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                                                                   EXHIBIT 10.49

                              READ-RITE CORPORATION


                            MANAGEMENT SEVERANCE PLAN



                                    ARTICLE I

                PURPOSE, ESTABLISHMENT AND APPLICABILITY OF PLAN

         1. Purposes. It is expected that the Company from time to time will
consider the possibility of a Change of Control. The Board recognizes that such
consideration can be a distraction to key Employees and can cause such Employees
to consider alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication and objectivity of these
Employees, notwithstanding the possibility, threat or occurrence of a Change of
Control. The Board believes that it is in the best interests of the Company and
its stockholders to provide these Employees with certain severance benefits upon
termination of employment following a Change of Control. Such benefits provide
these Employees with enhanced financial security and provide an efficient
incentive and encouragement to these Employees to remain with the Company,
notwithstanding the possibility or occurrence of a Change of Control, and to
maximize the value of the Company upon a Change of Control for the benefit of
its stockholders.

         2.  Establishment of Plan. As of the Effective Date, the Company hereby
establishes the Plan, as set forth in this document.

         3. Applicability of Plan. Subject to the terms of this Plan, the
benefits provided by this Plan shall be available to those Employees who, on or
after the Effective Date, receive a Notice of Participation.

         4. Contractual Right to Benefits. This Plan and the Notice of
Participation establish and vest in each Participant a contractual right to the
benefits to which he or she is entitled pursuant to the terms thereof,
enforceable by the Participant against the Company.


                                   ARTICLE II

                          DEFINITIONS AND CONSTRUCTION

         Whenever used in the Plan, the following terms shall have the meanings
set forth below.

         1. Annual Compensation. "Annual Compensation" shall mean an amount
equal to the sum of (i) the Participant's gross annual base salary, exclusive of
bonuses, commissions and other incentive pay, as in effect immediately preceding
the Change of Control, and (ii) the Participant's Average Annual Bonus.



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         2. Average Annual Bonus. "Average Annual Bonus" shall mean the average
bonus payments received by the Participant under the Company's incentive bonus
and variable compensation programs as in effect on the Effective Date (or any
predecessor or successor programs) for the three most recent consecutive and
complete fiscal years of the Company prior to the fiscal year in which the
Change of Control occurs. For purposes of calculating a Participant's Average
Annual Bonus, the following rules shall apply:

                   (i) In the event a Participant was not eligible to
participate in such bonus and variable compensation programs for the entire
three year period, the Average Annual Bonus shall be calculated based upon the
Participant's actual period of eligibility;

                  (ii) In the event a Participant first became eligible to
participate in such bonus and variable compensation programs in the fiscal year
in which the Change of Control occurs, the Participant=s Average Annual Bonus
shall be based on his or her targeted bonus and variable compensation amounts as
in effect immediately prior to such Change of Control; and

                 (iii) Bonus payments made to a Participant in the form of stock
option grants under the Company's Amended and Restated 1987 Stock Option Plan
(the "1987 Plan") shall be calculated based upon the cash equivalent of such
grants as specified on the Participant's Notice of Participation.

         3. Benefits Continuation Period. "Benefits Continuation Period" shall
mean the period set forth in a Participant's Notice of Participation.

         4. Board.  "Board" shall mean the Board of Directors of the Company.

         5. Cause. "Cause" shall mean (i) any act of personal dishonesty taken
by the Participant in connection with his or her responsibilities as an Employee
and intended to result in substantial personal enrichment of the Participant,
(ii) the Participant's conviction of a felony that is injurious to the Company,
(iii) a willful act by the Participant which constitutes gross misconduct and
which is injurious to the Company, or (iv) continued substantial violations by
the Participant of the Participant's employment duties which are demonstrably
willful and deliberate on the Participant's part after there has been delivered
to the Participant a written demand for performance from the Company which
specifically sets forth the factual basis for the Company's belief that the
Participant has not substantially performed his duties.

         6. Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:

                   (i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or




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                  (ii) A change in the composition of the Board occurring within
a two-year period, as a result of which fewer than a majority of the directors
are Incumbent Directors. "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or

                 (iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or

                  (iv) the consummation of the sale or disposition by the
Company of all or substantially all of the Company's assets.

         7. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

         8. Company. "Company" shall mean Read-Rite Corporation, any subsidiary
corporations, any successor entities as provided in Article VII hereof, and any
parent or subsidiaries of such successor entities.

         9. Disability. "Disability" shall mean that the Participant has been
unable to perform his or her duties as an Employee as the result of incapacity
due to physical or mental illness, and such inability, at least 26 weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Participant or the
Participant's legal representative (such agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Participant's employment. In the event that the Participant
resumes the performance of substantially all of his or her duties hereunder
before the termination of his or her employment becomes effective, the notice of
intent to terminate shall automatically be deemed to have been revoked.

         10. Effective Date. "Effective Date" shall mean the date this Plan is
approved by the Board.

         11. Employee.  "Employee" shall mean an employee of the Company.

         12. ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.




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         13. Involuntary Termination. "Involuntary Termination" shall mean (i)
without the Participant's express written consent, the significant reduction of
the Participant's title, duties or responsibilities relative to the
Participant's title, duties or responsibilities in effect immediately prior to
such reduction; provided, however, that a reduction in title, duties or
responsibilities solely by virtue of the Company being acquired and made part of
a larger entity (as, for example, when the Chief Financial Officer of Read-Rite
remains as such following a Change of Control and is not made the Chief
Financial Officer of the acquiring corporation) shall not constitute an
"Involuntary Termination;" (ii) without the Participant's express written
consent, a reduction by the Company in the annual base salary or in the maximum
dollar amount of potential annual cash bonuses relative to the annual base
salary and maximum dollar amount of potential annual cash bonuses as in effect
immediately prior to such reduction; (iii) without the Participant's express
written consent, a material reduction by the Company in the kind or level of
employee benefits to which the Participant is entitled immediately prior to such
reduction with the result that the Participant's overall benefits package is
significantly reduced; (iv) the relocation of the Participant to a facility or a
location more than 25 miles from the Participant's then present location,
without the Participant's express written consent; (v) any purported termination
of the Participant by the Company which is not effected for Disability or for
Cause; or (vi) the failure of the Company to obtain the assumption of this
agreement by any successors contemplated in Article VII below.

         14. Notice of Participation. "Notice of Participation" shall mean an
individualized written notice of participation in the Plan from an authorized
officer of the Company.

         15. Participant. "Participant" shall mean an individual who meets the
eligibility requirements of Article III.

         16. Plan. "Plan" shall mean this Read-Rite Corporation Management
Severance Plan.

         17. Plan Administrator. "Plan Administrator" shall mean the Board of
Directors of the Company, or its committee or designate, as shall be
administering the Plan.

         18. Pro-Rated Bonus Amount. "Pro-Rated Bonus Amount" shall mean a
pro-rated portion of the Participant's quarterly and annual bonus and variable
compensation calculated as of the Change of Control date, as follows:

                  (i) In the case of quarterly bonus or variable compensation,
the portion shall be the amount of quarterly bonus or variable compensation paid
or payable to the Participant with respect to the fiscal quarter of the Company
completed as of or prior to the fiscal quarter in which the Change of Control
occurs, pro-rated by multiplying such amount by a fraction, the numerator of
which is the number of days during the fiscal quarter in which the Change of
Control occurs prior to the occurrence of the Change of Control, and the
denominator of which shall be ninety-one and one-quarter; and

                  (ii) In the case of annual bonus or variable compensation, the
portion shall be the amount of annual bonus or variable compensation payable to
the Participant under the Company's




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annual bonus or variable compensation program in effect as of the Change of
Control date, based on year-to-date financial performance of the Company for the
period ended immediately prior to the Change of Control. For this purpose, the
performance measures for such fiscal year shall be adjusted, as appropriate, to
take into account the shortened performance period. The amount so determined
shall be pro-rated by multiplying such amount by a fraction, the numerator of
which is the number of days during such fiscal year prior to the occurrence of
the Change of Control, and the denominator of which shall be three hundred and
sixty-five.

         19. Severance Payment. "Severance Payment" shall mean the payment of
severance compensation as provided in Article IV hereof.

         20. Severance Payment Percentage. "Severance Payment Percentage" shall
mean, for each Participant, the Severance Payment Percentage set forth in such
Participant's Notice of Participation.

         21. Vesting Continuation Period. "Vesting Continuation Period" shall
mean, for each Participant, the period set forth in the Participant's Notice of
Participation.


                                   ARTICLE III

                                   ELIGIBILITY

         1. Waiver. As a condition of receiving benefits under the Plan, an
Employee must sign a general waiver and release on a form provided by the
Company.

         2. Participation in Plan. Each Employee who is designated by the Board
and who signs and timely returns to the Company a Notice of Participation shall
be a Participant in the Plan. A Participant shall cease to be a Participant in
the Plan (i) upon ceasing to be an Employee, or (ii) upon receiving written
notice from the Plan Administrator prior to a Change of Control that the
Participant is no longer eligible to participate in the Plan, unless in either
case such Participant is entitled to benefits hereunder. A Participant entitled
to benefits hereunder shall remain a Participant in the Plan until the full
amount of the benefits have been delivered to the Participant.


                                   ARTICLE IV

                               SEVERANCE BENEFITS

         1. Termination Following A Change of Control. If a Participant's
employment terminates at any time within the eighteen (18) month period
following a Change of Control, then, subject to Article V hereof, the
Participant shall be entitled to receive severance benefits as follows:

                  (a) Severance Pay Upon an Involuntary Termination. If the
Participant's employment with the Company terminates as a result of Involuntary
Termination other than for




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Cause, the Participant shall be entitled to receive a Severance Payment equal to
the sum of (i) the product obtained by multiplying the Participant's Severance
Payment Percentage times the Participant's Annual Compensation, plus (ii) the
Participant's Pro-Rated Bonus Amount. Any such Severance Payment shall be paid
in cash by the Company to the Participant in a single lump sum payment, less
applicable tax withholding, within ten (10) business days of the Participant's
termination date, and shall be in lieu of any other severance or severance-type
benefits to which the Participant may be entitled under any other
Company-sponsored plan, practice or arrangement.

         EXAMPLE: A Change of Control is consummated on June 15, 1997.
         Participant is Involuntarily Terminated other than for Cause as of July
         1, 1997. Participant's Annual Compensation is $150,000. The Severance
         Payment Percentage set forth in the Participant's Notice of
         Participation is 100%. The Participant's Pro-Rated Bonus Amount for the
         1997 fiscal year is $90,000. The Participant is entitled to a Severance
         Payment equal to (i) 100% x $150,000, plus (ii) $90,000, for a total
         Severance Payment equal to $240,000.

                  (b) Continued Option Vesting Upon an Involuntary Termination.
If the Participant's employment with the Company is terminated as a result of
Involuntary Termination other than for Cause, then, with respect to any Company
stock options held by the Participant as of the date of such termination, the
Participant shall be entitled to continued vesting of such options during the
Vesting Continuation Period, and, for all purposes of the 1987 Plan or the
Company's 1995 Stock Plan, the Participant shall be considered an employee of
the Company during the Vesting Continuation Period.

                  (c) Employee Benefits Upon an Involuntary Termination. If the
Participant's employment with the Company is terminated as a result of
Involuntary Termination other than for Cause, then the Company shall continue to
provide the Participant with medical, dental, vision, disability and life
insurance coverage and employee assistance programs (or such comparable
alternative benefits as the Company may, in its discretion, determine to be
sufficient to satisfy its obligations to the Participant under this Plan) that
are no less favorable to the Participant than such coverage as was provided to
the Participant immediately prior to the Change of Control, with the same
percentage of any premiums or costs for such coverage paid for by the Company as
was paid for by the Company on behalf of such Participant immediately prior to
the Change of Control (the "Company-Paid Coverage"). Company-Paid Coverage shall
be provided to the Participant for a period that ends on the earlier of (i)
termination of the Participant's Benefits Continuation Period, or (ii) the date
that the Participant and his or her covered dependents become covered under
another employer's employee benefit plans providing benefits and levels of
coverage comparable to the Company-Paid Coverage. For purposes of Title X of the
Consolidated Budget Reconciliation Act of 1985 ("COBRA"), the date of the
"qualifying event" for the Participant and his or her covered dependents shall
be the date upon which Company-Paid Coverage terminates. Company-Paid Coverage
shall be provided at the Company's discretion, under either, (i) the Company's
plans, or (ii) other plans or arrangements secured by the Company no less
favorable to the Participant and his or her dependents.




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         2. Voluntary Resignation; Termination For Cause. If the Participant's
employment terminates by reason of the Participant's voluntary resignation (and
is not an Involuntary Termination), or if the Company terminates the Participant
for Cause, then the Participant shall not be entitled to receive severance or
other benefits under this Plan and shall be entitled only to those benefits (if
any) as may be available under the Company's then existing benefit plans and
policies at the time of such termination.

         3. Disability; Death. If the Participant's employment terminates by
reason of the Participant's death, or in the event the Company terminates the
Participant's employment for Disability, then the Participant shall not be
entitled to receive severance or other benefits under this Plan and shall be
entitled only to those benefits (if any) as may be available under the Company's
then existing benefit plans and policies at the time of such death or
Disability.

         4. Termination Apart from Change of Control. In the event that a
Participant's employment terminates for any reason prior to the occurrence of a
Change of Control or after the eighteen (18)-month period following a Change of
Control, then the Participant shall not be entitled to receive severance or
other benefits under this Plan and shall be entitled only to those benefits (if
any) as may be available under the Company's then existing benefit plans and
policies at the time of such termination.


                                    ARTICLE V

          GOLDEN PARACHUTE EXCISE TAX AND NON-DEDUCTIBILITY LIMITATIONS

         1. Benefits Cap. Except if specifically otherwise set forth in a
Participant's Notice of Participation, in the event that the benefits under this
Plan, when aggregated with any other payments or benefits received by a
Participant, or to be received by a Participant, would (i) constitute "parachute
payments" within the meaning of Section 280G of the Code, and (ii) but for this
provision, would be subject to the excise tax imposed by Section 4999 of the
Code or any similar or successor provision, then the Participant's Plan benefits
shall be reduced to such lesser amount or degree as would result in no portion
of such benefits being subject to the excise tax under Section 4999 of the Code.

         2. Determination. Unless the Company and the Participant otherwise
agree in writing, any determination required under this Article shall be made in
writing by the same firm of independent public accountants who were employed by
the Company immediately prior to the Change of Control (the "Accountants"),
whose determination shall be conclusive and binding upon the Participant and the
Company for all purposes. For purposes of making the calculations required by
this Article, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a




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determination under this Article. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Article.


                                   ARTICLE VI

                         EMPLOYMENT STATUS; WITHHOLDING

         1. Employment Status. This Plan does not constitute a contract of
employment or impose on the Participant or the Company any obligation to retain
the Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment. The Participant's employment is and shall continue to be at-will, as
defined under applicable law. If the Participant's employment with the Company
or a successor entity terminates for any reason, including (without limitation)
any termination prior to a Change of Control, the Participant shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Plan, or as may otherwise be available in accordance with
the Company's established employee plans and practices or other agreements with
the Company at the time of termination.

         2. Taxation of Plan Payments. All amounts paid pursuant to this Plan
shall be subject to regular payroll and withholding taxes.


                                   ARTICLE VII

                     SUCCESSORS TO COMPANY AND PARTICIPANTS

         1. Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Plan and agree expressly to
perform the obligations under this Plan by executing a written agreement. For
all purposes under this Plan, the term "Company" shall include any successor to
the Company's business and/or assets which executes and delivers the assumption
agreement described in this subsection or which becomes bound by the terms of
this Plan by operation of law.

         2. Participant's Successors. All rights of the Participant hereunder
shall inure to the benefit of, and be enforceable by, the Participant's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.




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                                  ARTICLE VIII

                       DURATION, AMENDMENT AND TERMINATION

         1. Duration. This Plan shall terminate on the fifth anniversary of the
Effective Date, unless, (i) this Plan is extended by the Board, (ii) a Change of
Control occurs prior to the fifth anniversary of the Effective Date or (iii) the
Board terminates the Plan in accordance with Article VIII.2 below. If a Change
of Control occurs prior to termination of this Plan pursuant to the preceding
sentence, then this Plan shall terminate upon the date that all obligations of
the Company hereunder have been satisfied, unless sooner terminated as provided
in this Article. A termination of this Plan pursuant to the preceding sentences
shall be effective for all purposes, except that such termination shall not
affect the payment or provision of compensation or benefits earned by a
Participant prior to the termination of this Plan.

         2. Amendment and Termination. The Board shall have the discretionary
authority to amend the Plan in any respect, including as to the removal or
addition of Participants, by resolution adopted by a majority of the Board,
unless a Change of Control has previously occurred. The Plan may be terminated
by resolution adopted by a majority of the Board, unless a Change of Control has
previously occurred. If a Change of Control occurs, the Plan and the designation
of Participants thereto shall no longer be subject to amendment, change,
substitution, deletion, revocation or termination in any respect whatsoever.


                                   ARTICLE IX

                                 CLAIMS PROCESS

         1. Right to Appeal. A Participant or former Participant who disagrees
with her or her allotment of benefits under this Plan may file a written appeal
with the designated Human Resources representative. Any claim relating to this
Plan shall be subject to this appeal process. The written appeal must be filed
within sixty (60) days of the Participant's termination date.

         2. Form of Appeal. The appeal must state the reasons the Participant or
former Participant believes he or she is entitled to different benefits under
the Plan. The designated Human Resources representative shall review the claim.
If the claim is wholly or partially denied, the designated Human Resources
representative shall provide the Participant or former Participant a written
notice of the denial, specifying the reasons the claim was denied. Such notice
shall be provided within ninety (90) days of receiving the written appeal.

         3. Right to Review. If the claim is denied, in whole or in part, the
Participant may request a review of the denial at any time within ninety (90)
days following the date the Participant received written notice of the denial of
his or her claim. For purposes of this subsection, any action required or
authorized to be taken by the Participant may be taken by a representative
authorized in




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writing by the Participant to represent him or her. The designated Human
Resources representative shall afford the Participant a full and fair review of
the decision denying the claim and, if so requested, shall:

                  (a) Permit the Participant to review any documents that are
pertinent to the claim; and

                  (b) Permit the Participant to submit to the designated Human
Resources representative issues and comments in writing.

         4. Decision on Review. The decision on review by the designated Human
Resources representative shall be in writing and shall be issued within 60 days
following receipt of the request for review. The decision on review shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision of the designated Human
Resources representative is based.


                                    ARTICLE X

                                     NOTICE

         1. General. Notices and all other communications contemplated by this
Plan shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Participant, mailed
notices shall be addressed to him or her at the home address which he or she
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its General Counsel.

         2. Notice of Termination by the Company. Any termination by the Company
of the Participant's employment with the Company at any time within the eighteen
(18) month period following a Change of Control shall be communicated by a
notice of termination to the Participant at least five (5) days prior to the
date of such termination (or at least thirty (30) days prior to the date of a
termination by reason of the Participant's Disability). Such notice shall
indicate the specific termination provision or provisions in this Plan relied
upon (if any), shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision or provisions so
indicated, and shall specify the termination date.

         3. Notice by the Participant of Involuntary Termination by the Company.
In the event that the Participant determines that an Involuntary Termination has
occurred at any time within the eighteen (18) month period following a Change of
Control, the Participant shall give written notice to the Company that such
Involuntary Termination has occurred. Such notice shall be delivered by the
Participant to the Company within ninety (90) days following the date on which
such Involuntary Termination occurred, shall indicate the specific provision or
provisions in this Plan upon which the




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Participant relied to make such determination and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
determination. The failure by the Participant to include in the notice any fact
or circumstance which contributes to a showing of Involuntary Termination shall
not waive any right of the Participant hereunder or preclude the Participant
from asserting such fact or circumstance in enforcing his or her rights
hereunder.


                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         1. No Duty to Mitigate. The Participant shall not be required to
mitigate the amount of any benefits contemplated by this Plan, nor shall any
such benefits be reduced by any earnings or benefits that the Participant may
receive from any other source.

         2. Severability. The invalidity or unenforceability of any provision or
provisions of this Plan shall not affect the validity or enforceability of any
other provision hereof, which shall remain in full force and effect.

         3. No Assignment of Benefits. The rights of any person to payments or
benefits under this Plan shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this subsection shall be void.

         4. Assignment by Company. The Company may assign its rights under this
Plan to an affiliate, and an affiliate may assign its rights under this Plan to
another affiliate of the Company or to the Company; provided, however, that no
assignment shall be made if the net worth of the assignee is less than the net
worth of the Company at the time of assignment; provided, further, that the
Company shall guarantee all benefits payable hereunder. In the case of any such
assignment, the term "Company" when used in this Plan shall mean the corporation
that actually employs the Participant.


                                   ARTICLE XII

                           ERISA REQUIRED INFORMATION

         1.       Plan Sponsor.  The Plan sponsor and administrator is:

                           Read-Rite Corporation
                           345 Los Coches Street
                           Milpitas, California  95035




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         2.       Designated Agent.  Designated agent for service of process:

                           General Counsel
                           Read-Rite Corporation
                           345 Los Coches Street
                           Milpitas, California  95035

         3.       Plan Records.  Plan records are kept on a fiscal year basis.
         4.       Plan Funding.  The Plan is funded from the Company's general
                  assets.







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                 READ-RITE CORPORATION MANAGEMENT SEVERANCE PLAN

                             NOTICE OF PARTICIPATION

TO:

DATE:

         The Board has designated you as a Participant in the Read-Rite
Corporation Management Severance Plan (the "Plan"), a copy of which is attached
hereto. The terms and conditions of your participation in the Plan are as set
forth in the Plan and herein. As a condition to receiving benefits under the
Plan you agree to sign a general waiver and release in the form provided by the
Company. The variables relating to your Plan participation are as follows:

STOCK OPTION CASH EQUIVALENT:               [$                    ]

SEVERANCE PAYMENT PERCENTAGE:               [200%] [100%]

BENEFITS CONTINUATION PERIOD:               [24 MONTHS] [12 MONTHS]

VESTING CONTINUATION PERIOD:                [12 MONTHS] [6 MONTHS]

[GOLDEN PARACHUTE EXCISE TAX TREATMENT:

         Instead of the limitation set forth in Article V.1 of the Plan, the
following provisions shall apply:

         In the event that the benefits provided for in the Plan, when
aggregated with any other payments or benefits received by you, would (i)
constitute "parachute payments" within the meaning of Section 280G of the Code,
and (ii) would be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then your Plan benefits shall be either

                  (a)      delivered in full, or

                  (b)      delivered as to such lesser extent which would result
                           in no portion of such benefits being subject to the
                           Excise Tax,

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by you
on an after-tax basis, of the greatest amount of benefits, notwithstanding that
all or some portion of such benefits may be taxable under Section 4999 of the
Code.]

         If you agree to participate in the Plan on these terms and conditions,
please acknowledge your acceptance by signing below. Please return the signed
copy of this Notice of Participation within ten (10) days of the date set forth
above to:




<PAGE>   14
                                    Sherry McVicar
                                    Vice President, Human Resources
                                    Read-Rite Corporation
                                    345 Los Coches Street
                                    Milpitas, California  95035

Your failure to timely remit this signed Notice of Participation will result in
your removal from the Plan. Please retain a copy of this Notice of
Participation, along with the Plan, for your records.



Date: __________________________     Signature: ________________________________