Exhibit (d)(3)
Quantum Corporation
Supplemental Stock Option Plan
Prospectus
The date of this prospectus is June 4, 2001
This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
TABLE OF CONTENTS
Page
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INTRODUCTION................................................................ 1
1. What is the Plan?................................................. 1
2. What are the purposes of the Plan?................................ 1
3. How many Shares are available for issuance under the Plan?........ 1
4. What should I know about this prospectus?......................... 1
ADMINISTRATION AND ELIGIBILITY.............................................. 2
5. Who administers the Plan?......................................... 2
6. Who is eligible to participate in the Plan?....................... 2
7. Does participation in the Plan affect my employment or service?... 2
STOCK OPTIONS............................................................... 2
8. What is an option and how do I benefit from it?................... 2
9. How will I know the terms of my option?........................... 3
10. What is the exercise price of my option?.......................... 3
11. When can I exercise my option?.................................... 3
12. How can I exercise my option?..................................... 4
13. How do I pay the exercise price of my option?..................... 4
14. When does my option expire?....................................... 4
15. What happens if my employment or service is terminated?........... 5
16. Can the Administrator buy out my option?.......................... 5
STOCK PURCHASE RIGHTS....................................................... 5
17. What are stock purchase rights?................................... 5
U.S. TAX AND ERISA INFORMATION.............................................. 5
18. What are the tax effects of options?.............................. 6
19. What are the tax effects of stock purchase rights?................ 6
20. What are the tax effects for Quantum?............................. 6
21. Is the Plan subject to ERISA?..................................... 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 7
ADDITIONAL INFORMATION ABOUT THE PLAN AND PROSPECTUS........................ 7
22. How do I pay tax withholding?..................................... 7
23. Can Quantum change or terminate the Plan?......................... 7
24. Will I receive shareholder reports?............................... 7
25. Does the Plan limit my ability to resell Shares acquired
under the Plan?.................................................. 8
26. Can I transfer my Award?.......................................... 8
27. What happens if Quantum dissolves or is liquidated?............... 8
28. What happens if Quantum is acquired?.............................. 8
29. What if I need more information?.................................. 9
30. What else should I know about this prospectus?.................... 9
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INTRODUCTION
The following questions and answers give a summary of the main features of the
Quantum Corporation Supplemental Stock Option Plan (the "Plan"). Please read
this prospectus carefully.
1. What is the Plan?
The Plan permits Quantum Corporation ("Quantum") to issue shares of its common
stock ("Shares") to eligible employees and consultants of Quantum and its
subsidiaries. Shares are issuable through the grant of awards ("Awards"),
including stock options and stock purchase rights.
An individual who has received one or more Awards is referred to in this
prospectus as a "participant".
2. What are the purposes of the Plan?
The Plan is intended to provide an incentive to eligible employee and
consultants whose present and potential contributions are important to the
continued success of Quantum, to afford these individuals the opportunity to
acquire a proprietary interest in Quantum, and to enable Quantum to enlist and
retain in its employment the best available talent for the successful conduct of
its business.
3. How many Shares are available for issuance under the Plan?
There are 12,909,767 Shares available for issuance under the Plan. Such Shares
may be authorized but unissued Shares or reacquired Shares.
If an Award expires or is cancelled for any reason without having been fully
exercised or vested, the unvested or cancelled Shares that were subject to the
Award generally again will be available for grant under the Plan.
If Quantum experiences a stock split, reverse stock split, stock dividend,
reclassification, or other similar change to its capital structure, the Board of
Directors of Quantum (the "Board") will adjust (as appropriate) the number of
Shares available for issuance under the Plan and any outstanding Awards.
4. What should I know about this prospectus?
This prospectus describes the main features of the Plan as of June 4, 2001.
However, this prospectus does not contain all of the terms and conditions of the
official Plan document. Accordingly, if there is any difference between the
terms and conditions of the Plan as described in this prospectus and the
provisions of the official Plan document, the Plan document will govern.
ADMINISTRATION AND ELIGIBILITY
5. Who administers the Plan?
The Plan is administered by the Board or a committee appointed by the Board (as
applicable, the "Administrator"). The Administrator has all discretion and
authority to administer the Plan and to control its operation. Subject to the
terms of the Plan, the Administrator has the power to:
. select which eligible employees and consultants will be granted Awards,
. determine the terms and conditions of each Award (which need not be the
same), and
. interpret the terms of the Plan and the outstanding Awards.
The Administrator may make whatever rules it considers appropriate for the
administration and interpretation of the Plan. All decisions made by the
Administrator are final and binding on all persons.
6. Who is eligible to participate in the Plan?
Awards may be granted to employees and consultants of Quantum and its
subsidiaries. However, no Awards may be granted to Quantum's officers or
directors. For purposes of the Plan, a corporation generally is a "subsidiary"
of Quantum if Quantum directly or indirectly owns at least 50% of the
corporation's voting stock.
The Administrator has complete authority to determine which eligible employees
and consultants will be selected for participation in the Plan.
7. Does participation in the Plan affect my employment or service?
No, the grant of an Award under the Plan does not affect the terms and
conditions of your employment or service. Quantum and its subsidiaries reserve
the right to terminate your employment or service at any time, with or without
cause, subject to the provisions of local law. The grant of an Award does not
entitle you to any future award, compensation or severance pay.
STOCK OPTIONS
8. What is an option and how do I benefit from it?
An option gives you the right to purchase a specified number of Shares for a
fixed price (the "exercise price") during a prescribed period of time. If the
value of the Shares increases above your exercise price during its term, you
will be able to buy the Shares at a "discount." If the value of the Shares does
not increase above your exercise price, you will not recognize a benefit from
your option.
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The principal benefit of your option is the potential to profit from any
increase in the value of the Shares subject to the option during the period in
which the option is exercisable, without risking any of your money.
Please note that the grant and exercise of your option are subject to any United
States and local laws, including, but not limited to, laws relating to
securities and foreign currency, as well as any Quantum policies that may apply
to you. By accepting and exercising your option, Quantum deems that you have
authorized and directed Quantum or any subsidiary of Quantum to disclose to
Quantum or any of its subsidiaries any information regarding your employment or
service, the nature and amount of your compensation and the details of your
participation in the Plan as Quantum or the subsidiary finds necessary to
facilitate the administration of the Plan.
9. How will I know the terms of my option?
Each option granted under the Plan is evidenced by a written agreement (an
"option agreement") between Quantum and you. The option agreement will show all
of the following, all of which the Administrator determines in its discretion:
. the exercise price of the option,
. the expiration date of the option,
. the total number of Shares that may be purchased under the option,
. any conditions to exercise of the option, and
. any other terms and conditions of the option.
The option agreement also will specify that the option is intended to be a
nonstatutory stock option (that is, an option that is not an "incentive stock
option" for federal income tax purposes).
10. What is the exercise price of my option?
The exercise price is the price at which you may purchase a Share by exercising
an option. The Administrator has the discretion to determine the exercise price
of each option granted under the Plan.
11. When can I exercise my option?
You generally cannot immediately exercise an option granted under the Plan.
Instead, an option will become exercisable (that is, it will "vest") at the time
or times shown in the related option agreement, assuming that you have satisfied
any conditions to vesting (for example, continued employment or service with
Quantum). The Administrator has the discretion to determine the vesting
schedule for each option, including any conditions to vesting.
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12. How can I exercise my option?
To exercise your option, you must use the Smith Barney online tool (domestic
only) at www.benefitsaccess.com to perform a same day sale, or contact a Smith
----------------------
Barney customer service representative by calling 1-800-303-3508 to perform a
cash or same day sale exercise. International employees are required to submit
a completed notice of exercise form to Stock Administration and Smith Barney in
addition to calling Smith Barney to exercise. Upon exercise, you also must send
full payment of the exercise price of the number of Shares in respect of which
the option is being exercised and any applicable federal (including FICA), state
and local withholding taxes. Note that your ability to purchase Shares through
the exercise of an option is conditioned upon compliance with any laws and
Quantum policies that apply to you.
13. How do I pay the exercise price of my option?
The Administrator determines how you may pay the exercise price of an option.
The Administrator's current policy is to permit payment of the exercise price:
. in cash or by check,
. by the tender of already-owned Shares that have been held for at least
6 months, if acquired pursuant to an exercise of stock options, have a
fair market value equal to the exercise price, and are of the same
class of stock as the Shares to be purchased, or
. by an immediate sale of some or all of the Shares acquired upon
exercise.
An immediate sale is when the exercise price (and any required tax withholding)
is paid by requesting a Quantum-approved stockbroker to sell all or part of the
Shares acquired upon exercise (often referred to as a "cashless exercise" or
"same-day sale"). That is, the stockbroker will forward part of the proceeds to
Quantum as necessary to pay the exercise price and any required tax withholding.
The stockbroker will then send the remaining cash proceeds (less any commissions
and fees) or Shares directly to you. For more detailed information about the
same-day sale program under the Plan, please contact Stock Administration.
For purposes of the Plan, "fair market value" generally means the closing sales
price of the Shares as quoted on the New York Stock Exchange for the last market
trading day prior to the day in question, as reported in The Wall Street
Journal. Quantum's Shares are traded under the symbol "DSS".
14. When does my option expire?
The Administrator has the discretion to determine the expiration provisions that
apply to options. The expiration dates for any particular option will be shown
in the related option agreement. The expiration date is the date on which your
option expires and after which you no longer may exercise the option.
Expiration dates may vary for different options and in different circumstances.
Therefore, it is important for you to read and understand your individual option
agreement.
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15. What happens if my employment or service is terminated?
If your employment or service is terminated for any reason (other than due to
your death or total and permanent disability), your Option may be exercised, to
the extent it is then vested, for such period of time as is determined by the
Administrator (and set forth in the related option agreement), but in no event
later than the original expiration date of the Option. To the extent that the
Option is not exercised within the specified time period, the Option will
terminate.
If your employment or service is terminated due to your death or total and
permanent disability, your Option may be exercised, to the extent it is then
vested, for a period of 12 months after the date of such termination (but in no
event later than the original expiration date of the Option). To the extent
that the Option is not exercised within the 12-month period, the Option will
terminate.
16. Can the Administrator buy out my option?
The Administrator may at any time offer to buy out, for a payment in cash, a
promissory note or Shares, any outstanding option, based on such terms and
conditions as the Administrator establishes and communicates to you at the time
the offer is made.
STOCK PURCHASE RIGHTS
17. What are stock purchase rights?
A stock purchase right is a right to buy Shares. The Administrator determines
the terms and conditions under which Shares may be purchased pursuant to a stock
purchase right granted under the Plan, including the number of Shares that may
be purchased by a participant and the purchase price to be paid for the Shares.
If you are granted a stock purchase right, Quantum generally will retain the
right to repurchase the Shares at their purchase price if your employment or
service terminates for any reason (including death or disability). Shares that
are subject to Quantum's right to repurchase are often referred to as
"restricted stock". The Administrator determines the rate at which Quantum's
repurchase option will lapse each year.
U.S. TAX AND ERISA INFORMATION
The following discussion is intended only as a summary of the general U.S.
income tax laws that apply to Awards granted under the Plan and the sale of any
Shares acquired through the Awards. However, the federal, state and local tax
consequences to any particular taxpayer will depend upon his or her individual
circumstances. Also, if you are not a U.S. taxpayer, the taxing jurisdiction or
jurisdictions that apply to you will determine the tax effect of your
participation in the Plan. Accordingly, Quantum strongly advises you to seek
the advice of a qualified tax adviser regarding your participation in the Plan.
The following discussion assumes that the per Share exercise price of an option
is less than the fair market value of a Share on the date of exercise.
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18. What are the tax effects of nonstatutory stock options?
You will not be required to include an amount in income when you are granted a
nonstatutory stock option. However, when you exercise the option you will have
ordinary income to the extent the value of the Shares (and any cash) you receive
on the date of exercise is greater than the exercise price you pay. If you
exercise an option through payment of the exercise price in Shares, or in a
combination of Shares and cash, you will have ordinary income upon exercise to
the extent the value of the Shares purchased on the date of exercise is greater
than the value of the Shares surrendered, less the amount of any cash paid upon
exercise.
Any gain or loss you recognize upon the sale or exchange of Shares you acquire
generally will be treated as capital gain or loss and will be long-term or
short-term, depending on whether you have held the Shares for more than one
year. The holding period for such Shares will begin just after the time you
recognize income. The amount of such gain or loss will be the difference
between the amount you realize upon the sale or exchange of the Shares and the
value of the Shares at the time you recognize income.
19. What are the tax effects of stock purchase rights?
Generally, no income will be recognized by you in connection with the grant of a
stock purchase right or the exercise of the right for unvested Shares, unless
you file an election under Section 83(b) of the Internal Revenue Code of 1986,
as amended (the "Code") within 30 days of the date of exercise of the stock
purchase right. Otherwise, as Quantum's repurchase right lapses, you will
recognize ordinary income when (and if) the Shares vest and no longer can be
forfeited. If you make a Code Section 83(b) election, you will recognize
ordinary income at the time you exercise a stock purchase right. However, if
you later forfeit the Shares, no tax deduction is allowed with respect to the
forfeiture. In all cases, the amount of ordinary income that you recognize will
equal the fair market value of the Shares at the time you recognize income, less
the amount (if any) you pay for the Shares.
20. What are the tax effects for Quantum?
Quantum generally will receive a deduction for federal income tax purposes in
connection with an Award equal to the ordinary income you realize. Quantum will
be entitled to such deduction at the time that you recognize the ordinary
income.
21. Is the Plan subject to ERISA?
The Plan is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), nor is it qualified under Section 401(a)
of the Code.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows Quantum to "incorporate by reference" the information it files
with the SEC, which means that Quantum can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information filed with
the SEC will update and supersede this information. Quantum incorporates by
reference the documents listed below:
1. Quantum's latest annual report filed pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 Act, as amended (the "1934 Act");
2. All other reports and proxy statements filed pursuant to Section 13(a) or
15(d) of the 1934 Act since the end of the fiscal year covered by the
annual report referred to in paragraph (1) above; and
3. The description of Shares contained in Quantum's Registration Statement
on Form 8-A, as it may have been amended from time to time.
All documents filed by Quantum pursuant to Sections 13(a), 13(c), 14, and 15(d)
of the 1934 Act after the date of this prospectus and prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, will be deemed
to be incorporated by reference in this prospectus and to be a part of this
prospectus from the date of filing of such documents.
ADDITIONAL INFORMATION ABOUT THE PLAN AND PROSPECTUS
22. How do I pay tax withholding?
You must pay any taxes that Quantum is required to withhold upon exercise of an
Award in cash or through other means as required by the Administrator.
23. Can Quantum change or terminate the Plan?
The Board may amend, suspend or terminate the Plan at any time and for any
reason. However, no such amendment, suspension or termination may adversely
affect your outstanding Award without your written consent.
24. Will I receive shareholder reports?
As a participant in the Plan, you will receive the annual reports, proxy
statements and other materials Quantum sends to its shareholders generally.
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25. Does the Plan limit my ability to resell Shares acquired under the Plan?
Except as described below, the Plan generally places no limitations upon your
ability to sell Shares acquired under the Plan. Quantum will not receive any
part of the proceeds of any such sales.
While you are in possession of "inside information" (that is, material
information about Quantum that is not yet public but that a reasonable investor
would consider important in deciding whether to buy or sell Shares), you are
prohibited by federal securities laws and Quantum policy from trading Shares
until the information has become public.
Also, you may not resell under this prospectus any Shares acquired under the
Plan if you are an "affiliate" of Quantum (within the meaning of Rule 405 under
the Securities Act of 1933, as amended (the "1933 Act"). Any such resales must
be either described in a separate prospectus, or, in certain instances,
registered in a separate registration statement, or sold in accordance with the
requirements of Rule 144 under the 1933 Act or another exemption available under
the 1933 Act.
26. Can I transfer my Award?
Unless otherwise determined by the Administrator, you may not sell, transfer,
pledge, assign or otherwise alienate or hypothecate Awards granted under the
Plan, other than by will or the applicable laws of descent and distribution, and
all rights with respect to an Award granted to you will be available during your
lifetime only to you.
27. What happens if Quantum dissolves or is liquidated?
In the event of Quantum's proposed dissolution or liquidation, all outstanding
Awards automatically will terminate immediately prior to the consummation of the
dissolution or liquidation. However, the Administrator may, in its discretion,
accelerate the exercisability of any outstanding Award in such event.
28. What happens if Quantum is acquired?
In the event of Quantum's merger with or into another corporation, or the sale
of all or substantially all of its assets, each outstanding Award may be assumed
or substituted for by the successor corporation (or a parent or subsidiary of
the successor corporation). If the successor corporation does not agree to
assume or substitute the outstanding Awards, the Administrator will provide for
the participants to have the right to exercise the Awards as to all or a portion
of the Shares subject to the Awards, including Shares as to which the Awards
would not otherwise be vested or exercisable. In such a case, the Administrator
will notify you that your Award will be exercisable for a period of 15 days from
that notice. The Award will terminate upon the expiration of that 15-day
period.
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29. What if I need more information?
Quantum will provide you free of charge with a copy of any or all of the
documents incorporated by reference in this prospectus and in the Registration
Statement on Form S-8 filed with the SEC relating to the Plan (except for any
exhibits to these documents), including Quantum's annual report, and copies of
other reports, proxy statements and communications distributed to Quantum's
stockholders generally. You should direct your requests to:
Quantum Corporation
Attn: Investor Relations
501 Sycamore Drive
Milpitas, CA 95035
Telephone: (408) 894-4000
Facsimile: (408) 894-6296
Copies of the Plan document, this prospectus, any supplements to the prospectus,
and further information concerning the Plan and its administration also are
available free of charge by calling or writing Quantum Corporation, Attention:
Stock Administration at the numbers and/or address listed above.
30. What else should I know about this prospectus?
Quantum may update this prospectus in the future by furnishing to you an
appendix, memorandum, notice or replacement page containing updated information.
Quantum generally will not send you a new prospectus, except upon request.
Accordingly, you should keep this prospectus for future reference.
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. Quantum has not authorized anyone
to provide you with different or additional information. Quantum is not making
an offer to sell any stock in any state or country where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of this document.
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