Document:

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                                                                    EXHIBIT 10.1

                            RIGHTPOINT SOFTWARE, INC.
                         (FORMERLY DATAMIND CORPORATION)

                             1996 STOCK OPTION PLAN

      1.    Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.

      2.    Definitions. As used herein, the following definitions shall apply:

            (a)   "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

            (b)   "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options will be or are being granted under
the Plan.

            (c)   "Board" means the Board of Directors of the Company.

            (d)   "Code" means the Internal Revenue Code of 1986, as amended.

            (e)   "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.

            (f)   "Common Stock" means the Common Stock of the Company.

            (g)   "Company" means RightPoint Software, Inc., a California
Corporation.

            (h)   "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.

            (i)   "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options,

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no such leave may exceed 90 days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract, including Company policies. If
reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option.

            (j)   "Employee" means any person, including Officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

            (k)   "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (l)   "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

                  (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination, or;

                  (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

            (m)   "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.

            (n)   "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

            (o)   "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

            (p)   "Option" means a stock option granted pursuant to the Plan.

            (q)   "Optioned Stock" means the Common Stock subject to an Option.

            (r)   "Optionee" means an Employee or Consultant who receives an
                  Option.

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            (s)   "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

            (t)   "Plan" means this 1996 Stock Option Plan.

            (u)   "Section 16(b) " means Section 16(b) of the Securities
Exchange Act of 1934, as amended.

            (v)   "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.

            (w)   "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

      3.    Stock Subject to the Plan. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 6,558,612 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.

      If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if unvested Shares are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

      4.    Administration of the Plan.

            (a)   Initial Plan Procedure. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.

            (b)   Plan Procedure after the Date, if any, upon Which the Company
becomes Subject to the Exchange Act.

                  (i)   Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.

                  (ii)  Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

                  (iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the Plan shall be
administered by the Board or a Committee of two or more "non-employee directors"
within the meaning of Rule 16b-3.

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                  (iv)  Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

            (c)   Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its discretion:

                  (i)   to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(l) of the Plan;

                  (ii)  to select the Consultants and Employees to whom Options
may from time to time be granted hereunder;

                  (iii) to determine whether and to what extent Options are
granted hereunder;

                  (iv)  to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

                  (v)   to approve forms of agreement for use under the Plan;

                  (vi)  to determine the terms and conditions of any award
granted hereunder;

                  (vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;

                  (viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted; and

                  (ix)  to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.

            (d)   Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

      5.    Eligibility.

            (a)   Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.

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            (b)   Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

            (c)   The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

      6.    Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.

      7.    Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.

      8.    Option Exercise Price and Consideration.

            (a)   The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

                  (i)   In the case of an Incentive Stock Option

                        (1)   granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                        (2)   granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

                  (ii)  In the case of a Nonstatutory Stock Option

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                        (1)   granted to a person who, at the time of the grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant.

                        (2)   granted to any person, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the date
of grant.

                  (b)   The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

      9.    Exercise of Option.

            (a)   Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan, but in no case at a rate of less than 20% per year over five (5)
years from the date the Option is granted.

         An Option may not be exercised for a fraction of a Share.

         An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 11 of the Plan.

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         Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

            (b)   Termination of Employment or Consulting Relationship. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant with the Company (but not in the event of an Optionee's change of
status from Employee to Consultant (in which case an Employee's Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option on the date
three (3) months and one day from the date of such change of status) or from
Consultant to Employee), such Optionee may, but only within such period of time
as is determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

            (c)   Disability of Optionee. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee as a
result of his or her disability, Optionee may, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the day three months and
one day following such termination. To the extent that Optionee is not entitled
to exercise the Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

            (d)   Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

            (e)   Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

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      10.   Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

      11.   Adjustments Upon Changes in Capitalization or Merger.

            (a)   Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

            (b)   Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.

            (c)   Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation other than a merger in which the shareholders
of the Company immediately prior to the merger own a majority of the voting
power in the surviving corporation following the merger, or a sale of
substantially all of the assets of the Company, the Option may be assumed or an
equivalent option may be substituted by such successor corporation or a parent
or subsidiary of such successor corporation. If, in such event, the Option is
not assumed or substituted, (i) such Option shall become fully vested and
exercisable as to all Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable and (ii) any restricted stock received upon
the early exercise of an Option shall fully vest. If, in the event of a merger
or asset sale, an Option becomes fully vested and exercisable in lieu of
assumption or substitution, the Administrator shall notify the Optionee in
writing or electronically that (i) the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice and
the Option shall terminate at the expiration of such period and (ii) any
restricted stock the Optionee has as a result of an early exercise of an Option
has fully vested. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger, the option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger by holders of Common Stock for each Share

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held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger was not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon the
exercise of the Option for each Share of Optioned Stock subject to the Option to
be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger.

      12.   Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.

      13.   Amendment and Termination of the Plan.

            (a)   Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

            (b)   Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

      14.   Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

      As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

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      15.   Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

         The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

      16.   Agreements. Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.

      17.   Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws and the rules of any
stock exchange upon which the Common Stock is listed.

      18.   Information to Optionees and Purchasers. The Company shall provide
to each Optionee, not less frequently than annually, copies of annual financial
statements. The Company shall also provide such statements to each individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.

                                      -10-<PAGE>   1
                                                                   EXHIBIT 10.59

                              READ-RITE CORPORATION
                           WAIVER AND THIRD AMENDMENT
                               TO CREDIT AGREEMENT

      This WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
dated as of September 27, 1999 and entered into among Read-Rite Corporation, a
Delaware corporation (the "Borrower"), the financial institutions named on the
signature pages hereof (each a "Bank" and collectively the "Banks"), Canadian
Imperial Bank of Commerce, New York Agency, as agent for the Banks (the "Agent")
and issuer of Letters of Credit (the "Designated Issuer") and is made with
reference to that certain Credit Agreement dated as of October 2, 1997 (as
amended by the First Amendment to Credit Agreement dated February 5, 1998 and
the Second Amendment to Credit Agreement dated as of August 10, 1998, the
"Credit Agreement" and the Credit Agreement, as amended by this Amendment, the
"Amended Agreement") among the Borrower, the Banks, the Designated Issuer and
the Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Amended Agreement.

                                    RECITALS

      WHEREAS, the Borrower has requested that the Banks waive certain financial
covenants and amend certain other provisions set forth in Credit Agreement.

      NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT

      A. The definition of the term "Revolving Facility" in Section 1.01 of the
Credit Agreement shall be amended by deleting the figure "$100,000,000" and
substituting therefore "$75,000,000".

      B. The definition of the term "Interest Period" in Section 1.01 of the
Credit Agreement shall be amended by replacing the period at the end thereof
with a semicolon and adding the following thereafter: "; provided, however, that
the Interest Periods for the Eurodollar Rate Loans commencing on October 4, 1999
and October 20, 1999 shall end no later than November 30, 1999 and in no event
shall any Interest Period commencing after October 1, 1999 end later than
December 31, 1999.

SECTION 2. WAIVERS AND CONSENTS

<PAGE>   2
      A. By their execution hereof, the Banks hereby waive compliance by the
Borrower with Section 6.02(b) to (e) inclusive of the Credit Agreement for the
period from September 30, 1999 through and including December 31, 1999. Unless
extended by the Majority Banks, this waiver shall terminate on January 1, 2000,
and on January 1, 2000 an Event of Default will exist if the Borrower is not
(and has not been) in compliance with Sections 6.02(b) to (e) of the Credit
Agreement for all periods from and after September 30, 1999. This waiver shall
be limited precisely as provided for herein and shall not be deemed to be a
waiver or modification of any other term or provision of the Credit Agreement or
to be a consent to any other transaction or further action on the part of the
Borrower or any of its Subsidiaries which would require the consent of the Banks
under the Credit Agreement.

      B. By their execution hereof, notwithstanding the definition of the term
"Financial Institution" or the minimum assignment requirements in Section 9.06,
the parties hereto consent to the assignment by Foothill Partners III, L.P. to
Cerberus Partners, L.P. of a portion of its Commitment in an amount less than
$5,000,000 and to the assignment by The Long-Term Credit Bank of Japan, Ltd.,
Los Angeles Agency to General Electric Capital Corporation of its entire
Commitment. From and after the effective date of this Amendment, each of
Cerberus Partners, L.P. and General Electric Capital Corporation shall be deemed
to be a Bank for all purposes of the Credit Agreement.

SECTION 3. CONDITIONS TO EFFECTIVENESS

      This Amendment shall become effective as of the first date (the "Third
Amendment Date") on or before October 7, 1999 upon which the following
conditions have been satisfied:

      A. The Agent shall have received for each Bank counterparts hereof duly
executed on behalf of the Borrower, the Agent, and the Majority Banks (or, in
lieu of execution by the Majority Banks, notice of the approval of this
Amendment by the Majority Banks satisfactory to the Agent); and

      B. An acknowledgment and amendment in the form of Exhibit A hereto duly
executed by each party to the Guaranty.

      C. The Borrower shall have reduced the aggregate outstanding principal
amount of Revolving Loans to an amount not in excess of $75,000,000.

      D. The Agent shall have received a copy of a board resolution of the
Borrower, in form and substance satisfactory, to the Agent authorizing the
execution, delivery and performance of this Amendment certified by the Secretary
of the Borrower as being in full force and effect on the date hereof.

<PAGE>   3
      E. The Amendment Fee referred to in Section 5.C shall have been paid, and
all other fees and expenses payable by the Borrower pursuant to the Loan
Documents shall have been paid or provided for.

      F. All the representations and warranties in Section 4 shall be true and
correct as of the date of this Amendment.

      G. No Potential Event of Default or Event of Default shall have occurred
and be continuing on the date of this Amendment or will result from the
consummation of this Amendment (after giving effect to this Amendment).

      H. The Agent shall have received, in form and substance satisfactory to
it, a certificate dated on or before the date of this Amendment certifying that
the conditions in clauses (F) and (G) have been met.

SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES

      In order to induce the Agent and the Banks to enter into this Amendment
and to amend the Credit Agreement in the manner provided herein, the Borrower
represents and warrants to the Agent and each Bank that the following statements
are true, correct and complete:

      A. CORPORATE POWER AND AUTHORITY. The Borrower has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, this Amendment
and the Amended Agreement.

      B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of the Borrower.

      C. NO CONFLICT. The execution and delivery by the Borrower of this
Amendment does not and will not contravene (i) any law or any governmental rule
or regulation applicable to the Borrower or any of its Subsidiaries, (ii) the
Certificate of Incorporation or Bylaws of the Borrower, (iii) any order,
judgment or decree of any court or other agency of government binding on the
Borrower or any of its Subsidiaries or (iv) any material agreement or instrument
binding on the Borrower or any of its Subsidiaries.

      D. GOVERNMENTAL CONSENTS. The execution and delivery by the Borrower of
this Amendment and the performance by the Borrower of the Amended Agreement do
not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body.

      E. BINDING OBLIGATION. This Amendment has been duly executed and delivered
by the Borrower and is the binding obligation of the Borrower, enforceable
against the Borrower in

<PAGE>   4
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.

      F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT.
The representations and warranties contained in Article V of the Amended
Agreement are and will be true, correct and complete in all material respects on
and as of the date of this Amendment to the same extent as though made on and as
of such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

      G. ABSENCE OF DEFAULT. No event has occurred and is continuing as of the
date of this Amendment or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default or a
Potential Event of Default (as determined after giving effect to the amendments
made by this Amendment).

      H. FINANCIAL CONDITION. The unaudited consolidated balance sheet of the
Borrower for the Borrower's fiscal quarter ended June 30, 1999 and the related
consolidated statements of operations and cash flow of the Borrower for the
fiscal quarter then ended, which have been previously circulated to the Banks,
fairly present in all material respects the consolidated financial condition of
the Borrower as at such date and the consolidated results of the operations of
the Borrower for the period ended on such date, all in accordance with GAAP,
consistently applied, subject to year-end adjustments and the absence of
footnotes.

SECTION 5. MISCELLANEOUS

      A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
AGREEMENTS.

      (i) On and after the Third Amendment Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Agreements to the "Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement.

      (ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Agreements shall remain in full force and effect
and are hereby ratified and confirmed.

      (iii) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of the Agent or any Bank
under, the Credit Agreement or any of the other

<PAGE>   5
Loan Agreements nor to create any course of dealing or otherwise obligate the
Agent or the Banks to forebear or execute similar amendments or any waiver in
similar circumstances in the future.

      B. COSTS AND EXPENSES. The Company covenants to pay to or reimburse the
Agent, upon demand, for all costs and expenses (including allocated costs of
in-house counsel) incurred in connection with the development, preparation,
negotiation, execution and delivery of this Amendment, the Collateral Documents
and the documents and transactions contemplated hereby.

      C. AMENDMENT FEE. The Company hereby agrees to pay to the Agent on or
before the Third Amendment Date, for the ratable benefit of those Banks who
consent to this Amendment (as evidenced by their return of a signed signature
page to Agent or Agent's counsel) by 5:00 p.m. (San Francisco time) October 6,
1999, an amendment fee (the "Amendment Fee") of 0.125% of the aggregate
Revolving Commitments and Term Commitments of such consenting Banks (after any
reduction made by this Third Amendment). The Amendment Fee shall be paid to the
Agent in immediately available funds and shall be non-refundable. The Amendment
Fee is in addition to any fees, costs, expenses or other amounts otherwise
payable pursuant to this Amendment or the Amended Agreement.

      D. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

      E. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

      F. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of a Bank or the Borrower shall bind such Bank or the
Borrower, respectively, with the same force and effect as the delivery of a hard
copy original. Any failure by the Agent to receive the hard copy executed
original of such document shall not diminish the binding effect of receipt of
the facsimile transmitted executed original of such document of the party whose
hard copy page was not received by the Agent.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>   6

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

                                         BORROWER:

                                         READ-RITE CORPORATION

                                         By:
                                         Title:

<PAGE>   7

                                         AGENT:

                                         CANADIAN IMPERIAL BANK OF
                                         COMMERCE, NEW YORK AGENCY, as Agent

                                         By:
                                         Title:

<PAGE>   8

                                         BANKS:

                                         CIBC INC.

                                         By:
                                         Title:

                                         ABN AMRO BANK N.V.

                                         By:
                                         Title:

                                         By:
                                         Title:

                                         FLEET NATIONAL BANK

                                         By:
                                         Title:

                                         KEYBANK, N.A.

                                         By:
                                         Title:

                                         THE LONG TERM CREDIT BANK OF JAPAN,
                                         LTD., LOS ANGELES AGENCY

                                         By:
                                         Title:

<PAGE>   9

                                         MELLON BANK

                                         By:
                                         Title:

                                         THE MITSUBISHI TRUST AND BANKING
                                         CORPORATION, LOS ANGELES AGENCY

                                         By:
                                         Title:

                                         THE SUMITOMO BANK LIMITED,
                                         SAN FRANCISCO BRANCH

                                         By:
                                         Title:

                                         THE INDUSTRIAL BANK OF JAPAN LIMITED,
                                         SAN FRANCISCO AGENCY

                                         By:
                                         Title:

                                         BANKBOSTON, N.A.

                                         By:
                                         Title:

<PAGE>   10

                                         BANQUE NATIONALE DE PARIS

                                         By:
                                         Title:

                                         By:
                                         Title:

                                         FOOTHILL PARTNERS III, L.P.

                                         By:
                                         Title:

                                         WELLS FARGO BANK, N.A.

                                         By:
                                         Title:

                                         THE DESIGNATED ISSUER:

                                         CANADIAN IMPERIAL BANK OF
                                         COMMERCE, NEW YORK AGENCY

                                         By:
                                         Title:

<PAGE>   11

                                EXHIBIT A
            TO WAIVER AND THIRD AMENDMENT
                      TO CREDIT AGREEMENT

September 27, 1999

The parties listed on the acknowledgment page hereof:

Re: Credit Agreement dated as of October 2, 1997

Ladies and Gentlemen:

     Please refer to (i) the Credit Agreement dated as of October 2, 1997 (the
"Credit Agreement") by and among Read-Rite Corporation (the "Borrower"), the
financial institutions party thereto (the "Banks") and Canadian Imperial Bank of
Commerce, New York Agency, as agent (in such capacity, the "Agent") and (ii) the
Continuing Guaranty dated as of August 10, 1998 (the "Guaranty", which was
executed by you on such date. Pursuant to an amendment of even date herewith,
certain terms of the Credit Agreement were amended. We hereby request that you
(i) consent to the terms of the amendment, (ii) acknowledge and reaffirm all of
your obligations and undertakings under the Guaranty and (iii) acknowledge and
agree that the Guaranty, as amended by the following paragraph hereof, is and
shall remain in full force and effect in accordance with the terms thereof.

     By this letter, we further agree that the Guaranty shall be amended by
adding the following clause immediately prior to the end of Section 3 thereof:

     "The obligations of each of the Guarantors under this Guaranty shall be
limited to the maximum amount as will, as giving effect to all other liabilities
of such Guarantor (including, but limited to, contingent liabilities, but
excluding the liabilities of such Guarantor hereunder) and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the Borrower under the Credit Agreement, result in the obligations
of such Guarantor under the Guaranty not constituting a fraudulent transfer or
conveyance."
<PAGE>   12
     Except as modified hereby, we and you acknowledge and agree that the
Guaranty is ratified and confirmed in all respects.

                                         Very truly yours,

                                         CANADIAN IMPERIAL BANK OF COMMERCE,
                                         NEW YORK AGENCY, as Agent

                                         By:
                                            ------------------------------------
                                         Title:
                                               ---------------------------------

ACKNOWLEDGED AND AGREED AS
OF THE DATE FIRST ABOVE WRITTEN:

GUARANTORS

SUNWARD TECHNOLOGIES, INC.

By:
   --------------------------------------
Title:
      -----------------------------------

SUNWARD TECHNOLOGIES, CALIFORNIA

By:
   --------------------------------------
Title:
      -----------------------------------

                                       A-2

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