Document:

ex10.1

 

PLAN AND AGREEMENT OF TRIANGULAR MERGER

BETWEEN

ARS NETWORKS, INCORPORATED (a New Hampshire corporation)

ARS PRODUCTS INC. (a Delaware corporation)

AND

HMM CAPITAL HOLDINGS, INC. (a Nevada corporation)

ARS NETWORKS, INCORPORATED, a New Hampshire
corporation ("ARSN"), ARS PRODUCTS INC., a Delaware corporation ("ARS
Products"), and HMM CAPITAL HOLDINGS, INC., a Nevada corporation ("HMM
Capital"), hereby agree as follows:

WHEREAS, ARS Products is a wholly-owned
subsidiary of ARSN; and

WHEREAS, the stockholders of HMM Capital desire
to cause the merger of HMM Capital with and into ARS Products, and receive
shares of the common stock of ARSN, par value $0.0001 per share (the "ARSN
Stock") in exchange for all  issued and authorized
common stock of HMM Capital, par value $0.0001 per share (the "HMM Capital
Stock");

NOW, THEREFORE, in consideration of the
foregoing and the following mutual covenants and agreements, the parties agree
as follows:

1.                   
Plan Adopted. 
A plan of merger whereby HMM Capital merges with and into ARS Products
(this "Plan of Merger"), pursuant to the provisions of the Delaware General
Corporation Law (the "DGCL"), Chapter 92A of the Nevada Revised Statutes (the
"NRS"), and Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended, is adopted as follows:

(a)                
HMM Capital shall be merged with and into ARS Products, to
exist and be governed by the laws of the State of Delaware.

(b)                
ARS Products shall be the Surviving Corporation (the
"Surviving Corporation").

(c)                
When this Plan of Merger shall become effective, the separate
existence of HMM Capital shall cease and the Surviving Corporation shall
succeed, without other transfer, to all the rights and properties of HMM
Capital and shall be subject to all the debts and liabilities of such
corporation in the same manner as if the Surviving Corporation had itself
incurred them.  All rights of creditors
and all liens upon the property of each constituent entity shall be preserved
unimpaired, limited in lien to the property affected by such liens immediately
prior to the merger (the "Merger").

(d)                
The Surviving Corporation will be responsible for the payment
of all fees and franchise taxes of the constituent entities payable to the
states of Delaware and Nevada, if any.

(e)                
The Surviving Corporation will carry on business with the
assets of HMM Capital, as well as the assets of ARS Products.

(f)                 
The Surviving Corporation will be responsible for the payment
of the fair value of shares, if any, required under the DGCL and the NRS.

(g)                
The stockholders of HMM Capital will surrender all of their
shares of the HMM Capital Stock in the manner hereinafter set forth.

(h)                
In exchange for the shares of HMM Capital Stock surrendered by
the stockholders of HMM Capital, ARSN will issue and transfer to such
stockholders on the basis hereinafter set forth, shares of the ARSN Stock.

 

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(i)                  
ARSN, the sole stockholder of ARS Products, will keep its
shares of the Surviving Corporation.

2.                   
Effective Date. 
The effective date of the Merger (the "Effective Date") shall be the
date of the filing of Articles of Merger for HMM Capital and ARS Products in
the states of Delaware and Nevada.

3.                   
Submission to Stockholders.  This Plan of Merger shall be submitted for
approval separately to the stockholders of HMM Capital and ARS Products in the
manner provided by the laws of the states of Delaware and Nevada.

4.                   
Manner of Exchange.  On the Effective Date, the stockholders of HMM Capital shall
surrender their stock certificates representing the HMM Capital Stock to ARS
Products in exchange for certificates representing the shares of ARSN Stock to
which they are entitled.

5.                   
Basis of Exchange.  The stockholders of HMM Capital currently own 10,000,000 shares
of the HMM Capital Stock, which shares constitute all of the issued and
outstanding shares of the capital stock of HMM Capital.  As a result of the Merger, the stockholders
of HMM Capital shall be entitled to receive, in exchange for all HMM Capital
Stock, 10,000,000 shares of the ARSN Stock.

6.                   
Shares of the Surviving Corporation Held by the
Current Stockholders of ARS Products. 
The presently issued and outstanding shares of the ARS Products Stock
shall be retained by its current stockholder, ARSN, following the Merger, so
that following the Merger, ARSN will continue to own 100 percent of the issued
and outstanding shares of the ARS Products Stock.

7.                   
Registration Rights.  Not Applicable.

8.                   
Directors and Officers.

(a)                
The present Board of Directors of ARS Products shall serve as
the Board of Directors of the Surviving Corporation until the next annual
meeting or until such time as their successors have been elected and qualified.

(b)                
If a vacancy shall exist on the Board of Directors of the
Surviving Corporation on the Effective Date, such vacancy may be filled by the
Board of Directors as provided in the Bylaws of the Surviving Corporation.

(c)                
All persons who, on the Effective Date, are executive or
administrative officers of ARS Products shall be officers of the Surviving
Corporation until the Board of Directors of the Surviving Corporation shall
otherwise determine.  The Board of
Directors of the Surviving Corporation may elect or appoint such additional
officers as it may deem necessary or appropriate.

9.                   
Certificate of Incorporation.  The Certificate of Incorporation of ARS
Products, existing on the Effective Date, a copy of which is attached hereto as
Exhibit A and incorporated herein for all purposes, shall continue in
full force as the Certificate of Incorporation of the Surviving Corporation
until altered, amended, or repealed as provided therein or as provided by law.

10.                
Bylaws. 
The Bylaws of ARS Products existing on the Effective Date, a copy of
which are attached hereto as Exhibit B and incorporated herein for all
purposes, shall continue in full force as the Bylaws of the Surviving
Corporation until altered, amended, or repealed as provided therein or as
provided by law.

11.                
Copies of the Plan of Merger.  A copy of this Plan of Merger is on file at
100 Walnut Street, Champlain, New York 12919, the principal offices of HMM
Capital, and 100 Walnut Street, Champlain, New York 12919, the principal
offices of ARSN and ARS Products.  A
copy of this Plan of Merger will be furnished to any stockholder of HMM
Capital, ARSN, or ARS Products, on written request and without cost.

 

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12.                
Representations and Warranties of HMM Capital.  HMM Capital represents and warrants to ARSN
and ARS Products as follows:

(a)                
Organization. 
HMM Capital is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada.  HMM Capital is not currently qualified to do business in any
other state.

(b)                
Capitalization. 
The authorized capital stock of HMM Capital consists of 300,000,000
shares of common stock, with a par value of $0.0001 per share (the "HMM Capital
Stock" herein).  As of the date of this
Plan of Merger, there are 10,000,000 shares of the HMM Capital Stock issued and
outstanding.  Each outstanding share of
the HMM Capital Stock is duly authorized, validly issued, fully paid and
non-assessable, has not been issued and is not owned or held in violation of
any preemptive rights of the stockholders of HMM Capital.  Such capital stock is free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.  There is
no commitment, plan or arrangement to issue and no outstanding option, warrant,
or other right calling for the issuance of, any share of the capital stock of
HMM Capital or any security or other instrument convertible into or
exchangeable for the capital stock of HMM Capital.

(c)                
Financial Condition. 
HMM Capital has furnished to ARSN and ARS Products an unaudited balance
sheet of HMM Capital as of January 31, 2003, and the related statement of
income and retained earnings for the period covered thereby (the "Financial
Statement").  The Financial Statement (i)
is in accordance with the books and records of HMM Capital; (ii) fairly
presents the financial condition of HMM Capital at such date and the results of
its operations for the period therein specified; (iii) was prepared in
accordance with generally accepted accounting principles applied upon a basis
consistent with prior accounting periods; and (iv) with respect to all
contracts and commitments of HMM Capital, reflects adequate reserves for all
reasonably anticipated losses and costs in excess of anticipated income.  Specifically, but not by way of limitation,
the Financial Statement discloses all of the debts, liabilities, and
obligations of any nature (whether absolute, accrued, contingent, or otherwise
and whether due or to become due) of HMM Capital on the dates therein specified
(except such debts, liabilities, and obligations as are not required to be
reflected therein in accordance with generally accepted accounting principles)
and includes appropriate reserves for all taxes and other liabilities accrued
or due at such dates but not yet payable.

(d)                
Present Status. 
Since the dates reflected on the Financial Statement, HMM Capital has
not: (i) incurred any material obligations or material liabilities, absolute,
accrued, contingent, or otherwise, except current trade payables; (ii)
discharged or satisfied any liens or encumbrances, or paid any obligations or
liabilities, except current Financial Statement liabilities and current
liabilities incurred since the dates reflected on the Financial Statement, in
each case, in the ordinary course of business; (iii) declared or made any
stockholder payment or distribution or purchased or redeemed any of its
securities or agreed to do so; (iv) mortgaged, pledged, or subjected to lien,
encumbrance, or charge any of its assets except as shall be removed prior to or
at the Effective Date; (v) canceled any debt or claim; (vi) sold or transferred
any assets of a material value except sales from inventory in the ordinary
course of business; (vii) suffered any damage, destruction, or loss (whether or
not covered by insurance) materially affecting its properties, business, or
prospects; (viii) waived any rights of a material value; or (ix) entered into
any transaction other than in the ordinary course of business.

(e)                
Tax Liabilities. 
The amounts set up as provisions for taxes on the Financial Statement
are sufficient for all accrued and unpaid federal, state, local, and foreign
taxes of HMM Capital, whether or not due and payable and whether or not
disputed, under tax laws as in effect on the date of the Financial Statement or
now in effect, for the period ended on that date and for all fiscal years prior
thereto.  HMM Capital (i) has filed all
federal, state, local, and foreign tax returns required to be filed by it; (ii)
has delivered to ARSN and ARS Products true and correct copies for the last two
years thereof initialed by the chief executive officer of HMM Capital; (iii)
has paid (or has established on the Financial Statement a reserve for) all
taxes, assessments, and other governmental charges payable or remittable by it
or levied upon it or its properties, assets, income, or franchises which are
due and payable; and (iv) has delivered to ARSN and ARS Products a true and
correct copy so initialed of any report as to adjustments received by HMM
Capital from any taxing authority during the past five years and a statement,
so initialed, as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect with respect to
any of those reports or the subject matter of those reports.

 

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(f)                 
Litigation and Claims. 
There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or in
prospect (or any basis therefor known to HMM Capital or its stockholders) with
respect to HMM Capital, its stockholders, or any of their business, properties,
or assets.  HMM Capital is not affected
by any present or threatened strike or other labor disturbance nor, to the
knowledge of HMM Capital or its stockholders, is any union attempting to
represent any employee of HMM Capital as collective bargaining agent.  HMM Capital is not in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, or decree;
nor is HMM Capital or its stockholders required to take any action in order to
avoid such a violation or default.

(g)                
Properties.  HMM
Capital has good and marketable title in fee simple absolute to all real
properties and good title to all other properties and assets used in its
business or owned by it (except real and other properties and assets as are
held pursuant to leases or licenses, free and clear of all liens, mortgages,
security interests, pledges, charges, and encumbrances, other than as shown on
the Financial Statement, including, but not limited to a tax lien for unpaid
real estate taxes.  Moreover:

(i)                  
No real property owned, leased, licensed, or used by HMM
Capital lies in an area which is, or to the knowledge of HMM Capital or its
stockholders will be, subject to zoning, use, or building code restrictions
which would prohibit, and no state of facts relating to the actions or inaction
of another person or entity or their ownership, leasing, licensing, or use of
that real property in the business in which HMM Capital is now engaged or the business
in which it contemplates engaging.

(ii)                
The real and other properties and assets owned, leased, or
licensed by HMM Capital constitute all such properties and assets which are
necessary to the business of HMM Capital as presently conducted or as it contemplates
conducting.

(h)                
Contracts and Other Instruments.  All contracts have been disclosed to ARSN
and ARS Products as it relates to HMM Capital or its stockholders.  HMM Capital has furnished to ARSN and ARS
Products the articles of incorporation and bylaws of HMM Capital and all
amendments thereto, as presently in effect, certified by the Secretary of the
corporation.  Neither HMM Capital nor
its stockholders, or any other party to any of those contracts, agreements, instruments,
leases, or licenses, is now or expects in the future to be in violation or
breach of, or in default with respect to complying with, any material provision
thereof, and each contract, agreement, instrument, lease, or license is in full
force and is the legal, valid, and binding obligation of the parties thereto
and is enforceable as to them in accordance with its terms, subject to any laws
relating to bankruptcy or any other similar laws.

(i)                  
Employees.  HMM
Capital has no employees on the date of this Plan of Merger.

(j)                  
Authority to Merge. 
HMM Capital has all requisite power and authority to execute, deliver,
and perform this Plan of Merger.  All
necessary corporate proceedings of HMM Capital have been duly taken to
authorize the execution, delivery, and performance of this Plan of Merger by HMM
Capital.  This Plan of Merger has been
duly authorized, executed and delivered by HMM Capital; is the legal, valid,
and binding obligation of HMM Capital; and is enforceable as to it in
accordance with its terms subject to any laws relating to bankruptcy or any
other similar laws.

No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration of filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by HMM Capital for the execution, delivery, or performance
of this Plan of Merger by HMM Capital. 
No consent of any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which HMM Capital is a party, or to
which any of its properties or assets are subject, is required for the
execution, delivery or performance of this Plan of Merger; and the execution,
delivery, and performance of this Plan of Merger will not violate, result in a
breach of, conflict with, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default under
any contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the articles of
incorporation (or other charter document) or bylaws of HMM Capital or violate,
result in a breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on HMM Capital or to which any of its operations,
business, properties, or assets are subject.

 

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(k)                
Completeness of Disclosure.  No representation or warranty by HMM Capital in this Plan of
Merger contains, or on the Effective Date will contain, any untrue statement of
material fact or omits, or will omit, to state a material fact necessary to
make the statements made not misleading.

13.                
Conditions to Obligations of ARSN and ARS Products.  The obligations of ARSN and ARS Products
under this Plan of Merger are subject, at the option of ARSN and ARS Products,
to the following conditions:

(a)                
Accuracy of Representations and Compliance with Conditions.  (i) All representations and warranties of
HMM Capital contained in this Plan of Merger shall be accurate when made and,
in addition, shall be accurate as of the Effective Date as though the representations
and warranties were then made in exactly the same language by HMM Capital and
regardless of knowledge or lack thereof on the part of HMM Capital or changes
beyond its control; (ii) as of the Effective Date, HMM Capital shall have
performed and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by it at or before that
time by this Plan of Merger; and (iii) ARSN and ARS Products shall have
received certificates signed by the Chief Executive Officer of HMM Capital
dated the Effective Date to that effect.

(b)                
Review of Proceedings. 
All actions, proceedings, instruments, and documents required to carry
out this Plan of Merger or incidental thereto and all other related legal
matters shall be subject to the reasonable approval of the counsel for ARSN and
ARS Products, and HMM Capital shall have furnished such counsel those documents
as such counsel may have reasonably requested for the purpose of enabling them
to pass upon such matters.

(c)                
Payment of Fees. 
All fees and franchise taxes with respect to the Merger will be paid by
HMM Capital.

(d)                
Legal Action. 
There shall not have been instituted or threatened any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Plan of Merger, or to obtain substantial
damages with respect thereto.

14.                
Contractual Consents Needed.  The parties to this Plan of Merger shall
have obtained, at or prior to the Effective Date, all consents required for the
consummation of the transactions contemplated by this Plan of Merger from any
party to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which any of them is a party, or to which any of their
respective businesses, properties, or assets are subject.

15.                
Notices. 
All notices, requests, demands, and other communications hereunder shall
be in writing and delivered personally or sent by registered or certified
United States mail, return receipt requested with postage prepaid, or by
telecopy or e-mail, if to HMM Capital, addressed to Mr. George Perlin, 100
Walnut Street, Champlain, New York 12919, telecopier (518) 298-2813, and e-mail
gipco@sympatico.ca; and if to ARSN and ARS Products, addressed to Mr. Sydney A.
Harland, 100 Walnut Street, Champlain, New York 12919, telecopier (518)
298-2813, and e-mail harmuir@aol.com.  Any party hereto may change its address upon
10 days' written notice to any other party hereto.

16.                
Legal Construction.  In case any one or more of the provisions contained in this Plan
of Merger shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions hereof, and this Plan of Merger shall be construed
as if such invalid, illegal, or unenforceable provision had never been
contained herein.

17.                
Benefit. 
All the terms and provisions of this Plan of Merger shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto, and
their successors and permitted assigns.

18.                
Law Governing. 
This Plan of Merger shall be construed and governed by the laws of the
State of Nevada, and all obligations hereunder shall be deemed performable in
Clinton County, New York.

 

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19.                
Perfection of Title.  The parties hereto shall do all other acts and things that may be
reasonably necessary or proper, fully or more fully, to evidence, complete or
perfect this Plan of Merger, and to carry out the intent of this Plan of
Merger.

20.                
Cumulative Rights.  The rights and remedies of any party under this Plan of Merger
and the instruments executed or to be executed in connection herewith, or any
of them, shall be cumulative and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy.

21.                
Waiver. 
No course of dealing on the part of any party hereto or its agents, nor
any failure or delay by any such party with respect to exercising any right,
power or privilege of such party under this Plan of Merger or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.

22.                
Construction. 
Whenever used herein, the singular number shall include the plural, the
plural number shall include the singular, and the masculine gender shall
include the feminine.

23.                
Multiple Counterparts.  This Plan of Merger may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

IN WITNESS
WHEREOF, the parties have executed this Plan of Merger on April 24, 2003.

  		ARS NETWORKS, INCORPORATED
	 	

By                                                                                           
      
	 	    Sydney A. Harland, President
	 	 
	 	 
	 	ARS PRODUCTS INC.
	 	

By                                                                                           
      
	 	    Sydney A. Harland, President
	 	 
	 	 
	 	HMM CAPITAL HOLDINGS, INC.
	 	

By                                                                                           
      
	 	    George Perlin,
President

 

Attachments:

Exhibit A - Certificate of Incorporation of ARS Products
Inc.

Exhibit B - Bylaws of ARS Products Inc.

6

 

 

 

 

EXHIBIT A

CERTIFICATE OF INCORPORATION OF

ARS PRODUCTS INC.

CERTIFICATE OF INCORPORATION

        FIRST:   The name of this corporation shall be:  ARS
PRODUCTS INC.

        SECOND:  Its registered office in the State of Delaware
is to be located at 2711 Centerville Road, Suite 400, Wilmington, County of New
Castle, Delaware, 19808.  The name of its registered agent at such address is
THE COMPANY CORPORATION.

        THIRD:  The purpose or purposes of the corporation shall
be:

  
    
      To engage in any lawful act or activity for which
      corporations may be

      organized under the General Corporation Law of Delaware.

    

  

        FOURTH:  The total number of shares of stock which this
corporation is authorized to issue is:  Fifteen-hundred (1,500) shares of common
stock with no par value.

        FIFTH: The name and address of the incorporator is as
follows:

  
    
      
        
          Brandon Laramore

          2711 Centerville Road

          Suite 400

          Wilmington, Delaware 19808

        

      

    

  

        SIXTH: The Board of Directors shall have the power to
adopt, amend or repeal the by-laws.

        SEVENTH; No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant  to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.

        IN WITNESS WHEREOF, the undersigned, being the incorporator herein
before named, has executed signed and acknowledged this certificate of
incorporation.

 

  	
	Name: Brandon Laramore

      Incorporator

 

 

 

 

  	City of Wilmington

      County of New Castle

      Dated: March 21,2003

ORGANIZATION ACTION IN WRITING OF INCORPORATOR

OF

ARS PRODUCTS INC.

(Organized March 21, 2003)

            The following action is taken this day through this instrument by
the incorporator of the above corporation:

1. The election of the following person[s] to serve as the
director[s] of the corporation until the first annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal:

SYDNEY HARLAND

RONALD MOODIE

 

	
    Name: 
	
	
     
	Brandon Laramore

    Incorporator

 

 

 

EXHIBIT B

BYLAWS OF

ARS PRODUCTS INC.

 

 

 

 

 

BY-LAWS

OF

ARS Products Inc.

 

ARTICLE I - OFFICES

 The principal office of the corporation in the State of NEW YORK shall be
located at 100 WALNUT STREET, CHAMPLAIN, NEW YORK 12919 County of CLINTON, NEW
YORK. The corporation may have such other offices, either within or without the
State of incorporation as the board of directors may designate or as the
business of the corporation may from time to time require.

ARTICLE II - STOCKHOLDERS

1.  ANNUAL MEETING.

      The annual meeting of the stockholders shall, subject to the
certificate of incorporation be held at such a place in or outside the State of
Delaware as the directors may determine for the purpose of hearing and receiving
the reports and statements required by the Act to be read and laid before the
stockholders at any annual meeting, electing directors, reappointing, if
necessary, the incumbent auditor and fixing or authorizing the board of
directors to fix his remuneration.  No other business shall be transacted at the
annual meeting of the stockholders unless such meeting is also properly
constituted as a special meeting of stockholders.

2. SPECIAL MEETINGS.

      Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the president or by the
directors, and shall Be called by the president at the request of the holders of
a SIMPLE MAJORITY 50.1

per cent of all the outstanding shares of the corporation entitled to vote at
the meeting.

3. PLACE OF MEETING.

      The directors may designate any place, either within or without the
State unless otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the directors.  A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting.  If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.

 

 

4.   NOTICE OF MEETING.

   Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose of purposes for which the meeting
is called, shall be delivered not less than 10 DAYS nor more than 30 days before
the date of the meeting, either personally or by mail, by or at the direction of
the president, or the secretary, or the officer or persons calling the meeting,
to each stockholder of record entitled to vote at such meeting.  If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.

5.  CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.

     For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, 30 days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least 15
days immediately preceding such meeting.  In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than 5 days
and, in case of a meeting of stockholders, not less than 2 days prior to the
date on which the particular action requiring such determination of stockholders
is to be taken. If the stock transfer books are not closed and no record date is
fixed for the determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the directors declaring such dividend is adopted, as the case
may be, shall be the record date for such determination of stockholders.  When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof.

6.  VOTING LISTS.

   The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least 30 days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of 30
days prior to such meeting, shall be kept on file at the principal office of the
corporation and shall be subject to inspection by any stockholder at any time
during usual business hours.  Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.  The original stock transfer
book shall be prima facie evidence as to who are the stockholders entitled to
examine such list or transfer books or to vote at the meeting of stockholders.

 

 

7.  QUORUM.

     At any meeting of stockholders, more than 50% of the outstanding shares
of the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders.  If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. 
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.

8.   PROXIES.

     At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact.  Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting.

9. VOTING.

     Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by

proxy, for each share of stock entitled to vote held by such stockholders.
Upon the  demand of any stockholder, the vote for directors and upon any
question before the meeting shall be by ballot. All elections for directors
shall be decided by plurality vote; all other questions shall be decided by
majority vote except as otherwise provided by the Certificate of Incorporation
or the laws of this State.

10.  ORDER OF BUSINESS.

     The order of business at all meetings of the stockholders, shall be as
follows;

       1.  Roll Call.

       2.  Proof of notice of meeting or waiver of notice.

       3.  Reading of minutes of preceding meeting.

       4.  Reports of Officers.

 

 

 

       5.  Reports of Committees.

       6.  Election of Directors.

       7.  Unfinished Business.

       8.  New Business.

 11.  INFORMAL ACTION BY STOCKHOLDERS.

     Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.

ARTICLE III - BOARD OF DIRECTORS

1.  GENERAL POWERS.

     The business and affairs of the corporation shall be managed by its
board of directors.  The directors shall in all cases act as a board, and they
may adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as

they may deem proper, not inconsistent with these by-laws and the laws of
this State.

2.  NUMBER, TENURE AND QUALIFICATIONS.

      The number of directors of the corporation shall be a minimum of 2.
Each director shall hold office until the next annual meeting of stockholders
and until his successor shall have been elected and qualified.

3.  REGULAR MEETINGS.

     A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual meeting
of stockholders.  The directors may provide, by resolution, the time and place
for the holding of additional regular meetings without other notice than such
resolution.

4. SPECIAL MEETINGS.

     Special meetings of the directors may be called by or at the request of
the president or any two directors.  The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.

 

 

5.  NOTICE.

       Notice of any special meeting shall be given at least 7 days
previously thereto by written notice delivered personally, or by fax or mailed
to each director at his business address. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
The attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.

6.  QUORUM.

      At any meeting of the directors a majority shall constitute a quorum
for the transaction of business, but if less than said number is present at a
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.

7.  MANNER OF ACTING.

     The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.

8.  NEWLY CREATED DIRECTORSHIPS AND VACANCIES.

     Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office only if a quorum exists. Vacancies occurring by reason
of the removal of directors without cause shall be filled by vote of more than
50% of the then outstanding stockholders entitled to vote.  A director elected
to fill a vacancy caused by resignation, death, or removal shall be elected to
hold office for the unexpired term of his predecessor.

9. REMOVAL OF DIRECTORS.

    Any or all of the directors may be removed by cause by a majority vote of
the stockholders.  Directors may be removed without cause only by more than 50%
of the then outstanding stock entitled to vote.

 

 

10.  RESIGNATION.

     A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.

11.  C0MPENSATION.

     No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized.  Nothing herein
contained shall be

construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.

12. PRESUMPTION OF ASSENT.

     A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting. 
Such right to dissent shall not apply to a director who voted in favor of such
action.

13.  EXECUTIVE AND OTHER COMMITTEES.

     The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors.  Each such committee shall serve at the pleasure of the board.

ARTICLE IV - OFFICERS

1. NUMBER.

     The officers of the corporation shall be the President and shall be
elected by the directors.  Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the directors.

2.  ELECTION AND TERM OF OFFICE.

     The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders.  Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.

 

 

3. REMOVAL.

     Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.

4.  VACANCIES.

     A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.

5.  President

      The President shall be the Chief Executive Officer of the Corporation
and shall, subject to the control of the directors, shall in general supervise
and control all the business and affairs of the corporation.  He shall be a
director of the Corporation and

he shall, when present, preside at all meetings of the stockholders and of
the directors.  The President shall perform such other duties as may be
prescribed by the directors of the Corporation from time to time.

 6. SALARIES.

      The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.

ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS

1.  CONTRACTS.

      The directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation and such authority may be general or confined
to specific instances.

2. LOANS.

     No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors.  Such authority may be general or confined to
specific instances.

 

 

3.  CHECKS, DRAFTS, ETC.

     All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.

4. DEPOSITS.

     All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the directors may select.

ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER

1.  CERTIFICATES FOR SHARES.

     Certificates representing shares of the corporation shall be in such
form as shall be determined by the directors.  Such certificates shall be signed
by the president and by the secretary or by such other officers authorized by
law and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified.  The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation.  All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the 
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued there for upon such terms and indemnity to the corporation
as the directors may prescribe.

2.  TRANSFERS OF SHARES.

     (a)  Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office, 

     (b)  The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.

 

 

ARTICLE VII - FISCAL YEAR

       The fiscal year of the corporation shall end on the 31st
Day of January in each year.

ARTICLE VIII - DIVIDENDS

       The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.

ARTICLE IX - SEAL

     The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".

ARTICLE X - WAIVER OF NOTICE

     Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.

ARTICLE XI - AMENDMENTS

     These by-laws may be altered, amended or repealed and new by- laws may
be adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at any annual stockholders' meeting or at any
special stockholders' meeting when the proposed amendment has been set out in
the notice of such meeting.

ARTICLE XII - INDEMNIFICATION

(a)  The corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the corporation to procure a judgment in its favor)
by reason of the fact that that person is or was an agent of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with that proceeding if the person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of that person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction, or on
a plea of  nolo contenders or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a n-Lanner that the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe was unlawful.

 

 

(b)  The corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that the person is or was an agent of the
corporation, against expenses actually and reasonably incurred by the person in
connection with the defense or settlement of that action if that person acted in
good faith, in a manner the person believed to be in the best interests of the
corporation and its shareholders.  No indemnification shall be made for any of
the following:

   (1) Any claim, issue, or matter for which any person has been adjudged
liable to the corporation in the performance of that person's duty to the
corporation and its shareholders, unless and only to the extent that the court
where the proceeding was or is pending determines on application that, in view
of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for expenses, and then only to the extent that the court
determines,

   (2) Amounts paid in settling or otherwise, disposing of a threatened or
pending action without court approval; or

   (3)  Expenses incurred in defending a threatened or pending action that is
settled or otherwise disposed of without court approval.Amended and Restated Employee Stock Purchase Plan

 
EXHIBIT
4.1 
 
READ-RITE CORPORATION

 
EMPLOYEE STOCK PURCHASE PLAN

 
(As amended and restated effective
November 26, 2001) 
 
1.    Establishment of Plan.    Read-Rite Corporation proposes to grant the opportunity to purchase the Company’s Common Stock to employees of the Company and Subsidiaries (as
hereinafter defined) pursuant to the Plan herein set forth. For purposes of this Plan, “Parent Corporation” and “Subsidiary” (collectively, “Subsidiaries”) shall have the same meanings as, respectively, “parent
corporation” and “subsidiary corporation” in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”). The Company intends that the Plan shall qualify as an “employee stock purchase
plan” under Section 423 of the Code (including any amendments or replacements of such section), and the Plan shall be so construed. Any term not expressly defined in the Plan but defined for purposes of such Section 423 shall have the same
definition herein. 
 
2.    Purposes and Share Reserve.    The purpose of the Plan is to provide employees of the Company and Subsidiaries with a convenient means to acquire an equity interest in the Company,
to enhance such employees’ sense of participation in the affairs of the Company and Subsidiaries, to provide an incentive for continued employment and to help such employees provide for their future financial security. The maximum number of
shares of Common Stock which may be issued under the Plan shall be 5,600,000 shares of the Company’s authorized but unissued Common Stock or Common Stock which are treasury shares. In the event that any purchase opportunity for any reason
expires or is canceled or terminated, the shares of Common Stock allocable to the unexercised portion of such purchase opportunity may again be subjected to a purchase opportunity. 
 
3.    Administration and Shareholder Approval.    The Plan is
administered by the Compensation Committee appointed by the Board of Directors of the Company. Subject to the provisions of the Plan, all questions of interpretation or application of the Plan shall be determined by the Compensation Committee, and
its decisions shall be final and binding upon all participants. Members of the Compensation Committee shall receive no compensation for their services in connection with the administration of the Plan, other than standard fees as established from
time to time by the Board of Directors of the Company for services rendered by Board members serving on Board committees. All expenses incurred in connection with the administration of the Plan shall be paid by the Company. 
 
The Company shall indemnify and hold harmless any member of
the Compensation Committee or any employee to whom any responsibility with respect to the Plan is allocated or delegated, from and against any and all liabilities, costs and expenses, including attorney’s fees, incurred by such persons as a
result of any act, or omission to act, in connection with the performance of their duties, responsibilities and obligations under the Plan, other than such liabilities, costs and expenses as may result from the bad faith, criminal acts, or willful
misconduct of such persons or to the extent such indemnification is prohibited by law. The Company shall have the obligation to conduct the defense of such persons in any proceeding to which this provision applies. If any person covered by this
indemnification clause determines that the defense of the Company is inadequate, that person shall be entitled to retain separate legal counsel for his/her defense and the Company shall be obligated to pay for all reasonable legal fees and other
court costs 

 

1 

incurred in the course of such defense unless a court of competent jurisdiction finds such person acted in bad faith or engaged in criminal
acts or willful misconduct. The Company may satisfy this obligation in whole or in part through the purchase of a policy or policies of insurance, but no insurer shall have any rights against the Company arising out of this provision. 
 
Notwithstanding any other provision of the Plan to the
contrary, any purchase opportunity granted pursuant to the Plan shall be subject to (i) obtaining all necessary governmental approvals and/or qualifications of the sale and/or issuance of the purchase opportunities and/or the shares of Common Stock
and (ii) for a purchase opportunity granted after the date the Board of Directors of the Company has initially adopted or amended the Plan, obtaining any necessary shareholder approval of the Plan with respect to such initial adoption or amendment
for such purchase opportunity to be treated as an option described in section 423 of the Code or the grant or exercise of such purchase opportunity to not be treated as a non-exempt “purchase” under Section 16(b) of the Securities Exchange
Act of 1934, as amended. 
 
4.    Eligibility.    Any employee of the Company and Subsidiaries is eligible to participate in the Plan except the following: 
 
(a)    employees who are not employed by
the Company or Subsidiaries on the 15th day of the month before the beginning of a Purchase Period, with respect to that Purchase Period; 
 
(b)    employees who are customarily employed for less than 20 hours a week; 
 
(c)    employees who are customarily
employed for less than 5 months in a calendar year; and 
 
(d)    employees who own or hold options to purchase or who, as a result of participation in this plan, would own or hold options to purchase, 5% or more of the Company’s Common Stock within the meaning of
section 423(b)(3) of the Code. 
 
5.    Offering Dates.    The Plan is implemented by sequential offerings of six months’ duration (the “Purchase Period”); however, the Purchase Period beginning October 1,
1998 shall end April 30, 1999. Thereafter, Purchase Periods shall commence on or around May 1 and November 1 of each year and end on or around October 31 and April 30, respectively. The first day of each Purchase Period shall be the “Offering
Date” and the last day of each Purchase Period shall be the “Purchase Date.” 
 
Notwithstanding the foregoing, the Compensation Committee may establish a different term for one or more Purchase Periods and/or different commencing and/or ending dates for such Purchase Periods. In
the event the first and/or last day of a Purchase Period is not a business day, the Company shall specify the business day that will be deemed the first or last day, as the case may be, of the Purchase Period. 
 
6.    Participation in the
Plan.    Eligible employees become participants in the Plan on the first Offering Date after satisfying the eligibility requirements by delivering to the Company's or Subsidiary's (whichever employs such employee) payroll
office (the “Payroll Office”) not later than the 15th day of the month before such Offering Date a subscription agreement authorizing payroll 

 

2 

deductions. An eligible employee who does not deliver a subscription agreement to the Payroll Office by such date after becoming eligible to
participate in the Plan shall not participate in the Plan for that Purchase Period or for any subsequent Purchase Period unless such employee subsequently enrolls in the Plan by filing the subscription agreement with the Payroll Office not later
than the 15th day of the month preceding a subsequent Offering Date. Once an employee becomes a participant in the Plan, such employee will automatically participate in each successive offering until such time as such employee withdraws, or is
withdrawn, from the Plan as set forth below, and is not required to file any additional subscription agreements for subsequent Purchase Periods in order to continue participation in the Plan. 
 
7.    Grant of Purchase Opportunity on
Enrollment.    Enrollment by an eligible employee in the Plan with respect to a Purchase Period will constitute the grant (as of the Offering Date) by the Company to such employee of an opportunity to purchase shares of
Common Stock from the Company under the Plan. All participants granted a purchase opportunity under the Plan shall have the same rights and privileges within the meaning of Section 423(b)(5) of the Code. Re-enrollment by a participant in the Plan
(but not merely an increase or decrease in the level of payroll withholding) will constitute the grant by the Company to the participant of a purchase opportunity on the first day of the Offering Period with respect to which such re-enrollment
occurs. Any participant whose opportunity to purchase expires and who has not withdrawn from the Plan will automatically be reenrolled in the Plan and granted a new purchase opportunity on the first date of the next Offering Period. 
 
8.    Purchase
Price.    The purchase price per share at which a share of Common Stock will be sold in any Purchase Period shall be eighty-five percent (85%) of the lesser of: 
 
(a)    The fair market value on the Offering Date; or 
 
(b)    The fair market value of the Common
Stock on the Purchase Date. 
 
For purposes of the
Plan, the term “fair market value” shall mean for the applicable date the closing price of a share of the Common Stock as reported on the NASDAQ National Market System or, if not so reported, as reported on such other stock exchange or
market system on which the Common Stock is traded as determined by the Compensation Committee, or as otherwise determined by the Compensation Committee if shares of Common Stock are not so reported. 
 
(c)    Notwithstanding anything in the
Plan to the contrary, in the event (i) the Company’s stockholders approve an increase in the number of shares of Common Stock available for issuance under the Plan, (ii) all or a portion of such additional shares are to be issued with respect
to a Purchase Period that is under way at the time of such stockholder approval, and (iii) the per share fair market value (determined in accordance with Section 8(b) above) of the Common Stock on the date of such approval (the “Authorization
Date FMV”) is higher than the fair market value on the Offering Date of such Purchase Period, then for all purposes under the Plan, the Authorization Date FMV shall be used instead of the fair market value on the Offering Date. 
 
9.    Payment of Purchase Price;
Changes in Payroll Deductions; Issuance of Shares. 
 
(a)    Payment for the purchase price of the shares of Common Stock is accumulated by regular payroll deductions made during each Purchase Period. The deductions are 

 

3 

made as a percentage of the employee’s base pay in one percent (1%) increments not to exceed 10%. Base pay (a) shall include all
salaries, commissions, and advances paid against future commissions, before deduction for any contributions to any plan maintained by the Company and described in Section 401(k) or Section 125 of the Code, and (b) shall not include over-time,
bonuses, annual awards, other incentive payments, shift premiums, long-term disability, worker’s compensation or any other payments not specifically referenced in (a). Payroll deductions shall commence on the first payday following the Offering
Date and shall continue to the end of the Purchase Period unless sooner altered or terminated as provided in the Plan. 
 
(b)    A participant may lower (but not increase) the rate of payroll deductions during a Purchase Period by filing
with the Payroll Office a new authorization for payroll deductions (which must be expressed as a whole percentage of the employee’s base pay in one percent (1%) increments, including zero percent (0%)). A decrease in a participant’s
payroll deductions to zero percent (0%) during a Purchase Period shall not constitute the participant’s withdrawal from such Purchase Period and the Plan unless the participant expressly elects such a withdrawal in writing in accordance with
the requirements of Section 12 of the Plan. Such change in the rate of payroll deductions may be made at any time during a Purchase Period. A participant may increase or lower the rate of payroll deductions for any subsequent Purchase Period by
filing with the Payroll Office a new authorization for payroll deductions not later than the 15th day of the month before the beginning of such Purchase Period. 
 
(c)    All payroll deductions made for a participant are credited to his/her account
under the Plan and are deposited with the general funds of the Company; no interest accrues on the payroll deductions. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose. 
 
(d)    On each Purchase Date, so long as
the Plan remains in effect and provided that the participant has not terminated prior to a given Purchase Date, the Company shall apply the funds then in the participant’s account to the purchase of whole shares of Common Stock reserved to the
extent permitted by the Plan. The purchase price per share shall be as specified in Section 8 of the Plan. Any amount remaining in such participant’s account representing any excess over the sum required to purchase whole shares shall be held
for purchases on the next Purchase Date unless the remaining amount equals or exceeds the sum required to purchase one whole share of Common Stock at the end of the relevant Purchase Period, or the Plan has been oversubscribed, in which case such
funds shall be returned to the member. No Common Stock shall be purchased on behalf of any employee whose participation in the Plan has terminated prior to the last day of a Purchase Period. 
 
(e)    Subject to the provisions of this
Plan, as promptly as practical after the Purchase Date, the Company shall cause to be delivered to the participant, or the participant’s agent, certificates representing the shares of Common Stock purchased by the participant. Delivery shall be
deemed effective for all purposes when the Company’s stock transfer agent deposits the stock certificates in the United States mail addressed to the participant, or the participant’s agent, at the address specified by the participant.
Prior to the date of issuance of a stock certificate for the shares of Common Stock being purchased, a participant shall have no rights as a shareholder of the Company by virtue of participation in the Plan. 
 
(f)    The Company may, from time to time,
establish or change (i) a minimum required withholding amount for participation in any Purchase Period, (ii) limitations on the 

 

4 

frequency and/or number of changes in the amount withheld during a Purchase Period, (iii) an exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, (iv) payroll withholding in excess of or less than the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of subscription agreements, (v) the date(s) and
manner by which the fair market value of the Common Stock is determined for purposes of the administration of the Plan, and/or (vi) such other limitations or procedures as deemed advisable by the Company in the Company’s sole discretion which
are consistent with the Plan, and Section 423 of the Code. 
 
(g)    Any portion of a participant’s purchase opportunity remaining unexercised after the end of the Purchase Period to which it relates shall expire immediately upon the end of such Purchase Period.

 
10.    Designation of
Beneficiary. 
 
a.    A
participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the
option in exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the
event of such participant’s death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. 
 
b.    Such designation of beneficiary may
be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company
shall deliver such shares and/or cash to the executor or administrator of the estate of participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the company, then to such other person as the Company may designate. 
 
11.    Limitation on Shares to be
Purchased.    No employee shall be entitled to purchase Common Stock under the Plan at a rate which exceeds $25,000 in fair market value, determined as of the Offering Date (or such other limit as may be imposed by the Code)
for each calendar year in which the employee participates in the Plan. The aggregate number of shares available for issuance under the Plan for any Purchase Period shall be 350,000. If the number of shares to be purchased by all employees
participating in the Plan exceeds the number of shares available in the Plan, the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be practical and as the Compensation Committee shall determine to be
equitable. Any payroll deductions accumulated in a participant’s account which are not used to purchase stock due to the limitations in this paragraph shall be returned to the participant at the end of the Purchase Period, unless insufficient
to purchase a whole share of Common Stock as provided in Section 9(d) of the Plan, or at such other time as the Compensation Committee shall determine. 
 

5 

 
12.    Withdrawal.    Each participant may withdraw from the Plan by signing and delivering to the Payroll Office notice on a form provided for such purpose. Such withdrawal may be
elected for a Purchase Period at any time at least 30 days prior to the Purchase Date for that Purchase Period, or at such other time as the Company may specify. 
 
Upon withdrawal from the Plan, the accumulated payroll deductions shall be returned to the withdrawn employee
and his/her interest in the Plan shall terminate. In the event an employee voluntarily elects to withdraw from the Plan, he/she may not resume his/her participation in the Plan during the same Purchase Period, but he/she may participate in any
succeeding Purchase Period under the Plan by filing a new authorization for payroll deductions in the same manner as set forth above for initial participation in the Plan. 
 
13.    Termination of Employment.    Termination of a
participant’s employment for any reason, including retirement, disability or death or the failure of a participant to remain an eligible employee, terminates his/her participation in the Plan immediately. In such event, the payroll deductions
credited to the participant’s account will be returned to him/her or, in the case of his/her death, to his/her legal representative. 
 
14.    Repayment of Payroll Deductions Without Interest.    In the event an employee’s
interest in the Plan is terminated, or in the event the Plan is terminated by the Board of Directors of the Company, the Company shall promptly deliver to the employee the payroll deductions credited to his/her account. No interest shall accrue on
the payroll deductions of a participant in the Plan. 
 
15.    Capital Changes.    In the event of changes in the Common Stock of the Company due to stock dividends, stock splits or other changes in capitalization, or in the event of any
merger, sale or any other reorganization, appropriate adjustments will be made by the Company in the Plan’s share reserve, the shares subject to purchase under a participant’s purchase opportunity, and in the purchase price per share of
Common Stock. 
 
16.    Nonassignability.    No rights or accumulated payroll deductions of an employee under the Plan may be pledged, assigned or transferred for any reason and any such attempt may be
treated by the Company as an election by such employee to withdraw from the Plan. 
 
17.    Reports.    Individual accounts will be maintained for each participant in the Plan. Each participant shall receive promptly after the end of each
Purchase Period a report of his/her account setting forth the total payroll deductions accumulated, the number of shares of Common Stock purchased and the remaining cash balance, if any, carried forward to the next Purchase Period or returned to the
participant, as the case may be. 
 
18.    No Obligation.    Neither this Plan nor the grant of any opportunity to purchase hereunder shall confer any right on any employee to remain in the employ of the Company or any
Subsidiary or restrict the right of the Company or any Subsidiary to terminate such employee’s employment. 
 
19.    Headings.    Headings have been provided for purposes of identification and
organization only and shall not be treated as operative provisions of the Plan. 
 

6 

 
20.    Transfer of Control.    A “Transfer of Control” shall be deemed to have occurred in the event any of the following occurs with respect to the Company. 
 
(a)    the direct or indirect sale or
exchange by the shareholders of the Company of all or substantially all of the stock of the Company where the shareholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company; 
 
(b)    a merger in which the shareholders of the Company before such merger do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company; or

 
(c)    the sale, exchange,
or transfer of all or substantially all of the Company’s assets (other than a sale, exchange, or transfer to one (1) or more corporations where the shareholders of the Company before such sale, exchange or transfer retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock of the corporation(s) to which the assets were transferred). 
 
In the event of a Transfer of Control, the Board of Directors of the Company shall provide that purchase opportunities granted under the
Plan shall be fully exercisable to the extent of each participant’s account balance for the Purchase Period as of a date prior to the Transfer of Control. All purchase opportunities shall terminate effective as of the date of the Transfer of
Control to the extent that the purchase opportunity is not exercised as of the date of the Transfer of Control. 
 
21.    Restriction on Issuance or Transfer of Shares.    The issuance of shares of Common
Stock under the Plan shall be subject to compliance with all applicable requirements of federal or state law with respect to such securities. A purchase opportunity may be not be exercised if the issuance of shares of Common Stock upon such exercise
would constitute a violation of any applicable federal or state securities laws or other laws or regulations. In addition, no purchase opportunity may be exercised unless (i) a registration statement under the Securities Act of 1933, as amended,
shall at the time of exercise of the purchase opportunity be in effect with respect to the shares of Common Stock issuable upon exercise of the purchase opportunity, or (ii) in the opinion of legal counsel to the Company, the shares issuable upon
exercise of the purchase opportunity may be issued in accordance with the terms of an applicable exemption from the registration requirements of said Act. As a condition to the exercise of the purchase opportunity, the Company may require the
participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation, and to make any representation or warranty with respect thereto as may be requested by the Company.

 
The Company may at any time place legends or
other identifying symbols regarding any applicable federal and/or state securities restrictions or any provision convenient in the administration of the Plan on some or all of the certificates representing shares of Common Stock issued under the
Plan. The participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired under the Plan in the possession of the participant in order to carry out these
provisions. 
 
The Company, in its absolute
discretion may impose such restrictions on the transferability of the shares of Common Stock purchased under the Plan as it deems appropriate and any such 

 

7 

restriction may be set forth in the respective subscription agreement and may be referred to on the certificates evidencing such shares. The
Company may require the employee to give the Company prompt notice of any disposition of shares of Common Stock acquired by exercise of a purchase opportunity within two years from the date of granting such opportunity or one year from the date of
exercise of such opportunity. The Company may direct that the certificates evidencing shares of Common Stock acquired under the Plan refer to such requirement to give prompt notice of disposition. 
 
22.    Amendment or Termination of the
Plan.    This Plan shall continue until terminated by the Board of Directors of the Company or until all of the shares of Common Stock reserved for issuance under the Plan have been issued, whichever occurs first.

 
The Board of Directors of the Company may at any
time terminate the Plan, except that such termination cannot affect shares of Common Stock or purchase opportunities previously granted under the Plan, except as expressly permitted by the Plan. The Board of Directors or any officer as may be
authorized by the Board of Directors from time to time may at any time amend the Plan, provided that no amendment makes any change in shares of Common Stock or purchase opportunities previously granted which would adversely affect the right of any
participant, nor may any amendment be made without approval of the shareholders of the Company within 12 months of the adoption of such amendment if such amendment would authorize the sale of more shares than are authorized for issuance under the
Plan or would change the designation of corporations whose employees may be offered purchase opportunities under the Plan. In addition to the foregoing, approval of the Company’s shareholders shall be sought for any amendment to the Plan for
which the Board of Directors deems shareholder approval necessary in order to comply with Rule 16b-3. 
 
Notwithstanding any other provisions of the Plan to the contrary, in the event of an amendment to the Plan which affects the rights or
privileges of purchase opportunities offered under the Plan, each participant with an outstanding purchase opportunity shall have the right to exercise such outstanding purchase opportunity on the effective date of the amendment and to participate
in the Plan for the remaining term of such outstanding purchase opportunity pursuant to the terms and conditions of the Plan, as amended. If in accordance with the preceding sentence, a participant elects to exercise such outstanding purchase
opportunity and to commence participation in the Plan, as amended on the effective date of such amendment, the participant shall be deemed to have received a new purchase opportunity on such effective date, and such effective date shall be deemed
the Offering Date for such new purchase opportunity. 
 
IN WITNESS WHEREOF, the undersigned Secretary of Read-Rite Corporation, a Delaware corporation, hereby declares that the Read-Rite Corporation Employee Stock Purchase Plan was adopted by the Board of Directors of Read-Rite
Corporation at its meeting on January 30, 1992, readopted at its meeting on November 16, 1992, amended at its meeting on December 19, 1994, and further amended at its meetings on October 22, 1996, July 22, 1997, October 20, 1998 and November 26,
2001. 
 

	  

	 Andrew C. Holcomb

	 Vice President, General Counsel and Secretary

 

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