1
EXHIBIT 4.2
================================================================================
Read-Rite Corporation
and
State Street Bank and Trust Company of California, N.A.
Trustee
Supplemental Trust Indenture
Dated as of August 15, 1997
Supplementing that certain
Indenture
Dated as of August 15, 1997
Authorizing the Issuance and Delivery of
Subordinated Debt Notes
6 1/2% Convertible Subordinated Notes due September 1, 2004
================================================================================
2
TABLE OF CONTENTS
PAGE
----
ARTICLE ONE ISSUANCE OF NOTES.............................................................2
Section 101 Issuance of Notes; Principal Amount; Maturity.......................2
Section 102 Interest on the Notes; Payment of Interest..........................2
ARTICLE TWO CERTAIN DEFINITIONS..........................................................3
Section 201 Certain Definitions.................................................3
ARTICLE THREE CERTAIN COVENANTS...........................................................4
Section 301 Registration and Listing............................................4
ARTICLE FOUR REDEMPTION OF NOTES..........................................................5
Section 401 Right of Redemption.................................................5
Section 402 Conversion Arrangement on Call for Redemption.......................5
ARTICLE FIVE CONVERSION OF NOTES..........................................................6
Section 501 Conversion Privilege and Conversion Rate............................6
Section 502 Adjustment of Conversion Rate.......................................6
ARTICLE SIX REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL....................................................................11
Section 601 Right to Require Repurchase........................................11
Section 602 Conditions to the Company's Election to Pay the....................12
Section 603 Notices; Method of Exercising Repurchase Right, Etc................12
Section 604 Certain Definitions................................................15
Section 605 Consolidation, Merger, etc.........................................16
ARTICLE SEVEN EVENT OF DEFAULT...........................................................17
Section 701 Event of Default...................................................17
ARTICLE EIGHT MISCELLANEOUS..............................................................17
Section 801 Consent of Holders Required........................................17
Section 802 Applicability of Certain Indenture Provisions......................17
Section 803 Reference to and Effect on the Indenture...........................18
Section 804 Waiver of Certain Covenants........................................18
Section 805 Supplemental Indenture May be Executed In Counterparts.............18
Section 806 Effect of Headings.................................................18
Section 807 Separability.......................................................18
i
3
This Supplemental Trust Indenture, dated as of August 15, 1997 (the
"Supplemental Indenture"), between Read-Rite Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and State Street Bank and Trust Company of California, N.A., 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 15, 1997, between the Company and the Trustee (such Indenture, as
supplemented by this Supplemental Indenture for this series of Securities, being
referred to herein as the "Indenture").
Recitals
A. The Company has duly authorized the execution and delivery of the
Indenture 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 Indenture heretofore executed and delivered provides that the
Securities of each series shall be in substantially the form set forth in the
Indenture heretofore executed and delivered, or in such other form as may be
established by or pursuant to a Board Resolution or in one or more supplemental
indentures thereto, in each case with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by the
Indenture, and may have such letters, numbers, or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined to be required by the officers executing such securities, as
evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall issue
and deliver, and the Trustee shall authenticate, Securities denominated "6 1/2%
Convertible Subordinated Notes due September 1, 2004" (the "Notes") pursuant to
the terms of this Supplemental Indenture and substantially in the form set forth
below, in each case with such appropriate insertions, omissions, substitutions,
and other variations as are required or permitted by the Indenture heretofore
executed and delivered and this Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
4
ARTICLE ONE
ISSUANCE OF NOTES.
Section 101 Issuance of Notes; Principal Amount; Maturity.
(a) On August 25, 1997, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Notes substantially in the form set
forth in Exhibit A, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the Indenture
and this Supplemental Indenture, and with such letters, numbers, or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(b) There is hereby authorized a series of Securities designated
"6-1/2% Convertible Subordinated Notes due September 1, 2004" limited in
aggregate principal amount of $345,000,000. The Notes shall mature on
September 1, 2004, which shall be the Stated Maturity of the Notes.
Section 102 Interest on the Notes; Payment of Interest.
(a) The Notes shall bear interest at the rate of 6 1/2% per annum from
and including August 25, 1997 until the principal amount thereof is due and at a
rate of 6 1/2% per annum on any overdue principal and premium, if any, and, to
the extent permitted by law, on any overdue interest.
(b) The interest so payable, and punctually paid or duty provided for,
on any Interest Payment Date shall, as provided in such Indenture, be paid to
the Person in whose name a Note is registered at the close of business on the
Regular Record Date for such interest, which shall be the February 15 or August
15 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
(c) Payment of the principal of (and premium, if any) and any interest
on the Notes shall be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York (which shall
initially be State Street Bank and Trust Company, an Affiliate of the Trustee)
or at the Corporate Trust Office of the Trustee 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 appears in the Security Register.
The Company hereby initially designates the Trustee as Paying Agent,
Security Registrar, custodian and conversion agent and the Corporate Trust
Office and the office of State Street Bank and Trust Company, N.A., an Affiliate
of the Trustee located at 00 Xxxxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxxx Trust Window,
New York, New York 10006) as the offices or agencies where the Notes may be
surrendered for transfer or exchange or for presentation for payment or for
conversion,
2
5
redemption or repurchase and where notices and demands to or upon the Company in
respect of the Notes or this Supplemental Indenture may be received.
ARTICLE TWO CERTAIN DEFINITIONS.
Section 201 Certain Definitions.
The terms defined in this Section 201 (except as herein otherwise
expressly provided or unless the context of this Supplemental Indenture
otherwise requires) for all purposes of this Supplemental Indenture and of any
indenture supplemental hereto have the respective meanings specified in this
Section 201. All other terms used in this Supplemental Indenture that are
defined in the Indenture or the Trust Indenture Act, either directly or by
reference therein (except as herein otherwise expressly provided or unless the
context of this Supplemental Indenture otherwise requires), have the respective
meanings assigned to such terms in the Indenture or the Trust Indenture Act, as
the case may be, as in force at the date of this Supplemental Indenture as
originally executed.
"Change of Control" has the meaning specified in Section 604 of this
Supplemental Indenture.
"Closing Price Per Share" means, with respect to the Common Stock of
the Company, for any day, the reported last sales price regular way per share
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case (i) on the New
York Stock Exchange as reported in The Wall Street Journal (or other similar
newspaper) for New York Stock Exchange Composite Transactions or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the principal
(as determined by the Company's Board of Directors) national securities exchange
on which the Common Stock is listed or admitted to trading or (ii) if not listed
or admitted to trading on any national securities exchange, on the Nasdaq
National Market, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose. If no such prices are available, the Closing
Price Per Share shall be the fair value of a share as determined by the Board of
Directors of the Company.
"Conversion Price" shall equal $1,000 divided by the Conversion Rate.
"Conversion Rate" has the meaning specified in Section 501 of this
Supplemental Indenture.
"Redemption Date", when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Supplemental
Indenture.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Supplemental
Indenture.
"Repurchase Date" has the meaning specified in Section 601 of this
Supplemental Indenture.
3
6
"Repurchase Price" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Rights" shall mean "Rights" as such term is defined in the Rights
Agreement.
"Rights Agreement" means that certain Preferred Shares Rights
Agreements, dated as of March 3, 1997, between the Company and Xxxxx Xxxxxx
Shareholder Service, L.L.C., as amended from time to time.
"Trading Days" means (i) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business or (ii) if the Common Stock is quoted
on the Nasdaq National Market or any similar system of automated dissemination
of quotations of securities prices, days on which trades may be made on such
system or (iii) if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq National Market or similar
system, days on which the Common Stock is traded regular way in the
over-the-counter market and for which a closing bid and a closing asked price
for the Common Stock are available.
The definitions of other terms are specified in Article Five and
Article Six.
ARTICLE THREE
CERTAIN COVENANTS.
The following covenant shall be applicable to the Company for so long
as any of the Notes are outstanding.
Section 301 Registration and Listing.
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 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 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
Common Stock is then listed at such date of conversion.
4
7
ARTICLE FOUR
REDEMPTION OF NOTES
Section 401 Right of Redemption.
The Notes may be redeemed in accordance with the provisions of the form
of Security set forth herein.
Section 402 Conversion Arrangement on Call for Redemption.
In connection with any redemption of Notes, the Company may arrange for
the purchase and conversion of any Notes by an agreement with one or more
nationally recognized investment bankers to purchase such Notes by paying to the
Trustee in trust for the Holders, on or before the date fixed for redemption, an
amount not less than the applicable Redemption Price, together with interest
accrued to (but excluding) the date fixed for redemption, of such Notes.
Notwithstanding anything to the contrary contained herein, the obligation of the
Company to pay the Redemption Price of such Notes, together with interest
accrued to (but excluding) the Redemption Date, shall be deemed to be satisfied
and discharged to the extent such amount is so paid by such purchasers. If such
an agreement is entered into, a copy of which will be filed with the Trustee
prior to the Redemption Date, any Notes not duly surrendered for conversion by
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained herein) surrendered by such
purchasers for conversion, all as of immediately prior to the close of business
on the Redemption Date (and the right to convert any such Notes shall be
extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it in the same manner as it would monies deposited
with it by the Company for the redemption of Notes. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Notes shall increase or otherwise affect any of
the powers, duties, responsibilities or obligations of the Trustee as set forth
in this Indenture, and the Company agrees to indemnify the Trustee from, and
hold it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses, including reasonable
legal fees, incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
5
8
ARTICLE FIVE
CONVERSION OF NOTES
Section 501 Conversion Privilege and Conversion Rate.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Note may be converted into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock of the Company at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion right
shall commence immediately and expire at the close of business on September 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 or the Holder thereof
exercises his right to require the Company to repurchase the Note, such
conversion right in respect of the Note shall expire at the close of business on
the Business Day next preceding the Redemption Date or the Repurchase Date (as
defined in Article Six), as the case may be, unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be (in
each case subject as aforesaid to any applicable book-entry procedures).
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially 24.8524
shares of Common Stock for each $1,000 principal amount of Notes. The Conversion
Rate shall be adjusted in certain instances as provided in this Article Five.
Section 502 Adjustment of Conversion Rate.
The Conversion Rate shall be subject to adjustment from time to time as
follows:
(1) In case the Company shall pay or make a dividend or other
distribution on Common Stock payable in shares of Common Stock, the Conversion
Rate in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Conversion Rate by a fraction
of which the numerator shall be the number of shares of 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 increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. If, after any such date fixed for
determination, any dividend or distribution is not in fact paid, the Conversion
Rate shall be immediately readjusted, effective as of the date the Board of
Directors determines not to pay such dividend or distribution, to the
Conversion Rate that would have been in effect if such determination date had
not been fixed. For the purposes of this paragraph (1), the number of shares of
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 Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
6
9
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
share (determined as provided in paragraph (8) of this Section 502) of the
Common Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than any rights, options or
warrants that by their terms will also be issued to any Holder upon conversion
of a Note into shares of Common Stock without any action required by the Company
or any other Person), the Conversion Rate in effect at the opening of business
on the day following the date fixed for such determination shall be increased by
dividing such Conversion Rate by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. If, after any such date fixed for determination, any such rights,
options or warrants are not in fact issued, or are not exercised prior to the
expiration thereof, the Conversion Rate shall be immediately readjusted,
effective as of the date such rights, options or warrants expire, or the date
the Board of Directors determines not to issue such rights, options or warrants,
to the Conversion Rate that would have been in effect if the unexercised rights,
options or warrants had never been granted or such determination date had not
been fixed, as the case may be. For the purposes of this paragraph (2), the
number of shares of 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 Common
Stock. The Company will not issue any rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, 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.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares of any
class of capital stock, or other property (including securities, but excluding
(i) any rights, options or warrants referred to in paragraph (2) of this
Section, (ii) any dividend or distribution paid exclusively in cash, (iii) any
dividend or distribution referred to in paragraph (1) of this Section) the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for the determination of stockholders
entitled to receive such
7
10
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section 502) of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets, shares or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution. If, after any such date fixed for determination, any such
distribution is not in fact made, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors determines not to
make such distribution, to the Conversion Rate that would have been in effect if
such determination date had not been fixed.
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed as
part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (I) the aggregate amount of any
other cash distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such distribution and
in respect of which no adjustment pursuant to this paragraph (5) has been made
and (II) the aggregate of any cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and described in
a Board Resolution) of consideration payable in respect of any tender offer by
the Company or any of its subsidiaries for all or any portion of the Common
Stock concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to paragraph (6) of
this Section 502 has been made (the "combined cash and tender amount") exceeds
12.5% of the product of the current market price per share (determined as
provided in paragraph (8) of this Section 502) of the Common Stock on the date
for the determination of holders of shares of Common Stock entitled to receive
such distribution times the number of shares of Common Stock outstanding on such
date (the "aggregate current market price"), then, and in each such case,
immediately after the close of business on such date for determination, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section 502) of the Common Stock on the date fixed for
such determination less an amount equal to the quotient of (x) the excess of
such combined cash and tender amount over such aggregate current market price
divided by (y) the number of shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be equal to the current
market price per share (determined as provided in paragraph (8) of this Section
502) of the Common Stock on such date for determination.
(6) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
8
11
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (I) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration payable in respect of any other tender offer by
the Company or any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (6) has been made
and (II) the aggregate amount of any cash distributions to all holders of the
Company's Common Stock within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to paragraph (5) of this
Section has been made (the "combined tender and cash amount") exceeds 12.5% of
the product of the current market price per share of the Common Stock
(determined as provided in paragraph (8) of this Section 502) as of the last
time (the "Expiration Time") tenders could have been made pursuant to such
tender offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration Time, then, and
in each such case, immediately prior to the opening of business on the day after
the date of the Expiration Time, the Conversion Rate shall be adjusted so that
the same shall equal the rate determined by dividing the Conversion Rate
immediately prior to close of business on the date of the Expiration Time by a
fraction (i) the numerator of which shall be equal to (A) the product of (I) the
current market price per share of the Common Stock (determined as provided in
paragraph (8) of this Section 502) on the date of the Expiration Time multiplied
by (II) the number of shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time less (B) the combined tender and cash amount, and
(ii) the denominator of which shall be equal to the product of (A) the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this Section 502) as of the Expiration Time multiplied by (B) the number
of shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered 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").
(7) The reclassification of Common Stock into securities including
other than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 1409 of the Indenture applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such determination" within
the meaning of paragraph (4) of this Section), and (b) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section 502).
(8) For the purpose of any computation under paragraphs (2), (4), (5)
or (6) of this Section 502, the current market price per share of Common Stock
on any date shall be calculated by the Company and be deemed to be the average
of the daily Closing Prices Per Share for the five
9
12
consecutive Trading Days selected by the Company commencing not more than 10
Trading Days before, and ending not later than, the earlier of the day in
question and the day before the "ex" date with respect to the issuance or
distribution requiring such computation. For purposes of this paragraph, the
term "'ex' date", when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way in the applicable
securities market or on the applicable securities exchange without the right to
receive such issuance or distribution.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate;
provided, however, that any adjustments which by reason of this paragraph (9)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Notes or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 502, as
it considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes. The Company shall have
the power to resolve any ambiguity or correct any error in this paragraph (10)
and its actions in so doing shall, absent manifest error, be final and
conclusive.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
(12) To the extent permitted by applicable law, the Company from time
to time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty (20) days, the increase is irrevocable during such
period, and the Board of Directors shall have made a determination that such
increase would be in the best interests of the Company, which determination
shall be conclusive; provided, however, that no such increase shall be taken
into account for purposes of determining whether the Closing Price Per Share of
the Common Stock exceeds the Conversion Price by 105% in connection with an
event which would otherwise be a Change of Control pursuant to Section 604(4).
Whenever the Conversion Rate is increased pursuant to the preceding sentence,
the Company shall give notice of the increase to the Holders in the manner
provided in Section 106 of the Indenture at least fifteen (15) days prior to the
date the increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period during which it will be in effect.
(13) Each share of Common Stock issued upon conversion of the Notes
pursuant to this Article V shall be entitled to receive the appropriate number
of Rights, and the certificates
10
13
representing the Common Stock issued upon such conversion shall bear such
legends, in each case as provided by and subject to the terms of the Rights Plan
(without giving effect to the proviso contained in Section 22 thereof) as in
effect at the time of such conversion (whether or not such Rights have separated
from the Common Stock at the time if conversion). In the event that the Company
implements any new stockholders's rights plan, as amended, supplemented or
modified from time to time (a "New Rights Plan"), such New Rights Plan shall
provide that upon conversion of the Notes the Holders will receive, in addition
to the Common Stock issuable upon such conversion, the rights (whether or not
such rights have separated from Common Stock at the time of the conversion)
issuable pursuant to the New Rights Plan. Any distribution of Rights pursuant to
the Rights Plan or any distribution of rights pursuant to the New Rights Plan in
accordance with the requirements set forth in this paragraph (13) will not
constitute a distribution of rights or warrants for the purposes of paragraph
(4) of this Section 502.
ARTICLE SIX REPURCHASE OF NOTES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL
Section 601 Right to Require Repurchase.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of Section 602, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Notes not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to $1,000 or any integral multiple of
$1,000 in excess thereof (provided that no single Note may be repurchased in
part unless the portion of the principal amount of such Note to be Outstanding
after such repurchase is equal to $1,000 or integral multiples of $1,000 in
excess thereof), on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined in Section 603) at a purchase price equal
to 100% of the principal amount of the Notes to be repurchased plus interest
accrued to, but excluding, the Repurchase Date (the "Repurchase Price");
provided, however, that installments of interest on Notes whose Stated Maturity
is on or prior to the Repurchase Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such on the relevant
Record Date according to their terms and the provisions of Section 307 of the
Indenture. Such right to require the repurchase of the Notes shall not continue
after a discharge of the Company from its obligations with respect to the Notes
in accordance with Article Four of the Indenture, unless a Change in Control
shall have occurred prior to such discharge. At the option of the Company, the
Repurchase Price may be paid in cash or, subject to the fulfillment by the
Company of the conditions set forth Section 602, by delivery of shares of Common
Stock having a fair market value equal to the Repurchase Price. Whenever in this
Supplemental Indenture or the Indenture (including, without limitation, in the
Form of Note, Section 101 of this Supplemental Indenture, and Sections 501(1)
and 508 of the Indenture) there is a reference, in any context, to the principal
of any Note as of any time, such reference shall be deemed to include reference
to the Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Supplemental Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Supplemental Indenture or Indenture when such express
11
14
mention is not made; provided, however, that for the purposes of Article Fifteen
of the Indenture such reference shall be deemed to include reference to the
Repurchase Price only to the extent the Repurchase Price is payable in cash.
Section 602 Conditions to the Company's Election to Pay the Repurchase Price in
Common Stock.
The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to Section 601 if and only if the following conditions
shall have been satisfied:
(1) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the Repurchase Date of not less than
the Repurchase Price. For purposes of Section 601 and this Section 602, the fair
market value of shares of Common Stock shall be determined by the Company and
shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding the second Trading Day prior
to the Repurchase Date;
(2) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferrable without being subject to any transfer restrictions under
the Securities Act upon repurchase and if such registration is not completed or
does not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(3) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for listing on the New York
Stock Exchange or quotation on the Nasdaq National Market, in either case, prior
to the Repurchase Date; and
(4) All shares of Common Stock which may be issued upon repurchase of
Notes will be issued out of the Company's authorized but unissued Common Stock
and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 602 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
Section 603 Notices; Method of Exercising Repurchase Right, Etc.
(1) Unless the Company shall have theretofore called for redemption all
of the Outstanding Notes, on or before the 30th day after the occurrence of a
Change in Control, the Company or, at the request and expense of the Company on
or before the 15th day after such occurrence, the Trustee, shall give to all
Holders of Notes, in the manner provided in Section 106 of the Indenture, notice
(the "Company Notice") of the occurrence of the Change in Control and of the
12
15
repurchase right set forth herein arising as a result thereof. The Company shall
also deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be
exercised,
(iii) the Repurchase Price, and whether the Repurchase
Price shall be paid by the Company in cash or by
delivery of shares of Common Stock,
(iv) a description of the procedure which a Holder must
follow to exercise a repurchase right, and the place
or places where such Notes, are to be surrendered for
payment of the Repurchase Price and accrued interest,
if any,
(v) that on the Repurchase Date the Repurchase Price, and
accrued interest, if any, will become due and payable
upon each such Note designated by the Holder to be
repurchased, and that interest thereon shall cease to
accrue on and after said date,
(vi) the Conversion Rate then in effect, the date on which
the right to convert the principal amount of the
Notes to be repurchased will terminate and the place
or places where such Notes may be surrendered for
conversion, and
(vii) the place or places that the Note certificate with
the Election of Holder to Require Repurchase as
specified in the form of Note shall be delivered.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
Six are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Notes to be
repurchased (and, if any Note is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the Notes with respect to which the
13
16
repurchase right is being exercised. Such written notice shall be irrevocable,
except that the right of the Holder to convert the Notes with respect to which
the repurchase right is being exercised shall continue until the close of
business on the Business Day prior to the Repurchase Date.
(3) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Notes as to which the repurchase right has been exercised; provided, however,
that installments of interest that mature on or prior to the Repurchase Date
shall be payable in cash to the Holders of such Notes, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
(4) If any Note (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal amount of such Note (or
portion thereof, as the case may be) shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at the rate of 6
1/2% per annum, and each Note shall remain convertible into Common Stock until
the principal of such Note (or portion thereof, as the case may be) shall have
been paid or duly provided for.
(5) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such Note
without service charge, a new Note or Notes, containing identical terms and
conditions, each in an authorized denomination in aggregate principal amount
equal to and in exchange for the unrepurchased portion of the principal of the
Note so surrendered.
(6) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; provided,
however, that any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the Person or Persons in
whose name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open. No payment or adjustment shall be made for dividends or distributions on
any Common Stock issued upon repurchase of any Note declared prior to the
Repurchase Date.
(7) No fractions of shares shall be issued upon repurchase of Notes. If
more than one Note shall be repurchased from the same Holder and the Repurchase
Price shall be payable in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be
14
17
computed on the basis of the aggregate principal amount of the Notes so
repurchased. Instead of any fractional share of Common Stock which would
otherwise be issuable on the repurchase of any Note or Notes, the Company will
deliver to the applicable Holder a check for the current market value of such
fractional share. The current market value of a fraction of a share is
determined by multiplying the current market price of a full share by the
fraction, and rounding the result to the nearest cent. For purposes of this
Section, the current market price of a share of Common Stock is the Closing
Price Per Share of the Common Stock on the Trading Day immediately preceding the
Repurchase Date.
(8) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Notes shall be made without charge to the Holder of Notes
being repurchased for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the Notes represented thereby;
provided, however, that the Company shall not be required to pay any tax or duty
which may be payable in respect of (i) income of the Holder or (ii) any transfer
involved in the issuance or delivery of certificates for shares of Common Stock
in a name other than that of the Holder of the Notes being repurchased, and no
such issuance or delivery shall be made unless and until the Person requesting
such issuance or delivery has paid to the Company the amount of any such tax or
duty or has established, to the satisfaction of the Company, that such tax or
duty has been paid.
(9) All Notes delivered for repurchase shall be delivered to the
Trustee to be canceled at the direction of the Trustee, which shall dispose of
the same as provided in Section 309 of the Indenture.
Section 604 Certain Definitions.
For purposes of this Article Six,
(1) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3, as in effect on the date of the original execution of this
Supplemental Indenture, promulgated by the Commission pursuant to the Exchange
Act;
(2) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of the Notes, of:
(i) the acquisition by any Person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of capital
stock of the Company entitling such person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in the elections of directors (any shares of voting stock of which
such person or group is the beneficial owner that are not then outstanding being
deemed outstanding for purposes of calculating such percentage), other than any
such acquisition by the Company, any Subsidiary of the Company or any employee
benefit plan of the Company existing on the date of this Supplemental Indenture;
or
15
18
(ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company,
or any sale or transfer of all or substantially all of the assets (other than to
a wholly-owned subsidiary of the Company) of the Company to any other Person
(other than (a) any such transaction pursuant to which the holders of 50% or
more of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors immediately prior to such
transaction have, directly or indirectly, at least 50% or more of the total
voting power of all shares of capital stock of the continuing or surviving
corporation entitled to vote generally in elections of directors of the
continuing or surviving corporation immediately after such transaction and (b) a
merger (x) which does not result in any reclassification, conversion, exchange
or cancellation of outstanding shares of capital stock of the Company or (y)
which is effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of outstanding
shares of Common Stock into solely shares of common stock); provided, however,
that a Change in Control shall not be deemed to have occurred if either (a) the
Closing Price Per Share of the Common Stock for any five Trading Days within the
period of 10 consecutive Trading Days ending immediately after the later of the
Change in Control or the public announcement of the Change in Control (in the
case of a Change in Control under clause 604(2)(i) above) or the period of 10
consecutive Trading Days ending immediately before the Change in Control (in the
case of a Change in Control under clause 604(2)(ii) above) shall equal or exceed
105% of the Conversion Price of the Notes in effect on each such Trading Day, or
(b) all of the consideration (excluding cash payments for fractional shares and
cash payments made pursuant to dissenters' appraisal rights) in a merger or
consolidation constituting the Change in Control described in clause 604(2)(i)
and/or clause 604(2)(ii) above consists of shares of common stock traded on a
national securities exchange or quoted on the Nasdaq National Market (or will be
so traded or quoted immediately following the Change in Control) and as a result
of such transaction or transactions the Notes become convertible solely into
such common stock.
(3) for purposes of Section 604(2)(i), the term "person" shall include
any syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act, as in effect on the date of the original execution
of this Supplemental Indenture.
Section 605 Consolidation, Merger, etc.
In the case of any consolidation, conveyance, sale, transfer or lease
of all or substantially all of the assets of the Company to which Section 1409
applies, in which the Common Stock of the Company is changed or exchanged as a
result into the right to receive shares of stock and other securities or
property or assets (including cash) which includes shares of Common Stock of the
Company or common stock of another Person that are, or upon issuance will be,
traded on a United States national securities exchange or approved for trading
on an established automated over-the-counter trading market in the United States
and such shares constitute at the time such change or exchange becomes effective
in excess of 50% of the aggregate fair market value of such shares of stock and
other securities, property and assets (including cash) (as determined by the
Company, which determination shall be conclusive and binding), then the Person
formed by such consolidation or resulting from such merger or combination or
which acquires the properties or assets (including cash) of the Company, as the
case may be, shall execute and deliver to the Trustee a supplemental
16
19
indenture (which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) modifying the provisions of
this Supplemental Indenture relating to the right of Holders to cause the
Company to repurchase the Notes following a Change in Control, including without
limitation the applicable provisions of this Article Six and the definitions of
the Common Stock and Change in Control, as appropriate, and such other related
definitions set forth herein as determined in good faith by the Company (which
determination shall be conclusive and binding), to make such provisions apply in
the event of a subsequent Change of Control to the common stock and the issuer
thereof if different from the Company and Common Stock of the Company (in lieu
of the Company and the Common Stock of the Company).
ARTICLE SEVEN
EVENT OF DEFAULT
Section 701 Event of Default.
In addition to the Events of Default set forth in Section 501 of the
Indenture, the following will be an Event of Default under the Supplemental
Indenture: any indebtedness under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company in a principal amount then
outstanding in excess of $25,000,000 is not paid at final maturity thereof
(either at its stated maturity or upon acceleration thereof), and such
indebtedness is not discharged, or such acceleration is not rescinded or
annulled, within a period of 30 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder.
ARTICLE EIGHT
MISCELLANEOUS
Section 801 Consent of Holders Required.
In addition to those modifications or amendments requiring the consent
of the Holder of each Outstanding Note effected thereby as specified in Section
902 of the Indenture, there can be no modification or amendment that would
change the obligation of the Company to repurchase any Note upon the happening
of a Change in Control in a manner adverse to the Holder of Notes without the
consent of the Holder of each outstanding Note effected thereby.
Section 802 Applicability of Certain Indenture Provisions.
Each of the defeasance and covenant defeasance provisions of Article
Thirteen of the Indenture shall apply to the Notes; provided, however, that the
Company will not be able to defease the right of the Holders to convert the
Notes pursuant to Article Fourteen of the Indenture.
17
20
Section 803 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. Except as set
forth herein, the Indenture heretofore executed and delivered is hereby
ratified, approved and confirmed. The provisions of this Supplemental Indenture
shall for the purposes of this series of Securities supersede the provisions of
the Indenture heretofore executed and delivered to the extent such Indenture
heretofore executed and delivered is inconsistent herewith. 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 804 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision, or condition set forth in Article Three hereof if the Holders
of a majority in principal amount of the outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision, or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision, or condition shall remain in full force and effect.
Section 805 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.
Section 806 Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
Section 807 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.
18
21
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.
READ-RITE CORPORATION
By: /s/Xxx X. Xxxxxxx
-------------------------------------------
Name: Xxx X. Xxxxxxx
Title: Vice President and General Counsel
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/Xxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Assistant Vice President
22
Exhibit A
[Form of Face of Security]
[IF SUCH 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.]
READ-RITE CORPORATION
6 1/2% Convertible Subordinated Note due September 1, 2004
No. _________ $_____________
CUSIP: ___________
Read-Rite 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 September 1, 2004 and to pay
interest thereon from August 25, 1997 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
March 1 and September 1 in each year, commencing March 1, 1998, at the rate of 6
1/2% per annum, until the principal hereof is paid or made available for
payment, and at a rate of 6 1/2% per annum on any overdue principal and premium,
if any, and, to the extent permitted by law, on any overdue interest. 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 February 15 or August 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.
20
23
Payment of the principal of (and premium, if any) and any interest on
this Security will be made at 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 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.
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 thereon.
READ-RITE CORPORATION
By:
---------------------------------------------
Title:
Attest:
----------------------------
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.
Dated: STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.,
As Trustee
By:
----------------------------------------------
Authorized Officer
21
24
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 15, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and State Street Bank an Trust Company of
California, N.A., 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 Debt 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 $345,000,000, and is
issued pursuant to a Supplemental Trust Indenture supplementing the Indenture,
dated as of August 15, 1997, from the Company to Trustee relating to the
issuance of the "6 1/2% Convertible Notes due September 1, 2004" of this series
(the "Supplemental Indenture").
The Securities will not be subject to redemption prior to September 7,
2000 and will be redeemable on and after such date at the option of the Company,
in whole or in part, upon not less than 20 nor more than 60 days notice to the
Holders, at the Redemption Prices (expressed as percentages of the principal
amount) set forth below.
The Redemption Price (expressed as a percentage of principal amount) is
as follows for the 12-month periods beginning on September 1 of the following
years (beginning on September 7, 2000, and ending on August 31, 2001, in the
case of the first such period):
YEAR REDEMPTION PRICE
---- ----------------
2000.............................................. 103.714%
2001.............................................. 102.786%
2002.............................................. 101.857%
2003.............................................. 100.929%
and thereafter is equal to 100% of the principal amount, 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 or
prior to 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.
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 Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is $1,000 or any integral multiple of
22
25
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be Outstanding after such repurchase is at least equal to
$1,000) for cash at a Repurchase Price equal to 100% of the principal amount
thereof plus interest accrued to, but excluding, the Repurchase Date. At the
option of the Company, the Repurchase Price may be paid in cash or, subject to
the conditions provided in the Indenture, by delivery of shares of Common Stock
having a fair market value equal to the Repurchase Price. For purposes of this
paragraph, the fair market value of shares of Common Stock shall be determined
by the Company and shall be equal to 95% of the average of the Closing Prices
Per Share for the five consecutive Trading Days immediately preceding the second
Trading Day prior to the Repurchase Date. Whenever in this Security there is a
reference, in any context, to the principal of any Security as of any time, such
reference shall be deemed to include reference to the Repurchase Price payable
in respect of such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price in
any provision of this Security shall not be construed as excluding the
Repurchase Price so payable in those provisions of this Security when such
express mention is not made; provided, however, that, for the purposes of the
succeeding paragraph, such reference shall be deemed to include reference to the
Repurchase Price only to the extent the Repurchase Price is payable in cash.
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 Debt 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.
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 September 1, 2004 (except
that, in case this Security or any portion hereof shall be called for redemption
or submitted for repurchase, such right shall terminate with respect to this
Security or portion hereof, as the case may be, so called for redemption or
submitted for repurchase, as the case may be, at the close of business on the
first Business Day next preceding the date fixed for redemption or repurchase,
as the case may be, as provided in the Indenture unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be), to
convert the principal amount of this Security (or any portion hereof which is
$1,000 or an integral multiple thereof) into fully paid and non-assessable
shares of the Common Stock of the Company, as said shares shall be constituted
at the date of conversion, at the Conversion Rate of 24.8524 shares of Common
Stock for each $1,000 principal amount of Securities, or at the adjusted
Conversion Rate in effect at the date of conversion determined as provided in
the Indenture, upon surrender of this Security, together with the conversion
notice hereon duly executed, to the office or agency of the
23
26
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
accompanied (if so required by the Company) by instruments of transfer, in form
satisfactory to the Company 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 Common Stock issued on conversion. The Company is not
required to issue fractional shares upon any such conversion, but shall make
adjustment therefor as provided in the Indenture. The Conversion Rate is subject
to adjustment as provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the Company is a
party or the sale of substantially all of the assets of the Company, the
Indenture shall be amended, without the consent of any Holders of Securities, so
that this Security, if then outstanding, will be convertible thereafter, during
the period this Security shall be convertible as specified above, only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or sale by a holder of the number of shares of Common
Stock into which this Security might have been converted immediately prior to
such consolidation, merger or sale (assuming such holder of Common Stock failed
to exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares). 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.
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
24
27
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 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.
25
28
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.
26
29
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 Custodian __________ under Uniform
right of survivorship (Minor)
and not as tenants
in common Gifts to Minors Act ______________
(State)
Additional abbreviations may also be used though not in the above list.
CONVERSION NOTICE
To Read-Rite 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 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.
27
30
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 if shares of
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 Common Stock and Security if to
be issued otherwise than to the registered Holder.
----------------------- ------------------------------------------------
(Name) Social Security or Other Taxpayer Identification
Number
-----------------------
-----------------------
(Address)
28
31
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(4) Pursuant to Section 601 of the Supplemental Indenture, the
undersigned hereby elects to have this Security repurchased by the Company.
(5) The undersigned hereby directs the Trustee or the Company to pay it
or __________________ an amount in cash or, at the Company's election, Common
Stock valued as set forth in the Indenture, equal to 100% of the principal
amount to be repurchased (as set forth below), plus interest accrued to, but
excluding, the Repurchase Date, as provided in the Supplemental Indenture.
Dated:
-------------------
--------------------------------------------
--------------------------------------------
Signature(s)
Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1943.
--------------------------------------------
Signature Guaranteed
Principal amount to be repurchased
(an integral multiple of $1,000):
----------------------
Remaining principal amount following such repurchase
(not less than $1,000):
---------------------------------
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.
29
