<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
READ-RITE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2770690
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
345 LOS COCHES STREET
MILPITAS, CALIFORNIA 95035
(408) 262-6700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CYRIL J. YANSOUNI
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
READ-RITE CORPORATION
345 LOS COCHES STREET
MILPITAS, CALIFORNIA 95035
(408) 262-6700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
FRANCES S. CURRIE
JOHN A. FORE
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(415) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. //
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /__________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /__________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Debt Securities and Common Stock, par value $0.0001 per share(3).. $350,000,000 $106,061
</TABLE>
(1) Or (i) if any Debt Securities are issued at an original issue discount,
such greater principal amount as shall result in an aggregate initial
offering price equal to the amount to be registered or (ii) if any Debt
Securities are issued with a principal amount denominated in a foreign
currency or composite currency, such principal amount as shall result in an
aggregate initial offering price equivalent thereto in United States
dollars at the time of initial offering.
(2) These figures are estimates made solely for the purpose of calculating the
registration fee pursuant to Rule 457(o). Exclusive of accrued interest,
if any, on the Debt Securities.
(3) Each share of Common Stock registered hereby shall include the associated
right to purchase one one-thousandth of a share of the Company's Series A
Participating Preferred Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION, DATED MARCH 28, 1997
PROSPECTUS $350,000,000
[LOGO] READ-RITE CORPORATION
Debt Securities and Common Stock
____________________________
Read-Rite Corporation ("Read-Rite" or the "Company") may from time to
time offer, together or separately, (1) its debt securities (the "Debt
Securities"), which may be either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities") and (2) shares of its common stock, par value $0.0001 per share
(the "Common Stock"). The Debt Securities and the Common Stock are
collectively referred to herein as the "Securities".
The Securities offered pursuant to this Prospectus may be issued in
one or more series or issuance and will be limited to $350,000,000 aggregate
public offering price (or its equivalent (based on the applicable exchange rate
at the time of the sale) in one or more foreign currencies, currency units or
composite currencies as shall be designated by the Company). Certain specific
terms of the particular Securities in respect of which this Prospectus is being
delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), including, where applicable, (i) in the case of Debt
Securities, the specific title, aggregate principal amount, the denomination,
whether such Debt Securities are secured or unsecured obligations, whether such
Debt Securities are senior or subordinated, maturity, premium, if any, the
interest rate (which may be fixed, floating or adjustable), the time and method
of calculating payment of interest, if any, the place or places where principal
of (and premium, if any) and interest, if any, on such Debt Securities will be
payable, the currency in which principal of (and premium, if any) and interest,
if any, on such Debt Securities will be payable, any terms of redemption at the
option of the Company or the Holder, any sinking fund provisions, terms for any
conversion into other Securities, the initial public offering price and other
special terms and (ii) in the case of Common Stock, the number of shares
offered for sale by the Company and the initial public offering price or method
of determining the initial public offering price. If so specified in the
applicable Prospectus Supplement, Debt Securities of a series may be issued in
whole or in part in the form of one or more temporary or permanent global
securities. The Company's Common Stock is listed on the Nasdaq National Market
under the symbol "RDRT". Any Common Stock sold pursuant to a Prospectus
Supplement will be quoted on such market.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities, when issued, will be subordinated in right of payment to all
Senior Debt (as defined herein) of the Company, including any outstanding
Senior Debt Securities. See "Description of Debt Securities -- Subordination
of Subordinated Debt Securities".
The Prospectus Supplement may contain information concerning U.S.
federal income tax considerations, if applicable to the Securities offered.
The Securities may be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. See "Plan of Distribution". If agents of the Company or any dealers
or underwriters are involved in the sale of the Securities in respect of which
the Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts, if any, are set forth
in or may be calculated from the Prospectus Supplement with respect to such
Securities.
This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement.
SEE "RISK FACTORS" ON PAGE 3 OF THIS PROSPECTUS FOR A DESCRIPTION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE SECURITIES.
_______________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION PASSED UPON THE ACCURACY OF ADEQUACY OF THIS PRO-
SPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, NW, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C.
20549, at prescribed rates. The Common Stock is listed for quotation on the
Nasdaq National Market. Reports and other information concerning the Company may
be inspected at the offices of the Nasdaq Stock Market at 1735 K Street NW,
Washington, D.C. 20001. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the World Wide Web site is http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities. This Prospectus which
constitutes part of the Registration Statement does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Securities offered
hereby, reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission at the addresses set forth above or
through the Commission's World Wide Web site.
Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
are qualified in all respects by reference to the copy of such contract or
document filed as an exhibit to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1996;
(c) The Company's Registration Statement on Form 8-A filed with the
Commission on September 16, 1991; and
(d) The Company's Registration Statement on Form 8-A filed with the
Commission on March 6, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Registration Statement of
which this Prospectus forms a part and prior to the termination of the offering
of the Securities offered hereby shall be deemed to be incorporated by reference
into this Prospectus and be a part hereof from the date of filing such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Corporate Secretary, Read-Rite Corporation, 345 Los Coches Street,
Milpitas, California 95035, telephone (408) 262-6700.
-2-
<PAGE> 4
THE COMPANY
Read-Rite Corporation, a Delaware corporation ("Read-Rite" or the
"Company"), is the world's largest independent supplier of magnetic recording
heads for rigid disk drives. The Company supplies magnetic recording heads as
head gimbal assemblies ("HGAs"), and for certain of its customers incorporates
multiple HGAs into headstack assemblies ("HSAs"). The Company's products are
sold primarily for use in 3.5" form factor rigid disk drives. Read-Rite
believes it supplies HGAs and HSAs for a broader range of disk drive products
than any other independent supplier.
Read-Rite was incorporated in California in 1981 and reincorporated in
Delaware in 1985. The Company's principal executive offices are located at 345
Los Coches Street, Milpitas, California 95035, and its telephone number is (408)
262-6700.
RISK FACTORS
Prior to making an investment decision with respect to the Securities
offered hereby, prospective investors should carefully consider the specific
factors set forth under the caption "Risk Factors" in the applicable Prospectus
Supplement pertaining thereto, together with all of the other information
appearing herein or therein or incorporated by reference herein, in light of
their particular investment objectives and financial circumstances.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement,
the net proceeds to be received by the Company from the sale of the Securities
will be used for general corporate purposes, including capital expenditures and
to meet working capital needs. Pending such uses, the Company will invest the
net proceeds in interest-bearing securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for the Company and its consolidated subsidiaries for the periods indicated.
The ratio of earnings to fixed charges represents the number of times that
fixed charges were covered by earnings. In computing the ratio, earnings
represent pretax income before minority interest and extraordinary credits
plus fixed charges. Fixed charges consist of interest expense and a portion of
rental expense which is considered representative of the interest factor. This
table will be updated in any Prospectus Supplements to the extent required.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED SEPTEMBER 30, ENDED
1992 1993 1994 1995 1996 DECEMBER 31, 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges....... 16.2x 2.2x 5.0x 22.7x 1.3x 3.1x
</TABLE>
-3-
<PAGE> 5
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture (the
"Senior Indenture"), between the Company, as issuer, and
as Trustee (the "Trustee"). The Subordinated Debt Securities are to be issued
under a separate Indenture (the "Subordinated Indenture"), also between the
Company, as issuer, and as Trustee. The Senior
Indenture and Subordinated Indenture are sometimes referred to collectively as
the "Indentures". A copy of the form of each Indenture is filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The Debt
Securities may be issued from time to time in one or more series. The
particular terms of each series, or of Debt Securities forming a part of a
series, which are offered by a Prospectus Supplement will be described in such
Prospectus Supplement.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indentures, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
GENERAL
The Indentures will provide that Debt Securities in separate series
may be issued thereunder from time to time without limitation as to aggregate
principal amount. The Company may specify a maximum aggregate principal amount
for the Debt Securities of any series. (Section 301) The Debt Securities are to
have such terms and provisions which are not inconsistent with the Indentures,
including as to maturity, principal and interest, as the Company may determine.
Unless otherwise specified in the applicable Prospectus Supplement, the Senior
Debt Securities when issued will be unsecured and unsubordinated obligations of
the Company and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
when issued will be subordinated in right of payment to the prior payment in
full of all Senior Debt of the Company, including any outstanding Senior Debt
Securities, as described under "Subordination of Subordinated Debt Securities"
and in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will set forth whether the Debt
Securities offered shall be Senior Debt Securities or Subordinated Debt
Securities, the price or prices at which the Debt Securities to be offered will
be issued and will describe the following terms of such Debt Securities: (1)
the title of such Debt Securities; (2) any limit on the aggregate principal
amount of such Debt Securities or the series of which they are a part; (3) the
Person to whom any interest on a Debt Security of the series shall be payable,
if other than the Person in whose name that Debt Security (or one or more
predecessor Debt Securities) is registered at the close of business on the
Regular Record Date for such interest; (4) the date or dates on which the
principal of any of such Debt Securities will be payable; (5) the rate or rates
at which any of such Debt Securities will bear interest, if any, the date or
dates from which any such interest will accrue, the Interest Payment Dates on
which any such interest will be payable and the Regular Record Date for any
such interest payable on any Interest Payment Date; (6) the place or places
where the principal of and any premium and interest on any of such Debt
Securities will be payable; (7) the period or periods within which, the price
or prices at which and the terms and conditions on which any
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<PAGE> 6
of such Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (8) the obligation, if any, of the Company to redeem or purchase
any of such Debt Securities pursuant to any sinking fund or analogous provision
or at the option of the Holder thereof, and the period or periods within which,
the price or prices at which and the terms and conditions on which any of such
Debt Securities will be redeemed or purchased, in whole or in part, pursuant to
any such obligation; (9) the denominations in which any of such Debt Securities
will be issuable, if other than denominations of $1,000 and any integral
multiple thereof; (10) if the amount of principal of or any premium or interest
on any of such Debt Securities may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;
(11) if other than the currency of the United States of America, the currency,
currencies or currency units in which the principal of or any premium or
interest on any of such Debt Securities will be payable (and the manner in
which the equivalent of the principal amount thereof in the currency of the
United States of America is to be determined for any purpose, including for the
purpose of determining the principal amount deemed to be Outstanding at any
time); (12) if the principal of or any premium or interest on any of such Debt
Securities is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than those in which
such Debt Securities are stated to be payable, the currency, currencies or
currency units in which payment of any such amount as to which such election is
made will be payable, the periods within which and the terms and conditions
upon which such election is to be made and the amount so payable (or the manner
in which such amount is to be determined); (13) if other than the entire
principal amount thereof, the portion of the principal amount of any of such
Debt Securities which will be payable upon declaration of acceleration of the
Maturity thereof; (14) if the principal amount payable at the Stated Maturity
of any of such Debt Securities will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any Maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to
be determined); (15) if applicable, that such Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the Indentures
described under "Defeasance and Covenant Defeasance-Defeasance and Discharge"
or "Defeasance and Covenant Defeasance-Defeasance of Certain Covenants," or
under both such captions; (16) if applicable, the terms of any right to convert
Debt Securities into shares of Common Stock of the Company or other securities
or property; (17) whether any of such Debt Securities will be issuable in whole
or in part in the form of one or more Global Securities and, if so, the
respective Depositaries for such Global Securities, the form of any legend or
legends to be borne by any such Global Security in addition to or in lieu of
the legends referred to under "Form, Exchange and Transfer" or "Global
Securities" and, if different from those described under such captions, any
circumstances under which any such Global Security may be exchanged in whole or
in part for Securities registered, and any transfer of such Global Security in
whole or in part may be registered, in the names of Persons other than the
Depositary for such Global Security or its nominee; (18) any addition to or
change in the Events of Default applicable to any of such Debt Securities and
any change in the right of the Trustee or the Holders to declare the principal
amount of any of such Debt Securities due and payable; (19) any addition to or
change in the covenants in the Indentures described under "Restrictive
Covenants" applicable to any of such Debt Securities; (20) provisions, if any,
granting special rights to holders of Debt Securities upon the occurrence of
certain events; (21) if Subordinated Debt Securities, whether such Subordinated
Debt Securities will rank senior to other series of Subordinated Debt
Securities issued under the Subordinated Debt Indenture; (22) if Subordinated
Debt Securities, any modification of the provisions regarding subordination set
forth in Article Fifteen of the Subordinated Debt Indenture; (23) any
modifications or additions to the definitions in the relevant Indenture; and
(24) any other terms of such Debt Securities not inconsistent with the
provisions of the relevant Indenture.
(Section 301)
5
<PAGE> 7
Debt Securities, including Original Issue Discount Securities, may be
sold at a substantial discount below their principal amount. Certain special
United States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount will be described in the
applicable Prospectus Supplement under "United States Taxation". In addition,
certain special United States federal income tax or other considerations (if
any) applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars will be described in the
applicable Prospectus Supplement.
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into
Common Stock or other securities or property will be set forth in the
Prospectus Supplement relating thereto. Such terms shall include provisions as
to whether conversion is mandatory or at the option of the Holder and may
include provisions pursuant to which the number of shares of Common Stock or
other securities or property to be received by the Holders of Debt Securities
upon conversion would be calculated according to the market price of Common
Stock or other securities or property as of a time stated in the applicable
Prospectus Supplement. (Article Fourteen)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt, including the Senior Debt Securities. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of all amounts due thereon or to be due
thereon, if any, on such Senior Debt before the Holders of the Subordinated
Debt Securities will be entitled to receive or retain any payment in respect of
the principal of (and premium, if any) or interest, if any, on the Subordinated
Debt Securities. (Section 1502)
By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Company who are not holders of Senior Debt or
Holders of Subordinated Debt Securities may recover less, ratably, than holders
of Senior Debt and may recover more, ratably, than the Holders of the
Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Subordinated
Debt Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Section 1503)
No payments on account of principal (or premium, if any) or interest,
if any, in respect of the Subordinated Debt Securities may be made if (i) a
default in the payment of principal, premium, if any,
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<PAGE> 8
or interest (including a default under any repurchase or redemption obligation)
or other amounts with respect to any Senior Debt occurs and is continuing
beyond the applicable grace period or (ii) any other event of default occurs
and is continuing with respect to Designated Senior Debt (as defined below)
that permits the holders thereof to accelerate the maturity thereof, and the
Trustee under the Subordinated Indenture receives a notice of such default (a
"Payment Blockage Notice") from the Company, a holder of such Designated Senior
Debt or other person permitted to give such notice under the Subordinated
Indenture. Payments on the Subordinated Debt Securities may and shall be
resumed (a) in the case of a payment default, upon the date on which such
default is cured or waived and (b) in the case of a nonpayment default, the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is
received. No new period of payment blockage may be commenced unless and until
(i) 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice and (ii) all scheduled payments of principal, premium,
if any, and interest on the Subordinated Debt Securities that have come due have
been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee under the Subordinated Indenture shall be, or be made, the basis for a
subsequent Payment Blockage Notice. (Section 1504) For purposes of the
subordination provisions, the payment, issuance and delivery of cash, property
or securities (other than stock and certain subordinated securities of the
Company) upon conversion of a Subordinated Debt Security will be deemed to
constitute payment on account of the principal of such Subordinated Debt
Security.
"Senior Debt" is defined in the Subordinated Indenture to mean: the
principal of (and premium, if any) and interest, if any (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent that such claim for
post-petition interest is allowed in such proceeding) on, rent with respect to,
and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Subordinated Indenture or thereafter created,
incurred or assumed: (a) indebtedness of the Company evidenced by credit or
loan agreements, notes, bonds, debentures or other written obligations, (b) all
obligations of the Company for money borrowed, (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind, (d)
obligations of the Company as lessee (i) under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles and (ii) under other leases for facilities, equipment or
related assets, whether or not capitalized, entered into or leased after the
date of the Subordinated Indenture for financing purposes (as determined by the
Company), (e) all obligations of the Company under interest rate and currency
swaps, caps, floors, collars, hedge agreements, forward contracts, or similar
agreements or arrangements, (f) all obligations of the Company with respect to
letters of credit, bankers' acceptances or similar facilities, (g) all
obligations of the Company issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable arising in the
ordinary course of business), (h) all obligations of the type referred to in
clauses (a) through (g) above of another Person and all dividends of another
Person, the payment of which, in either case, the Company has assumed or
guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on property of the Company, and (i) renewals, extensions,
modifications, replacements, restatements and refundings of, or any
indebtedness or obligation issued in exchange for, any such indebtedness or
obligation described in clauses (a) through (h) of this paragraph; provided,
however, that Senior Debt shall not include the Subordinated Debt Securities or
any such indebtedness or obligation if the terms of such indebtedness or
obligation (or the terms of the instrument under which, or pursuant
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to which it is issued) expressly provide that such indebtedness or obligation
is not superior in right of payment to the Subordinated Debt Securities.
"Designated Senior Debt" means the Company's obligations under any
particular Senior Debt in which the instrument creating or evidencing the same
or the assumption or guarantee thereof (or related agreements or documents to
which the Company is a party) expressly provides that such Senior Debt shall be
"Designated Senior Debt" for purposes of the Subordinated Indenture (provided
that such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Debt to exercise the rights of
Designated Senior Debt).
The Subordinated Indenture does not limit or prohibit the incurrence
of additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully
registered form, without coupons, and, unless otherwise specified in the
applicable Prospectus Supplement, only in denominations of $1,000 and integral
multiples thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indentures
and the limitations applicable to Global Securities, Debt Securities of each
series will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indentures and the limitations applicable
to Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for any
Debt Securities will be named in the applicable Prospectus Supplement. (Section
305) The Company may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that the Company will be required
to maintain a transfer agent in each Place of Payment for the Debt Securities
of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified
terms) are to be redeemed in part, the Company will not be required to (i)
issue, register the transfer of or exchange any Debt Security of that series
(or of that series and specified terms, as the case may be) during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any such Debt Security
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that may be selected for redemption and ending at the close of business on the
day of such mailing or (ii) register the transfer of or exchange any Debt
Security so selected for redemption, in whole or in part, except the unredeemed
portion of any such Debt Security being redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented,
in whole or in part, by one or more global securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby (a "Global Security"). Each Global Security will be registered in the
name of a depositary (the "Depositary") or a nominee thereof identified in the
applicable Prospectus Supplement, will be deposited with such Depositary or
nominee or a custodian therefor and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to
below and any such other matters as may be provided for pursuant to the
Indentures.
Notwithstanding any provision of the Indentures or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for
such Global Security or any nominee of such Depositary unless (i) the
Depositary has notified the Company that it is unwilling or unable to continue
as Depositary for such Global Security or has ceased to be qualified to act as
such as required by the Indentures, (ii) there shall have occurred and be
continuing an Event of Default with respect to the Debt Securities represented
by such Global Security or (iii) there shall exist such circumstances, if any,
in addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of
a Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indentures. Except in the limited circumstances referred to above, owners
of beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the
Indentures. All payments of principal of and any premium and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited
to institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depositary (with respect to participants' interests) or any such participant
(with respect to interests of persons held by such participants on their
behalf).
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Payments, transfers, exchanges and others matters relating to beneficial
interests in a Global Security may be subject to various policies and
procedures adopted by the Depositary from time to time. None of the Company,
the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of interest on a Debt Security on any Interest Payment Date will be
made to the Person in whose name such Debt Security (or one or more Predecessor
Debt Securities) is registered at the close of business on the Regular Record
Date for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears in
the Security Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the corporate trust office of the Trustee in The City of New York
will be designated as the Company's sole Paying Agent for payments with respect
to Debt Securities of each series. Any other Paying Agents initially
designated by the Company for the Debt Securities of a particular series will
be named in the applicable Prospectus Supplement. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that the Company will be required to maintain a Paying Agent in each
Place of Payment for the Debt Securities of a particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of
the principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company, and the Holder of such
Debt Security thereafter may look only to the Company for payment thereof.
(Section 1003)
RESTRICTIVE COVENANTS
Unless otherwise indicated in the applicable Prospectus Supplement,
the following provisions will apply to the Senior Debt Securities.
Limitations on Liens
The Senior Indenture will provide that the Company will not issue,
incur, create, assume or guarantee, and will not permit any Restricted
Subsidiary (as defined below) to issue, incur, create, assume or guarantee, any
debt for borrowed money secured by a mortgage, security interest, pledge, lien,
charge or other encumbrance ("mortgages") upon any Principal Property (as
defined below) of the Company or any Restricted Subsidiary or upon any shares
of stock or indebtedness of any Restricted Subsidiary (whether such Principal
Property, shares or indebtedness are now existing or owned or hereafter created
or acquired) without in any such case effectively providing concurrently with
the issuance, incurrence, creation, assumption or guarantee of any such secured
debt, or the grant of a mortgage with respect to
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any such indebtedness, that the Senior Debt Securities (together with, if the
Company shall so determine, any other indebtedness of or guarantee by the
Company or such Restricted Subsidiary ranking equally with the Senior Debt
Securities) shall be secured equally and ratably with (or, at the option of the
Company, prior to) such secured debt. The foregoing restriction, however, will
not apply to: (a) mortgages on property existing at the time of acquisition
thereof by the Company or any Subsidiary, provided that such mortgages were in
existence prior to the contemplation of such acquisition; (b) mortgages on
property, shares of stock or indebtedness or other assets of any corporation
existing at the time such corporation becomes a Restricted Subsidiary, provided
that such mortgages are not incurred in anticipation of such corporation
becoming a Restricted Subsidiary; (c) mortgages on property, shares of stock or
indebtedness existing at the time of acquisition thereof by the Company or a
Restricted Subsidiary or mortgages thereon to secure the payment of all or any
part of the purchase price thereof, or mortgages on property, shares of stock
or indebtedness to secure any indebtedness for borrowed money incurred prior
to, at the time of, or within 270 days after, the latest of the acquisition
thereof, or, in the case of property, the completion of construction, the
completion of improvements, or the commencement of substantial commercial
operation of such property for the purpose of financing all or any part of the
purchase price thereof, such construction, or the making of such improvements;
(d) mortgages to secure indebtedness owing to the Company or to a Restricted
Subsidiary; (e) mortgages existing at the date of the Senior Indenture; (f)
mortgages on property of a corporation existing at the time such corporation is
merged into or consolidated with the Company or a Restricted Subsidiary or at
the time of a sale, lease or other disposition of the properties of a
corporation as an entirety or substantially as an entirety to the Company or a
Restricted Subsidiary, provided that such mortgage was not incurred in
anticipation of such merger or consolidation or sale, lease or other
disposition; (g) mortgages in favor of the United States or any State,
territory or possession thereof (or the District of Columbia), or any
department, agency, instrumentality or political subdivision of the United
States or any State, territory or possession thereof (or the District of
Columbia), to secure partial, progress, advance or other payments pursuant to
any contract or statute or to secure any indebtedness incurred for the purpose
of financing all or any part of the purchase price or the cost of constructing
or improving the property subject to such mortgages; (h) mortgages created in
connection with the acquisition of assets or a project financed with, and
created to secure, a Nonrecourse Obligation (as defined below); and (i)
extensions, renewals, refinancings or replacements of any mortgage referred to
in the foregoing clauses (a), (b), (c), (d), (e), (f), (g), and (h) provided,
however, that any mortgages permitted by any of the foregoing clauses (a), (b),
(c), (d), (e), (f), (g), and (h) shall not extend to or cover any property of
the Company or such Restricted Subsidiary, as the case may be, other than the
property, if any, specified in such clauses and improvements thereto, and
provided further that any refinancing or replacement of any mortgages permitted
by the foregoing clauses (g) and (h) shall be of the type referred to in such
clauses (g) or (h), as the case may be.
Notwithstanding the restrictions described in the preceding paragraph,
the Company or any Restricted Subsidiary will be permitted to issue, incur,
create, assume or guarantee debt secured by a mortgage which would otherwise be
subject to such restrictions, without equally and ratably securing the Senior
Debt Securities, provided that after giving effect thereto, the aggregate
amount of all debt so secured by mortgages (not including mortgages permitted
under clauses (a) through (i) above) does not exceed 15% of the Consolidated
Net Tangible Assets (as defined below) of the Company as most recently
determined on or prior to such date.
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Limitations on Sale and Lease-Back Transactions
The Senior Indenture will provide that the Company will not, nor will
it permit any Restricted Subsidiary to, enter into any Sale and Lease-Back
Transaction (as defined below) with respect to any Principal Property, other
than any such transaction involving a lease for a term of not more than three
years or any such transaction between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries, unless (a) the Company or such Restricted
Subsidiary would be entitled to incur indebtedness secured by a mortgage on the
Principal Property involved in such transaction at least equal in amount to the
Attributable Debt (as defined below) with respect to such Sale and Lease-Back
Transaction, without equally and ratably securing the Senior Debt Securities,
pursuant to the limitation on liens in the Senior Indenture; or (b) the Company
shall apply an amount equal to the greater of the net proceeds of such sale or
the Attributable Debt with respect to such Sale and Lease-Back Transaction
within 180 days of such sale to either (or a combination of) the retirement
(other than any mandatory retirement, mandatory prepayment or sinking fund
payment or by payment at maturity) of debt for borrowed money of the Company or
a Restricted Subsidiary that matures more than 12 months after the creation of
such indebtedness or the purchase, construction or development of other
comparable property.
Certain Definitions Applicable to Covenants
The term "Attributable Debt" when used in connection with a Sale and
Lease-Back Transaction involving a Principal Property shall mean, at the time
of determination, the lesser of: (a) the fair value of such property (as
determined in good faith by the Board of Directors of the Company); or (b) the
present value of the total net amount of rent required to be paid under such
lease during the remaining term thereof (including any renewal term or period
for which such lease has been extended), discounted at the rate of interest set
forth or implicit in the terms of such lease or if not practicable to determine
such rate, the weighted average interest rate per annum (in the case of
Original Issue Discount Securities, the imputed interest rate) borne by the
Senior Debt Securities of each share outstanding pursuant to the Indenture
compounded semi-annually. For purposes of the foregoing definition, rent shall
not include amounts required to be paid by the lessee, whether or not
designated as rent or additional rent, on account of or contingent upon
maintenance and repairs, insurance, taxes, assessments, water rates and similar
charges. In the case of any lease which is terminable by the lessee upon the
payment of a penalty, such net amount shall be the lesser of the net amount
determined assuming termination upon the first date such lease may be
terminated (in which case the net amount shall also include the amount of the
penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated) and the
net amount determined assuming no such termination.
The term "Consolidated Net Tangible Assets" shall mean, as of any
particular time, total assets (excluding applicable reserves and other properly
deductible items) less: (a) total current liabilities, except for (1) notes and
loans payable; (2) current maturities of long- term debt and (3) current
maturities of obligations under capital leases; and (b) goodwill, patents and
trademarks, to the extent included in total assets; all as set forth on the
most recent consolidated balance sheet of the Company and its Restricted
Subsidiaries and computed in accordance with generally accepted accounting
principles.
The term "Nonrecourse Obligation" means indebtedness or other
obligations substantially related to (i) the acquisition of assets not
previously owned by the Company or any Restricted Subsidiary or (ii) the
financing of a project involving the development or expansion of properties of
the Company or
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any Restricted Subsidiary, as to which the obligee with respect to such
indebtedness or obligation has no recourse to the Company or any Restricted
Subsidiary or any assets of the Company or any Restricted Subsidiary other than
the assets which were acquired with the proceeds of such transaction or the
project financed with the proceeds of such transaction (and the proceeds
thereof).
The term "Principal Property" shall mean the land, land improvements,
buildings and fixtures (to the extent they constitute real property interests,
including any leasehold interest therein) constituting the principal corporate
office, any manufacturing facility or any distribution center (whether now
owned or hereafter acquired) which: (a) is owned by the Company or any
Subsidiary; (b) is located within any of the present 50 states of the United
States (or the District of Columbia); (c) has not been determined in good faith
by the Board of Directors of the Company not to be materially important to the
total business conducted by the Company and its Subsidiaries taken as a whole;
and (d) has a market value on the date as of which the determination is being
made in excess of 2.0% of Consolidated Net Tangible Assets of the Company as
most recently determined on or prior to such date.
The term "Restricted Subsidiary" shall mean any Subsidiary that owns
any Principal Property; provided, however, that the term "Restricted
Subsidiary" shall not include (a) any Subsidiary which is principally engaged
in financing receivables, or which is principally engaged in financing the
Company's operations outside the United States of America or (b) any
Subsidiary less that 80% of the voting stock of which is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries if the common stock of such
Subsidiary is traded on any national securities exchange or quoted on the
Nasdaq National Market or in the over-the-counter market.
The term "Sale and Lease-Back Transaction" shall mean any arrangement
with any person providing for the leasing by the Company or any Restricted
Subsidiary of any Principal Property which property has been or is to be sold
or transferred by the Company or such Restricted Subsidiary to such person.
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding voting stock having the power to elect a majority
of the board of directors of such corporation is at the time owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries. For the purposes of this
definition, "voting stock" means stock which ordinarily has voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that the Company may not consolidate with
or merge into any other Person (in a transaction in which the Company is not
the surviving corporation), or convey, transfer or lease its properties and
assets substantially as an entirety to, any Person (a "Successor Person"),
unless (i) the Successor Person (if any) is a corporation, limited liability
company, partnership, trust or other entity organized and existing under the
laws of any domestic jurisdiction and assumes the Company's obligations on the
Debt Securities and under the Indentures, (ii) immediately after giving effect
to the transaction, and treating any indebtedness which becomes an obligation
of the Company or any Subsidiary as a result of the transaction as having been
incurred by it at the time of the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing, (iii) if, as a result of the
transaction, property of the Company
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would become subject to a Lien that would not be permitted under the limitation
on liens described above under "Restrictive Covenants- Limitations on Liens",
the Company takes such steps as shall be necessary to secure the Debt
Securities, if any, equally and ratably with (or prior to) the indebtedness
secured by such Lien and (iv) certain other conditions are met. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indentures with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due,
whether or not such payment is prohibited by the subordination provisions of
the Subordinated Indenture; (b) failure to pay any interest on any Debt
Securities of that series when due, continued for 30 days, whether or not such
payment is prohibited by the subordination provisions of the Subordinated
Indenture; (c) failure to deposit any sinking fund payment, when due, in
respect of any Debt Security of that series, whether or not such deposit is
prohibited by the subordination provisions of the Subordinated Indenture; (d)
failure to perform any other covenant of the Company in the Indentures (other
than a covenant included in the Indentures solely for the benefit of a series
other than that series), continued for 60 days after written notice has been
given by the Trustee, or the Holders of at least 25% in aggregate principal
amount of the Outstanding Debt Securities of that series, as provided in the
Indentures; (e) certain events in bankruptcy, insolvency or reorganization; and
(f) any other Event of Default specified in the applicable Prospectus
Supplement. (Section 501)
The Indentures will provide that if an Event of Default (other than an
Event of Default described in clause (e) above) with respect to the Debt
Securities of any series at the time Outstanding shall occur and be continuing,
either the Trustee or the Holders of at least 25% in aggregate principal amount
of the Outstanding Securities of that series by notice as provided in the
Indentures may declare the principal amount of the Debt Securities of that
series (or, in the case of any Debt Security that is an Original Issue Discount
Security or the principal amount of which is not then determinable, such
portion of the principal amount of such Debt Security, or such other amount in
lieu of such principal amount, as may be specified in the terms of such Debt
Security) to be due and payable immediately. If an Event of Default described
in clause (e) above with respect to the Debt Securities of any series at the
time Outstanding shall occur, the principal amount of all the Debt Securities
of that series (or, in the case of any such Original Issue Discount Security or
other Debt Security, such specified amount) will automatically, and without any
action by the Trustee or any Holder, become immediately due and payable. After
any such acceleration, but before a judgment or decree based on acceleration,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal (or other specified amount), have been cured or waived as
provided in the Indentures. (Section 502) For information as to waiver of
defaults, see "Modification and Waiver".
Subject to the provisions of the Indentures relating to the duties of
the Trustee in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indentures at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of that series. (Section 512)
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No Holder of a Debt Security of any series will have any right to
institute any proceeding with respect to the Indentures, or for the appointment
of a receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Debt Securities of that series, (ii) the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities of
that series have made a written request, and such Holder or Holders have
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee and (iii) the Trustee has failed to institute such proceeding, and has
not received from the Holders of a majority in aggregate principal amount of
the Outstanding Securities of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security. (Section 508)
The Indentures will include a covenant requiring the Company to
furnish to the Trustee annually a statement by certain of its officers as to
whether or not the Company, to their knowledge, is in default in the
performance or observance of any of the terms, provisions and conditions of the
Indentures and, if so, specifying all such known defaults. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Security affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of principal of or interest on, any Debt
Security, (b) reduce the principal amount of, or any premium or interest on,
any Debt Security, (c) reduce the amount of principal of an Original Issue
Discount Security or any other Debt Security payable upon acceleration of the
Maturity thereof, (d) change the place or currency of payment of principal of,
or any premium or interest on, any Debt Security, (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Security, (f) in the case of Subordinated Debt Securities, modify the
subordination provisions in a manner adverse to the Holders of the Subordinated
Debt Securities, (g) reduce the percentage in principal amount of Outstanding
Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indentures, (h) reduce the percentage in
principal amount of Outstanding Securities of any series necessary for waiver
of compliance with certain provisions of the Indentures or for waiver of
certain defaults or (i) modify such provisions with respect to modification and
waiver. (Section 902)
The Indentures will provide that the Holders of a majority in
aggregate principal amount of the Outstanding Securities of any series may
waive, on behalf of the Holders of all Debt Securities of such series,
compliance by the Company with certain restrictive provisions of the
Indentures. (Sections 1010 and 1008 of the Senior Indenture and the
Subordinated Indenture, respectively) The Holders of a majority in principal
amount of the Outstanding Securities of any series may waive any past default
under the Indentures, except a default in the payment of principal, premium or
interest and certain covenants and provisions of the Indentures which cannot be
amended without the consent of the Holder of each Outstanding Security of such
series affected. (Section 513)
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The Indentures will provide that in determining whether the Holders of
the requisite principal amount of the Outstanding Securities have given or
taken any direction, notice, consent, waiver or other action under the
Indentures as of any date, (i) the principal amount of an Original Issue
Discount Security that will be deemed to be Outstanding will be the amount of
the principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (ii) if, as of such date,
the principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be
an amount determined in the manner prescribed for such Debt Security and (iii)
the principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that will be deemed to be Outstanding will be the
U.S. dollar equivalent, determined as of such date in the manner prescribed for
such Debt Security, of the principal amount of such Debt Security (or, in the
case of a Debt Security described in clause (i) or (ii) above, of the amount
described in such clause). Certain Debt Securities, including those for whose
payment or redemption money has been deposited or set aside in trust for the
Holders and those that have been fully defeased pursuant to Section 1302, will
not be deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled
to set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indentures, in the manner and
subject to the limitations provided in the Indentures. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such other shorter
period as may be specified by the Company (or the Trustee, if it set the record
date), and may be shortened or lengthened (but not beyond 180 days) from time
to time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus
Supplement, the Company may elect, at its option at any time, to have the
provisions of Section 1302, relating to defeasance and discharge of
indebtedness, or Section 1303, relating to defeasance of certain restrictive
covenants in the Indentures, applied to the Debt Securities of any series, or
to any specified part of a series. (Section 1301)
Defeasance and Discharge. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1302 applied to any
Subordinated Debt Securities, the provisions of Article Fifteen of the
Subordinated Indenture relating to subordination will cease to be effective
and, with respect to any Debt Securities, the Company will be discharged from
all its obligations with respect thereto (except for certain obligations to
exchange or register the transfer of Debt Securities, to replace stolen, lost
or mutilated Debt Securities, to maintain paying agencies and to hold moneys
for payment in trust) upon the deposit in trust for the benefit of the Holders
of such Debt Securities of money or U.S. Government Obligations, or both,
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indentures and
such Debt Securities. Such defeasance or discharge may occur only if, among
other things, the Company has delivered to the Trustee an Opinion of Counsel to
the effect that
16
<PAGE> 18
the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling, or there has been a change in tax
law, in either case to the effect that Holders of such Debt Securities will not
recognize gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge were not to occur. (Sections
1302 and 1304)
Defeasance of Certain Covenants. The Indentures will provide that,
upon the Company's exercise of its option (if any) to have Section 1303 applied
to any Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Restrictive Covenants" and in the
last sentence under "Consolidation, Merger and Sale of Assets" and any that may
be described in the applicable Prospectus Supplement, and the occurrence of
certain Events of Default, which are described above in clause (d) (with
respect to such restrictive covenants) under "Events of Default" and any that
may be described in the applicable Prospectus Supplement, will be deemed not to
be or result in an Event of Default, in each case with respect to such Debt
Securities, and, in the case of the Subordinated Indenture, the provisions of
Article Fifteen relating to subordination will cease to be effective with
respect to any Subordinated Debt Securities. The Company, in order to exercise
such option, will be required to deposit, in trust for the benefit of the
Holders of such Debt Securities, money or U.S. Government Obligations, or both,
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indentures and
such Debt Securities. The Company will also be required, among other things,
to deliver to the Trustee an Opinion of Counsel to the effect that Holders of
such Debt Securities will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance were not to occur. In the event the Company exercised this option
with respect to any Debt Securities and such Debt Securities were declared due
and payable because of the occurrence of any Event of Default, the amount of
money and U.S. Government Obligations so deposited in trust would be sufficient
to pay amounts due on such Debt Securities at the time of their respective
Stated Maturities but may not be sufficient to pay amounts due on such Debt
Securities upon any acceleration resulting from such Event of Default. In such
case, the Company would remain liable for such payments. (Sections 1303 and
1304)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the Security Register.
(Sections 101 and 106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name a Debt Security is registered as the
absolute owner thereof (whether or not such Debt Security may be overdue) for
the purpose of making payment and for all other purposes. (Section 308)
GOVERNING LAW
17
<PAGE> 19
The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the law of the State of New York. (Section 112)
18
<PAGE> 20
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 160,000,000
shares of common stock, $0.0001 par value per share ("Common Stock"), and
4,000,000 shares of preferred stock, $0.0001 par value per share (the
"Preferred Stock"). Of such shares of Preferred Stock, 116,000 shares are
designated as Series A Participating Preferred Stock (the "Series A
Preferred"). As of March 27, 1997, there were 47,334,858 shares of Common Stock
issued and outstanding and no shares of Preferred Stock issued and outstanding.
The following summary is qualified in its entirety by reference to the
Company's Charter and Bylaws.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding Preferred Stock, the holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to the prior liquidation rights of the
Preferred Stock, if any, then outstanding. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and non-assessable.
PREFERRED STOCK
The Board of Directors has designated 116,000 shares of the Preferred
Stock as Series A Preferred. See "Preferred Share Rights." The Board of
Directors has the authority to issue any undesignated shares of Preferred Stock
in one or more series and to fix the rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend rights,
voting rights, terms of redemption, redemption prices, liquidation preferences
and the number of shares constituting any series or the designation of such
series, without any further vote or action by the stockholders. The issuance of
Preferred Stock may have the effect of delaying or preventing a change in
control of the Company without further action by the stockholders. The issuance
of Preferred Stock with voting and conversion rights may adversely affect the
voting power of the holders of Common Stock, including the loss of voting
control to others. The Company has no present plans to issue any of the
Preferred Stock except pursuant to the Rights described below.
PREFERRED SHARE RIGHTS
On March 3, 1997, pursuant to a Preferred Shares Rights Agreement, (the
"Rights Agreement") between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent"), the Company's Board of Directors
declared a dividend of one right (a "Right") to purchase one one-thousandth
share of the Company's Series A Preferred for each outstanding share of Common
Stock ("Common Shares"). The dividend is payable on March 17, 1997 (the "Record
Date") to stockholders of record as of the close of business on that day. Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Preferred at an exercise price of $150.00
(the "Purchase Price"), subject to adjustment.
The following summary of the principal terms of the Rights Agreement is
a general description only and is subject to the detailed terms and conditions
of the Rights Agreement. A copy of the Rights Agreement is incorporated by
reference herein as Exhibit 4.5 to this Registration Statement.
Rights Evidenced by Common Share Certificates. The Rights will not be
exercisable until the Distribution Date (defined below). Certificates for the
Rights ("Rights Certificates") will not be sent to stockholders and the Rights
will attach to and trade only together with the Common Shares. Accordingly,
Common Share certificates outstanding on the Record Date will evidence the
Rights related thereto, and Common Share certificates issued after the Record
Date will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender or transfer of any certificates for Common Shares, outstanding as
of the Record Date, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
19
<PAGE> 21
Distribution Date. The Rights will separate from the Common Shares,
Rights Certificates will be issued and the Rights will become exercisable upon
the earlier of: (i) ten (10) days (or such later date as may be determined by
the Board of Directors) following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares, or (ii) ten (10) business days (or such later date as
may be determined by the Board of Directors) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding Common Shares. The earlier of such dates
is referred to as the "Distribution Date."
Issuance of Rights Certificates; Expiration of Rights. As soon as
practicable following the Distribution Date, separate Rights Certificates will
be mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Rights Certificates alone will
evidence the Rights from and after the Distribution Date. The Rights will expire
on the earliest of (i) March 17, 2007 (the "Final Expiration Date") or (ii)
redemption or exchange of the Rights as described below.
Initial Exercise of the Rights. Following the Distribution Date, and
until one of the further events described below, holders of the Rights will be
entitled to receive, upon exercise and the payment of the Purchase Price, one
one-thousandth of a share of Series A Preferred.
Right to Buy Company Common Shares. Unless the Rights are earlier
redeemed, in the event that an Acquiring Person becomes the beneficial owner of
20% or more of the Company's Common Shares then outstanding, then proper
provision will be made so that each holder of a Right which has not theretofore
been exercised (other than Rights beneficially owned by the Acquiring Person or
any affiliate of the Acquiring Person, which will thereafter be void) will
thereafter have the right to receive, upon exercise, Common Shares having a
value equal to two times the Purchase Price. In the event that the Company does
not have sufficient Common Shares available for all Rights to be exercised, or
the Board decides that such action is necessary and not contrary to the
interests of Rights holders, the Company may instead substitute cash, assets or
other securities for the Common Shares for which the Rights would have been
exercisable.
Right to Buy Acquiring Company Stock. Similarly, unless the Rights are
earlier redeemed, in the event that, after an Acquiring Person becomes the
beneficial owner of 20% or more of the Company's Common Shares then outstanding,
(i) the Company is acquired in a merger or other business combination
transaction, or (ii) 50% or more of the Company's consolidated assets or earning
power are sold (other than in transactions in the ordinary course of business),
each holder of a Right which has not previously been exercised (other than
Rights beneficially owned by the Acquiring Person or any affiliate of the
Acquiring Person, which will thereafter be void) will thereafter have the right
to receive, upon exercise, shares of common stock of the acquiring company
having a value equal to two times the Purchase Price.
Exchange Provision. At any time after the acquisition by an Acquiring
Person of beneficial ownership of 20% or more of the Company's outstanding
Common Shares and prior to the acquisition by any person or entity of beneficial
ownership of 50% or more of the Company's outstanding Common Shares, the Board
of Directors of the Company may exchange the Rights (other than Rights owned by
the Acquiring Person), in whole or in part, at an exchange ratio of one Common
Share per Right.
Redemption. At any time on or prior to the close of business on the
earlier of (i) the tenth day following the acquisition by an Acquiring Person of
beneficial ownership of 20% or more of the Company's Common Shares or such later
date as may be determined by the Board of Directors and publicly announced by
the Company, or (ii) the Final Expiration Date of the Rights, the Company may
redeem the Rights in whole, but not in part, at a price of $0.001 per Right.
Adjustments to Prevent Dilution. The Purchase Price payable, the number
of Rights, and the number of shares of Series A Preferred or Common Shares or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time in connection with certain dilutive issuances by
the Company as set forth in the Rights Agreement. With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.
Cash Paid Instead of Issuing Fractional Shares. No fractional portion
less than integral multiples of one Common Share or one one-thousandth of a
share of Series A Preferred will be issued upon exercise of a Right and in lieu
thereof, an adjustment in cash will be made based on the market price of the
security to be so issued on the last trading date prior to the date of exercise.
20
<PAGE> 22
No Stockholders' Rights Prior to Exercise. Until a Right is exercised,
the holder thereof, as such, will have no rights as a stockholder of the Company
(other than any rights resulting from such holder's ownership of Common Shares),
including, without limitation, the right to vote or to receive dividends.
Amendment of Rights Agreement. The provisions of the Rights Agreement
may be supplemented or amended by the Board of Directors in any manner prior to
the close of business on the date the Rights separate from the Common Shares and
become exercisable. After such date, the provisions of the Rights Agreement may
be amended by the Board in order to cure any ambiguity, defect or inconsistency,
to make changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.
Rights and Preferences of the Series A Preferred. Series A Preferred
purchasable upon exercise of the Rights will not be redeemable. Each share of
Series A Preferred will be entitled to an aggregate dividend of 1,000 times the
dividend declared per Common Share. In the event of liquidation, the holders of
the Series A Preferred will be entitled to 1,000 times the amount paid per
Common Share plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment.
Each share of Series A Preferred will have 1,000 votes, voting together with the
Common Shares. These rights are protected by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights of
the shares of Series A Preferred, the value of the one one-thousandth interest
in a share of Series A Preferred purchasable upon exercise of each Right should
approximate the value of one Common Share.
Certain Anti-takeover Effects. The Rights may have the effect of
rendering more difficult or discouraging an acquisition of the Company deemed
undesirable by the Board of Directors. The Rights may cause substantial
dilution to a person or group that attempts to acquire the Company on terms or
in a manner not approved by the Company's Board of Directors, except pursuant
to an offer conditioned upon the negation, purchase or redemption of the
Rights.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"), which, subject to certain exceptions,
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three (3) years following the time
that such stockholder became an interested stockholder, unless: (i) prior to
such time, the board of directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes
21
<PAGE> 23
of determining the number of shares outstanding those shares owned (a) by
persons who are directors and also officers and (b) by employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer, or (iii) at or subsequent to such time, the business combination is
approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of
at least 66-2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
Section 203 defines "business combination" to include: (i) any merger
or consolidation involving the corporation and the interested stockholder, (ii)
any sale, transfer, pledge or other disposition of 10% or more of the assets of
the corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an "interested stockholder" as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholders Services, L.L.C.
22
<PAGE> 24
PLAN OF DISTRIBUTION
The Company may sell the Securities separately or together, (i) to one
or more underwriters or dealers for public offering and sale by them and (ii) to
investors directly or through agents. The distribution of the Securities may be
effected from time to time in one or more transactions at a fixed price or
prices (which may be changed from time to time), at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Each Prospectus Supplement will describe the method of
distribution of the Securities offered thereby.
In connection with the sale of the Securities, underwriters, dealers or
agents may receive compensation from the Company or from purchasers of the
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers or agents which
participate in the distribution of the Securities may be deemed to be
underwriters under the Securities Act and any discounts or commissions received
by them and any profit on the resale of the Securities received by them may be
deemed to be underwriting discounts and commissions thereunder. Any such
underwriter, dealer or agent will be identified and any such compensation
received from the Company will be described in the Prospectus Supplement. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Under agreements that may be entered into with the Company,
underwriters, dealers and agents may be entitled to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which the
underwriters, dealers or agents may be required to make in respect thereof.
The Company may grant underwriters who participate in the distribution
of Securities an option to purchase additional Securities to cover
over-allotments, if any.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with or perform services for the Company in
the ordinary course of business.
LEGAL OPINIONS
The validity of the Securities is being passed upon for the Company by
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The consolidated financial statements of Read-Rite Corporation
appearing in Read-Rite Corporation's Annual Report (Form 10-K) for the year
ended September 30, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
23
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses, other than any
underwriting discount and commissions, in connection with the issuance and
distribution of the Securities being registered. All of the amounts are
estimates, except the registration fee.
<TABLE>
<CAPTION>
AMOUNT TO BE PAID
-----------------
<S> <C>
Registration fee.................................................. $ 106,061
Trustee's fees and expenses....................................... *
Accounting fees and expenses...................................... *
Printing and engraving............................................ *
Transfer agent and registrar fees and expenses.................... *
Blue Sky and legal investment fees and expenses................... *
Legal fees and expenses of the registrant......................... *
Miscellaneous..................................................... *
-------------
Total.................................................... $ *
=============
</TABLE>
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("Delaware Law")
authorizes a court to award or a corporation's Board of Directors to grant
indemnification to directors and officers in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended. The registrant's Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by Delaware Law. The registrant has entered into indemnification agreements with
its directors and certain of its officers. The indemnification agreements
provide the registrant's directors and elected officers with further
indemnification to the maximum extent permitted by Delaware Law.
Reference is made to the form of Underwriting Agreement (Common Stock)
and Underwriting Agreement (Debt Securities) filed as Exhibit 1.1 and Exhibit
1.2, respectively, to this registration statement for certain provisions
regarding indemnification of officers and directors of the registrant by the
several Underwriters.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
1.1 Form of Underwriting Agreement (Common Stock)*.
1.2 Form of Underwriting Agreement (Debt Securities)*.
4.1 Form of Senior Indenture*.
4.2 Form of Subordinated Indenture*.
4.3 Form of Senior Debt Security (included in Exhibit
4.1)*.
4.4 Form of Subordinated Debt Security (included in Exhibit
4.2)*.
4.5+ Preferred Shares Rights Agreement, dated as of March 3,
1997 between the Registrant and ChaseMellon Shareholder
Services, L.L.C., including the Certificate of
Designation, the form of Rights Certificate and the
Summary of Rights attached thereto as Exhibits A, B and
C, respectively.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation*.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Wilson Sonsini Goodrich & Rosati,
Professional Corporation (included in Exhibit 5.1)*.
24.1 Power of Attorney of certain directors and officers of
the Company (contained on Page II-4).
25.1 Form T-1 Statement of Eligibility and Qualification of
Trustee for Senior Indenture under the Trust
Indenture Act of 1939*.
25.2 Form T-1 Statement of Eligibility and Qualification of
Trustee for Subordinated Indenture under the Trust
Indenture Act of 1939*.
- ---------------------------
</TABLE>
* To be filed by amendment.
+ Incorporated by reference to the Company's Registration Statement on Form
8-A filed with the Securities and Exchange Commission on March 6, 1997.
II-1
<PAGE> 26
ITEM 17. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that the undertakings set forth in clauses (i) and (ii)
above shall not apply if the information required to be included in a
post-effective amendment by these clauses is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrant hereby undertakes, that, for purposes of
determining any liability under the Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification of liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
4. The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-2
<PAGE> 27
(b) For the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Milpitas, State of California, on March 27, 1997.
READ-RITE CORPORATION
By: /s/ Frederic Schwettmann
-------------------------------------
Frederic Schwettmann
President and Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Frederic Schwettmann and John T.
Kurtzweil, and each of them individually, as his true and lawful attorneys-
in-fact and agents with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign the
Registration Statement filed herewith and any or all amendments to said
Registration Statement (including post-effective amendments and registration
statements filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended and otherwise), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission granting unto said attorneys-in-fact and agents the full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or her substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, on March 27,
1997 this Registration Statement has been signed by the following persons in the
capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE TITLE
---------------- -----
<S> <C>
/s/ Cyril J. Yansouni Chief Executive Officer (Principal Executive
- ----------------------------------- Officer) and Chairman of the Board of Directors
Cyril J. Yansouni
/s/ Frederic Schwettmann
- ----------------------------------- President, Chief Operating Officer and Director
Frederic Schwettmann
/s/ John T. Kurtzweil Vice President, Finance and Chief Financial Officer
- ----------------------------------- (Principal Financial and Accounting Officer)
John T. Kurtzweil
/s/ John G. Linvill Director
- -----------------------------------
John G. Linvill
/s/ William J. Almon Director
- -----------------------------------
William J. Almon
/s/ Michael L. Hackworth Director
- -----------------------------------
Michael L. Hackworth
/s/ Matthew J. O'Rourke Director
- -----------------------------------
Matthew J. O'Rourke
</TABLE>
II-4
<PAGE> 29
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT TABLE
- ------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement (Common Stock)*.
1.2 Form of Underwriting Agreement (Debt Securities)*.
4.1 Form of Senior Indenture*.
4.2 Form of Subordinated Indenture*.
4.3 Form of Senior Debt Security (included in Exhibit
4.1)*.
4.4 Form of Subordinated Debt Security (included in Exhibit
4.2)*.
4.5+ Preferred Shares Rights Agreement, dated as of March 3,
1997 between the Registrant and ChaseMellon Shareholder
Services, L.L.C., including the Certificate of
Designation, the form of Rights Certificate and the
Summary of Rights attached thereto as Exhibits A, B and
C, respectively.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation*.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Wilson Sonsini Goodrich & Rosati,
Professional Corporation (included in Exhibit 5.1)*.
24.1 Power of Attorney of certain directors and officers of
the Company (contained on Page II-4).
25.1 Form T-1 Statement of Eligibility and Qualification of
Trustee for Senior Indenture under the Trust
Indenture Act of 1939*.
25.2 Form T-1 Statement of Eligibility and Qualification of
Trustee for Subordinated Indenture under the Trust
Indenture Act of 1939*.
</TABLE>
- ---------------------------
* To be filed by amendment.
+ Incorporated by reference to the Company's Registration Statement on Form
8-A filed with the Securities and Exchange Commission on March 6, 1997.
II-5
<PAGE> 1
EXHIBIT 12.1
READ-RITE CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, Fiscal Quarter
---------------------------------------------------------------------- Ended
1992 1993 1994 1995 1996 December 31, 1996
------- ------ ------- -------- ------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Income before income taxes,
minority interest and
extraordinary credit $67,763 $4,281 $28,767 $177,514 $ 3,916 $ 8,608
Fixed Charges 4,460 3,703 7,271 8,198 14,839 4,178
------- ------ ------- -------- ------- -------
"Earnings" 72,223 7,984 36,038 185,712 18,755 12,786
Divided by Fixed Charges 4,460 3,703 7,271 8,198 14,839 4,178
Ratio of Earnings to Fixed
Charges: 16.2 2.2 5.0 22.7 1.3 3.1
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of Read-Rite
Corporation for the registration of $350,000,000 of Debt Securities and Common
Stock and to the incorporation by reference therein of our report dated October
21, 1996 (except for Note 11, for which the date is December 11, 1996) with
respect to the consolidated financial statements and schedule of Read-Rite
Corporation included in its Annual Report (Form 10-K) for the year ended
September 30, 1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Jose, California
March 27, 1997
