ii) the date on which such reclassification,
consolidation, merger, share exchange, sale, dissolution, liquidation
or winding up is expected to become effective, and the date as of
which it is expected that holders of Maxtor Common Stock of record
shall be entitled to exchange their shares of Maxtor Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale,
dissolution, liquidation or winding up. If at any time the Trustee
shall not be the conversion agent, a copy of such notice shall also
forthwith be filed by Maxtor with the Trustee.
SECTION 1406. Reservation of Shares of Quantum Common Stock and Maxtor
Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Quantum Common Stock,
for the purpose of effecting the conversion of Securities, the full number
of shares of Quantum Common Stock then issuable upon the conversion of all
outstanding Securities that have conversion rights.
Maxtor shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Maxtor Common Stock,
for the purpose of effecting the conversion of Securities, the full number
of shares of Maxtor Common Stock then issuable upon the conversion of all
outstanding Securities that have conversion rights.
SECTION 1407. Payment of Certain Taxes Upon Conversion.
Except as provided in the next sentence, the Company will pay any and
all taxes that may be payable in respect of the issue or delivery of shares
of its Quantum Common Stock on conversion of Securities pursuant hereto.
The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of
shares of its Quantum Common Stock in a name other than that of the Holder
of the Security or Securities to be converted, and no such issue or
delivery shall be made unless and until the person requesting such issue
has paid to the Company the amount of any such tax, or has established, to
the satisfaction of the Company, that such tax has been paid.
Except as provided in the next sentence, Maxtor will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of
its Maxtor Common Stock on conversion of Securities pursuant hereto.
Maxtor shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
its Maxtor Common Stock in a name other than that of the Holder of the
Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the person requesting such issue has paid to
Maxtor the amount of any such tax, or has established, to the satisfaction
of Maxtor, that such tax has been paid.
SECTION 1408. Nonassessability.
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The Company covenants that all shares of its Quantum Common Stock
which may be issued upon conversion of Securities will upon issue in
accordance with the terms hereof be duly and validly issued and fully paid
and nonassessable.
Maxtor covenants that all shares of its Maxtor Common Stock which may
be issued upon conversion of Securities will upon issue in accordance with
the terms hereof be duly and validly issued and fully paid and
nonassessable.
SECTION 1409. Provision in Case of Consolidation, Merger or Sale of
Assets.
(i) With respect to the Company, if any of the following events
occur, namely (i) any reclassification or change of the
outstanding shares of Quantum Common Stock (other than a
subdivision or combination of Quantum Common Stock to which
Section 1404 applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result
of which holders of Quantum Common Stock shall be entitled to
receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Quantum Common
Stock, or (iii) any sale or conveyance of the properties and
assets of the Company as, or substantially as, an entirety to any
other corporation as a result of which holders of Quantum Common
Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in
exchange for such Quantum Common Stock, then the Company and
Maxtor (as required) or the successor or purchasing corporation,
as the case may be, shall execute with the Trustee a supplemental
indenture (which shall comply with the Trust Indenture Act as in
force at the date of execution of such supplemental indenture)
providing that the Holder of each Security of a series then
Outstanding that is convertible into Quantum Common Stock of the
Company shall have the right thereafter to convert such Security
into the kind and amount of shares of stock and other securities
or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination,
sale or conveyance by a holder of a number of shares of Quantum
Common Stock issuable upon conversion of such Securities
(assuming, for such purposes, a sufficient number of authorized
shares of Quantum Common Stock is available to convert all such
Securities) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming
such holder of Quantum Common Stock did not exercise his rights
of election, if any, as to the kind or amount of securities, cash
or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance (provided that, if the
kind or amount of securities, cash or other property receivable
upon such consolidation, merger, statutory exchange, sale or
conveyance is not the same for each share of Quantum Common Stock
in respect of which such rights of election shall not have been
exercised ("nonelecting share")), then for the purposes of this
Section 1409 the kind and amount of securities, cash or other
property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance for each
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non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the nonelecting shares.
(ii) With respect to Maxtor, if any of the following events occur,
namely (i) any reclassification or change of the outstanding
shares of Maxtor Common Stock (other than a subdivision or
combination of Maxtor Common Stock to which Section 1404
applies), (ii) any consolidation, merger or combination of Maxtor
with another corporation as a result of which holders of Maxtor
Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in
exchange for such Maxtor Common Stock, or (iii) any sale or
conveyance of the properties and assets of Maxtor as, or
substantially as, an entirety to any other corporation as a
result of which holders of Maxtor Common Stock shall be entitled
to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Maxtor
Common Stock then the Company and Maxtor or the Company and the
successor or purchasing corporation, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall
comply with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) providing that the
Holder of each Security of a series then Outstanding that is
convertible into Maxtor Common Stock shall have the right
thereafter to convert such Security into the kind and amount of
shares of stock and other securities or property or assets
(including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a
holder of a number of shares of Maxtor Common Stock issuable upon
conversion of such Securities (assuming, for such purposes, a
sufficient number of authorized shares of Maxtor Common Stock
available to convert all such Securities) immediately prior to
such reclassification, change, consolidation, merger,
combination, sale or conveyance assuming such holder of Maxtor
Common Stock did not exercise his rights of election, if any, as
to the kind or amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange,
sale or conveyance (provided that, if the kind or amount of
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securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is
not the same for each share of Maxtor Common Stock in respect of
which such rights of election shall not have been exercised
("Maxtor nonelecting share")), then for the purposes of this
Section 1409 the kind and amount of securities, cash or other
property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance for each Maxtor non-electing share
shall be deemed to be the kind and amount so receivable per share
by a plurality of the Maxtor nonelecting shares.
(iii) Such supplemental indenture in the event of either (i) or (ii)
above shall provide for adjustments which, for events subsequent
to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Article Fourteen or in accordance with the
terms
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of the supplemental indenture or Board Resolutions of the Company
or Maxtor, as the case may be, setting forth the terms of such
adjustments. The above provisions of this Section 1409 shall
similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases. Notice of the execution
of such a supplemental indenture shall be given by the Company to
the Holder of each Security of a series that is convertible into
Quantum Common Stock or Maxtor Common Stock as provided in
Section 106 promptly upon such execution.
Neither the Trustee nor any conversion agent, if any, shall be
under any responsibility to determine the correctness of any
provisions contained in any such supplemental indenture relating
either to the kind or amount of shares of stock or other
securities or property or cash receivable by Holders of
Securities of a series convertible into Quantum Common Stock and
Maxtor Common Stock upon the conversion of their Securities after
any such consolidation, merger, conveyance, transfer, sale or
lease or to any such adjustment, but may accept as conclusive
evidence of the correctness of any such provisions, and shall be
protected in relying upon, an Opinion of Counsel with respect
thereto, which the Company or Maxtor, as applicable, shall cause
to be furnished to the Trustee upon request.
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SECTION 1410. Duties of Trustee Regarding Conversion.
Neither the Trustee nor any conversion agent shall at any time be
under any duty or responsibility to any Holder of Securities that are
convertible into Quantum Common Stock and Maxtor Common Stock to determine
whether any facts exist which may require any adjustment of the Quantum
Conversion Price or the Maxtor Conversion Price, as the case may be, or
with respect to the nature or extent of any such adjustment when made, or
with respect to the method employed, whether herein or in any supplemental
indenture, any resolutions of the Board of Directors of the Company or
Maxtor, as the case may be, or written instrument executed by one or more
officers of the Company provided to be employed in making the same. Neither
the Trustee nor any conversion agent shall be accountable with respect to
the validity or value (or the kind or amount) of any shares of Quantum
Common Stock or Maxtor Common Stock, or of any securities or property,
which may at any time be issued or delivered upon the conversion of any
Securities and neither the Trustee nor any conversion agent makes any
representation with respect thereto. Subject to the provisions of Section
601, neither the Trustee nor any conversion agent shall be responsible for
any failure of either the Company or Maxtor to issue, transfer or deliver
any shares of their respective Quantum Common Stock or Maxtor Common Stock
or stock certificates or other securities or property upon the surrender of
any Security for the purpose of conversion or to comply with any of the
covenants of the Company and Maxtor contained in this Article Fourteen or
in the applicable supplemental indenture, resolutions of the Board of
Directors of the Company or Maxtor, as the case may be, or written
instrument executed by one or more duly authorized officers of the Company
or Maxtor, as the case may be.
SECTION 1411. Repayment of Certain Funds Upon Conversion.
Any funds which at any time shall have been deposited by the Company
or on its behalf with the Trustee or any other paying agent for the purpose
of paying the principal of, and premium, if any, and interest, if any, on
any of the Securities (including, but not limited to funds deposited
pursuant to Article Thirteen hereof) and which shall not be required for
such purposes because of the conversion of such Securities as provided in
this Article Fourteen shall after such conversion be repaid to the Company
by the Trustee upon the Company's written request.
Section 103 Amendments to Section 201 of First Supplemental Indenture.
Section 201 of the First Supplemental Indenture, as amended by Section 201
of the Second Supplemental Indenture, is hereby amended by deleting the
definitions of DSS Conversion Price and HDD Conversion Price and by adding the
following definitions in the appropriate alphabetized order:
"Maxtor Conversion Price" shall have the meaning specified in Section
501 of this Supplemental Indenture.
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"Quantum Conversion Price" has the meaning specified in Section 501 of
this Supplemental Indenture.
Section 104 Amendment to Section 401 of First Supplemental Indenture.
Section 401 of the First Supplemental Indenture, as amended by Section 104
of the Second Supplemental Indenture, is hereby amended by replacing the proviso
beginning in the fourth line of the first paragraph of Section 401 with the
following:
provided, however, that the Notes will not be redeemable following August
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1, 1999, and before August 1, 2001, unless the fair market value of the
Quantum Common Stock and Maxtor Common Stock issuable upon the conversion
of $1,000 of principal amount of Notes, based on the Closing Prices for at
least 20 Trading Days within a period of 30 consecutive Trading Days ending
within five Trading Days prior to the notice of redemption, exceeds $1,250
(using the same Trading Days for determining the Closing Prices of both the
Quantum Common Stock and the Maxtor Common Stock).
Section 105 Amendment to Article Five of First Supplemental Indenture.
Article Five of the First Supplemental Indenture, as amended by Section 105
of the Second Supplemental Indenture, is hereby replaced in its entirety with
the following:
Section 501 Conversion Right
Subject to and upon compliance with the provisions of this Article
Five, each Holder shall have the right to convert any $1000 of principal of
Notes held by such Holder into the number of shares of Quantum Common Stock
obtained by dividing $666.67 by the Quantum Conversion Price and into the
number of shares of Maxtor Common Stock obtained by dividing $333.33 by the
Maxtor Conversion Price. Such conversion right shall commence on August 1,
1997 and expire at the close of business on August 1, 2004, subject, in the
case of the conversion of any Global Security, to any applicable book-entry
procedures of the Depositary therefor. In case a Note is called for
redemption at the election of the Company, such conversion right in respect
of the Note shall expire at the close of business on the Business Day next
preceding the Redemption Date. A Note in respect of which a Holder is
exercising its option to require redemption upon a Fundamental Change may
be converted only if such Holder withdraws its election to exercise its
option in accordance with Article Six hereof.
The initial Quantum Conversion Price shall be $30.883 and the initial
Maxtor Conversion Price shall be $20.318, and each shall be adjusted in
certain instances as provided in this Article Five.
Section 502 Adjustment of Conversion Price.
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The Quantum Conversion Price shall be subject to adjustment from time to
time as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Quantum Common Stock in shares of
Quantum Common Stock, the Quantum Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Quantum Conversion Price by a fraction of which the
numerator shall be the number of shares of Quantum Common Stock outstanding at
the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. The Company will not pay any dividend or
make any distribution on shares of Quantum Common Stock held in the treasury of
the Company. If any dividend or distribution of the type described in this
Section 502(a) is declared but not so paid or made, the Quantum Conversion Price
shall again be adjusted to the Quantum Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Quantum Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Quantum Common Stock at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Quantum Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Quantum Conversion Price in effect immediately prior to the date fixed for
determination of stockholders entitled to receive such rights or warrants by a
fraction of which the numerator shall be the number of shares of Quantum Common
Stock outstanding at the close of business on the date fixed for determination
of stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Quantum Common Stock outstanding on
the date fixed for determination of stockholders entitled to receive such rights
and warrants plus the total number of additional shares of Quantum Common Stock
offered for subscription or purchase. Such adjustment shall be successively
made whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following the
date fixed for determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Quantum Common Stock are not delivered
after the expiration of such rights or warrants, the Quantum Conversion Price
shall be readjusted to the Quantum Conversion Price which would then be in
effect had the
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adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Quantum Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Quantum Conversion Price shall again be adjusted to be the Quantum Conversion
Price which would then be in effect if such date fixed for the determination of
stockholders entitled to receive such rights or warrants had not been fixed. In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase shares of Quantum Common Stock at less than such Current Market
Price, and in determining the aggregate offering price of such shares of Quantum
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors.
(c) In case outstanding shares of Quantum Common Stock shall be
subdivided into a greater number of shares of Quantum Common Stock, the Quantum
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and conversely, in case outstanding shares of Quantum Common Stock
shall be combined into a smaller number of shares of Quantum Common Stock, the
Quantum Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Quantum Common Stock shares of any class of capital stock
of the Company (other than any dividends or distributions to which Section
502(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 502(b),
and excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 502(a) (any of the foregoing hereinafter in this Section
502(d) called the "Distribution Securities")), then, in each such case (unless
the Company elects to reserve such Distribution Securities for distribution to
the Holders upon the conversion of the Notes so that any such Holder converting
Notes will receive upon such conversion, in addition to the shares of Quantum
Common Stock to which such Holder is entitled, the amount and kind of such
Distribution Securities which such Holder would have received if such Holder had
converted its Notes immediately prior to the Distribution Record Date (as
defined in Section 504(c) for such distribution of the Distribution
Securities)), the Quantum Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Quantum Conversion
Price in effect on the Distribution Record Date with respect to such
distribution by a fraction of which the numerator shall be the Current Market
Price per share of the Quantum Common Stock on such Distribution Record Date
less the fair market value (as determined by
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the Board of Directors, whose determination shall be conclusive, and described
in a Board Resolution) on the Distribution Record Date of the portion of the
Distribution Securities so distributed applicable to one share of Quantum Common
Stock and the denominator shall be the Current Market Price per share of the
Quantum Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following such Distribution Record Date;
provided, however, that in the event the then fair market value (as so
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determined) of the portion of the Distribution Securities so distributed
applicable to one share of Quantum Common Stock is equal to or greater than the
Current Market Price of the Quantum Common Stock on the Distribution Record
Date, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive upon conversion the amount of
Distribution Securities such Holder would have received had such Holder
converted each Note on the Distribution Record Date. In the event that such
dividend or distribution is not so paid or made, the Quantum Conversion Price
shall again be adjusted to be the Quantum Conversion Price which would then be
in effect if such dividend or distribution had not been declared. If the Board
of Directors determines the fair market value of any distribution for purposes
of this Section 502(d) by reference to the actual or when issued trading market
for any securities, it must in doing so consider the prices in such market over
the same period used in computing the Current Market Price of the Quantum Common
Stock.
Each share of Quantum Common Stock upon conversion of Notes shall be
entitled to receive the appropriate number of Rights, if any, and the
certificates representing the Quantum Common Stock issued upon such conversion
shall bear such legends, if any, in each case as provided by and subject to the
terms of the Rights Agreement as in effect at the time of such conversion. If
the Rights are separated from the Quantum Common Stock in accordance with the
provisions of the Rights Agreement such that the Holders would thereafter not be
entitled to receive any such Rights in respect to the Quantum Common Stock,
issuable upon conversion of such Notes, the Quantum Conversion Price will be
adjusted as provided in this Section 502(d) on the separation date; provided
--------
that if such Rights expire, terminate or are redeemed by the Company, the
Quantum Conversion Price shall again be adjusted to be the Quantum Conversion
Price which would then be in effect if such separation had not occurred. In
lieu of any such adjustment, the Company may amend the Rights Agreement to
provide that upon conversion of the Notes the Holders will receive, in addition
to the Quantum Common Stock issuable upon such conversion, the Rights which
would have attached to such shares of Quantum Common Stock if the Rights had not
become separated from the Quantum Common Stock pursuant to the provisions of the
Rights Agreement.
Rights or warrants distributed by the Company to all holders of
Quantum Common Stock entitling the holders thereof to subscribe for or purchase
shares of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger
-16-
Event"): (i) are deemed to be transferred with such shares of Quantum Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Quantum Common Stock, shall be deemed not to have been distributed
for purposes of this Section 502 (and no adjustment to the Quantum Conversion
Price under this Section 502 will be required) until the occurrence of the
earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment (if any is required) to the
Quantum Conversion Price shall be made under this Section 502(d). If any such
right or warrant, including any such existing rights or warrants distributed
prior to the date of this Supplemental Indenture, are subject to events, upon
the occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Quantum Conversion Price under this
Section 502 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Quantum Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Quantum Common Stock with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Quantum Common Stock as of the date
of such redemption or repurchase, and (2) in the case of such rights or warrants
which shall have expired or been terminated without exercise by any holders
thereof, the Quantum Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
For purposes of this Section 502(d) and Sections 502(a) and (b), any
dividend or distribution to which this Section 502(d) is applicable that also
includes shares of Quantum Common Stock, or rights or warrants to subscribe for
or purchase shares of Quantum Common Stock (or both), shall be deemed instead to
be (1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Quantum Common Stock or rights
or warrants (and any Quantum Conversion Price reduction required by this Section
502(d) with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares of Quantum
Common Stock or such rights or warrants (and any further Quantum Conversion
Price reduction required by Sections 502(a) and (b) with respect to such
dividend or distribution shall then be made), except (A) the Distribution Record
Date of such dividend or distribution shall be substituted as "the date fixed
for the determination of stockholders entitled to receive such dividend
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or other distribution" and "the date fixed for such determination" within the
meaning of Sections 502(a) and (b) and (B) any shares of Quantum Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Section 502(a).
(e) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Quantum Common Stock cash (excluding (x) any quarterly
cash dividend on the Quantum Common Stock to the extent the aggregate cash
dividend per share of Quantum Common Stock in any fiscal quarter does not exceed
the greater of (A) the amount per share of Quantum Common Stock of the next
preceding quarterly cash dividend on the Quantum Common Stock to the extent that
such preceding quarterly dividend did not require any adjustment of the Quantum
Conversion Price pursuant to this Section 502(e) (as adjusted to reflect
subdivisions or combinations of the Quantum Common Stock), and (B) 3.75% of the
arithmetic average of the Closing Price (determined as set forth in Section
504(a)) during the ten Trading Days (as defined in Section 504(e)) immediately
prior to the date of declaration of such dividend, and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary), then, in such case, the Quantum
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Quantum Conversion Price in effect immediately
prior to the close of business on such Distribution Record Date by a fraction of
which the numerator shall be the Current Market Price of the Quantum Common
Stock on the Distribution Record Date less the amount of cash so distributed
(and not excluded as provided above) applicable to one share of Quantum Common
Stock and the denominator shall be such Current Market Price of the Quantum
Common Stock, such reduction to be effective immediately prior to the opening of
business on the day following the Distribution Record Date; provided, however,
-------- -------
that in the event the portion of the cash so distributed applicable to one share
of Quantum Common Stock is equal to or greater than the Current Market Price of
the Quantum Common Stock on the Distribution Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder shall
have the right to receive upon conversion the amount of cash such Holder would
have received had such Holder converted each Note on the Distribution Record
Date. In the event that such dividend or distribution is not so paid or made,
the Quantum Conversion Price shall again be adjusted to be the Quantum
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If any adjustment is required to be made as set forth in
this Section 502(e) as a result of a distribution that is a quarterly dividend,
such adjustment shall be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant hereto. If an adjustment is required to be made as set forth in this
Section 502(e) above as a result of a distribution that is not a quarterly
dividend, such adjustment shall be based upon the full amount of the
distribution.
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(f) In case a tender or exchange offer made by the Company or any
Subsidiary of the Company for all or any portion of the Quantum Common Stock
shall expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per share of
Quantum Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that as of the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended) exceeds the Current Market Price of the Quantum Common Stock on the
Trading Day next succeeding the Expiration Time, the Quantum Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Quantum Conversion Price in effect immediately prior to the
Expiration Time by a fraction of which the numerator shall be the number of
shares of Quantum Common Stock outstanding (including any tendered or exchanged
shares) on the Expiration Time multiplied by the Current Market Price of the
Quantum Common Stock on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Quantum Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the Current Market Price of the Quantum Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time. In the event that the Company is obligated to purchase shares
pursuant to any such tender or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Quantum Conversion Price shall again be adjusted to
be the Quantum Conversion Price which would then be in effect if such tender or
exchange offer had not been made.
(g) In case of a tender or exchange offer made by a Person other than
the Company or any Subsidiary for an amount which increases the offeror's
ownership of Quantum Common Stock to more than 25% of the aggregate amount of
Quantum Common Stock outstanding and shall involve the payment by such Person of
consideration per share of Quantum Common Stock having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a Board Resolution) at the last time (the "Offer Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Current Market Price of
the Quantum Common Stock on the Trading Day next succeeding the Offer Expiration
Time, and in which, as of the Offer Expiration Time the Board of Directors is
not recommending rejection of the offer, the Quantum Conversion Price shall be
reduced
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so that the same shall equal the price determined by multiplying the Quantum
Conversion Price in effect immediately prior to the Offer Expiration Time by a
fraction of which the numerator shall be the number of shares of Quantum Common
Stock outstanding (including any tendered or exchanged shares) on the Offer
Expiration Time multiplied by the Current Market Price of the Quantum Common
Stock on the Trading Day next succeeding the Offer Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Offer Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Quantum Common Stock outstanding (less any Accepted
Purchased Shares) on the Offer Expiration Time and the Current Market Price of
the Quantum Common Stock on the Trading Day next succeeding the Offer Expiration
Time, such reduction to become effective immediately prior to the opening of
business on the day following the Offer Expiration Time. In the event that such
Person is obligated to purchase shares pursuant to any such tender or exchange
offer, but such Person is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Quantum Conversion
Price shall again be adjusted to be the Quantum Conversion Price which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 502(g)
shall not be made if, as of the Offer Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article Eight of the Indenture.
Section 503 Adjustment of Maxtor Conversion Price.
The Maxtor Conversion Price shall be subject to adjustment from time to
time as follows:
(a) In case Maxtor shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Maxtor Common Stock in shares of
Maxtor Common Stock, the Maxtor Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Maxtor Conversion Price by a fraction of which the
numerator shall be the number of shares of Maxtor Common Stock outstanding at
the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. The Company will not pay any dividend or
make any distribution on shares of Maxtor Common Stock held in the treasury of
Maxtor. If any dividend or distribution of the type
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described in this Section 503(a) is declared but not so paid or made, the Maxtor
Conversion Price shall again be adjusted to the Maxtor Conversion Price which
would then be in effect if such dividend or distribution had not been declared.
(b) In case Maxtor shall issue rights or warrants to all holders of
its outstanding shares of Maxtor Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Maxtor Common Stock at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Maxtor Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Maxtor Conversion Price in effect immediately prior to the date fixed for
determination of stockholders entitled to receive such rights or warrants by a
fraction of which the numerator shall be the number of shares of Maxtor Common
Stock outstanding at the close of business on the date fixed for determination
of stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Maxtor Common Stock outstanding on
the date fixed for determination of stockholders entitled to receive such rights
and warrants plus the total number of additional shares of Maxtor Common Stock
offered for subscription or purchase. Such adjustment shall be successively
made whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following the
date fixed for determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Maxtor Common Stock are not delivered
after the expiration of such rights or warrants, the Maxtor Conversion Price
shall be readjusted to the Maxtor Conversion Price which would then be in effect
had the adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Maxtor Common Stock
actually delivered. In the event that such rights or warrants are not so
issued, the Maxtor Conversion Price shall again be adjusted to be the Maxtor
Conversion Price which would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Maxtor Common Stock at less than
such Current Market Price, and in determining the aggregate offering price of
such shares of Maxtor Common Stock, there shall be taken into account any
consideration received by Maxtor for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors of
Maxtor.
(c) In case outstanding shares of Maxtor Common Stock shall be
subdivided into a greater number of shares of Maxtor Common Stock, the Maxtor
Conversion Price in effect at the opening of business on the day following the
day
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upon which such subdivision becomes effective shall be proportionately reduced,
and conversely, in case outstanding shares of Maxtor Common Stock shall be
combined into a smaller number of shares of Maxtor Common Stock, the Maxtor
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(d) In case Maxtor shall, by dividend or otherwise, distribute to all
holders of its Maxtor Common Stock shares of any class of capital stock of
Maxtor (other than any dividends or distributions to which Section 503(a)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 503(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 503(a) (any of the foregoing hereinafter in this Section 503(d) called
the "Maxtor Distribution Securities")), then, in each such case (unless Maxtor
elects to reserve such Maxtor Distribution Securities for distribution to the
Holders upon the conversion of the Notes so that any such Holder converting
Notes will receive upon such conversion, in addition to the shares of Maxtor
Common Stock to which such Holder is entitled, the amount and kind of such
Maxtor Distribution Securities which such Holder would have received if such
Holder had converted its Notes immediately prior to the Distribution Record Date
(as defined in Section 504(c) for such distribution of the Maxtor Distribution
Securities)), the Maxtor Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Maxtor Conversion
Price in effect on the Distribution Record Date with respect to such
distribution by a fraction of which the numerator shall be the Current Market
Price per share of the Maxtor Common Stock on such Distribution Record Date less
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the Maxtor
Board of Directors) on the Distribution Record Date of the portion of the Maxtor
Distribution Securities so distributed applicable to one share of Maxtor Common
Stock and the denominator shall be the Current Market Price per share of the
Maxtor Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Distribution Record Date;
provided, however, that in the event the then fair market value (as so
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determined) of the portion of the Maxtor Distribution Securities so distributed
applicable to one share of Maxtor Common Stock is equal to or greater than the
Current Market Price of the Maxtor Common Stock on the Distribution Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each Holder shall have the right to receive upon conversion the amount of Maxtor
Distribution Securities such Holder would have received had such Holder
converted each Note on the Distribution Record Date. In the event that such
dividend or distribution is not so paid or made, the Maxtor Conversion Price
shall again be adjusted to be the Maxtor Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
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If the Board of Directors of Maxtor determines the fair market value of any
distribution for purposes of this Section 503(d) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price of the Maxtor Common Stock.
Rights or warrants distributed by Maxtor to all holders of Maxtor Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Maxtor's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events ("Maxtor
Trigger Event"): (i) are deemed to be transferred with such shares of Maxtor
Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of
future issuances of Maxtor Common Stock (such rights or warrants the "Maxtor
Rights"), shall be deemed not to have been distributed for purposes of this
Section 503 (and no adjustment to the Maxtor Conversion Price under this Section
503 will be required) until the occurrence of the earliest Maxtor Trigger Event,
whereupon such Maxtor Rights shall be deemed to have been distributed and an
appropriate adjustment (if any is required) to the Maxtor Conversion Price shall
be made under this Section 503(d). In lieu of any such adjustment, Maxtor may
provide in the agreement that governs the Maxtor Rights (the "Maxtor Rights
Agreement") that upon conversion of the Notes the Holders will receive, in
addition to the Maxtor Common Stock issuable upon such conversion, the Maxtor
Rights which would have attached to such shares of Maxtor Common Stock if the
Maxtor Rights had not become separated from the Maxtor Common Stock pursuant to
the provisions of the Maxtor Rights Agreement. Each share of Maxtor Common Stock
upon conversion of Notes shall be entitled to receive the appropriate number of
Maxtor Rights, if any, and the certificates representing the Maxtor Common Stock
issued upon such conversion shall bear such legends, if any, in each case as
provided by and subject to the terms of the Maxtor Rights Agreement as in effect
at the time of such conversion. If any Maxtor Rights are subject to events, upon
the occurrence of which such rights the Maxtor Rights become exercisable to
purchase different securities, evidences of indebtedness or other assets, then
the date of the occurrence of any and each such event shall be deemed to be the
date of distribution and record date with respect to new rights or warrants with
such Maxtor Rights (and a termination or expiration of the existing Maxtor
Rights without exercise by any of the holders thereof). In addition, in the
event of any distribution (or deemed distribution) of Maxtor Rights, or any
Maxtor Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Maxtor Conversion Price under
this Section 503 was made, (1) in the case of any such Maxtor Rights which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Maxtor Conversion Price shall be readjusted upon such final redemption or
-23-
repurchase to give effect to such distribution or Maxtor Trigger Event, as the
case may be, as though it were a cash distribution, equal to the per share
redemption or repurchase price received by a holder or holders of Maxtor Common
Stock with respect to such Maxtor Rights (assuming such holder had retained such
Maxtor Rights ), made to all holders of Maxtor Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such Maxtor Rights which
shall have expired or been terminated without exercise by any holders thereof,
the Maxtor Conversion Price shall be readjusted as if such Maxtor Rights had not
been issued.
For purposes of this Section 503(d) and Sections 503(a) and (b), any
dividend or distribution to which this Section 503(d) is applicable that also
includes shares of Maxtor Common Stock, or rights or warrants to subscribe for
or purchase shares of Maxtor Common Stock (or both), shall be deemed instead to
be (1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Maxtor Common Stock or rights
or warrants (and any Maxtor Conversion Price reduction required by this Section
503(d) with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares of Maxtor
Common Stock or such rights or warrants (and any further Maxtor Conversion Price
reduction required by Sections 503(a) and (b) with respect to such dividend or
distribution shall then be made), except (A) the Distribution Record Date of
such dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution" and "the date fixed for such determination" within the meaning of
Sections 503(a) and (b) and (B) any shares of Maxtor Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of Section
503(a).
(e) In case Maxtor shall, by dividend or otherwise, distribute to all
holders of its Maxtor Common Stock cash (excluding (x) any quarterly cash
dividend on the Maxtor Common Stock to the extent the aggregate cash dividend
per share of Maxtor Common Stock in any fiscal quarter does not exceed the
greater of (A) the amount per share of Maxtor Common Stock of the next preceding
quarterly cash dividend on the Maxtor Common Stock to the extent that such
preceding quarterly dividend did not require any adjustment of the Maxtor
Conversion Price pursuant to this Section 503(e) (as adjusted to reflect
subdivisions or combinations of the Maxtor Common Stock), and (B) 3.75% of the
arithmetic average of the Closing Price (determined as set forth in Section
504(a)) during the ten Trading Days (as defined in Section 504(e)) immediately
prior to the date of declaration of such dividend, and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up of
Maxtor, whether voluntary or involuntary), then, in such case, the Maxtor
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Maxtor Conversion Price in effect immediately
prior to the close of business on such Distribution Record Date by a fraction of
which the numerator
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shall be the Current Market Price of the Maxtor Common Stock on the Distribution
Record Date less the amount of cash so distributed (and not excluded as provided
above) applicable to one share of Maxtor Common Stock and the denominator shall
be such Current Market Price of the Maxtor Common Stock, such reduction to be
effective immediately prior to the opening of business on the day following the
Distribution Record Date; provided, however, that in the event the portion of
-------- -------
the cash so distributed applicable to one share of Maxtor Common Stock is equal
to or greater than the Current Market Price of the Maxtor Common Stock on the
Distribution Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted each Note on the Distribution Record Date. In the event that such
dividend or distribution is not so paid or made, the Maxtor Conversion Price
shall again be adjusted to be the Maxtor Conversion Price which would then be in
effect if such dividend or distribution had not been declared. If any adjustment
is required to be made as set forth in this Section 503(e) as a result of a
distribution that is a quarterly dividend, such adjustment shall be based upon
the amount by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant hereto. If an adjustment is required
to be made as set forth in this Section 503(e) above as a result of a
distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution.
(f) In case a tender or exchange offer made by Maxtor or any Maxtor
Subsidiary for all or any portion of the Maxtor Common Stock shall expire and
such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to Maxtor stockholders of consideration per share of Maxtor
Common Stock having a fair market value (as determined by the Board of Directors
of Maxtor, whose determination shall be conclusive and described in a resolution
of the Board of Directors of Maxtor) that as of the last time (the "Maxtor
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) exceeds the Current Market Price of the
Maxtor Common Stock on the Trading Day next succeeding the Maxtor Expiration
Time, the Maxtor Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Maxtor Conversion Price in effect
immediately prior to the Maxtor Expiration Time by a fraction of which the
numerator shall be the number of shares of Maxtor Common Stock outstanding
(including any tendered or exchanged shares) on the Maxtor Expiration Time
multiplied by the Current Market Price of the Maxtor Common Stock on the Trading
Day next succeeding the Maxtor Expiration Time and the denominator shall be the
sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Maxtor Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Maxtor Purchased Shares") and (y) the product of the number of
-25-
shares of Maxtor Common Stock outstanding (less any Maxtor Purchased Shares) on
the Maxtor Expiration Time and the Current Market Price of the Maxtor Common
Stock on the Trading Day next succeeding the Maxtor Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Maxtor Expiration Time. In the event that Maxtor is
obligated to purchase shares pursuant to any such tender or exchange offer, but
Maxtor is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Maxtor Conversion Price shall
again be adjusted to be the Maxtor Conversion Price which would then be in
effect if such tender or exchange offer had not been made.
(g) In case of a tender or exchange offer made by a Person other than
Maxtor or any Maxtor Subsidiary for an amount which increases the offeror's
ownership of Maxtor Common Stock to more than 25% of the aggregate Maxtor Common
Stock outstanding and shall involve the payment by such Person of consideration
per share of Maxtor Common Stock having a fair market value (as determined by
the Board of Directors of Maxtor, whose determination shall be conclusive, and
described in a resolution of the Board of Directors of Maxtor) at the last time
(the "Maxtor Offer Expiration Time") tenders or exchanges may be made pursuant
to such tender or exchange offer (as it shall have been amended) that exceeds
the Current Market Price of the Maxtor Common Stock on the Trading Day next
succeeding the Maxtor Offer Expiration Time, and in which, as of the Maxtor
Offer Expiration Time the Board of Directors of Maxtor is not recommending
rejection of the offer, the Maxtor Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Maxtor Conversion Price
in effect immediately prior to the Maxtor Offer Expiration Time by a fraction of
which the numerator shall be the number of shares of Maxtor Common Stock
outstanding (including any tendered or exchanged shares) on the Maxtor Offer
Expiration Time multiplied by the Current Market Price of the Maxtor Common
Stock on the Trading Day next succeeding the Maxtor Offer Expiration Time and
the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Maxtor Offer Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Maxtor Accepted Purchased Shares") and (y)
the product of the number of shares of Maxtor Common Stock outstanding (less any
Maxtor Accepted Purchased Shares) on the Maxtor Offer Expiration Time and the
Current Market Price of the Maxtor Common Stock on the Trading Day next
succeeding the Maxtor Offer Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Maxtor
Offer Expiration Time. In the event that such Person is obligated to purchase
shares pursuant to any such tender or exchange offer, but such Person is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Maxtor Conversion Price shall again be
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adjusted to be the Maxtor Conversion Price which would then be in effect if such
tender or exchange offer had not been made. Notwithstanding the foregoing, the
adjustment described in this Section 503(g) shall not be made if, as of the
Maxtor Offer Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause Maxtor to engage in any transaction
described in Article Eight of the Indenture.
Section 504 Certain Definitions. For purposes of this Article Five, the
following terms shall have the meaning indicated:
(a) "Closing Price" with respect to any securities on any day shall
mean the closing sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the New York Stock Exchange, or, if such
security is not listed or admitted to trading on such exchange, on the principal
national securities exchange or quotation system on which such security is
quoted or listed or admitted to trading, or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors of the Company or
Maxtor, as the case may be, for that purpose, or a price determined in good
faith by the Board of Directors of the Company or Maxtor, as the case may be,
or, to the extent permitted by applicable law, a duly authorized committee
thereof, whose determination shall be conclusive.
(b) "Current Market Price" shall mean the average of the daily Closing
Prices per share of Quantum Common Stock or Maxtor Common Stock as applicable,
for the ten consecutive Trading Days immediately prior to the date in question;
provided, however, that (1) if the "ex" date (as hereinafter defined) for any
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event (other than the issuance or distribution or Fundamental Change requiring
such computation) that requires an adjustment to the Quantum Conversion Price or
the Maxtor Conversion Price, as the case may be, pursuant to Section 502 or
Section 503, as applicable, occurs during such ten consecutive Trading Days, the
Closing Price for each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the Quantum Conversion Price or the Maxtor Conversion Price, as the case
may be, is so required to be adjusted as a result of such other event, (2) if
the "ex" date for any event (other than the issuance, distribution or
Fundamental Change requiring such computation) that requires an adjustment to
the Quantum Conversion Price or the Maxtor Conversion Price pursuant to Section
502 or Section 503, as applicable, occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the
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"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the Quantum Conversion Price or
the Maxtor Conversion Price, as the case may be, is so required to be adjusted
as a result of such other event, and (3) if the "ex" date for the issuance,
distribution or Fundamental Change requiring such computation is prior to the
day in question, after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors of the
Company or Maxtor, as the case may be, or, to the extent permitted by applicable
law, a duly authorized committee thereof in a manner consistent with any
determination of such value for purposes of Section 502(d), (f) or (g), in the
case of Quantum Common Stock, or Section 503 (d), (f) or (g), in the case of
Maxtor Common Stock, whose determination shall be conclusive and described in a
resolution of the Board of Directors of the Company or Maxtor, as the case may
be, or such duly authorized committee thereof, as the case may be) of the
evidences of indebtedness, shares of capital stock or assets being distributed
applicable to one share of Quantum Common Stock or Maxtor Common Stock, as the
case may be, as of the close of business on the day before such "ex" date. For
purposes of any computation under Section 502(f) or (g) in the case of Quantum
Common Stock, or 503(f) or (g) in the case of Maxtor Common Stock, the Current
Market Price on any date shall be deemed to be the average of the daily Closing
Prices per share of Quantum Common Stock or Maxtor Common Stock, as the case may
be, for such day and the next two succeeding Trading Days; provided, however,
-------- -------
that if the "ex" date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the Quantum
Conversion Price or Maxtor Conversion Price pursuant to Section 502 or Section
503 occurs on or after the Expiration Time, Offer Expiration Time, Maxtor
Expiration Time or Maxtor Offer Expiration Time, as the case may be, for the
tender or exchange offer requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Quantum Conversion Price or the Maxtor
Conversion Price, as the case may be, is so required to be adjusted as a result
of such other event. For purposes of this paragraph, the term "ex" date, (1)
when used with respect to any issuance or distribution, means the first date on
which the Quantum Common Stock or Maxtor Common Stock, as the case may be,
trades regular way on the relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or combination of
shares of Quantum Common Stock or Maxtor Common Stock, as the case may be, means
the first date on which the Quantum Common Stock or Maxtor Common Stock, as the
case may be, trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective, and (3) when
used with respect to any tender or exchange offer means the first date on which
the Quantum Common Stock or Maxtor Common Stock, as the case may be, trades
regular way on such exchange
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or in such market after the Expiration Time, Offer Expiration Time, Maxtor
Expiration Time or Maxtor Offer Expiration Time, as the case may be, of such
offer.
(c) "Distribution Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Quantum Common Stock or Maxtor Common Stock, as the case may be, have the right
to receive any cash, securities or other property or in which such Quantum
Common Stock or Maxtor Common Stock, as the case may be, (or other applicable
security) is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of stockholders entitled to
receive such cash, securities or other property (whether such date is fixed by
the Board of Directors of the Company or the Board of Directors of Maxtor, as
the case may be, or by statute, contract or otherwise).
(d) "fair market value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's length transaction.
(e) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national securities exchange, a day on which the New York Stock Exchange or such
other national securities exchange is open for business or (y) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made on thereon or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
Section 505 General Conversion Provisions
(a) No adjustment in the Quantum Conversion Price or the Maxtor
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in either such price; provided, however,
-------- -------
that any adjustments which by reason of this Section 505(a) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment of the Quantum Conversion Price or the Maxtor Conversion Price, as
the case may be. All calculations under this Article Five with respect to the
Quantum Common Stock shall be made by the Company and with respect to the Maxtor
Common Stock by Maxtor, and shall be made to the nearest one tenth of a cent or
to the nearest one hundredth of a share, as the case may be. No adjustment need
be made for rights to purchase Quantum Common Stock pursuant to a Company plan
for reinvestment of dividends or interest. No adjustment need be made for
rights to purchase Maxtor Common Stock pursuant to a Maxtor plan for
reimbursement of dividends or interest. To the extent the Notes become
convertible into cash, assets, property or securities (other than capital stock
of the Company or Maxtor), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on the cash.
-29-
(b) Whenever the Quantum Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an Officers' Certificate setting forth the Quantum
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. Whenever the Maxtor Conversion Price is
adjusted as herein provided, Maxtor shall promptly file with the Trustee and any
conversion agent other than the Trustee an Officers' Certificate signed by the
applicable officers of Maxtor setting forth the Maxtor Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company or Maxtor,
as the case may be, shall prepare a notice of such adjustment of the Quantum
Conversion Price or the Maxtor Conversion Price, as the case may be, setting
forth the adjusted Quantum Conversion Price or Maxtor Conversion Price, as the
case may be, and the date on which each adjustment becomes effective and shall
mail such notice of such adjustment to the Holder of each Note at his last
address appearing on the Security Register within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
(c) In any case in which this Article Five provides that an adjustment
shall become effective immediately after a record date for an event, the Company
or Maxtor, as the case may be, may defer until the occurrence of such event (i)
issuing to the Holder of any Note converted after such record date and before
the occurrence of such event the additional shares of Quantum Common Stock or
Maxtor Common Stock, as the case may be, issuable upon such conversion by reason
of the adjustment required by such event over and above the Quantum Common Stock
and Maxtor Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 1403 of the Indenture.
(d) For purposes of this Article Five, the number of shares of Quantum
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Quantum Common Stock.
The Company will not pay any dividend or make any distribution on shares of
Quantum Common Stock held in the treasury of the Company. For purposes of this
Article Five, the number of shares of Maxtor Common Stock at any time
outstanding shall not include shares held in the treasury of Maxtor but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Maxtor Common Stock. Maxtor will not pay any dividend or
make any distribution on shares of Maxtor Common Stock held in the treasury of
Maxtor.
(e) The Company may make such reductions in the Quantum Conversion
Price, in addition to those required by this Sections 502 or 503, as the
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Board of Directors of the Company considers to be advisable to avoid or
diminish any income tax to holders of Quantum Common Stock or rights to
purchase Quantum Common Stock resulting from any dividend or distribution
of stock (or rights to acquire stock) or from any event treated as such for
income tax purposes.
Maxtor may make such reductions in the Maxtor Conversion Price, in
addition to those required by this Section 503, as the Board of Directors
of Maxtor considers to be advisable to avoid or diminish any income tax to
holders of Maxtor Common Stock or rights to purchase Maxtor Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Quantum Conversion Price by any amount for any period
of time if the period is at least twenty (20) days, the reduction is
irrevocable during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. Whenever the Quantum
Conversion Price is reduced pursuant to the preceding sentence, the Company
shall mail to holders of record of the Notes a notice of the reduction at
least fifteen (15) days prior to the date the reduction takes effect, and
such notice shall state the reduced Quantum Conversion Price and the period
during which it will be in effect.
To the extent permitted by applicable law, Maxtor from time to time
may reduce the Maxtor Conversion Price by any amount for any period of time
if the period is at least twenty (20) days, the reduction is irrevocable
during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of Maxtor,
which determination shall be conclusive. Whenever the Maxtor Conversion
Price is reduced pursuant to the preceding sentence, Maxtor shall mail to
holders of record of the Notes a notice of the reduction at least fifteen
(15) days prior to the date the reduction takes effect, and such notice
shall state the reduced Maxtor Conversion Price and the period during which
it will be in effect.
Section 106 Amendment to Section 301 of the First Supplemental Indenture.
Section 301 of the First Supplemental Indenture is hereby amended
by replacing in its entirety the following:
ARTICLE THREE
CERTAIN COVENANTS
Section 301 Registration and Listing.
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The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the
Exchange Act and state securities and Blue Sky laws) before the shares of
Quantum Common Stock issuable upon conversion of Notes may be lawfully
issued and delivered, and thereafter publicly traded, and qualified or
listed as contemplated by clause (ii); and (ii) will list the shares of
Quantum Common Stock required to be issued and delivered upon conversion of
the Notes prior to such issuance or delivery on the New York Stock
Echangeor such other exchange or automated quotation as the Quantum Common
Stock is then listed at such date of conversion.
Maxtor (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the
Exchange Act and state securities and Blue Sky laws) before the shares of
Maxtor Common Stock issuable upon conversion of Notes may be lawfully
issued and delivered, and thereafter publicly traded, and qualified or
listed as contemplated by clause (ii); and (ii) will list the shares of
Maxtor Common Stock required to be issued and delivered upon conversion of
the Notes prior to such issuance or delivery on the Nasdaq National Market
or such other exchange or automated quotation as the Maxtor Common Stock is
then listed at such date of conversion.
The provisions of Section 1008 of the Indenture shall not apply to
this Section 301.
Section 107 Amendment to Annex 1.
Annex 1 of the First Supplemental Indenture is hereby replaced in its
entirety with Annex 1 hereto.
ARTICLE TWO
MISCELLANEOUS
Section 201 Reference to and Effect on the Indenture.
This Supplemental Indenture shall be construed as supplemental to the
Indenture and all the terms and conditions of this Supplemental Indenture shall
be deemed to be part of the terms and conditions of the Indenture. This
Supplemental Indenture is subject to the provisions of the Trust Indenture Act,
and shall, to the extent applicable, be governed by such provisions.
Section 202 Supplemental Indenture May be Executed In Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
-32-
Section 203 Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
Section 204 Separability.
In case any one or more of the provisions contained in this Supplemental
Indenture or in the Notes shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any other provisions of this Supplemental Indenture or of the
Notes, but this Supplemental Indenture and the Notes shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
Section 205 Governing Law.
THIS SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 206 Company's Obligations with Respect to Maxtor.
The Company will be required to fulfill any and all obligations set forth
in this Supplemental Indenture of Maxtor in the event and to the extent that
Maxtor fails to fulfill its obligations set forth in this Supplemental
Indenture.
Section 207 Access to Information
The Trustee and the Company shall provide Maxtor with access to all Books ,
Records, and personnel, upon reasonable request in writing by Maxtor, required
for Maxtor to meet its obligations set forth in this Supplemental Indenture,
including, without limitation, lists of the holders of the Notes.
-33-
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed all as of the day and year first above written.
Quantum Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
_____________________________________________
Xxxxxxx X. Xxxxxxx
Executive Vice President, Finance and
Chief Financial Officer
Maxtor Corporation
By: /s/ Xxxxx Xxxxxxx
_____________________________________________
LaSalle Bank National Association (f/k/a
LaSalle National Bank), as Trustee
By: /s/ Xxxxxxxx Xxxxxx
_____________________________________________
Xxxxxxxx Xxxxxx, Vice President
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Annex 1
[Form of Face of Security]
[If the Security is a Global Security, insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
QUANTUM CORPORATION
7% Convertible Subordinated Note due 2004
No. __________ $ ____________
CUSIP: ____________
Quantum Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ________________, or registered assigns, the principal sum of
___________________ Dollars on August 1, 2004 and to pay interest thereon from
August 1, 1997 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on February 1 and August 1 in
each year, commencing February 1, 1998, at the rate of 7% per annum, until the
principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the January 15 or
July 15 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of (and premium, if any) and any interest on this
Security will be made at the office or agency of the Company maintained for such
purpose in the Borough of
A-1
Manhattan, The City of New York, or at the option of the Holder of this
Security, at the Corporate Trust Office, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
-------- -------
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register;
provided, further, that a Holder with an aggregate principle amount in excess of
-------- -------
$5,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by their duly authorized officers and by its corporate
seal to be affixed or imported hereon.
Dated: ___________
QUANTUM CORPORATION
By:____________________________________
Title:
Attest:
By:___________________________
Title:
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
LASALLE BANK NATIONAL
ASSOCIATION (f/k/a LaSalle National Bank)
As Trustee
By:____________________________________
Xxxxxxxx Xxxxxx, Vice President
A-2
Form of Reverse of Security
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of August 1, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and LaSalle Bank National Association (f/k/a
LaSalle National Bank), as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), and reference is hereby
made to the Indenture and all indentures supplemental thereto for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Indebtedness and the Holders
of the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $287,500,000, and is
issued pursuant to a Supplemental Trust Indenture supplementing the Indenture,
dated as of August 1, 1997, from the Company to Trustee relating to the issuance
of the "7% Convertible Notes due 2004" of this series (the "Supplemental
Indenture").
The Securities will not be subject to redemption prior to August 1, 1999
and will be redeemable on and after such date at the option of the Company, in
whole or in part, upon not less than 15 nor more than 60 days' notice to the
Holders, at the Redemption Prices (expressed as a percentage of principal
amount) set forth below; provided, however, that the Securities will not be
-------- -------
redeemable following August 1, 1999, and before August 1, 2001, unless the fair
market value of the Quantum Common Stock and Maxtor Common Stock issuable upon
the conversion of $1,000 of principal amount of Notes, based on the Closing
Prices for at least 20 Trading Days within a period of 30 consecutive Trading
Days ending within five Trading Days prior to the notice of redemption, exceeds
$1,250 (using the same Trading Days for determining the Closing Prices of both
the Quantum Common Stock and the Maxtor Common Stock).
The Redemption Price (expressed as a percentage of principal amount) is as
follows for the 12 month periods beginning on August 1 of the following years:
Year Redemption Price
---- ----------------
1999....................... 105%
2000....................... 104%
2001....................... 103%
2002....................... 102%
2003....................... 101%
and 100% at August 1, 2004, in each case together with accrued and unpaid
interest to, but excluding, the Redemption Date; provided, however, that
-------- -------
interest installments whose Stated Maturity is on such Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.
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The Securities are not subject to redemption through operation of any
sinking fund.
In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
If a Fundamental Change (as defined in the Supplemental Indenture) occurs
at any time prior to August 1, 2004, the Securities will be redeemable on the
30th day after notice thereof at the option of the Holder. Such payment shall
be made at the following prices (expressed as a percentage of principal amount)
in the event of a Fundamental Change occurring during the 12 month period
beginning August 1 of the following years:
Year Percentage Year Percentage
---- ---------- ---- ----------
1997............. 107% 2001............. 103%
1998............. 106 2002............. 102
1999............. 105 2003............. 101
2000............. 104
and 100% at August 1, 2004; provided in each case that if the Applicable Price
(as defined in the Supplemental Indenture) is less than the Reference Market
Price (as defined in the Supplemental Indenture), the Company shall redeem such
Securities at a price equal to the foregoing redemption price multiplied by the
fraction obtained by dividing the Applicable Price by the Reference Market
Price. In each case, the Company shall also pay accrued interest, if any, on
such Securities to, but excluding, the Repurchase Date; provided, however, that
-------- -------
interest installments whose Stated Maturity is on such Repurchase Date will be
paid to the Holders of such Securities, or one or more Predecessor Securities,
of record at the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Supplemental Indenture. The Company
shall mail to all Holders a notice of the occurrence of a Fundamental Change and
of the redemption right arising as a result thereof on or before the 10th day
after the occurrence of such Fundamental Change. For a Security to be so repaid
at the option of the Holder, the Company must receive at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, the City of
New York, or, at the option of the Holder, the Corporate Trust Office of the
Trustee, such Security with the form entitled "Option to Elect Redemption Upon a
Fundamental Change" on the reverse thereof duly completed, together with such
Securities duly endorsed for transfer, on or before the 30th day after the date
of such notice (or if such 30th day is not a Business Day, the immediately
succeeding Business Day).
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee as his or
her attorney-in-fact for any and all such purposes.
A-4
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture, except that the Company will not be able
to defease the right of the Holders to convert this Security pursuant to Article
Fourteen of the Indenture.
Subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before August 1, 2004 (except that,
in case this Security or any portion hereof shall be redeemed, such right shall
terminate with respect to this Security or portion hereof, as the case may be,
so redeemed at the close of business on the first Business Day next preceding
the date fixed for redemption as provided in the Indenture, unless the Company
defaults in making the payment due upon redemption or except as otherwise
provided in the Indenture), to convert any $1,000 of principal of Notes held by
such holder into the number of Quantum Common Stock obtained by dividing $666.67
by the Quantum Conversion Price (initially $30.883) and into the number of
Maxtor Common Stock obtained by dividing $333.33 by the Maxtor Conversion Price
(initially $20.318), as the Quantum Conversion Price or the Maxtor Conversion
Price may be adjusted from time to time, upon surrender of this Security,
together with the conversion notice hereon duly executed, to be accompanied (if
so required by the Company and Maxtor) by instruments of transfer, in form
satisfactory to the Company and Maxtor and to the Trustee, duly executed by the
Holder or by its duly authorized attorney in writing. Such surrender shall, if
made during any period beginning at the close of business on a Regular Record
Date and ending at the opening of business on the Interest Payment Date next
following such Regular Record Date (unless this Security or the portion being
converted shall have been called for redemption on a Redemption Date during the
period beginning at the close of business on a Regular Record Date and ending at
the opening of business on the first Business Day after the next succeeding
Interest Payment Date, or if such Interest Payment Date is not a Business Day,
the second such Business Day), also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Security then being
converted. Subject to the aforesaid requirement for payment and, in the case of
a conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest (with certain exceptions provided in
the Indenture), no adjustment is to be made on conversion for interest accrued
hereon or for dividends on shares of Quantum Common Stock or Maxtor Common Stock
issued on conversion. Neither the Company nor Maxtor will be required to issue
fractional shares upon any such conversion, but shall make adjustment therefor
as provided in the Indenture. Each of the Quantum Conversion Price and the
Maxtor Conversion Price is subject to adjustment as provided in the Indenture.
In the event of conversion of this Security in part only, a new Security or
Securities for the unconverted portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
A-5
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate
A-6
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
A-7
Abbreviations
The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT___________
TEN ENT - as tenants by the entireties
(Cust)
JT TEN - as joint tenants with right of Custodian _____ under Uniform
survivorship and not as tenants (Minor)
in common Gifts to Minors Act _________
(State)
Additional abbreviations may also be used though not in the above list.
Conversion Notice
To Quantum Corporation:
Maxtor Corporation
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Quantum Common Stock
and Maxtor Common Stock of the Company in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon the conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted principal
amount hereof, be issued and delivered to the registered Holder hereof unless a
different name has been indicated below. If this Notice is being delivered on a
date after the close of business on a Regular Record Date and prior to the
opening of business on the related Interest Payment Date (unless this Security
or the portion thereof being converted has been called for redemption on a
Redemption Date after the close of business on a Regular Record Date and prior
to the opening of business on the first Business Day after the next succeeding
Interest Payment Date, or if such Interest Payment Date is not a Business Day,
the next such Business Day), this Notice is accompanied by payment, in funds
acceptable to the Company, of an amount equal to the interest payable on such
Interest Payment Date of the principal of this Security to be converted. If
shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect hereto. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
A-8
Principal Amount to be Converted
(in an integral multiple of $1,000, if less
than all)
$ __________
Dated:___________
__________________________________
__________________________________
Signature(s) must be guaranteed by
a qualified guarantor institution
with membership in an approved
signature guarantee program
pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934 if
shares of Quantum Common Stock and
Maxtor Common Stock are to be
delivered, or Securities to be
issued, other than to and in the
name of the registered owner.
__________________________________
Signature Guaranty
Fill in for registration of shares of Quantum Common Stock or Maxtor Common
Stock, or Securities to be issues, if to be issued otherwise than to the
registered Holder.
___________________________ ____________________________________________
(Name) Social Security or Other Taxpayer
Identification Number
___________________________
(Address)
___________________________
A-9
OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE
To: Quantum Corporation
The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Quantum Corporation (the "Company") as to
the occurrence of a Fundamental Change and requests and instructs the Company to
redeem the entire principal amount of this Security, or the portion thereof
(which is $1,000 or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture referred to in this Security at the
redemption price, together with accrued interest to, but excluding, such date,
to the registered Holder hereof.
Dated: ______________________ ___________________________________
___________________________________
Signature(s)
Signature(s) must be guaranteed by
a qualified guarantor institution
with membership in an approved
signature guarantee program
pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934.
___________________________________
Signature Guaranty
Principal amount to be redeemed
(in an integral multiple of $1,000,
if less than all):
__________________________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
A-10
