<PAGE>
As filed with the Securities and Exchange Commission on February 7, 2000
(S-4) Registration No. 333-95527/(S-3) Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
Amendment #1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(with respect to the 10% Convertible Subordinated Notes due September 1, 2004
being issued in the exchange offer)
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(with respect to the additional 10% Convertible Subordinated Notes due
September 1, 2004 being offered for cash)
-------------------
READ-RITE CORPORATION
(Exact name of Registrant as specified in its charter)
-------------------
<TABLE>
<S> <C>
Delaware 94-2770690
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
</TABLE>
345 Los Coches Street Milpitas, California (408) 262-6700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-------------------
Cyril J. Yansouni 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:
<TABLE>
<S> <C>
John A. Fore, Esq. Abigail Arms, Esq.
Wilson Sonsini Goodrich & Rosati Shearman & Sterling
Professional Corporation 801 Pennsylvania Avenue, N.W.
650 Page Mill Road Washington, D.C. 20004
Palo Alto, CA 94304-1050 (202) 508-8000
(650) 493-9300
</TABLE>
-------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
-------------------
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is filed a post-effective amendment filed pursuant to Rule
462(b) 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. [_]
-------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Each Class of Maximum Maximum
Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Unit Offering Price Registration Fee
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10% Convertible
Subordinated Notes due $70,725,000
September 1, 2004..... $172,500,000 100% (1) $18,672 (2)(7)
- ---------------------------------------------------------------------------------------
10% Convertible
Subordinated Notes due
September 1, 2004
(3)................... $83,500,000 100% $83,500,000 $22,044 (7)
- ---------------------------------------------------------------------------------------
Common Stock, par value 26,363,275 $137,994,609
$0.0001 per share (4).. shares (5) $5.23435 (6) $36,431 (7)
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, this amount is
the market value as of January 25, 2000 of the maximum amount of 6 1/2%
Convertible Subordinate Notes due September 1, 2004 (the "existing notes")
that may be received by the Registrant from tendering holders in the
exchange offer.
(2) The registration fee has been calculated pursuant to Rule 457(f) under the
Securities Act of 1933.
(3) We are registering an additional amount of exchange notes to be offered for
cash to holders of existing notes who participate in the exchange offer and
for payment of fees to the dealer manager.
(4) Includes the associated Preferred Shares Purchase Rights issued under the
Registrant's Preferred Share Rights Agreement.
(5) The 26,363,275 shares of common stock are being registered to the extent
the Registrant elects to pay in common stock instead of cash under the
terms of the exchange notes or the exchange offer. Also includes such
indeterminate number of shares of Common Stock as shall be issuable upon
conversion of the exchange notes being registered hereunder. No additional
consideration shall be received for the Common Stock issuable upon
conversion of the exchange notes and therefore no registration fee is
required pursuant to Rule 457 under the Securities Act.
(6) Estimated in accordance with Rule 457(c) and Rule 457(d) solely for the
purpose of calculating the amount of the registration fee based on the
average of the high and low price of the Registrants common stock as
reported on The Nasdaq National Market on January 25, 2000.
(7) Previously paid.
-------------------
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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell securities, and we are not soliciting offers to buy these +
+securities, in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 7, 2000
PROSPECTUS
--------------
Exchange Offer for
10% Convertible Subordinated Notes due September 1, 2004 for its
6 1/2% Convertible Subordinated Notes due September 1, 2004
--------------
If you elect to participate in the exchange offer, you will receive from us
$1,000 principal amount of the 10% Convertible Subordinated Notes due September
1, 2004 for each $2,000 principal amount of the 6 1/2% Convertible Subordinated
Notes due September 1, 2004. In addition, if we do not make the interest
payment due March 1, 2000 on the 6 1/2% Convertible Subordinated Notes due
September 1, 2004 that you tender in the exchange offer, you will receive a
payment, in cash or in common stock at our election, of $50 for each $1,000
principal amount of the 10% Convertible Subordinated Notes due September 1,
2004 issued to you in the exchange offer. If you participate in the exchange
offer, you will have the right to participate in the cash offer under which we
are offering up to $50,000,000 of additional 10% Convertible Subordinated Notes
due September 1, 2004.
This exchange offer will expire at 5:00 p.m., Eastern Standard Time, on March
8, 2000, unless we extend the offer.
Our common stock is traded on The Nasdaq National Market under the symbol
"RDRT." On February 4, 2000, the last reported sale price from our common stock
on The Nasdaq National Market was $3 27/32 per share.
We are mailing this prospectus and the letter of transmittal on February 8,
2000.
--------------
Please see "Risk Factors" beginning on page 11 for a discussion of factors
that you should consider before you decide to participate in this exchange
offer or purchase additional exchange notes.
--------------
We have retained Georgeson Shareholder Communications Inc. as our information
agent to assist you in connection with the exchange offer. You may call
Georgeson Shareholder Communications Inc., at (800) 223-2064, toll free, to
receive additional documents and to ask questions.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
--------------
The Dealer Manager for the Exchange Offer:
Robertson Stephens
This prospectus is dated , 2000
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus is accurate as of any date other than the date of this prospectus.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary ................................................................... 4
Risk Factors .............................................................. 11
Special Note Regarding Forward Looking Statements ......................... 23
Use of Proceeds ........................................................... 24
Price Range of Common Stock ............................................... 24
Dividend Policy ........................................................... 24
Capitalization ............................................................ 25
Selected Consolidated Financial Data ...................................... 26
Bank Facility Refinancing.................................................. 28
The Exchange Offer ........................................................ 31
Cash Offer for Additional Exchange Notes................................... 39
Description of Exchange Notes ............................................. 40
Description of Existing Notes ............................................. 51
Description of Capital Stock .............................................. 61
Book-Entry System--The Depository Trust Company ........................... 64
Federal Income Tax Considerations ......................................... 66
Underwriting .............................................................. 71
Legal Matters ............................................................. 73
Experts ................................................................... 73
Where You Can Find Additional Information ................................. 73
</TABLE>
3
<PAGE>
SUMMARY
This summary does not contain all the information you should consider
before exchanging your existing notes for the exchange notes or investing in
additional exchange notes. You should read this entire prospectus carefully.
Unless otherwise indicated, "we," "us," "our" and similar terms refer to Read-
Rite Corporation.
Our company
Read-Rite Corporation is one of the world's largest independent suppliers
of magnetic recording heads for the hard disk drive market. Recording heads are
miniature components that read and write information to and from a hard-disk
drive or other storage medium. We design, manufacture and market magnetic
recording heads as head gimbal assemblies and incorporate multiple head gimbal
assemblies into headstack assemblies. A head gimbal assembly (generally
referred to as an "HGA") is a recording head bonded to a small metal suspension
that holds the head in position above or beneath a rotating disk in a computer
hard drive. Head stack assemblies (or "HSA") are sets of head gimbal assemblies
stacked together for installation in a computer hard drive. Our products are
sold primarily for use in 3.5" form factor hard disk drives. We also supply
magnetic recording heads for the tape drive market.
Our principal wafer manufacturing facility is located in Fremont,
California. We also have a secondary wafer fabrication facility at Read-Rite
SMI Corporation, our joint venture in Japan with Sumitomo Metal Industries,
Ltd. near Osaka, Japan. Our primary HGA fabrication and assembly facility is in
Bangkok, Thailand. Our primary HSA facilities are in Manila, Philippines and
Bangkok, Thailand. We manufacture wafers for tape heads at our Milpitas
facility, and perform device fabrication, assembly and test operations in the
Philippines.
We were incorporated in California in 1981 and reincorporated in Delaware
in 1985. Our principal office is located at 345 Los Coches Street, Milpitas,
California 95035, and our telephone number is (408) 262-6700. Our world wide
web address is http://www.readrite.com. Information on our web site does not
constitute part of this prospectus.
Company business strategy
Technology leadership, expansion of our customer and product base and
improved manufacturing efficiencies are extremely important to our future
success. 1999 was a year of transition, as our industry moved from one
recording head technology, called magnetoresistive or "MR technology," to a
more advanced technology, called giant magnetoresistive or "GMR technology." We
completed our GMR transition in the December 1999 quarter, producing over 10
million GMR heads. 1999 was also the year we firmly established Read-Rite as a
technology leader, announcing several world record setting areal density
demonstrations. Areal density refers to the amount of data which can be stored
on disks in computer hard disk drives. In the latest demonstration, in November
1999, we achieved a recording density equivalent to 50 GB per platter, which is
approximately five times the recording density of today's products. This
technology leadership has allowed us, in the quarter ending December 1999, to
ship GMR products to 5 major customers on 8 different mainstream desktop
programs. As we enter the March 2000 quarter, the strong demand for our current
products and the qualification status on new programs with our customers
positions us well for expected unit and revenue growth throughout fiscal year
2000. We remained focused on the cost structure at our factories and will
continue to take appropriate actions to improve the efficiency and productivity
of our operations.
4
<PAGE>
Company's financing strategy
Effective February 1, 2000, we obtained from our bank group a new waiver,
forebearance and amendment to our bank agreement to permit us to issue the
exchange notes in the exchange offer and to sell up to $50 million of
additional exchange notes. This waiver expires on May 25, 2000, and will be
extended to August 25, 2000 if, in connection with the sale of the additional
notes, we and a majority of the banks have reached agreement as to:
(1) the lifting of the blockage notice, if any, on the existing notes;
(2) the payment by us of the interest to the holders of existing notes that
do not tender their existing notes in the exchange offer;
(3) the percentage of the proceeds of the cash raised, if any, from the
sale of the additional exchange notes, to be paid to the banks under
the bank facility; and
(4) other terms and conditions with respect to interest rates, fees and
covenants under the bank agreement.
The banks reserve the right under the current waiver to block the regularly
scheduled interest payment on the notes due on March 1, 2000. In the context of
negotiations concerning this waiver, forebearance and amendment, the banks
stated that they had a current intention to exercise their rights under the
indenture for the existing notes to block the regularly scheduled interest
payment on the notes due on March 1, 2000. Although we are unable to predict
what the banks will do, the exchange offer is intended to reduce the likelihood
that the banks will exercise this right by reducing the amount of our cash
required to make the March 1, 2000 interest payment to a level acceptable to
them. Our current plan is to complete the exchange offer, raise additional cash
proceeds from the sale of additional exchange notes and refinance the existing
bank facility as soon as possible.
Please read "Bank Facility Refinancing" for a detailed discussion of the
bank facility and our proposal to refinance our bank facility.
In addition, you should also carefully review the matters described under
"Risk Factors" to understand the risks affecting our ability to successfully
complete the exchange offer, raise additional money and refinance the bank
facility.
5
<PAGE>
The Exchange Offer
Terms Of The Exchange Offer
We have summarized the terms of the exchange offer in this section. Before
you decide whether to tender your existing notes in this offer, you should read
the detailed description of the offer under "The Exchange Offer" and of the
exchange notes under "Description of Exchange Notes" for further information.
Terms of the exchange
offer....................... We are offering up to $172,500,000 aggregate
principal amount of new 10% Convertible
Subordinated Notes due September 1, 2004 for up
to $345,000,000 aggregate principal amount of 6
1/2% Convertible Subordinated Notes due September
1, 2004. We are offering to exchange $1,000
principal amount of exchange notes for each
$2,000 principal amount of existing notes. In
addition, if we do not make the interest payment
due March 1, 2000 on the existing notes that you
tender in the exchange offer, you will receive a
payment, in cash or in common stock at our
election, of $50 for each $1,000 principal amount
of the exchange notes issued to you in the
exchange offer. If we elect to make this payment
in common stock, the shares of common stock will
be valued at 90% of the average of the closing
prices for the five trading days immediately
preceding the second trading day prior to the
interest payment date. You may tender all, some
or none of your existing notes. We may pay
interest on the exchange notes with shares of our
common stock, par value $0.0001 per share, or in
cash, solely at our option.
Conversion price............
The exchange notes will be convertible at any
time prior to maturity at a conversion price that
is equivalent to a 15% premium over the average
of the daily volume weighted average price for
our common stock for each of the five trading
days immediately preceding the second trading day
prior to the expiration date, subject to
adjustment.
Expiration date; extension;
termination...............
The exchange offer and withdrawal rights will
expire at 5:00 p.m., Eastern Standard Time, on
March 8, 2000, or any subsequent date to which we
extend it. We may extend the expiration date for
any reason. In the case of any extension, we will
issue a press release or other public
announcement no later than 9:00 a.m., Eastern
Standard Time, on the next business day after the
previously scheduled expiration date. You must
tender your existing notes prior to this date if
you wish to participate in the offer. We have the
right to:
.terminate the exchange offer,
. extend the expiration date of the exchange
offer and retain all tendered existing notes,
subject to your right to withdraw your
tendered notes, or
. waive any condition or otherwise amend the
terms of the exchange offer in any respect,
other than the condition that the
registration statement be declared effective.
6
<PAGE>
Conditions to the exchange The exchange offer is subject to the registration
offer....................... statement and any post-effective amendment to the
registration statement covering the exchange
notes being effective under the Securities Act of
1933. The offer also is subject to customary
conditions, which we may waive.
In addition, the offer is conditioned upon 66
2/3% of the existing notes being tendered in the
exchange offer. Please read "The Exchange Offer--
Conditions for completion of the exchange offer"
for more information.
Withdrawal rights........... You may withdraw a tender of your existing notes
at any time before the exchange offer expires by
delivering a written notice of withdrawal to
Norwest Bank Minnesota, National Association, the
exchange agent, before the expiration date. If
you change your mind, you may retender your
existing notes by again following the exchange
offer procedures before the exchange offer
expires.
Procedures for tendering
existing notes............
If you hold existing notes through a broker,
dealer, commercial bank, trust company or other
nominee, you should contact that person promptly
if you wish to tender your existing notes.
Tenders of your existing notes will be effected
by book-entry transfers through The Depository
Trust Company.
If you hold your existing notes through a broker,
dealer, commercial bank, trust company or other
nominee, you also may comply with the procedures
for guaranteed delivery.
Please do not send letters of transmittal to us.
You should send those letters to Norwest Bank
Minnesota, National Association, the exchange
agent. The exchange agent can answer your
questions regarding how to tender your existing
notes.
Interest.................... Interest on the exchange notes will be payable in
cash or, at our option, in common stock at a rate
of 10% per year, payable on March 1 and September
1 of each year.
Exchange agent.............. Norwest Bank Minnesota, National Association
Information agent...........
Georgeson Shareholder Communications Inc.
For information regarding the exchange offer,
please call (toll free (800) 223-2064; collect
(212) 440-9800).
Dealer manager.............. Robertson Stephens
To ascertain the conversion price to be used two
days prior to the expiration date, please call
(800) 234-2663.
Risk factors................ You should consider carefully the matters
described under "Risk Factors," as well as other
information set forth in this prospectus and in
the letter of transmittal.
7
<PAGE>
Deciding whether to
participate in the
exchange offer............
Neither we nor our officers or directors make any
recommendation as to whether you should tender or
refrain from tendering all or any portion of your
existing notes in the exchange offer. Further, we
have not authorized anyone to make any such
recommendation. You must make your own decision
whether to tender your existing notes in the
exchange offer and, if so, the aggregate amount
of existing notes to tender after reading this
prospectus and the letter of transmittal and
consulting with your advisers, if any, based on
your own financial position and requirements.
Consequences of not
exchanging existing
notes..................... If you do not exchange your existing notes in the
exchange offer, your existing notes will be
subordinate to the exchange notes. Further, the
liquidity and trading market for existing notes
not tendered in the exchange could be adversely
affected to the extent existing notes are
tendered and accepted in the exchange offer.
Cash offer.................. If you tender some or all of your existing notes
in the exchange offer, you may purchase
additional exchange notes in the cash offer
described below.
Cash Offer
Cash offer for additional
exchange notes............
We are offering up to $50,000,000 aggregate
additional exchange notes for cash. The
discussion under the heading "Cash Offer For
Additional Exchange Notes" provides further
information regarding the cash offer.
Use of proceeds.............
If the interest payment on the existing notes not
tendered in the exchange has not been paid or
provided for by us prior to the closing date, a
purchaser of the additional exchange notes will
deposit the purchase price for the additional
exchange notes and we will deposit a global
security for the additional exchange notes with
the escrow agent, which will then be released
from escrow if the following two conditions are
met on or prior to March 30, 2000:
. the blockage notice, if any, on the existing
notes has been lifted by the banks under our
bank facility, allowing us to make the payment
of interest on the existing notes not tendered
in the exchange offer; and
. we have agreed with the banks under our bank
facility as to the percentage of the escrow
proceeds to be paid to the banks.
Norwest Bank Minnesota will be the escrow agent.
Robertson Stephens will act as agent for the
purchasers under the Escrow Agreement. If these
conditions are met, remaining proceeds from the
escrow after the payment of funds to the banks
will be used by us for general corporate
purposes.
Placement agent............. Robertson Stephens
8
<PAGE>
Comparison of Exchange Notes and Existing Notes
The following is a brief summary of the terms of the exchange notes and the
existing notes. For a more complete description of the exchange notes, see
"Description of Exchange Notes."
<TABLE>
<CAPTION>
Exchange Notes Existing Notes
-------------------------------- ---------------------------------
<C> <S> <C>
Securities.......... $172,500,000 aggregate principal $345,000,000 aggregate principal
amount of 10% Convertible amount of 6 1/2% Convertible
Subordinated Notes due September Subordinated Notes due September
1, 2004. The exchange notes will 1, 2004.
be issued in principal amount of
$1,000 and integral multiples of
$1,000.
Issuer.............. Read-Rite Corporation. Read-Rite Corporation.
Maturity............ September 1, 2004. September 1, 2004.
Interest............ Interest on the exchange notes Interest on the existing notes is
will be payable in cash or, at payable in cash at a rate of 6
our option, in common stock at a 1/2% per year, payable on March 1
rate of 10% per year, payable on and September 1 of each year.
March 1 and September 1 of each
year. If we elect to pay
interest in common stock, the
shares of common stock will be
valued at 90% of the average of
the closing prices for the five
trading days immediately
preceding the second trading day
prior to the interest payment
date.
Conversion:
General........... The exchange notes will be The existing notes are
convertible at any time prior to convertible at any time prior to
the maturity at a conversion the maturity at a conversion rate
price that is equivalent to a of 24.8524 shares for each $1,000
15% premium over the average of principal amount of existing
the daily volume weighted notes, subject to adjustment.
average price for our common
stock for each of the five
trading days immediately
preceding the second trading day
prior to the expiration date of
the exchange offer, subject to
adjustment.
Auto-conversion... We may elect to automatically None.
convert the exchange notes on or
prior to maturity if our common
stock price has exceeded 200% of
the conversion price for at
least 20 trading days during a
30-day trading period ending
five trading days prior to the
notice of automatic conversion.
If an automatic conversion
occurs on or prior to March 5,
2002, we will pay additional
interest in cash or, at our
option, in common stock equal to
two years worth of interest on
the
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Exchange Notes Existing Notes
------------------------ ---------------------------------
<C> <S> <C>
(Auto-conversion, converted exchange
continued) notes, less any interest
actually paid prior to
automatic conversion. If
we elect to pay the
additional interest in
common stock, the shares
of common stock will be
valued at 90% of the
average of the closing
prices for the five
trading days immediately
preceding the second
trading day prior to the
conversion date.
Ranking............. The exchange notes will The existing notes are
be subordinated to all subordinated to all of our senior
of our senior debt and debt and will be subordinated to
will be senior in right the exchange notes. As of
of payment to our December 31, 1999, we had
existing notes. The approximately $121.8 million of
exchange notes also are outstanding senior debt. The
effectively subordinated existing notes also are
to all indebtedness and effectively subordinated to all
other liabilities of our indebtedness and other
subsidiaries, including liabilities of our subsidiaries,
trade payables but including trade payables but
excluding intercompany excluding intercompany
liabilities. liabilities. As of December 31,
1999 our subsidiaries had
approximately $136.3 million
outstanding indebtedness and
other liabilities.
Optional We may redeem the We may redeem the existing notes
redemption........ exchange notes on or on or after September 7, 2000, in
after March 5, 2002, in whole or in part, on not less
whole or in part, on not than 20 but no more than 60 days'
less than 20 but no more notice, at the redemption prices
than 60 days' notice, at set forth in this prospectus,
the redemption prices plus accrued and unpaid interest,
set forth in this if any, to the redemption date.
prospectus, plus accrued
and unpaid interest, if
any, to the redemption
date.
Repurchase at option
of holders........ You may require us to You may require us to repurchase
repurchase all or part all or part of your existing
of your exchange notes notes upon a change in control at
upon a change in control a repurchase price equal to 100%
at a repurchase price of the outstanding principal
equal to 105% of the amount of the existing notes
outstanding principal being redeemed, plus any accrued
amount of the exchange and unpaid interest. We have the
notes being redeemed, option to pay the repurchase
plus any accrued and price in cash, common stock or a
unpaid interest. We have combination of cash and common
the option to pay the stock.
repurchase price in
cash, common stock or a
combination of cash and
common stock.
Listing............. The exchange notes are The existing notes trade in the
expected to trade in the over-the-counter market.
over-the-counter market.
</TABLE>
10
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before you decide
to exchange your existing notes for exchange notes or buy for cash additional
exchange notes. The risks and uncertainties described below are not the only
ones facing our company. Additional risks and uncertainties that we do not
presently know or that we currently deem immaterial may also impair our
business operations.
If any of the following risks actually occur, they could materially
adversely affect our business, financial condition or operating results. In
that case, the trading price of our common stock and the existing notes could
decline.
If our plan to refinance our existing bank facility fails, we will not be able
to successfully implement our business and financial strategy necessary to
return us to profitable operations.
We may not be able to successfully refinance our current bank facility. Our
ability to refinance our bank facility will depend, among other things, on our
ability to complete one or more of the following transactions:
. completing the exchange offer;
. raising cash from the issuance of the additional exchange notes; and
. raising additional funds through a variety of alternative sources,
including the sale of additional securities or from other financing
arrangements, including proceeds from an asset-based financing
arrangement, or the sale of assets.
If we do not receive at least 66 2/3% of the existing notes in the tender
offer, we will not be able to issue the exchange notes in the exchange offer
without amending the offer. Unless we have a high percentage of participation
in the exchange offer, we will not be able to sufficiently reduce our cash
interest payment and to implement our plan to effect a refinancing of our
existing bank facility.
In addition, our ability to raise cash proceeds from the issuance of the
additional exchange notes will depend, in part, on completion of the exchange
offer. If we are unable to raise cash proceeds from the sale of the additional
notes, the banks may not allow us to pay the cash interest due on the existing
notes not tendered in the exchange. In addition, our current waiver,
forbearance and amendment may not be extended from May 25, 2000 to August 25,
2000 unless the banks rescind the blockage notice and permit the cash interest
payment. If we fail to raise new money from the issuance of the additional
exchange notes, our plan to effect a restructuring or refinancing of our
existing bank facility may fail.
If we are unable to sell additional securities or portions of our existing
assets or enter into a new bank facility such as an asset-based facility, we
will not be able to refinance the bank facility. We may not receive any offers
for our assets or the offers we may receive may not adequately reflect the
value of the assets. We have currently received preliminary proposals from
asset-based lenders. We are currently reviewing these proposals. However, we
can not guarantee that we will be able to obtain an asset-based facility on
acceptable terms or at all. Any of these factors could cause us to be unable to
refinance our bank facility.
Because we are not in compliance with a number of financial covenants under our
bank facility, we may not be able to pay interest on the existing notes.
We are not in compliance with a number of financial covenants under our
bank facility. As a result, the banks have the right to block the interest
payment due on our existing notes on March 1, 2000. In the context of the
negotiations in which we obtained our current waiver, forbearance and
amendment, the banks stated that they had a current intention to exercise their
rights under the indenture for the existing notes to block the regularly
scheduled interest payment on the notes due on March 1, 2000. If the banks send
a blockage notice to the trustee of the existing notes, we will not be allowed
to make the March 1, 2000 interest payment. If the interest payment is not made
on March 1, 2000, we will have 30 days, or until March 30, 2000, to make the
interest payment. If the interest payment is not made within this 30 day
period, an event of default would occur.
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If the interest payment is blocked by the banks, we may not be able to
subsequently remove the blockage notice. If the banks do issue a blockage
notice and refuse to withdraw the payment blockage notice after completion of
the exchange offer, we would be in default under the existing notes. If we
default on our existing notes, the existing noteholders could accelerate the
outstanding principal on the existing notes. This acceleration could give the
exchange note holders the right to a cross-acceleration of the exchange notes
if more than $25 million in existing notes remain outstanding after the
exchange offer. Finally, amounts under our bank facility would be accelerated
as well. If this were to occur, we would be unable to meet our obligations as
they become due.
Concerns from current and prospective customers, suppliers, employees and
lenders about the going-concern explanatory paragraph in our audit report could
detrimentally affect our operating results and financial condition.
We incurred operating losses in fiscal years 1998 and 1999. We are also not
in compliance with a number of financial covenants under our bank facility. Our
failure to comply with covenants under our bank facility has forced us to seek
to obtain short-term waivers to the bank facility, the most recent waiver
extending to May 25, 2000. Due to the short-term nature of the waivers, we have
had to reclassify our debt under the bank facility from long-term debt to
short-term debt. As a result, our independent auditors have included a going-
concern explanatory paragraph for our fiscal year ended September 30, 1999.
This emphasis paragraph represents our auditor's conclusion that there is
substantial doubt as to our ability to continue as a going concern for a
reasonable time. If we are unable to complete the exchange offer, raise
additional funds or refinance the bank facility, our auditors may not remove
the explanatory paragraph from their opinion and any of the following may
occur:
. our customer relationships and orders with our customers could
deteriorate;
. suppliers could reduce their willingness to extend credit;
. employee attrition could increase; and
. new lenders could be unwilling to refinance our bank facility.
If our financial condition continues to deteriorate, we may have to seek relief
under Chapter 11 of the Bankruptcy Code.
If our financial condition continues to deteriorate and we are unable to
reduce our losses or obtain additional financing, we may be forced to seek
relief under Chapter 11 of the bankruptcy code. Chapter 11 permits a company to
remain in control of its business, protected by a stay of all creditor action,
while the company attempts to negotiate and confirm a plan of reorganization
with its creditors. If we commenced a case under Chapter 11, we would expect
deterioration in our customer relationships, a reduction in orders, the loss of
suppliers and an erosion of employee morale. We may be unsuccessful in our
attempts to confirm a plan of reorganization with our creditors. Many
Chapter 11 cases are unsuccessful and virtually all involve substantial expense
and damage to the business. When a company is unsuccessful in obtaining
confirmation of a plan of reorganization, the assets of the company are
liquidated.
In a bankruptcy case, holders of our senior debt will be entitled to
receive full payment on their claims before the holders of the existing notes
and the exchange notes receive any payment. While we have not performed a
liquidation analysis, we believe that in a bankruptcy liquidation the holders
of our subordinated debt would recover a relatively small percentage of their
notes or may not receive anything. While the exchange notes would be senior to
the existing notes and entitled to payment in full prior to payment of the
existing notes, both would be subordinate to the prior right of payment of
senior debt.
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We have a large amount of debt and our ability to meet our debt payment
obligations depends upon our future operating performance and cash flows.
We incurred losses of approximately $155.7 million in fiscal 1999 and
$319.7 million in fiscal 1998. We also incurred losses in the first quarter of
fiscal year 2000 and these losses could continue. If we are unable to refinance
our bank facility and reduce the level of our existing debt, we may not be able
to make payments on our existing debt. As of December 31, 1999, we had
approximately $466.8 million of debt, of which approximately $121.8 million was
senior to the existing notes.
Our ability to make scheduled debt payments will depend on our future
operating performance and cash flow. Our operating performance and cash flow,
in part, are subject to economic factors beyond our control, including
prevailing interest rates. We may not be able to generate enough cash flow to
meet our obligations and commitments, including payments under our bank
facilities or on the existing notes or exchange notes. If we cannot generate
sufficient cash flow from operations to service our debt, we may need to
refinance our debt, dispose of assets, or issue equity to obtain the necessary
funds. We do not know whether we will be able to refinance our debt, issue
equity or dispose of assets to raise funds on a timely basis or on terms
satisfactory to us. In addition, our current bank facility restricts our
ability to raise funds through asset sales. If we are unable to refinance the
bank facility, raise funds through asset sales, sales of equity or otherwise,
our ability to pay principal and interest in cash on the exchange notes would
be harmed.
Our large amount of debt could negatively impact holders of the exchange
notes in many ways, including:
. reducing funds available to fund our business operations and for other
corporate purposes because portions of our cash flow from operations
must be dedicated to the payment of principal and interest on our debt;
. impairing our ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate
purposes;
. increasing vulnerability to increases in interest rates;
. reducing financial flexibility because the debt outstanding under our
current bank facility is secured by substantially all of our existing
and future acquired assets and 65% of the capital stock of our existing
and future acquired international operating subsidiaries;
. placing us at a competitive disadvantage because we are substantially
more leveraged than certain of our competitors;
. hindering our ability to adjust rapidly to changing market conditions;
and
. making us more vulnerable to a downturn in general economic conditions
or in our business.
We may not be able to raise future capital for the substantial capital
expenditures needed to operate our business competitively.
Our business is highly capital intensive. We need to have enough production
capacity and flexibility to meet our customers' needs. Our ability to
accurately plan our expected production capacity may be inhibited by:
. the pace of technological change;
. availability of financing;
. unpredictable demand variations;
. the effects of variable manufacturing yields; and
. the long lead times for our plant and equipment expenditures, requiring
major expenditure commitments well before actual requirements.
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Due to our recent financial performance, we may not be able to maintain
adequate sources of capital to finance our capital expenditures. We do not know
when the additional financing will be available to us or available on favorable
terms. If we use equity as a source of capital, it could be dilutive to
existing stockholders and noteholders.
Our operating results and cash flow may fluctuate because of a number of
factors.
Our operating results and cash flow have fluctuated significantly in the
past and are likely to continue to fluctuate in the future as a result of the
following factors:
. short product life cycles that require us to constantly qualify new
products for our customers' programs;
. our inability to be selected as an initial supplier, generally referred
to as "design-in wins," on customer programs due to increased
competition or our failure to execute;
. industry cycles of over and under manufacturing capacity and aggressive
pricing strategies;
. low product manufacturing yields;
. delayed product introductions;
. under-utilization of capacity for lower than anticipated demand;
. decreased demand or decreased average selling prices for our products;
. increased operating costs associated with the ramp-up of production due
to increased capacity;
. capacity constraints on certain technologies;
. product mix changes;
. increased material costs or the unavailability of material or
equipment;
. disruptions in our domestic or foreign operations;
. reduced average selling prices; and
. delays and cancellations of customer product orders.
As a result of these factors, our past financial results are not
necessarily a good predictor of our future operating results. Further, our
future operating results may not meet the expectations of public market
analysts and investors.
Any decrease in demand for our products could further reduce our revenue,
operating margins and cash flows.
Our customers provide us with individual purchase orders that may be
changed or cancelled on short notice, often without material penalties. In the
past, our operating results have been harmed by fluctuations in demand for our
products. Demand for our products is generally difficult to accurately predict.
In the past, demand for our product has been impacted as follows:
. in the second half of fiscal 1996, we had significant orders
unexpectedly cancelled or rescheduled;
. in the first quarter of fiscal 1998, there was an abrupt reduction in
demand for advanced inductive thin film products as there was a quicker
than expected industry transition from advanced inductive to
magnetoresistive technology;
. in fiscal 1998, we were harmed by general industry conditions; and
. in fiscal 1999, the industry made a faster than anticipated transition
from magnetoresistive technology to giant magnetoresistive technology.
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We were harmed in each case because of the decreases in demand. If
cancellations or reductions in demand for our products occur in the future, our
business, financial condition and results of operations could be seriously
harmed.
Delays and cancellations of our customer orders may cause us to underutilize
our production capacity, which could significantly reduce our gross margins and
result in significant losses.
Our business has a large amount of fixed costs as we are highly capital
intensive. If there is a decrease in demand for our products, our production
capacity could be under-utilized and as a result we may experience:
. equipment write-offs;
. restructuring charges;
. reduced average selling prices;
. increased unit costs; and
. employee layoffs.
We have had losses in recent years and we may not be able to regain
profitability in the foreseeable future, which could adversely affect our
ability to implement our business and finance strategies.
We had net losses of approximately $155.7 million in fiscal 1999 and $319.7
million in fiscal 1998 after having net income of $76.2 million in fiscal 1997.
These losses were caused in part by:
. continued competitive pricing pressure;
. industry trends toward fewer head gimbal assemblies for each headstack
assembly;
. short product life cycles, which resulted in write-down of excess
inventory and obsolete products and equipment; and
. the industry's quicker than expected transition in fiscal 1998 from
advanced inductive to magnetoresistive technology and in fiscal 1999
from magnetoresistive to giant magnetoresistive technology.
If we are unable to successfully compete in the highly competitive disk drive
industry, our operating results could be harmed.
The disk drive industry is highly competitive at both the drive level and
the component level. Our products often have short life cycles. The price for
our products declines substantially over their useful life. We compete on price
and our ability to deliver new technology in a timely manner. We also compete
on customer service and support, product quality and manufacturing capability.
If we are unable to effectively compete, our business, operating results and
financial condition could be harmed.
Our competitors in the merchant market include TDK, Alps, Hitachi Metal,
Headway Technologies and IBM. We also compete against disk drive manufacturers
with "captive" or internal recording head manufacturing capabilities, such as
Fujitsu, IBM and Seagate. These manufacturers are formidable competitors
because they have greater resources and greater customer access. For example in
June 1998, one of our largest customers, Western Digital Corporation, announced
an agreement with IBM under which IBM would supply Western Digital with giant
magnetoresistive heads and other components for Western Digital's manufacture
of desktop hard disk drives. If our competitors enter into similar agreements
with our customers to supply giant magnetoresistive products in the merchant
market in volume quantities at competitive pricing, our operating results could
be harmed.
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We receive a large percentage of our revenues from only a few customers, the
loss of any one would adversely affect our business and financial condition.
We sell our products to a limited number of customers. Our largest
customers are Western Digital, Maxtor, and Samsung. Western Digital represented
37%, Maxtor represented 32% and Samsung represented 19% of our net sales during
fiscal 1999. We produced head gimbal assemblies in volume for five customers,
headstack assemblies in volume for four customers and tape drive products in
volume for four customers during fiscal 1999. There are a small number of high
performance disk drive and tape drive manufacturers who require an independent
source for their head gimbal assemblies, headstack assemblies or tape head
supplies. As a result, we are heavily dependent upon a limited number of
customers. If we lose a large customer or if one or more of our large customers
reduces their orders, our business, financial condition and operating results
will be harmed.
If one or more of our customers is acquired, merged or liquidated, our
operating results could be harmed.
We are heavily dependent on a limited number of customers. If one of these
customers is acquired or merged, our business, financial condition and
operating results could be harmed. For example, in a series of transactions,
Seagate:
. acquired the tape head operations of AMC in fiscal 1995;
. completed the acquisition of Conner Peripherals, Inc., then one of our
major customers, in fiscal 1996; and
. completed the acquisition of Quinta Corporation, our partner and sole
customer for our magneto-optical head development effort, in August
1997.
In November 1997, Singapore Technologies, Pte. Ltd. unexpectedly liquidated
one of its wholly owned subsidiaries, Micropolis Ltd. We had anticipated that
Micropolis would account for approximately 1.5% of our net sales during that
quarter. A similar liquidation by one of our current customers could harm our
business, financial condition and operating results.
Because we sell our products to a limited number of customers, we have a
concentration of credit risk.
We are subject to the credit risk of our customers. Consequently, if any
one of our customers experiences financial difficulties, our financial
condition and business would be affected. For example, in November 1997
Micropolis Ltd. ceased doing business. As a result, in fiscal 1997, we wrote-
off $9.3 million of accounts receivables due from that customer as well as
additional write-off of our inventory and equipment related to that customer's
orders.
If our customers vertically integrate by acquiring or increasing internal
production and assembly of head gimbal assemblies or headstack assemblies, our
operating results could be harmed.
If one or more of our customers vertically integrates by acquiring or
increasing their internal head gimbal assembly or headstack assembly production
capability, our business, financial condition and results of operations could
be harmed. For example, in 1994, Quantum Corporation, one of our principal
customers with no previous magnetic recording head capacity, acquired Digital
Equipment Corporation's recording head and disk drive operations. In May 1997,
Quantum Corporation announced the formation of a joint venture with its primary
manufacturing partner in Japan, Matsushita Kotobuki Electronics, to manufacture
magnetoresistive recording heads for rigid disk drives. In October 1998,
Quantum and Matsushita announced that the joint venture was dissolved, but
Matsushita retaining the slider fabrication and head gimbal assembly factory.
Matsushita continues to operate this facility. If Matsushita re-enters the
wafer fabrication business and becomes
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a full line manufacturer, we may not be able to supply head gimbal assemblies
to Quantum Corporation. Any further vertical integration in this industry could
also materially and adversely affect our business, financial condition and
results of operations.
Because our customers in the disk drive industry have been limiting the number
of suppliers of recording heads, we may not be able to achieve design-in wins.
Customers in the disk drive industry have been increasingly moving towards
limiting their number of suppliers of recording heads per program. Customers
also have focused their own efforts on fewer and larger new programs. As a
result, we expect it will be increasingly important for us to successfully
achieve design-in wins for all major programs for our primary customers. As a
result, the loss of any customer, a significant decrease in orders from one or
more large customers, or if we fail to achieve a design-in win or wins on
particular customer programs, our business, financial condition and results of
operations could be harmed.
Our industry experiences rapid technological change, and our inability to
timely anticipate and develop new products and production technologies could
harm our competitive position.
Technology changes rapidly in our industry. The rapid changes require us to
address current technologies and anticipate new technologies. If we are unable
to anticipate and smoothly transition to new technologies, our business,
financial condition and results of operations may suffer. For example, in the
first quarter of fiscal 1998, we incurred a special charge of $114.8 million,
primarily for the write-off of equipment and inventory associated with the
phase-out of advanced inductive technologies. In the third quarter of fiscal
year 1999, we incurred a restructuring charge of $37.7 million for the write-
off of equipment associated with our transition to giant magnetoresistive
technology and the decrease in customer demand for the earlier generation
magnetoresistive heads. Similar changes in the future will have an adverse
effect on our business.
The rapid introduction of new, higher performance products, shorter product
life cycles and the trend toward fewer heads per drive places significant
pricing pressure on hard disk drives and drive components, including recording
heads. In addition, during fiscal 1998 and continuing into fiscal 1999, the sub
$700 PC market emerged. Users in the sub $700 PC market typically require less
storage capacities. As a result, they require a lower number of heads per drive
than that for the office desktop computer applications. We expect growth in the
sub $700 PC market and the trend for lower number of heads per drive to
continue for the foreseeable future.
We expect the development and advancement of technologies, such as pico
sliders and giant magnetoresistive heads, to continue in fiscal 2000. Other
manufacturers may already have or may develop more advanced giant
magnetoresistive technology or giant magnetoresistive production capability
than we possess or may develop. In addition, other alternative data storage
technologies, such as solid-state (flash or ferroelectric) memory or optical
disk drive technologies, are being developed that do not utilize our products.
If one of our competitors introduces improved or new technologies or products
before we do, or if we are unable to respond to new product introductions by
our competitors, our business, financial condition and results of operations
could be seriously harmed.
If we underestimate or overestimate our capacity requirements, our business,
financial condition and results of operations could be harmed.
We have made substantial capital expenditures and installed significant
production capacity to support our new technologies, to meet the increased
demand for our products, to improve manufacturing yields and to increase our
margins. We made capital expenditures during fiscal 1999 of $101.0 million and
$186.2 million during fiscal 1998. We plan to spend approximately $80 million
during fiscal 2000. We cannot guarantee that our net sales and cash flows from
operations will increase enough to absorb these additional costs or that we
will have sufficient capital to finance our planned capital expenditures.
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We face risks associated with our international operations that could harm our
company.
Substantially all of our machining, assembly and test operations for our
head gimbal assembly, our headstack assembly and tape head assembly operations
are conducted outside of the Unites States. As a result, our international
operations are subject to a variety of risks, including:
. obtaining requisite governmental permits and approvals;
. currency exchange fluctuations and restrictions;
. variable or higher tax rates;
. expiration of tax holidays;
. political instability;
. changes in government policies relating to foreign investment and
operations;
. cultural issues;
. labor problems;
. trade restrictions;
. transportation delays and interruptions; and
. changes in tariff and freight rates.
We have in the past had labor organizational activities at some of our
foreign operations. While none of our employees are currently represented by a
union, we may be unable to avoid work stoppages or other labor issues in the
future.
In addition, several Asian countries, including Japan, Thailand and the
Philippines, have experienced fluctuations in the value of their currencies
relative to the U.S. dollar in recent periods. These foreign currency
fluctuations may impact our ability to manufacture products in these markets.
We enter into foreign currency forward contracts to manage our exposure to
foreign currency fluctuations. These hedging activities, however, do not
completely eliminate the exposure to foreign currency risk.
Any failure to manage our inventory could adversely affect our company.
The hard disk drive industry is subject to business cycles and rapid
technological change. As a result, if we do not properly manage our inventory,
we could have too much, or too little, inventory on hand. We monitor our
inventories on a periodic basis and provide inventory write-downs if deemed
appropriate for excess, obsolete or lower of cost or market concerns. We have
limited remedies in the event of order cancellations because of:
. our dependence on a few customers;
. the limited number of product programs for each customer; and
. the magnitude of the commitments we must make to support our customers'
product programs.
If a customer cancels or reduces a product program, or experiences
financial difficulties, we may take significant inventory charges. We have
taken charges and provided inventory write-downs in the past. We may in the
future have to take additional inventory write-downs if we are unable to obtain
necessary product qualifications or our customers cancel their orders.
We manufacture custom products for a limited number of customers. As a
result, we cannot typically shift raw materials, work-in-process or finished
goods from customer to customer. We must invest substantial resources and make
significant materials commitments to our customers. In addition, the disk drive
products
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typically have very short life cycles. Our customers have also implemented
just-in-time hubs to limit their purchase order commitments from us. If our
customer does not have demand from their end customer, they will not use the
inventory from the just-in-time hub. If the inventory is not used, we may have
excess or obsolete inventory and increased inventory risk. Customers also have
canceled or materially modified purchase orders with us without significant
penalties. Canceled orders could lead to charges for inventory obsolescence,
which could seriously harm our business, operating results and financial
condition.
Insufficient demand for products from our joint venture in Japan with Sumitomo
Metal Industries, Ltd. will continue to adversely affect operations.
We currently have a wafer fabrication facility at Read-Rite SMI
Corporation, a joint venture between us and Sumitomo Metal Industries Ltd.,
near Osaka, Japan. Read-Rite SMI manufactures thin-film magnetic recording
heads. Market demand in Japan for thin film heads manufactured by Read-Rite SMI
may not develop. Read-Rite SMI is also a supplier for Quantum/Matsushita on
certain giant magnetoresistive programs. However, Read-Rite SMI may be unable
to qualify for future Quantum/Matsushita giant magnetoresistive programs. If we
are unable to obtain a positive operating margin from Read-Rite SMI in the near
term, we will have to take actions to align our cost structure, cash flows, and
equity position.
Problems associated with our complex manufacturing processes could harm our
revenues.
Our manufacturing processes involve numerous complex steps. Minor
deviations can cause substantial manufacturing yield loss and, in some cases,
suspension of production. Manufacturing yields for new products initially tend
to be lower until we complete product development and commence volume
manufacturing. Yields typically increase as we ramp to full production. Because
forward product pricing assumes improving manufacturing yields, material
variances between projected and actual manufacturing yields have a direct
effect on our gross margin and profitability. In addition, the shortening of
product life cycles requires us to produce new products at higher volume and
acceptable manufacturing yields without, in many cases, reaching the longer-
term, higher volume manufacturing cycle conducive to higher manufacturing
yields and declining costs.
Increased amounts of defective products could harm our business.
We typically test our head gimbal assemblies before shipment to ensure that
the head gimbal assemblies meet customer specifications. Customers may return
defective lots if the customer determines that an agreed upon percentage of the
head gimbal assemblies in the lot do not meet specifications. We expect
manufacturing yields to increase during fiscal 2000 as we ramp-up production of
giant magnetoresistive head gimbal assemblies. However, we may not be able to
achieve component cost levels, manufacturing yields and productivity levels
necessary to achieve adequate giant magnetoresistive head gimbal assembly
margins.
Because we depend on a limited number of suppliers, if our suppliers experience
capacity constraints or production failures, our production could be
significantly harmed.
We depend on a limited number of suppliers and subcontractors for our raw
materials. In some cases, we depend on a single source. Limitations or
interruptions in the supply of these components could severely and adversely
affect our production and operating results. We have limited alternative
sources of key materials such as wafer substrates, wires and suspensions and
these suppliers are also generally determined in advance by our customers. In
addition, we frequently rely on a single equipment supplier for a particular
type of equipment due to either a lack of viable alternatives or to insure
process consistency. As a result, if our suppliers experience capacity
constraints or production failures, our production could be significantly
harmed.
If we are unable to adequately protect our intellectual property rights, our
operating results and financial condition may be harmed.
We believe that the success of our business depends on our proprietary
technology, information processes and know-how. Much of our proprietary
information and technology relating to manufacturing processes is not
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patented and may not be patentable. We rely primarily on trade secret
protection to protect our intellectual property. We face a number of
intellectual property risks:
. our competitors may be able to develop similar technology
independently;
. we may not be able to adequately protect our technology;
. claims allowed on any patents held by us may not be sufficiently broad
to protect our technology; and
. foreign intellectual property laws may not adequately protect our
intellectual property rights.
We expect to continue to file patent applications when appropriate to
protect our proprietary technologies. However, seeking patent protection can be
expensive and time consuming. We may not be able to enforce patents outside the
U.S. As a result, we may not be able to stop our competitors from infringing on
our patents.
We have, from time to time, been notified of claims that we may be
infringing patents owned by others. If we receive additional claims of
infringement in the future, we may decide to seek licenses under patents that
we are allegedly infringing. However, we may not be able to obtain a license on
acceptable terms. If we have to defend an infringement claim or if we fail to
obtain a key patent license, we may incur substantial liabilities or be unable
to manufacture products utilizing such patented inventions.
Our inability to retain and attract key personnel and a skilled workforce may
materially and adversely affect our financial condition.
We depend on a limited number of key management, sales, engineering,
customer support and product development personnel. Many of our key personnel
would be difficult to replace and are not subject to employment or non-
competition agreements. We believe our future success will depend on our
ability to attract and retain highly-skilled managerial, engineering, sales,
customer support and product development personnel. Competition for qualified
personnel in our industry and geographic locations is intense. If we are unable
to retain existing or hire key personnel, our business, financial condition and
results of operations could be harmed.
The nature of our operations makes us susceptible to material environmental
liabilities which could adversely affect our financial condition.
We are subject to a variety of federal, state, local and foreign
regulations relating to:
. the use, storage, discharge and disposal of hazardous materials used
during our manufacturing process;
. the treatment of water used in our manufacturing process; and
. air quality management.
We are required to obtain necessary permits for expanding our facilities.
We must also comply with new regulations on our existing operations. Public
attention has increasingly been focused on the environmental impact of
manufacturing operations that use hazardous materials. If we fail to comply
with environmental regulations or fail to obtain the necessary permits:
. we could be subject to significant penalties;
. our ability to expand or operate at locations in California or our
locations in Thailand, Japan and the Philippines could be restricted;
. our ability to establish additional operations in other locations could
be restricted; or
. we could be required to obtain costly equipment or incur significant
expenses to comply with environmental regulations.
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Any accidental hazardous discharge could result in significant liability
and clean-up expenses which could harm our business, financial condition and
results of operations.
We use a significant amount of water in our manufacturing process. Future
drought conditions could cause the state or local authorities to mandate higher
fees or reductions in water usage allocations. If we are required to restrict
our production because of water scarcity, our business, financial condition and
results of operations could be adversely affected.
Delisting of our common stock could have a material adverse effect on the
market price of, and the efficiency of the trading market for, our common
stock, the exchange notes and the existing notes.
As a result of the going-concern opinion in our recent Form 10-K, we
received a letter from Nasdaq-Amex regarding our ability to maintain compliance
with the Nasdaq Stock Market listing requirements. The Nasdaq National Market
has alternative compliance requirements for the continued listing of common
stock on its exchange of either: (i) $4 million of net tangible assets or (ii)
a $5 minimum closing bid price. As of the date of this filing, we are currently
complying with only the $4 million of net tangible assets requirement. If we
experience loses that drop our net tangible assets below $4 million, and if our
stock price continues to remain below $5 per share, our common stock may not
remain listed on The Nasdaq National Market. This could have a material adverse
effect on the market price of, and the efficiency of the trading market for,
our common stock and the exchange notes.
The exchange notes are subordinated to our senior debt, but senior in payment
to the existing notes.
The exchange notes will be unsecured and subordinated in right of payment
to senior debt, including our existing bank facility. The exchange notes are
also senior to the existing notes. As a result of such subordination, in the
event of our liquidation or insolvency, a payment default with respect to
senior debt, a covenant default with respect to designated senior debt or upon
acceleration of the exchange notes due to an event of default, our assets will
be available to pay obligations on the exchange notes only after all senior
debt has been paid in full, and there may not be sufficient assets remaining to
pay amounts due on any or all of the exchange notes then outstanding. Neither
we nor our subsidiaries are prohibited under the exchange note indenture from
incurring debt.
As of December 31, 1999, we had approximately $121.8 million of outstanding
senior debt. The existing notes are also effectively subordinated to all
indebtedness and other liabilities of our subsidiaries, including trade
payables but excluding intercompany liabilities.
The exchange notes are obligations exclusively of Read-Rite Corporation.
Substantially all of our operations are conducted through our subsidiaries. As
a result, our cash flow and our ability to service our debt, including the
exchange notes, is dependent upon the earnings of our subsidiaries. In
addition, we are dependent on the distribution of our subsidiaries' earnings,
loans and other payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the exchange notes or to provide
us with funds for our payment obligations, whether by dividends, distributions,
loans or other payments. In addition, any payment of dividends, distributions,
loans or advances by our subsidiaries to us could be subject to statutory or
contractual restrictions. Payments to us by our subsidiaries will also be
contingent upon our subsidiaries' earnings and business considerations.
We may not have the financial resources to repurchase the exchange notes in the
event of a change in control.
We may be unable to repurchase the exchange notes in the event of a change
in control. Upon a change in control, you may require us to repurchase all or a
portion of your exchange notes. If a change in control were to occur, we may
not have enough funds to pay the repurchase price for all tendered exchange
notes. The terms of our existing bank facility prohibit the repurchase of the
exchange notes in cash. Any future credit agreements or other debt agreements
may contain similar provisions, or expressly prohibit the repurchase of the
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exchange notes upon a change in control or may provide that a change in control
constitutes an event of default under that agreement. If a change in control
occurs at a time when we are prohibited from repurchasing the exchange notes,
we could seek the consent of our lenders to repurchase the exchange notes or
could attempt to refinance the debt agreements. If we do not obtain consent, we
could not repurchase the exchange notes. Our failure to repurchase the exchange
notes would constitute an event of default under the exchange note indenture,
which might constitute an event of default under the terms of our other debt.
Our obligation to offer to repurchase the exchange notes upon a change in
control would not necessarily afford you protection in the event of a highly
leveraged transaction, reorganization, merger or similar transaction.
If an active market for the exchange notes fails to develop, the trading price
and liquidity of the exchange notes could be materially adversely affected.
Prior to the offering there has been no trading market for the exchange
notes. The dealer manager has advised us that it currently intends to make a
market in the exchange notes. The liquidity of the trading market for the
exchange notes will depend in part on the level of participation of the holders
of existing notes in the exchange offer. The greater the participation in the
exchange offer, the greater the liquidity of the trading market for the
exchange notes and the lesser the liquidity of the trading market for the
existing notes not tendered in the exchange offer. However, Robertson Stephens
is not obligated to make a market and may discontinue this market making
activity at any time without notice. In addition, market making activity by
Robertson Stephens will be subject to the limits imposed by the Securities Act
and the Exchange Act. As a result, we cannot assure you that any market for the
exchange notes will develop or, if one does develop, that it will be
maintained. If an active market for the exchange notes fails to develop or be
sustained, the trading price and liquidity of the exchange notes could be
materially adversely affected.
We expect the trading price of the exchange notes and the underlying common
stock to be highly volatile, which could adversely affect the market price of
our exchange notes and underlying common stock.
The trading price of the exchange notes and the underlying common stock
will fluctuate in response to variations in:
. operating results;
. announcements by us or our competitors of technological innovations or
new products;
. qualifications of volume shipment programs from major customers;
. general conditions in the disk drive and computer industries; and
. general economic and market conditions.
In addition, stock markets have experienced extreme price volatility in
recent years, particularly for high technology companies. In the past, our
common stock has experienced volatility not necessarily related to
announcements of our financial performance. Broad market fluctuations may also
adversely affect the market price of our exchange notes and underlying common
stock.
In the event of a change in control after the expiration date, holders of the
exchange notes will receive substantially less than holders of existing notes
to the extent that a holder elects to exercise his or her repurchase right.
In the event that there is a change in control prior to the expiration date
of the exchange offer, holders of existing notes would have the right to
receive, to the extent they elected to exercise their repurchase right,
$345,000,000 in aggregate principal amount as a result of the change in
control. In the event that there is a change in control after the expiration
date of the exchange offer and 100% of the holders of the existing notes
tendered in the exchange, holders of the exchange notes would have the right to
receive, to the extent they
22
<PAGE>
elected to exercise their repurchase right, $172,500,000 as a result of the
change in control.
If we automatically convert the exchange notes, you should be aware that there
is a substantial risk that the price of our common stock could fluctuate from
the date we elect to automatically convert to the conversion date.
We may elect to automatically convert the exchange notes on or prior to
maturity if our common stock price has exceeded 200% of the conversion price
for at least 20 trading days during a 30-day trading period ending five trading
days prior to the notice of automatic conversion. You should be aware that
there is a substantial risk that the price of our common stock could fluctuate
between the time when we may first elect to automatically convert the exchange
notes and the automatic conversion date. This time period may extend from 15 to
30 calendar days from the time we elect to automatically convert the exchange
notes until the conversion date.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus, including the sections entitled "Summary" and "Risk
Factors," contains forward-looking information. This forward-looking
information is subject to risks and uncertainties including the factors listed
under "Risk Factors," as well as elsewhere in this prospectus. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expects," "intends," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential" or "continue," or the negative of these
terms or other comparable terminology. These statements are only predictions
and may be inaccurate. Actual events or results may differ materially. In
evaluating these statements, you should specifically consider various factors,
including the risks outlined under "Risk Factors." These factors may cause our
actual results to differ materially from any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.
23
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the exchange of the existing notes
for the exchange notes pursuant to the exchange offer. We are also offering up
to $50,000,000 aggregate principal amount of additional exchange notes for
cash. We intend to use the proceeds, if any, from the sale of the additional
exchange notes to repay amounts due under our bank facility. As of January 1,
2000, we had $50 million of revolving loans outstanding under our bank facility
at variable rates (9.5% as of January 1, 2000). The banks' lending commitments
under the bank facility will be permanently reduced by the amount of the loan
repayment we make from these proceeds. We may also apply any remaining portion
of the proceeds of the offering to pay the remaining interest payments, if any,
due March 1, 2000 on the existing notes or for general corporate purposes. We
have not yet determined the amount of net proceeds to be used specifically for
each of these purposes. Pending such use, we intend to invest the net proceeds
in high quality, interest-bearing instruments.
PRICE RANGE OF COMMON STOCK
The following table sets forth the high and low closing sales prices of a
share of the common stock reported on The Nasdaq National Market during the
indicated periods.
<TABLE>
<CAPTION>
High Low
--------- ---------
<S> <C> <C>
Fiscal year ending September 30, 1998
First Quarter............................................ $26 13/16 $15 3/8
Second Quarter........................................... 17 9/16 12 3/8
Third Quarter............................................ 15 1/4 6 13/16
Fourth Quarter........................................... 9 17/32 5 1/2
Fiscal year ending September 30, 1999
First Quarter............................................ $16 15/16 $ 6 1/16
Second Quarter........................................... 19 11/16 6 1/8
Third Quarter............................................ 8 5 35/64
Fourth Quarter........................................... 6 7/8 4 1/32
Fiscal year ending September 30, 2000
First Quarter............................................ $ 5 15/16 $ 3 15/32
Second Quarter (through February 4, 2000)................ 6 7/16 2 25/32
</TABLE>
On February 4, 2000, the last reported sales price of our common stock on
The Nasdaq National Market was $3 27/32 per share.
DIVIDEND POLICY
We do not pay any dividends on our common stock. We currently intend to
retain earnings, if any, for use in our business and do not anticipate paying
cash dividends to holders of our common stock. Our existing credit facility
currently restricts the payment of dividends.
24
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated unaudited capitalization of
Read-Rite:
. at December 31, 1999:
. as adjusted to give effect to the issuance of the exchange notes in the
exchange offer on the assumption that all of the outstanding existing
notes were validly tendered and accepted for exchange:
. as adjusted to give effect to the issuance for cash of an additional
$50 million of exchange notes;
. as adjusted to give effect to the issuance of $6.81 million of exchange
notes to the dealer manager for payment of their fees in connection
with the exchange offer and for their placement of the additional $50
million of exchange notes; and
. as adjusted to reflect an extraordinary gain of $166 million on the
assumed early extinguishment of all outstanding existing notes.
To the extent that existing notes are not validly tendered or accepted in
the exchange offer, the amount attributed to the exchange notes would decrease
and the amount attributed to the existing notes would increase. The financial
data at December 31, 1999 in the following table are derived from our unaudited
financial statements for the quarter ended December 31, 1999.
<TABLE>
<CAPTION>
December 31, 1999
----------------------
Actual As Adjusted
--------- -----------
(dollars in
thousands)
<S> <C> <C>
Long-term debt
10% Convertible Subordinated Notes due 2004 (exchange
notes)............................................... $ -- $ 229,312
6 1/2% Convertible Subordinated Notes due 2004
(existing notes)..................................... 345,000 --
Other long-term debt................................... 15,900 15,900
--------- ---------
Total long-term debt.................................. 360,900 245,212
--------- ---------
Stockholders' equity:
Preferred stock, par value $0.0001 per share, issuable
in series; 4,000,000 shares authorized, none issued
and outstanding...................................... -- --
Common stock, par value $0.0001 per share, 160,000,000
shares authorized, 49,927,337 shares issued and
outstanding (1)...................................... 5 5
Additional paid-in capital............................. 370,118 370,118
Accumulated Deficit.................................... (341,783) (175,292)
Accumulated other comprehensive income (loss).......... (738) (738)
--------- ---------
Total stockholders' equity............................ 27,602 194,088
--------- ---------
Total capitalization................................. $ 494,368 $ 439,300
========= =========
</TABLE>
- --------
(1) Outstanding shares exclude the shares reserved for issuance upon conversion
of the exchange notes and 15,600,735 shares issuable under our stock award
and purchase plans.
25
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated operating data for the three years in the period ended
September 30, 1999 and the balance sheet data at September 30, 1998 and
September 30, 1999 are derived from our audited consolidated financial
statements audited by Ernst & Young LLP, independent auditors, which are
incorporated by reference in this prospectus. Please refer to the complete
consolidated financial statements and related existing notes for more
information. The selected operating data for the years ended September 30, 1995
and September 30, 1996 and the balance sheet data at September 30, 1995,
September 30, 1996 and September 30, 1997 have been derived from our
consolidated financial statements audited by Ernst & Young LLP that are not
included or incorporated by reference. The consolidated operating data for the
three months ended December 31, 1998 and December 31, 1999, and the
consolidated balance sheet data as of December 31, 1999 are derived from our
unaudited consolidated financial statements, and include in our opinion all
adjustments, including normal recurring adjustments necessary to present fairly
the financial information therein. These results are not necessarily indicative
of the results that may be expected for future periods.
<TABLE>
<CAPTION>
Three Months
Years Ended September 30, Ended
---------------------------------------------------- ------------------
Dec. 31, Dec. 31,
1995 1996 1997 1998 1999 1998 1999
---------- -------- ---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Net sales............... $1,003,040 $991,118 $1,162,050 $ 808,622 $ 716,460 $230,118 $114,492
Cost of sales--on net
sales................. 739,000 887,464 923,244 826,602 739,725 195,327 145,619
Cost of sales--special
charges............... -- -- -- 114,800 -- -- --
---------- -------- ---------- --------- --------- -------- --------
Gross margin............ 264,040 103,654 238,806 (132,780) (23,265) 34,861 (31,127)
Operating expenses:
Research and
development.......... 41,788 52,221 64,995 92,265 92,211 23,732 19,147
Selling, general and
administrative....... 44,406 43,644 54,098 34,137 29,154 7,289 6,581
Restructuring costs.... -- -- -- 93,728 37,685 -- --
---------- -------- ---------- --------- --------- -------- --------
Total operating
expenses............ 86,194 95,865 119,093 220,130 159,050 31,021 25,728
---------- -------- ---------- --------- --------- -------- --------
Operating income
(loss)................ 117,846 7,789 119,713 (352,910) (182,315) 3,840 (56,855)
Interest expense........ 5,589 12,897 15,699 29,648 31,910 7,368 8,845
Interest income and
other, net............ 5,257 9,024 8,627 7,126 4,143 (1,048) 4,592
---------- -------- ---------- --------- --------- -------- --------
Income (loss) before
provision (benefit)
for income taxes and
minority interest..... 177,514 3,916 112,641 (375,432) (210,082) (4,576) (61,108)
Provision (benefit) for
income taxes.......... 41,715 34,582 29,311 (24,577) (25,946) 48 --
---------- -------- ---------- --------- --------- -------- --------
Income (loss) before
minority interest..... 135,799 (30,666) 83,330 (350,855) (184,136) (4,624) (61,108)
Minority interest in net
income (loss) of
consolidation
subsidiary............ 12,234 12,320 7,151 (31,108) (28,421) (5,746) (3,633)
---------- -------- ---------- --------- --------- -------- --------
Net income (loss)....... $ 123,565 $(42,986) $ 76,179 $(319,747) $(155,715) $ 1,122 $(57,475)
========== ======== ========== ========= ========= ======== ========
Basic net income (loss)
per common share...... $ 2.69 $ (0.92) $ 1.61 $ (6.59) $ (3.16) $ .02 $ (1.15)
========== ======== ========== ========= ========= ======== ========
Diluted net income
(loss) per common
share................. $ 2.59 $ (0.92) $ 1.56 $ (6.59) $ (3.16) $ .02 $ (1.15)
========== ======== ========== ========= ========= ======== ========
Number of shares used in
per common share
computation:
Basic................... 45,951 46,755 47,444 48,513 49,352 49,027 49,834
========== ======== ========== ========= ========= ======== ========
Diluted................. 47,653 46,755 48,775 48,513 49,352 50,671 49,834
========== ======== ========== ========= ========= ======== ========
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
At September 30, At
---------------------------------------------- December 31,
1995 1996 1997 1998 1999 1999
-------- -------- --------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital......... $286,902 $113,959 $ 343,185 $97,618 $18,714 $(22,802)
Total assets............ 939,457 908,672 1,301,481 879,800 784,490 695,522
Long-term debt.......... 137,406 172,037 403,871 388,248 361,668 360,900
Stockholders' equity.... 537,977 453,799 545,653 233,929 84,209 27,602
Ratio of earnings to
fixed charges(1)...... 22.7x 1.3x 6.4x NM(2) NM(2) NM(2)
</TABLE>
- --------
(1) For purposes of this ratio, "earnings" consist of earnings before income
taxes, minority interest and fixed charges. "Fixed charges" consist of
interest on indebtedness and capital lease obligations, the interest
component of rental expense, amortization of debt discount and issuance
expenses. Earnings were insufficient to cover fixed charges by
$375,432,000, $210,082,000 and $61,108,000 for the years ended
September 30, 1998 and September 30, 1999, and the three-month period ended
December 31, 1999, respectively. On a pro forma basis, assuming the full
conversion of the existing notes for exchange notes as of the beginning of
the year ended September 30, 1999 and the three months ended December 31,
1999, and using the estimated net change in interest expense from the
exchange, earnings were insufficient to cover fixed charges by $210,082,000
and $61,108,000 respectively.
(2) Not meaningful
27
<PAGE>
BANK FACILITY REFINANCING
History of the bank facility
In October 1997, we entered into a $200 million unsecured bank facility
with a syndicate of banks that had a $150 million revolving credit facility and
a $50 million four year term loan. Under the terms of the bank facility, we had
to maintain specified financial ratios and meet additional covenants. During
the period ended December 31, 1997, in response to the industry-wide shift to
magnetoresistive technology, we incurred a special charge of approximately
$114.8 million as a result of the write-off of equipment and inventory
associated with the phase out of advanced inductive technologies. Primarily as
a result of this write-off, we were out of compliance with two of the bank
facility covenants. We obtained an amendment to the bank facility revising
these covenants in February 1998.
During the period ended June 30, 1998, we incurred a restructuring charge
of approximately $93.7 million. As a result, we were not in compliance with
several financial covenants under the bank facility. In August 1998, we
obtained an amendment to the bank facility to maintain compliance with the
facility. Under the amendment, the revolving credit facility was reduced from
$150 million to $100 million. In addition, the bank facility was converted from
an unsecured to secured facility. Read-Rite Corporation's assets and 65% of the
stock of our international subsidiaries secures the facility. Borrowings under
the revolving credit facility became based upon eligible receivables of Read-
Rite Corporation and Read-Rite International and cash balances of Read-Rite
Corporation.
In April 1999, in response to industry-wide downturns in the average
selling prices for head gimbal assembly and headstack assembly products and in
anticipation of approximately $37.7 million restructuring costs in that
quarter, we drew down the entire $100 million available under the bank facility
to improve our cash balances. This was the first time that we borrowed under
the revolving credit facility.
As of September 30, 1999, we had $42.5 million of the term loan outstanding
and $100 million outstanding on our revolving credit facility. As a result of
losses incurred by us in fiscal year 1999, we were unable to maintain
compliance with some of the financial covenants under the bank facility. In
October 1999, we repaid $25 million on the bank facility, reducing the size of
the revolving credit facility from $100 million to $75 million. In connection
with this repayment, the bank waived compliance with several financial
covenants through December 31, 1999. Due to the short term nature of the
waiver, the debt under the facility was classified as a current liability and
our independent auditors included a going-concern explanatory paragraph in our
Annual Report on Form 10-K for the fiscal year ended September 30, 1999.
For the three-month period ended December 31, 1999, we were unable to
maintain compliance with the financial covenants concerning consolidated
tangible net worth, senior debt, interest expense coverage and minimum earnings
under our bank agreement; we obtained a waiver with respect to our
noncompliance under the bank facility. In connection with this waiver, we
reduced the size of the revolving credit facility by $25 million, to $50
million. We have continued to pay all principal and interest payments under
this facility on the scheduled due dates. In addition, we have reduced the
amount outstanding under the bank facility from $101.3 million as of December
31, 1999 to $86.3 million as of January 21, 2000.
Current waiver and forbearance
Effective February 1, 2000, we obtained from our bank group a waiver,
forbearance and fifth amendment to the bank facility. In connection with this
waiver, we repaid an additional $15 million of the principal amount of the bank
facility, reducing the outstanding principal amount to approximately $71.3
million under the bank facility. In the context of negotiations in which we
obtained our current waiver, forbearance and fifth amendment, the banks stated
that they had a current intention to exercise their rights under the indenture
for the existing notes to block the regularly scheduled interest payment on the
notes due on March 1, 2000. Although we are unable to predict what the banks
will do, the exchange offer is intended to reduce the likelihood that the
28
<PAGE>
banks will exercise this right by reducing the amount of our cash required to
make the March 1, 2000 interest payment to a level acceptable to them.
Under the waiver and forbearance, the banks:
(1) waive compliance with the covenants to permit us to exchange the
exchange notes for the existing notes;
(2) waive compliance with the covenants to permit us to sell up to an
additional $50 million of exchange notes for cash to holders of
existing notes; and
(3) agree to forebear from exercising any remedies that the banks might
have as a result of our noncompliance with five financial covenants
under the bank facility until May 25, 2000.
Under the waiver and forbearance, the banks expressly reserve the right to:
(1) send a notice to the trustee under the indenture for the existing
notes to block the interest payment on those notes due on March 1,
2000; and
(2) take any other action necessary to provide that no payment of interest
or principal may be made on the existing notes.
The waiver may be extended to August 25, 2000 if, in connection with the
sale of the additional notes, a majority of the banks and Read-Rite Corporation
reach agreement as to:
(1) the lifting of the blockage notice, if any, on the existing notes;
(2) the payment of the interest by us to the holders of existing notes
that do not tender their existing notes in the exchange offer;
(3) the percentage of the proceeds of the cash raised, if any, from the
sale of the additional exchange notes that is to be paid to the banks
under the bank facility; and
(4) other terms and conditions with respect to interest rates, fee and
covenants under the bank agreement.
The exchange notes will be treated as permitted subordinated debt under the
waiver.
Proposed bank facility refinancing
We are undertaking a series of actions to enable us to refinance our
current bank facility. First, we are offering to exchange the existing notes
for the exchange notes pursuant to this exchange offer. The exchange offer is
conditioned on the tender and acceptance of at least 66 2/3% of the existing
notes. Completion of the exchange offer would reduce our level of outstanding
debt. In addition, we would have the option to pay interest on the exchange
notes in cash or common stock. We would also reduce the principal amount of
existing notes outstanding which would reduce our obligation to pay cash
interest on the existing notes. We believe that this would reduce the
likelihood that the banks will exercise their right to block the March 1, 2000
interest payment on any existing notes remaining outstanding after the exchange
offer.
Second, we could raise cash proceeds through the sale of the additional
exchange notes. Proceeds from the sale of the additional exchange notes will be
held in escrow. The escrow proceeds will be released only when:
. the blockage notice, if any, with respect to the March 1, 2000 interest
payment on existing notes has been lifted by the banks under our bank
facility allowing us to make the payment of interest on the existing
notes not tendered in the exchange, and;
. we have agreed with the banks as to the percentage of the cash raised,
if any, from the sale of additional exchange notes to be paid to the
banks under our bank facility.
29
<PAGE>
Third, we are attempting to raise additional funds though a variety of
alternative sources to enable us to repay the balance of the amounts
outstanding under the bank facility, while continuing discussions with our
existing banks with respect to the possibility of refinancing the existing bank
facility at a lower level of outstanding borrowings. These sources could
include proceeds of a new lending arrangement, the sale of
additional securities by us, the sale of non-core assets, or a combination of
the foregoing. We have received several proposals from lenders for asset-based
lending arrangements which we are currently evaluating.
Our current plan is to complete the exchange offer, raise additional cash
proceeds from the sale of additional exchange notes and put in place a new loan
facility or refinance the existing bank facility as soon as possible. If we are
unable to refinance the bank facility by March 30, 2000, and the banks have
issued a notice blocking payment of the March 1, 2000 interest payment on the
existing notes, our plan is to request that the banks remove the blockage
notice in connection with the negotiation of an agreement to apply a portion of
the proceeds from the sale of additional exchange notes to repay a portion of
the amounts outstanding under the bank facility.
Our ability to successfully refinance the bank facility is likely to depend
on a number of factors, including:
. our ability to successfully complete the exchange offer;
. our ability to raise funds from the sale of additional notes or obtain
alternate sources of funds; and
. our ability to continue to improve the performance of our business.
Whether we are able to refinance the bank facility is therefore subject to a
number of risks, including those risks identified under "Risk Factors."
30
<PAGE>
THE EXCHANGE OFFER
Terms of the exchange offer; Period for tendering existing notes
We are offering to exchange $1,000 principal amount of exchange notes for
each $2,000 principal amount of existing notes that are validly tendered on
the terms and subject to the conditions set forth in this prospectus and in
the accompanying letter of transmittal. In addition, you will receive a
payment, in cash or in common stock at our election, of $50 for each $1,000
principal amount of exchange notes issued to you in the exchange offer in the
event that the interest payment on the existing notes due on March 1, 2000 has
not been paid or provided for by us prior to the exchange date. If we elect to
make this payment in common stock, the shares of common stock will be valued
at 90% of the average of the closing prices for the five trading days
immediately preceding the second trading day prior to the interest payment
date. In the event that this payment is paid in common stock, we may at our
election either round up to avoid distribution of fractional shares, or pay
any fractional share amount in cash.
Holders must tender existing notes in a principal amount of $2,000 and any
integral multiple of $2,000.
You may tender all, some or none of your existing notes.
The exchange offer is not being made to, and we will not accept tenders
for exchange from, holders of existing notes in any jurisdiction in which the
exchange offer or the acceptance of the offer would not be in compliance with
the securities or blue sky laws of that jurisdiction.
Our board of directors and officers do not make any recommendation to the
holders of existing notes as to whether or not to tender all or any portion of
their existing notes. In addition, we have not authorized anyone to make any
recommendation. You must make your own decision whether to tender your
existing notes and, if so, the amount of existing notes to tender.
Expiration date
The expiration date for the offer is 5:00 p.m., Eastern Standard Time, on
March 8, 2000, unless we extend the offer. We may extend this expiration date
for any reason. The last date on which tenders will be accepted, whether on
March 8, 2000 or any later date to which the exchange offer may be extended,
is referred to as the expiration date.
Extensions; Amendments
We expressly reserve the right, in our discretion, for any reason to:
. delay the acceptance of existing notes for exchange,
. extend the time period during which the exchange offer is open, by
giving oral or written notice of an extension to the holders of
existing notes in the manner described below. During any extension,
all existing notes previously tendered and not withdrawn will remain
subject to the exchange offer,
. amend the terms of the exchange offer other than the condition that
the registration statement become effective under the Securities Act,
and
. terminate the exchange offer.
If we consider an amendment to the exchange offer to be material, or if we
waive a material condition of the exchange offer, we will promptly disclose
the amendment in a prospectus supplement, and if required by law, we will
extend the exchange offer for a period of five to ten business days.
31
<PAGE>
We will give oral or written notice of any (1) extension, (2) amendment,
(3) non-acceptance or (4) termination to the holders of the existing notes as
promptly as practicable. In the case of any extension, we will issue a press
release or other public announcement no later than 9:00 a.m., Eastern Standard
Time, on the next business day after the previously scheduled expiration date.
Procedures for tendering existing notes
Your tender to us of existing notes and our acceptance of your tender will
constitute a binding agreement between you and us upon the terms and subject to
the conditions set forth in this prospectus and in the accompanying letter of
transmittal.
Tender of existing notes held through a custodian. If you are a beneficial
holder of the existing notes, that are held of record by a custodian bank,
depository institution, broker, dealer, trust company or other nominee, you
must instruct the custodian to tender the existing notes on your behalf. Your
custodian will provide you with their instruction letter which you must use to
give these instructions. Any beneficial owner of existing notes held of record
by The Depository Trust Company or its nominee, through authority granted by
The Depository Trust Company, may direct The Depository Trust Company
participant through which the beneficial owner's existing notes are held in The
Depository Trust Company to tender on the beneficial owner's behalf.
Tender of existing notes held through The Depository Trust Company. To
effectively tender existing notes that are held through The Depository Trust
Company, Depository Trust Company participants should transmit their acceptance
through the Automated Tender Offer Program ("ATOP"), for which the transaction
will be eligible, and The Depository Trust Company will then edit and verify
the acceptance and send an agent's message to the exchange agent for its
acceptance. Delivery of tendered existing notes must be made to the exchange
agent pursuant to the book-entry delivery procedures set forth below or the
tendering Depository Trust Company participant must comply with the guaranteed
delivery procedures set forth below. No letters of transmittal will be required
to tender existing notes through ATOP.
In addition, the exchange agent must receive:
. a completed and signed letter of transmittal or an electronic
confirmation pursuant to The Depository Trust Company's ATOP system
indicating the principal amount of existing notes to be tendered and
any other documents, if any, required by the letter of transmittal,
and
. prior to the expiration date, a confirmation of book-entry transfer of
such existing notes, into the exchange agent's account at The
Depository Trust Company, in accordance with the procedure for book-
entry transfer described below, or
. the holder must comply with the guaranteed delivery procedures
described below.
Your existing notes must be tendered by book-entry transfer. The exchange
agent will establish an account with respect to the existing notes at The
Depository Trust Company for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in The Depository Trust Company must make book-entry delivery of
existing notes by having The Depository Trust Company transfer such existing
notes into the exchange agent's account at The Depository Trust Company in
accordance with The Depository Trust Company's procedures for transfer.
Although your existing notes will be tendered through The Depository Trust
Company facility, the letter of transmittal, or facsimile, or an electronic
confirmation pursuant to The Depository Trust Company's ATOP system, with any
required signature guarantees and any other required documents, if any, must be
transmitted to and received or confirmed by the exchange agent at its address
set forth below under "Exchange agent," prior to 5:00 pm Eastern Standard Time
on the expiration date. You or your broker must ensure that the exchange agent
receives an agent's message from The Depository Trust Company confirming the
book-entry transfer of your existing notes. An agent's message is a message
transmitted by The Depository Trust Company and received by the exchange
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agent that forms a part of the book-entry confirmation which states that The
Depository Trust Company has received an express acknowledgement from the
participant in The Depository Trust Company tendering the shares that such
participant agrees to be bound by the terms of the letter of transmittal.
Delivery of documents to The Depository Trust Company in accordance with its
procedures does not constitute delivery to the exchange agent.
If you are an institution which is a participant in The Depository Trust
Company's book-entry transfer facility, you should follow the same procedures
that are applicable to persons holding existing notes through a financial
institution.
Do not send letters of transmittal or other exchange offer documents to us,
Robertson Stephens or Georgeson Shareholder Communications Inc., the
information agent.
It is your responsibility that all necessary materials get to the exchange
agent before the expiration date. If the exchange agent does not receive all of
the required materials before the expiration date, your existing notes will not
be validly tendered.
Any existing notes not accepted for exchange for any reason will be
returned without expense to the tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.
We will have accepted the validity of tendered existing notes if and when
we give oral or written notice to Norwest Bank Minnesota, National Association,
the exchange agent. The exchange agent will act as the tendering holders' agent
for purposes of receiving the exchange notes from us. If we do not accept any
tendered existing notes for exchange because of an invalid tender or the
occurrence of any other event, Norwest Bank Minnesota, National Association
will return those existing notes to you, without expense, promptly after the
expiration date via book-entry transfer through The Depository Trust Company.
Our interpretations are binding
We will determine in our sole discretion, all questions as to the validity,
form, eligibility and acceptance of existing notes tendered for exchange. Our
determination will be final and binding. We reserve the absolute right to
reject any and all tenders of any particular existing notes not properly
tendered or to not accept any particular existing note which acceptance might,
in our judgment or our counsel's judgment, be unlawful. We also reserve the
absolute right to waive any defects or irregularities or conditions of the
exchange offer as to any particular existing notes either before or after the
expiration date, including the right to waive the ineligibility of any holder
who seeks to tender existing notes in the exchange offer. Our interpretation of
the terms and conditions of the exchange offer as to any particular existing
note either before or after the expiration date, including the letter of
transmittal and the instructions to such letter of transmittal, will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of existing notes for exchange must be cured within
such reasonable period of time as we shall determine. Neither we, the exchange
agent nor any other person shall be under any duty to give notification of any
defect or irregularity with respect to any tender of existing notes for
exchange, nor shall any of them incur any liability for failure to give such
notification.
Acceptance of existing notes for exchange; Delivery of exchange notes
Once all of the conditions to the exchange offer are satisfied or waived,
we will accept, promptly after the expiration date, all existing notes properly
tendered, and will issue the exchange notes promptly after acceptance of the
existing notes. The discussion under the heading "Conditions for completion of
the exchange offer" provides further information regarding the conditions to
the exchange offer. For purposes of the exchange offer, we shall be deemed to
have accepted properly tendered existing notes for exchange when, as and if we
have given oral or written notice to the exchange agent, with written
confirmation of any oral notice to be given promptly after giving such notice.
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For each $2,000 principal amount of existing notes accepted for exchange,
the holder of such existing note will receive an exchange note having a
principal amount of $1,000. In addition, you will also receive payment, in cash
or in common stock, at our option of $50 for each $1,000 principal amount of
exchange notes issued to you in the exchange offer in the event that the
interest payment due on March 1, 2000 with respect to the existing notes has
not been paid or provided for prior to the exchange date. In the event the
interest payment is paid in common stock, we may at our election either round-
up to avoid distribution of fractional shares, or pay any fractional share
amount in cash. The exchange notes will bear interest from the issue date.
Existing notes accepted for exchange will cease to accrue interest from and
after the date of consummation of the exchange offer. Holders of existing notes
whose existing notes are accepted for exchange will not receive any payment in
respect of accrued interest on such existing notes.
In all cases, issuance of exchange notes for existing notes that are
accepted for exchange in the offer will be made only after timely receipt by
the exchange agent of:
. a timely book-entry confirmation of such existing notes. into the
exchange agent's account at the book-entry transfer facility,
. a properly completed and duly executed letter of transmittal or an
electronic confirmation of the submitting holder's acceptance through
The Depository Trust Company's ATOP system, and
. all other required documents, if any.
If we do not accept any tendered existing notes for any reason set forth in
the terms and conditions of the exchange offer, or if existing notes are
submitted for a greater principal amount than the holder desires to exchange,
the unaccepted or non-exchanged existing notes tendered by book-entry transfer
into the exchange agent's account at the book-entry transfer facility will be
returned in accordance with the book-entry procedures described above, and the
existing notes that are not exchange notes will be credited to an account
maintained with The Depository Trust Company, as promptly as practicable after
the expiration or termination of the exchange offer.
Guaranteed delivery procedures
If you desire to tender your existing notes and you cannot complete the
procedures for book-entry transfer set forth above on a timely basis, you may
still tender your existing notes if:
. your tender is made through an eligible institution,
. prior to the expiration date, the exchange agent received from the
eligible institution a properly completed and duly executed letter of
transmittal, or a facsimile of such letter of transmittal or an
electronic confirmation pursuant to the Depository Trust Company's
ATOP system, and notice of guaranteed delivery, substantially in the
form provided by us, by facsimile transmission, mail or hand delivery,
that:
(a) sets forth the name and address of the holder of existing notes
and the amount of existing notes tendered,
(b) states that the tender is being made thereby, and
(c) guarantees that within three New York Stock Exchange trading days
after the expiration date a book-entry confirmation and any other
documents required by the letter of transmittal, if any, will be
deposited by the eligible institution with the exchange agent; and
. book-entry confirmation and all other documents, if any, required by
the letter of transmittal are received by the exchange agent within
three New York Stock Exchange trading days after the expiration date.
Withdrawal rights
You may withdraw your tender of existing notes at any time prior to 5:00
p.m., Eastern Standard Time, on the expiration date.
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For a withdrawal to be effective, the exchange agent must receive a
written notice of withdrawal at the address or, in the case of eligible
institutions, at the facsimile number, set forth below under the heading
"Exchange agent" prior to 5:00 p.m. Eastern Standard Time, on the expiration
date. Any notice of withdrawal must:
. specify the name of the person who tendered the existing notes to be
withdrawn;
. contain a statement that you are withdrawing your election to have
your existing notes exchanged;
. be signed by the holder in the same manner as the original signature
on the letter of transmittal by which the existing notes were
tendered, including any required signature guarantees; and
. if you have tendered your existing notes in accordance with the
procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at The
Depository Trust Company to be credited with the withdrawn existing
notes and otherwise comply with the procedures of such facility.
Any existing notes that have been tendered for exchange, but which are not
exchanged for any reason, will be credited to an account maintained with the
book-entry transfer facility for the existing notes, as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn existing notes may be retendered by following the
procedures described under the heading "Procedures for tendering existing
notes" above at any time on or prior to 5:00 p.m., Eastern Standard Time, on
the expiration date.
Conditions for completion of the exchange offer
We will not accept existing notes for exchange notes and may terminate or
not complete the exchange offer if the registration statement covering the
exchange offer is not effective under the Securities Act. In addition, the
exchange offer is conditional upon a minimum principal amount of 66 2/3% of
the existing notes being tendered, which condition may be waived or amended.
We may not accept existing notes for exchange and may terminate or not
complete the exchange offer if:
. any action, proceeding or litigation seeking to enjoin, make illegal
or delay completion of the exchange offer or otherwise relating in any
manner to the exchange offer is instituted or threatened;
. any order, stay, judgment or decree is issued by any court,
government, governmental authority or other regulatory or
administrative authority and is in effect, or any statute, rule,
regulation, governmental order or injunction shall have been proposed,
enacted, enforced or deemed applicable to the exchange offer, any of
which would or might restrain, prohibit or delay completion of the
exchange offer or impair the contemplated benefits of the exchange
offer to us;
. any of the following occurs and the adverse effect of such occurrence
shall, in our reasonable judgment, be continuing:
. any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-
counter market in the United States;
. any extraordinary or material adverse change in U.S. financial
markets generally, including, without limitation, a decline of at
least twenty percent in either the Dow Jones Average of Industrial
stocks or the Standard & Poor's 500 Index from January, 2000;
. a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States;
. any limitation, whether or not mandatory, by any governmental
entity on, or any other event that would reasonably be expected to
materially adversely affect, the extension of credit by banks or
other lending institutions;
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. a commencement of a war or other national or international
calamity directly or indirectly involving the United States, which
would reasonably be expected to affect materially and adversely,
or to delay materially, the completion of the exchange offer;
. if any of the situations described above existed at the time of
commencement of the exchange offer and that situation deteriorates
materially after commencement of the exchange offer;
. any tender or exchange offer, other than this exchange offer by us,
with respect to some or all of our outstanding common stock or any
merger, acquisition or other business combination proposal involving
us shall have been proposed, announced or made by any person or
entity;
. any event or events occur that have resulted or may result, in our
judgment, in an actual or threatened change in our business condition,
income, operations, stock ownership or prospects and our subsidiaries,
taken as a whole;
. as the term "group" is used in Section 13(d)(3) of the Securities
Exchange Act,
. any person, entity or group acquires more than five percent of our
outstanding shares of common stock, other than a person, entity or
group which had publicly disclosed such ownership with the SEC
prior to February 7, 2000;
. any such person, entity or group which had publicly disclosed such
ownership prior to such date shall acquire additional common stock
constituting more than two percent of our outstanding shares; or
. any new group shall have been formed that beneficially owns more
than five percent of our outstanding shares of common stock which
in our judgment in any such case, and regardless of the
circumstances, makes it inadvisable to proceed with the exchange
offer or with such acceptance for exchange of shares.
If any of the above events occur, we may:
. terminate the exchange offer and as promptly as practicable return all
tendered existing notes to tendering note holders;
. extend the exchange offer and, subject to the withdrawal rights
described in "--Withdrawal rights" on page 34, retain all tendered
existing notes until the extended exchange offer expires;
. amend the terms of the exchange offer; or
. waive the unsatisfied condition and, subject to any requirement to
extend the period of time during which the exchange offer is open,
complete the exchange offer.
The conditions are for our sole benefit. We may assert these conditions
with respect to all or any portion of the exchange offer regardless of the
circumstances giving rise to them. We may waive any condition in whole or in
part at any time in our discretion. Our failure to exercise our rights under
any of the above conditions does not represent a waiver of these rights. Each
right is an ongoing right which may be asserted at any time. Any determination
by us concerning the conditions described above will be final and binding upon
all parties.
If a stop order issued by the SEC is in effect with respect to the
registration statement of which this document is a part, we will not accept any
existing notes tendered and we will not exchange for any exchange notes.
Fees and expenses
Robertson Stephens is acting as the dealer manager in connection with the
exchange offer. Robertson Stephens will receive a fee in the manner described
below for its services as dealer manager, in addition to being reimbursed for
its out-of-pocket expenses, including attorneys' fees, in connection with the
exchange offer. The fees will be payable if and when the exchange offer is
completed.
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The fee will be paid for each $1,000 principal amount of existing notes
tendered, based on a sliding scale, with higher fees per existing note paid on
the incremental principal amount of existing notes tendered above specified
thresholds. The fee scale ranges from $5.00 per $1,000 principal amount up to a
maximum of $35.00 per $1,000 principal amount if more than 75% of the aggregate
principal amount of the existing notes are tendered. Based on the foregoing fee
structure, if all the outstanding existing notes are tendered in the exchange
offer, Robertson Stephens will receive an aggregate fee of approximately $4.3
million, or 1.25%, of the principal amount of existing notes currently
outstanding. This fee will be paid in the form of exchange notes.
Robertson Stephens will also be reimbursed for its reasonable out-of-pocket
expenses incurred in connection with the exchange offer (including the
reasonable fees and disbursements of counsel).
We have agreed to indemnify Robertson Stephens against specified
liabilities relating to or arising out of the offer, including civil
liabilities under the federal securities laws, and to contribute to payments
which Robertson Stephens may be required to make in respect thereof. However,
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. Robertson
Stephens may from time to time hold existing notes, exchange notes and our
common stock in its proprietary accounts, and to the extent it owns existing
notes in these accounts at the time of the exchange offer, Robertson Stephens
may tender these existing notes.
We have retained Georgeson Shareholder Communications Inc. to act as the
information agent and Norwest Bank Minnesota, National Association to act as
the exchange agent in connection with the exchange offer. The information agent
may contact holders of existing notes by mail, telephone, facsimile
transmission and personal interviews and may request brokers, dealers and other
nominee stockholders to forward materials relating to the exchange offer to
beneficial owners. The information agent and the exchange agent each will
receive reasonable compensation for their respective services, will be
reimbursed for reasonable out-of-pocket expenses and will be indemnified
against liabilities in connection with their services, including liabilities
under the federal securities laws.
Neither the information agent nor the exchange agent has been retained to
make solicitations or recommendations. The fees they receive will not be based
on the principal amount of existing notes tendered under the exchange offer.
We will not pay any fees or commissions to any broker or dealer or any
other person, other than Robertson Stephens, for soliciting tenders of existing
notes under the exchange offer. Brokers, dealers, commercial banks and trust
companies will, upon request, be reimbursed by us for reasonable and necessary
costs and expenses incurred by them in forwarding materials to their customers.
Legal limitation
The above conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition, or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, we will not accept for exchange any existing notes tendered,
and no exchange notes will be issued in exchange for any such existing notes,
if at such time any stop order shall be threatened or in effect with respect to
the registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act of 1939.
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Exchange agent
Norwest Bank Minnesota, National Association, has been appointed as the
exchange agent for the exchange offer. All executed letters of transmittal
should be directed to the exchange agent at the address set forth below.
Questions, requests for assistance, requests for additional copies of this
prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent addressed as
follows:
Norwest Bank Minnesota, National Association, Exchange Agent
<TABLE>
<S> <C>
By Registered & Certified Mail: By Regular Mail or Overnight Courier:
NORWEST BANK MINNESOTA, N.A. NORWEST BANK MINNESOTA, N.A.
Corporate Trust Operations Corporate Trust Operations
MAC N9303-121 MAC N9303-121
P.O. Box 1517 Sixth & Marquette Avenue
Minneapolis, MN 55480 Minneapolis, MN 55479
</TABLE>
In Person by Hand Only:
NORWEST BANK MINNESOTA, N.A.
12th Floor--Northstar East Building
Corporate Trust Services
608 Second Avenue South
Minneapolis, MN
For Information Call:
(612) 667-9764
By Facsimile Transmission (for Eligible Institutions only):
Attention: Corporate Trust Operations
Confirm by Telephone
(612) 667-4927
If you deliver the letter of transmittal to an address other than as set
forth above or transmission of instructions via facsimile other than as set
forth above, then such delivery or transmission does not constitute a valid
delivery of such letter of transmittal.
Fees and expenses
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the exchange offer. The estimated cash expenses to be incurred
in connection with the exchange offer will be paid by us. We estimate these
expenses in the aggregate to be approximately $500,000.
Consequences of exchanging or failing to exchange existing notes
Holders who tender their existing notes for exchange will not be obligated
to pay any related transfer taxes.
The existing notes that are not exchanged for exchange notes pursuant to
the exchange offer will be subordinate in payment to the exchange notes.
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CASH OFFER FOR ADDITIONAL EXCHANGE NOTES
In addition to the exchange offer, we are offering holders who tender
existing notes the right to purchase up to $50,000,000 aggregate principal
amount of additional exchange notes for cash, which we refer to as the "cash
offer." The exchange notes in the cash offer are identical in all respects to
the exchange notes issued in the exchange offer as described in this document
under the heading "Description of Exchange Notes."
If the interest payment on the existing notes not tendered in the exchange
has not been paid or provided for by us prior to the closing date, a purchaser
of the additional exchange notes will deposit the purchase price for the
additional exchange notes and we will deposit a global security for the
additional exchange notes with the escrow agent, which will then be released
from escrow if the following two conditions are met on or prior to March 30,
2000:
. the blockage notice, if any, on the existing notes has been lifted by
the banks under our bank facility, allowing us to make the payment of
interest on the existing notes not tendered in the exchange offer; and
. we have agreed with the banks as to the percentage of the proceeds of
the cash raised, if any, from the sale of the additional exchange notes
that is to be paid to the banks under our bank facility.
Norwest Bank Minnesota will be the escrow agent. Robertson Stephens will
act as agent for the purchasers under the Escrow Agreement. If these conditions
are met, remaining proceeds from the escrow after the payment of funds to the
banks will be used by us for general corporate purposes.
If a noteholder's tender of existing notes is withdrawn we will not sell
any additional exchange notes to that holder. Offers to purchase additional
exchange notes must be in denominations of principal amount of $1,000 and any
integral multiple of $1,000.
You may indicate your interest in purchasing additional exchange notes on
the letter of transmittal or by contacting Robertson Stephens.
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DESCRIPTION OF EXCHANGE NOTES
We will issue the exchange notes under a subordinated indenture, dated as
of March 1, 2000, between us and Norwest Bank Minnesota, National Association,
as exchange notes trustee, to be supplemented by a supplemental indenture,
dated as of March 1, 2000, between us and the exchange notes trustee. In this
description, we refer to the subordinated indenture, as supplemented by the
supplemental indenture, as the "exchange notes indenture." The following
description is a summary of the material provisions of the exchange notes and
the exchange notes indenture. This summary is subject to and is qualified by
reference to all the provisions of the exchange notes indenture.
As used in this "Description of Exchange Notes" section, references to
"Read-Rite," "we," "our" or "us" refer solely to Read-Rite Corporation and not
its subsidiaries.
General
The exchange notes will be unsecured subordinated obligations of Read-Rite.
The exchange notes are limited to $230,000,000 aggregate principal amount,
which amount includes:
. $172,500,000 aggregate principal amount to be issued in the exchange
offer assuming all of the existing notes are tendered and accepted in
the exchange offer;
. up to an additional $50,000,000 aggregate principal amount to be
issued for cash to holders of existing notes interested in purchasing
additional exchange notes; and
. up to an additional $6,812,500 aggregate principal amount to be issued
to Robertson Stephens as a fee for their services in the exchange
offer and for acting as the placement agent of additional exchange
notes.
The exchange notes will mature on September 1, 2004 and be payable at a
price of 100% of the principal amount of the exchange notes. The exchange notes
will bear interest at the rate of 10% per year. Interest will be in cash or, at
our option, in common stock at a rate of 10% per year, payable on March 1 and
September 1 of each year. If we elect to pay interest in common stock, the
shares of common stock will be valued at 90% of the average of the closing
prices for the five trading days immediately preceding the second trading day
prior to the interest payment date.
The exchange notes will be unsecured obligations of Read-Rite. The exchange
notes are subordinated to all our senior debt, but senior in right of payment
to the existing notes. Neither we nor our subsidiaries are prohibited from
incurring debt under the exchange notes indenture. There are no financial
covenants in the exchange notes indenture. The exchange notes are effectively
subordinated in right of payment to all indebtedness and liabilities of our
subsidiaries.
The exchange notes will be convertible into common stock at a conversion
price equivalent to a 15% premium over the average of the daily volume weighted
average price for the common stock for each of the five trading days
immediately preceding the second trading day prior to the expiration date of
the exchange offer. The average of the daily volume weighted average price,
known as "VWAP," shall mean the daily volume weighted average price of our
common stock, based on a trading day from 9:00 a.m. to 4:00 p.m., on the Nasdaq
National Market as reported by Bloomberg Financial. We will notify holders of
the conversion price after such determination. The conversion rate will be
subject to adjustment as described under "--Conversion Rights." The exchange
notes are convertible at any time prior to maturity, unless previously redeemed
or repurchased.
We will pay principal and premium, if any, on the exchange notes any you
may submit your exchange notes for conversion, transfer or exchange, without
service charge, at our office maintained for the purpose in the Borough of
Manhattan, The City of New York, which shall initially be an office or agency
of the exchange notes trustee.
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If and to the extent we elect to make a payment in common stock instead of
cash with respect to any payment under the terms of the indenture that permits
such election, we may either pay cash for any fractional shares or round the
fractional share up to the nearest whole share.
Book-entry system
The exchange notes will be issued in the form of a global security held in
book-entry form. The Depository Trust Company or its nominee will be the sole
registered holder of the exchange notes for all purposes under the exchange
notes indenture. Owners of beneficial interests in the exchange notes
represented by the global security will hold these interests pursuant to the
procedures and practices of The Depository Trust Company. Owners of beneficial
interest must exercise any rights in respect of their interests, including any
right to convert or require repurchase of their interests, in accordance with
The Depository Trust Company's procedures and practices. Beneficial owners will
not be holders, and will not be entitled to any rights under the global
security or the exchange notes indenture with respect to the global security.
We and the exchange notes trustee may treat The Depository Trust Company as the
sole holder and owner of the global security.
Conversion rights
You may convert your exchange note, in whole or in part, into common stock
at any time prior to the close of business on the maturity date, unless
previously redeemed or repurchased. Your right to convert an exchange note
called for redemption or submitted for repurchase will terminate at the close
of business on the last business day prior to the redemption date or repurchase
date.
If you are a beneficial owner of exchange notes, you may exercise your
conversion right by delivering to The Depository Trust Company the appropriate
conversion instruction form pursuant to The Depository Trust Company's
conversion program. You can obtain this conversion notice from the office of
any conversion agent. The conversion date will be the date when you deliver
your exchange note and the duly signed and completed notice of conversion to
the conversion agent. As promptly as practicable on or after the conversion
date, we will issue and deliver to the exchange notes trustee a certificate or
certificates for the number of full shares of common stock issuable upon
conversion, together with payment for any fractional shares. These certificates
will be sent by the exchange notes trustee to the conversion agent for delivery
to the holder. The shares of common stock issuable upon conversion of the
exchange notes will be fully paid and nonassessable and will rank pari passu
with our other shares of common stock.
If you surrender your exchange note for conversion during the period from
the close of business on any regular record date to the opening of business on
the next succeeding interest payment date, your exchange note must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of surrendered exchange notes.
However, you will not be required to submit payment in this period if exchange
notes, or portions of exchange notes, are called for redemption on a redemption
date during the period beginning at the close of business on a regular record
date and ending on the opening of business on the first business day after the
next succeeding interest payment date, or if such interest payment date is not
a business day, the second succeeding business day. We will not make any
payment or adjustment for interest or dividends upon conversion. If you convert
your exchange notes, you will not be entitled to receive any dividends payable
to holders of common stock as of any record time or date before the close of
business on the conversion date. We will not issue fractional shares but will
instead pay cash based on the market bid price of common stock at the close of
business on the last trading day prior to conversion.
You will not be required to pay any taxes or duties upon conversion but
will be required to pay any tax or duty if the common stock issued upon
conversion of the exchange notes is in a name other than your name.
Certificates representing shares of common stock will not be issued or
delivered unless all taxes and duties, if any, payable by the holder have been
paid.
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We will adjust the conversion rate if the following events occur:
(1) we issue common stock as a dividend or distribution on our common
stock;
(2) we issue to all holders of our common stock rights, options or
warrants entitling them to subscribe for or purchase common stock at
less than the current market price of our common stock, provided the
conversion rate will be readjusted if these rights, options or
warrants are not exercised prior to expiration;
(3) we subdivide, combine or reclassify our common stock;
(4) we distribute to all holders of our common stock evidences of
indebtedness of Read-Rite, shares of capital stock or assets,
including securities, but excluding:
. those dividends and distributions listed in (1) above,
. those rights, options and warrants listed in (2) above, and
. all-cash distributions listed in (5) below;
(5) we make distributions consisting exclusively of cash to all holders of
our common stock in an aggregate amount that, combined together with
(A) other such all-cash distributions made within the preceding 12
months in respect of which no adjustment has been made and (B) any
cash and the fair market value of other consideration payable in
respect of any tender offer by us or any of our subsidiaries for
common stock concluded within the preceding 12 months in respect of
which no adjustment has been made, exceeds 12.5% of our market
capitalization; and
(6) we or any of our subsidiaries successfully complete a tender offer for
common stock which involves an aggregate consideration that, together
with (A) any cash and other consideration payable in a tender offer by
us or any of our subsidiaries for common stock expiring within the
12 months preceding the expiration of such tender offer in respect of
which no adjustment has been made and (B) the aggregate amount of any
such all-cash distributions referred to in (5) above to all holders of
common stock within the 12 months preceding the expiration of such
tender offer in respect of which no adjustments have been made,
exceeds 12.5% of our market capitalization on the expiration of such
tender offer.
We reserve the right to make reductions in the conversion rate in addition
to those specified above as we consider advisable in order that any event
treated for United States federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the recipients. We will not make any
conversion rate adjustment until the cumulative adjustments amount to 1.0% or
more of the conversion rate. We will compute any adjustments to the conversion
rate pursuant to this paragraph and will give you notice by mail of any
adjustments.
Under the provisions of our rights agreement, holders will receive, in
addition to the common stock issuable upon such conversion, the rights, whether
or not the rights have separated from the common stock at the time of the
conversion. In addition, if we implement a new shareholder rights plan, this
new rights plan must provide that upon conversion of the exchange notes the
holders will receive, in addition to the common stock issuable upon such
conversion, the rights whether or not such rights have separated from the
common stock at the time of such conversion.
If we consolidate or merge with or into another person or any person merges
into us, or in case of any sale, transfer or lease of all or substantially all
of our assets, each exchange note then outstanding will, without the consent of
the holder of any exchange note, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer or lease by a holder of number of shares
of common stock into which the exchange note was convertible immediately prior
this event. However, this provision will not apply to any merger that does not
result in any reclassification, conversion, exchange or cancellation of our
common stock.
We may from time to time increase the conversion rate by any amount for any
period of at least 20 days if our board of directors has made a determination
that such increase would be in the best interests of
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Read-Rite, which determination shall be conclusive. We shall give at least 15
days' notice of any proposed increase. No such increase shall be taken into
account for purposes of determining:
. whether the closing price of the common stock exceeds the conversion
price by 105% in connection with an event which otherwise would be a
change in control, and
. whether the closing price of the common stock is at least 200% of the
conversion price for purposes of determining whether we may
automatically convert the exchange notes.
If we make a distribution of property to our stockholders that would be
taxable to such stockholders as a dividend for United States federal income tax
purposes and the number of shares into which exchange notes are convertible is
increased as a result of above antidilution provisions, this increase may be
deemed to be a payment of a taxable dividend to holders. See "Federal Income
Tax Considerations."
We may elect to automatically convert the exchange notes if our stock price
hits specific targets.
We may elect to automatically convert the exchange notes at any time prior
to maturity if the price of our common stock has exceeded 200% of the
conversion price for at least 20 trading days during a 30-day trading period
ending five trading days prior to the notice of automatic conversion. We refer
to this as an "automatic conversion." The notice of automatic conversion must
be given not more than 30 and not less than 15 days before the date of
automatic conversion.
If an automatic conversion occurs on or prior to March 5, 2002, we will pay
additional interest in cash or, at our option, in common stock to holders of
notes. If we elect to pay the additional interest in common stock, the shares
of common stock will be valued at 90% of the average of the closing prices for
the five trading days immediately preceding the second trading day preceding
the conversion date. This additional interest shall be equal to two year's
worth of interest, less any interest actually paid prior to the date of
automatic conversion.
Subordination
The exchange notes will be subordinate in right of payment to the prior
payment in full of all senior debt. The exchange notes would be senior to the
existing notes, since the exchange notes are "notes" within the definition of
senior debt for the existing notes under the indenture for the existing notes.
In the event of:
. any insolvency or bankruptcy case or proceeding, or
. any receivership, liquidation, reorganization or debt restructuring,
or
. any liquidation, dissolution or other winding up of Read-Rite, or
. any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of Read-Rite,
the holders of senior debt will be entitled to receive payment in full of all
senior debt in cash or other payment satisfactory to the holders of senior debt
before the holders of the exchange notes are entitled to receive any payment.
However, any amounts previously deposited by us with the exchange notes trustee
or paying agent in accordance with the subordination provisions of the exchange
notes indenture at the time of the deposit may be paid to the holders of the
exchange notes (called "defeased payments").
In the event of our liquidation or insolvency, creditors of Read-Rite who
are not holders of senior debt may recover less, ratably, than holders of
senior debt and may recover more, ratably, than the holders of the exchange
notes.
In the event that any exchange notes are declared due and payable before
their stated maturity as a result of an event of default, the holders of the
senior debt will be entitled to receive payment in full of all senior debt
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before the holders of the exchange notes are entitled to receive any payment by
us on the exchange notes, other than defeased payments. If the payment of
exchange notes is accelerated because of an event of default, we are required
under the exchange notes indenture to promptly notify holders of senior debt of
this acceleration.
We may not make any payment on the exchange notes or purchase, redeem or
acquire the exchange notes or make any sinking fund or defeasance payment on
the exchange notes to the exchange notes trustee or paying agent, other than
defeased payments, if:
. a default in the payment of senior debt occurs and is continuing
beyond the applicable grace period, or
. any other event of default occurs and is continuing with respect to
designated senior debt that permits the holders of designated senior
debt or their representatives to accelerate the maturity, and the
exchange notes trustee receives a notice of such default (called a
"payment blockage notice") from us, a holder of designated senior debt
or any other person permitted to give this notice under the exchange
notes indenture.
We may resume payments on the exchange notes or purchase, redeem or
otherwise acquire the exchange notes or make a sinking fund or defeasance
payment:
. in the case of a payment default, upon the date on which this default
is cured or waived or ceases to exist, and
. in the case of a nonpayment default, the earlier of the date on which
this nonpayment default is cured or waived or ceases to exist or 179
days after the date on which the applicable payment blockage notice is
received, unless the subordination provisions of the exchange notes
indenture prohibit the payment, distribution, purchase, redemption,
acquisition, sinking fund payment or defeasance payment at such time,
including, without limitation, in the case of a nonpayment default
referred to above, as a result of a payment default with respect to
the applicable senior debt as a consequence of the acceleration of the
maturity thereof or otherwise.
No new period of payment blockage may be commenced unless and until 365
days have elapsed since the effectiveness of the immediately prior payment
blockage notice. No nonpayment default that existed or was continuing on the
date of delivery of any payment blockage notice to the exchange notes trustee
shall be the basis for a subsequent payment blockage notice. Any payment,
issuance and delivery of cash, property or securities, upon conversion of an
exchange note will be deemed to constitute payment on account of the principal
of the exchange notes, other than stock and subordinated securities of Read-
Rite.
Definitions
"designated senior debt" means our obligations under certain existing
senior debt, including our existing bank revolving credit agreement and bank
term loan agreement, and our obligations under any other particular senior debt
that expressly provides that such senior debt shall be "designated senior debt"
for purposes of the exchange notes indenture.
"senior debt" means the principal of, 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 us 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 exchange notes indenture or thereafter created,
incurred or assumed:
. our indebtedness evidenced by a credit or loan agreement, note, bond,
debenture or other written obligation,
. all of our obligations for money borrowed,
. all of our obligations evidenced by a note or similar instrument given
in connection with the acquisition of any businesses, properties or
assets of any kind,
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. our obligations as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles,
. our obligations as lessee under other leases for facilities, equipment
or related assets, whether or not capitalized, entered into or leased
after the date of the exchange notes indenture for financing purposes,
as determined by us,
. our obligations under any lease or related document, including a
purchase agreement, that provides that we are contractually obligated
to purchase or cause a third party to purchase the leased property and
our obligations under such lease or related document to purchase or to
cause a third party to purchase such leased property,
. all of our obligations under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts, or similar
agreements or arrangements,
. all of our obligations under letters of credit, bankers' acceptances
or similar facilities, including reimbursement obligations with
respect to any of the foregoing,
. all of our obligations issued or assumed as the deferred purchase
price of property or services, but excluding trade accounts payable
arising in the ordinary course of business,
. all obligations of the type referred to in the above clauses of
another person and all dividends of another person, the payment of
which, in either case, we have assumed or guaranteed, or in effect
guaranteed through an agreement to purchase or otherwise, or for which
we are responsible or liable, directly or indirectly, jointly or
severally, as obligor, guarantor or otherwise, or which is secured by
a lien on our property, and all of our obligations with respect
thereto, and
. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange
for, any such indebtedness or obligation described the above clauses.
However, senior debt shall not include the existing notes or the exchange
notes or any indebtedness or obligation if the terms of the indebtedness or
obligation expressly provide that the indebtedness or obligation is not
superior in right of payment to the exchange notes.
Optional redemption
At any time on or after March 5, 2002, we may redeem the exchange notes, in
whole or in part, upon not less than 20 nor more than 60 days' notice, at the
following prices, expressed as a percentage of principal amount:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
Beginning on March 5, 2002 and ending on February 28, 2003........ 105.0%
Beginning on March 1, 2003 and ending on August 31, 2004.......... 102.5
</TABLE>
and 100% at September 1, 2004, in each case together with accrued interest to,
but excluding, the redemption date.
If fewer than all the exchange notes are to be redeemed, the exchange notes
trustee will select the exchange notes to be redeemed in principal amounts of
$1,000 or multiples of $1,000 by lot or, in its discretion, on a pro rata
basis. If any exchange note is to be redeemed in part, a new exchange note or
exchange notes in principal amount equal to the unredeemed principal portion
thereof will be issued. If a portion of a holder's exchange notes is selected
for partial redemption and the holder converts a portion of this exchange note,
the converted portion shall be deemed to be taken from the portion selected for
redemption.
No sinking fund is provided for the exchange notes.
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Repurchase at option of holders upon a change in control
If a change in control occurs, you have the right, at your option, to
require us to repurchase all of your exchange notes, in whole or in part, on
the repurchase date that is 45 days after the date of the company notice, at a
price equal to 105% of the principal amount of the exchange notes to be
repurchased, together with interest accrued to, but excluding, the repurchase
date. The exchange notes will be repurchased in multiples of $1,000 principal
amount.
We may, at our option, instead of paying the repurchase price in cash, pay
the repurchase price in common stock valued at 95% of the average of the
closing bid prices of the common stock for the five trading days immediately
preceding the second trading day prior to the repurchase date. However, we will
not be able to pay the repurchase price in common stock unless we satisfy
certain conditions prior to the repurchase date as provided in the exchange
notes indenture.
We are obligated to give you notice at the change in control and your
repurchase right within 30 days after the occurrence of a change in control
(called the "company notice"). At our request, on or before the 15th day after
the occurrence of a change in control the exchange notes trustee shall give the
company notice. We must also deliver a copy of the company notice to the
exchange notes trustee. To exercise the repurchase right, you must deliver on
or before the 30th day after the date of the company notice irrevocable written
notice to the exchange notes trustee of your decision to exercise your
repurchase right, together with your exchange notes.
A "change in control" shall be deemed to have occurred if there shall
occur:
1. the acquisition by any person, including any syndicate or group deemed
to be a "person" under Section 13(d)(3) of the Exchange Act, of
beneficial ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of
shares of capital stock of Read-Rite entitling such person to exercise
50% or more of the total voting power of all shares of capital stock
of Read-Rite entitled to vote generally in elections of directors,
other than any such acquisition by Read-Rite, any subsidiary of Read-
Rite or any employee benefit plan of Read-Rite, or
2. any consolidation of Read-Rite with, or merger of Read-Rite into, any
other person, any merger of another person into Read-Rite, or any sale
or transfer of all or substantially all of the assets, other than to a
wholly-owned subsidiary of Read-Rite, of Read-Rite to any other
person, other than
. any such transaction pursuant to which the holders of 50% or more
of the total voting power of all shares of capital stock of Read-
Rite entitled to vote generally in elections of directors
immediately prior to such transaction have, directly or
indirectly, at least 50% or more of the total voting power of all
shares of capital stock of the continuing or surviving corporation
entitled to vote generally in elections of directors of the
continuing or surviving corporation immediately after such
transaction, and
. a merger (A) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of
capital stock of Read-Rite or (B) which is effected solely to
change the jurisdiction of incorporation of Read-Rite and results
in a reclassification, conversion or exchange of outstanding
shares of common stock into solely shares of common stock.
However, a change in control shall not be deemed to have occurred if
either:
. the closing price per share of the common stock for any five trading
days within the period of 10 consecutive trading days ending
immediately after the later of a change in control or the public
announcement of the change in control (in the case of a change in
control under clause (1) above) or the period of 10 consecutive
trading days ending immediately before the change in control (in the
case of a change in control under clause (2) above) shall equal or
exceed 105% of the conversion price of the exchange notes in effect on
each trading day, or
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. all of the consideration, excluding cash payments for fractional
shares and cash payments made pursuant to dissenters' appraisal
rights, in a merger or consolidation constituting a change in control
described in clause (1) and/or clause (2) above consists of shares of
common stock traded on a national securities exchange or quoted on the
Nasdaq National Market (or will be so traded or quoted immediately
following the change in control) and as a result of such transaction
or transactions the exchange notes become convertible solely into such
common stock.
The "conversion price" is equal to $1,000 divided by the conversion rate.
"Beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. "Person" includes any syndicate
or group which would be deemed to be a "person" under Section 13 (d)(3) of the
Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of information
to security holders in the event of an issuer tender offer. These Exchange Act
rules may apply in the event that the repurchase option becomes available to
holders of the exchange notes. We will comply with these rules to the extent
applicable at that time.
We may purchase exchange notes in the open market or by tender at any price
or by private agreement. Any exchange note so purchased by us may:
. be reissued or resold, to the extent permitted by applicable law, or
. at our option, be surrendered to the exchange notes trustee for
cancellation.
Any exchange notes surrendered to the exchange notes trustee may not be
reissued or resold and will be canceled promptly. The above provisions would
not necessarily afford you protection in the event of highly leveraged or other
transactions involving us that may adversely affect holders.
Our ability to repurchase exchange notes upon the occurrence of a change in
control is subject to limitations. We may not have the financial resources or
be able to arrange financing to pay the repurchase price for all the tendered
exchange notes. Our existing revolving credit facility and term loan facility
prohibit the repurchase of exchange notes by us or our subsidiaries in cash or
any other form of payment, excluding shares of common stock. In addition, our
ability to repurchase exchange notes may be limited or prohibited by the terms
of any future borrowing arrangements, including senior debt existing at the
time of a change in control. Our ability to repurchase exchange notes may also
be limited by the terms of its subsidiaries' then-existing borrowing
arrangements due to dividend restrictions. Any failure by us to repurchase the
exchange notes when required following a change in control would result in an
event of default under the exchange notes indenture. Any such default may, in
turn, cause a default under our senior debt. In addition, our repurchase of the
exchange notes as a result of the occurrence of a change in control may be
prohibited or limited by, or create an event of default under, the terms of
agreements related to other borrowings, including agreements relating to senior
debt.
Consolidation, merger and sale of assets
We may not consolidate with or merge into any other person, in a
transaction in which we are not the surviving corporation, or convey, transfer
or lease its properties and assets substantially as an entirety to, any person
(called a "successor person"), unless:
. 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 our
obligations on the exchange notes and under the exchange notes
indenture,
. immediately after giving effect to the transaction, and treating any
indebtedness as a result of the transaction as having been incurred at
the time of the transaction, no event of default, and no event
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which, after notice or lapse of time or both, would become an event of
default, shall have occurred and be continuing, and
. certain other conditions are met.
Modification and waiver
The consent of the holders for a majority principal amount of the
outstanding exchange notes is required to amend or modify the exchange notes
indenture. However, a modification or amendment requires the consent of the
holder of each outstanding exchange note if it would:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any exchange note,
. reduce the principal amount of, or any premium or interest on, any
exchange note,
. reduce the amount of principal payable upon acceleration of the
maturity,
. change the place or currency of payment of principal of, or any
premium or interest on, any exchange note,
. impair the right to institute suit for the enforcement of any payment
on any exchange note,
. modify the subordination provisions in a manner adverse to the holders
of the exchange notes,
. reduce the percentage in principal amount of exchange notes required
for modification or amendment,
. reduce the percentage in principal amount of exchange notes necessary
for waiver of compliance with certain provisions of the exchange notes
indenture or for waiver of certain defaults, or
. modify such provisions with respect to modification and waiver.
Holders of a majority in principal amount of the exchange notes may waive
any past default under the exchange notes indenture, except a default in the
payment of principal, premium or interest and certain covenants and provisions
of the exchange notes indenture which cannot be amended without the consent of
the holder of each outstanding exchange note.
Events of default
The following will be events of default under the exchange notes
indenture:
. we fail to pay principal or premium on any exchange note when due,
whether or not such payment is prohibited by the subordination
provisions of the exchange notes indenture;
. we fail to pay any interest on exchange notes when due, continued for
30 days, whether or not such payment is prohibited by the
subordination provisions of the exchange notes indenture;
. we fail to deposit any sinking fund payment, when due, whether or not
such deposit is prohibited by the subordination provisions of the
exchange notes indenture;
. we fail to perform any of our other covenants in the exchange notes
indenture continued for 60 days after written notice has been given by
the exchange notes trustee or the holders of at least 25% in aggregate
principal amount of the exchange notes as provided in the exchange
notes indenture;
. our bankruptcy, insolvency or reorganization; and
. we fail to pay at final maturity any indebtedness under any bond,
debenture, exchange note or other evidence of indebtedness for money
borrowed by us in a principal amount then outstanding in excess of
$25,000,000, either at stated maturity or upon acceleration, and such
indebtedness is not discharged, or such acceleration is not rescinded
or annulled, within a period of 30 days after notice as provided in
the exchange notes indenture.
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If an event of default shall occur and be continuing, either the exchange
notes trustee or the holders of at least 25% in aggregate principal amount of
the outstanding exchange notes may declare the principal amount of the exchange
notes to be immediately due and payable. In case of certain events of
bankruptcy, insolvency or reorganization involving Read-Rite, the principal,
premium, if any, and interest on the exchange notes will automatically become
immediately due and payable. Any payment by us on the exchange notes following
any such acceleration will be subject to the subordination provisions of the
exchange notes indenture. After any acceleration, but before a judgment or
decree based on acceleration, holders of a majority in aggregate principal
amount of the outstanding exchange notes 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 exchange notes indenture.
Subject to the provisions of the exchange notes indenture relating to the
duties of the exchange notes trustee in case of an event of default, the
exchange notes trustee will be under no obligation to exercise any of its
rights or powers under the exchange notes indenture at the request or direction
of any of the holders, unless such holders have offered to the exchange notes
trustee reasonable indemnity. Subject to these indemnification provisions,
holders of a majority in aggregate principal amount of the outstanding exchange
notes will have the right to:
. direct the time, method and place of conducting any proceeding for any
remedy available to the exchange notes trustee,
. or exercise any trust or power conferred on the exchange notes trustee
with respect to the exchange notes.
No holder of an exchange note will have any right to institute any
proceeding with respect to the exchange notes indenture unless:
. the holder has previously given to the exchange notes trustee written
notice of a continuing event of default,
. the holders of at least 25% in aggregate principal amount of the
outstanding exchange notes have made a written request and offered
reasonable indemnity to the exchange notes trustee to institute this
proceeding, and
. the exchange notes trustee has failed to institute such proceeding,
within 60 days after this notice, request and offer.
However, these limitations do not apply to a suit instituted by a holder of
an exchange note for the enforcement of payment of the principal, premium, if
any, or interest on the exchange note on or after the due date specified in the
exchange note.
We are required to furnish to the exchange notes trustee annually a
statement by our officers as to whether or not we are in default in the
performance or observance of any of the terms, provisions and conditions of the
exchange notes indenture and, if so, specifying all known defaults.
Transfer and exchange
We have initially appointed the exchange notes trustee as security
registrar, transfer agent and conversion agent, acting through its corporate
trust office. We reserve the right to vary or terminate the appointment of the
security registrar or any transfer agent or conversion agent. In addition, we
may appoint other transfer agents or conversion agents or approve any change in
any security registrar, transfer agent or conversion agent's office.
Purchase and cancellation
Either we or one of our subsidiaries may, to the extent permitted by
applicable law, purchase exchange notes at any price in the open market or
otherwise.
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All exchange notes surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall be delivered to the
exchange notes trustee. All exchange notes delivered to the exchange notes
trustee shall be canceled promptly by the exchange notes trustee. No exchange
notes shall be authenticated in exchange for any canceled exchange notes.
Replacement of existing notes
We will replace exchange notes that become mutilated, destroyed, stolen or
lost at your expense upon delivery to the exchange notes trustee of the
mutilated exchange notes or evidence of the loss, theft or destruction of the
exchange notes satisfactory to us and the exchange notes trustee. In the case
of a lost, stolen or destroyed exchange note, indemnity satisfactory to the
exchange notes trustee and us may be required at the expense of the holder of
the exchange note before a replacement exchange note will be issued.
Governing law
The subordinated indenture, the supplemental indenture and the exchange
notes are governed by and construed in accordance with the laws of the State of
New York.
The exchange notes trustee
In case an event of default shall occur and not be cured, the exchange
notes trustee will be required to use the degree of care of a prudent person in
the conduct of his own affairs in the exercise of its powers. Subject to this
provision, the exchange notes trustee will be under no obligation to exercise
any of its rights or powers under the exchange notes indenture at the request
of any of the holders of exchange notes, unless they shall have offered to the
exchange notes trustee reasonable security or indemnity.
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DESCRIPTION OF EXISTING NOTES
We issued the existing notes under a subordinated indenture, dated as of
August 15, 1997, between us and State Street Bank and Trust Company of
California, N.A., as trustee, that was supplemented by the supplemental
indenture, dated as of August 15, 1997, between us and the trustee. In this
description, we refer to the subordinated indenture, as supplemented by the
supplemental indenture, as the "indenture." The following description is a
summary of the material provisions of the existing notes and the indenture.
This summary is subject to and is qualified by reference to all the provisions
of the indenture.
As used in this "Description of Existing Notes" section, references to
"Read-Rite," "we," "our" or "us" refer solely to Read-Rite Corporation and not
its subsidiaries.
General
The existing notes are unsecured subordinated obligations of Read-Rite. The
existing notes are limited to $345,000,000 aggregate principal amount. The
existing notes will mature on September 1, 2004 and be payable at a price of
100% of the principal amount of the existing notes. The existing notes bear
interest at the rate of 6 1/2% per year. Interest will be payable on March 1
and September 1 of each year.
The existing notes are unsecured obligations of Read-Rite. The existing
notes are subordinated to all of our present and future senior debt. Neither we
nor our subsidiaries are restricted from incurring debt under the indenture.
There are no financial covenants in the indenture. The existing notes are
effectively subordinated in right of payment to all indebtedness and
liabilities of our subsidiaries.
The existing notes will be convertible into common stock at the conversion
rate of 24.8524 shares of common stock for each 1,000 principal amount of
existing notes, subject to adjustment as described under "--Conversion Rights,"
at any time prior to maturity, unless previously redeemed or repurchased.
We will pay principal and premium, if any, on the existing notes any you
may submit your existing notes for conversion, transfer or exchange, without
service charge, at our office maintained for the purpose in the Borough of
Manhattan, The City of New York, which shall initially be an office or agency
of the trustee.
Book-entry system
The existing notes were issued in the form of a global security held in
book-entry form. The Depository Trust Company or its nominee will be the sole
registered holder of the existing notes for all purposes under the indenture.
Owners of beneficial interests in the existing notes represented by the global
security will hold these interests pursuant to the procedures and practices of
The Depository Trust Company. Owners of beneficial interest must exercise any
rights in respect of their interests, including any right to convert or require
repurchase of their interests, in accordance with The Depository Trust
Company's procedures and practices. Beneficial owners will not be holders, and
will not be entitled to any rights under the global security or the indenture
with respect to the global security. We and the trustee may treat The
Depository Trust Company as the sole holder and owner of the global security.
Conversion rights
You may convert your existing note, in whole or in part, into common stock
at any time prior to the close of business on the maturity date, unless
previously redeemed or repurchased. Your right to convert an existing note
called for redemption or submitted for repurchase will terminate at the close
of business on the last business day prior to the redemption date or repurchase
date.
If you are a beneficial owner of existing notes, you may exercise your
conversion right by delivering to The Depository Trust Company the appropriate
conversion instruction form pursuant to The Depository Trust Company's
conversion program. You can obtain this conversion notice from the office of
any conversion agent. The conversion date will be the date when you deliver
your existing note and the duly signed and completed notice of conversion to
the conversion agent. As promptly as practicable on or after the conversion
date, we
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will issue and deliver to the trustee a certificate or certificates for the
number of full shares of common stock issuable upon conversion, together with
payment for any fractional shares. These certificates will be sent by the
trustee to the conversion agent for delivery to the holder. The shares of
common stock issuable upon conversion of the existing notes will be fully paid
and nonassessable and will rank pari passu with our other shares of common
stock.
If you surrender your existing note for conversion during the period from
the close of business on any regular record date to the opening of business on
the next succeeding interest payment date, your existing note must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of surrendered existing notes.
However, you will not be required to submit payment in this period if existing
notes, or portions of existing notes, are called for redemption on a redemption
date during the period beginning at the close of business on a regular record
date and ending on the opening of business on the first business day after the
next succeeding interest payment date, or if such interest payment date is not
a business day, the second succeeding business day. We will not make any
payment or adjustment for interest or dividends upon conversion. If you convert
your existing notes, you will not be entitled to receive any dividends payable
to holders of common stock as of any record time or date before the close of
business on the conversion date. We will not issue fractional shares but will
instead pay cash based on the market bid price of common stock at the close of
business on the last trading day prior to conversion.
You will not be required to pay any taxes or duties upon conversion but
will be required to pay any tax or duty if the common stock issued upon
conversion of the existing notes is in a name other than your name.
Certificates representing shares of common stock will not be issued or
delivered unless all taxes and duties, if any, payable by the holder have been
paid.
We will adjust the conversion rate if the following events occur:
(1) we issue common stock as a dividend or distribution on our common
stock;
(2) we issue to all holders of our common stock rights, options or
warrants entitling them to subscribe for or purchase common stock at
less than the current market price of our common stock, provided the
conversion rate will be readjusted if these rights, options or
warrants are not exercised prior to expiration;
(3) we subdivide, combine or reclassify our common stock;
(4) we distribute to all holders of our common stock evidences of
indebtedness of Read-Rite, shares of capital stock or assets,
including securities, but excluding:
. those dividends and distributions listed in (1) above,
. those rights, options and warrants listed in (2) above, and
. all-cash distributions listed in (5) below;
(5) we make distributions consisting exclusively of cash to all holders of
our common stock in an aggregate amount that, combined together with
(A) other such all-cash distributions made within the preceding 12
months in respect of which no adjustment has been made and (B) any
cash and the fair market value of other consideration payable in
respect of any tender offer by us or any of our subsidiaries for
common stock concluded within the preceding 12 months in respect of
which no adjustment has been made, exceeds 12.5% of our market
capitalization; and
(6) we or any of our subsidiaries successfully complete a tender offer for
common stock which involves an aggregate consideration that, together
with (A) any cash and other consideration payable in a tender offer by
us or any of our subsidiaries for common stock expiring within the
12 months preceding the expiration of such tender offer in respect of
which no adjustment has been made and (B) the aggregate amount of any
such all-cash distributions referred to in (5) above to all holders of
common stock within the 12 months preceding the expiration of such
tender offer in respect of which no adjustments have been made,
exceeds 12.5% of our market capitalization on the expiration of such
tender offer.
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We reserve the right to make reductions in the conversion rate in addition
to those specified above as we consider advisable in order that any event
treated for United States federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the recipients. We will not make any
conversion rate adjustment until the cumulative adjustments amount to 1.0% or
more of the conversion rate. We will compute any adjustments to the conversion
rate pursuant to this paragraph and will give you notice by mail of any
adjustments.
Under the provisions of our rights agreement, holders will receive, in
addition to the common stock issuable upon such conversion, the rights, whether
or not the rights have separated from the common stock at the time of the
conversion. In addition, if we implement a new shareholder rights plan, this
new rights plan must provide that upon conversion of the existing notes the
holders will receive, in addition to the common stock issuable upon such
conversion, the rights whether or not such rights have separated from the
common stock at the time of such conversion.
If we consolidate or merge with or into another person or any person merges
into us, or in case of any sale, transfer or lease of all or substantially all
of our assets, each existing note then outstanding will, without the consent of
the holder of any existing note, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer or lease by a holder of number of shares
of common stock into which the existing note was convertible immediately prior
this event. However, this provision will not apply to any merger that does not
result in any reclassification, conversion, exchange or cancellation of our
common stock.
We may from time to time increase the conversion rate by any amount for any
period of at least 20 days if our board of directors has made a determination
that such increase would be in the best interests of Read-Rite, which
determination shall be conclusive. We shall give at least 15 days' notice of
any proposed increase. No such increase shall be taken into account for
purposes of determining whether the closing price of the common stock exceeds
the conversion price by 105% in connection with an event which otherwise would
be a change in control.
If we make a distribution of property to our stockholders that would be
taxable to such stockholders as a dividend for United States federal income tax
purposes and the number of shares into which existing notes are convertible is
increased as a result of above antidilution provisions, this increase may be
deemed to be a payment of a taxable dividend to holders. See "Federal Income
Tax Considerations."
Subordination
The existing notes are subordinate in right of payment to the prior payment
in full of all senior debt. In the event of:
. any insolvency or bankruptcy case or proceeding, or
. any receivership, liquidation, reorganization or debt restructuring, or
. any liquidation, dissolution or other winding up of Read-Rite, or
. any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of Read-Rite,
the holders of senior debt will be entitled to receive payment in full of all
senior debt in cash or other payment satisfactory to the holders of senior debt
before the holders of the existing notes are entitled to receive any payment.
However, any amounts previously deposited by us with the trustee or paying
agent in accordance with the subordination provisions of the indenture at the
time of the deposit may be paid to the holders of the existing notes (called
"defeased payments").
In the event of our liquidation or insolvency, creditors of Read-Rite who
are not holders of senior debt may recover less, ratably, than holders of
senior debt and may recover more, ratably, than the holders of the existing
notes.
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In the event that any existing notes are declared due and payable before
their stated maturity as a result of an event of default, the holders of the
senior debt will be entitled to receive payment in full of all senior debt
before the holders of the existing notes are entitled to receive any payment by
us on the existing notes, other than defeased payments. If the payment of
existing notes is accelerated because of an event of default, we are required
under the indenture to promptly notify holders of senior debt of this
acceleration.
We may not make any payment on the existing notes or purchase, redeem or
acquire the existing notes or make any sinking fund or defeasance payment on
the existing notes to the trustee or paying agent, other than defeased
payments, if:
. a default in the payment of senior debt occurs and is continuing beyond
the applicable grace period, or
. any other event of default occurs and is continuing with respect to
designated senior debt that permits the holders of designated senior
debt or their representatives to accelerate the maturity, and the
trustee receives a notice of such default (called a "payment blockage
notice") from us, a holder of designated senior debt or other person
permitted to give this notice under the indenture.
We may resume payments on the existing notes or purchase, redeem or
otherwise acquire the existing notes or make a sinking fund or defeasance
payment:
. in the case of a payment default, upon the date on which this default
is cured or waived or ceases to exist, and
. in the case of a nonpayment default, the earlier of the date on which
this nonpayment default is cured or waived or ceases to exist or 179
days after the date on which the applicable payment blockage notice is
received, unless the subordination provisions of the indenture prohibit
the payment, distribution, purchase, redemption, acquisition, sinking
fund payment or defeasance payment, including, without limitation, in
the case of a nonpayment default referred to above, as a result of a
payment default with respect to the applicable senior debt as a
consequence of the acceleration of the maturity thereof or otherwise.
No new period of payment blockage may be commenced unless and until 365
days have elapsed since the effectiveness of the immediately prior payment
blockage notice. No nonpayment default that existed or was continuing on the
date of delivery of any payment blockage notice to the trustee shall be the
basis for a subsequent payment blockage notice. Any payment, issuance and
delivery of cash, property or securities, upon conversion of an existing note
will be deemed to constitute payment on account of the principal of the
existing notes, other than stock and subordinated securities of Read-Rite.
Definitions
"designated senior debt" means our obligations under certain existing
senior debt, including our existing bank revolving credit agreement and bank
term loan agreement, and our obligations under any other particular senior debt
that expressly provides that such senior debt shall be "designated senior debt"
for purposes of the indenture.
"senior debt" means the principal of, 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 us 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 indenture or thereafter created, incurred or
assumed:
. our indebtedness evidenced by a credit or loan agreement, note, bond,
debenture or other written obligation,
. all of our obligations for money borrowed,
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. all of our obligations evidenced by a note or similar instrument given
in connection with the acquisition of any businesses, properties or
assets of any kind,
. our obligations as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles,
. our obligations as lessee under other leases for facilities, equipment
or related assets, whether or not capitalized, entered into or leased
after the date of the indenture for financing purposes, as determined
by us,
. our obligations under any lease or related document, including a
purchase agreement, that provides that we are contractually obligated
to purchase or cause a third party to purchase the leased property and
our obligations under such lease or related document to purchase or to
cause a third party to purchase such leased property,
. all of our obligations under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts, or similar
agreements or arrangements,
. all of our obligations under letters of credit, bankers' acceptances or
similar facilities, including reimbursement obligations with respect to
any of the foregoing,
. all of our obligations issued or assumed as the deferred purchase price
of property or services, but excluding trade accounts payable arising
in the ordinary course of business,
. all obligations of the type referred to in the above clauses of another
person and all dividends of another person, the payment of which, in
either case, we have assumed or guaranteed, or in effect guaranteed
through an agreement to purchase or otherwise, or for which we are
responsible or liable, directly or indirectly, jointly or severally, as
obligor, guarantor or otherwise, or which is secured by a lien on our
property, and all of our obligations with respect thereto, and
. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange
for, any such indebtedness or obligation described the above clauses.
However, senior debt shall not include the existing notes or any
indebtedness or obligation if the terms of the indebtedness or obligation,
expressly provide that the indebtedness or obligation is not superior in right
of payment to the existing notes.
Optional redemption
At any time on or after September 7, 2000, we may redeem the existing
notes, in whole or in part, upon not less than 20 nor more than 60 days'
notice, at the following prices, expressed as a percentage of principal amount:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
Beginning on September 7, 2000 and ending on August 31, 2001..... 103.714%
Beginning on September 1, 2001 and ending on August 31, 2002..... 102.786
Beginning on September 1, 2002 and ending on August 31, 2003..... 101.857
Beginning on September 1, 2003 and ending on August 31, 2004..... 100.929
</TABLE>
and 100% at September 1, 2004, in each case together with accrued interest to,
but excluding, the redemption date.
If fewer than all the existing notes are to be redeemed, the trustee will
select the existing notes to be redeemed in principal amounts of $1,000 or
multiples of $1,000 by lot or, in its discretion, on a pro rata basis. If any
existing note is to be redeemed in part, a new existing note or existing notes
in principal amount equal to the unredeemed principal portion thereof will be
issued. If a portion of a holder's existing notes is selected for
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partial redemption and the holder converts a portion of this existing note, the
converted portion shall be deemed to be taken from the portion selected for
redemption.
No sinking fund is provided for the existing notes.
Repurchase at option of holders upon a change in control
If a change in control occurs, you have the right, at your option, to
require us to repurchase all of your existing notes, in whole or in part, on
the repurchase date that is 45 days after the date of the company notice, at a
price equal to 100% of the principal amount of the existing notes to be
repurchased, together with interest accrued to, but excluding, the repurchase
date. The existing notes will be repurchased in multiples of $1,000 principal
amount.
We may, at our option, instead of paying the repurchase price in cash, pay
the repurchase price in common stock valued at 95% of the average of the
closing bid prices of the common stock for the five trading days immediately
preceding the second trading day prior to the repurchase date. However, we will
not be able to pay the repurchase price in common stock unless we satisfy
certain conditions prior to the repurchase date as provided in the indenture.
We are obligated to give you notice at the change in control and your
repurchase right within 30 days after the occurrence of a change in control
(called the "company notice"). At our request, on or before the 15th day after
the occurrence of a change in control the trustee shall give the company
notice. We must also deliver a copy of the company notice to the trustee. To
exercise the repurchase right, you must deliver on or before the 30th day after
the date of the company notice irrevocable written notice to the trustee of
your decision to exercise your repurchase right, together with your existing
notes.
A "change in control" shall be deemed to have occurred if there shall
occur:
(1) the acquisition by any person, including any syndicate or group deemed
to be a "person" under Section 13(d)(3) of the Exchange Act, of
beneficial ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of
shares of capital stock of Read-Rite entitling such person to exercise
50% or more of the total voting power of all shares of capital stock
of Read-Rite entitled to vote generally in elections of directors,
other than any such acquisition by Read-Rite, any subsidiary of Read-
Rite or any employee benefit plan of Read-Rite, or
(2) any consolidation of Read-Rite with, or merger of Read-Rite into, any
other person, any merger of another person into Read-Rite, or any sale
or transfer of all or substantially all of the assets, other than to a
wholly-owned subsidiary of Read-Rite, of Read-Rite to any other
person, other than
. any such transaction pursuant to which the holders of 50% or more
of the total voting power of all shares of capital stock of Read-
Rite entitled to vote generally in elections of directors
immediately prior to such transaction have, directly or indirectly,
at least 50% or more of the total voting power of all shares of
capital stock of the continuing or surviving corporation entitled
to vote generally in elections of directors of the continuing or
surviving corporation immediately after such transaction, and
. a merger (A) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of
capital stock of Read-Rite or (B) which is effected solely to
change the jurisdiction of incorporation of Read-Rite and results
in a reclassification, conversion or exchange of outstanding shares
of common stock into solely shares of common stock.
However, a change in control shall not be deemed to have occurred if
either:
. the closing price per share of the common stock for any five trading
days within the period of 10 consecutive trading days ending
immediately after the later of a change in control or the public
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announcement of the change in control (in the case of a change in
control under clause (1) above) or the period of 10 consecutive trading
days ending immediately before the change in control (in the case of a
change in control under clause (2) above) shall equal or exceed 105% of
the conversion price of the existing notes in effect on each trading
day, or
. all of the consideration, excluding cash payments for fractional shares
and cash payments made pursuant to dissenters' appraisal rights, in a
merger or consolidation constituting a change in control described in
clause (1) and/or clause (2) above consists of shares of common stock
traded on a national securities exchange or quoted on The Nasdaq
National Market (or will be so traded or quoted immediately following
the change in control) and as a result of such transaction or
transactions the existing notes become convertible solely into such
common stock.
The "conversion price" is equal to $1,000 divided by the conversion rate.
"Beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. "Person" includes any syndicate
or group which would be deemed to be a "person" under Section 13 (d)(3) of the
Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of information
to security holders in the event of an issuer tender offer. These Exchange Act
rules may apply in the event that the repurchase option becomes available to
holders of the existing notes. We will comply with these rules to the extent
applicable at that time.
We may purchase existing notes in the open market or by tender at any price
or by private agreement. Any existing note so purchased by us may:
. be reissued or resold, to the extent permitted by applicable law, or
. at our option, be surrendered to the trustee for cancellation.
Any existing notes surrendered to the trustee may not be reissued or resold
and will be canceled promptly. The above provisions would not necessarily
afford you protection in the event of highly leveraged or other transactions
involving us that may adversely affect holders.
Our ability to repurchase existing notes upon the occurrence of a change in
control is subject to limitations. We may not have the financial resources or
be able to arrange financing to pay the repurchase price for all the tendered
existing notes. Our existing revolving credit facility and term loan facility
prohibit the repurchase of existing notes by us or our subsidiaries in cash or
any other form of payment, including shares of common stock. In addition, our
ability to repurchase existing notes may be limited or prohibited by the terms
of any future borrowing arrangements, including senior debt existing at the
time of a change in control. Our ability to repurchase existing notes may also
be limited by the terms of its subsidiaries' then-existing borrowing
arrangements due to dividend restrictions. Any failure by us to repurchase the
existing notes when required following a change in control would result in an
event of default under the indenture. Any such default may, in turn, cause a
default under our senior debt. In addition, our repurchase of the existing
notes as a result of the occurrence of a change in control may be prohibited or
limited by, or create an event of default under, the terms of agreements
related to other borrowings, including agreements relating to senior debt.
Consolidation, merger and sale of assets
We may not consolidate with or merge into any other person, in a
transaction in which we are not the surviving corporation, or convey, transfer
or lease its properties and assets substantially as an entirety to, any person
(called a "successor person"), unless:
. 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 our obligations
on the existing notes and under the indenture,
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. immediately after giving effect to the transaction, and treating any
indebtedness as a result of the transaction as having been incurred 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, and
. certain other conditions are met.
Modification and waiver
The consent of the holders for a majority principal amount of the
outstanding existing notes is required to amend or modify the indenture.
However, a modification or amendment requires the consent of the holder of each
outstanding existing note if it would:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any existing note,
. reduce the principal amount of, or any premium or interest on, any
existing note,
. reduce the amount of principal payable upon acceleration of the
maturity,
. change the place or currency of payment of principal of, or any premium
or interest on, any existing note,
. impair the right to institute suit for the enforcement of any payment
on any existing note,
. modify the subordination provisions in a manner adverse to the holders
of the existing notes,
. reduce the percentage in principal amount of existing notes required
for modification or amendment,
. reduce the percentage in principal amount of existing notes necessary
for waiver of compliance with certain provisions of the indenture or
for waiver of certain defaults, or
. modify such provisions with respect to modification and waiver.
Holders of a majority in principal amount of the existing notes may waive
any past default under the indenture, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
indenture which cannot be amended without the consent of the holder of each
outstanding existing note.
Events of default
The following will be events of default under the indenture:
. we fail to pay principal or premium on any existing note when due,
whether or not such payment is prohibited by the subordination
provisions of the indenture;
. we fail to pay any interest on existing notes when due, continued for
30 days, whether or not such payment is prohibited by the subordination
provisions of the indenture;
. we fail to deposit any sinking fund payment, when due, whether or not
such deposit is prohibited by the subordination provisions of the
indenture;
. we fail to perform any of our other covenants in the indenture
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 existing notes as provided in the indenture;
. our bankruptcy, insolvency or reorganization; and
. we fail to pay at final maturity any indebtedness under any bond,
debenture, note or other evidence of indebtedness for money borrowed by
us in a principal amount then outstanding in excess of $25,000,000,
either at stated maturity or upon acceleration, and such indebtedness
is not discharged,
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or such acceleration is not rescinded or annulled, within a period of
30 days after notice as provided in the indenture.
If an event of default shall occur and be continuing, either the trustee
or the holders of at least 25% in aggregate principal amount of the
outstanding existing notes may declare the principal amount of the existing
notes to be immediately due and payable. In case of certain events of
bankruptcy, insolvency or reorganization involving Read-Rite, the principal,
premium, if any, and interest on the existing notes will automatically become
immediately due and payable. Any payment by us on the existing notes following
any such acceleration will be subject to the subordination provisions of the
indenture. After any acceleration, but before a judgment or decree based on
acceleration, holders of a majority in aggregate principal amount of the
outstanding existing notes 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 indenture.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default, the trustee will be under no obligation
to exercise any of its rights or powers under the indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
trustee reasonable indemnity. Subject to these indemnification provisions,
holders of a majority in aggregate principal amount of the outstanding
existing notes will have the right to:
. direct the time, method and place of conducting any proceeding for any
remedy available to the trustee,
. or exercise any trust or power conferred on the trustee with respect to
the existing notes.
No holder of an existing note of any series will have any right to
institute any proceeding with respect to the indenture unless:
. the holder has previously given to the trustee written notice of a
continuing event of default,
. the holders of at least 25% in aggregate principal amount of the
outstanding existing notes have made a written request and offered
reasonable indemnity to the trustee to institute this proceeding, and
. the trustee has failed to institute such proceeding, within 60 days
after this notice, request and offer.
However, these limitations do not apply to a suit instituted by a holder
of an existing note for the enforcement of payment of the principal, premium,
if any, or interest on the existing note on or after the applicable due date
specified in the existing note.
We are required to furnish to the trustee annually a statement by our
officers as to whether or not we are in default in the performance or
observance of any of the terms, provisions and conditions of the indenture
and, if so, specifying all such known defaults.
Transfer and exchange
We have initially appointed the trustee as security registrar, transfer
agent and conversion agent, acting through its corporate trust office. We
reserve the right to vary or terminate the appointment of the security
registrar or any transfer agent or conversion agent. In addition, we may
appoint other transfer agents or conversion agents or approve any change in
any security registrar, transfer agent or conversion agent's office.
Purchase and cancellation
Either we or one of our subsidiaries may, to the extent permitted by
applicable law, purchase existing notes at any price in the open market or
otherwise.
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All existing notes surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall be delivered to the
trustee. All existing notes delivered to the trustee shall be canceled promptly
by the trustee. No existing notes shall be authenticated in exchange for any
canceled existing notes.
Replacement of existing notes
We will replace existing notes that become mutilated, destroyed, stolen or
lost at your expense upon delivery to the trustee of the mutilated existing
notes or evidence of the loss, theft or destruction of the existing notes
satisfactory to us and the trustee. In the case of a lost, stolen or destroyed
existing note, indemnity satisfactory to the trustee and us may be required at
the expense of the holder of the existing note before a replacement existing
note will be issued.
Governing law
The subordinated indenture, the supplemental indenture and the existing
notes are governed by and construed in accordance with the laws of the State of
New York.
Trustee
In case an event of default shall occur and not be cured, the trustee will
be required to use the degree of care of a prudent person in the conduct of his
own affairs in the exercise of its powers. Subject to this provision, the
trustee will be under no obligation to exercise any of its rights or powers
under the indenture at the request of any of the holders of existing notes,
unless they shall have offered to the trustee reasonable security or indemnity.
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DESCRIPTION OF CAPITAL STOCK
General
Our authorized capital stock consists of 160,000,000 shares of common
stock, $0.0001 par value per share and 4,000,000 shares of preferred stock,
$0.0001 par value per share. 116,000 shares of our preferred stock are
designated as Series A participating preferred stock. As of December 31, 1999,
there were 49,927,337 shares of common stock issued and outstanding and no
shares of preferred stock issued and outstanding.
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 dividends, if any, as may be declared from time
to time by our board of directors out of legally available funds. In the event
of our liquidation, dissolution or winding up, 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
Our board of directors has designated 116,000 shares of the preferred stock
as Series A preferred stock. 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
of the preferred stock 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 Read-Rite 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. We have no
present plans to issue any of the preferred stock except pursuant to the rights
described below.
Rights agreement
We entered into a Preferred Shares Rights Agreement with ChaseMellon
Shareholder Services, L.L.C., as rights agent in March, 1997. Under the rights
agreement, our board of directors declared a dividend of one right to purchase
one one-thousandth share of our Series A preferred stock for each outstanding
share of common stock. Each right entitles the registered holder to purchase
from Read-Rite one one-thousandth of a share of Series A preferred stock at an
exercise price of $150.00 (called the "purchase price"), subject to adjustment.
The rights will not be exercisable until the distribution date. Rights
certificates will not be sent to stockholders. Currently, the rights trade with
the shares of common stock. The rights will trade separately from the common
stock and the rights will become exercisable upon the earlier of:
. ten days, or such later date as may be determined by our board of
directors,
. following a public announcement that a person or group of affiliated or
associated persons (called an "acquiring person") has acquired
beneficial ownership of 20% or more of our common stock, or
. ten business days, or such later date as may be determined by our board
of directors following the commencement or announcement of a tender
offer or exchange offer which, if consummated, would result in the
beneficial ownership by a person or group of 20% or more of our
outstanding common shares. The earlier of these dates is referred to as
the "distribution date."
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The right will expire on the earliest of March 17, 2007 or redemption or
exchange of the rights as described below. Following the distribution date,
holders of the rights will initially be entitled to receive one one-thousandth
of a share of Series A preferred stock.
In general, if an acquiring person becomes the beneficial owner of 20% or
more of our common stock, each right not held by the acquiring person will
entitle its holder to common stock having a value equal to two times the
purchase price. If we do not have enough common stock for the rights to be
exercised, or our board decides that this action is necessary and not contrary
to the interests of rights holders, we may instead substitute cash, assets or
other securities for the common stock for which the rights would have been
exercisable.
In general, if an acquiring person becomes the beneficial owner of 20% or
more of our common stock then outstanding:
. we are acquired in a merger or other business transaction, or
. 50% or more of our consolidated assets or earning power are sold, other
than in transactions in the ordinary course of business,
each right will receive, upon exercise, shares of common stock of the acquiring
company having a value equal to two times the purchase price.
At any time after an acquiring person has 20% or more of our common stock
and prior to the acquisition by any person or entity of beneficial ownership of
50% or more of our outstanding common stock, our board of directors may
exchange the rights, other than rights owned by the acquiring person, in whole
or in part, at an exchange ratio of one share of common stock per right.
We may redeem the rights in whole, but not in part, at a price of $0.001
per right. At any time on or prior to the close of business on the earlier of:
. the tenth day following the acquisition by an acquiring person of
beneficial ownership of 20% or more of our common stock or such later
date as may be determined by the board of directors and publicly
announced by Read-Rite, or
. March 17, 2007, the final expiration date of the rights.
Anti-takeover effects of Delaware law
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Under Section 203, we would generally be prohibited from
engaging in any business combination with any interested stockholder for a
period of three years following the time that this stockholder became an
interested stockholder unless:
(1) prior to this 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;
(2) 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 shares owned:
. by persons who are directors and also officers, and
. 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
(3) 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 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.
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Under Section 203, a "business combination" includes:
. any merger or consolidation involving the corporation and the
interested stockholder;
. any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholders;
. any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested
stockholders, subject to limited exceptions;
. 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
. 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.
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BOOK-ENTRY SYSTEM--THE DEPOSITORY TRUST COMPANY
The exchange notes will be evidenced by a global security initially
deposited with The Depository Trust Company, and registered in the name of Cede
& Co., as The Depository Trust Company's nominee. Except as set forth below,
the global security may be transferred only to another nominee of The
Depository Trust Company or to a successor of The Depository Trust Company or
its nominee.
Holders of exchange notes may hold their interests in the global security
directly through The Depository Trust Company or indirectly through
organizations which are participants in The Depository Trust Company (called
"participants"). Transfers between participants will be affected in the
ordinary way in accordance with The Depository Trust Company rules and will be
settled in clearinghouse funds. The laws of some states require that some
persons take physical delivery of securities in definitive form. As a result,
holders may be unable to transfer beneficial interests in the global security
to those persons.
Holders that are not participants may beneficially own interests in the
global security held by The Depository Trust Company only through participants
or indirect participants, including banks, brokers, dealers, trust companies
and other parties that clear through or maintain a custodial relationship with
a participant. So long as Cede & Co., as the nominee of The Depository Trust
Company, is the registered owner of the global security, Cede & Co. will be
considered the sole holder of the global security for all purposes. Except as
provided below, owners of beneficial interests in the global security will not:
. be entitled to have certificates registered in their names.
. be entitled to receive physical delivery of certificates in definitive
form, and
. be considered registered holders.
We will make payments of interest on and principal of and the redemption or
repurchase price of the global security to Cede & Co., the nominee for The
Depository Trust Company, as the registered holder of the global security. We
will make these payments by wire transfer of immediately available funds.
Neither we, the trustee nor any paying agent will have any responsibility or
liability for:
. records or payments on beneficial ownership interests in the global
security; or
. maintaining, supervising or reviewing any records relating to those
beneficial ownership interests.
We have been informed that The Depository Trust Company's practice is to
credit participants' accounts on the payment date. These payments will be made
in amounts proportionate to participants' beneficial interests in the exchange
notes. Payments by participants to owners of beneficial interests in the
exchange notes represented by the global security held through participants
will be the responsibility of those participants.
We will send any redemption notices to Cede & Co. We understand that if
less than all of the exchange notes are being redeemed, The Depository Trust
Company's practice is to determine by lot the amount of the holdings of each
participant to be redeemed. We also understand that neither The Depository
Trust Company nor Cede & Co. will consent or vote with respect to the exchange
notes. We have been advised that under its usual procedures, The Depository
Trust Company will mail an "omnibus proxy" to us as soon as possible after the
record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights
to those participants to whose accounts the exchange notes are credited on the
record date identified in a listing attached to the omnibus proxy.
A person having a beneficial interest in existing notes represented by the
global security may be unable to pledge that interest to persons or entities
that do not participate in The Depository Trust Company system, or to take
other actions in respect of that interest, because that interest is not
represented by a physical certificate.
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The Depository Trust Company has advised us that it is:
. a limited purpose trust company organized under the laws of the State
of New York;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the Uniform Commercial
Code, and
. a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
The Depository Trust Company was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to
accounts of its participants. Some of the participants, together with other
entities, own The Depository Trust Company. Indirect access to The Depository
Trust Company system is available to others such as banks, brokers, dealers and
trust companies that clear through, or maintain a custodial relationship with a
participant, either directly or indirectly.
The Depository Trust Company is under no obligation to perform or continue
to perform the above procedures. The Depository Trust Company may discontinue
these at any time. If The Depository Trust Company is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will cause existing notes to be issued in definitive form
in exchange for the global security.
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FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences relating to the exchange offer and the ownership and disposition
of the exchange notes and common stock received upon a conversion of exchange
notes by holders that receive their exchange notes in the exchange offer. This
discussion does not purport to address all aspects of United States federal
income taxation that may be relevant to particular holders in light of their
personal circumstances, the United States federal income tax consequences to
certain types of holders subject to special treatment under the Code, or the
effect of any applicable state, local or foreign tax laws. The discussion
assumes that the existing notes are held, and the exchange notes will be held,
as "capital assets" within the meaning of Section 1221 of the Internal Revenue
Code of 1986 (the "Code"). The discussion also assumes that the exchange notes
will be treated as debt for federal income tax purposes.
This discussion is based upon provisions of the Code, the Treasury
Regulations, and judicial and administrative interpretations of the Code and
Treasury Regulations, all as in effect as of the date hereof, and all of which
are subject to change (possibly on a retroactive basis) or different
interpretation. There can be no assurance that the Internal Revenue Service
(the "Service") will not challenge one or more of the tax consequences
described herein, and the Company has not obtained, nor does it intend to
obtain, a ruling from the Service with respect to the federal income tax
consequences of the Exchange Offer.
Investors considering the exchange of existing notes in the exchange offer
are urged to consult their own tax advisors to determine their particular tax
consequences of the exchange offer and the ownership and disposition of the
exchange notes under federal and applicable state, local and foreign tax laws.
As used herein, a "U.S. holder" means a beneficial holder of existing notes
or exchange notes received in the exchange offer that is a citizen or resident
(within the meaning of Section 7701(b) of the Code) of the United States, a
corporation, partnership or other entity formed under the laws of the United
States or any political subdivision thereof, an estate the income of which is
subject to United States federal income taxation regardless of its source and a
trust subject to the primary supervision of a court within the United States
and the control of a United States fiduciary as described in Section
7701(a)(30) of the Code or any other person whose income or gain with respect
to an exchange note is effectively connected with the conduct of a United
States trade or business. A "non-U.S. holder" is any holder other than a U.S.
holder.
Treatment of exchange offer
The tax treatment of a U.S. holder's exchange of existing notes for
exchange notes pursuant to the exchange offer will depend on whether that
exchange is treated as a recapitalization. The exchange will be treated as a
recapitalization only if both the existing notes and the exchange notes
constitute "securities," within the meaning of the provisions of the Code
governing reorganizations. This, in turn, depends upon the facts and
circumstances surrounding the origin and nature of these debt instruments and
upon the interpretation of numerous judicial decisions.
If the exchange of existing notes for exchange notes constitutes a
recapitalization, a U.S. holder will not recognize gain or loss on the
exchange. A U.S. holder will receive a tax basis in the exchange notes equal to
the U.S. holder's adjusted tax basis in the existing notes exchanged for the
exchange notes. The U.S. holder's holding period for the exchange notes will
include the period in which the U.S. holder held the existing notes.
If the exchange of existing notes for exchange notes does not constitute a
recapitalization, a U.S. holder generally will recognize gain or loss on the
exchange of existing notes for exchange notes equal to the difference between
(i) the issue price of the exchange notes received and (ii) the U.S. holder's
adjusted tax basis in the existing notes. A U.S. holder will receive a tax
basis in the exchange notes equal to the fair market value of the exchange
notes, and the U.S. holder's holding period for the exchange notes will
commence on the date after the exchange offer is completed.
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Any gain or loss recognized by a U.S. holder will be long-term capital
gain or loss if the U.S. holder has held the existing notes as capital assets
for more than one year. However, under the market discount rules, any gain
recognized by a U.S. holder will be ordinary income to the extent of the
accrued market discount which has not previously been included in income.
A non-U.S. holder generally will not recognize gain or loss for United
States federal income tax purposes on the exchange of existing notes for
exchange notes, except in the instances comparable to those described in "Non-
U.S. holders--Gain on disposition of the exchange notes and common stock" with
respect to sales of the exchange notes and common stock.
For tax purposes, the exchange offer should generally be considered to
take place on the expiration date.
Tax treatment of the ownership and disposition of exchange notes and common
stock
Stated interest and original issue discount on the exchange notes
The stated interest on the existing notes will be includable in a U.S.
holder's gross income as ordinary income for United States federal income tax
purposes at the time it is paid or accrued in accordance with the U.S.
holder's regular method of tax accounting.
We anticipate that the exchange notes will be issued with de minimis
original issue discount. As a result, we anticipate that a U.S. holder will
not be subject to tax on original issue discount but instead will be subject
to tax only on stated interest on the exchange notes. If, however, the issue
price of the exchange notes is determined to be significantly less than the
stated redemption price at maturity of the exchange notes so that the original
issue discount on the exchange notes is no longer considered to be de minimis,
the United States federal income tax consequences set forth below will apply.
The amount of original issue discount on a debt instrument generally is
equal to the difference between the stated redemption price at maturity of the
debt instrument and the debt instrument's issue price. However, if the
original issue discount on a debt instrument is less than 1/4 of 1 percent of
the stated redemption price at maturity of the debt instrument multiplied by
the number of complete years to maturity, the original issue discount on the
debt instrument is considered de minimis and will be deemed to be zero. The
stated redemption price at maturity of a debt instrument will equal the sum of
all amounts provided under the debt instrument, regardless of whether
denominated as principal or interest, other than "qualified stated interest"
payments. For such purposes, "qualified stated interest" generally means
stated interest that is unconditionally payable in cash or property, other
than debt instruments of the issuer, at least annually at a single fixed rate.
The stated interest on the exchange notes will constitute "qualified stated
interest."
A U.S. holder, other than holders with amortizable bond premium or
offsetting acquisition premium, must include any original issue discount on
the exchange notes as ordinary interest income as it accrues (in advance of
the receipt of any cash payments attributable to such income) in accordance
with a constant yield method based on a compounding of interest, regardless of
such U.S. holder's regular method of tax accounting. Subject to making an
appropriate election, a U.S. holder generally will be permitted to include all
interest that accrues or is to be paid on the exchange notes in income under
the constant yield method applicable to original issue discount, subject to
limitations and exceptions.
Amortizable bond premium and acquisition premium
As discussed above, a U.S. holder's initial tax basis in the exchange
notes will depend in part on the tax treatment of the exchange offer to such
U.S. holder, including whether the U.S. holder reports a gain as a result
thereof. If a U.S. holder's initial tax basis in the exchange notes is greater
than the stated redemption price at maturity, such U.S. holder generally will
not be required to include original issue discount, if any, in income. In
addition, such U.S. holder will have "amortizable bond premium" with respect
to the exchange notes, to the
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extent that the premium is not attributable to the conversion feature on the
exchange note, which may be deductible to the U.S. holder over the term of the
exchange notes.
If a U.S. holder's initial tax basis in the exchange notes is greater than
the issue price of the exchange notes but less than the stated redemption price
at maturity, such U.S. holder generally will be considered to have "acquisition
premium" with respect to the exchange notes, which may reduce the amount of
original issue discount, if any, that the U.S. holder is required to include in
income.
Sale, exchange or retirement of the exchange notes
A U.S. holder generally will recognize gain or loss on the sale, exchange
or retirement of exchange notes equal to the difference between the amount
realized on the sale, exchange or retirement of the exchange notes and the U.S.
holder's adjusted tax basis in the exchange notes. Any gain or loss recognized
on the sale, exchange or retirement of exchange notes will generally be long-
term capital gain or loss if the U.S. holder has held the exchange notes as
capital assets for more than one year, other than amounts attributable to
accrued interest. However, under the market discount rules, any gain recognized
by a U.S. holder will be ordinary income to the extent of the accrued market
discount which has not previously been included in income. For these purposes,
any market discount that the U.S. holder had in the existing notes not been
previously included in income will be considered to be market discount with
respect to the exchange notes.
Constructive dividend
If at any time we make a distribution of property to shareholders that
would be taxable to such shareholders as a dividend for United States federal
income tax purposes and, pursuant to the anti-dilution provisions of the
indenture, the conversion rate of the exchange notes is increased, such
increase may be deemed to be the payment of a taxable dividend to U.S. holders
of exchange notes. If the conversion rate is increased at our discretion, this
increase may be deemed to be the payment of the taxable dividend to U.S.
holders of exchange notes.
Conversion of exchange notes into common stock
A U.S. holder's conversion of an exchange note into common stock will
generally not be a taxable event. The U.S. holder's tax basis in the common
stock received on conversion of exchange notes will be the same as the U.S.
holder's adjusted tax basis in the exchange notes at the time of conversion,
exclusive of any tax basis allocable to a fractional share for which the holder
receives cash. The holding period for the common stock received on conversion
will include the holding period of the exchange notes converted. The receipt of
cash in lieu of fractional shares of common stock should generally result in
capital gain or loss. This capital gain or loss will be measured by the
difference between the cash received for the fractional share interest and the
U.S. holder's tax basis in the fractional share interest.
Common stock
Distributions, if any, paid on the common stock after a conversion, to the
extent made from our current or accumulated earnings and profits, will be
included in a U.S. holder's income as ordinary income as they are paid. Gain or
loss realized on a sale or exchange of common stock will equal the difference
between the amount realized on such sale or exchange and the holder's adjusted
tax basis in such stock. Such gain or loss will generally be long-term capital
gain or loss if the U.S. holder's holding period in the common stock is more
than one year. However, under the market discount rules, any gain recognized by
a U.S. holder will be ordinary income to the extent of the accrued market
discount that has not previously been included in income. For these purposes,
any market discount that the U.S. holder had in the existing notes that carried
over to the exchange notes, and has not been previously included in income,
will be considered to be market discount with respect to the common stock.
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Non-U.S. holders
The following discussion is a summary of the principal United States
federal income and estate tax consequences resulting from the ownership of the
exchange notes or common stock by Non-U.S. holders.
Withholding tax on payments of principal and interest on exchange notes
The payment of principal and interest on exchange notes to a non-U.S.
holder will not be subject to United States federal withholding tax if:
. the Non-U.S. holder does not actually or constructively own 10% or more
of the total voting power of all of our voting stock and is not a
controlled foreign corporation that is related to us within the meaning
of the Code, and
. the beneficial owner of the exchange notes certifies to us or our
agent, under penalties of perjury, that it is not a U.S. holder and
provides its name and address on United States Treasury Form W-8 (or a
suitable substitute form) or a securities clearing organization, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution")
and holds the exchange note certifies under penalties of perjury that
such a Form W-8 (or suitable substitute form) has been received from
the beneficial owner by it or by a financial institution between it and
the beneficial owner and furnishes the payor with a copy thereof.
Gain on disposition of the exchange notes and common stock
Provided that we are at no time a United States real property holding
corporation within the meaning of Section 897(c) of the Code (a "USRPHC"), a
Non-U.S. holder generally will not be subject to United States federal income
tax on gain or income realized on the sale, exchange or redemption of exchange
notes, including the conversion of exchange notes for common stock, or the sale
or exchange of common stock, unless in the case of an individual Non-U.S.
holder such holder is present in the United States for 183 days or more in the
year of such sale, exchange or redemption and either:
. has a "tax home" in the United States and the gain or income is not
attributable to an office or other fixed place of business maintained
by such non-U.S. holder outside of the United States, or
. the gain from the disposition is attributable to an office or other
fixed place of business in the United States.
Even if we are determined to be a USRPHC, a Non-U.S. holder not described
in the preceding sentence will not be subject to United States federal income
tax on any such gain or income provided that such holder does not actually or
constructively own more than 5% of the common stock, including any common stock
that may be received as a result of the conversion of exchange notes and does
not own, on any date on which the holder acquires exchange notes, exchange
notes with an aggregate value of 5% or more of the aggregate value of the
outstanding common stock on such date. Under present law the Company would not
at any time within a specified (generally five-year) period be a USRPHC so long
as during a specified (generally five-year) period:
. the fair market value of its United States real property interests is
less than
. 50% of the sum of the fair market value of its United States real
property interests, interests in real property located outside the
United States and other of its assets that are used or held for use in
a trade or business.
The Company believes that it is not presently a USRPHC, but there can be no
assurance that it will not become a USRPHC in the future.
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Common stock
Dividends, if any, paid on the common stock to a Non-U.S. holder generally
will be subject to a 30% United States federal withholding tax, subject to
reduction for non-U.S. holders eligible for the benefits of certain income tax
treaties. Common stock held by an individual who at the time of death is not a
citizen or resident of the United States (as specially defined for United
States federal estate tax purposes) will be included in the individual's gross
estate subject to reduction of such estate tax if the individual is eligible
for the benefits of an estate tax treaty.
Information reporting and backup withholding
Payments on the exchange notes, and payments of dividends on the common
stock to certain non-corporate holders generally will be subject to information
reporting and possible to "backup withholding" at a rate of 31%. Information
reporting and backup withholding will not apply, however, to payments made on
an exchange note if the certification described under "Non-U.S. holders--
Withholding tax on payments of principal and interest on exchange notes" above
is received, provided in each case that the payor does not have actual
knowledge that the holder is a U.S. holder, or to payments made on the common
stock if such payments are subject to the 30% (or reduced treaty rate)
withholding tax described above under "Non-U.S. holders--Common stock."
Payment of proceeds from the sale of an exchange note or common stock to or
through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding. Payment outside
the United States of the proceeds of the sale of an exchange note or common
stock to or through a foreign office of a "broker" (as defined in applicable
Treasury Regulations) will not be subject to information reporting or backup
withholding, except that, if the broker is a U.S. person, a controlled foreign
corporation for United States tax purposes or a foreign person 50 percent or
more of whose gross income is from a United States trade or business,
information reporting will apply to such payment unless the broker has
documentary evidence in its records that the beneficial owner is not a U.S.
holder and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption.
Any amounts withheld from a payment to a Non-U.S. holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax, and may entitle such holder to a refund, provided
that the required information is furnished to the Service.
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PLAN OF DISTRIBUTION
We have engaged FleetBoston Robertson Stephens Inc. to use its best efforts
to find purchasers for any or all of the $50 million of additional exchange
notes. FleetBoston Robertson Stephens Inc. is not obligated to take or pay for
any of the additional exchange notes. The purchase price for the additional
exchange notes is 100% of the principal amount of the exchange notes, plus
accrued interest from the issue date. As compensation for its services, we have
agreed to pay FleetBoston Robertson Stephens Inc. a selling commission of 5% of
the aggregate principal amount of additional exchange notes sold in the form of
exchange notes which will be subject to a one-year holding period. We are also
paying FleetBoston Robertson Stephens Inc. a dealer manager fee in connection
with the exchange offer which is discussed under the heading "The Exchange
Offer--Fees and expenses."
The placement agreement provides that the obligations of FleetBoston
Robertson Stephens Inc. are subject to enumerated conditions.
FleetBoston Robertson Stephens Inc. has advised us that it proposes to
resell the exchange notes to holders submitting their existing notes in the
exchange offer that wish to purchase exchange notes in addition to those
received in exchange for their existing notes.
We will enter into a registration rights agreement with FleetBoston
Robertson Stephens Inc. with respect to the exchange notes to be issued to
FleetBoston Robertson Stephens Inc. for payment of their fees in connection
with the issuance of the exchange notes.
Indemnity. The dealer manager agreement provides that we will indemnify
FleetBoston Robertson Stephens Inc. against specific liabilities, including
liabilities under the Securities Act.
Lock-up agreements. All of our executive officers and directors have
agreed, for a period of 90 days after the date of the expiration date of the
exchange offer, not to offer, sell, contract to sell or otherwise sell, dispose
of, loan, pledge, assign or grant (whether with or without consideration and
whether voluntarily or involuntarily or by operation of law) any rights to, or
interests in, any shares of common stock, any options or warrants to purchase
any shares of common stock, any securities convertible into or exchangeable for
shares of common stock owned as of the date of this prospectus or subsequently
acquired directly by the holders or to which they have or subsequently acquire
the power of disposition, without the prior written consent of FleetBoston
Robertson Stephens Inc. Our executive officers and directors also have agreed.
However, FleetBoston Robertson Stephens Inc., in some instances together with
Read-Rite, may, in its sole discretion and at any time without notice, release
all or any portion of the securities subject to lock-up agreements. There are
no agreements between the representatives and any of our stockholders providing
consent by the representatives to the sale of shares prior to the expiration of
the period of 180 days after the date of this prospectus.
Future sales. In addition, we have agreed that during the period of 90 days
after the date of this prospectus, we will not, without the prior written
consent of FleetBoston Robertson Stephens Inc., issue, sell, contract to sell
or otherwise dispose of any shares of any common stock, any options or warrants
to purchase
any shares of common stock or any securities convertible into, exercisable for
or exchangeable for shares of common stock, other than our sale of shares in
this offering, the issuance of shares of common stock upon the exercise of
outstanding options or warrants and the grant of options to purchase shares of
common stock under our existing stock option, 401(k) or stock purchase plans or
the issuance of shares of common stock upon conversion of the existing notes
and the exchange notes. We also have agreed not to enter into any transaction
(including a derivative transaction) having an economic effect similar to that
of a sale of, any shares or any securities of the company which are
substantially similar to the shares or which are convertible into or
exchangeable for, or represent the right to receive, shares or securities that
are substantially similar to the shares, subject to certain exceptions, without
the prior consent of FleetBoston Robertson Stephens Inc.
No prior market. Prior to this offering, there has been no market for the
exchange notes. Consequently, the initial offering price for the exchange notes
sold in this offering will be determined through negotiations
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between us and FleetBoston Robertson Stephens Inc. Among the factors to be
considered in these negotiations are prevailing market conditions, our
financial information, the price of the existing notes, market valuations of
other companies that we and FleetBoston Robertson Stephens Inc. believe to be
comparable to us, estimates of our business potential and the present state of
our development.
We have been advised by FleetBoston Robertson Stephens Inc. that it
presently intends to make a market in the exchange notes as permitted by
applicable laws and regulations. FleetBoston Robertson Stephens Inc. has no
obligation, however, to make a market in the exchange notes and may discontinue
market making at any time without notice. As a result, we can give you no
assurance regarding the liquidity of the exchange notes or trading markets for
the exchange notes.
Stabilization. We have been advised by FleetBoston Robertson Stephens Inc.
that certain persons participating in this offering may engage in transactions,
including stabilizing bids that may have the effect of stabilizing or
maintaining the market price of the exchange notes. Stabilization bids are bids
for, or the purchase of, exchange notes on behalf of FleetBoston Robertson
Stephens Inc. for the purpose of fixing or maintaining the price of the
exchange notes.
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LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California.
Customary legal matters will be passed upon for the dealer manager by Shearman
& Sterling, Washington, D.C.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our annual report on form 10-K
for the year ended September 30, 1999, as set forth in their report (which
contains an explanatory paragraph describing conditions that raise substantial
doubt about the Company's ability to continue as a going concern as described
in Note 1 to the consolidated financial statements), which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file reports, proxy statements and other information with the
Commission, in accordance with the Securities Exchange Act of 1934. You may
read and copy our reports, proxy statements and other information filed by us
at the public reference facilities of the Commission in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-
0330 for further information about the public reference rooms. Our reports,
proxy statements and other information filed with the Commission are available
to the public over the Internet at the Commission's World Wide Web site at
http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information we
filed with them, which means that we can disclose important information by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future filings
made by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until our offering is complete:
. Annual Report on Form 10-K for the fiscal year ended September 30,
1999, and
. Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,
1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Investor Relations Department
Read-Rite Corporation
345 Los Coches Street
Milpitas, California
(510) 683-7676
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
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The exchange agent:
Norwest Bank Minnesota, National Association
<TABLE>
<S> <C>
By Regular Mail or Overnight Courier: By Registered & Certified Mail:
NORWEST BANK MINNESOTA, N.A. NORWEST BANK MINNESOTA, N.A.
Corporate Trust Operations Corporate Trust Operations
MAC N9303-121 MAC N9303-121
Sixth & Marquette Avenue P.O. Box 1517
Minneapolis, MN 55479 Minneapolis, MN 55480
</TABLE>
In Person by Hand Only:
NORWEST BANK MINNESOTA, N.A.
12th Floor--Northstar East Building
Corporate Trust Services
608 Second Avenue South
Minneapolis, MN
By Facsimile Transmission (For Eligible Institutions Only):
(612) 667-4927
For Information or Confirmation by Telephone:
(612) 667-9764
The Information Agent:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
---------------------
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
Call Toll Free: (800) 223-2064
Any questions or requests for assistance or additional copies of this
prospectus and the letter of transmittal may be directed to the information
agent at its telephone number and location set forth above. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the exchange offer.
The dealer manager for the exchange offer:
ROBERTSON STEPHENS
555 California Street, Suite 2600
San Francisco, CA 94104
(415) 781-9700
Call Toll Free: (800) 234-2663
Attention: Mark McGlade, Convertible Securities Desk
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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 some 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 some 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.
Section 11 of the form of Dealer Manager Agreement filed as Exhibit 1.1 to
this registration statement provides for indemnification of the Company and its
directors and officers who sign this registration statement, and each person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act of 1933, as amended (the "Securities Act"), or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") by the dealer
manager with respect to information relating to the dealer manager furnished to
the Company in writing by the dealer manager expressly for use in this
registration statement and other materials prepared in connection with the
exchange offer contemplated hereby.
Item 21. Exhibits and financial statement schedules
(a) Exhibits
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<C> <S>
1.1 Form of Dealer Manager Agreement.
1.2 Form of Distribution Agreement.
4.1 Form of Subordinated Indenture between the Company and Norwest Bank
Minnesota, National Association, as exchange notes trustee.
4.2 Form of Supplemental Indenture between the Company and Norwest Bank
Minnesota, National Association, as exchange notes trustee.
4.3 Form of Exchange Note (included in Exhibit 4.2).
4.4 Restated Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1996).
4.5 Bylaws of the Company, as amended (incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996).
4.6 Preferred Shares Rights Agreement, dated as of March 3, 1997 (the
"Rights Agreement"), between the Company and Chase Mellon Shareholder
Services, L.L.C. (incorporated by reference to Exhibit 1 to the
Company's Current Report on Form 8-A12G filed on March 6, 1997).
4.7 Form of Escrow Agreement between the Company, the holders of additional
exchange notes, Norwest Bank Minnesota, as escrow agent and FleetBoston
Robertson Stephens Inc., as agent for the holders.
4.8 Form of Registration Rights Agreement between the Company and
FleetBoston Robertson Stephens Inc.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
12.1 Statement re: computation of ratio of earnings to fixed charges.**
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(contained in its opinion filed as Exhibit 5.1 to this registration
statement).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<C> <S>
24.1 Power of Attorney (reference is made to page II-3).
25.1 Form T-1 Statement of Eligibility under the Trust indenture Act of
1939, as amended, of Norwest Bank Minnesota, National Association.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and other Nominees.
99.4 Form of Letter to Clients.
</TABLE>
- --------
**Previously filed.
Item 22. Undertakings
(a) The Company hereby undertakes to respond to requests for information
that is incorporated by reference into the Prospectus pursuant to Item 4,
10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first-class mail or equally
prompt means. This includes information contained in documents filed subsequent
to the effective date of the registration statement throughout the date
responding to the request.
(b) The undersigned registrants each hereby undertake to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(c) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the existing notes Exchange Act of 1934
(and, where applicable, each filing of any employee benefit plan's annual
report pursuant to Section 15(d) of the existing notes Exchange Act of 1934)
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.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 20 above, or
otherwise, the registrants have each been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants 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
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by them is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(e) The undersigned registrant hereby undertakes 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;
(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
II-2
<PAGE>
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
percent change in the maximum aggregate price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the securities act of 1933, the registrant
has duly caused this Amendment No. 1 to Registration Statement on Form S-4 and
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized in the city of Milpitas, State of
California on February 6, 2000.
READ-RITE CORPORATION
By: /s/ Cyril J. Yansonni
-----------------------------------
Name: Cyril J. Yansouni
Title: Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Cyril J. Yansouni 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 thereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement on Form S-4 and Registration Statement on Form
S-3 has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ Cyril J. Yansouni Chief Executive Officer February 6, 2000
____________________________________ and Chairman of the
Cyril J. Yansouni Board of Directors
(Principal Executive
Officer)
/s/ John T. Kurtzweil Sr. Vice President and February 6, 2000
____________________________________ Chief Financial Officer
John T. Kurtzweil (Principal Financial
Officer and Accounting
Officer)
/s/ William J. Almon Director February 6, 2000
____________________________________
William J. Almon
/s/ Michael L. Hackworth Director February 6, 2000
____________________________________
Michael L. Hackworth
/s/ John G. Linvill Director February 6, 2000
____________________________________
John G. Linvill
/s/ Matthew J. O'Rourke Director February 6, 2000
____________________________________
Matthew J. O'Rourke
/s/ Dr. Robert M. White Director February 6, 2000
____________________________________
Dr. Robert M. White
</TABLE>
II-4
<PAGE>
EXHIBIT 1.1
FORM OF DEALER MANAGER AGREEMENT
February ___, 2000
FLEETBOSTON ROBERTSON STEPHENS
555 California Street
Suite 2600
San Francisco, California 94104
Ladies/Gentlemen:
1. General. Read-Rite Corporation, a Delaware corporation (the
-------
"Company"), proposes to offer to exchange $172,500,000 aggregate principal
amount of 10% Convertible Subordinated Notes due September 1, 2004 (the
"Exchange Notes") that are convertible into common stock, par value $0.0001 per
share, (the "Shares") of the Company for $345,000,000 aggregate principal amount
of its outstanding 6 1/2% Convertible Subordinated Notes due September 1, 2004
(the "Existing Notes") (the "Exchange Offer"). For each $2,000 principal amount
of Existing Notes accepted for exchange, the Holder of such Existing Notes will
receive $1,000 principal amount in Exchange Notes. Capitalized terms used herein
without definition shall have their respective meanings set forth in or pursuant
to the Exchange Offer Materials (as defined herein).
2. Engagement as Dealer Manager. By this Dealer Manager Agreement (the
----------------------------
"Agreement"), the Company hereby engages and appoints you as the exclusive
Dealer Manager for the Exchange Offer and authorizes you to act as such in
connection with the Exchange Offer.
As Dealer Manager you agree, in accordance with your customary
practice, to use reasonable efforts to perform in connection with the Exchange
Offer those services as are customarily performed by investment banking concerns
in connection with similar offers, including, without limitation, soliciting
from individuals and institutions the tender of the Existing Notes pursuant to
and in accordance with the terms and conditions of the Exchange Offer. You
shall act as an independent contractor in connection with the Exchange Offer
with duties solely to the Company and nothing herein contained shall constitute
you as an agent of the Company in connection with the solicitation of the tender
of Existing Notes pursuant to and in accordance with the terms and conditions of
the Exchange Offer; provided, however, that the Company hereby authorizes the
Dealer Manager and/or one or more registered brokers or dealers chosen by the
Dealer Manager, to act as the Company's agent in making the Exchange Offer to
residents of any jurisdiction in which such agent designation may be necessary
to comply with applicable law. Nothing in this Agreement shall constitute the
Dealer Manager a partner or joint venturer with the Company or any of its
subsidiaries. On the basis of the representations and warranties and agreements
of the Company contained herein and subject to and in accordance with the terms
and conditions hereof and of the Exchange Offer, the Dealer Manager agrees to
act in such capacity.
<PAGE>
3. Registration Statement, Offering Circular/Prospectus and Offering
-----------------------------------------------------------------
Materials.
- ---------
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933, as
amended (the "Securities Act"), the Trust Indenture Act of 1939, as amended (the
"TIA"), and applicable rules and regulations (the "Rules and Regulations") of
the Commission under both Acts, a registration statement on Form S-4 (333-
95527), including a Prospectus, covering the registration of the offer and sale
of the Exchange Notes; the Shares issuable upon conversion of the Exchange
Notes; the Shares that may be issued solely at the Company's option as payment
of interest on the Exchange Notes; and the Rights, if any, issuable under the
Preferred Shares Rights Agreement. The term "Registration Statement" as used in
this Agreement shall mean such registration statement, including financial
statements, schedules and exhibits, in the form in which it becomes effective
and, in the event of any amendment thereto or the filing of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations
relating thereto after the effective date of such registration statement, shall
also mean (from and after the effectiveness of such amendment or the filing of
such abbreviated registration statement) such registration statement as so
amended, together with any such abbreviated registration statement. The term
"Prospectus" as used in this Agreement shall mean the final prospectus included
in the Registration Statement. Notwithstanding the foregoing, if any revised
prospectus shall be provided to you by the Company for use in connection with
the Exchange Offer that differs from the Prospectus referred to in the
immediately preceding sentence (whether or not such revised prospectus is
required to be filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations), the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to you for such use. Any reference
to the Registration Statement or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 11 of
Form S-4 under the Securities Act, as of the date of the Registration Statement
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations of the Commission thereunder, which, upon filing, are incorporated
by reference therein, as required by Item 11 of Form S-4. As used in this
Agreement, the term "Incorporated Documents" means the documents which at the
time are incorporated by reference in the Registration Statement, the Prospectus
or any amendment or supplement thereto. The terms "supplement" and "amendment"
or "supplemented" and "amended" as used herein with respect to the Prospectus
shall include all documents deemed to be incorporated by reference in the
Prospectus that are filed subsequent to the date of the Prospectus and prior to
the termination of the Exchange Offer by the Company with the Commission
pursuant to the Exchange Act and the rules and regulations of the Commission
thereunder.
(b) The Company has prepared and filed, or agrees that prior to or on
the date of commencement of the Exchange Offer (the "Commencement Date") it will
file, with the Commission under the Exchange Act and the rules and regulations
of the Commission promulgated thereunder a Statement on Schedule TO with respect
to the Exchange Offer,
-2-
<PAGE>
including the exhibits thereto and any documents incorporated by reference
therein. The term "Schedule TO" as used in this Agreement shall mean such
Schedule TO, including any amendment or supplement thereto.
(c) The Registration Statement, Prospectus, Schedule TO, the related
letters from the Dealer Manager to securities brokers, dealers, commercial
banks, trust companies and other nominees that have been approved for use by the
Company, which approval shall not be unreasonably withheld, letters to
beneficial owners of Existing Notes, the Letter of Transmittal and any newspaper
announcements, if any, press releases and other exchange offer solicitation
materials and information the Company may prepare, approve, publicly
disseminate, provide to registered or beneficial Holders of Existing Notes or
authorize for public dissemination or use by registered or beneficial Holders of
Existing Notes in connection with the Exchange Offer, are collectively referred
to as the "Exchange Offer Materials."
4. Use of Exchange Offer Material.
------------------------------
(a) The Exchange Offer Materials have been or will be prepared and
approved by, and are the sole responsibility of, the Company. The Company shall
disseminate or, to the extent permitted by law use its best efforts to
disseminate, the Exchange Offer Materials to each registered Holder of any
Existing Notes, as soon as practicable on the Commencement Date, pursuant to
Rule 13e-4 under the Exchange Act, and comply with its obligations thereunder.
Thereafter, to the extent practicable until three days prior to the Expiration
Date of the Exchange Offer, the Company shall use its best efforts to cause
copies of such Exchange Offer Materials and a return envelope to be mailed to
each person who becomes a Holder of record of any Existing Notes. The Company
acknowledges and agrees that you may use the Exchange Offer Materials as
specified herein without assuming any responsibility for independent
verification on your part other than information about the Dealer Manager
supplied by you in writing and the Company represents and warrants to you that
you may rely on the accuracy and completeness of any information delivered to
you by or on behalf of the Company without assuming any responsibility for
independent verification of such information and without performing or receiving
any appraisal or evaluation of the assets or liabilities of the Company.
(b) The Company agrees to provide you with as many copies as you may
reasonably request of the Exchange Offer Materials. The Company agrees that
within a reasonable time prior to using or filing with the Commission or any
governmental or regulatory entity or agency (an "Other Agency"), including the
National Association of Securities Dealers, Inc. (the "NASD"), of any Exchange
Offer Materials, it will submit copies of such materials to you and your counsel
("Dealer Manager's Counsel") and will give reasonable consideration to your and
your counsel's comments, if any, thereon. The Company agrees prior to the
termination of the Exchange Offer, before amending or supplementing the
Registration Statement or the Prospectus, to furnish copies of drafts to, and
consult with, you and your counsel within a reasonable time in advance of filing
with the Commission of any amendment or supplement to the Registration
Statement, the Prospectus or the other Exchange Offer Materials and will give
reasonable consideration to your and your counsel's comments, if any, thereon.
-3-
<PAGE>
(c) The Company has furnished or shall use its best efforts to furnish
to you, or cause the transfer agents or registrars for the Exchange Notes to
furnish to you, as soon as practicable after the date hereof (to the extent not
previously furnished), cards or lists in reasonable quantities or copies thereof
showing the names of persons who were the holders of record or, to the extent
available, the beneficial owners of the Exchange Notes as of a recent date,
together with their addresses and the aggregate principal amount at maturity of
the Exchange Notes held by them. Additionally, the Company shall update, or
cause the transfer agents or registrars referred to above to update, such
information from time to time during the term of this Agreement as may be
reasonably requested by you. Except as otherwise provided herein, you agree to
use such information only in connection with the Exchange Offer.
(d) The Company authorizes the Dealer Manager to use the Exchange
Offer Materials in connection with the Exchange Offer for such period of time as
any such materials are required by law to be delivered in connection therewith.
The Dealer Manager shall not have any obligation to cause any Exchange Offer
Materials to be transmitted generally to the Holders of Existing Notes.
(e) The Company authorizes the Dealer Manager to communicate with any
information agent (the "Information Agent") or exchange agent (the "Exchange
Agent") appointed by the Company to act in such capacity in connection with the
Exchange Offer. The Company will arrange for the Exchange Agent to advise you,
as necessary and at least daily, as to such matters relating to the Exchange
Offer as you may reasonably request.
(f) The Company agrees that any reference to the Dealer Manager in any
Exchange Offer Materials or in any newspaper announcement or press release or
other document or communication is subject to the Dealer Manager's prior
consent, which consent shall not be unreasonably withheld.
5. Withdrawal. In the event that the Company (i) uses or permits the use
----------
of, or files with the Commission or any Other Agency, any Exchange Offer
Materials or any amendment or supplement to the Registration Statement or the
Prospectus, and such document (a) has not been submitted to you previously for
your and your counsel's comments or (b) has been so submitted, and you or your
counsel have made comments which have not been reflected in a manner reasonably
satisfactory to you or your counsel; or (ii) shall have breached, in any
material respect, any of its representations, warranties, agreements or
covenants herein; or (iii) amend or revise the Exchange Offer in a manner not
reasonably acceptable to you then you shall be entitled to withdraw as Dealer
Manager in connection with the Exchange Offer without any liability or penalty
to you and without loss of any right to indemnification or contribution provided
in Section 11 or to the payment of all fees and expenses payable under Sections
6 and 7 below which have accrued to the date of such withdrawal (it being agreed
that in the event of any such withdrawal, for the purpose of determining the
fees payable to you pursuant to Section 6, the aggregate principal amount of
Existing Notes tendered pursuant to the Exchange Offer as of the close of
business on the date of such withdrawal which are thereafter acquired by the
Company
-4-
<PAGE>
or any of its subsidiaries or affiliates pursuant to the Exchange Offer or
otherwise shall be deemed to have been acquired as of the date of such
withdrawal).
6. Fees. As compensation for your services in connection with the
----
Exchange Offer, the Company will pay you a fee determined in accordance with the
fee schedule set forth below as of the Expiration Date with regard to the
Existing Notes validly tendered and accepted for exchange pursuant to the
Exchange Offer:
<TABLE>
<CAPTION>
Percentage of Aggregate Principal
Amount of Existing Notes Converted Graduated Fee Total Fees
- ---------------------------------------------------- ------------------------ ------------------
<S> <C> <C>
0.00% to 45.00% 0.500% $ 776,000
45.01% to 60.00% 1.000% $1,294,000
60.01% to 75.00% 2.250% $2,458,000
75.01% to 100% 3.500% $4,269,000
----- ----- ----- ----------
Total
</TABLE>
Such fee shall be paid by the Company on the date when the Exchange Offer is
consummated (the "Closing Date"). The total fee to be paid in additional
Exchange Notes will be equal to the principal amount of total fees due and
payable.
7. Expenses.
--------
(a) The Company agrees that it will pay the costs and expenses
incident to the performance of the obligations hereunder, including, without
limitation (i) all costs and expenses incurred by dealers and brokers (including
yourself), commercial banks, trust companies and nominees for their customary
mailing and handling expenses incurred in forwarding the Exchange Offer
Materials to their customers, (ii) the filing fees and expenses, if any,
incurred with respect to any filing with the NASD, (iii) all costs and expenses
incident to the preparation, issuance, execution and delivery of the Exchange
Notes upon exchange of the Existing Notes, (iv) all costs and expenses incident
to the preparation, printing and filing under the Securities Act of the
Registration Statement and the Prospectus (including, without limitation, in
each case all exhibits, amendments and supplements thereto), (v) all costs and
expenses incurred in connection with the registration or qualification of the
Exchange Notes issuable upon exchange of the Existing Notes under the laws of
such jurisdictions as the Dealer Manager may designate, if any (including,
without limitation, reasonable fees of counsel for the Dealer Manager and its
reasonable disbursements), (vi) all costs and expenses incurred in connection
with the printing (including word processing and duplication costs) and delivery
of all Exchange Offer Materials (including, without limitation, any preliminary
and supplemental blue sky memoranda) including, without limitation, mailing and
shipping; (vii) all advertising expenses related to the Exchange Offer and the
fees and expenses of the Exchange Agent and the Information Agent;
-5-
<PAGE>
(viii) all fees and expenses incurred in marketing the Exchange Offer, including
but not limited to road show presentations, if any; but excluding travel and
related expenses incurred by Dealer Manager, and (ix) the fees and disbursements
of Wilson, Sonsini, Goodrich and Rosati, counsel to the Company, and Ernst &
Young LLP, auditors to the Company. In addition, the Company agrees to reimburse
the reasonable out-of-pocket expenses of the Dealer Manager in connection with
the Exchange Offer, including without limitation, reasonable legal fees and
expenses of Dealer Manager's Counsel in connection with the Exchange Offer.
8. Representations, Warranties and Agreements of the Company. The Company
---------------------------------------------------------
represents and warrants to you, and agrees with you, that:
(a) The Registration Statement, including the Prospectus, has been
prepared by the Company in conformity with the requirements of the Securities
Act and the Rules and Regulations and has been filed with the Commission; such
amendments to such Registration Statement and Prospectus and such abbreviated
registration statements pursuant to Rule 462(b) of the Rules and Regulations as
may have been required prior to the date hereof have been similarly prepared and
filed with the Commission; and the Company will file such additional amendments
to such Registration Statement and Prospectus and such abbreviated registration
statements as may hereafter be required. Copies of such Registration Statement
and Prospectus, including all amendments thereto and all documents incorporated
by reference therein, and of any abbreviated registration statement pursuant to
Rule 462(b) of the Rules and Regulations have been or, if filed after the
Commencement Date, will be, delivered or made available to you and your counsel.
(b) The Schedule TO has been prepared by the Company in conformity
with the requirements of the Exchange Act and the rules and regulations of the
Commission thereunder and has been filed with the Commission; such amendments to
such Schedule TO as may have been required prior to the date hereof have been
similarly prepared and filed with the Commission; and the Company will file such
additional amendments to such Schedule TO as may hereafter be required. Copies
of such Schedule TO, including all amendments thereto and all documents
incorporated by reference therein have been or, if filed after the Commencement
Date, will be, delivered or made available to you and your counsel.
(c) The Registration Statement, including the Prospectus, has been
filed as of the Commencement Date and will become effective not later than the
Expiration Date; and the Commission has not issued any order refusing or
suspending the effectiveness of the Registration Statement or preventing or
suspending the use of any Prospectus or instituted proceedings for that purpose.
The Exchange Offer Materials, including the Registration Statement, the Schedule
TO and the Prospectus, comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act, the Exchange Act
and the TIA, and the applicable rules and regulations of the Commission
thereunder. The Registration Statement, when it becomes effective, will not
contain and, as amended or supplemented, if applicable, will not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
None of the
-6-
<PAGE>
Prospectus or other Exchange Offer Materials contains, and, as amended or
supplemented, if applicable, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties contained in
this subparagraph (c) shall apply to information contained in or omitted from
the Exchange Offer Materials or the Registration Statement or Prospectus, or any
amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to you furnished to the Company by you specifically
for use in the preparation thereof.
The Incorporated Documents heretofore filed, when they were filed (or,
if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission thereunder;
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder; no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and no such further amendment will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiaries taken as a whole ("Material Adverse Effect").
(e) Each of the Company's significant subsidiaries listed below has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, and has the corporate power
to own, lease and operate its properties and to conduct its business as
described in the Prospectus, and is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction, if any, in which the
ownership and leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified or be in good
standing would not have a Material Adverse Effect. The Company does not have
any "significant subsidiaries" as defined in Rule 405 under the Securities Act
except Read-Rite International, Read-Rite (Thailand) Co., Ltd., Read-Rite SMI
Corporation and Read-Rite Philippines Inc. which together are referred to as
"Significant Subsidiaries."
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<PAGE>
(f) All of the issued and outstanding shares of capital stock of each
of the Significant Subsidiaries as been duly authorized and validly issued and
are fully paid and nonassessable, and, has not been issued in violation of or
subject to any preemptive right, co-sale right, registration right, right of
first refusal or other similar right and, except as disclosed in the
Registration Statement, Prospectus and Exchange Offer Materials, are owned by
the Company, (except for directors' qualifying shares and the minority interest
in Read-Rite SMI Corporation held by Sumitomo Metal Industries, Ltd.
("Sumitomo"), free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest (except for certain restrictions
contained in Article 5 and Article 14.4 of the Joint Venture Agreement dated as
of June 14, 1991 between the Company and Sumitomo) (other than such preemptive
rights or other rights to subscribe for or purchase securities as were fully
complied with or expressly waived or with respect to the violation of which the
right to make a claim is barred by the applicable statute of limitations).
(g) The Company has full legal right, power and authority to enter
into and perform its obligations under this Agreement, the Indenture and the
Exchange Notes and to consummate the Exchange Offer and all other transactions
contemplated in the Exchange Offer Materials. The Exchange Offer and all other
actions by the Company contemplated in the Exchange Offer Materials have been
duly and validly authorized by all necessary corporate action by the Company,
and no other corporate proceedings by the Company are necessary to authorize
such actions. This Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement on the part of the
Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; the execution
and delivery by the Company of, and the performance by the Company of its
obligations under this Agreement, the Exchange Offer, the issuance and delivery
by the Company of the Exchange Notes pursuant to the Exchange Offer, the
consummation of the Exchange Offer, and the other transactions contemplated in
the Exchange Offer Materials, and the fulfillment of the terms hereof and
thereof, do not and will not result in a material breach or violation of any of
the terms and provisions of, or constitute a material default under, (i) any
material bond, debenture, note or other evidence of indebtedness, or under any
material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other material agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it or any of its subsidiaries or
their respective properties may be bound, (ii) the charter or bylaws of the
Company or any of its subsidiaries, or (iii) any law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or any
of its subsidiaries or over their respective properties except where such
breach, violation, or default would not have a Material Adverse Effect. No
consent, approval, authorization, permit or order of or qualification with any
court, government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or over their
respective properties is required for the execution and delivery of this
Agreement, the Exchange Offer, the issuance and delivery of the Exchange Notes
pursuant to the
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<PAGE>
Exchange Offer, and the consummation by the Company or any of its subsidiaries
of the transactions contemplated herein or in the Exchange Offer Materials,
except such as may be required under the Securities Act, the Exchange Act, or
under state or other securities, or Blue Sky laws, all of which requirements
have been satisfied other than as contemplated by such agreements or except
where such requirement would not have a material adverse effect on the execution
and delivery of this Agreement, the Exchange Offer, the execution and delivery
of the Indenture, the issuance of the Exchange Notes or the consummation of the
transactions contemplated herein or in the Exchange Offer Materials.
Notwithstanding the foregoing, to the extent any of the foregoing
representations speak as to any of the Company's subsidiaries, such
representations shall be deemed to be made only as it relates to the execution
and delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement, the Exchange Offer, the issuance and delivery
by the Company of the Exchange Notes pursuant to the Exchange Offer, and the
consummation of the Exchange Offer, but no other transaction contemplated in the
Exchange Offer Materials.
(h) Except as disclosed in the Exchange Offer Materials, there is not
any pending or, to the best of the Company's knowledge, threatened action, suit,
claim or proceeding against the Company, any of its subsidiaries or any of their
respective officers or any of their respective properties, assets or rights
before any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or over
their respective officers or properties or otherwise which might prevent
consummation of the Exchange Offer, the transactions contemplated hereby or
thereby or the other transactions contemplated in the Exchange Offer Materials
that has not been accurately described in all material respects in the
Registration Statement or the Prospectus; and there are no agreements,
contracts, leases or documents of the Company or any of its subsidiaries of a
character required to be described or referred to in the Registration Statement
or the Prospectus or any Incorporated Document or to be filed as an exhibit to
the Registration Statement or any Incorporated Document by the Securities Act or
the rules and regulations thereunder or by the Exchange Act or the rules and
regulations of the Commission thereunder which have not been accurately
described in all material respects in the Registration Statement or Prospectus
or any Incorporated Document or filed as exhibits to the Registration Statement
or any Incorporated Document.
(i) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus and
any Incorporated Document (and such statements correctly state the substance of
the instruments defining the capitalization of the Company); the Shares issuable
pursuant to the terms of the Exchange Notes have been duly authorized for
issuance and delivery and, when issued and delivered by the Company in
accordance with the terms of the Exchange Notes will be duly and validly issued
and fully paid and nonassessable, and will be free and clear of any pledge,
lien, security interest, encumbrance,
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<PAGE>
claim or equitable interest; and no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders exists with respect to any of the Shares issuable in the Exchange
Offer or the issuance thereof other than those that have been expressly waived
prior to the date hereof and those that will automatically expire upon and will
not apply to the consummation of the transactions contemplated on or before the
Closing Date; and the Rights, if any, issuable under the Preferred Shares Rights
Agreement have been duly authorized and when, and if, issued upon the terms of
the Preferred Shares Rights Agreement will be valid and binding obligations of
the Company enforceable in accordance with their terms. No further approval or
authorization of any shareholder, the Board of Directors of the Company or
others is required for the issuance or transfer of the Shares issuable in
accordance with the Exchange Notes and except as may be required under the
Securities Act, the Exchange Act or under state or other securities or Blue Sky
laws.
(j) The Indenture has been or will be duly authorized by the Company,
has been filed as of the Commencement Date, will be qualified under the TIA not
later than the Expiration Date, and assuming due authorization, execution and
delivery of the Indenture by the Trustee, when executed and delivered by the
Company, will constitute a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(k) The Exchange Notes to be issued pursuant to the Exchange Offer
have been authorized, and assuming due authorization, execution and delivery of
the Indenture by the Trustee, when executed and authenticated in accordance with
the provisions of the Indenture and delivered in accordance with the terms of
the Exchange Offer, will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Company enforceable in accordance with
their terms, except as the enforcement thereof may be limited by the (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws affecting enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity); the Exchange Notes will conform in all
material respects to the description thereof contained in the Registration
Statement and Prospectus.
(l) The consolidated financial statements (including the related
notes) included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendments or supplements thereto) present fairly, in
all material respects, the financial position, the results of operations and
cash flows of the Company at the dates and for the periods indicated in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated except as may otherwise be stated
therein. The interim consolidated financial statements (including the related
notes) included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendments and supplements thereto) have been prepared
on a basis consistent with the audited consolidated
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<PAGE>
financial statements except as otherwise stated therein, and include in your
opinion all adjustments, including normal recurring adjustments necessary to
present fairly the financial information therein. The selected and summary
consolidated financial and statistical data included in the Registration
Statement and the Prospectus (and any amendments or supplements thereto) present
fairly the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein. No financial
statements or schedules, other than the consolidated financial statements or
schedules that are included in the Registration Statement and the Prospectus
(and any amendments or supplements thereto), are required to be included
therein.
(m) Except as disclosed in the Registration Statement and Prospectus,
the Common Stock is registered pursuant to Section 12(g) of the Exchange Act and
has been accepted for quotation on The NASDAQ Stock Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from The NASDAQ Stock Market, nor has the Company received any
notification that the Commission or NASD is contemplating terminating such
registration or listing.
(n) The Company has conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it is not and will not become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations thereunder.
(o) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, and (ii) completion of the distribution of
the Exchange Notes in exchange for the Existing Notes pursuant to the Exchange
Offer, any offering material in connection with the Exchange Offer other than
the Exchange Offer Materials.
(p) The Company has not taken and will not take, directly or
indirectly, any action resulting in a violation of Rule 102 promulgated under
the Exchange Act or designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the distribution of the Exchange Notes.
(q) The Exchange Agent Agreement between the Company and Norwest Bank
Minnesota, National Association (the "Exchange Agent Agreement") is or will be
in full force and effect.
(r) Except as disclosed in the Prospectus, neither the Company nor any
of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances, owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any
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<PAGE>
claim relating to any environmental laws, which violation, contamination,
liability or claim would, individually or in the aggregate, have a Material
Adverse Effect; and the Company is not aware of any pending investigation which
would reasonably be expected to lead to such a claim.
(s) All written communications, in addition to the Schedule TO, made
during the period from the first public announcement and to the earlier of
either the termination date or the Closing Date of the Exchange Offer have been
or will be filed with the SEC in accordance with the Exchange Act and the SEC's
rules and regulations including Rule 13e-4 under the Exchange Act.
9. Further Agreements of the Company. The Company agrees with you that:
---------------------------------
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof to become effective as soon as possible but
no later than the Expiration Date; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
rules and regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus or additional Exchange Offer
Materials has been filed; if for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the rules and regulations, it
will provide evidence satisfactory to you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed; it will notify you promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or
other Exchange Offer Materials or for additional information relating to the
Exchange Offer; promptly upon your request, it will prepare and file with the
Commission any amendments or supplements to the Registration Statement or
Prospectus or other Exchange Offer Materials which, in the opinion of Dealer
Manager's Counsel, may be necessary or advisable in connection with the Exchange
Offer; it will promptly prepare and file with the Commission, and promptly
notify you of the filing of, any amendments or supplements to the Registration
Statement or the Prospectus or other Exchange Offer Materials which may be
necessary to correct any statements or omissions, if, at any time when a
Prospectus relating to the Exchange Offer is required to be delivered under the
Securities Act and the Exchange Act, any event shall have occurred as a result
of which the Prospectus or any other prospectus relating to the Exchange Offer
as then in effect would include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and it will file
no amendment or supplement to the Registration Statement or the Prospectus or
other Exchange Offer Materials or the Incorporated Documents, or, prior to the
end of the period of time in which the Exchange Offer Materials relating to the
Exchange Offer are required to be delivered under the Securities Act and the
Exchange Act, file any document which upon filing becomes an Incorporated
Document, which shall not previously have been submitted to you a reasonable
time prior to the proposed filing thereof and will give reasonable consideration
to you or your counsel's
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<PAGE>
comments, if any, thereon, subject, however, to compliance with the Securities
Act and the Rules and Regulations, the Exchange Act and the rules and
regulations of the Commission thereunder and the provisions of this Agreement.
Notwithstanding anything else to the contrary set forth in this Agreement, the
Company reserves the right to terminate the Exchange Offer prior to the
Expiration Date of the Exchange Offer or amend or modify the business terms of
the Exchange Offer in its sole and absolute discretion, subject to the Company's
obligations under Sections 6, 7 and 11 of this Agreement in the event that the
Dealer Manager withdraws pursuant to Section 5 as a result of any such
termination, amendment or modification.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge, of the issuance of any order by the Commission
refusing or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any refusal or stop order or to
obtain its withdrawal at the earliest possible moment if such refusal or stop
order should be issued.
(c) The Company will use its best efforts to qualify the Exchange
Notes issuable pursuant to the Exchange Offer under the securities laws of such
jurisdictions as you may designate and to continue such qualifications in effect
for so long as may be required for purposes of the Exchange Offer, except that
the Company shall not be required in connection therewith or as a condition
thereof to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction in which it is not otherwise required to
be so qualified or to so execute a general consent to service of process. In
each jurisdiction in which the Exchange Notes shall have been qualified as above
provided, the Company will make and file such statements and reports in each
year as are or may be required by the laws of such jurisdiction.
(d) To make generally available to its security holders and to the
Dealer Manager by filing with the SEC as soon as practicable, an earnings
statement covering a twelve-month period beginning not later than the first day
of the Company's fiscal quarter next following the effective date of the
Registration Statement that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
(e) To use its best efforts to advise or cause the Exchange Agent to
advise the Dealer Manager at 5:00 P.M., Eastern Standard Time, or promptly
thereafter, daily (or more frequently if requested), by telephone or facsimile
transmission, with respect to Existing Notes tendered as follows: (i) the
aggregate principal amount of Existing Notes validly tendered and represented by
confirmations of receipt of book-entry transfer of Existing Notes pursuant to
the procedures set forth in the Exchange Offer on such day; (ii) the aggregate
principal amount of any Existing Notes properly withdrawn on such day; and (iii)
the cumulative totals of the principal amount of Existing Notes in categories
(i) through (ii), inclusive, above.
(f) Without limiting Sections 5, 7 and 13 of this Agreement, if the
transactions contemplated hereby are not consummated by reason of any failure,
refusal or
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<PAGE>
inability on the part of the Company to perform any agreement on its part to be
performed hereunder or to fulfill any condition of your obligations hereunder,
the Company will reimburse the you for all out-of-pocket expenses (including
fees and disbursements of Dealer Manager's Counsel) incurred by you in
connection with the Exchange Offer.
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<PAGE>
10. Conditions of Dealer Manager's Obligations. Your obligations as
------------------------------------------
provided herein shall be subject at all times on and prior to the Closing Date,
to the accuracy of the representations and warranties of the Company herein, to
the accuracy of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Registration Statement shall have been filed prior to the
Commencement Date and no stop order refusing the effectiveness thereof shall
have been issued and the Registration Statement shall become effective prior to
the Expiration Date and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for either purpose shall have been initiated
or, to the knowledge of the Company or you, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement, the Prospectus, any Incorporated Document, or other
Exchange Offer Materials or otherwise) shall have been complied with to the
reasonable satisfaction of Dealer Manager's Counsel.
(b) After execution and delivery of this Agreement and prior to the
Closing Date there shall not have occurred from that described in the Prospectus
(a) any adverse change or development in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise, (b) any obligation, direct or
contingent, incurred by the Company or its subsidiaries, except obligations
incurred in the ordinary course of business, (d) any change in the capital stock
or outstanding indebtedness of the Company, (e) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company; or (f) any
loss or damage (whether or not insured) to the property of the Company or any of
its subsidiaries which has been sustained or will have been sustained that
either individually or in the aggregate, in the Dealer Manager's reasonable
judgment, are material and adverse and that makes it, in the Dealer Manager's
judgment impracticable to recommend that holders of Existing Notes participate
in the Exchange Offer on the terms and in the manner contemplated in the
Registration Statement.
(c) All corporate proceedings and other legal matters in connection
with this Agreement, the Registration Statement, the Prospectus, other Exchange
Offer Materials or otherwise, and the registration, authorization, issue, and
delivery of the Exchange Notes issuable in accordance with the Exchange Offer,
shall have been reasonably satisfactory to Dealer Manager's Counsel, and such
counsel shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this Section.
(d) You shall have received the opinion of Wilson, Sonsini, Goodrich
and Rosati, counsel for the Company, dated the Closing Date, respectively,
addressed to you to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware;
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<PAGE>
(ii) The Company has the corporate power and corporate authority
to enter into this Agreement, the Exchange Agent Agreement, the
Information Agent Agreement, and the Indenture under which the
Exchange Notes will be issued pursuant to the Exchange Offer;
(iii) This Agreement, the performance by the Company of it
obligations hereunder, the Exchange Offer, the issuance and delivery
by the Company of the Exchange Notes pursuant to the Indenture and
consummation of the Exchange Offer has been duly authorized by all
necessary corporate action on the part of the Company; this Agreement
has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, is a valid and binding
agreement of the Company;
(iv) The Exchange Agent Agreement and the Information Agent
Agreement have been duly authorized, executed and delivered by the
Company;
(v) The Company is not, or after giving effect to the Exchange
Offer, will not be, and the Company is not directly or indirectly
"controlled" by, an "investment company," as such terms are defined in
the 1940 Act;
(vi) The Registration Statement has been filed under the
Securities Act prior to the Commencement Date and, to such counsel's
knowledge, no refusal order preventing effectiveness, and after
effectiveness, no stop order suspending the effectiveness, of the
Registration Statement has been issued and to such counsel's
knowledge, no proceedings for that purpose have been instituted or are
pending or threatened under the Securities Act;
(vii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements,
including supporting schedules, and financial data derived therefrom
as to which such counsel need express no opinion), as of the effective
date of the Registration Statement, complied as to form in all
material respects with the requirements of the Securities Act and the
applicable rules and regulations thereunder;
(viii) The Schedule TO, and each amendment or supplement
thereto, and the documents required by Item 12 thereof (other than the
financial statements, including supporting schedules, and the
financial data derived therefrom as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder;
(ix) The information in the Prospectus under the captions "The
Exchange Offer," "Description of the Existing Notes,"
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"Description of Exchange Notes" and "Description of the Capital
Stock," insofar as such statements purport to constitute a summary of
the legal matters, documents or proceedings referred to therein,
fairly present the information required to be disclosed under the
Securities Act and the applicable rules and regulations thereunder;
and the statements in the Prospectus under the caption "U.S. Federal
Income Tax Considerations," in so far as they purport to describe the
provisions of the laws referred to therein, fairly summarize such laws
in all material respects.
(x) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes,
and of the bank facility Agreements are accurate and fairly present
the information required to be presented by the Securities Act and the
applicable rules and regulations thereunder;
(xi) The execution and delivery by the Company of, and the
performance by the Company of it obligations under this Agreement, the
Exchange Offer, the issuance and delivery by the Company of the
Exchange Notes pursuant to the Exchange Offer and consummation of the
Exchange Offer, and the fulfillment of the terms hereof and thereof
will not, to such counsel's knowledge, result in a material breach or
violation of any of the terms and provisions of, or constitute a
default under, any Reviewed Agreements other than the Bank Revolving
Credit and Term Loan Agreements which are covered by the opinion of
Murphy, Sheneman, Julian & Rogers; or any applicable statute, rule or
regulation known to such counsel or, to such counsel's knowledge, any
order, writ or decree of any U.S. federal, California or Delaware
court, government or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or over any of their
properties or operations; provided, however, that no opinion need be
rendered concerning state securities or Blue Sky laws. For purposes
of counsel's opinion, "Reviewed Agreements" means all agreements that
would be required to be filed as an exhibit to the Company's Annual
Report on Form 10-K if the Company was filing its Form 10-K for its
first complete fiscal year (i.e., only those agreements currently in
effect as such list is certified in writing by the Company to such
counsel);
(xii) No consent, approval, authorization, permit or order of or
qualification with any U.S. federal or California or Delaware court,
government or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries, or over any of their properties or
operations is necessary in connection with the consummation by the
Company of its obligations under this Agreement, the Exchange Offer,
the issuance and delivery of the Exchange Notes pursuant to the
Exchange Offer and the consummation of the Exchange Offer, except such
as have been obtained under the Securities Act or Exchange Act or
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such as may be required under state or other securities or Blue Sky
laws or as contemplated by such agreements;
(xii) The Indenture has been duly authorized, executed and
delivered by the Company and assuming due authorization, execution and
delivery of the Indenture by the Trustee, constitutes a valid and
binding agreement of the Company enforceable in accordance with its
terms; and has been duly qualified under the TIA;
(xiii) The Exchange Notes when executed and authenticated in
accordance with the provisions of the Indenture, assuming due
authorization, execution and delivery of the Indenture by the Trustee,
and delivered in accordance with the terms of the Exchange Offer, will
be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company enforceable in accordance with
their terms; and the Exchange Notes conform in all material respects
to the description contained in the Registration Statement and
Prospectus;
(xiv) The Shares issuable pursuant to the terms of the Exchange
Notes have been duly authorized and reserved for the issuance and
delivery and when issued in accordance with the terms of the Exchange
Notes, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares is not subject to any preemptive or similar
rights under the Company's certificate of incorporation, by-laws or
applicable law and the Rights, if any, issuable under the Preferred
Shares Rights Agreement have been duly authorized and when, and if,
issued in accordance with the terms of the Preferred Shares Rights
Agreement will be valid and binding obligations of the Company
enforceable in accordance with their terms.
In addition to their opinions set forth above, Wilson, Sonsini,
Goodrich & Rosati shall provide a statement to the effect that nothing has come
to such counsel's attention that causes it to believe that the Registration
Statement, Prospectus and other Exchange Offer Materials (other than the
financial statements and notes thereto and supporting schedules and other
financial and statistical data derived therefrom, set forth therein or omitted
therefrom, as to which no advice is given), at the time the Registration
Statement was declared effective by the Commission, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus and Exchange Offer Materials (other than the financial
statements and notes thereto and supporting schedules and other financial and
statistical data derived therefrom, set forth therein or omitted therefrom, as
to which no advice is given), as of its date and at all times subsequent thereto
up to and on the Closing Date included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. With respect to such statement,
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<PAGE>
such counsel may state that its belief is based upon procedures set forth
therein, but it is without independent check or verification except as specified
therein.
The opinions set forth above that any document [counsel should list
each] is valid, binding or enforceable according to its terms are qualified as
to:
(i) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors generally;
(ii) rights to indemnification and contribution which may be limited
by applicable law or equitable principles; and
(iii) general principles of equity including without limitation, the
possible unavailability of specific performance or injunctive relief, and
limitations or rights of acceleration, regardless of whether enforceability
is considered in a proceeding at law or in equity.
Moreover, such counsel expresses no opinion as to the validity,
binding effect or enforceability of any provisions of the Indenture purporting
to impose penalties or any increase in interest rate to the extent they
constitute a penalty or are otherwise contrary to public policy.
The foregoing opinions of such counsel shall be limited to the laws of
the United States of America, the State of California, the State of New York
(but only with respect to paragraphs -- and --- above and only insofar as the
opinions set forth therein related to validity, binding effect and
enforceability of the agreements referred to therein) and the General
Corporation Law of the State of Delaware as such laws exist on the date such
opinion is delivered.
(d) You shall have received the opinion of the Vice President -
General Counsel of the Company dated the Closing Date, addressed to you to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation;
(ii) The Company has the corporate power and corporate authority
to own, lease and operate its properties and to conduct its business
as described in the Prospectus;
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in [list each jurisdiction];
(iv) All issued and outstanding shares of capital stock of each
of the Company's significant subsidiaries have been duly authorized
and validly issued
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and are fully paid and nonassessable and, to such counsel's knowledge,
have not been issued in violation of or subject to any preemptive
right, co-sale right, registration right, right of first refusal or
other similar right and, except as disclosed in the Registration
Statement and Exchange Offer Materials, are owned by the Company
directly or indirectly through one or more subsidiaries of the
Company,free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest (other than such preemptive
rights or other rights to subscribe for or purchase securities as were
fully complied with or expressly waived or with respect to the
violation of which the right to make a claim is barred by the
applicable statute of limitations.);
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus as of the dates stated
therein, the issued and outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and
nonassessable, and, to such counsel's knowledge, will not have been
issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar
right;
(vi) Each of the Incorporated Documents (other than the
financial statements, including supporting schedules, and the
financial data derived therefrom as to which such counsel need express
no opinion) complied when filed pursuant to the Exchange Act and the
applicable rules and regulations of the Commission thereunder as to
form in all material respects with the requirements of the Securities
Act and the rules and regulations and the Exchange Act and the
applicable rules and regulations of the Commission thereunder;
(vii) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement, the Prospectus or any Incorporated Document by
the Securities Act or the rules and regulations thereunder or by the
Exchange Act or the applicable rules and regulations of the Commission
thereunder, other than those described therein;
(viii) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is presently (a) in material violation of its
respective charter or bylaws, or (b) in material breach of any
applicable U.S. federal, California or Delaware statute, rule or
regulation known to such counsel or, to such counsel's knowledge, any
order, writ or decree of any U.S. federal, California or Delaware
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries, or over any of their properties or
operations;
(ix) The execution and delivery by the Company of, and the
performance by the Company of it obligations under this Agreement, the
Exchange Offer, the issuance and delivery by the Company of the
Exchange Notes
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pursuant to the Exchange Offer and consummation of the Exchange Offer,
and the fulfillment of the terms hereof and thereof will not, to such
counsel's knowledge, result in any violation of the Company's charter
or bylaws.
In addition to his opinions set forth above, the Vice President - General
Counsel shall provide a statement to the effect that nothing has come to such
counsel's attention that causes it to believe that the Registration Statement,
Prospectus and other Exchange Offer Materials (other than the financial
statements and notes thereto and supporting schedules and other financial and
statistical data derived therefrom, set forth therein or omitted therefrom, as
to which no advice is given), at the time the Registration Statement was
declared effective by the Commission, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus and Exchange Offer Materials (other than the financial statements and
notes thereto and supporting schedules and other financial and statistical data
derived therefrom, set forth therein or omitted therefrom, as to which no advice
is given), as of its date and at all times subsequent thereto up to and on the
Closing Date included an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. With respect
to such statement, such counsel may state that its belief is based upon
procedures set forth therein, but it is without independent check or
verification except as specified therein.
(e) You shall have received an opinion substantially in the form below
of foreign counsel satisfactory to you, addressed to you to the effect that:
Each of the Company's subsidiaries has been duly incorporated and
is validly exiting as a corporation in good standing under the laws of
its jurisdiction of incorporation , and has the corporate power to
own, lease and operate its properties and to conduct its business as
described in the Prospectus, and is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction, if
any, in which the ownership and leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a
Material Adverse Effect;
(f) You shall have received an opinion substantially in the form
below of Murphy, Sheneman, Julian & Rogers addressed to you to the effect that:
The execution and delivery by the Company of, and the performance
by the Company of it obligations under this Agreement, the Exchange
Offer, the issuance and delivery by the Company of the Exchange Notes
pursuant to the Exchange Offer and consummation of the Exchange Offer,
and the fulfillment of the terms hereof and thereof will not, to such
counsel's knowledge, result in any violation of the bank facility
Agreement dated as of October 2, 1997
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as amended February 11, 1998, August 10, 1998, September 27, 1999,
December 29, 1999 and February 1, 2000.
Counsel rendering the foregoing opinions may rely as to questions of
law not involving the laws of the United States of America or the State of
California or the State of Delaware upon opinions of local counsel, and as to
questions of fact upon representations or certifications of officers of the
Company, and of government officials, in which case their opinion is to state
that they are so relying and that they have no knowledge of any material
misstatement or inaccuracy in any such opinion, representation or certificate.
Copies of any opinion, representation or certificate so relied upon shall be
delivered to you, as Dealer Manager, and to Dealer Manager's Counsel.
(g) You shall have received on the Closing Date an opinion of Shearman &
Sterling, in form and substance satisfactory to you, with respect to the
sufficiency of all such corporate proceedings and other legal matters relating
to this Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.
(h) You shall have received on the Commencement Date and the Closing
Date, letters, dated as of the Commencement Date (or one business day prior
thereto) and Closing Date, as the case may be, from Ernst and Young LLP
addressed to you substantially in the form of that draft letter dated February
, 2000.
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(i) You shall have received a certificate of the Company, dated as of
the Closing Date, signed by the Chief Executive Officer and Chief Financial
Officer of the Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects, as if made on
and as of the Closing Date or such other date as of which any
representation speaks, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date,
as the case may be;
(ii) No stop order refusing or suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Securities Act;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the date of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, and the Incorporated Documents, when such
Incorporated Documents became effective or were filed with the
Commission, contained all material information required to be included
therein by the Securities Act and the rules and regulations thereunder
or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and in all material
respects conformed to the requirements of the Securities Act and the
rules and regulations thereunder or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the
case may be, the Registration Statement, and any amendment or
supplement thereto, did not and does not include any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, the Prospectus, and any amendment or supplement thereto,
did not and does not include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth;
and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus and up to the
date of such certificate, and except as disclosed therein, there has
not been (a) any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise, (b) any
transaction that is material to the Company and its subsidiaries
considered as one enterprise, except transactions entered into
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in the ordinary course of business, (c) any obligation, direct or
contingent, that is material to the Company and its subsidiaries
considered as one enterprise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding
indebtedness of the Company that is material to the Company and its
subsidiaries considered as one enterprise, (e) any dividend or
distribution of any kind declared, paid or made on the capital stock
of the Company; or (f) any loss or damage (whether or not insured) to
the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained and which has a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations under the Exchange Offer or consummate the
Exchange Offer.
(j) The Company shall have furnished to you such further certificates
and documents as you shall reasonably request (including certificates of
officers of the Company) as to the accuracy of the representations and
warranties of the Company herein, as to the performance by the Company of its
obligations hereunder and as to the other conditions concurrent and precedent to
your obligations hereunder.
(k) The Registration Rights Agreement shall be executed and delivered
by the Company on or prior to the Closing Date.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Dealer Manager's Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
11 Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Securities Act, the Exchange Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of the Company
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Schedule TO or any
Exchange Offer Materials, or any amendments or supplements thereto, including
any Incorporated Document, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and agrees to
reimburse you for any legal or other expenses reasonably incurred by you in
connection with investigating or defending any such loss, claim, damage,
liability or action;
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<PAGE>
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Schedule TO, any
Exchange Offer Materials, or the Prospectus, or any such amendment or supplement
thereto, in reliance upon, and in conformity with, written information relating
to you furnished to the Company by you, specifically for use in the preparation
thereof.
The indemnity agreement in this Section 11(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, you and your
affiliates and the partners, directors, officers, employees and agents of you
and your affiliates, and each person, if any, who controls you within the
meaning of the Securities Act or the Exchange Act. This indemnity agreement
shall be in addition to any liabilities which the Company may otherwise have.
(b) You agree to indemnify and hold harmless the Company against any
losses, claims, damages or liabilities, joint or several, to which the Company
may become subject under the Securities Act, the Exchange Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of yours herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Schedule TO or any Exchange
Offer Materials, or any amendments or supplements thereto, including any
Incorporated Document, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 11(b) to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon, and in conformity with, written
information furnished to the Company by you specifically for use in the
Registration Statement, the Prospectus, the Schedule TO, any other Exchange
Offer Materials or any amendment or supplement thereto or in the preparation
thereof, and agree to reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action.
The indemnity agreement in this Section 11(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each officer of
the Company who signed the Registration Statement and each director of the
Company, and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which you may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
11 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect
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thereof is to be made against any indemnifying party under this Section 11,
notify the indemnifying party in writing of the commencement thereof but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11. In case any such action is brought against any indemnified party,
and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it shall elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 11 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed separate counsel in accordance
with the proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with appropriate local counsel) approved by the
indemnifying party representing all the indemnified parties under Section 11(a)
or 11(b) hereof who are parties to such action), (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. In no event shall any indemnifying party be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
party shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnification could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on all claims that are the subject
matter of such proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 11
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 11 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that you are responsible
for the portion represented by the percentage that the
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maximum Dealer Manager's fee payable to the Dealer Manager pursuant to Section 6
hereof bears to the value of the maximum number of Exchange Notes issuable
pursuant to the Exchange Offer, and the Company is responsible for the remaining
portion, provided, however, that (i) you shall not be required to contribute any
amount in excess of the amount by which the fee paid to you pursuant to Section
6 hereof exceeds the amount of damages which you have been otherwise required to
pay and (ii) no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 11(d) shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls you or the Company within the meaning of the
Securities Act or the Exchange Act and each officer of the Company who signed
the Registration Statement and each director of the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 11, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 11 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement, the Schedule TO, any Exchange Offering Materials and the
Prospectus as required by the Securities Act and the Exchange Act.
12 Representations, Warranties, Covenants and Agreements to Survive
----------------------------------------------------------------
Delivery. All representations, warranties, covenants and agreements of the
- --------
Company and you herein or in certificates delivered pursuant hereto, and the
indemnity and contribution agreements contained in Section 11 hereof shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of you or any person controlling you within the meaning of
the Securities Act or the Exchange Act, or by or on behalf of the Company or any
of its officers, directors or controlling persons within the meaning of the
Securities Act or the Exchange Act, and shall survive the completion of the
Exchange Offer or termination of this Agreement.
13 Termination. (a) This Agreement shall terminate upon the earliest to
-----------
occur of (i) thirty days after the Expiration Date, (ii) any of the
conditions specified in Section 10 has not been fulfilled as of any date such
condition is required to be fulfilled pursuant to Section 10 (and the Dealer
Manager shall have notified the Company thereof), (iii) the date on which the
Company terminates or withdraws the Exchange Offer for any reason, or (iv) any
modification to the business terms of the Exchange Offer in the Company's sole
and absolute discretion that results in the Dealer Manager withdrawing pursuant
to Section 5 hereof (the earliest to occur of clauses (i), (ii), (iii) or (iv)
being referred to as the "Termination Date").
(b) Notwithstanding termination of this Agreement pursuant to
subsection (a) above, the obligations of the parties pursuant to Sections 6, 7
and 11 shall survive any termination of this Agreement.
If you elect to terminate this Agreement as provided in this Section
13, you shall promptly notify the Company by telephone, telecopy or telegram, in
each case confirmed by letter.
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<PAGE>
14 Notices. All notices or communications hereunder, except as herein
-------
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, or telecopied (and confirmed by letter) to you c/o
BancAmerica Robertson Stephens, 555 California Street, Suite 2600, San
Francisco, California 94104, telecopier number (415) 781-0278, Attention:
General Counsel; if sent to the Company, such notice shall be mailed, delivered,
telegraphed (and confirmed by letter) or telecopied (and confirmed by letter) to
Read-Rite, Attention: Vice President -- General Counsel, with a copy to Wilson,
Sonsini, Goodrich & Rosati.
15 Parties. This Agreement shall inure to the benefit of and be binding
-------
upon the Dealer Manager and the Company and their respective executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective executors, administrators,
successors and assigns, and the controlling persons within the meaning of the
Securities Act or the Exchange Act, officers and directors referred to in
Section 11 hereof, any legal or equitable right, remedy or claim in respect of
this Agreement or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or entity. No
Holder of Existing Notes receiving Exchange Notes upon exchange of such Existing
Notes shall be construed a successor or assign by reason merely of such
exchange.
16 Applicable Law. This Agreement shall be governed by, and construed in
--------------
accordance with, the laws of the State of New York.
17 Counterparts. This Agreement may be signed in several counterparts,
------------
each of which will constitute an original.
Please indicate your willingness to act as Dealer Manager on the terms set
forth herein and your acceptance of the foregoing provisions by signing in the
space provided below for that purpose and returning to us a copy of this letter,
whereupon this letter and your acceptance shall constitute a binding agreement
among us.
Very truly yours,
READ-RITE CORPORATION
By
---------------------------------------
Name:
Title:
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Accepted as of the date first above written:
FLEETBOSTON ROBERTSON STEPHENS
By
------------------------------------------
Name:
Title:
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EXHIBIT 1.2
FORM OF DISTRIBUTION AGREEMENT
February ___, 2000
FLEETBOSTON ROBERTSON STEPHENS
555 California Street
Suite 2600
San Francisco, California 94104
Ladies/Gentlemen:
1. General. Read-Rite Corporation, a Delaware corporation (the
"Company"), proposes to offer for cash up to $75,000,000 aggregate principal
amount of 10% Convertible Subordinated Notes due September 1, 2004 (the
"Exchange Notes") that are convertible into common stock (the "Shares") of the
Company to Holders who submit their Existing Notes in the Exchange Offer (the
"Cash Offer").
In the event Holders submit indications of interest for more than
$75,000,000 aggregate principal amount in the Cash Offer, the additional
Exchange Notes will be allocated on a pro rata basis based on the amount of each
Holder's indication in the Cash Offer. The additional Exchange Notes issued in
the Cash Offer are to be issued pursuant to an Indenture, dated February __,
2000, as amended or modified from time to time (the "Indenture"), between the
Company, and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"). Capitalized terms used herein without definition shall have their
respective meanings set forth in or pursuant to the Registration Statement (as
defined herein).
2. Appointment as Agent. By this Placement Agreement (the "Agreement"),
the Company hereby engages and appoints you as exclusive Distribution Agent (the
"Distribution Agent") for the Cash Offer and authorizes you to act as such in
connection with the Cash Offer.
(a) Subject to the terms and conditions stated herein, the Company
hereby agrees that the Exchange Notes issued in the Cash Offer will be sold
exclusively through the Distribution Agent. Accordingly, the Company agrees
that it will not appoint any other agent to act on its behalf, or assist it in
the placement of the additional Exchange Notes in the Cash Offer. The
Distribution Agent agrees to use its best efforts to obtain purchases from the
Holders for any and all of the additional Exchange Notes at a price of $
per additional Exchange Notes.
(b) The Company shall not sell or approve the solicitation of offers
for the purchase of additional Exchange Notes in excess of the amount which
shall be authorized by the Company or in excess of the aggregate offering price
of the Exchange Notes registered pursuant to the Registration Statement.
<PAGE>
3. Registration Statement, Offering Circular/Prospectus and Offering
Materials.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), under the Securities Act of 1933, as amended (the
"Securities Act"), the Trust Indenture Act of 1939, as amended (the "TIA"), and
applicable rules and regulations (the "Rules and Regulations") of the Commission
thereunder, a combined Registration Statement on Form S-4 (No. 333-95527) and
Form S-3 (No. ___ - _____), including an Offering Circular/Prospectus, covering
the registration of the additional Exchange Notes and Shares issuable upon
conversion of the Exchange Notes and the Shares that may be issued solely at the
Company's option as payment of interest on the Exchange Notes. The term
"Registration Statement" as used in this Agreement shall mean such registration
statement, including financial statements, schedules and exhibits, in the form
in which it became or becomes, as the case may be, effective and, in the event
of any amendment thereto or the filing of any abbreviated registration statement
pursuant to Rule 462(b) of the Rules and Regulations relating thereto after the
effective date of such registration statement, shall also mean (from and after
the effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration statement as so amended, together with
any such abbreviated registration statement. The term "Offering
Circular/Prospectus" as used in this Agreement shall mean the final offering
circular/prospectus included in the Registration Statement. Notwithstanding the
foregoing, if any revised offering circular/prospectus shall be provided to you
by the Company for use in connection with the Cash Offer that differs from the
Offering Circular/Prospectus referred to in the immediately preceding sentence
(whether or not such revised prospectus is required to be filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations), the term
"Offering Circular/Prospectus" shall refer to such revised offering
circular/prospectus from and after the time it is first provided to you for such
use. Any reference to the Registration Statement or the Offering
Circular/Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 11 of Form S-4 and Item 12 of
Form S-3 under the Securities Act, as of the date of the Registration Statement
or the Offering Circular/Prospectus, as the case may be, and any reference to
any amendment or supplement to the Registration Statement or the Offering
Circular/Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations of the Commission thereunder,
which, upon filing, are incorporated by reference therein, as required by Item
11 of Form S-4 and Item 12 of Form S-3. As used in this Agreement, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the Registration Statement, the Offering Circular/Prospectus or
any amendment or supplement thereto. The terms "supplement" and "amendment" or
"supplemented" and "amended" as used herein with respect to the Offering
Circular/Prospectus shall include all documents deemed to be incorporated by
reference in the Offering Circular/Prospectus that are filed subsequent to the
date of the Offering Circular/Prospectus and prior to the termination of the
Exchange Offer and Cash Offer by the Company with the Commission pursuant to the
Exchange Act and the rules and regulations of the Commission thereunder.
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4. Use of the Prospectus and Registration Statement.
(a) The Prospectus has been or will be prepared and approved by, and
is the sole responsibility of, the Company. The Company shall disseminate or, to
the extent permitted by law, use its best efforts to disseminate the Prospectus
to each registered Holder of any Existing Notes, as soon as practicable on the
Commencement [Date] (the "Commencement Date"), pursuant to Rule 13e-4 under the
Exchange Act, and comply with its obligations thereunder. Thereafter, to the
extent practicable until three days prior to the Expiration Date of the Cash
Offer, the Company shall use its best efforts to cause copies of the Prospectus
and a return envelope to be mailed to each person who becomes a Holder of record
of any Existing Notes. The Company acknowledges and agrees that you may use the
Prospectus as specified herein without assuming any responsibility for
independent verification on your part other than information about the
Distribution Agent supplied by you in writing and the Company represents and
warrants to you that you may rely on the accuracy and completeness of any
information delivered to you by or on behalf of the Company without assuming any
responsibility for independent verification of such information and without
performing or receiving any appraisal or evaluation of the assets or liabilities
of the Company.
(b) The Company agrees to provide you with as many copies as you may
reasonably request of the Prospectus and Registration Statement. The Company
agrees that within a reasonable time prior to using or filing with the
Commission or any governmental or regulatory entity or agency (an "Other
Agency"), including the National Association of Securities Dealers, Inc. (the
"NASD"), the Prospectus and Registration Statement, it will submit copies of
such materials to you and your counsel and will give reasonable consideration to
your and your counsel's comments, if any, thereon. The Company agrees prior to
the termination of the Cash Offer, before amending or supplementing the
Registration Statement or the Prospectus, to furnish copies of drafts to, and
consult with, the Distribution Agent and its counsel ("Distribution Agent's
counsel") within a reasonable time in advance of filing with the Commission of
any amendment or supplement to the Registration Statement, or Prospectus and
will give reasonable consideration to your and your counsel's comments, if any,
thereon.
(c) The Company has furnished or shall use its best efforts to
furnish to you, or cause the transfer agents or registrars for the Exchange
Notes to furnish to you, as soon as practicable after the date hereof (to the
extent not previously furnished), cards or lists in reasonable quantities or
copies thereof showing the names of persons who were the holders of record or,
to the extent available, the beneficial owners of the Exchange Notes as of a
recent date, together with their addresses. Additionally, the Company shall
update, or cause the transfer on agents or registrars referred to above to
update, such information from time to time during the term of this Agreement as
may be reasonably requested by you. Except as otherwise provided herein, you
agree to use such information only in connection with the Cash Offer.
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(d) The Company authorizes the Distribution Agent to use the
Prospectus in connection with the Cash Offer for such period of time as any such
materials are required by law to be delivered in connection therewith.
(e) The Company agrees that any reference to the Distribution Agent
in any Prospectus or in any newspaper announcement or press release or other
document or communication is subject to the Distribution Agent's prior consent,
which consent shall not be unreasonably withheld.
5. Withdrawal. In the event that the Company (i) uses or permits the use
of, or files with the Commission or any Other Agency, or any amendment or
supplement to the Registration Statement or the Prospectus, and such document
(a) has not been submitted to you previously for your and your counsel's
comments or (b) has been so submitted, and you or your counsel have made
comments which have not been reflected in a manner reasonably satisfactory to
you or your counsel; or (ii) shall have breached, in any material respect, any
of its representations, warranties, agreements or covenants herein, then you
shall be entitled to withdraw as Distribution Agent in connection with the Cash
Offer without any liability or penalty to you and without loss of any right to
indemnification or contribution provided in Section 11 or to the payment of all
fees and expenses payable under Sections 6 and 7 below which have accrued to the
date of such withdrawal (it being agreed that in the event of any such
withdrawal, for the purpose of determining the fees payable to you pursuant to
Section 6, the aggregate principal amount of Existing Notes tendered pursuant to
the Cash Offer as of the close of business on the date of such withdrawal which
are thereafter acquired by the Company or any of its subsidiaries or affiliates
pursuant to the Cash Offer or otherwise shall be deemed to have been acquired as
of the date of such withdrawal).
6. Fees. As compensation for your services in connection with the Cash
Offer, the Company will pay you a fee determined as set forth below as of the
Expiration Date with regard to the Existing Notes validly tendered and accepted
for exchange pursuant to the Cash Offer: the fee for the Cash Offer if paid in
Exchange Notes, will be (i) fungible with the Exchange Notes except in relation
to resale restrictions (explained below), and (a) will be 5% of the final Cash
Offer amount or, (b) if paid in cash, 4% of the final Cash Offer amount. If the
fee for the Cash Offer is paid in Exchange Notes, such Exchange Notes will not
be covered by the Registration Statement.
7. Expenses.
(a) The Company agrees that it will pay the costs and expenses
incident to the performance of the obligations hereunder, including, without
limitation (i) all costs and expenses incurred by dealers and brokers (including
yourself), commercial banks, trust companies and nominees for their customary
mailing and handling expenses incurred in forwarding the Prospectus to their
customers, (ii) the filing fees and expenses, if any, incurred with respect to
any filing with the NASD, (iii) all costs and expenses incident to the
preparation, issuance, execution and delivery of the Exchange Notes upon
exchange of the Existing Notes, (iv) all
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costs and expenses incident to the preparation, printing and filing under the
Securities Act of the Registration Statement and the Prospectus (including,
without limitation, in each case all exhibits, amendments and supplements
thereto), (v) all costs and expenses incurred in connection with the
registration or qualification of the Exchange Notes issuable upon exchange of
the Existing Notes under the laws of such jurisdictions as the Distribution
Agent may designate, if any (including, without limitation, reasonable fees of
counsel for the Distribution Agent and its reasonable disbursements), (vi) all
costs and expenses incurred in connection with the printing (including word
processing and duplication costs) and delivery of the Prospectus and
Registration Statement (including, without limitation, any preliminary and
supplemental blue sky memoranda) including, without limitation, mailing and
shipping; (vii) all advertising expenses related to the Cash Offer and the fees
and expenses of the Exchange Agent and the Information Agent; (viii) all fees
and expenses incurred in marketing the Cash Offer, including but not limited to
road show presentations, if any; and (ix) the fees and disbursements of Wilson,
Sonsini, Goodrich and Rosati, counsel to the Company, and Ernst & Young LLP,
auditors to the Company. In addition, the Company agrees to reimburse the
reasonable out-of-pocket expenses of the Distribution Agent in connection with
the Cash Offer, including, without limitation, the reasonable legal fees and
expenses of the Distribution Agent's Counsel in connection with the Cash Offer.
(b) In addition to its other obligations under Section 11(a) hereof,
the Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding described in Section 11(a)
hereof, it will reimburse the Distribution Agent on a monthly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Distribution Agent
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, the
Distribution Agent shall promptly return such payment to the Company together
with interest. Any such interim reimbursement payments which are not made to
the Distribution Agent within thirty (30) days of a request for reimbursement
shall bear interest compounded daily, determined on the basis of the prime rate
(or other commercial lending rate for borrowers of the highest credit standing)
listed from time to time in The Wall Street Journal which represents the base
rate on corporate loans posted by a substantial majority of the nation's thirty
(30) largest banks ("Prime Rate"). Any such interim reimbursement payments
which are not made to the Distribution Agent within thirty (30) days of a
request for reimbursement shall bear interest at the Prime Rate from the date of
such request.
(c) In addition to its other obligations under Section 11(b) hereof,
the Distribution Agent agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding described in
Section 11(b) hereof, it will reimburse the Company on a monthly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of
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the Distribution Agent's obligation to reimburse the Company for such expenses
and the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Distribution Agent together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
(d) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 7(b) and 7(c)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 7(b) and 7(c) hereof
and will not resolve the ultimate propriety or enforceability of the obligation
to indemnify for expenses which is created by the provisions of Sections 11(a)
and 11(b) hereof or the obligation to contribute to expenses which is created by
the provisions of Section 11(d) hereof.
8. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to you, and agrees with you, that:
(a) The Registration Statement, including the Prospectus, has been
prepared by the Company in conformity with the requirements of the Securities
Act and the Rules and Regulations of the Commission thereunder and has been
filed with the Commission; such amendments to such Registration Statement and
Prospectus and such abbreviated registration statements pursuant to Rule 462(b)
of the Rules and Regulations as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission; and the Company will
file such additional amendments to such Registration Statement and Prospectus
and such abbreviated registration statements as may hereafter be required.
Copies of such Registration Statement and Prospectus, including all amendments
thereto and all documents incorporated by reference therein, and of any
abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations have been or, if filed after the Commencement Date, will be,
delivered to you and your counsel.
(b) The Registration Statement, including the Prospectus, has been
filed as of the Commencement Date; will become effective not later than the
Expiration Date; and the Commission has not issued any order refusing or
suspending the effectiveness of the Registration Statement or preventing or
suspending the use of any Prospectus or instituted proceedings for
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that purpose; the Prospectus, including the Registration Statement, comply and,
as amended or supplemented, if applicable, will comply in all material respects
with the Securities Act, the Exchange Act and the TIA, and the applicable Rules
and Regulations of the Commission thereunder; the Registration Statement, when
it became effective, did not contain and as amended or supplemented, if
applicable, will not contain, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and neither the Prospectus nor the
Registration Statement contains, and, as amended or supplemented, if applicable,
will contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that none of the
representations and warranties contained in this subparagraph (b) shall apply to
information contained in or omitted from the Registration Statement or
Prospectus, or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information relating to you furnished to the Company by
you specifically for use in the preparation thereof.
The Incorporated Documents heretofore filed, when they were filed (or,
if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the Rules and Regulations of the Commission thereunder;
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder; no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and no such further amendment will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiaries taken as a whole ("Material Adverse Effect").
(d) Each of the Company's subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and has the corporate power to own, lease and
operate its properties and to conduct its business as described in the
Prospectus, and is qualified to do business as a foreign corporation and is in
good standing in each jurisdiction, if any, in which the ownership and
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<PAGE>
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a Material Adverse Effect.
(e) All issued and outstanding shares of capital stock of each of the
Company's material subsidiaries has been duly authorized and validly issued and
are fully paid and nonassessable, and, has not been issued in violation of or
subject to any preemptive right, co-sale right, registration right, right of
first refusal or other similar right and, except as disclosed in the
Registration Statement and Prospectus, are owned by the Company free and clear
of any pledge, lien, security interest, encumbrance, claim or equitable interest
(other than such preemptive rights or other rights to subscribe for or purchase
securities as were fully complied with or expressly waived or with respect to
the violation of which the right to make a claim is barred by the applicable
statute of limitations.
(f) The Company has full legal right, power and authority to enter
into and perform its obligations under this Agreement, the Indenture and the
Exchange Notes and to consummate the Cash Offer and all other transactions
contemplated in the Prospectus. The Cash Offer and all other actions by the
Company contemplated in the Prospectus have been duly and validly authorized by
all necessary corporate action by the Company, and no other corporate
proceedings by the Company are necessary to authorize such actions. This
Agreement has been duly authorized, executed and delivered by the Company and is
a legal, valid and binding agreement on the part of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; the execution and delivery by the Company of, and the
performance by the Company of its obligations under this Agreement, the Cash
Offer, the issuance and delivery by the Company of the Exchange Notes pursuant
to the Cash Offer, the consummation of the Cash Offer, and the other
transactions contemplated in the Prospectus, and the fulfillment of the terms
hereof and thereof, do not and will not result in a material breach or violation
of any of the terms and provisions of, or constitute a default under, (i) any
material bond, debenture, note or other evidence of indebtedness, or under any
material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other material agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it or any of its subsidiaries or
their respective properties may be bound, and except where such breach,
violation, or default would not have a Material Adverse Effect, (ii) the charter
or bylaws of the Company or any of its subsidiaries, or (iii) any law, order,
rule, regulation, writ, injunction, judgment or decree of any court, government
or governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any of its subsidiaries or over their respective properties. No
consent, approval, authorization, permit or order of or qualification with any
court, government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or over their
respective properties is required for the execution and delivery of this
Agreement, the Cash Offer, the issuance and delivery of the Exchange Notes
pursuant to the Cash Offer, and the consummation by the Company or any of its
subsidiaries of the transactions contemplated herein or in the Prospectus,
except such as may be required under the Securities
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<PAGE>
Act, the Exchange Act, or under state or other securities, or Blue Sky laws or
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR" Act) all of which requirements have been satisfied. Notwithstanding the
foregoing, to the extent any of the foregoing representations speak as to any of
the Company's subsidiaries, such representations shall be deemed to be made only
as it relates to the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, and the
Cash Offer, the issuance and delivery by the Company of the Exchange Notes
pursuant to the Cash Offer, and the consummation of the Cash Offer, but no other
transaction contemplated in the Prospectus.
(g) Except as disclosed in the Prospectus, there is not any pending
or, to the best of the Company's knowledge, threatened action, suit, claim or
proceeding against the Company, any of its subsidiaries or any of their
respective officers or any of their respective properties, assets or rights
before any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or over
their respective officers or properties or otherwise which (i) might prevent
consummation of the Cash Offer, the transactions contemplated hereby or thereby
or the other transactions contemplated in the Prospectus or (ii) is required to
be disclosed in the Registration Statement or the Prospectus, and is not so
disclosed; and there are no agreements, contracts, leases or documents of the
Company or any of its subsidiaries of a character required to be described or
referred to in the Registration Statement or the Prospectus or any Incorporated
Document or to be filed as an exhibit to the Registration Statement or any
Incorporated Document by the Securities Act or the Rules and Regulations
thereunder or by the Exchange Act or the Rules and Regulations of the Commission
thereunder which have not been accurately described in all material respects in
the Registration Statement or Prospectus or any Incorporated Document or filed
as exhibits to the Registration Statement or any Incorporated Document.
(h) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus and
any Incorporated Document (and such statements correctly state the substance of
the instruments defining the capitalization of the Company); the Shares issuable
pursuant to the terms of the Exchange Notes have been duly authorized for
issuance and delivery and, when issued and delivered by the Company in
accordance with the terms of the Exchange Notes will be duly and validly issued
and fully paid and nonassessable, and will be free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest; and no
preemptive right, co-sale right, registration right, right of first refusal or
other similar right of shareholders exists with respect to any of the Shares
issuable in the Cash Offer or the issuance thereof other than those that have
been expressly waived prior to the date hereof and those that will automatically
expire upon and will not apply to the consummation of the transactions
contemplated on or before the Closing Date; and if the Rights,
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if any, issuable under the Preferred Shares Right Agreement have been duly
authorized and when, and if, issued upon the terms of the Preferred Shares
Rights Agreement will be valid and binding obligations of the Company
enforceable in accordance with their terms. No further approval or authorization
of any shareholder, the Board of Directors of the Company or others is required
for the issuance or transfer of the Shares issuable in accordance with the Cash
Offer and except as may be required under the Securities Act, the Exchange Act
or under state or other securities or Blue Sky laws.
(i) The Indenture has been or will be duly authorized by the Company,
has been filed as of the Commencement Date, will be qualified under the TIA, not
later than the Expiration Date and assuming due authorization, execution and
delivery of the Indenture by the Trustee, when executed and delivered by the
Company, will constitute a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(j) The Exchange Notes to be issued pursuant to the Cash Offer have
been authorized, and assuming due authorization, execution and delivery of the
Indenture by the Trustee, when executed and authenticated in accordance with the
provisions of the Indenture and delivered in accordance with the terms of the
Cash Offer, will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company enforceable in accordance with their
terms, except as the enforcement thereof may be limited by the (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws affecting enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); the Exchange Notes will conform in all material
respects to the description thereof contained in the Prospectus.
(k) The consolidated financial statements (including the related
notes) included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendments or supplements thereto) present fairly, in
all material respects, the financial position, the results of operations and
cash flows of the Company at the dates and for the periods indicated in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated except as may otherwise be stated
therein. The interim consolidated financial statements (including the related
notes) included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendments and supplements thereto) have been prepared
on a basis consistent with the audited consolidated financial statements and
include in your opinion all adjustments, including normal recurring adjustments
necessary to present fairly the financial information therein. The selected and
summary consolidated financial and statistical data included in the Registration
Statement and the Prospectus (and any amendments or supplements thereto) present
fairly the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein. No
financial statements or schedules, other than the consolidated financial
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statements or schedules that are included in the Registration Statement and the
Prospectus (and any amendments or supplements thereto), are required to be
included therein.
(l) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and has been accepted for quotation on The NASDAQ Stock Market, and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from The NASDAQ Stock Market, nor has the Company
received any notification that the Commission or NASD is contemplating
terminating such registration or listing.
(m) The Company has conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it is not and will not become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations thereunder.
(n) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, and (ii) completion of the distribution of
the additional Exchange Notes in exchange for the Existing Notes pursuant to the
Cash Offer, any offering material in connection with the Cash Offer other than
the Prospectus.
(o) The Company has not taken and will not take, directly or
indirectly, any action resulting in a violation of Rule 102 promulgated under
the Exchange Act or designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the distribution of the Exchange Notes, except for which the approval
thereof will be obtained by the Company in a no-action letter of the Commission
to be delivered to the Company prior to the Expiration Date.
(p) The Exchange Agent Agreement between the Company and Norwest Bank
Minnesota, National Association (the "Exchange Agent Agreement") is or will be
in full force and effect.
(q) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances, owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any environmental
laws, which violation, contamination, liability or claim would, individually or
in the aggregate, have a Material Adverse Effect; and the Company is not aware
of any pending investigation which would reasonably be expected to lead to such
a claim.
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9. Further Agreements of the Company. The Company agrees with you that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof to become effective as soon as possible but
no later than the Expiration Date, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
rules and regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if for any reason
the filing of the final form of the Prospectus is required under Rule 424(b)(3)
of the rules and regulations, it will provide evidence satisfactory to you that
the Prospectus contains such information and has been filed with the Commission
within the time period prescribed; it will notify you promptly of any request by
the Commission for the amending or supplementing of the Registration Statement
or the Prospectus or for additional information relating to the Cash Offer;
promptly upon your request, it will prepare and file with the Commission any
amendments or supplements to the Registration Statement or Prospectus which, in
the opinion of your counsel, may be necessary or advisable in connection with
the Cash Offer; it will promptly prepare and file with the Commission, and
promptly notify you of the filing of, any amendments or supplements to the
Registration Statement or Prospectus which may be necessary to correct any
statements or omissions, if, at any time when a prospectus relating to the Cash
Offer is required to be delivered under the Securities Act and the Exchange Act,
any event shall have occurred as a result of which the Prospectus or any other
prospectus relating to the Cash Offer as then in effect would include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and it will file no amendment or supplement to the
Registration Statement or Prospectus or the Incorporated Documents, or, prior to
the end of the period of time in which the Prospectus relating to the Cash Offer
are required to be delivered under the Securities Act and the Exchange Act, file
any document which upon filing becomes an Incorporated Document, which shall not
previously have been submitted to you a reasonable time prior to the proposed
filing thereof and will give reasonable consideration to you or your counsel's
comments, if any, thereon, subject, however, to compliance with the Securities
Act and the Rules and Regulations, the Exchange Act and the rules and
regulations of the Commission thereunder and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge, of the issuance of any order by the Commission
refusing or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any refusal or stop order or to
obtain its withdrawal at the earliest possible moment if such refusal or stop
order should be issued.
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(c) The Company will use its best efforts to qualify the Exchange
Notes issuable pursuant to the Cash Offer under the securities laws of such
jurisdictions as you may designate and to continue such qualifications in effect
for so long as may be required for purposes of the Cash Offer, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Exchange Notes shall have been qualified as above
provided, the Company will make and file such statements and reports in each
year as are or may be required by the laws of such jurisdiction.
(d) To make generally available to its security holders and to the
Distribution Agent as soon as practicable an earnings statement covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement
that satisfies the provisions of Section 11(a) of the Securities Act and the
Rules and Regulations of the Commission thereunder.
(e) To use its best efforts to advise or cause the Exchange Agent to
advise the Distribution Agent at 5:00 P.M., Eastern Standard Time, or promptly
thereafter, daily (or more frequently if requested), by telephone or facsimile
transmission, with respect to Existing Notes tendered as follows: (i) the
aggregate principal amount of Existing Notes validly tendered and represented by
confirmations of receipt of book-entry transfer of Existing Notes pursuant to
the procedures set forth in the Cash Offer on such day; (ii) the aggregate
principal amount of any Existing Notes properly withdrawn on such day; and (iii)
the cumulative totals of the principal amount of Existing Notes in categories
(i) through (ii), inclusive, above.
(f) Without limiting Sections 5, 7 and 13 of this Agreement, if the
transactions contemplated hereby are not consummated by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed hereunder or to fulfill any condition of your obligations
hereunder, the Company will reimburse the you for all out-of-pocket expenses
(including fees and disbursements of Distribution Agent's Counsel) incurred by
you in connection with the Cash Offer.
10. Conditions of Distribution Agent's Obligations. Your obligations as
provided herein shall be subject, as of the Commencement Date and all times on
and prior to the Closing Date, to the accuracy of the representations and
warranties of the Company herein, to the accuracy of the statements of officers
of the Company made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have been filed; and no stop order
refusing or suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or you, threatened by the Commission, and any request of the
Commission for additional information (to be included in
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the Registration Statement, the Prospectus, any Incorporated Document, or
otherwise) shall have been complied with to the reasonable satisfaction of
Distribution Agent's Counsel.
(b) The Registration Statement shall become effective prior to the
Expiration Date and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or you, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement, the Prospectus, any Incorporated Document, or otherwise)
shall have been complied with to the reasonable satisfaction of Distribution
Agent's Counsel.
(c) After execution and delivery of this Agreement and prior to the
Closing Date there shall not have occurred any change, or development involving
a prospective change, or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings, business or operations,
of the Company and its subsidiaries, taken as a whole, from that described in
the Prospectus that, in the Distribution Agent's judgment, is material and
adverse and that makes it, in the Distribution Agent's judgment, impracticable
to recommend that holders of Existing Notes participate in the Cash Offer on the
terms and in the manner contemplated in the Registration Statement.
(d) All corporate proceedings and other legal matters in connection with
this Agreement, the Registration Statement, the Prospectus, or otherwise, and
the registration, authorization, issue, and delivery of the Exchange Notes
issuable in accordance with the Cash Offer, shall have been reasonably
satisfactory to Distribution Agent's Counsel, and such counsel shall have been
furnished with such papers and information as they may reasonably have requested
to enable them to pass upon the matters referred to in this Section.
(e) You shall have received the opinion of Wilson, Sonsini, Goodrich and
Rosati, counsel for the Company, dated the Commencement Date (except as to
clauses (xiii and xx)) and the Closing Date, respectively, addressed to you to
the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation;
(ii) The Company has the corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus;
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction, if any, in
which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be
so qualified or be in good standing would not have a Material Adverse
Effect;
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(iv) Each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, and has the
corporate power to own, lease and operate its properties and to
conduct its business as described in the Prospectus, and is qualified
to do business as a foreign corporation and is in good standing in
each jurisdiction, if any, in which the ownership and leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or be in good standing
would not have a Material Adverse Effect;
(v) All issued and outstanding shares of capital stock of each
of the Company's material subsidiaries have been duly authorized and
validly issued and are fully paid and nonassessable, and, to such
counsel's knowledge, have not been issued in violation of or subject
to any preemptive right, co-sale right, registration right, right of
first refusal or other similar right and are owned by the Company free
and clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest (other than such preemptive rights or other
rights to subscribe for or purchase securities as were fully complied
with or expressly waived or with respect to the violation of which the
right to make a claim is barred by the applicable statute of
limitations);
(vi) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus as of the dates stated
therein, the issued and outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and
nonassessable, and, to such counsel's knowledge, will not have been
issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar
right;
(vii) The Exchange Notes to be issued pursuant to the Cash Offer
have been authorized, and assuming due authorization, execution and
delivery of the Indenture by the Trustee, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered in accordance with the terms of the Exchange Offer, will be
entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company enforceable in accordance with
their terms, except as the enforcement thereof may be limited by the
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity); the Exchange Notes will conform in all material respects to
the description thereof contained in the Prospectus; and will not have
been issued in violation of or subject to any preemptive right, co-
sale right, registration right, right of first refusal or other
similar right (other than such preemptive rights or other rights to
subscribe for or purchase securities as were fully complied with or
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expressly waived or with respect to the violation of which the right
to make a claim is barred by the applicable statute of limitations;
(viii) The Company has the corporate power and authority to
enter into this Agreement, the Exchange Agent Agreement, the
Information Agent Agreement, and the Indenture under which the
Exchange Notes will be issued pursuant to the Cash Offer;
(ix) This Agreement, the performance by the Company of it
obligations hereunder, the Cash Offer, the issuance and delivery by
the Company of the Indenture pursuant to the Cash Offer and
consummation of the Cash Offer has been duly authorized by all
necessary corporate action on the part of the Company; this Agreement
has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, is a valid and binding
agreement of the Company, enforceable in accordance with its terms,
except insofar as indemnification provisions may be limited by
applicable law and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally or by general
equitable principles;
(x) The Exchange Agent Agreement has been duly authorized,
executed and delivered by the Company;
(xi) The Company is not, or after giving effect to the Cash
Offer, will not be, and the Company is not directly or indirectly
"controlled" by, an "investment company," as such terms are defined in
the 1940 Act;
(xii) The Registration Statement has been filed under the
Securities Act prior to the Commencement Date and, to such counsel's
knowledge, no refusal order preventing effectiveness and after no
effectiveness stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Securities Act;
(xiii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements,
including supporting schedules and financial data derived therefrom as
to which such counsel need express no opinion), as of the effective
date of the Registration Statement, complied as to form in all
material respects with the requirements of the Securities Act and the
applicable rules and regulations thereunder; and each of the
Incorporated Documents (other than the financial statements (including
supporting schedules) and the financial data derived therefrom as to
which such counsel need express no opinion) complied when filed
pursuant to the Exchange Act and the applicable rules and regulations
of the Commission thereunder as to
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form in all material respects with the requirements of the Securities
Act and the rules and regulations and the Exchange Act and the
applicable rules and regulations of the Commission thereunder;
(xiv) The information in the Prospectus under the captions "The
Cash Offer," "U.S. Federal Income Tax Considerations," "Description of
the Existing Notes" and "Description of the Exchange Notes," insofar
as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, have been reviewed by
such counsel and fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein and the form of certificates
evidencing the Common Stock of the Company comply with Delaware law;
(xv) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes
are accurate and fairly present the information required to be
presented by the Securities Act and the applicable rules and
regulations thereunder; the descriptions of the Dealer Manager
Agreement, the Distribution Agreement, the Bank Facility Agreement,
Registration Statement and the Prospectus are accurate and fair
summaries of the material terms of such agreements;
(xvi) The execution and delivery by the Company of, and the
performance by the Company of it obligations under this Agreement, the
Cash Offer, the issuance and delivery by the Company of the Exchange
Notes pursuant to the Cash Offer and consummation of the Cash Offer,
and the fulfillment of the terms hereof and thereof will not (a)
result in any violation of the Company's charter or bylaws or (b) to
such counsel's knowledge, result in a material breach or violation of
any of the terms and provisions of, or constitute a default under, any
material bond, debenture, note or other evidence of indebtedness, or
any material lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument known to
such counsel to which the Company is a party or by which its
properties are bound, or any applicable statute, rule or regulation
known to such counsel or, to such counsel's knowledge, any order, writ
or decree of any court, government or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or
over any of their properties or operations; provided, however, that no
opinion need be rendered concerning state securities or Blue Sky laws;
(xvii) No consent, approval, authorization, permit or order of
or qualification with any court, government or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries,
or over any of their properties or operations is necessary in
connection with the consummation by the Company of its obligations
under this Agreement, the Cash Offer, the issuance and delivery of the
Exchange Notes pursuant to the Cash Offer and the
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consummation of the Cash Offer, except such as have been obtained
under the Securities Act or Exchange Act or such as may be required
under state or other securities or Blue Sky laws;
(xviii) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement, the Prospectus or any Incorporated Document by
the Securities Act or the Rules and Regulations thereunder or by the
Exchange Act or the applicable Rules and Regulations of the Commission
thereunder, other than those described therein;
(xix) To such counsel's knowledge, neither the Company nor any of
its subsidiaries is presently (a) in material violation of its
respective charter or bylaws, or (b) in material breach of any
applicable statute, rule or regulation known to such counsel or, to
such counsel's knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries, or over any of their properties or
operations;
(xx) The Indenture has been duly qualified under the TIA, has
been duly authorized, executed and delivered by the Company and
assuming due authorization, execution and delivery of the Indenture by
the Trustee, constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms except as the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws affecting
enforcement of creditors' rights generally and (ii) general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(xxi) The Exchange Notes when executed and authenticated in
accordance with the provisions of the Indenture, assuming due
authorization, execution and delivery of the Indenture by the Trustee,
and delivered in accordance with the terms of the Cash Offer, will be
entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company enforceable in accordance with
their terms, except as the enforcement thereof may be limited by the
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
(xxii) The Shares issuable pursuant to the terms of the Exchange
Notes have been duly authorized and reserved for the issuance and
delivery and when issued in accordance with the terms of the Exchange
Notes, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares is not subject to any preemptive or similar
rights under the Company's certificate of incorporation,
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by-laws or applicable law and the Rights, if any, issuable under the
Preferred Shares Rights Agreement have been duly authorized and when,
and if, issued in accordance with the terms of the Rights Agreement
will be valid and binding obligations of the company enforceable in
accordance with their terms.
(xxiii) such counsel (1) is of the opinion that each document
incorporated by reference in the Registration Statement and Prospectus
(except for financial statements and schedules and other financial and
statistical data included therein or incorporated by reference therein
as to which such counsel need not express any opinion), complied as to
form when filed with the Commission in all material respects with the
Exchange Act and the rules and regulations of the Commission
thereunder, (2) is of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules and other
financial and statistical data included or incorporated therein as to
which such counsel need not express an opinion and except for that
part of the Registration Statement that constitutes the Form T-1)
comply as to form in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder, (3)
has no reason to believe that (except for financial statements and
schedules and other financial and statistical data included or
incorporated by reference therein as to which such counsel need not
express and belief) the Registration Statement and the Prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (4) has no reason to
believe that (except for financial statements and schedules, and other
financial and statistical data as to which such counsel need not
express any belief) the Prospectus at the date of such opinion
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
In addition to their opinions set forth above, Wilson, Sonsini,
Goodrich & Rosati shall include in its opinion a statement to the effect that
nothing has come to its attention that causes it to believe that the
Registration Statement and Prospectus (other than the financial statements and
notes thereto and supporting schedules and other financial and statistical data
derived therefrom, set forth therein or omitted therefrom, as to which no advice
is given), at the time it was declared effective by the Commission and at all
times subsequent thereto up to and on the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus (other than the financial statements and notes thereto and
supporting schedules and other financial and statistical data derived therefrom,
set forth therein or omitted therefrom, as to which no advice is given), as of
its date and at all times subsequent thereto up to and on the Closing Date
included an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. With respect to such
statement,
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Wilson, Sonsini, Goodrich & Rosati may state that its belief is based upon
procedures set forth therein, but it is without independent check or
verification except as specified therein.
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States of America or the State of
Delaware upon opinions of local counsel, and as to questions of fact upon
representations or certifications of officers of the Company, and of government
officials, in which case their opinion is to state that they are so relying and
that they have no knowledge of any material misstatement or inaccuracy in any
such opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Distribution Agent, and to Distribution Agent's Counsel. Such counsel shall
also state that the conditions for the use of Form S-4 and Form S-3 set forth in
the General Instructions thereto have been satisfied. In addition, the
Distribution Agent on the Closing Date shall be entitled to rely on such
counsel's tax opinion delivered in connection with Distributions to the effect
that such Distributions will qualify as a tax-free spinoff under Section 355(e)
of the Internal Revenue Code.
(c) You shall have received on the Closing Date an opinion of Shearman &
Sterling, in form and substance satisfactory to you, with respect to the
sufficiency of all such corporate proceedings and other legal matters relating
to this Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.
(d) You shall have received on the Commencement Date and the Closing Date,
letters, dated as of the Commencement Date (or one business day prior thereto)
and Closing Date, as the case may be, from Ernst and Young LLP addressed to you
substantially in the form of that certain draft letter dated February , 2000.
(e) You shall have received a certificate of the Company, dated as of the
Commencement Date (excluding (iii)) and the Closing Date, signed by the Chief
Executive Officer and Chief Financial Officer of the Company, to the effect
that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects, as if made on
and as of the Commencement Date or Closing Date or such other date as
of which any representation speaks, as the case may be, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Commencement Date or Closing Date, as the case may be;
(ii) No stop order refusing or suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Securities Act;
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(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the date of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, and the Incorporated Documents, when such
Incorporated Documents became effective or were filed with the
Commission, contained all material information required to be included
therein by the Securities Act and the rules and regulations thereunder
or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and in all material
respects conformed to the requirements of the Securities Act and the
rules and regulations thereunder or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the
case may be, the Registration Statement, and any amendment or
supplement thereto, did not and does not include any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, the Prospectus, and any amendment or supplement thereto,
did not and does not include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth;
and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus and up to the
date of such certificate, and except as disclosed therein, there has
not been (a) any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise, (b) any
transaction that is material to the Company and its subsidiaries
considered as one enterprise, except transactions entered into in the
ordinary course of business, (c) any obligation, direct or contingent,
that is material to the Company and its subsidiaries considered as one
enterprise, incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (d) any
change in the capital stock or outstanding indebtedness of the Company
that is material to the Company and its subsidiaries considered as one
enterprise, (e) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company; or (f) any loss or
damage (whether or not insured) to the property of the Company or any
of its subsidiaries which has been sustained or will have been
sustained and which has a Material Adverse Effect or a material
adverse effect on the ability of the Company to perform its
obligations under the Cash Offer or consummate the Cash Offer.
(f) The Company shall have furnished to you such further certificates and
documents as you shall reasonably request (including certificates of officers of
the Company) as to the accuracy of the representations and warranties of the
Company herein, as to the performance by
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the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to your obligations hereunder.
(g) You shall have received on the Closing Date the execution and delivery
of the Registration Rights Agreement dated February __, 2000.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Distribution Agent's Counsel. The Company will furnish you with such number
of conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Securities Act, the Exchange Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of the Company
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, Prospectus, or any
amendments or supplements thereto, including any Incorporated Document, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Prospectus or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and agrees to reimburse you for any legal or other
expenses reasonably incurred by you in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to you furnished to the Company by you, specifically for
use in the preparation thereof.
The indemnity agreement in this Section 11(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, you and your
affiliates and the partners, directors, officers, employees and agents of you
and your affiliates, and each person, if any, who controls you within the
meaning of the Securities Act or the Exchange Act. This indemnity agreement
shall be in addition to any liabilities which the Company may otherwise have.
(b) You agree to indemnify and hold harmless the Company against any
losses, claims, damages or liabilities, joint or several, to which the Company
may become subject under the Securities Act, the Exchange Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based
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upon (i) any breach of any representation, warranty, agreement or covenant of
yours herein contained, (ii) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, or Prospectus, or any
amendments or supplements thereto, including any Incorporated Document, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, in the case of subparagraphs (ii) and (iii) of this
Section 11(b) to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon, and in conformity with, written information furnished to the Company by
you specifically for use in the Registration Statement, the Prospectus, or any
amendment or supplement thereto or in the preparation thereof, and agree to
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action.
The indemnity agreement in this Section 11(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each officer of
the Company who signed the Registration Statement and each director of the
Company, and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which you may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
11 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 11, notify the indemnifying party in writing of the commencement
thereof but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party otherwise than
under this Section 11. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it shall elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 11 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed
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separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with appropriate
local counsel) approved by the indemnifying party representing all the
indemnified parties under Section 11(a) or 11(b) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on all claims that are the subject matter of such proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 11
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 11 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that you are responsible
for the portion represented by the percentage that the maximum Distribution
Agent's fee payable to the Distribution Agent pursuant to Section 6 hereof bears
to the value of the maximum number of Exchange Notes issuable pursuant to the
Cash Offer, and the Company is responsible for the remaining portion, provided,
however, that (i) you shall not be required to contribute any amount in excess
of the amount by which the fee paid to you pursuant to Section 6 hereof exceeds
the amount of damages which you have been otherwise required to pay and (ii) no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. The contribution
agreement in this Section 11(d) shall extend upon the same terms and conditions
to, and shall inure to the benefit of, each person, if any, who controls you or
the Company within the meaning of the Securities Act or the Exchange Act and
each officer of the Company who signed the Registration Statement and each
director of the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 11, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 11 fairly allocate
the risks in light of the ability of the parties to investigate the
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Company and its business in order to assure that adequate disclosure is made in
the Registration Statement, and the Prospectus as required by the Securities Act
and the Exchange Act.
12. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company and you herein or in certificates delivered pursuant hereto, and the
indemnity and contribution agreements contained in Section 11 hereof shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of you or any person controlling you within the meaning of
the Securities Act or the Exchange Act, or by or on behalf of the Company or any
of its officers, directors or controlling persons within the meaning of the
Securities Act or the Exchange Act, and shall survive the completion of the Cash
Offer or termination of this Agreement.
13. Termination. (a) This Agreement shall terminate upon the earliest to
occur of (i) thirty days after the Expiration Date, (ii) any of the conditions
specified in Section 10 has not been fulfilled as of any date such condition is
required to be fulfilled pursuant to Section 10 (and the Distribution Agent
shall have notified the Company thereof) or (iii) the date on which the Company
terminates or withdraws the Cash Offer for any reason (the earliest to occur of
clauses (i), (ii) and (iii) being referred to as the "Termination Date").
(b) Notwithstanding termination of this Agreement pursuant to
subsection (a) above, the obligations of the parties pursuant to Sections 6, 7
and 11 shall survive any termination of this Agreement.
If you elect to terminate this Agreement as provided in this Section
13, you shall promptly notify the Company by telephone, telecopy or telegram, in
each case confirmed by letter.
14. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, or telecopied (and confirmed by letter) to you c/o
BancAmerica Robertson Stephens, 555 California Street, Suite 2600, San
Francisco, California 94104, telecopier number (415) 781-0278, Attention:
General Counsel; if sent to the Company, such notice shall be mailed, delivered,
telegraphed (and confirmed by letter) or telecopied (and confirmed by letter) to
Read-Rite, Attention: Executive Vice President -- Administration, with a copy
to Wilson, Sonsini, Goodrich & Rosati.
15. Parties. This Agreement shall inure to the benefit of and be binding
upon the Distribution Agent and the Company and their respective executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective executors, administrators,
successors and assigns, and the controlling persons within the meaning of the
Securities Act or the Exchange Act, officers and directors referred to in
Section 11 hereof, any legal or equitable right, remedy or claim in respect of
this Agreement or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and
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being for the sole and exclusive benefit of the parties hereto and their
respective executors, administrators, successors and assigns and said
controlling persons and said officers and directors, and for the benefit of no
other person or entity. No Holder of Existing Notes receiving additional
Exchange Notes upon exchange of such Existing Notes shall be construed a
successor or assign by reason merely of such exchange.
16. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
17. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original.
Please indicate your willingness to act as Distribution Agent on the terms
set forth herein and your acceptance of the foregoing provisions by signing in
the space provided below for that purpose and returning to us a copy of this
letter, whereupon this letter and your acceptance shall constitute a binding
agreement among us.
Very truly yours,
READ-RITE CORPORATION
By ____________________________________
Name:
Title:
Accepted as of the date first above
written:
FLEETBOSTON ROBERTSON STEPHENS
By _________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.1
================================================================================
Read-Rite Corporation
TO
Norwest Bank Minnesota, National Association,
as Trustee
_________________________
Indenture
Dated as of March __, 2000
_________________________
Subordinated Debt Securities
================================================================================
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ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.............................................. 1
SECTION 101. Definitions................................................................................ 1
SECTION 102. Compliance Certificates and Opinions....................................................... 9
SECTION 103. Form of Documents Delivered to Trustee..................................................... 9
SECTION 104. Acts of Holders; Record Dates.............................................................. 10
SECTION 105. Notices, Etc............................................................................... 12
SECTION 106. Notice to Holders; Waiver.................................................................. 12
SECTION 107. Conflict with Trust Indenture Act.......................................................... 12
SECTION 108. Effect of Headings and Table of Contents................................................... 13
SECTION 109. Successors and Assigns..................................................................... 13
SECTION 110. Separability Clause........................................................................ 13
SECTION 111. Benefits of Indenture...................................................................... 13
SECTION 112. Governing Law.............................................................................. 13
SECTION 113. Legal Holidays............................................................................. 13
SECTION 114. Indenture and Securities Solely Corporate Obligations...................................... 14
SECTION 115. Indenture May be Executed in Counterparts.................................................. 14
ARTICLE TWO SECURITY FORMS....................................................................................... 14
SECTION 201. Forms Generally............................................................................ 14
SECTION 202. Form of Face of Security................................................................... 14
SECTION 203. Form of Reverse of Security................................................................ 16
SECTION 204. Form of Legend for Global Securities....................................................... 21
SECTION 205. Form of Trustee's Certificate of Authentication............................................ 21
SECTION 206. Form of Conversion Notice.................................................................. 22
ARTICLE THREE THE SECURITIES..................................................................................... 23
SECTION 301. Amount Unlimited; Issuable in Series....................................................... 23
SECTION 302. Denominations.............................................................................. 26
SECTION 303. Execution, Authentication, Delivery and Dating............................................. 26
SECTION 304. Temporary Securities....................................................................... 27
SECTION 305. Registration; Registration of Transfer and Exchange........................................ 28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities........................................... 29
SECTION 307. Payment of Interest; Interest Rights Preserved............................................. 30
SECTION 308. Persons Deemed Owners...................................................................... 31
SECTION 309. Cancellation............................................................................... 31
SECTION 310. Computation of Interest.................................................................... 32
ARTICLE FOUR SATISFACTION AND DISCHARGE.......................................................................... 32
SECTION 401. Satisfaction and Discharge of Indenture.................................................... 32
SECTION 402. Application of Trust Money................................................................. 33
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ARTICLE FIVE REMEDIES............................................................................................ 33
SECTION 501. Events of Default.......................................................................... 33
SECTION 502. Acceleration of Maturity; Rescission and Annulment......................................... 34
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee............................ 36
SECTION 504. Trustee May File Proofs of Claim........................................................... 36
SECTION 505. Trustee May Enforce Claims Without Possession of Securities................................ 37
SECTION 506. Application of Money Collected............................................................. 37
SECTION 507. Limitation on Suits........................................................................ 37
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert... 38
SECTION 509. Restoration of Rights and Remedies......................................................... 38
SECTION 510. Rights and Remedies Cumulative............................................................. 38
SECTION 511. Delay or Omission Not Waiver............................................................... 38
SECTION 512. Control by Holders......................................................................... 39
SECTION 513. Waiver of Past Defaults.................................................................... 39
SECTION 514. Undertaking for Costs...................................................................... 39
SECTION 515. Waiver of Usury, Stay or Extension Laws.................................................... 40
ARTICLE SIX THE TRUSTEE.......................................................................................... 40
SECTION 601. Certain Duties and Responsibilities........................................................ 40
SECTION 602. Notice of Defaults......................................................................... 40
SECTION 603. Certain Rights of Trustee.................................................................. 41
SECTION 604. Not Responsible for Recitals or Issuance of Securities..................................... 41
SECTION 605. May Hold Securities and Act as Trustee Under Other Indentures.............................. 42
SECTION 606. Money Held in Trust........................................................................ 42
SECTION 607. Compensation and Reimbursement............................................................. 42
SECTION 608. Conflicting Interests...................................................................... 42
SECTION 609. Corporate Trustee Required; Eligibility.................................................... 43
SECTION 610. Resignation and Removal; Appointment of Successor.......................................... 43
SECTION 611. Acceptance of Appointment by Successor..................................................... 44
SECTION 612. Merger, Conversion, Consolidation or Succession to Business................................ 45
SECTION 613. Preferential Collection of Claims Against Company.......................................... 46
SECTION 614. Appointment of Authenticating Agent........................................................ 46
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.................................................. 47
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.................................. 47
SECTION 702. Preservation of Information; Communications to Holders..................................... 48
SECTION 703. Reports by Trustee......................................................................... 48
SECTION 704. Reports by Company......................................................................... 48
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ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........ 49
SECTION 801. Company May Consolidate, Etc. Only On Certain Terms. 49
SECTION 802. Successor Substituted............................... 50
ARTICLE NINE SUPPLEMENTAL INDENTURES...................................... 50
SECTION 901. Supplemental Indentures Without Consent of Holders.. 50
SECTION 902. Supplemental Indentures With Consent of Holders..... 51
SECTION 903. Execution of Supplemental Indentures................ 52
SECTION 904. Effect of Supplemental Indentures................... 53
SECTION 905. Conformity with Trust Indenture Act................. 53
SECTION 906. Reference in Securities to Supplemental Indentures.. 53
SECTION 907. Subordination Unimpaired............................ 53
ARTICLE TEN COVENANTS..................................................... 53
SECTION 1001. Payment of Principal, Premium and Interest.......... 53
SECTION 1002. Maintenance of Office or Agency..................... 53
SECTION 1003. Money for Securities Payments to Be Held in Trust... 54
SECTION 1004. Statement by Officers as to Default................. 55
SECTION 1005. Existence........................................... 55
SECTION 1006. Maintenance of Properties........................... 55
SECTION 1007. Payment of Taxes and Other Claims................... 55
SECTION 1008. Waiver of Certain Covenants......................... 56
ARTICLE ELEVEN REDEMPTION OF SECURITIES................................... 56
SECTION 1101. Applicability of Article............................ 56
SECTION 1102. Election to Redeem; Notice to Trustee............... 56
SECTION 1103. Selection by Trustee of Securities to Be Redeemed... 57
SECTION 1104. Notice of Redemption................................ 57
SECTION 1105. Deposit of Redemption Price......................... 58
SECTION 1106. Securities Payable on Redemption Date............... 58
SECTION 1107. Securities Redeemed in Part......................... 59
ARTICLE TWELVE SINKING FUNDS.............................................. 59
SECTION 1201. Applicability of Article............................ 59
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities.......................................... 60
SECTION 1203. Redemption of Securities for Sinking Fund........... 60
ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE....................... 60
SECTION 1301. Company's Option to Effect Defeasance or Covenant
Defeasance.......................................... 60
SECTION 1302. Defeasance and Discharge............................ 60
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SECTION 1303. Covenant Defeasance................................. 61
SECTION 1304. Conditions to Defeasance or Covenant Defeasance..... 61
SECTION 1305. Deposited Money and U.S. Government Obligations to
be Held in Trust; Miscellaneous Provisions.......... 63
SECTION 1306. Reinstatement....................................... 64
ARTICLE FOURTEEN CONVERSION OF SECURITIES................................. 64
SECTION 1401. Applicability of Article............................ 64
SECTION 1402. Exercise of Conversion Privilege.................... 65
SECTION 1403. No Fractional Shares................................ 66
SECTION 1404. Adjustment of Conversion Price...................... 66
SECTION 1405. Notice of Certain Corporate Actions................. 67
SECTION 1406. Reservation of Shares of Common Stock............... 67
SECTION 1407. Payment of Certain Taxes Upon Conversion............ 68
SECTION 1408. Nonassessability.................................... 68
SECTION 1409. Provision in Case of Consolidation, Merger or Sale
of Assets........................................... 68
SECTION 1410. Duties of Trustee Regarding Conversion.............. 69
SECTION 1411. Repayment of Certain Funds Upon Conversion.......... 70
ARTICLE FIFTEEN SUBORDINATION OF SECURITIES............................... 70
SECTION 1501. Securities Subordinate to Senior Debt............... 70
SECTION 1502. Payment Over of Proceeds Upon Dissolution, Etc...... 70
SECTION 1503. Prior Payment to Senior Debt Upon Acceleration of
Securities.......................................... 72
SECTION 1504. No Payment in Certain Circumstances................. 72
SECTION 1505. Payment Permitted If No Default..................... 74
SECTION 1506. Subrogation to Rights of Holders of Senior Debt..... 74
SECTION 1507. Provisions Solely to Define Relative Rights......... 74
SECTION 1508. Trustee to Effectuate Subordination................. 75
SECTION 1509. No Waiver of Subordination Provisions............... 75
SECTION 1510. Notice to Trustee................................... 75
SECTION 1511. Reliance on Judicial Order or Certificate of
Liquidating Agent................................... 76
SECTION 1512. Trustee Not Fiduciary for Holders of Senior Debt.... 76
SECTION 1513. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.................... 76
SECTION 1514. Article Applicable to Paying Agents................. 77
SECTION 1515. Certain Conversions Deemed Payment.................. 77
SECTION 1516. Obligations of Company and Right to Convert
Unconditional....................................... 77
SECTION 1517. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................ 78
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INDENTURE, dated as of March __, 2000, between Read-Rite Corporation, a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal executive office at 345 Los
Coches Street, Milpitas, California 95035, and Norwest Bank Minnesota, National
Association, a national banking association duly organized and existing under
the laws of the United States of America, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof
appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation;
(4) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
<PAGE>
(5) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board empowered to act for it with respect
to this Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company; provided, however,
-------- -------
subject to the provisions of Section 1409, shares issuable upon conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, further, that
-------- -------
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
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"Company" means the corporation named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its principal
financial officer, its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the corporate trust office of the Trustee at
725 South Figueroa Street, Suite 3100, Los Angeles, California 90017, at which
at any particular time its corporate trust business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301.
"Designated Senior Debt" means the Company's obligations under the
Revolving Credit Agreement and the Term Loan Agreement and 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 this
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).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
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"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular series of Securities
established as contemplated by Section 301; provided, however, that if at any
-------- -------
time more than one Person is acting as Trustee under this Indenture due to the
appointment of one or more separate Trustees for any one or more separate series
of Securities, "Indenture" shall mean, with respect to such series of Securities
for which any such Person is Trustee, this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities for which such
Person is Trustee established as contemplated by Section 301, exclusive,
however, of any provisions or terms which relate solely to other series of
Securities for which such Person is not Trustee, regardless of when such terms
or provisions were adopted, and exclusive of any provisions or terms adopted by
means of one or more indentures supplemental hereto executed and delivered after
such person had become such Trustee, but to which such person, as such Trustee,
was not a party; provided, further that in the event that this Indenture is
-------- -------
supplemented or amended by one or more indentures supplemental hereto which are
only applicable to certain series of Securities, the term "Indenture" for a
particular series of Securities shall only include the supplemental indentures
applicable thereto.
"interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Maturity," when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, repurchase at the option of
the Holder or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
501(4).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the principal financial officer, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company.
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"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for, or an employee of, the Company, and who shall be reasonably acceptable to
the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Security (or, in the case of a Security described in Clause (A) or (B)
above, of the amount determined as provided in such Clause), and (D) Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall
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be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Payment Blockage Notice" has the meaning specified in Section 1504.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment," when used with respect to the Securities of any series,
means the place or places where the principal of and any premium and interest on
the Securities of that series are payable as specified as contemplated by
Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Record Date" means any Regular Record Date or Special Record Date.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Representative" means the (a) indenture trustee or other trustee, agent or
representative for any Senior Debt or (b) with respect to any Senior Debt that
does not have any such trustee, agent or other representative, (i) in the case
of such Senior Debt issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Debt, any holder or
owner of such Senior Debt acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Debt and (ii) in the
case of all other such Senior Debt, the holder or owner of such Senior Debt.
"Revolving Credit Agreement" means that certain Credit Agreement, dated as
of October 2, 1997, by and among the Company, the financial institutions named
on the signature pages thereof (the "Banks"), Canadian Imperial Bank of
Commerce, New York Agency, as agent for the Banks
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and issuer of Letters of Credit, as amended by the First Amendment to Credit
Agreement dated February 5, 1998, the Second Amendment to Credit Agreement dated
as of August 10, 1998, the Waiver and Third Amendment to Credit Agreement dated
as of September 27, 1999, the Waiver and Fourth Amendment to Credit Agreement
dated as of December 29, 1999 and the Waiver, Forbearance and Fifth Amendment to
Credit Agreement dated January 28, 2000, as amended, amended and restated,
supplemented or otherwise modified from time to time.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" means 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 this Indenture or thereafter created,
incurred or assumed: (a) indebtedness of the Company evidenced by credit or loan
agreement, note, bond, debenture or other written obligation, (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 (i) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles, (ii)
as lessee under other leases for facilities, equipment or related assets,
whether or not capitalized, entered into or leased after the date of this
Indenture for financing purposes (as determined by the Company) or (iii) under
any lease or related document (including a purchase agreement) that provides
that the Company is contractually obligated to purchase or cause a third party
to purchase the leased property and the obligations of the Company under such
lease or related document to purchase or to cause a third party to purchase such
leased property, (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
(including reimbursement obligations with respect to any of the foregoing), (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 in effect guaranteed through an agreement to purchase or
otherwise (including, without limitation, "take or pay" and similar
arrangements)), 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 lien on property of the Company, and all obligations of the
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Company with respect thereto, 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 Securities or the Company's 6 1/2% Convertible Subordinated Notes
due September 1, 2004 or any such indebtedness or obligation if the terms of
such indebtedness or obligation (or the terms of the instrument under which, or
pursuant to which it is issued) expressly provide that such indebtedness or
obligation is not superior in right of payment to the Securities. For the
purposes of this definition of Senior Debt under this Indenture, it is the
intent of the parties hereto that the Securities issued under this Indenture be
"Senior Debt" (as defined under that certain Indenture, dated August 15, 1997,
between the Company and State Street Bank and Trust Company of California, N.A.
(the "Existing Notes Trustee"), as supplemented by that certain Supplemental
Trust Indenture, dated August 15, 1997, between the Company and Existing Notes
Trustee (collectively the "Existing Notes Indenture") for purposes of the
Existing Notes Indenture and 6-1/2% Convertible Subordinated Notes due September
1, 2004 issued thereunder (the "Existing Notes"), and in furtherance thereof,
the parties hereto agree that nothing contained in this Indenture or in the
definition of Senior Debt under this Indenture is meant to or shall be construed
to expressly provide that the Securities issued under this Indenture are not
superior to the Existing Notes.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation of which at least a majority of the
outstanding voting stock having the power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly, by
the Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries, and the accounts of which are consolidated with those
of the Company in its most recent consolidated financial statements in
accordance with generally accepted accounting principles. For the purposes of
this definition, "voting stock" means stock which ordinarily has voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
["Term Loan Agreement" means that certain Term Loan Agreement, dated as of
________, 199_, by and among the Company, the financial institutions named on
the signature pages thereof (the "Banks") and the Canadian Imperial Bank of
Commerce, New York Agency, as agent for the Banks, as amended by the First
Amendment to Credit Agreement dated February 5, 1998, the Second Amendment to
Credit Agreement dated as of August 10, 1998, the Waiver and Third Amendment to
Credit Agreement dated as of September 27, 1999, the Waiver and Fourth Amendment
to Credit Agreement dated as of December 29, 1999 and the Waiver, Forbearance
and Fifth Amendment to Credit Agreement dated January 28, 2000, as amended,
amended and restated, supplemented or otherwise modified from time to time.]
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
-------- -------
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
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"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate or opinion of counsel may be based,
insofar as it relates to factual
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matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instrument or
instruments delivered to the Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to give, make or
take any request, demand, authorization, direction, vote, notice, consent,
waiver or other action provided or permitted by this Indenture to be given, made
or taken by Holders of Securities of such series, provided that the
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Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities of the relevant series in
the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
--------
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
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designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing (or by
facsimile transmissions ((___) -_____), provided that oral confirmation of
receipt shall have been received) to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company, Attention: Chief Financial Officer.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
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If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert a Security at a particular conversion price shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities (other than a provision of any Security which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) or, if applicable to a
particular series of Securities, conversion need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, at the Stated Maturity or on such last day for
conversion, as the case may be.
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SECTION 114. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer, or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Securities.
SECTION 115. Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instruments.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities. Any such Board Resolution or record of such action shall have
attached thereto a true and correct copy of the form of Security referred to
therein approved by or pursuant to such Board Resolution.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
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[Insert any legend required by the Internal Revenue Code and the regulations
thereunder.]
READ-RITE CORPORATION
____________________________________________________
No. _________ $_____________
Read-Rite Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ________________________, or registered assigns, the
principal sum of ____________________ Dollars on ________________ [if the
Security is to bear interest prior to Maturity, insert -- , and to pay interest
thereon from _________ or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on _________ and
_________ in each year, commencing _________, at the rate of ___% per annum,
until the principal hereof is paid or made available for payment [if applicable,
insert -- , provided that any principal and premium, and any such installment of
interest, which is overdue shall bear interest at the rate of ___% per annum (to
the extent that the payment of such interest shall be legally enforceable), from
the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand]. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the ______ or
_______ (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of ___% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the rate
of ___% per annum (to the extent that the payment of such interest on interest
shall be legally enforceable), from the date of such demand until the amount so
demanded is paid or made available for payment. Interest on any overdue interest
shall be payable on demand.]
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Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in _________, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert -- ;
provided, however, that at the option of the Company payment of interest may be
- -------- -------
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: READ-RITE CORPORATION
By:__________________________________
Title:
Attest:
__________________________________
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of March __, 2000 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Debt and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [if applicable, insert -- , limited in aggregate principal
amount to $_________].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than [If applicable, insert -- 30] days' notice by
mail, [if applicable, insert -- (1) on _________ in any year commencing with the
year _____ and ending with the year _____ through operation of the sinking fund
for this series at a Redemption Price equal to 100% of the principal amount, and
(2)] at
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any time [if applicable, insert -- on or after _________, 19__], as a whole or
in part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed [if applicable,
insert -- on or before _________, ___%, and if redeemed] during the 12-month
period beginning ________ of the years indicated, and thereafter at a Redemption
Price equal to .% of the principal amount, together in the case of any such
redemption [if applicable, insert -- (whether through operation of the sinking
fund or otherwise)] with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.]
Redemption Redemption
Year Price Year Price
--------- ------------------ ------------ ----------- ---------------
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than [if applicable, insert -- 30] days' notice by
mail, (1) on _________ in any year commencing with the year _____ and ending
with the year _____ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below,
and (2) at any time [if applicable, insert -- on or after __________], as a
whole or in part, at the election of the Company, at the Redemption Prices for
redemption otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below: If redeemed
during the 12-month period beginning ________ of the years indicated,
Redemption Price For Redemption Price For
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Year Sinking Fund of the Sinking Fund
--------- ------------------------- -----------------------------
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert -- Notwithstanding the foregoing, the Company may
not, prior to __________, redeem any Securities of this series as contemplated
by [if applicable, insert --
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Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly, of moneys
borrowed having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than ___% per annum.]
[If applicable, insert -- The sinking fund for this series provides for the
redemption on _________, in each year beginning with the year _____ and ending
with the year _____ of [if applicable, insert -- not less than $_______
("mandatory sinking fund") and not more than] $_______ aggregate principal
amount of Securities of this series. Securities of this series acquired or
redeemed by the Company otherwise than through [if applicable, insert --
mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert -- mandatory] sinking fund payments otherwise required to be
made [if applicable, insert -- , in the inverse order in which they become
due].]
[If the Security is subject to redemption of any kind, insert -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance with certain conditions set forth in the Indenture.]
[If the Security is convertible into Common Stock of the Company, insert --
Subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before [insert date] (except that, in
case this Security or any portion hereof shall be called for redemption, such
right shall terminate with respect to this Security or portion hereof, as the
case may be, so called for redemption at the close of business on the first
Business Day next preceding the date fixed for redemption as provided in the
Indenture unless the Company defaults in making the payment due upon
redemption), to convert the principal amount of this Security (or any portion
hereof which is $1,000 or an integral multiple thereof), into fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of the Common Stock of the Company, as said shares shall be
constituted at the date of conversion, at the conversion price of $______
principal amount of Securities for each share of Common Stock, or at the
adjusted conversion price in effect at the date of conversion determined as
provided in the Indenture, upon surrender of this Security, together with the
conversion notice hereon duly executed, to the Company at the designated office
or agency of the Company in ____________, accompanied (if so required by the
Company) by instruments of transfer, in form satisfactory to the Company and to
the Trustee, duly executed by the Holder or by its duly authorized attorney in
writing. Such surrender shall, if made during any period beginning at the close
of business on a Regular Record Date and ending at the opening of business on
the Interest Payment Date next following such Regular Record Date (unless this
Security or the portion being converted shall have been called for redemption on
a Redemption Date during the period beginning at the close of business on a
Regular Record Date and ending at the opening of business on the first Business
Day after the next succeeding Interest
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Payment Date, or if such Interest Payment Date is not a Business Day, the second
such Business Day), also be accompanied by payment in funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment Date
on the principal amount of this Security then being converted. Subject to the
aforesaid requirement for payment and, in the case of a conversion after the
Regular Record Date next preceding any Interest Payment Date and on or before
such Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the Indenture), no
adjustment is to be made on conversion for interest accrued hereon or for
dividends on shares of Common Stock issued on conversion. The Company is not
required to issue fractional shares upon any such conversion, but shall make
adjustment therefor in cash on the basis of the current market value of such
fractional interest as provided in the Indenture. The conversion price is
subject to adjustment as provided in the Indenture. In addition, the Indenture
provides that in case of certain consolidations or mergers to which the Company
is a party or the sale of substantially all of the assets of the Company, the
Indenture shall be amended, without the consent of any Holders of Securities, so
that this Security, if then outstanding, will be convertible thereafter, during
the period this Security shall be convertible as specified above, only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or sale by a holder of the number of shares of Common
Stock into which this Security might have been converted immediately prior to
such consolidation, merger or sale (assuming such holder of Common Stock failed
to exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares). In the event of
conversion of this Security in part only, a new Security or Securities for the
unconverted portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.]
[If the Security is convertible into other securities of the Company,
specify the conversion features.]
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary to appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.
[If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to --insert formula for determining the
amount.
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Upon payment (i) of the amount of principal so declared due and payable and (ii)
of interest on any overdue principal, premium and interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
premium and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities
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of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $_____ and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
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<PAGE>
As Trustee
By:______________________________________
Authorized Officer
SECTION 206. Form of Conversion Notice.
Conversion notices shall be in substantially the following form:
To Read-Rite Corporation:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the opening of business on the
related Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption on a Redemption Date during the period
beginning at the close of business on a Regular Record Date and ending at the
opening of business on the first Business Day after the next succeeding Interest
Payment Date, or if such Interest Payment Date is not a Business Day, the second
such Business Day), this Notice is accompanied by payment, in funds acceptable
to the Company, of an amount equal to the interest payable on such Interest
Payment Date of the principal of this Security to be converted. If shares are to
be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect hereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.
Principal Amount to be Converted
(in an integral multiple of $1,000, if less than all)
U.S. $_______
Dated:________________________ ____________________________________________
____________________________________________
Signature(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a national stock exchange if shares
of Common Stock are to be delivered, or
Securities to be issued, other than to and
in the name of the registered owner.
____________________________________________
Signature Guaranty
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Fill in for registration of shares of Common Stock and Security if to be
issued otherwise than to the registered Holder.
________________________________ ____________________________________________
(Name) Social Security or Other Taxpayer
Identification Number
________________________________
(Address)
________________________________
Please print Name and Address
(including zip code number)
[The above conversion notice is to be modified, as appropriate, for conversion
into other securities or property of the Company.]
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the
Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to Section
304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and delivered
hereunder);
(3) the Person to whom any interest on a Security of the series shall be
payable, if other than the Person in whose name that Security (or one or more
Predecessor 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 Securities of the
series is payable;
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(5) the rate or rates at which any Securities of the series shall bear
interest, if any, the date or dates from which any such interest shall accrue,
the Interest Payment Dates on which any such interest shall 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 Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which and
the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other than
by a Board Resolution, the manner in which any election by the Company to redeem
the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous provisions 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 upon which any Securities
of the series shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(10) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall 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 Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose, including for purposes of the definition of
"Outstanding" in Section 101;
(12) if the principal of or any premium or interest on any Securities of
the series is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than that or those in
which such Securities are stated to be payable, the currency, currencies or
currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall 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 shall be
determined);
(13) if other than the entire principal amount thereof, the portion of the
principal amount of any Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
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(14) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in
any such case, the manner in which such amount deemed to be the principal amount
shall be determined);
(15) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1302 or Section 1303 or
both such Sections and, if other than by a Board Resolution, the manner in which
any election by the Company to defease such Securities shall be evidenced;
(16) if applicable, the terms of any right to convert Securities of the
series into shares of Common Stock of the Company or other securities or
property;
(17) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such case,
the respective Depositaries for such Global Securities, the form of any legend
or legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 204 and any circumstances in addition to or in
lieu of those set forth in Clause (2) of the last paragraph of Section 305 in
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 name or names of Persons other than the
Depositary for such Global Security or a nominee thereof;
(18) any addition to or change in the Events of Default which applies to
any Securities of the series and any change in the right of the Trustee or the
requisite Holders of such Securities to declare the principal amount thereof due
and payable pursuant to Section 502;
(19) any addition to or change in the covenants set forth in Article Ten
which applies to Securities of the series; and
(20) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture, except as permitted by Section 901(5)).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
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<PAGE>
The Securities shall be subordinated in right of payment to Senior Debt as
provided in Article Fifteen.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its principal financial officer,
its President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Treasurer, its Assistant Treasurer, its Secretary or one
of its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, a copy of such Board Resolution, the Officers' Certificate setting
forth the terms of the series and an Opinion of Counsel, with such Opinion of
Counsel stating,
(1) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 301, that such terms have been
established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their
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<PAGE>
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of like tenor
and aggregate
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principal amount. Until so exchanged, the temporary Securities of any series
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series and tenor.
SECTION 305. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
its attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
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The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for 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 a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (ii)
has ceased to be a clearing agency registered under the Exchange Act, (B) there
shall have occurred and be continuing an Event of Default with respect to such
Global Security or (C) there shall exist such circumstances, if any, in addition
to or in lieu of the foregoing as have been specified for this purpose as
contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
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Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
given to each Holder of Securities of such series in the manner set forth in
Section 106, not less than 10
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days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Subject to the provisions of Section 1402, in the case of any Security (or
any part thereof) which is converted after any Regular Record Date and on or
prior to the next succeeding Interest Payment Date (other than any Security the
principal of (or premium, if any, on) which shall become due and payable,
whether at Stated Maturity or by declaration of acceleration or otherwise prior
to such Interest Payment Date), interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or any one or more Predecessor Securities) is registered at the close
of business on such Regular Record Date. Except as otherwise expressly provided
in the immediately preceding sentence or in Section 1402, in the case of any
Security (or any part thereof) which is converted, interest whose Stated
Maturity is after the date of conversion of such Security (or such part thereof)
shall not be payable.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
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hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
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and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
money in an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest to the date of such deposit (in the case
of Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
Fifteen or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
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(3) default in the deposit of any sinking fund payment, when and as due by
the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this Indenture solely for the
benefit of series of Securities other than that series), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities of that
series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
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If an Event of Default (other than an Event of Default specified in Section
501(5) or 501(6)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of all the Securities of that
series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. If an Event of Default specified in Section 501(5)
or 501(6) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified by the terms
thereof) shall automatically, and without any declaration or other action on the
part of the Trustee or any Holder, become immediately due and payable. Any
payments by the Company on the Securities following any such acceleration will
be subject to the subordination provisions of Article Fifteen to the extent
provided therein.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
-------- -------
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
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SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
and
SECOND: Subject to Article Fifteen, to the payment of the amounts then due
and unpaid for principal of and any premium, if any, and interest on the
Securities in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and any premium, if
any, and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
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(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date), to convert
such Securities in accordance with Article Fourteen and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as
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often as may be deemed expedient, by the Trustee (subject to the limitations
contained in this Indenture) or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall 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 Securities of
such series, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture and the Trustee shall not have determined that the action so
directed would be unjustly prejudicial to Holders of Securities of that series,
or any other series, not taking part in such direction; and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction or this Indenture.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under Article Nine
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
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In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to convert any Security in accordance with Article
Fourteen.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the
Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
--------
however, that in the case of any default of the character specified in Section
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501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any
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Authenticating Agent assumes any responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent
shall be accountable for the use or application by the Company of Securities or
the proceeds thereof.
SECTION 605. May Hold Securities and Act as Trustee Under Other Indentures.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Subject to the limitations imposed by the Trust Indenture Act, nothing in
this Indenture shall prohibit the Trustee from becoming and acting as trustee
under other indentures under which other securities, or certificates of interest
of participation in other securities, of the Company are outstanding in the same
manner as if it were not Trustee hereunder.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
SECTION 608. Conflicting Interests.
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If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has (or if the
Trustee is a member of a bank holding company system, its bank holding company
has) a combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes of
this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee with respect to the Securities of any
series shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or
more series by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
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(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such successor Trustee may
be appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, the
retiring Trustee may petition, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of
Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect to
all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring
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Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to
the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have
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been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having (or if the Authenticating Agent is a member of a bank holding
company system, its bank holding company has) a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment with respect to one or more series is made pursuant to
this Section 612, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
As Trustee
By: ______________________________,
As Authenticating Agent
By: ______________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
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(1) semi-annually, not later than 15 days after the Regular Record Date, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities of each series as of such Regular Record
Date, as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
provided that no such list need be furnished by the Company to the Trustee so
long as the Trustee is acting as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701, if any, and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than July 1 in each calendar year,
commencing with the first July 1 after the first issuance of Securities pursuant
to this Indenture.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
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The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc. Only on Certain Terms.
The Company shall 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, unless:
(1) in case the Company shall consolidate with or merge into another
Person (in an 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, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the part of the
Company to be performed or observed and the conversion rights shall be provided
for in accordance with Article Fourteen, if applicable, or as otherwise
specified pursuant to Section 301, by supplemental indenture satisfactory in
form to the Trustee, executed and delivered to the Trustee, by the Person (if
other than the Company) formed by such consolidation or into which the Company
shall have been merged or by the Person which shall have acquired the Company's
assets;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such 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 happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture
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comply with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of Securities
in uncertificated form; or
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(5) to add to, change or eliminate any of the provisions of this Indenture
in respect of one or more series of Securities, provided that any such addition,
change or elimination (A) shall neither (i) apply to any Security of any series
created prior to the execution of such supplemental indenture and entitled to
the benefit of such provision nor (ii) modify the rights of the Holder of any
such Security with respect to such provision or (B) shall become effective only
when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611; or
(9) to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Article Fourteen, including providing for the
conversion of the securities into any security (other than the Common Stock of
the Company) or property of the Company; or
(10) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this Clause (10) shall not
adversely affect the interests of the Holders of Securities of any series in any
material respect; or
(11) to supplement any of the provisions of the Indenture to such extent as
shall be necessary to permit or facilitate the defeasance and discharge of any
series of Securities pursuant to Articles Four and Thirteen, provided that any
such action shall not adversely affect the interests of the Holders of
Securities of such series or any other series of Securities in any material
respect.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of a majority in principal amount of the
Outstanding Securities of each series affected by such supplemental indenture,
by Act of said Holders delivered to the Company and the Trustee, the Company,
when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
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supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any
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premium payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Security or any other Security which
would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 502, or change any Place of Payment where, or the
coin or currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date), or modify the provisions of this Indenture
with respect to the subordination of such series of Securities in a manner
adverse to the Holders of Securities of such series, or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or Section
1008, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; provided, however,
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that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section and Section 1008, or the deletion of this proviso, in accordance
with the requirements of Sections 611 and 901(8), or
(4) if applicable, make any change that adversely affects the right to
convert any security as provided in Article Fourteen or pursuant to Section 301
(except as permitted by Section 901(9)) or decrease the conversion rate or
increase the conversion price of any such security.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 601 and 603) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
SECTION 907. Subordination Unimpaired.
No provision in any supplemental indenture which affects the superior
position of the holders of Senior Debt shall be effective against holders of
Senior Debt.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities of that series may be
surrendered for conversion and where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be served.
The Company
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will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
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any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, on or prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
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Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for a period
ending on the earlier of the date that is ten Business Days prior to the date
such money would escheat to the State or two years after such principal, premium
or interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
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that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in each Place of Payment, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. The fiscal year of the Company ends on December
31; and the Company will give the Trustee prompt written notice of any change of
its fiscal year.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence.
SECTION 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of its
business to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as, and to the extent, in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
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Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvantageous
in any material respect to the Holders.
SECTION 1007. Payment of Taxes and Other Claims.
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The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or upon the income, profits or
property of the Company, and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company; provided, however, that the Company shall not be required to pay or
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discharge or cause to be paid or discharged any such tax, assessment, charge or
claim (i) whose amount, applicability or validity is being contested in good
faith by appropriate proceedings or (ii) if the failure to pay or discharge
would not have a material adverse effect on the assets, business, operations,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
SECTION 1008. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for Securities
of such series or in a supplemental indenture, the Company may, with respect to
the Securities of any series, omit in any particular instance to comply with any
term, provision or condition set forth in any covenant provided pursuant to
Section 301(19), 901(2), 901(7), 1006 or 1007 for the benefit of the Holders of
such series if before the time for such compliance the Holders of at least 50%
in principal amount of the Outstanding Securities of such series shall, by Act
of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution or in another manner specified as contemplated by Section 301
for such Securities. In case of any redemption at the election of the Company of
less than all the Securities of any series (including any such redemption
affecting only a single Security), the Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
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provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by lot, or in the Trustee's discretion, on
a pro-rata basis, provided that the unredeemed portion of the principal amount
of any Security shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination) for such Security. If less than all
the Securities of such series and of a specified tenor are to be redeemed
(unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
and specified tenor not previously called for redemption in accordance with the
preceding sentence.
If any Security selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption. Securities which have been
converted during a selection of Securities to be redeemed shall be treated by
the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect
to any redemption affecting only a single Security, whether such Security is to
be redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date,
unless a shorter period is specified in the Securities to be redeemed, to each
Holder of Securities to be redeemed, at its address appearing in the Security
Register.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (including accrued interest, if any),
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the identification
(and, in the case of partial redemption of any such Securities, the principal
amounts) of the particular Securities to be redeemed and, if less than all the
Outstanding Securities of any series consisting of a single Security are to be
redeemed, the principal amount of the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be surrendered
for payment of the Redemption Price,
(6) if applicable, the conversion price, that the date on which the
right to convert the principal of the Securities or the portions thereof to be
redeemed will terminate will be the Redemption Date and the place or places
where such Securities may be surrendered for conversion, and
(7) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to the right of any Holder of
such Security to receive interest as provided in the last paragraph of Section
307) be paid to the Company on Company Request, or if then held by the Company,
shall be discharged from such trust.
SECTION 1106. Securities Payable on Redemption Date.
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Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
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contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or its attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of such
Securities is herein referred to as an "optional sinking fund payment." If
provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by
the terms of such Securities.
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SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to any Securities of such series required to be made pursuant to the terms of
such Securities as and to the extent provided for by the terms of such
Securities; provided that the Securities to be so credited have not been
previously so credited. The Securities to be so credited shall be received and
credited for such purpose by the Trustee at the Redemption Price, as specified
in the Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the case
may be, designated pursuant to Section 301 as being defeasible pursuant to such
Section 1302 or 1303, in accordance with any applicable requirements provided
pursuant to Section 301 and upon compliance with the conditions set forth below
in this Article. Any such election shall be evidenced by a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities.
SECTION 1302. Defeasance and Discharge.
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Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations, and the
provisions of Article Fifteen shall cease to be effective, with respect to such
Securities as provided in this Section on and after the date the conditions set
forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Securities and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), subject to
the following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Securities to receive, solely from
the trust fund described in Section 1304 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and interest on
such Securities when payments are due, (2) the Company's obligations with
respect to such Securities under Sections 304, 305, 306, 1002 and 1003, and, if
applicable, Article Fourteen, (3) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (4) this Article. Subject to compliance
with this Article, the Company may exercise its option (if any) to have this
Section applied to any Securities notwithstanding the prior exercise of its
option (if any) to have Section 1303 applied to such Securities.
SECTION 1303. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Company shall be released from its obligations under Sections 1006 through
1007, inclusive, and any covenants provided pursuant to Section 301(19), 901(2)
or 901(7) for the benefit of the Holders of such Securities and (2) the
occurrence of any event specified in Sections 501(4) (with respect to any of
Sections 1006 through 1007, inclusive, and any such covenants provided pursuant
to Section 301(19), 901(2) or 901(7)), shall be deemed not to be or result in an
Event of Default, and (3) the provisions of Article Fifteen shall cease to be
effective, in each case with respect to such Securities as provided in this
Section on and after the date the conditions set forth in Section 1304 are
satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that, with respect to such Securities, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section (to the extent
so specified in the case of Section 501(4)) or Article Fifteen, whether directly
or indirectly by reason of any reference elsewhere herein to any such Section or
Article or by reason of any reference in any such Section or Article to any
other provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the requirements
contemplated by Section 609 and agrees
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to comply with the provisions of this Article applicable to it) as trust funds
in trust for the purpose of making the following payments, specifically pledged
as security for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (C) a combination thereof, in each
case sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or any
such other qualifying trustee) to pay and discharge, the principal of and any
premium and interest on such Securities on the respective Stated Maturities, in
accordance with the terms of this Indenture and such Securities. As used herein,
"U.S. Government Obligation" means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified in
Clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest evidenced
by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the date of this instrument, there has been a change in
the applicable Federal income tax law, in either case (A) or (B) to the effect
that, and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit,
Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize gain or loss for Federal income
tax purposes as a result of the deposit and Covenant Defeasance to be effected
with respect to such Securities and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would be the case if
such deposit and Covenant Defeasance were not to occur.
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(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other Securities
of the same series, if then listed on any securities exchange, will be delisted
as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such deposit or,
with regard to any such event specified in Sections 501(5) and (6), at any time
on or prior to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to
have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Securities are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act unless such trust shall be registered under such
Act or exempt from registration thereunder.
(9) At the time of such deposit, (A) no default in the payment of any
principal of or premium or interest on any Senior Debt shall have occurred and
be continuing, (B) no event of default with respect to any Senior Debt shall
have resulted in such Senior Debt becoming, and continuing to be, due and
payable prior to the date on which it would otherwise have become due and
payable (unless payment of such Senior Debt has been made or duly provided for),
and (C) no other event of default with respect to any Senior Debt shall have
occurred and be continuing permitting (after notice or lapse of time or both)
the holders of such Senior Debt (or a trustee on behalf of such holders) to
declare such Senior Debt due and payable prior to the date on which it would
otherwise have become due and payable.
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1305. Deposited Money and U.S. Government Obligations to be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1306, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent
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(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal and any premium and interest, but money so held
in trust need not be segregated from other funds except to the extent required
by law. Money and U.S. Government Obligations so held in trust shall not be
subject to the provisions of Article Fifteen.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in Section 1304 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1305 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
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any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
ARTICLE FOURTEEN
CONVERSION OF SECURITIES
SECTION 1401. Applicability of Article.
The provisions of this Article shall be applicable to the Securities of any
series which are convertible into shares of Common Stock of the Company, and the
issuance of such shares of Common Stock upon the conversion of such Securities,
except as otherwise specified as contemplated by Section 301 for the Securities
of such series.
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SECTION 1402. Exercise of Conversion Privilege.
In order to exercise a conversion privilege, the Holder of a Security of a
series with such a privilege shall surrender such Security to the Company at the
office or agency maintained for that purpose pursuant to Section 1002,
accompanied by a duly executed conversion notice to the Company substantially in
the form set forth in Section 206 stating that the Holder elects to convert such
Security or a specified portion thereof. Such notice shall also state, if
different from the name and address of such Holder, the name or names (with
address) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued. Securities
surrendered for conversion shall (if so required by the Company or the Trustee)
be duly endorsed by or accompanied by instruments of transfer in forms
satisfactory to the Company and the Trustee duly executed by the registered
Holder or its attorney duly authorized in writing; and Securities so surrendered
for conversion (in whole or in part) during the period from the close of
business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date (excluding Securities or portions thereof
called for redemption during the period beginning at the close of business on a
Regular Record Date and ending at the opening of business on the first Business
Day after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
such Security then being converted, and such interest shall be payable to such
registered Holder notwithstanding the conversion of such Security, subject to
the provisions of Section 307 relating to the payment of Defaulted Interest by
the Company. As promptly as practicable after the receipt of such notice and of
any payment required pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto setting forth the
terms of such series of Security, and the surrender of such Security in
accordance with such reasonable regulations as the Company may prescribe, the
Company shall issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written order, a certificate
or certificates for the number of full shares of Common Stock issuable upon the
conversion of such Security (or specified portion thereof), in accordance with
the provisions of such Board Resolution, Officers' Certificate or supplemental
indenture, and cash as provided therein in respect of any fractional share of
such Common Stock otherwise issuable upon such conversion. Such conversion shall
be deemed to have been effected immediately prior to the close of business on
the date on which such notice and such payment, if required, shall have been
received in proper order for conversion by the Company and such Security shall
have been surrendered as aforesaid (unless such Holder shall have so surrendered
such Security and shall have instructed the Company to effect the conversion on
a particular date following such surrender and such Holder shall be entitled to
convert such Security on such date, in which case such conversion shall be
deemed to be effected immediately prior to the close of business on such date)
and at such time the rights of the Holder of such Security as such Security
Holder shall cease and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock of the Company shall be
issuable upon such conversion shall be deemed to have become the Holder or
Holders of record of the shares represented thereby. Except as set forth above
and subject to the final paragraph of Section 307, no payment or adjustment
shall be made upon any conversion on account of any
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interest accrued on the Securities (or any part thereof) surrendered for
conversion or on account of any dividends on the Common Stock of the Company
issued upon such conversion.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the Company,
a new Security or Securities of the same series, of authorized denominations, in
aggregate principal amount equal to the unconverted portion of such Security.
SECTION 1403. No Fractional Shares.
No fractional share of Common Stock of the Company shall be issued upon
conversions of Securities of any series. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Securities (or specified portions thereof
to the extent permitted hereby) so surrendered. If, except for the provisions of
this Section 1403, any Holder of a Security or Securities would be entitled to a
fractional share of Common Stock of the Company upon the conversion of such
Security or Securities, or specified portions thereof, the Company shall pay to
such Holder an amount in cash equal to the current market value of such
fractional share computed, (i) if such Common Stock is listed or admitted to
unlisted trading privileges on a national securities exchange or market, on the
basis of the last reported sale price regular way on such exchange or market on
the last trading day prior to the date of conversion upon which such a sale
shall have been effected, or (ii) if such Common Stock is not at the time so
listed or admitted to unlisted trading privileges on a national securities
exchange or market, on the basis of the average of the bid and asked prices of
such Common Stock in the over-the-counter market, on the last trading day prior
to the date of conversion, as reported by the National Quotation Bureau,
Incorporated or similar organization if the National Quotation Bureau,
Incorporated is no longer reporting such information, or if not so available,
the fair market price as determined by the Board of Directors. For purposes of
this Section, "trading day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday other than any day on which the Common Stock is not traded on the
Nasdaq National Market, or if the Common Stock is not traded on the Nasdaq
National Market, on the principal exchange or market on which the Common Stock
is traded or quoted.
SECTION 1404. Adjustment of Conversion Price.
The conversion price of Securities of any series that is convertible into
Common Stock of the Company shall be adjusted for any stock dividends, stock
splits, reclassifications, combinations or similar transactions in accordance
with the terms of the supplemental indenture or Board Resolutions setting forth
the terms of the Securities of such series.
Whenever the conversion price is adjusted, the Company shall compute the
adjusted conversion price in accordance with terms of the applicable Board
Resolution or supplemental indenture and shall prepare an Officers' Certificate
setting forth the adjusted conversion price and showing in reasonable detail the
facts upon which such adjustment is based, and such certificate
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shall forthwith be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 1002 and, if different, with the
Trustee. The Company shall forthwith cause a notice setting forth the adjusted
conversion price to be mailed, first class postage prepaid, to each Holder of
Securities of such series at its address appearing on the Security Register and
to any conversion agent other than the Trustee.
SECTION 1405. Notice of Certain Corporate Actions.
In case:
(1) the Company shall declare a dividend (or any other distribution) on
its Common Stock payable otherwise than in cash out of its retained earnings
(other than a dividend for which approval of any shareholders of the Company is
required) that would require an adjustment pursuant to Section 1404; or
(2) the Company shall authorize the granting to all or substantially all
of the holders of its Common Stock of rights, options or warrants to subscribe
for or purchase any shares of capital stock of any class or of any other rights
(other than any such grant for which approval of any shareholders of the Company
is required); or
(3) of any reclassification of the Common Stock of the Company (other than
a subdivision or combination of its outstanding shares of Common Stock, or of
any consolidation, merger or share exchange to which the Company is a party and
for which approval of any shareholders of the Company is required), or of the
sale of all or substantially all of the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company;
then the Company shall cause to be filed with the Trustee, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 20 days (or 10 days in any case specified in Clause
(1) or (2) above) prior to the applicable record date hereinafter specified, a
notice stating (i) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights, options or warrants, or, if a record is not
to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, options or warrants are to be
determined, or (ii) the date on which such reclassification, consolidation,
merger, share exchange, sale, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, dissolution,
liquidation or winding up. If at any time the Trustee shall not be the
conversion agent, a copy of such notice shall also forthwith be filed by the
Company with the Trustee.
SECTION 1406. Reservation of Shares of Common Stock.
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The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock of the Company then issuable upon the conversion of all outstanding
Securities of any series that has conversion rights.
SECTION 1407. Payment of Certain Taxes Upon Conversion.
Except as provided in the next sentence, the Company will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of its
Common Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of its Common Stock in a
name other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax,
or has established, to the satisfaction of the Company, that such tax has been
paid.
SECTION 1408. Nonassessability.
The Company covenants that all shares of its Common Stock which may be
issued upon conversion of Securities will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.
SECTION 1409. Provision in Case of Consolidation, Merger or Sale of Assets.
In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security of a series then Outstanding that is convertible into Common Stock
of the Company shall have the right thereafter (which right shall be the
exclusive conversion right thereafter available to said Holder), during the
period such Security shall be convertible, to convert such Security only into
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by a holder of the
number of shares of Common Stock of the Company into which such Security might
have been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or lease, assuming such holder of Common Stock of the Company (i)
is not a Person with which the Company consolidated or merged with or into or
which merged into or with the Company or to which such conveyance, sale,
transfer or lease was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease (provided that if the kind or amount of securities, cash and other
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property receivable upon such consolidation, merger, conveyance, sale, transfer,
or lease is not the same for each share of Common Stock of the Company held
immediately
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prior to such consolidation, merger, conveyance, sale, transfer or lease by
others than a Constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised ("Non-electing Share"),
then for the purpose of this Section 1409 the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, conveyance,
sale, transfer or lease by the holders of each Non-electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
Non-electing Shares). Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article or in accordance with the terms of the
supplemental indenture or Board Resolutions setting forth the terms of such
adjustments. The above provisions of this Section 1409 shall similarly apply to
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security of a series that is convertible into
Common Stock of the Company as provided in Section 106 promptly upon such
execution.
Neither the Trustee nor any conversion agent, if any, shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities of a series convertible into Common Stock of the Company upon the
conversion of their Securities after any such consolidation, merger, conveyance,
transfer, sale or lease or to any such adjustment, but may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, an Opinion of Counsel with respect thereto, which the Company
shall cause to be furnished to the Trustee upon request.
SECTION 1410. Duties of Trustee Regarding Conversion.
Neither the Trustee nor any conversion agent shall at any time be under any
duty or responsibility to any Holder of Securities of any series that is
convertible into Common Stock of the Company to determine whether any facts
exist which may require any adjustment of the conversion price, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, whether herein or in any supplemental indenture, any
resolutions of the Board of Directors or written instrument executed by one or
more officers of the Company provided to be employed in making the same. Neither
the Trustee nor any conversion agent shall be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock of the
Company, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Securities and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Subject to the
provisions of Section 601, neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of its Common Stock or stock certificates or other securities or property
upon the surrender of any Security for the purpose of conversion or to comply
with any of the covenants of the Company contained in this Article Fourteen or
in the applicable supplemental indenture, resolutions of the Board of Directors
or written instrument executed by one or more duly authorized officers of the
Company.
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SECTION 1411. Repayment of Certain Funds Upon Conversion.
Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other paying agent for the purpose of paying
the principal of, and premium, if any, and interest, if any, on any of the
Securities (including, but not limited to, funds deposited for the sinking fund
referred to in Article Twelve hereof and funds deposited pursuant to Article
Thirteen hereof) and which shall not be required for such purposes because of
the conversion of such Securities as provided in this Article Fourteen shall
after such conversion be repaid to the Company by the Trustee upon the Company's
written request.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. Securities Subordinate to Senior Debt.
Except as otherwise provided in a supplemental indenture or pursuant to
Section 301, the Company covenants and agrees, and each Holder of a Security, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the indebtedness
represented by the Securities and the payment of the principal of and any
premium and interest on each and all of the Securities or on the account of the
purchase, redemption or other acquisition of the Securities or constituting a
sinking fund or defeasance payment by the Company to the Trustee or any Paying
Agent, as the case may be, in accordance with Article Twelve or Article
Thirteen, respectively, on the Securities are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior Debt.
Notwithstanding the foregoing, this Article Fifteen shall not apply to the
application of any amounts deposited with the Trustee or any Paying Agent
pursuant to any sinking fund requirement or defeasance which, at the time such
amounts were deposited with the Trustee or Paying Agent, as the case may be,
such deposits were not prohibited by the provisions of this Article Fifteen
("Previous Payments").
The expressions "prior payment in full," "payment in full" and "paid in
full" and any other similar term or phrase when used in this Article Fifteen
with respect to Senior Debt shall mean in the case of Senior Debt consisting of
contingent obligations in respect of letters of credit (or local guaranties, as
applicable), bankers' acceptances, interest rate protection agreements or
currency exchange or purchase agreements, the setting apart of cash or other
payment acceptable to holders of such Senior Debt sufficient to discharge such
portion of Senior Debt in an account for the exclusive benefit of the holders
thereof, in which account such holders shall be granted by the Company a first
priority perfected security interest, which first priority perfected security
interest shall have been retained by the holders of Senior Debt for a period of
time in excess of all applicable preference or other similar periods, if any,
under applicable bankruptcy, insolvency or creditors' rights laws.
SECTION 1502. Payment Over of Proceeds Upon Dissolution, Etc.
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In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization, debt restructuring or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshaling of assets and liabilities of the Company, then
and in any such event the holders of Senior Debt shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Debt in cash or other payment satisfactory to the holders of Senior Debt
before the Holders of the Securities are entitled to receive any payment on
account of principal of or any premium or interest on the Securities or on the
account of the purchase, redemption or other acquisition of Securities or
constituting a sinking fund or defeasance payment by the Company to the Trustee
or the Paying Agent, as the case may be, in accordance with Article Twelve or
Article Thirteen, respectively, on the Securities (other than Previous
Payments), and to that end the holders of Senior Debt or their representative or
representatives or the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Debt may have been issued shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
which may be payable or deliverable in respect of the Securities in any such
case, proceeding, dissolution, liquidation or other winding up or event, to the
extent necessary to pay all Senior Debt in full in cash or other payment
satisfactory to the holders of Senior Debt, after giving effect to any
concurrent payment or distribution to or for the holders of other Senior Debt.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, before all Senior Debt is paid in full
in cash or other payment satisfactory to the holders of Senior Debt then, and in
such event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior Debt
remaining unpaid, to the extent necessary to pay all Senior Debt in full, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Debt.
For purposes of this Article only, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which are subordinated in right of
payment to all Senior Debt which may at the time be outstanding to substantially
the same extent as, or to a greater extent than, the Securities are so
subordinated as provided in this Article. The consolidation of the Company
with, or the merger of the Company into, another Person or the liquidation or
dissolution of the Company following the conveyance or transfer of its
properties and assets substantially as an entirety to another Person upon the
terms and conditions set forth in Article Eight shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshaling of assets and liabilities of the Company for the
purposes of this Section if the Person formed by such consolidation or into
which the Company is merged or which acquires by conveyance or transfer such
properties and assets
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substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
SECTION 1503. Prior Payment to Senior Debt Upon Acceleration of Securities.
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of the Senior Debt
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full in cash or other payment satisfactory to the
holders of Senior Debt of all amounts due or to become due on or in respect of
all Senior Debt before the Holders of the Securities are entitled to receive any
payment by the Company on account of the principal of or any premium or interest
on the Securities or on account of the purchase, redemption or other acquisition
of Securities or constituting a sinking fund or defeasance payment by the
Company to the Trustee or the Paying Agent, as the case may be, in accordance
with Article Twelve or Article Thirteen, respectively, on the Securities (other
than Previous Payments); provided, however, that nothing in this Section shall
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prevent the satisfaction of any sinking fund payment in accordance with Article
Twelve by delivering and crediting pursuant to Section 1202 Securities which
have been acquired (upon redemption or otherwise) prior to such declaration of
acceleration or which have been converted pursuant to Article Fourteen; provided
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further that the Holders of the Securities shall be entitled to receive payment
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on the Securities to the extent such acceleration is rescinded in accordance
with the terms of this Indenture. If the payment of Securities is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Debt of the acceleration.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 1502 would be applicable.
SECTION 1504. No Payment in Certain Circumstances.
The Company may not make any payment of principal of, or premium, if any,
or interest on the Securities on or account of the purchase, redemption or other
acquisition of Securities or constituting a sinking fund or defeasance payment
by the Company to the Trustee or the Paying Agent, as the case may be, in
accordance with Article Twelve or Article Thirteen, respectively, on the
Securities (other than Previous Payments), if:
(i) a default in the payment of principal, premium, if any, or
interest (including a default under any redemption or repurchase
obligation) or other amounts with respect to any Senior Debt occurs and is
continuing (or, in the case of Senior Debt for which there is a period of
grace, in the event of such a default that continues beyond the period of
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grace, if any, specified in the instrument or lease evidencing such Senior
Debt) unless and until such default shall have been cured or waived or
shall have ceased to exist; or
(ii) a default, other than a payment default, on any Designated
Senior Debt occurs and is continuing that then permits holders of such
Designated Senior Debt to accelerate its maturity and the Trustee receives
a notice of the default (a "Payment Blockage Notice") from the Company, a
holder such Designated Senior Debt or a Representative of such Designated
Senior Debt.
; provided, however, that nothing in this Section shall prevent the satisfaction
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of any sinking fund payment in accordance with Article Twelve by delivering and
crediting pursuant to Section 1202 Securities which have been acquired (upon
redemption or otherwise) prior to such declaration of acceleration or which have
been converted pursuant to Article Fourteen.
If the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice. No
nonpayment default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee (unless such default was waived, cured or
otherwise ceased to exist and thereafter subsequently reoccurred) shall be, or
be made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in respect
of the Securities and may purchase, redeem or otherwise acquire Securities and
may make a sinking fund or defeasance payment to the Trustee or Paying Agent, as
the case may be, in accordance with Article Twelve or Article Thirteen,
respectively, on the Securities, upon the earlier of:
(1) the date upon which the default is cured or waived or ceases to exist,
or
(2) in the case of a default referred to in clause (ii) above, 179 days
pass after the Payment Blockage Notice is received,unless this Article Fifteen
otherwise prohibits the payment, distribution, purchase, redemption,
acquisition, sinking fund payment or defeasance payment at the time of such
payment, distribution, purchase, redemption, acquisition, sinking fund payment
or defeasance payment (including, without limitation, in the case of a default
referred to in clause (ii) above, as a result of a payment default with respect
to the applicable Senior Debt as a consequence of the acceleration of the
maturity thereof or otherwise).
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
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The provisions of this Section shall not apply to any payment with respect
to which Section 1502 would be applicable.
SECTION 1505. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
debt restructuring, assignment for the benefit of creditors or other marshaling
of assets and liabilities of the Company referred to in Section 1502 or under
the conditions described in Section 1503 or 1504, from making payments at any
time of principal of and any premium or interest on the Securities or on the
account of the purchase, redemption or other acquisition of Securities, or (b)
the application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of and any premium or interest on the
Securities or on the account of the purchase, redemption or other acquisition of
Securities, or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 1506. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all Senior Debt, the Holders of the
Securities shall be subrogated to the rights of the holders of such Senior Debt
to receive payments and distributions of cash, property and securities
applicable to the Senior Debt until the principal of and any premium and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt of
any cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt.
SECTION 1507. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Debt on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under this
Article of the holders of Senior Debt, is intended to rank equally with all
other general obligations of the Company), to pay to the Holders of the
Securities the principal of and any premium and interest on the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior Debt;
or (c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any,
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<PAGE>
under this Article of the holders of Senior Debt to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1508. Trustee to Effectuate Subordination.
Each Holder of a Security by its acceptance thereof authorizes and directs
the Trustee on its behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee its attorney-in-fact for any and all such purposes.
SECTION 1509. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any non-compliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise dispose of any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 1510. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee or other Representative
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
-------- -------
not have received the notice provided for in this Section at least two Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of and any premium or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and
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<PAGE>
to apply the same to the purpose for which such money was received and shall not
be affected by any notice to the contrary which may be received by it within two
Business Days prior to such date.
Subject to the provisions of Section 601, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt (or a trustee or other Representative therefor) to
establish that such notice has been given by a holder of Senior Debt (or a
trustee or other Representative therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Debt to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Debt held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 1511. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1512. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be
liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article or otherwise.
SECTION 1513. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Debt which may at any time
be held by it, to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
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<PAGE>
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1514. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that
-------- -------
Section 1512 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
SECTION 1515. Certain Conversions Deemed Payment.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article
Fourteen shall not be deemed to constitute a payment or distribution on account
of the principal of or any premium or interest on Securities or on account of
the purchase, redemption or other acquisition of Securities, and (2) the
payment, issuance or delivery of cash, property or securities (other than junior
securities and cash paid for fractional shares) upon conversion of a Security
shall be deemed to constitute payment on account of the principal of such
Security. For the purposes of this Section, the term "junior securities" means
(a) shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to all Senior Debt which may
be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.
SECTION 1516. Obligations of Company and Right to Convert Unconditional.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Debt and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and any premium and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of Senior Debt, nor shall
anything herein or therein prevent the Trustee or the Holder of any Securities
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Debt in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Debt and the Holders of the Securities, the right,
which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article Fourteen (if applicable).
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<PAGE>
SECTION 1517. Reliance by Holders of Senior Indebtedness on Subordination
Provisions.
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt and such
holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt, and no amendment or modification of the provisions
contained herein shall diminish the rights of such holders of Senior Debt unless
such holders shall have agreed in writing hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
READ-RITE CORPORATION
By: ______________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: ______________________________________
Name:
Title:
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<PAGE>
Read-Rite Corporation
Certain Sections of this Indenture relating to Sections 310
through 318, inclusive, of the Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
----------------- -----------
(S)310 (a)(1) ............................... 609
(a)(2) ............................... 609
(a)(3) ............................... Not Applicable
(a)(4) ............................... Not Applicable
(b) ............................... 608, 610
(S)311 (a) ............................... 613
(b) ............................... 613
(S)312 (a) ............................... 701, 702
(b) ............................... 702
(c) ............................... 702
(S)313 (a) ............................... 703
(b) ............................... 703
(c) ............................... 703
(d) ............................... 703
(S)314 (a) ............................... 704
(a)(4) ............................... 101, 1004
(b) ............................... Not Applicable
(c)(1) ............................... 102
(c)(2) ............................... 102
(c)(3) ............................... Not Applicable
(d) ............................... Not Applicable
(e) ............................... 102
(S)315 (a) ............................... 601
(b) ............................... 602
(c0 ............................... 601
(d) ............................... 601
(e) ............................... 514
(S)316 (a) ............................... 101
(a)(1)(A) ............................... 502, 512
(a)(1)(B) ............................... 513
(a)(2) ............................... Not Applicable
(b) ............................... 508
(c) ............................... 104
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<PAGE>
(S)317 (a)(1) ............................... 503
(a)(2) ............................... 504
(b) ............................... 1003
(S)318 (a) ............................... 107
____________________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
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<PAGE>
EXHIBIT 4.2
Read-Rite Corporation
and
Norwest Bank Minnesota, National Association
Trustee
Supplemental Trust Indenture
Dated as of March __, 2000
Supplementing that certain
Indenture
Dated as of March __, 2000
Authorizing the Issuance and Delivery of
Subordinated Debt Securities
10% Convertible Notes due September 1, 2004
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE ISSUANCE OF NOTES............................................. 2
Section 101 Issuance of Notes; Principal Amount; Maturity.......... 2
Section 102 Interest on the Notes; Payment of Interest............. 2
ARTICLE TWO CERTAIN DEFINITIONS........................................... 3
Section 201 Certain Definitions.................................... 3
ARTICLE THREE CERTAIN COVENANTS........................................... 5
Section 301 Registration and Listing............................... 6
ARTICLE FOUR REDEMPTION OF NOTES.......................................... 6
Section 401 Right of Redemption.................................... 6
Section 402 Conversion Arrangement on Call for Redemption.......... 6
ARTICLE FIVE CONVERSION OF NOTES.......................................... 7
Section 501 Conversion Privilege and Conversion Rate............... 7
Section 502 Adjustment of Conversion Rate.......................... 7
Section 503 Automatic Conversion................................... 12
ARTICLE SIX REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL.................................................... 14
Section 601 Right to Require Repurchase............................ 14
Section 602 Conditions to the Company's Election to Pay the
Repurchase Price in Common Stock....................... 15
Section 603 Notices; Method of Exercising Repurchase Right, Etc.... 16
Section 604 Certain Definitions.................................... 18
Section 605 Consolidation, Merger, etc............................. 20
ARTICLE SEVEN EVENT OF DEFAULT............................................ 20
Section 701 Event of Default....................................... 20
ARTICLE EIGHT SUBORDINATION............................................... 21
ARTICLE NINE MISCELLANEOUS................................................ 21
Section 901 Consent of Holders Required............................ 21
Section 902 Applicability of Certain Indenture Provisions.......... 21
Section 903 Reference to and Effect on the Indenture............... 21
Section 904 Waiver of Certain Covenants............................ 22
Section 905 Supplemental Indenture May be Executed In
Counterparts........................................... 22
Section 906 Effect of Headings..................................... 22
Section 907 Separability........................................... 22
</TABLE>
i
<PAGE>
This Supplemental Trust Indenture, dated as of March __, 2000 (the
"Supplemental Indenture"), between Read-Rite Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and Norwest Bank Minnesota, National Association, a national banking association
organized and existing under the laws of the United States of America, as
Trustee (the "Trustee"), supplementing that certain Indenture, dated as of March
__, 2000, between the Company and the Trustee (such Indenture, as supplemented
by this Supplemental Indenture for this series of Securities, being referred to
herein as the "Indenture").
Recitals
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes, or other evidences of indebtedness to be issued in one or
more series as provided for in the Indenture heretofore executed and delivered
B. The Indenture heretofore executed and delivered provides that the
Securities of each series shall be in substantially the form set forth in the
Indenture heretofore executed and delivered, or in such other form as may be
established by or pursuant to a Board Resolution or in one or more supplemental
indentures thereto, in each case with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by the
Indenture, and may have such letters, numbers, or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined to be required by the officers executing such securities, as
evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall issue
and deliver, and the Trustee shall authenticate, Securities denominated "10%
Convertible Subordinated Notes due September 1, 2004" (the "Notes") pursuant to
the terms of this Supplemental Indenture and substantially in the form set forth
below, in each case with such appropriate insertions, omissions, substitutions,
and other variations as are required or permitted by the Indenture heretofore
executed and delivered and this Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
<PAGE>
ARTICLE ONE
ISSUANCE OF NOTES.
Section 101 Issuance of Notes; Principal Amount; Maturity.
---------------------------------------------
(a) On March __, 2000, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Notes substantially in the form set
forth in Exhibit A, in each case with such appropriate insertions, omissions,
---------
substitutions and other variations as are required or permitted by the Indenture
and this Supplemental Indenture, and with such letters, numbers, or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(b) There is hereby authorized a series of Securities designated "10%
Convertible Subordinated Notes due September 1, 2004" limited in aggregate
principal amount of $__________. The Notes shall mature on September 1, 2004,
which shall be the Stated Maturity of the Notes.
Section 102 Interest on the Notes; Payment of Interest.
------------------------------------------
(a) The Notes shall bear interest at the rate of 10% per annum from and
including March __, 2000 until the principal amount thereof is due and at a rate
of 10% per annum on any overdue principal and premium, if any, and, to the
extent permitted by law, on any overdue interest.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall, as provided in such Indenture, be paid, in
cash or, at the Company's election, in Common Stock to the Person in whose name
a Note is registered at the close of business on the Regular Record Date for
such interest, which shall be the February 15 or August 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
The Company may elect to pay the Additional Interest by delivery of shares of
Common Stock pursuant to this Section 201 if and only if the following
conditions shall have been satisfied:
(1) The shares of Common Stock deliverable in payment of the
interest shall have a fair market value as of the Interest Payment Date of not
less than the interest as determined by Section 102 hereof. For purposes of this
Section 102, the fair market value of shares of Common Stock shall be determined
by the Company and shall be equal to 90% of the average of the Closing Price
Per Share for the five consecutive Trading Days immediately preceding the second
Trading Day prior to the Interest Payment Date;
(2) Interest shall be paid only in cash in the event any shares of
Common Stock to be issued for the payment of interest in the Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferrable without being subject to any transfer restrictions under
the Securities Act upon issuance and if such registration is not completed or
does not become effective prior to the Interest Payment Date, and/or (ii)
require registration with or approval of any governmental authority under any
state law or any other federal law before such
2
<PAGE>
shares may be validly issued or delivered upon issuance and if such registration
is not completed or does not become effective or such approval is not obtained
prior to the Interest Payment Date;
(3) The Common Stock is, or shall have been, approved for quotation
on the Nasdaq National Market or listing on the New York Stock Exchange, in
either case, prior to the Interest Payment Date; and
(4) All shares of Common Stock which may be issued with respect to
the payment of interest on the Notes will be issued out of the Company's
authorized but unissued Common Stock and, will upon issue, be duly and validly
issued and fully paid and non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 102(b) are not satisfied
in accordance with the terms thereof, the interest required to be paid or duly
provided for by the Company pursuant to this Section shall be paid by the
Company only in cash.
(c) Payment of the principal of (and premium, if any) and any interest on
the Notes shall be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York (which shall
initially be [Norwest Bank Minnesota, National Association], an [Affiliate of
the Trustee]) or at the Corporate Trust Office of the Trustee in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
-------- -------
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register.
The Company hereby initially designates the Trustee as Paying Agent,
Security Registrar, custodian and conversion agent and the Corporate Trust
Office and the office of [Norwest Bank Minnesota, National Association], an
[Affiliate of the Trustee] located at ____________________ __________________)
as the offices or agencies where the Notes may be surrendered for transfer or
exchange or for presentation for payment or for conversion, redemption or
repurchase and where notices and demands to or upon the Company in respect of
the Notes or this Supplemental Indenture may be received.
ARTICLE TWO
CERTAIN DEFINITIONS.
Section 201 Certain Definitions.
-------------------
The terms defined in this Section 201 (except as herein otherwise expressly
provided or unless the context of this Supplemental Indenture otherwise
requires) for all purposes of this Supplemental Indenture and of any indenture
supplemental hereto have the respective meanings specified in this Section 201.
All other terms used in this Supplemental Indenture that are defined in the
Indenture or the Trust Indenture Act, either directly or by reference therein
(except as herein otherwise expressly provided or unless the context of this
Supplemental Indenture otherwise requires), have the respective meanings
assigned to such terms in the Indenture or the Trust
3
<PAGE>
Indenture Act, as the case may be, as in force at the date of this Supplemental
Indenture as originally executed.
"Automatic Conversion" shall have the meaning specified in Section 503 of
this Supplemental Indenture.
"Automatic Conversion Date," when used with respect to any Note subject to
Automatic Conversion, means the date fixed for such Automatic Conversion by or
pursuant to this Supplemental Indenture.
"Automatic Conversion Notice" shall have the meaning specified in Section
503 of this Supplemental Indenture.
"Change of Control" has the meaning specified in Section 604 of this
Supplemental Indenture.
"Closing Price Per Share" means, with respect to the Common Stock of the
Company, for any day, the reported last sales price regular way per share or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case (i) on the New York
Stock Exchange as reported in The Wall Street Journal (or other similar
newspaper) for New York Stock Exchange Composite Transactions or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the principal
(as determined by the Company's Board of Directors) national securities exchange
on which the Common Stock is listed or admitted to trading or (ii) if not listed
or admitted to trading on any national securities exchange, on the Nasdaq
National Market, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose. If no such prices are available, the Closing
Price Per Share shall be the fair value of a share as determined by the Board of
Directors of the Company.
4
<PAGE>
"Conversion Price" shall equal $1,000 divided by the Conversion Rate.
"Conversion Rate" has the meaning specified in Section 501 of this
Supplemental Indenture.
"Redemption Date", when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Supplemental
Indenture.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Supplemental
Indenture.
"Repurchase Date" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Repurchase Price" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Rights" shall mean "Rights" as such term is defined in the Rights
Agreement.
"Rights Agreement" means that certain Preferred Shares Rights Agreements,
dated as of March 3, 1997, between the Company and Chase Mellon Shareholder
Service, L.L.C., as amended from time to time.
"Trading Days" means (i) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business or (ii) if the Common Stock is quoted
on the Nasdaq National Market or any similar system of automated dissemination
of quotations of securities prices, days on which trades may be made on such
system or (iii) if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq National Market or similar
system, days on which the Common Stock is traded regular way in the over-the-
counter market and for which a closing bid and a closing asked price for the
Common Stock are available.
The definitions of other terms are specified in Article Five and Article
Six.
ARTICLE THREE
CERTAIN COVENANTS.
The following covenant shall be applicable to the Company for so long as
any of the Notes are outstanding.
Section 301 Registration and Listing.
------------------------
The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the Exchange
Act and state securities and Blue Sky laws) before the shares of Common Stock
issuable upon conversion of Notes may be lawfully issued and delivered, and
thereafter publicly traded, and qualified or listed as contemplated by clause
(ii); and (ii) will list the shares of Common Stock required to be issued and
delivered upon conversion of the Notes prior
5
<PAGE>
to such issuance or delivery on the Nasdaq National Market or such other
exchange or automated quotation as the Common Stock is then listed at such date
of conversion.
ARTICLE FOUR
REDEMPTION OF NOTES
Section 401 Right of Redemption.
-------------------
The Notes may be redeemed in accordance with the provisions of the form of
Security set forth herein.
Section 402 Conversion Arrangement on Call for Redemption.
---------------------------------------------
In connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more nationally
recognized investment bankers to purchase such Notes by paying to the Trustee in
trust for the Holders, on or before the date fixed for redemption, an amount not
less than the applicable Redemption Price, together with interest accrued to
(but excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained herein, the obligation of the Company to pay
the Redemption Price of such Notes, together with interest accrued to (but
excluding) the Redemption Date, shall be deemed to be satisfied and discharged
to the extent such amount is so paid by such purchasers. If such an agreement
is entered into, a copy of which will be filed with the Trustee prior to the
Redemption Date, any Notes not duly surrendered for conversion by the Holders
thereof may, at the option of the Company, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained herein) surrendered by such
purchasers for conversion, all as of immediately prior to the close of business
on the Redemption Date (and the right to convert any such Notes shall be
extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it in the same manner as it would monies deposited
with it by the Company for the redemption of Notes. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Notes shall increase or otherwise affect any of
the powers, duties, responsibilities or obligations of the Trustee as set forth
in this Indenture, and the Company agrees to indemnify the Trustee from, and
hold it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses, including reasonable
legal fees, incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
ARTICLE FIVE
CONVERSION OF NOTES
Section 501 Conversion Privilege and Conversion Rate.
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Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Note may be converted into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock of the Company at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion
right shall commence immediately and expire at the close of business on
September 1, 2004, subject, in the case of the conversion of any Global
Security, to any applicable book-entry procedures of the Depositary therefor.
In case a Note is called for redemption at the election of the Company or the
Holder thereof exercises his right to require the Company to repurchase the
Note, such conversion right in respect of the Note shall expire at the close of
business on the Business Day next preceding the Redemption Date or the
Repurchase Date (as defined in Article Six), as the case may be, unless the
Company defaults in making the payment due upon redemption or repurchase, as the
case may be (in each case subject as aforesaid to any applicable book-entry
procedures).
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially ________
shares of Common Stock for each $1,000 principal amount of Notes. The Conversion
Rate shall be adjusted in certain instances as provided in this Article Five.
Section 502 Adjustment of Conversion Rate.
-----------------------------
The Conversion Rate shall be subject to adjustment from time to time as
follows:
(1) In case the Company shall pay or make a dividend or other
distribution on Common Stock payable in shares of Common Stock, the Conversion
Rate in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Conversion Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. If, after any such date fixed for
determination, any dividend or distribution is not in fact paid, the Conversion
Rate shall be immediately readjusted, effective as of the date the Board of
Directors determines not to pay such dividend or distribution, to the Conversion
Rate that would have been in effect if such determination date had not been
fixed. For the purposes of this paragraph (1), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
share (determined as provided in paragraph (8) of this Section 502) of the
Common Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than any rights, options or
warrants that by their terms
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will also be issued to any Holder upon conversion of a Note into shares of
Common Stock without any action required by the Company or any other Person),
the Conversion Rate in effect at the opening of business on the day following
the date fixed for such determination shall be increased by dividing such
Conversion Rate by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, such increase
to become effective immediately after the opening of business on the day
following the date fixed for such determination. If, after any such date fixed
for determination, any such rights, options or warrants are not in fact issued,
or are not exercised prior to the expiration thereof, the Conversion Rate shall
be immediately readjusted, effective as of the date such rights, options or
warrants expire, or the date the Board of Directors determines not to issue such
rights, options or warrants, to the Conversion Rate that would have been in
effect if the unexercised rights, options or warrants had never been granted or
such determination date had not been fixed, as the case may be. For the purposes
of this paragraph (2), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not issue any rights,
options or warrants in respect of shares of Common Stock held in the treasury of
the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any class
of capital stock, or other property (including securities, but excluding (i) any
rights, options or warrants referred to in paragraph (2) of this Section, (ii)
any dividend or distribution paid exclusively in cash, (iii) any dividend or
distribution referred to in paragraph (1) of this Section) the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section 502) of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets, shares or evidences of indebtedness so distributed
applicable
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to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such distribution. If,
after any such date fixed for determination, any such distribution is not in
fact made, the Conversion Rate shall be immediately readjusted, effective as of
the date the Board of Directors determines not to make such distribution, to the
Conversion Rate that would have been in effect if such determination date had
not been fixed.
(5) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed as part
of a distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (I) the aggregate amount of any other cash
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) has been made and (II) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to paragraph (6) of
this Section 502 has been made (the "combined cash and tender amount") exceeds
12.5% of the product of the current market price per share (determined as
provided in paragraph (8) of this Section 502) of the Common Stock on the date
for the determination of holders of shares of Common Stock entitled to receive
such distribution times the number of shares of Common Stock outstanding on such
date (the "aggregate current market price"), then, and in each such case,
immediately after the close of business on such date for determination, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section 502) of the Common Stock on the date fixed for
such determination less an amount equal to the quotient of (x) the excess of
such combined cash and tender amount over such aggregate current market price
divided by (y) the number of shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be equal to the current
market price per share (determined as provided in paragraph (8) of this Section
502) of the Common Stock on such date for determination.
(6) In case a tender offer made by the Company or any Subsidiary for all
or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (I) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration payable in respect of any other tender offer by
the Company or any Subsidiary for all
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or any portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this paragraph (6) has been made and (II) the aggregate amount of any cash
distributions to all holders of the Company's Common Stock within 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to paragraph (5) of this Section has been made (the
"combined tender and cash amount") exceeds 12.5% of the product of the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this Section 502) as of the last time (the "Expiration Time") tenders
could have been made pursuant to such tender offer (as it may be amended) times
the number of shares of Common Stock outstanding (including any tendered shares)
as of the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate immediately prior to close of
business on the date of the Expiration Time by a fraction (i) the numerator of
which shall be equal to (A) the product of (I) the current market price per
share of the Common Stock (determined as provided in paragraph (8) of this
Section 502) on the date of the Expiration Time multiplied by (II) the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time less (B) the combined tender and cash amount, and (ii) the
denominator of which shall be equal to the product of (A) the current market
price per share of the Common Stock (determined as provided in paragraph (8) of
this Section 502) as of the Expiration Time multiplied by (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including other
than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 1409 of the Indenture applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such determination" within
the meaning of paragraph (4) of this Section), and (b) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section 502).
(8) For the purpose of any computation under paragraphs (2), (4), (5) or
(6) of this Section 502, the current market price per share of Common Stock on
any date shall be calculated by the Company and be deemed to be the average of
the daily Closing Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term " ex date", when used with
respect to any issuance or distribution, means the
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first date on which the Common Stock trades regular way in the applicable
securities market or on the applicable securities exchange without the right to
receive such issuance or distribution.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate;
provided, however, that any adjustments which by reason of this paragraph (9)
- -------- -------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
(10) The Company may make such increases in the Conversion Rate, for the
remaining term of the Notes or any shorter term, in addition to those required
by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 502, as it
considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes. The Company shall have
the power to resolve any ambiguity or correct any error in this paragraph (10)
and its actions in so doing shall, absent manifest error, be final and
conclusive.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
(12) To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty (20) days, the increase is irrevocable during such
period, and the Board of Directors shall have made a determination that such
increase would be in the best interests of the Company, which determination
shall be conclusive; provided, however, that no such increase shall be taken
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into account for purposes of determining whether (i) the Closing Price Per Share
of the Common Stock exceeds the Conversion Price by 105% in connection with an
event which would otherwise be a Change of Control pursuant to Section 604(4) or
(ii) the Closing Price Per Share of the Common Stock exceeds the Conversion
Price by 200% in determining whether the Company can trigger an Automatic
Conversion pursuant to Section 503. Whenever the Conversion Rate is increased
pursuant to the preceding sentence, the Company shall give notice of the
increase to the Holders in the manner provided in Section 106 of the Indenture
at least fifteen (15) days prior to the date the increased Conversion Rate takes
effect, and such notice shall state the increased Conversion Rate and the period
during which it will be in effect.
(13) Each share of Common Stock issued upon conversion of the Notes
pursuant to this Article V shall be entitled to receive the appropriate number
of Rights, and the certificates representing the Common Stock issued upon such
conversion shall bear such legends, in each case as provided by and subject to
the terms of the Rights Plan (without giving effect to the proviso contained in
Section 22 thereof) as in effect at the time of such conversion (whether or not
such
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Rights have separated from the Common Stock at the time if conversion). In the
event that the Company implements any new stockholders's rights plan, as
amended, supplemented or modified from time to time (a "New Rights Plan"), such
New Rights Plan shall provide that upon conversion of the Notes the Holders will
receive, in addition to the Common Stock issuable upon such conversion, the
rights (whether or not such rights have separated from Common Stock at the time
of the conversion) issuable pursuant to the New Rights Plan. Any distribution of
Rights pursuant to the Rights Plan or any distribution of rights pursuant to the
New Rights Plan in accordance with the requirements set forth in this paragraph
(13) will not constitute a distribution of rights or warrants for the purposes
of paragraph (4) of this Section 502.
Section 503 Automatic Conversion.
--------------------
(a) The Company may elect to automatically convert the Notes (an
"Automatic Conversion") at any time prior to Maturity if the average of Closing
Price Per Share of the Company's Common Stock has exceeded 200% of the
Conversion Price for at least 20 Trading Days during a 30-day Trading Day period
ending five Trading Days prior to the Automatic Conversion Date.
(b) In the event that the Automatic Conversion Date of the Automatic
Conversion occurs on or prior to March 5, 2002, the Company will pay Additional
Interest (as defined below) in cash or, at the Company's election, in Common
Stock to the Holders. In the event that the Company elects to pay Additional
Interest on the Notes in Common Stock upon an Automatic Conversion, the shares
of Common Stock will be valued at 90% of the average of the Closing Price Per
Share for the five Trading Days immediately preceding the second Trading Day
preceding the Automatic Conversion Date. In the event of an Automatic
Conversion on or prior to March 5, 2002, each Holder of the Notes will receive
$200 per each $1,000 principal amount of Notes, less any interest actually paid
or provided for with respect to such Notes in accordance with the provisions of
Section 102(b) prior to the Automatic Conversion Date (the "Additional
Interest").
(1) The shares of Common Stock deliverable in payment of the
Additional Interest shall have a fair market value as of the Automatic
Conversion Date of not less than the Additional Interest as determined by this
Section 503. For purposes of this Section 503, the fair market value of shares
of Common Stock shall be determined by the Company and shall be equal to 90% of
the average of the Closing Price Per Share for the five consecutive Trading Days
immediately preceding the second Trading Day prior to the Automatic Conversion
Date;
(2) Additional Interest shall be paid only in cash in the event
any shares of Common Stock to be issued for the payment of Additional Interest
in the Notes hereunder (i) require registration under any federal securities law
before such shares may be freely transferrable without being subject to any
transfer restrictions under the Securities Act upon an Automatic Conversion and
if such registration is not completed or does not become effective prior to the
Automatic Conversion Date, and/or (ii) require registration with or approval of
any governmental authority under any state law or any other federal law before
such shares may be validly issued or delivered upon an Automatic Conversion and
if such registration is not completed or does not become effective or such
approval is not obtained prior to the Automatic Conversion Date;
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(3) The Common Stock is, or shall have been, approved for quotation
on the Nasdaq National Market or listing on the New York Stock Exchange, in
either case, prior to the Automatic Conversion Date; and
(4) All shares of Common Stock which may be issued with respect to
the payment of interest on the Notes will be issued out of the Company's
authorized but unissued Common Stock and, will upon issue, be duly and validly
issued and fully paid and non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 503(b) are not satisfied
in accordance with the terms thereof, the interest required to be paid or duly
provided for by the Company pursuant to this Section shall be paid by the
Company only in cash.
(c) Unless the Company shall have theretofore called for redemption all of
the Outstanding Notes, the Company or, at the request and expense of the
Company, the Trustee, shall give to all Holders of Notes, in the manner provided
in Section 106 of the Indenture, notice (the "Automatic Conversion Notice") of
the Automatic Conversion not more than 30 days but not less than 15 days prior
to the Automatic Conversion Date. The Company shall also deliver a copy of such
notice of an Automatic Conversion to the Trustee.
Each Automatic Conversion Notice shall state:
(i) the Automatic Conversion Date,
(ii) whether the Additional Interest, if any, shall be paid by the
Company in cash or by delivery of shares of Common Stock,
(iii) the place or places where such Notes are to be surrendered for
conversion and accrued Additional Interest, if any, and
(iv) the Conversion Rate then in effect.
If any of the foregoing provisions or other provisions of this Section are
inconsistent with applicable law, such law shall govern.
(d) In the event of an Automatic Conversion, the Company shall issue and
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion of the Notes and the Additional Interest, if any,
due on such Notes along with any cash in respect of any fractional shares of
Common Stock otherwise issuable upon conversion or in the event that the Company
elects to pay Additional Interest, if any, in Common Stock instead of cash, for
payment to the Holder as promptly after the Automatic Conversion Date as
practicable in accordance with the provisions of Article Fourteen of the
Indenture.
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(e) All Notes subject to the Automatic Conversion shall be delivered to
the Trustee to be canceled at the direction of the Trustee, which shall dispose
of the same as provided in Section 309 of the Indenture.
ARTICLE SIX
REPURCHASE OF NOTES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL
Section 601 Right to Require Repurchase.
---------------------------
In the event that a Change in Control (as hereinafter defined) shall occur,
then each Holder shall have the right, at the Holder s option, but subject to
the provisions of Section 602, to require the Company to repurchase, and upon
the exercise of such right the Company shall repurchase, all of such Holder s
Notes not theretofore called for redemption, or any portion of the principal
amount thereof that is equal to $1,000 or any integral multiple of $1,000 in
excess thereof (provided that no single Note may be repurchased in part unless
--------
the portion of the principal amount of such Note to be Outstanding after such
repurchase is equal to $1,000 or integral multiples of $1,000 in excess
thereof), on the date (the "Repurchase Date") that is 45 days after the date of
the Company Notice (as defined in Section 603) at a purchase price equal to 105%
of the principal amount of the Notes to be repurchased plus interest accrued to,
but excluding, the Repurchase Date (the "Repurchase Price"); provided, however,
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that installments of interest on Notes whose Stated Maturity is on or prior to
the Repurchase Date shall be payable to the Holders of such Notes, or one or
more Predecessor Notes, registered as such on the relevant Record Date according
to their terms and the provisions of Section 307 of the Indenture. Such right to
require the repurchase of the Notes shall not continue after a discharge of the
Company from its obligations with respect to the Notes in accordance with
Article Four of the Indenture, unless a Change in Control shall have occurred
prior to such discharge. At the option of the Company, the Repurchase Price may
be paid in cash or, subject to the fulfillment by the Company of the conditions
set forth Section 602, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. Whenever in this Supplemental
Indenture or the Indenture (including, without limitation, in the Form of Note,
Section 101 of this Supplemental Indenture, and Sections 501(1) and 508 of the
Indenture) there is a reference, in any context, to the principal of any Note as
of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Supplemental Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Supplemental Indenture or Indenture when such express mention is not made;
provided, however, that for the purposes of Article Fifteen of the Indenture
- -------- -------
such reference shall be deemed to include reference to the Repurchase Price only
to the extent the Repurchase Price is payable in cash.
Section 602 Conditions to the Company's Election to Pay the Repurchase Price in
-------------------------------------------------------------------
Common Stock.
- ------------
The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 601 if and only if the following conditions
shall have been satisfied:
14
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(1) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the Repurchase Date of not less than
the Repurchase Price. For purposes of Section 601 and this Section 602, the fair
market value of shares of Common Stock shall be determined by the Company and
shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding the second Trading Day prior
to the Repurchase Date;
(2) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferrable without being subject to any transfer restrictions under
the Securities Act upon repurchase and if such registration is not completed or
does not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(3) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for listing on the New York
Stock Exchange or quotation on the Nasdaq National Market, in either case, prior
to the Repurchase Date; and
(4) All shares of Common Stock which may be issued upon repurchase of
Notes will be issued out of the Company's authorized but unissued Common Stock
and, will upon issue, be duly and validly issued and fully paid and non-
assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 602 are not satisfied
in accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.
Section 603 Notices; Method of Exercising Repurchase Right, Etc.
---------------------------------------------------
(1) Unless the Company shall have theretofore called for redemption all
of the Outstanding Notes, on or before the 30th day after the occurrence of a
Change in Control, the Company or, at the request and expense of the Company on
or before the 15th day after such occurrence, the Trustee, shall give to all
Holders of Notes, in the manner provided in Section 106 of the Indenture, notice
(the "Company Notice") of the occurrence of the Change in Control and of the
repurchase right set forth herein arising as a result thereof. The Company shall
also deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be exercised,
(iii) the Repurchase Price, and whether the Repurchase Price shall
be paid by the Company in cash or by delivery of shares of Common Stock,
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(iv) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such Notes, are to be
surrendered for payment of the Repurchase Price and accrued interest, if any,
(v) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Note designated by
the Holder to be repurchased, and that interest thereon shall cease to accrue on
and after said date,
(vi) the Conversion Rate then in effect, the date on which the
right to convert the principal amount of the Notes to be repurchased will
terminate and the place or places where such Notes may be surrendered for
conversion, and
(vii) the place or places that the Note certificate with the
Election of Holder to Require Repurchase as specified in the form of Note shall
be delivered.
No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder s right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
Six are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Notes to be
repurchased (and, if any Note is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the Notes with respect to which the repurchase right
is being exercised. Such written notice shall be irrevocable, except that the
right of the Holder to convert the Notes with respect to which the repurchase
right is being exercised shall continue until the close of business on the
Business Day prior to the Repurchase Date.
(3) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Notes as to which the repurchase right has been exercised; provided, however,
-------- -------
that installments of interest that mature on or prior to the Repurchase Date
shall be payable in cash to the Holders of such Notes, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
16
<PAGE>
(4) If any Note (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal amount of such Note (or
portion thereof, as the case may be) shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at the rate of 10%
per annum, and each Note shall remain convertible into Common Stock until the
principal such Note (or portion thereof, as the case may be) shall have been
paid or duly provided for.
(5) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such Note
without service charge, a new Note or Notes, containing identical terms and
conditions, each in an authorized denomination in aggregate principal amount
equal to and in exchange for the unrepurchased portion of the principal of the
Note so surrendered.
(6) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; provided,
--------
however, that any surrender for repurchase on a date when the stock transfer
- -------
books of the Company shall be closed shall constitute the Person or Persons in
whose name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open. No payment or adjustment shall be made for dividends or distributions on
any Common Stock issued upon repurchase of any Note declared prior to the
Repurchase Date.
(7) No fractions of shares shall be issued upon repurchase of Notes. If
more than one Note shall be repurchased from the same Holder and the Repurchase
Price shall be payable in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be computed on the basis of
the aggregate principal amount of the Notes so repurchased. Instead of any
fractional share of Common Stock which would otherwise be issuable on the
repurchase of any Note or Notes, the Company will deliver to the applicable
Holder a check for the current market value of such fractional share. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result to
the nearest cent. For purposes of this Section, the current market price of a
share of Common Stock is the Closing Price Per Share of the Common Stock on the
Trading Day immediately preceding the Repurchase Date.
(8) Any issuance and delivery of certificates for shares of Common Stock
on repurchase of Notes shall be made without charge to the Holder of Notes being
repurchased for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the Notes represented thereby;
provided, however, that the Company shall not be required to pay any tax or
- -------- -------
17
<PAGE>
duty which may be payable in respect of (i) income of the Holder or (ii) any
transfer involved in the issuance or delivery of certificates for shares of
Common Stock in a name other than that of the Holder of the Notes being
repurchased, and no such issuance or delivery shall be made unless and until the
Person requesting such issuance or delivery has paid to the Company the amount
of any such tax or duty or has established, to the satisfaction of the Company,
that such tax or duty has been paid.
(9) All Notes delivered for repurchase shall be delivered to the Trustee
to be canceled at the direction of the Trustee, which shall dispose of the same
as provided in Section 309 of the Indenture.
Section 604 Certain Definitions.
-------------------
For purposes of this Article Six,
(1) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3, as in effect on the date of the original execution of this
Supplemental Indenture, promulgated by the Commission pursuant to the Exchange
Act;
(2) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of the Notes, of:
(i) the acquisition by any Person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of capital
stock of the Company entitling such person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in the elections of directors (any shares of voting stock of which
such person or group is the beneficial owner that are not then outstanding being
deemed outstanding for purposes of calculating such percentage), other than any
such acquisition by the Company, any Subsidiary of the Company or any employee
benefit plan of the Company existing on the date of this Supplemental Indenture;
or
(ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company,
or any sale or transfer of all or substantially all of the assets (other than to
a wholly-owned subsidiary of the Company) of the Company to any other Person
(other than (a) any such transaction pursuant to which the holders of 50% or
more of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors immediately prior to such
transaction have, directly or indirectly, at least 50% or more of the total
voting power of all shares of capital stock of the continuing or surviving
corporation entitled to vote generally in elections of directors of the
continuing or surviving corporation immediately after such transaction and (b) a
merger (x) which does not result in any reclassification, conversion, exchange
or cancellation of outstanding shares of capital stock of the Company or (y)
which is effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of outstanding
shares of Common Stock into solely shares of common stock); provided, however,
-------- -------
that a Change in Control shall not be
18
<PAGE>
deemed to have occurred if either (a) the Closing Price Per Share of the Common
Stock for any five Trading Days within the period of 10 consecutive Trading Days
ending immediately after the later of the Change in Control or the public
announcement of the Change in Control (in the case of a Change in Control under
clause 604(2)(i) above) or the period of 10 consecutive Trading Days ending
immediately before the Change in Control (in the case of a Change in Control
under clause 604(2)(ii) above) shall equal or exceed 105% of the Conversion
Price of the Notes in effect on each such Trading Day, or (b) all of the
consideration (excluding cash payments for fractional shares and cash payments
made pursuant to dissenters' appraisal rights) in a merger or consolidation
constituting the Change in Control described in clause 604(2)(i) and/or clause
(2)(ii) above consists of shares of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market (or will be so traded or quoted
immediately following the Change in Control) and as a result of such transaction
or transactions the Notes become convertible solely into such common stock.
(3) for purposes of Section 604(2)(i), the term "person" shall include
any syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act, as in effect on the date of the original execution
of this Supplemental Indenture.
Section 605 Consolidation, Merger, etc.
--------------------------
In the case of any consolidation, conveyance, sale, transfer or lease of
all or substantially all of the assets of the Company to which Section 1409
applies, in which the Common Stock of the Company is changed or exchanged as a
result into the right to receive shares of stock and other securities or
property or assets (including cash) which includes shares of Common Stock of the
Company or common stock of another Person that are, or upon issuance will be,
traded on a United States national securities exchange or approved for trading
on an established automated over-the-counter trading market in the United States
and such shares constitute at the time such change or exchange becomes effective
in excess of 50% of the aggregate fair market value of such shares of stock and
other securities, property and assets (including cash) (as determined by the
Company, which determination shall be conclusive and binding), then the Person
formed by such consolidation or resulting from such merger or combination or
which acquires the properties or assets (including cash) of the Company, as the
case may be, shall execute and deliver to the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) modifying the provisions of this
Supplemental Indenture relating to the right of Holders to cause the Company to
repurchase the Notes following a Change in Control, including without limitation
the applicable provisions of this Article Six and the definitions of the Common
Stock and Change in Control, as appropriate, and such other related definitions
set forth herein as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply in the event of
a subsequent Change of Control to the common stock and the issuer thereof if
different from the Company and Common Stock of the Company (in lieu of the
Company and the Common Stock of the Company).
19
<PAGE>
ARTICLE SEVEN
EVENT OF DEFAULT
Section 701 Event of Default.
----------------
In addition to the Events of Default set forth in Section 501 of the
Indenture, the following will be an Event of Default under the Supplemental
Indenture: any indebtedness under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company in a principal amount then
outstanding in excess of $25,000,000 is not paid at final maturity thereof
(either at its stated maturity or upon acceleration thereof), and such
indebtedness is not discharged, or such acceleration is not rescinded or
annulled, within a period of 30 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder.
ARTICLE EIGHT
SUBORDINATION
Section 801 Payment of Common Stock for Interest.
------------------------------------
For purposes of Article Fifteen of the Indenture only, the issuance and
delivery of Common Stock for the payment of interest pursuant to Section 102 of
this Supplemental Indenture (including any cash paid for any fractional shares
with respect to any payment of interest in Common Stock) shall not be deemed to
constitute a payment or distribution on account of the principal of or any
premium or interest on Securities or on account of the purchase, redemption or
other acquisition of Securities.
ARTICLE NINE
MISCELLANEOUS
Section 901 Consent of Holders Required.
---------------------------
In addition to those modifications or amendments requiring the consent of
the Holder of each Outstanding Note effected thereby as specified in Section 902
of the Indenture, there can be no modification or amendment that would change
the obligation of the Company to repurchase any Note upon the happening of a
Change in Control in a manner adverse to the Holder of Notes without the consent
of the Holder of each outstanding Note effected thereby.
Section 902 Applicability of Certain Indenture Provisions.
---------------------------------------------
20
<PAGE>
Each of the defeasance and covenant defeasance provisions of Article
Thirteen of the Indenture shall apply to the Notes; provided, however, that the
-------- -------
Company will not be able to defease the right of the Holders to convert the
Notes pursuant to Article Fourteen of the Indenture.
Section 903 Reference to and Effect on the Indenture.
----------------------------------------
This Supplemental Indenture shall be construed as supplemental to the
Indenture and all the terms and conditions of this Supplemental Indenture shall
be deemed to be part of the terms and conditions of the Indenture. Except as set
forth herein, the Indenture heretofore executed and delivered is hereby
ratified, approved and confirmed. The provisions of this Supplemental Indenture
shall for the purposes of this series of Securities supersede the provisions of
the Indenture heretofore executed and delivered to the extent such Indenture
heretofore executed and delivered is inconsistent herewith. This Supplemental
Indenture is subject to the provisions of the Trust Indenture Act, and shall, to
the extent applicable, be governed by such provisions.
Section 904 Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any term,
provision, or condition set forth in Article Three hereof if the Holders of a
majority in principal amount of the outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision, or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision, or condition shall remain in full force and effect.
Section 905 Supplemental Indenture May be Executed In Counterparts.
------------------------------------------------------
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 906 Effect of Headings.
------------------
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
Section 907 Separability
------------
In case any one or more of the provisions contained in this Supplemental
Indenture or in the Notes shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any other provisions of this Supplemental Indenture or of the
Notes, but this Supplemental Indenture and the Notes shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed all as of the day and year first above written.
READ-RITE CORPORATION
By:____________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:____________________________________
Name:
Title:
22
<PAGE>
Exhibit A
[Form of Face of Security]
[IF SUCH SECURITY IS A GLOBAL SECURITY, insert --] THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
READ-RITE CORPORATION
10% Convertible Subordinated Note due September 1, 2004
No. _________ $_____________
CUSIP: ___________
Read-Rite Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ________________, or registered assigns, the principal sum of
___________________ Dollars on September 1, 2004 and to pay interest thereon
from March __, 2000 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on March 1 and
September 1 in each year, commencing September 1, 2000, at the rate of 10% per
annum, until the principal hereof is paid or made available for payment, and at
a rate of 10% per annum on any overdue principal and premium, if any, and, to
the extent permitted by law, on any overdue interest. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid in cash, or at the Company election, in
Common Stock in accordance with the provisions of the Supplemental Indenture, to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
23
<PAGE>
Payment of the principal of (and premium, if any) and any interest on this
Security will be made at office or agency of the company maintained for that
purpose in the Borough of Manhattan, The City of New York, or at the option of
the Holder, the Corporate Trust Office of the Trustee in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
-------- -------
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by their duly authorized officers and by its corporate
seal to be affixed or imported thereon.
READ-RITE CORPORATION
By:________________________________
Title:
Attest:
__________________________________
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
Dated: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
As Trustee
By:________________________________
Authorized Officer
24
<PAGE>
Form of Reverse of Security
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of March __, 2000 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Debt and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $_________, and is
issued pursuant to a Supplemental Trust Indenture supplementing the Indenture,
dated as of March __, 2000, from the Company to Trustee relating to the issuance
of the "10% Convertible Notes due September 1, 2004" of this series (the
"Supplemental Indenture").
The Securities will not be subject to redemption prior to March 5, 2002 and
will be redeemable on and after such date at the option of the Company, in whole
or in part, upon not less than 20 nor more than 60 days notice to the Holders,
at the Redemption Prices (expressed as percentages of the principal amount) set
forth below.
The Redemption Price (expressed as a percentage of principal amount) is as
follows:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
Beginning on March 5, 2002 and ending on February 28, 2003........... 105.0%
Beginning on March 1, 2003 and ending on August 31, 2004............. 102.5
</TABLE>
and 100% at September 1, 2004, in each case together with accrued and unpaid
interest to, but excluding, the Redemption Date; provided, however, that
-------- -------
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
If a Change in Control occurs, the Holder of this Security, at the Holder's
option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is $1,000 or any integral multiple of $1,000 in
excess thereof, provided that the portion of the principal amount of this
--------
Security to be Outstanding after such repurchase is at least equal to $1,000)
for cash at a Repurchase Price equal to 105% of the principal amount thereof
plus interest accrued to, but excluding, the Repurchase Date. At the option of
the Company, the Repurchase Price may be paid in cash or, subject to the
conditions
25
<PAGE>
provided in the Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. For purposes of this paragraph, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding the second Trading Day prior
to the Repurchase Date. Whenever in this Security there is a reference, in any
context, to the principal of any Security as of any time, such reference shall
be deemed to include reference to the Repurchase Price payable in respect of
such Security to the extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase Price in any
provision of this Security shall not be construed as excluding the Repurchase
Price so payable in those provisions of this Security when such express mention
is not made; provided, however, that, for the purposes of the succeeding
-------- -------
paragraph, such reference shall be deemed to include reference to the Repurchase
Price only to the extent the Repurchase Price is payable in cash.
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Debt of the Company, and this Security
is issued subject to such provisions of the Indenture with respect thereto.
Each Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee as his or her attorney-
in-fact for any and all such purposes.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture, except that the Company will not be able
to defease the right of the Holders to convert this Security pursuant to Article
Fourteen of the Indenture.
The Company may elect in accordance with the provisions of Section 503 of
the Supplemental Indenture to automatically convert the Security at any time
prior to Maturity if the Closing Price Per Share of the Company's Common Stock
has exceeded 200% of the Conversion Price for at least 20 Trading Days during
the 30 Trading Day period ending five Trading Days prior to the notice of
automatic conversion. In the event that the Automatic Conversion (as defined in
the Supplemental Indenture) occurs on or prior to March 5, 2002, the Company
will pay Additional Interest (as defined in the Supplemental Indenture) in cash,
or at the Company's election, in Common Stock to Holders of the Notes.
Subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before September 1, 2004 (except
that, in case this Security or any portion hereof shall be called for redemption
or submitted for repurchase, such right shall terminate with respect to this
Security or portion hereof, as the case may be, so called for redemption or
submitted for repurchase, as the case may be, at the close of business on the
first Business Day next preceding the date fixed for redemption or repurchase,
as the case may be, as provided in the Indenture unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be), to
convert the principal amount of this Security (or any portion hereof which is
$1,000 or an integral
26
<PAGE>
multiple thereof) into fully paid and non-assessable shares of the Common Stock
of the Company, as said shares shall be constituted at the date of conversion,
at the Conversion Rate of _______ shares of Common Stock for each $1,000
principal amount of Securities, or at the adjusted Conversion Rate in effect at
the date of conversion determined as provided in the Indenture, upon surrender
of this Security, together with the conversion notice hereon duly executed, to
the office or agency of the Company maintained for that purpose in the Borough
of Manhattan, The City of New York, or at the option of the Holder, the
Corporate Trust Office of the Trustee accompanied (if so required by the
Company) by instruments of transfer, in form satisfactory to the Company and to
the Trustee, duly executed by the Holder or by its duly authorized attorney in
writing. Such surrender shall, if made during any period beginning at the close
of business on a Regular Record Date and ending at the opening of business on
the Interest Payment Date next following such Regular Record Date (unless this
Security or the portion being converted shall have been called for redemption on
a Redemption Date during the period beginning at the close of business on a
Regular Record Date and ending at the opening of business on the first Business
Day after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the second such Business Day), also be accompanied
by payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of this Security
then being converted. Subject to the aforesaid requirement for payment and, in
the case of a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of Common Stock issued on
conversion. The Company is not required to issue fractional shares upon any such
conversion, but shall make adjustment therefor as provided in the Indenture. The
Conversion Rate is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain consolidations or
mergers to which the Company is a party or the sale of substantially all of the
assets of the Company, the Indenture shall be amended, without the consent of
any Holders of Securities, so that this Security, if then outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger or sale by a holder of the
number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger or sale (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares). In the event of conversion of this Security in part only, a new
Security or Securities for the unconverted portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the
27
<PAGE>
Trustee with the consent of the Holders of more than 50% in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
28
<PAGE>
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
29
<PAGE>
Abbreviations
The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ________________
TEN ENT - as tenants by the entireties
(Cust)
JT TEN - as joint tenants with right of Custodian ____________ under Uniform
survivorship and not as (Minor)
tenants in common Gifts to Minors Act ________________
</TABLE>
Additional abbreviations may also be used though not in the above list.
Conversion Notice
To Read-Rite Corporation:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the opening of business on the
related Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption on a Redemption Date after the close of
business on a Regular Record Date and prior to the opening of business on the
first Business Day after the next succeeding Interest Payment Date, or if such
Interest Payment Date is not a Business Day, the next such Business Day), this
Notice is accompanied by payment, in funds acceptable to the Company, of an
amount equal to the interest payable on such Interest Payment Date of the
principal of this Security to be converted. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect hereto. Any amount required to be paid by
the undersigned on account of interest accompanies this Security.
30
<PAGE>
Principal Amount to be Converted
(in an integral multiple of $1,000, if less
than all)
$____________
Dated: ____________ ___________________________________
___________________________________
Signature(s) must be guaranteed by
a qualified guarantor institution
if shares of Common Stock are to be
delivered, or Securities to be
issued, other than to and in the
name of the registered owner.
___________________________________
Signature Guaranty
Fill in for registration of shares of Common Stock and Security if to be
issued otherwise than to the registered Holder.
_____________________________________ ___________________________________
(Name) Social Security or Other Taxpayer
Identification Number
_____________________________________
_____________________________________
(Address)
31
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(4) Pursuant to Section 601 of the Supplemental Indenture, the undersigned
hereby elects to have this Security repurchased by the Company.
(5) The undersigned hereby directs the Trustee or the Company to pay it or
__________________ an amount in cash or, at the Company s election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to, but excluding,
the Repurchase Date, as provided in the Supplemental Indenture.
Dated: ______________________________ _____________________________________
_____________________________________
Signature(s)
_____________________________________
Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1943.
_____________________________________
Signature Guaranteed
Principal amount to be repurchased
(an integral multiple of $1,000):________________________
Remaining principal amount following such repurchase
(not less than $1,000):__________________________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
32
<PAGE>
EXHIBIT 4.7
FORM OF ESCROW AGREEMENT
Escrow Agreement dated as of February __, 2000 by and among Read-Rite
Corporation, a Delaware corporation (the "Company"), Norwest Bank Minnesota,
National Association, as Escrow Agent (the "Escrow Agent") the parties set forth
on the signature pages hereto (the "Holders") and FleetBoston Robertson Stephens
Inc., as agent for the Holders ("Agent").
WITNESSETH
WHEREAS, pursuant to that certain Indenture and Supplemental Indenture,
both dated March 1, 2000, between the Company and Norwest Bank Minnesota,
National Association (the "Trustee"), the Company is issuing up to $50,000,000
aggregate principal amount of 10% Convertible Subordinated Notes due September
1, 2004 (the "Additional Exchange Notes") for cash (the "Offering"). In
connection with the Offering, the Company has agreed for the benefit of the
purchasers of the Additional Exchange Notes to enter this Escrow Agreement.
WHEREAS, under the Revolving Credit Agreement the Banks have the right to
block the March 1, 2000 interest payment on the Existing Notes (as defined
below) under section 1504 of the Existing Notes Indenture (as defined below).
WHEREAS, the Banks have exercised this blockage right pursuant to Section
1504 of the Existing Notes Indenture which has prevented the Company from paying
the March 1, 2000 interest payments on the Existing Notes.
WHEREAS, pursuant to the terms of the Offering, FleetBoston Robertson
Stephens Inc. ("Robertson Stephens"), as placement agent on behalf of the
Holders, will deposit in escrow (the "Escrow"), to be held by the Escrow
Agent subject to the release conditions set forth herein, cash received from
the Holders with respect to such Holder's purchase of Additional Exchange
Notes.
WHEREAS, this Escrow Agreement shall govern the terms upon which the Escrow
Agent will receive, hold, and release the Escrow Property (as defined) from the
Escrow and the duties of the Escrow Agent.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the Company, the Holders, and the Escrow Agent
agree as follows:
1. Definitions. The following definitions shall apply under this Escrow
-----------
Agreement. Other capitalized terms shall have the meanings given to them in the
text.
"Banks" means the financial institutions which are currently parties to the
Revolving Credit Agreement.
"Exchange Offer" means the Company's offer to exchange an aggregate
principal amount of up to $172,500,000 of the Company's 10% Convertible
Subordinated Notes due September 1, 2004 for an aggregate principal amount of up
to $345,000,000 of the Company's Existing Notes.
"Existing Notes" means the 6 1/2% Convertible Subordinated Notes due
September 1, 2004, issued under the Existing Notes Indenture.
"Existing Notes Indenture" means the Indenture and Supplemental Trust
Indenture, each dated August 15, 1997, between the Company and State Street Bank
and Trust Company of California, N.A.,
<PAGE>
under which the Existing Notes were issued.
"Majority Banks" means Banks owed at least 51% of the then aggregate unpaid
principal amount outstanding under the Revolving Credit Agreement.
"Proceeds" means the funds received by the Company upon the compliance with
Section 6 of This Agreement.
"Revolving Credit Agreement" means that certain Credit Agreement, dated as
of October 2, 1997, by and among the Company, the financial institutions named
on the signature pages thereof, Canadian Imperial Bank of Commerce, New York
Agency, as agent for the Banks and issuer of Letters of Credit, as amended by
the First Amendment to Credit Agreement dated February 5, 1998, the Second
Amendment to Credit Agreement dated as of August 10, 1998, the Waiver and Third
Amendment to Credit Agreement dated as of September 27,1999, the Waiver and
Fourth Amendment to Credit Agreement dated as of December 29, 1999 and the
Waiver, Forbearance and Fifth Amendment to Credit Agreement dated January 28,
2000, as amended, amended and restated, supplemented or otherwise modified from
time to time.
2. Appointment of Escrow Agent. The Company and the Holders
---------------------------
do hereby appoint and designate the Escrow Agent for the purposes set forth
herein, and the Escrow Agent does hereby accept such appointment under the terms
and conditions set forth herein.
3. Establishment of Escrow. Simultaneously with the execution of
-----------------------
this Escrow Agreement: (i) the Company shall deposit $__________ aggregate
principal amount of Additional Exchange Notes evidenced by a global security
("Global Security") in the name of Cede & Co., as nominee for the Depository
Trust Company, with the Escrow Agent and (ii) Robertson Stephens, the initial
placement agent with respect to the Additional Exchange Notes, shall deposit
pursuant to a wire transfer the cash received from each Holder (collectively,
the "Escrow Property") with respect to the aggregate principal amount of the
Notes to be purchased by such Holders with the Escrow Agent. The Escrow Agent
shall hold the Escrow Property subject to the terms and conditions hereof.
4. Investment of Escrow Funds. The Escrow Property shall be recorded in
--------------------------
an escrow account by the Escrow Agent. The Escrow Agent shall be permitted, and
is hereby authorized to deposit, transfer, hold and invest Escrow Property, if
any, consisting of cash, in the Wells Fargo Fund, a money market fund available
through the Escrow Agent, or in a demand deposit account, during the period of
the Escrow in accordance with such instructions and directions as may from time
to time be provided to the Escrow Agent in writing and signed by the Company and
the Trustee. Any interest received by the Escrow Agent with respect to the
Escrow Property, including reinvested interest, shall become part of the Escrow
Property. The Escrow Agent shall have the right to liquidate any investments
held in order to provide funds necessary to make required distributions under
this Escrow Agreement. The Escrow Agent in its capacity as escrow agent
hereunder shall not have any liability for any loss sustained as a result of the
liquidation of any investment prior to its maturity of for the failure of the
parties to give the Escrow Agent instructions to invest or reinvest the Escrow
Funds or any earnings thereon.
5. Company Has No Rights in Escrow Property. The Company expressly
----------------------------------------
acknowledges and agrees that prior to the release of the Escrow Property upon
satisfaction of the conditions in Section 6, the Company shall have no interest
or rights in the cash proceeds of the Escrow Property. In the event of the
investment of funds, if any, in the
2
<PAGE>
Escrow Account, the Company shall have no interest or rights in such investments
or investment securities.
6. Release Conditions. Upon the occurrence last to occur of paragraphs
------------------
(a) and (b) of this Section 6, the Company shall execute the written
instructions, substantially in the form attached hereto as Exhibit A,
---------
instructing the Escrow Agent to release the cash portion of Escrow Property to
the Company and the Global Security portion of the Escrow Property to the
Trustee, as the custodian for Cede & Co., as nominee for the Depository Trust
Company.
(a) Lifting of the Blockage Notice. The blockage notice sent to the
------------------------------
Existing Notes Trustee under the Existing Notes Indenture that prohibited the
Company from making the March 1, 2000 interest payment on the Existing Notes
shall have been rescinded by the Agent, acting for Majority Banks, by delivery
of written notice to the Existing Notes Trustee rescinding said blockage notice
in order to allow the Company to pay the holders of Existing Notes that did not
tender their Existing Notes in the Exchange Offer the interest due on March 1,
2000, on or before March 30, 2000.
(b) Payment of Proceeds to the Banks. The Agent, acting for Majority
--------------------------------
Banks, and the Company shall have agreed as to the amount of the Proceeds to be
paid to the Banks by the Company.
7. Escrow Conditions Not Met. If the two conditions in Section 6 have
-------------------------
not been satisfied by the time set forth therein, the Escrow Agent shall send
notice to the Holders at their address as set forth on Exhibit C that the
---------
Company has failed to meet the conditions entitling the Company to receive the
cash portion of the Escrow Property and the Escrow Agent shall return the
Additional Exchange Notes to the Company and the cash portion of the Escrow
Property to the Holders in the amounts set forth on Exhibit C.
---------
8. Notices. All notices and communications hereunder shall be in writing
-------
and shall be deemed to be duly given if delivered by hand or by air delivery to
the address, with respect to the Holders, as set forth on Exhibit C, and
---------
with respect to the other parties to this Escrow Agreement as follows:
If to the Escrow Agent, to:
Norwest Bank Minnesota, National Association
Corporate Trust Department
N9303-120
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Rogene Pendleton
Phone: (612) 667-2245
Fax: (612) 667-9825
If to the Company, to:
Read-Rite Corporation
345 Los Coches Street
Milpitas, California 95035
Attention: Cyril J. Yansouni
Phone: (408) 262-6700
Fax: (408) 956-3205
3
<PAGE>
With a copy to:
Wilson Sonsini Goodrich & Rosati, Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: John A. Fore, Esq.
Phone: (650) 493-9300
Fax: (650) 493-6811
or at such other address as any of the above may have furnished to the other
parties in writing and any such notice or communication given in the manner
specified in this Paragraph 8 shall be deemed to have been given on the date
received. In the event that the Escrow Agent, in its sole discretion, shall
determine that an emergency exists, the Escrow Agent may use or accept such
other means of notice or communication as the Escrow Agent deems advisable,
including facsimile.
9. Reliance. The Escrow Agent may act upon any instrument or other
--------
writing believed by it in good faith to be genuine and to be signed or presented
by the proper person or persons and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions hereof, except for
its own willful misconduct or gross negligence.
10. Escrow Agent Duties. The duties and responsibilities of the Escrow
-------------------
Agent hereunder shall be determined solely by the express provisions of this
Escrow Agreement, and no other or further duties or responsibilities shall be
implied. The Escrow Agent shall not have any liability under, nor duty to
inquire into the terms and provisions of any agreement or instructions, other
than outlined in this Escrow Agreement.
11. Termination of Escrow. The escrow provided for in this Escrow
---------------------
Agreement shall expire on the earlier of : (i) the date on which the Escrow
Property are released from the Escrow or (ii) the close of business on March 30,
2000, at which time the Escrow Property shall be returned in accordance with
Section 7.
12. Representations and Warranties By the Company. The Company hereby
---------------------------------------------
represents and warrants that:
(a) The execution, delivery and performance by the Company of this
Escrow Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Certificate of Incorporation of the Company or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company.
(b) This Escrow Agreement has been duly executed and delivered by the
Company and assuming the due authorization and valid execution and delivery of
this Agreement by the Subscriber and the Escrow Agent and enforceability of this
Escrow Agreement against the Escrow Agent and the Subscriber in accordance with
its terms, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(c) No litigation, investigation or proceeding before any arbitrator
or governmental authority is pending or, to the knowledge of the Company, is
threatened by or against the Company with respect to this Escrow Agreement or
any of the transactions contemplated hereby.
4
<PAGE>
13. Fees and Expenses. The Escrow Agent shall be entitled to compensation
-----------------
for its services as stated in the fee schedule attached hereto as Exhibit B,
---------
which compensation shall be paid by the Company. The fee agreed upon for the
services rendered hereunder is intended as full compensation for the Escrow
Agent's services as contemplated by this Escrow Agreement; provided, however,
-------- -------
that in the event that the conditions for the disbursement of property under
this Escrow Agreement are not fulfilled, or the Escrow Agent renders any
material service not contemplated in this Escrow Agreement or there is any
assignment of interest in the subject matter of this Escrow Agreement, or any
material modification hereof, then the Escrow Agent shall be reasonably
compensated for such extraordinary services and reimbursed for all costs and
expenses related thereto.
14. Indemnification of Escrow Agent. The Company and each Holder both
-------------------------------
jointly and severally hereby indemnifies and holds harmless the Escrow Agent
from and against, any and all loss, liability, cost, damage and expense,
including, without limitation, reasonable counsel fees, which the Escrow Agent
may suffer or incur by reason of any action, claim or proceeding brought against
the Escrow Agent arising out of or relating in any way to this Escrow Agreement
or any transaction to which this Escrow Agreement relates unless such action,
claim or proceeding is the result of the willful misconduct of the Escrow Agent.
The Escrow Agent may consult counsel in respect of any question arising under
the Indentures and the Escrow Agent shall not be liable for any action taken or
omitted in good faith upon advice of such counsel; provided that in no event
shall any Holder be liable to the Escrow Agent for any amount in excess of
their applicable portion of cash proceeds deposited by said Holder with the
Escrow Agent.
15. Refrain from Action. In the event that the Escrow Agent shall be
-------------------
uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party hereto which, in its opinion, conflict with any
of the provisions of this Escrow Agreement, it shall be entitled to refrain from
taking any action and its sole obligation shall be to keep safely all property
held in escrow until it shall be directed otherwise in writing by all of the
other parties hereto or by a final order or judgment of a court of competent
jurisdiction.
16. Acceptance of Appointment. Norwest Bank Minnesota, National
-------------------------
Association hereby agrees to act as Escrow Agent under this Escrow Agreement.
The Escrow Agent shall have no duty to enforce any provision hereof requiring
performance by any other party hereunder.
17. Successor Escrow Agent. Any company into which the Escrow Agent may
----------------------
be merged or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it shall be a
party or any company to which the Escrow Agent may sell or transfer all or
substantially all of its escrow/custody business, provided such company shall be
eligible to serve as the Escrow Agent hereunder, shall be the successor
hereunder to the Escrow Agent without the execution or filing of any paper or
any further act.
18. Counterparts. This Escrow Agreement may be executed in two or more
------------
counterparts, all of which taken together shall constitute one instrument.
19. Resignation. The Escrow Agent may resign upon 30-days advance written
-----------
notice to the parties hereto. If a successor escrow agent is not appointed
within the 30-day period following such notice, the Escrow Agent may petition
any court of competent jurisdiction to name a successor escrow agent.
5
<PAGE>
20. Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS
OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY,
ESCROW AGENT AND THE HOLDERS IN CONNECTION WITH THIS AGREEMENT, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
21. Amendments. This Escrow Agreement may be amended or modified, and any
----------
of the terms, covenants, representations, warranties, or conditions hereof may
be waived, only by a written instrument executed by the Company, the Escrow
Agent and a majority of the Holders hereto, or in the case of a waiver, by the
party waiving compliance. Any waiver by any party of any condition, or of the
breach of any provision, term, covenant, representation, or warranty contained
in the Escrow Agreement, in any one or more instances, shall not be deemed to
be nor construed as further or continuing waiver of any such conditions, or of
the breach of any other provision, term, covenant, representation, or warranty
of this Escrow Agreement.
6
<PAGE>
22. Assignability. This Escrow Agreement shall not be assigned by
-------------
operation of law or otherwise, except as otherwise specifically provided in
writing by the parties hereto; provided that the Company may assign its rights
and obligations hereunder to any of its subsidiaries, or affiliates or any
successor in interest to the business of the Company.
23. Section Headings. The section headings in this Escrow Agreement are
----------------
for reference purposes only and shall not affect the meaning or interpretation
of this Escrow Agreement.
24. Severability. In the event that any part of this Escrow Agreement is
------------
declared by any court or other judicial or administrative body to be null, void,
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Escrow Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date and year first above written.
READ-RITE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Escrow Agent
By:________________________________
Name:______________________________
Title:_____________________________
FLEETBOSTON ROBERTSON STEPHENS
INC., as Agent for the Holders
By:________________________________
Name:______________________________
Title:_____________________________
HOLDERS
By:________________________________
Name:______________________________
Title:_____________________________
By:________________________________
Name:______________________________
Title:_____________________________
7
<PAGE>
EXHIBIT A
Date: ________________
Norwest Bank Minnesota, National Association, as Escrow Agent
Corporate Trust Department
N9303-120
Sixth Street & Marquette Avenue
Minneapolis, MN 55479
Attention: Rogene Pendleton
Re: Written Instructions
Dear Ms. Pendleton:
Reference is made to (i) the Escrow Agreement (the "Escrow
Agreement"), dated as of March __, 2000, by and among Read-Rite Corporation (the
"Company"), and Norwest Bank Minnesota, National Association, as Escrow Agent
and the Subscribers listed on the signature pages thereto. Capitalized terms
used by not defined herein shall have the meaning given them in the Escrow
Agreement.
In accordance with Section 6 of the Escrow Agreement, the undersigned
hereby jointly instruct the Escrow Agent to release the Escrow Property to the
Company and release the Additional Exchange Notes to Norwest Bank Minnesota,
National Association, the trustee under the Indenture and the Additional
Exchange Notes, as custodian for the Depository Trust Company.
READ-RITE CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
EXHIBIT B
FEES
ACCEPTANCE FEE: $1,500.00
For initial services including examination of the Escrow Agreement
and all supporting documents this is a one-time fee payable upon the
opening of the account.
ADMINISTRATION FEE: $1,500.00*
An annual charge or any portion of a 12-month period thereof. This
fee is payable upon the opening of the account and annually thereafter.
This charge is not prorated for the first year.
*Assumes use of Norwest Funds for funds on deposit.
TRANSACTION FEE:
Wire transfer of funds $ 25.00
Other transfer of funds (i.e. Checks, internal account transfers) $ 15.00
Asset transactions (purchases/sales/calls/deposit/withdrawals, etc.) $ 20.00
No charge for Norwest Funds transactions other than those disclosed in the Fund
Prospectus.
TAX REPORTING FEES:
$5.00 per individual 1099 reported to the Internal Revenue Service (optional -as
required)
EXTRAORDINARY SERVICES:
For any services other than those covered by the aforementioned, a special per
hour charge will be made to commensurate with the character of the service, time
required and responsibility involved. Such services include but are not limited
to excessive administrative time, attendance at closings, specialized reports
and record-keeping, unusual certifications, etc.
FEE SCHEDULE IS SUBJECT TO ANNUAL REVIEW AND ADJUSTMENT.
<PAGE>
EXHIBIT C
Holder (with address): Principal Amount of Exchange Notes Purchase Price
- --------------------- ---------------------------------- --------------
<PAGE>
Exhibit 4.8
FORM OF REGISTRATION RIGHTS AGREEMENT
Dated as of February , 2000
between
READ-RITE CORPORATION
and
FLEETBOSTON ROBERTSON STEPHENS
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "RR Agreement") is made and
entered into as of February ___, 2000, between READ-RITE CORPORATION, a Delaware
corporation (the "Company"), and FLEETBOSTON ROBERTSON STEPHENS (the
"Distribution Agent" and "Dealer Manager" or "FleetBoston").
This RR Agreement is made pursuant to the Dealer Manager Agreement and
Distribution Agreement (the "Agreements") dated February ___ and February ___,
2000, respectively, between the Company and FleetBoston which provide as (a)
Dealer Manager you are engaged to solicit individuals and institutions to tender
their Existing Notes pursuant to and in accordance with the terms and conditions
of the Exchange Offer; and as (b) Distribution Agent for the Cash Offer you are
acting as the sole agent for the Company and not as principal, to solicit offers
for the purchase of Exchange Notes from Holders who elect to participate in the
Exchange and may purchase additional 10% Convertible Subordinated Notes due
September 1, 2004 (the "Notes") from the Company. In order to induce
FleetBoston to enter into the RR Agreement, the Company has agreed to provide
FleetBoston the registration rights set forth in this RR Agreement. The
execution of RR Agreement is a condition to the closing under the Dealer Manager
and Distribution Agreements.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
-----------
As used in this RR Agreement, the following capitalized defined terms
shall have the following meanings:
"Agreements" shall mean the Dealer Manager Agreement and the
----------
Distribution Agreement.
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time.
"Closing Date" shall mean the Closing Date as defined in the
------------
Agreements.
"Company" shall have the meaning set forth in the preamble to this RR
-------
Agreement and shall also include the Company's successors and subsidiaries.
<PAGE>
2
"Dealer Manager" shall have the meaning set forth in the preamble to
--------------
this RR Agreement.
"Holder" shall mean the Dealer Manager or Distribution Agent, for so
------
long as it owns any Registrable Notes.
"Indenture" shall mean the Indenture relating to the Notes dated as of
---------
February ___, 2000 between the Company and Norwest Bank Minnesota, National
Association, as the same may be amended from time to time in accordance
with the terms thereof.
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political
subdivision thereof.
"Distribution Agent" shall have the meaning set forth in the preamble
------------------
to this RR Agreement.
"Distribution Agreement" shall have the meaning set forth in the
----------------------
preamble to this RR Agreement.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Notes covered by a Shelf Registration Statement,
and by all other amendments and supplements to such prospectus, and in each
case including all material incorporated by reference therein.
"Registrable Notes" shall mean the 10% Convertible Subordinated Notes
-----------------
due September 1, 2004 issued as compensation for the Exchange Offer and
Cash Offer as defined in the Agreements.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this RR Agreement,
including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii)
all fees and expenses incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and disbursements of
counsel for any underwriters or Holders in connection with blue sky
qualification of any of the Registrable Notes), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any
<PAGE>
3
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this RR Agreement, (iv)
all fees and disbursements relating to the qualification of the Indenture
under applicable securities laws, (v) the fees and disbursements of the
Trustee and its counsel, (vi) the fees and disbursements of counsel for the
Company and, in the case of a Shelf Registration Statement, the fees and
disbursements of counsel for the Holder and (vii) the fees and
disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding
fees and expenses of counsel to the underwriters (other than fees and
expenses set forth in clause (ii) above) or the Holder and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale
or disposition of Registrable Notes by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company that covers any of the Registrable Notes pursuant to the provisions
of this RR Agreement and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(a) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(a) of this
RR Agreement which covers all of the Registrable Notes (but no other
securities unless approved by the Person or Persons who have requested the
Company to file the Self Registration Statement) on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted
by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Trustee" shall mean the trustee Norwest Bank Minnesota, National
-------
Association with respect to the Notes under the Indenture.
"Underwritten Registration" or "Underwritten Offering" shall mean a
------------------------- ---------------------
registration in which Registrable Notes are sold to an Underwriter (as
hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act.
-------------------------------
<PAGE>
4
(a) Demand Registration. One year after Closing the Holder of the
-------------------
Registrable Notes then outstanding may request registration under the Securities
Act of all or any portion of its Registrable Notes on Form S-1 or any similar
long-form registration. In addition, the Holder of the Registrable Notes then
outstanding may request registration under the Securities Act of all or any
portion of their Registrable Notes on Form S-2 or S-3 or any similar short-form
registration.
All requests for Demand Registrations shall be made by giving written
notice to the Company (the "Demand Notice"). Each Demand Notice shall specify
the approximate number of Registrable Notes requested to be registered. Within
ten days after receipt of any Demand Notice, the Company shall give written
notice of such requested registration to all other holders of Registrable Notes,
shall include in such registration all Registrable Notes with respect to which
the Company has received written requests for inclusion therein within 15 days
after the receipt of the Company's notice.
Demand registrations shall be short-form registrations whenever the
Company is permitted to use any applicable short form. The Company shall use
its best efforts to make short-form registrations on Form S-2 or S-3 (or any
successor form) available for the sale of Registrable Notes. The Holder of the
Registrable Notes outstanding may, in connection with any demand Registration,
require the Company to file a short-form Registration with the Securities and
Exchange Commission in accordance with and pursuant to Rule 415 promulgated
under the Securities Act (or any successor rule then in effect) (a "Shelf
-----
Registration"). The Company agrees to furnish to the Holders of Registrable
- ------------
Notes copies of any such supplement or amendment promptly after its being used
or filed with the SEC.
(b) Piggyback Registrations. Whenever the Company proposes to
-----------------------
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration) and the registration form to be used may be used for the
registration of Registrable Notes (a "Piggyback Registration"), the Company
----------------------
shall give prompt written notice to the Holder of the Registrable Notes of its
intention to effect such registration and shall include in such registration all
Registrable Notes with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) and 2(b). The Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Registrable Notes pursuant to the
Shelf Registration Statement.
(d) Effective Registration Statement. A Registration Statement
--------------------------------
pursuant to Section 2(a) and 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that, if, after it has been declared effective, the offering of Registrable
Notes pursuant to a Shelf Registration Statement is interfered with by any
<PAGE>
5
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to
have become effective during the period of such interference until the offering
of Registrable Notes pursuant to such Registration Statement may legally resume.
(e) Specific Enforcement. Without limiting the remedies available to
--------------------
the Holder, the Company acknowledges that any failure by the Company to comply
with its obligations under Section 2(a) and 2(b) hereof may result in material
irreparable injury to the Holder for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Holder may obtain such relief as may
be required to specifically enforce the Company's obligations under Section 2(a)
and 2(b) hereof.
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and 2(b) hereof, the Company
shall as expeditiously as possible but in no event sooner than 1 year after the
Closing Date:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Notes by the Holder thereof and
(z) shall comply as to form in all material respects with the requirements
of the applicable form and include all financial statements required by the
SEC to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act;
(c) furnish to the Holder of Registrable Notes, to counsel for the
Holder, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such
other documents as the Holder may reasonably request, in order to
facilitate the public sale or other disposition of the Registrable Notes;
and the Company consents to the use of such Prospectus and any amendment or
supplement thereto in accordance with applicable law by the Holder of
Registrable Notes in connection with the offering and sale of the
Registrable Notes covered by and in the manner described in such Prospectus
or any amendment or supplement thereto in accordance with applicable law;
<PAGE>
6
(d) use its best efforts to register or qualify the Registrable Notes
under all applicable state securities or "blue sky" laws of such
jurisdictions as the Holder of Registrable Notes covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with
the Holder in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. and do any and all other
acts and things which may be reasonably necessary or advisable to enable
the Holder to consummate the disposition in each such jurisdiction of such
Registrable Notes owned by the Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign corporation or as a
dealer in Securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject;
(e) notify the representative of the Holder and its counsel promptly
and, if requested by the Holder or counsel, confirm such advice in writing
(i) when a Registration Statement has become effective and when any post-
effective amendments and supplements thereto has been filed and become
effective, (ii) of any request by the SEC or any state securities authority
for amendments and supplements to a Registration Statement and Prospectus
or for additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) if,
between the effective date of a Registration Statement and the closing of
any sale of Registrable Notes covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating to
the offering cease to be true and correct in all material respects or if
the Company receives any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any
event during the period a Shelf Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of
any changes in such Registration Statement or Prospectus in order to make
the statements therein not misleading and (vi) of any determination by the
Company that a post-effective amendment to a Registration Statement would
be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to the Holder of the
withdrawal of any such order;
(g) furnish to the Holder of Registrable Notes, without charge, at
least one conformed copy of each Registration Statement and any post-
effective amendment
<PAGE>
7
thereto (without documents incorporated therein by reference or exhibits
thereto, unless requested);
(h) cooperate with the Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold and not
bearing any restrictive legends and enable such Registrable Notes to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holder may reasonably request at
least one business day prior to the closing of any sale of Registrable
Notes;
(i) upon the occurrence of any event contemplated by Section 3(e)(v)
or (vi) hereof, use its best efforts to prepare and file with the SEC a
supplement or post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes, such Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees to notify
the Holder to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holder hereby agrees to
suspend use of the Prospectus upon receipt of such notice until the Company
has amended or supplemented the Prospectus to correct such misstatement or
omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Holder and it's counsel and make such of the
representatives of the Company as shall be reasonably requested by the
Holder or it's counsel available for discussion of such document, and shall
not at any time file or make any amendment to the Registration Statement,
any Prospectus or any amendment of or supplement to a Registration
Statement or a Prospectus or any document which is to be incorporated by
reference into a Registration Statement or a Prospectus, of which the
Holder and its counsel shall not have previously been advised and furnished
a copy or to which the Holder or its counsel shall reasonably object;
(k) cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended (the "TIA"), in connection with the registration of the
Registrable Notes, as the case may be, cooperate with the Trustee and the
Holder to effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the TIA and
execute, and use its best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes and all other forms and
documents
<PAGE>
8
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(l) in the case of a Shelf Registration, make available for inspection
by a representative of the Holder of the Registrable Notes, any Underwriter
participating in any disposition pursuant to such Shelf Registration
Statement, and attorneys and accountants designated by the Holder, at
reasonable times and in a reasonable manner, all financial and other
records, pertinent documents and properties of the Company, and cause the
respective officers, directors and employees of the Company to supply all
information reasonably requested by any such representative, Underwriter,
attorney or accountant in connection with a Shelf Registration Statement;
(m) if reasonably requested by the Holder of Registrable Notes covered
by a Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to the
Holder as the Holder reasonably requests to be included therein and (ii)
make all required filings of such Prospectus supplement or such post-
effective amendment as soon as the Company has received notification of the
matters to be incorporated in such filing; and
(n) enter into such customary agreements and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of such Registrable Notes including, but not limited to, an
Underwritten Offering and in such connection, (i) to the extent possible,
make such representations and warranties to the Holder and, in the event of
an Underwritten Offering, any Underwriters of such Registrable Notes with
respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by reference
or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii)
obtain opinions of counsel to the Company (which counsel and opinions, in
form, scope and substance, shall be reasonably satisfactory to the Holder
and such Underwriters and their respective counsel) addressed to the Holder
and Underwriter of Registrable Notes, covering the matters customarily
covered in opinions requested in underwritten offerings, (iii) obtain "cold
comfort" letters from the independent certified public accountants of the
Company (and, if necessary, any other certified public accountant of any
subsidiary of the Company, or of any business acquired by the Company for
which financial statements and financial data are or are required to be
included in the Registration Statement) addressed to the Holder and
Underwriter of Registrable Notes, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings, and (iv) deliver such documents
and certificates as may be reasonably requested by the Holder, and which
are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company
made pursuant to
<PAGE>
9
clause (i) above and to evidence compliance with any customary conditions
contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may require
the Holder of Registrable Notes to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Notes as the Company may from time to time reasonably request in
writing.
In the case of a Shelf Registration Statement, the Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 3(e)(v) or (vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Notes pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Notes current at the
time of receipt of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Notes pursuant to a Registration
Statement, the Company shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this RR Agreement by the
number of days during the period from and including the date of the giving of
such notice to and including the date when the Holder shall have received copies
of the supplemented or amended Prospectus necessary to resume such dispositions.
The Holder of Registrable Notes covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Notes included in such offering.
4. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the Holder, and
each Person, if any, who controls the Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common
control with, or is controlled by, the Holder, from and against all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by the Holder, or any such controlling or
affiliated Person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment thereto)
pursuant to which the Registrable Notes were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or
<PAGE>
10
necessary to make the statements therein not misleading, or caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to the Holder furnished to the Company in writing by
the Holder expressly for use therein. In connection with any Underwritten
Offering permitted by Section 3, the Company will also indemnify the
Underwriters, if any, selling brokers, dealers and similar Notes industry
professionals participating in the distribution, their officers and directors
and each Person who controls such Persons (within the meaning of the 1933 Act
and the 1934 Act) to the same extent as provided above with respect to the
indemnification of the Holder, if requested in connection with any Registration
Statement.
(b) The Holder agrees, to indemnify and hold harmless the Company, and
each of their respective directors, officers who sign the Registration Statement
and each Person, if any, who controls the Company, within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as
the foregoing indemnity from the Company to the Holder, but only with reference
to information relating to such Holder furnished to the Company in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel)
<PAGE>
11
for the Holder and all Persons, if any, who control the Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, its officers who sign the Registration
Statement and each Person, if any, who controls the Company within the meaning
of either such Section and (c) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Holder and all Persons, if any,
who control the Holder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In such case
involving the Holder and Persons who control the Holder, such firm shall be
designated in writing by the Holder. In all other cases, such firm shall be
designated by the Company. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but, if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 4 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holder shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holder
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holder's
respective obligations to contribute pursuant to this Section 4(d) are several
in proportion to the respective principal amount of Registrable Notes of such
Holder that were registered pursuant to a Registration Statement.
<PAGE>
12
(e) The Company and the Holder agree that it would not be just or
equitable if contribution pursuant to this Section 4 were determined by pro rata
--- ----
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Notes were
sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 4 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 4
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Holder or any Person controlling the Holder, or by or on behalf of the
Company, its officers or directors or any Person controlling the Company, and
(iii) any sale of Registrable Notes pursuant to a Shelf Registration Statement.
5. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not entered into, and
--------------------------
on or after the date of this RR Agreement will not enter into, any agreement
which is inconsistent with the rights granted to the Holder of Registrable Notes
in this RR Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holder hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Company's other
issued and outstanding Notes under any such agreements.
(b) Amendments and Waivers. The provisions of this RR Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Holder; provided, however, that no amendment, modification, supplement, waiver
-------- -------
or consent to any departure from the provisions of Section 4 hereof shall be
effective as against the Holder of Registrable Notes unless consented to in
writing by the Holder.
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier,
<PAGE>
13
or any courier guaranteeing overnight delivery (i) if to a Holder, at the most
current address given by such Holder to the Company by means of a notice given
in accordance with the provisions of this Section 5(c), which address initially
is, with respect to the Holder, the address set forth in the Agreements; and
(ii) if to the Company, initially at the Company's address set forth in the
Agreements and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 5(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This RR Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
--------
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms of the Agreements. If any transferee of any
Holder shall acquire Registrable Notes, in any manner, whether by operation of
law or otherwise, such Registrable Notes shall be held subject to all of the
terms of this RR Agreement, and by taking and holding such Registrable Notes
such Person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this RR Agreement and such Person
shall be entitled to receive the benefits hereof. The Holder (in its capacity
as Distribution Manager and Placement Agent) shall have no liability or
obligation to the Company with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this RR Agreement.
(e) Third Party Beneficiary. The Holder shall be the third party
-----------------------
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Holder, on the other hand, and shall have the right to enforce
such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of the Holder hereunder.
(f) Counterparts. This RR Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
14
(g) Headings. The headings in this RR Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This RR Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
(i) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Purchases and Sales of Securities. The Company shall not, and
---------------------------------
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act) not to, purchase and then resell or otherwise transfer any
Securities.
<PAGE>
15
IN WITNESS WHEREOF, the parties have executed this RR Agreement as of
the date first written above.
READ-RITE CORPORATION
By
______________________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
FLEETBOSTON ROBERTSON STEPHENS
By
__________________________________
Name:
Title:
<PAGE>
EXHIBIT 5.1
OPINION OF WILSON SONSINI GOODRICH & ROSATI
February 7, 2000
Read-Rite Corporation
345 Los Coches Street
Milpitas, CA 95035
RE: READ-RITE CORPORATION -- REGISTRATION STATEMENT ON FORM S-4 AND
FORM S-3
Ladies and Gentlemen:
At your request, we have examined: (i) the Registration Statement on
Form S-4 (File No. 333-95527), including Amendment No. 1 (the "Form S-4") filed
or to be filed by Read-Rite Corporation, a Delaware corporation (the "Company")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
Company's offer to exchange its 10% Convertible Subordinated Notes due September
1, 2004 (the "Exchange Notes") for up to all of its outstanding 6 1/2%
Convertible Subordinated Notes due September 1, 2004 and (ii) the Registration
Statement on Form S-3, as amended, (the "Form S-3," and, with the Form S-4, the
"Registration Statement") filed or to be filed by the Company with the
Commission under the Securities Act relating to the Company's issuance of up to
$75,000,000 aggregate principal amount of additional Exchange Notes (the
"Additional Exchange Notes").
The Exchange Notes and the Additional Exchange Notes are to be issued
pursuant to a Subordinated Indenture, as supplemented by a Supplemental Trust
Indenture, which have been filed as exhibits to the Registration Statement
(collectively, the "Indenture"), to be entered into between the Company and
Norwest Bank Minnesota, National Association, as Trustee (the "Trustee").
We have examined instruments, documents and records which we deemed
relevant and necessary for the basis of our opinion hereinafter expressed. In
such examination, we have assumed (a) the authenticity of original documents and
the genuineness of all signatures, (b) the conformity to the originals of all
documents submitted to us as copies and (c) the truth, accuracy and completeness
of the information, representations and warranties contained in the records,
documents, instruments and certificates we have reviewed.
Based on such examination, we are of the opinion that the issuance of the
Exchange Notes and the Additional Exchange Notes has been duly authorized by
appropriate corporate action and that when the Exchange Notes and the Additional
Exchange Notes, in the form included in the Indenture, have been duly completed,
executed, authenticated and delivered in accordance with the Indenture and sold
and delivered as described in the Registration Statement and the Prospectus, the
Exchange Notes and the Additional Exchange Notes will be valid and binding
obligations of the Company, entitled to the benefits of the Indenture. We are of
the further opinion that the shares issuable upon conversion of the Exchange
Notes and the Additional Exchange Notes have been duly authorized and, when
issued by the Company upon conversion of the Exchange Notes and the Additional
Exchange Notes in accordance with the Indenture, will be validly issued, fully
paid and nonassessable.
<PAGE>
Read-rite Corporation
February 7, 2000
Page 2
Our opinion that any document is legal, valid and binding is qualified as
to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other laws relating to or
affecting the rights of creditors generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, including without limitation, concepts
of materiality reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief and limitation of
rights of acceleration, regardless of whether such enforceability is considered
in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the above-
referenced Registration Statement and the use of our name wherever it appears in
the Registration Statement, the Prospectus and in any amendment of supplement
thereto. In giving such consent, we do not believe that we are "experts" within
the meaning of such term used in the Act or the rules and regulations of the
Securities and Exchange Commission issued thereunder with respect to any part of
the Registration Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati, P.C.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in the Amendment No. 1 to
Registration Statement on Form S-4 (No. 333-95527) and the Registration
Statement on Form S-3 and related Prospectus of Read-Rite Corporation for the
offer to exchange Convertible Subordinated Notes and to the incorporation by
reference therein of our report dated October 22, 1999 (except for the sixth
paragraph of Note 1, as to which the date is December 29, 1999), 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,
1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
February 6, 2000
<PAGE>
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
_____________________________
_____ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. National Banking Association 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
_____________________________
READ-RITE CORPORATION
(Exact name of obligor 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
(Address of principal executive offices) (Zip code)
_____________________________
Convertible Subordinated Notes due 2004
(Title of the indenture securities)
================================================================================
<PAGE>
Item 1. General Information. Furnish the following information as to the
--------------------
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
--------------------------
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 15. Foreign Trustee. Not applicable.
----------------
Item 16. List of Exhibits. List below all exhibits filed as a part of this
----------------- Statement of Eligibility. Norwest Bank incorporates
by reference into this Form T-1 the exhibits
attached hereto.
Exhibit 1. a. A copy of the Articles of Association of the trustee
now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28, 1872,
by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of the
Currency dated January 2, 1934, approving the
consolidation of The Northwestern National Bank of
Minneapolis and The Minnesota Loan and Trust Company
of Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust Company
of Minneapolis.*
c. A copy of the certificate of the Acting Comptroller
of the Currency dated January 12, 1943, as to change
of corporate title of Northwestern National Bank and
Trust Company of Minneapolis to Northwestern
National Bank of Minneapolis.*
<PAGE>
d. A copy of the letter dated May 12, 1983 from the
Regional Counsel, Comptroller of the Currency,
acknowledging receipt of notice of name change
effective May 1, 1983 from Northwestern National
Bank of Minneapolis to Norwest Bank Minneapolis,
National Association.*
e. A copy of the letter dated January 4, 1988 from the
Administrator of National Banks for the Comptroller
of the Currency certifying approval of consolidation
and merger effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with various other
banks under the title of "Norwest Bank Minnesota,
National Association."*
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b) of
the Act.
Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.**
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to exhibit number 25 filed with registration
statement number 33-66026.
** Incorporated by reference to exhibit number 25.1 filed with
registration statement number 333-93499
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 21st day of January 2000.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Timothy P. Mowdy
_________________________
Timothy P. Mowdy
Corporate Trust Officer
<PAGE>
EXHIBIT 6
January 21, 2000
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Timothy P. Mowdy
________________________
Timothy P. Mowdy
Corporate Trust Officer
<PAGE>
EXHIBIT 99.1
------------
LETTER OF TRANSMITTAL
READ-RITE CORPORATION
Offer for all Outstanding
6 1/2% Convertible Subordinated Notes due September 1, 2004
in Exchange for the 10% Convertible Subordinated Notes
due September 1, 2004
Which Will be Registered Under the
Securities Act of 1933, As Amended, Prior to Closing
________________________________________________________________________________
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON MARCH 8, 2000 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS
MAY BE WITHDRAWN PRIOR TO 5:00 P.M., EASTERN STANDARD
TIME, ON THE EXPIRATION DATE
________________________________________________________________________________
Delivery To: Norwest Bank Minnesota, National Association, Exchange Agent
By Regular Mail or Overnight Courier: By Registered and Certified Mail:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Operations
MAC N9303-121 MAC N9303-121
Sixth Street & Marquette Avenue P.O. Box 1517
Minneapolis, MN 55479 Minneapolis, MN 55480
In Person by Hand Only:
Norwest Bank Minnesota, N.A.
12th Floor - Northstar East Building
Corporate Trust Services
608 Second Avenue South
Minneapolis, MN
For Information or Confirmation by Telephone Call:
(612) 667-9764
By Facsimile Transmission
(for Eligible Institutions only):
(612) 667-4927
Attention: Corporate Trust Department
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
<PAGE>
The undersigned acknowledges that he or she has received and reviewed the
preliminary Prospectus, dated February 7, 2000 (the "Prospectus"), of Read-Rite
Corporation, a Delaware corporation (the "Company"), and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer (the
"Exchange Offer") to exchange an aggregate principal amount of up to
$172,500,000 of the Company's 10% Convertible Subordinated Notes due September
1, 2004 (the "Exchange Notes"), for an aggregate principal amount of up to
$345,000,000 of the Company's issued and outstanding 6 1/2% Convertible
Subordinated Notes due September 1, 2004 (the "Existing Notes") from the
registered holders thereof (the "Holders").
For each Existing Note accepted for exchange, the Holder of such Existing
Note will receive an Exchange Note having a principal amount equal to fifty
percent (50%) of the principle amount of the surrendered Existing Note. Each
Holder will also receive a payment, in cash or in common stock at our
election, of $50 for each $1,000 principal amount of the Exchange Notes issued
in the Exchange Offer in the event that the interest payment on the Existing
Notes due March 1, 2000 has not been paid or provided by us prior to the
Exchange Offer. The Exchange Notes will bear interest from the date of issuance.
Accordingly, Holders of Exchange Notes on the relevant record date for the
first interest payment date following the consummation of the Exchange Offer
will receive interest accruing from the date of issuance.
Holder's who tender Existing Notes may offer to purchase up to $50,000,000
aggregate principal amount of additional Exchange Notes for cash pursuant to the
Cash Offer. See "Cash Offer for Additional Exchange Notes" section of the
Prospectus.
This Letter is to be completed by a Holder of Existing Notes and is to be
made by book-entry transfer to the account maintained by the Exchange Agent at
The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in "The Exchange Offer--Procedures for tendering
existing notes" section of the Prospectus. Holders of Existing Notes who are
unable to deliver confirmation of the book-entry tender of their Existing
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their
Existing Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed delivery procedures" section of the Prospectus.
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer and Cash Offer.
<PAGE>
List below the Existing Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Existing Notes should be listed and attached on a separate signed schedule.
_______________________________________________________________________________
DESCRIPTION OF EXISTING NOTES 1 2
- -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Aggregate Principal
Holder(s) Principal Amount
(Please fill in, if blank) Amount of Tendered*
Existing
Note(s)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------
* Unless otherwise indicated in this column, a Holder will be deemed to have
tendered ALL of the Existing Notes represented by the Existing Notes
indicated in column 2. See Instruction 2. Existing Notes tendered hereby
must be in denominations of principal amount of $2,000 and any integral
multiple thereof. See Instruction 1.
- -------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution____________________________________________
Account Number__________________ Transaction Code Number_____________
[_] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)__________________________________________
Window Ticket Number (if any)____________________________________________
Date of Execution of Notice of Guaranteed Delivery_______________________
Name of Institution which Guaranteed Delivery____________________________
For Book-Entry Transfer, Complete the Following:
Account Number__________________ Transaction Code Number_____________
<PAGE>
[_] CHECK HERE IF OFFERING TO BUY ADDITIONAL EXCHANGE NOTES FOR CASH AND
COMPLETE THE FOLLOWING:
Aggregate Principal Amount of Exchange Notes $ **
------------------------
* The Cash Offer is entirely contingent upon the completion of the Exchange
Offer and, in no event, will we will sell any additional Exchange Notes if the
Exchange Offer is not completed for any reason.
** Offers for additional Exchange Notes must be in denominations of principal
amount of $1,000 and any integral multiple thereof.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:____________________________________________________________________
Address:_________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Existing Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering such a prospectus the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. If the undersigned is a broker-dealer that will receive Exchange Notes, it
represents that the Existing Notes to be exchanged for the Exchange Notes were
acquired as a result of market-making activities or other trading activities.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Existing Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Existing Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Existing Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Existing Notes, with full power of substitution, among
other things, to cause the Existing Notes to be assigned, transferred and
exchanged. The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Existing
Notes, and to acquire Exchange Notes issuable upon the exchange of such tendered
Existing Notes, and that, when the same are accepted for exchange, the Company
will acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim when
the same are accepted by the Company. The undersigned hereby further represents
that any Exchange Notes acquired in exchange for Existing Notes tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is the undersigned,
that neither the Holder of such Existing Notes nor any such other person is
participating in, intends to participate in or has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and that neither the Holder of such Existing Notes nor any such
other person is an "affiliate," as defined in Rule 405 under the Securities Act
of the Company.
The Exchange Notes issued pursuant to the Exchange Offer in exchange for
the Existing Notes may be offered for resale, resold and otherwise transferred
by Holders thereof (other than any such Holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such Holders' business and such Holders have no arrangement with any
person to participate in the distribution of such Exchange Notes. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes
and has no arrangement or understanding to participate in a distribution of
Exchange Notes. If any Holder is an affiliate of the Company, is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the Exchange Notes to be acquired pursuant to the Exchange
Offer, such Holder must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. If
the undersigned is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Existing Notes, it represents that the Existing Notes to
be exchanged for the Exchange Notes were acquired by it as a result of market-
making activities or other trading activities and acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes;
<PAGE>
however, by so acknowledging and by delivering a prospectus meeting the
requirements of the Securities Act, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Existing Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please credit the account indicated above maintained at the
Book-Entry Transfer Facility.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
EXISTING NOTES AS SET FORTH IN SUCH BOX ABOVE.
<PAGE>
_______________________________________________________________________________
SPECIAL ISSUANCE INSTRUCTION
(See Instructions 3 and 4)
_______________________________________________________________________________
To be completed ONLY if Exchange Notes not accepted for exchange are to be
returned by credit to an account maintained at the Book-Entry Transfer Facility
other than the account indicated above.
Issue: Exchange Notes and/or Existing Notes to:
Name(s)........................................................................
(Please Type or Print)
...............................................................................
(Please Type or Print)
Address........................................................................
...............................................................................
(Zip Code)
(Complete Substitute Form W-9)
[_] Credit unexchanged Existing Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
_______________________________________________________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
...............................................................................
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF, OR AN ELECTRONIC CONFIRMATION
PURSUANT TO THE DEPOSITORY TRUST COMPANY'S ATOP SYSTEM (TOGETHER WITH A BOOK-
ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., EASTERN STANDARD TIME, ON THE EXPIRATION DATE.
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
________________________________________________________________________________
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 below)
x__________________________________ ___________________,2000
x__________________________________ ___________________,2000
(Signature(s) of Owner) (Date)
Area Code and Telephone Number__________________________________________________
If a Holder is tendering any Existing Notes, this Letter must be signed by
the registered Holder(s) as the name(s) appear(s) on the certificate(s) for the
Existing Notes or by any person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s):________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity:_______________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name and Firm)
Dated:____________________________________________________________________, 2000
________________________________________________________________________________
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer for the
61/2% Convertible Subordinated Notes due September 1, 2004 of Read-Rite
Corporation in Exchange for the
10% Convertible Subordinated Notes due September 1, 2004
of Read-Rite Corporation
Which Will be Registered Under the
Securities Act of 1933, As Amended, Prior to Closing
1. Delivery of this Letter; Guaranteed Delivery Procedures.
This Letter, or an electronic confirmation pursuant to the Depository
Trust Company's ATOP system, is to be completed by Holders of Existing Notes
for tenders that are made pursuant to the procedures for delivery by book-
entry transfer set forth in "The Exchange Offer--Procedures for tendering
existing notes" section of the Prospectus. Book-Entry Confirmation as well as
a properly completed and duly executed Letter (or manually signed facsimile
hereof), or an electronic confirmation pursuant to the Depository Trust
Company's ATOP system, and any other required documents, must be received by
the Exchange Agent at the address set forth herein on or prior to the
Expiration Date, or the tendering Holder must comply with the guaranteed
delivery procedures set forth below. Existing Notes tendered hereby must be in
denominations of principal amount of $2,000 and any integral multiple thereof.
Holders who cannot complete the procedure for book-entry transfer on a
timely basis or who cannot deliver all other required documents to the Exchange
Agent on or prior to the Expiration Date may tender their Existing Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed delivery procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) prior to 5:00 P.M., Eastern Standard Time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof), or an electronic
confirmation pursuant to the Depository Trust Company's ATOP system, and
Notice of Guaranteed Delivery, substantially in the form provided by the
Company (by facsimile transmission, mail or hand delivery), setting forth the
name and address of the Holder of Existing Notes and the amount of Existing
Notes tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange ("NYSE") trading days after the
Expiration Date a Book-Entry Confirmation and any other documents requested by
this Letter will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) a Book-Entry Confirmation and all other documents required by
this Letter, must be received by the Exchange Agent within three NYSE trading
days after the Expiration Date.
The delivery of the Existing Notes and all other required documents will be
deemed made only when confirmed by the Exchange Agent.
See "The Exchange Offer" section of the Prospectus.
<PAGE>
2. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered Holder of the Existing Notes
tendered hereby, the signature must correspond exactly with the name as it
appears on a security position listing as the Holder of such Existing Notes in
the Book-Entry Transfer Facility System without any change whatsoever.
If any tendered Existing Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Existing Notes are registered in different names, it will
be necessary to complete, sign and submit as many separate copies of this Letter
as there are different registrations.
When this Letter is signed by the registered Holder or Holders of the
Existing Notes specified herein and tendered hereby, no separate bond powers are
required. If, however, the Exchange Notes are to be issued to a person other
than the registered Holder, then separate bond powers are required.
If this Letter or any bond powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.
Signatures on bond powers required by this Instruction 3 must be guaranteed
by a firm which is a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program (each an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Existing Notes are tendered: (i) by a registered
Holder of Existing Notes (including any participant in the Book-Entry Transfer
Facility system whose name appears on a security position listing as the Holder
of such Existing Notes) who has not completed the box entitled "Special Issuance
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
3. Special Issuance Instructions.
Holders tendering Existing Notes by book-entry transfer may request that
Existing Notes not exchanged be credited to such account maintained at the Book-
Entry Transfer Facility as such Holder may designate hereon. If no such
instructions are given, such Existing Notes not exchanged will be credited to
the proper account maintained at The Depository Trust Company.
<PAGE>
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated.
4. Taxpayer Identification Number.
Federal income tax law generally requires that a tendering Holder whose
Existing Notes are accepted for exchange must provide the Company (as payor)
with such Holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering Holder who is an individual, is
his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption from backup withholding, such
tendering Holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, the Exchange Agent may be required to withhold 31% of the
amount of any reportable payments made after the exchange to such tendering
Holder of Exchange Notes. If withholding results in an overpayment of taxes, a
refund may obtained.
Exempt Holders of Existing Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering Holder of Existing Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying, under penalties of perjury, that the TIN provided is correct, (or
that such Holder is awaiting a TIN) and that (i) the Holder is exempt from
backup withholding, or (ii) the Holder has not been notified by the Internal
Revenue Service that such Holder is subject to backup withholding as a result of
a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the Holder that such Holder is no longer subject to backup
withholding. If the tendering Holder of Existing Notes is a nonresident alien or
foreign entity not subject to backup withholding, such Holder must give the
Exchange Agent a completed Form W-8, Certificate of Foreign Status. These forms
may be obtained from the Exchange Agent. If the Existing Notes are in more than
one name or are not in the name of the actual owner, such Holder should consult
the W-9 Guidelines for information on which TIN to report. If such Holder does
not have a TIN, such Holder should consult the W-9 Guidelines for instructions
on applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN. Note: Checking this box and writing
"applied for" on the form means that such Holder has already applied for a TIN
or that such Holder intends to apply for one in the near future. If the box in
Part 2 of the Substitute Form W-9 is checked, the Exchange Agent will retain 31%
of reportable payments made to a Holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the Holder furnishes the
Exchange Agent with his or her TIN within sixty (60) days of the date of the
Substitute Form W-9, the Exchange Agent will remit such amounts retained during
such sixty (60) day period to such Holder and no further amounts will be
retained or withheld from payments made to the Holder thereafter. If, however,
such Holder does not provide its TIN to the Exchange Agent within such sixty
(60) day period, the Exchange Agent will remit such previously withheld amounts
to the Internal Revenue Service as backup withholding and will
<PAGE>
withhold 31% of all reportable payments to the Holder thereafter until such
Holder furnishes its TIN to the Exchange Agent.
5. Transfer Taxes,
The Company will pay all transfer taxes, if any, applicable to the transfer
of Existing Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes and/or substitute Existing Notes not exchanged are to be
registered or issued in the name of, any person other than the registered Holder
of the Existing Notes tendered hereby, or if tendered Existing Notes are
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the transfer of
Existing Notes to the Company or its order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the registered Holder or
any other persons) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted
herewith, the amount of such transfer taxes will be billed directly to such
tendering Holder.
6. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Existing Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Existing
Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Existing Notes nor shall any of them incur any liability for failure to give any
such notice.
8. Withdrawal Rights.
Tenders of Existing Notes may be withdrawn at any time prior to 5:00 P.M.,
Eastern Standard Time, on the Expiration Date.
For a withdrawal of a tender of Existing Notes to be effective, a written
notice of withdrawal must be received by the Exchange Agent at the address set
forth above prior to 5:00 P.M., Eastern Standard Time, on the Expiration Date.
Any such notice of withdrawal must (i) specify the name of the person having
tendered the Existing Notes to be withdrawn (the "Depositor"), (ii) specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Existing Notes and otherwise comply with the
procedures of such facility, (iii) contain a statement that such Holder is
withdrawing his election to have such Existing Notes exchanged, (iv) be signed
by the Holder in the same manner as the
<PAGE>
original signature on the Letter by which such Existing Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer to have the Trustee with respect to the Existing Notes register the
transfer of such Existing Notes in the name of the person withdrawing the tender
and (v) specify the name in which such Existing Notes are registered, if
different from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Existing Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the Existing Notes so withdrawn are validly
retendered. Any Existing Notes that have been tendered for exchange but which
are not exchanged for any reason will be credited into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures set forth in "The Exchange Offer--Procedures for tendering existing
notes" section of the Prospectus, such Existing Notes will be credited to an
account maintained with the Book-Entry Transfer Facility for the Existing
Notes as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Existing Notes may be
retendered by following the procedures described above at any time on or prior
to 5:00 P.M., Eastern Standard Time, on the Expiration Date.
9. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: _______________
<TABLE>
<S> <C> <C>
SUBSTITUTE Part 1-PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY TIN:____________________________________
Form W-9 SIGNING AND DATING BELOW. Social Security Number or
Employer Identification Number
Department of the Treasury Part 2-TIN Applied For [__]
Internal Revenue Service
Payor's Request for CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Taxpayer
Identification Number (1) the number shown on this form is my correct TIN (or I am waiting for a number to be
("TIN") and issued to me).
Certification (2) I am not subject to backup withholding either because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding,
and
(3) any other information provided on this form is true and correct.
SIGNATURE.............................................................. DATE...............
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to backup
withholding because of underreporting of interest or dividends on your tax return and you have not been notified by the IRS that
you are no longer subject to backup withholding.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center of Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- -------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
READ-RITE CORPORATION
You must use this form or one substantially equivalent to this form to
accept the Exchange Offer of Read-Rite Corporation (the "Company") made pursuant
to the preliminary Prospectus, dated February 7, 2000 (the "Prospectus"), if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach Norwest Bank Minnesota, National
Association, as exchange agent (the "Exchange Agent") prior to 5:00 P.M.,
Eastern Standard Time, on the Expiration Date of the Exchange Offer. Such form
may be delivered or transmitted by facsimile transmission, mail or hand delivery
to the Exchange Agent as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Existing Notes pursuant to the Exchange
Offer, a Letter of Transmittal (or facsimile thereof) or an electronic
confirmation pursuant to the Depository Trust Company's ATOP system, with any
required signature guarantees and any other required documents must also be
received by the Exchange Agent prior to 5:00 P.M., Eastern Standard Time, on the
Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.
Delivery To: Norwest Bank Minnesota,
National Association, Exchange Agent
By Regular Mail or Overnight Courier: By Registered Certified Mail:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Operations
MAC N9303-121 MAC N9303-121
Sixth Street & Marquette Avenue P.O. Box 1517
Minneapolis, MN 55479 Minneapolis, MN 55480
In Person by Hand Only:
Norwest Bank Minnesota, N.A.
12th Floor - Northstar East Building
Corporate Trust Services
608 Second Avenue South
Minneapolis, MN
For Information or Confirmation by Telephone Call:
(612) 667-9764
By Facsimile Transmission
(for Eligible Institutions only):
(612) 667-4927
Attention: Corporate Trust Department
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Existing Notes set forth below pursuant to the
guaranteed delivery procedure described in "The Exchange Offer-Guaranteed
Delivery Procedures" section of the Prospectus.
Total Principal Amount of Existing Notes Tendered:* For book-entry transfer to
The Depository Trust
Company, please provide
account number.
$ _________ Account Number ___________
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
x _________________________________________ ______________________
x _________________________________________ ______________________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: ___________
Must be signed by the Holder(s) of Existing Notes as their name(s)
appear(s) on a security position listing, or by person(s) authorized to become
registered Holder(s) by endorsement and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below:
Please print name(s) and address(es)
Name(s): __________________________________________________________
__________________________________________________________
__________________________________________________________
Capacity: __________________________________________________________
Address(es): __________________________________________________________
__________________________________________________________
__________________________________________________________
_______________________
* Must be in denominations of principal amount of $2,000 and any integral
multiple thereof.
2
<PAGE>
EXHIBIT 99.3
READ-RITE CORPORATION
Offer for all Outstanding
6 1/2% Convertible Subordinated Notes due September 1, 2004
in Exchange for
10% Convertible Subordinated Notes due September 1, 2004,
Which Will Be Registered Under
the Securities Act of 1933,
As Amended, Prior to Closing
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Read-Rite Corporation (the "Company") is offering, upon and subject to the
terms and conditions set forth in the preliminary Prospectus, dated February 7,
2000 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") its 10% Convertible
Subordinated Notes due September 1, 2004 for its outstanding 6 1/2% Convertible
Subordinated Notes due September 1, 2004 (the "Existing Notes").
We are requesting that you contact your clients for whom you hold Existing
Notes regarding the Exchange Offer. For your information and for forwarding to
your clients for whom you hold Existing Notes registered in your name or in the
name of your nominee, or who hold Existing Notes registered in their own names,
we are enclosing the following documents:
1. Preliminary Prospectus dated February 7, 2000;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if time will not permit all required documents to reach the Exchange Agent prior
to the Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Existing Notes registered in your name or the name of your nominee,
with space provided for obtaining such clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
<PAGE>
6. Return envelopes addressed to Norwest Bank Minnesota, N.A., Corporate
Trust Operations, MAC N9303-121, P.O. Box 1517, Minnesota, MN 55480, the
Exchange Agent for the Exchange Offer.
Your prompt action is requested. The Exchange Offer will expire at 5:00
P.M., Eastern Standard Time, on March 8, 2000, unless extended by the Company
(the "Expiration Date"). Existing Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), or an electronic
confirmation pursuant to the Depository Trust Company's ATOP system, with any
required signature guarantees and any other required documents, should be sent
to the Exchange Agent all in accordance with the instructions set forth in the
Letter of Transmittal and the Prospectus.
If a registered holder of Existing Notes desires to tender, but the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected by following the guaranteed delivery procedures described
in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Existing Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Existing Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to Norwest
Bank Minnesota, N.A., the Exchange Agent for the Exchange Offer, at its
address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
READ-RITE CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
<PAGE>
EXHIBIT 99.4
READ-RITE CORPORATION
Offer for all Outstanding
6 1/2% Convertible Subordinated Notes due September 1, 2004
in Exchange for
10% Convertible Subordinated Notes due September 1, 2004,
Which Will Be Registered Under
the Securities Act of 1933,
As Amended, Prior to Closing
To Our Clients:
Enclosed for your consideration is a preliminary Prospectus, dated February
7, 2000 (the "Prospectus"), and the related Letter of Transmittal (the "Letter
of Transmittal"), relating to the offer (the "Exchange Offer") of Read-Rite
Corporation (the "Company") to exchange its 10% Convertible Subordinated Notes
due September 1, 2004 (the "Exchange Notes"), for its outstanding 6 1/2%
Convertible Subordinated Notes due September 1, 2004 (the "Existing Notes"),
upon the terms and subject to the conditions described in the Prospectus and the
Letter of Transmittal.
This material is being forwarded to you as the beneficial owner of the
Existing Notes held by us for your account but not registered in your name. A
tender of such Existing Notes may only be made by us as the holder of record and
pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Existing Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Existing Notes on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 P.M., Eastern Standard Time, on March 8, 2000, unless extended by the
Company. Any Existing Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Existing Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Conditions for
completion of the exchange offer."
<PAGE>
3. Any transfer taxes incident to the transfer of Existing Notes from the
holder to the Company will be paid by the Company, except as otherwise provided
in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 P.M., Eastern Standard Time, on
March 8, 2000, unless extended by the Company.
If you wish to have us tender your Existing Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. The Letter of Transmittal is furnished to you for information only
and may not be used directly by you to tender Existing Notes.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Read-Rite
Corporation with respect to its Existing Notes.
This will instruct you to tender the Existing Notes indicated below (or,
if no number is indicated below, all Existing Notes) held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
Please tender the Existing Notes held by you for my account as indicated
below:
6 1/2% Convertible Subordinated Notes due September 1, 2004
$_________________ (Aggregate Principal Amount of Existing Notes)
[__] Please do not tender any Existing Notes held by you for my
account.
Dated: ___________________, 2000
Signature(s): __________________________________________________________________
Print name(s) here: ____________________________________________________________
(Print Address(es)): ___________________________________________________________
(Area Code and Telephone Number(s)): ___________________________________________
(Tax Identification or Social Security Number(s)): _____________________________
None of the Existing Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. After receipt of
instructions to tender, unless we receive specific contrary instructions we will
tender all the Existing Notes held by us for your account.
