EXHIBIT 4.7
FORM OF ESCROW AGREEMENT
Escrow Agreement dated as of February __, 2000 by and among Read-Rite
Corporation, a Delaware corporation (the "Company"), Norwest Bank Minnesota,
National Association, as Escrow Agent (the "Escrow Agent") the parties set forth
on the signature pages hereto (the "Holders") and FleetBoston Xxxxxxxxx Xxxxxxxx
Inc., as agent for the Holders ("Agent").
WITNESSETH
WHEREAS, pursuant to that certain Indenture and Supplemental Indenture,
both dated March 1, 2000, between the Company and Norwest Bank Minnesota,
National Association (the "Trustee"), the Company is issuing up to $50,000,000
aggregate principal amount of 10% Convertible Subordinated Notes due September
1, 2004 (the "Additional Exchange Notes") for cash (the "Offering"). In
connection with the Offering, the Company has agreed for the benefit of the
purchasers of the Additional Exchange Notes to enter this Escrow Agreement.
WHEREAS, under the Revolving Credit Agreement the Banks have the right to
block the March 1, 2000 interest payment on the Existing Notes (as defined
below) under section 1504 of the Existing Notes Indenture (as defined below).
WHEREAS, the Banks have exercised this blockage right pursuant to Section
1504 of the Existing Notes Indenture which has prevented the Company from paying
the March 1, 2000 interest payments on the Existing Notes.
WHEREAS, pursuant to the terms of the Offering, FleetBoston Xxxxxxxxx
Xxxxxxxx Inc. ("Xxxxxxxxx Xxxxxxxx"), as placement agent on behalf of the
Holders, will deposit in escrow (the "Escrow"), to be held by the Escrow
Agent subject to the release conditions set forth herein, cash received from
the Holders with respect to such Holder's purchase of Additional Exchange
Notes.
WHEREAS, this Escrow Agreement shall govern the terms upon which the Escrow
Agent will receive, hold, and release the Escrow Property (as defined) from the
Escrow and the duties of the Escrow Agent.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the Company, the Holders, and the Escrow Agent
agree as follows:
1. Definitions. The following definitions shall apply under this Escrow
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Agreement. Other capitalized terms shall have the meanings given to them in the
text.
"Banks" means the financial institutions which are currently parties to the
Revolving Credit Agreement.
"Exchange Offer" means the Company's offer to exchange an aggregate
principal amount of up to $172,500,000 of the Company's 10% Convertible
Subordinated Notes due September 1, 2004 for an aggregate principal amount of up
to $345,000,000 of the Company's Existing Notes.
"Existing Notes" means the 6 1/2% Convertible Subordinated Notes due
September 1, 2004, issued under the Existing Notes Indenture.
"Existing Notes Indenture" means the Indenture and Supplemental Trust
Indenture, each dated August 15, 1997, between the Company and State Street Bank
and Trust Company of California, N.A.,
under which the Existing Notes were issued.
"Majority Banks" means Banks owed at least 51% of the then aggregate unpaid
principal amount outstanding under the Revolving Credit Agreement.
"Proceeds" means the funds received by the Company upon the compliance with
Section 6 of This Agreement.
"Revolving Credit Agreement" means that certain Credit Agreement, dated as
of October 2, 1997, by and among the Company, the financial institutions named
on the signature pages thereof, Canadian Imperial Bank of Commerce, New York
Agency, as agent for the Banks and issuer of Letters of Credit, as amended by
the First Amendment to Credit Agreement dated February 5, 1998, the Second
Amendment to Credit Agreement dated as of August 10, 1998, the Waiver and Third
Amendment to Credit Agreement dated as of September 27,1999, the Waiver and
Fourth Amendment to Credit Agreement dated as of December 29, 1999 and the
Waiver, Forbearance and Fifth Amendment to Credit Agreement dated January 28,
2000, as amended, amended and restated, supplemented or otherwise modified from
time to time.
2. Appointment of Escrow Agent. The Company and the Holders
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do hereby appoint and designate the Escrow Agent for the purposes set forth
herein, and the Escrow Agent does hereby accept such appointment under the terms
and conditions set forth herein.
3. Establishment of Escrow. Simultaneously with the execution of
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this Escrow Agreement: (i) the Company shall deposit $__________ aggregate
principal amount of Additional Exchange Notes evidenced by a global security
("Global Security") in the name of Cede & Co., as nominee for the Depository
Trust Company, with the Escrow Agent and (ii) Xxxxxxxxx Xxxxxxxx, the initial
placement agent with respect to the Additional Exchange Notes, shall deposit
pursuant to a wire transfer the cash received from each Holder (collectively,
the "Escrow Property") with respect to the aggregate principal amount of the
Notes to be purchased by such Holders with the Escrow Agent. The Escrow Agent
shall hold the Escrow Property subject to the terms and conditions hereof.
4. Investment of Escrow Funds. The Escrow Property shall be recorded in
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an escrow account by the Escrow Agent. The Escrow Agent shall be permitted, and
is hereby authorized to deposit, transfer, hold and invest Escrow Property, if
any, consisting of cash, in the Xxxxx Fargo Fund, a money market fund available
through the Escrow Agent, or in a demand deposit account, during the period of
the Escrow in accordance with such instructions and directions as may from time
to time be provided to the Escrow Agent in writing and signed by the Company and
the Trustee. Any interest received by the Escrow Agent with respect to the
Escrow Property, including reinvested interest, shall become part of the Escrow
Property. The Escrow Agent shall have the right to liquidate any investments
held in order to provide funds necessary to make required distributions under
this Escrow Agreement. The Escrow Agent in its capacity as escrow agent
hereunder shall not have any liability for any loss sustained as a result of the
liquidation of any investment prior to its maturity of for the failure of the
parties to give the Escrow Agent instructions to invest or reinvest the Escrow
Funds or any earnings thereon.
5. Company Has No Rights in Escrow Property. The Company expressly
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acknowledges and agrees that prior to the release of the Escrow Property upon
satisfaction of the conditions in Section 6, the Company shall have no interest
or rights in the cash proceeds of the Escrow Property. In the event of the
investment of funds, if any, in the
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Escrow Account, the Company shall have no interest or rights in such investments
or investment securities.
6. Release Conditions. Upon the occurrence last to occur of paragraphs
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(a) and (b) of this Section 6, the Company shall execute the written
instructions, substantially in the form attached hereto as Exhibit A,
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instructing the Escrow Agent to release the cash portion of Escrow Property to
the Company and the Global Security portion of the Escrow Property to the
Trustee, as the custodian for Cede & Co., as nominee for the Depository Trust
Company.
(a) Lifting of the Blockage Notice. The blockage notice sent to the
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Existing Notes Trustee under the Existing Notes Indenture that prohibited the
Company from making the March 1, 2000 interest payment on the Existing Notes
shall have been rescinded by the Agent, acting for Majority Banks, by delivery
of written notice to the Existing Notes Trustee rescinding said blockage notice
in order to allow the Company to pay the holders of Existing Notes that did not
tender their Existing Notes in the Exchange Offer the interest due on March 1,
2000, on or before March 30, 2000.
(b) Payment of Proceeds to the Banks. The Agent, acting for Majority
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Banks, and the Company shall have agreed as to the amount of the Proceeds to be
paid to the Banks by the Company.
7. Escrow Conditions Not Met. If the two conditions in Section 6 have
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not been satisfied by the time set forth therein, the Escrow Agent shall send
notice to the Holders at their address as set forth on Exhibit C that the
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Company has failed to meet the conditions entitling the Company to receive the
cash portion of the Escrow Property and the Escrow Agent shall return the
Additional Exchange Notes to the Company and the cash portion of the Escrow
Property to the Holders in the amounts set forth on Exhibit C.
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8. Notices. All notices and communications hereunder shall be in writing
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and shall be deemed to be duly given if delivered by hand or by air delivery to
the address, with respect to the Holders, as set forth on Exhibit C, and
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with respect to the other parties to this Escrow Agreement as follows:
If to the Escrow Agent, to:
Norwest Bank Minnesota, National Association
Corporate Trust Department
X0000-000
Xxxxx Xxxxxx & Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Company, to:
Read-Rite Corporation
000 Xxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
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With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
or at such other address as any of the above may have furnished to the other
parties in writing and any such notice or communication given in the manner
specified in this Paragraph 8 shall be deemed to have been given on the date
received. In the event that the Escrow Agent, in its sole discretion, shall
determine that an emergency exists, the Escrow Agent may use or accept such
other means of notice or communication as the Escrow Agent deems advisable,
including facsimile.
9. Reliance. The Escrow Agent may act upon any instrument or other
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writing believed by it in good faith to be genuine and to be signed or presented
by the proper person or persons and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions hereof, except for
its own willful misconduct or gross negligence.
10. Escrow Agent Duties. The duties and responsibilities of the Escrow
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Agent hereunder shall be determined solely by the express provisions of this
Escrow Agreement, and no other or further duties or responsibilities shall be
implied. The Escrow Agent shall not have any liability under, nor duty to
inquire into the terms and provisions of any agreement or instructions, other
than outlined in this Escrow Agreement.
11. Termination of Escrow. The escrow provided for in this Escrow
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Agreement shall expire on the earlier of : (i) the date on which the Escrow
Property are released from the Escrow or (ii) the close of business on March 30,
2000, at which time the Escrow Property shall be returned in accordance with
Section 7.
12. Representations and Warranties By the Company. The Company hereby
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represents and warrants that:
(a) The execution, delivery and performance by the Company of this
Escrow Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Certificate of Incorporation of the Company or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company.
(b) This Escrow Agreement has been duly executed and delivered by the
Company and assuming the due authorization and valid execution and delivery of
this Agreement by the Subscriber and the Escrow Agent and enforceability of this
Escrow Agreement against the Escrow Agent and the Subscriber in accordance with
its terms, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(c) No litigation, investigation or proceeding before any arbitrator
or governmental authority is pending or, to the knowledge of the Company, is
threatened by or against the Company with respect to this Escrow Agreement or
any of the transactions contemplated hereby.
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13. Fees and Expenses. The Escrow Agent shall be entitled to compensation
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for its services as stated in the fee schedule attached hereto as Exhibit B,
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which compensation shall be paid by the Company. The fee agreed upon for the
services rendered hereunder is intended as full compensation for the Escrow
Agent's services as contemplated by this Escrow Agreement; provided, however,
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that in the event that the conditions for the disbursement of property under
this Escrow Agreement are not fulfilled, or the Escrow Agent renders any
material service not contemplated in this Escrow Agreement or there is any
assignment of interest in the subject matter of this Escrow Agreement, or any
material modification hereof, then the Escrow Agent shall be reasonably
compensated for such extraordinary services and reimbursed for all costs and
expenses related thereto.
14. Indemnification of Escrow Agent. The Company and each Holder both
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jointly and severally hereby indemnifies and holds harmless the Escrow Agent
from and against, any and all loss, liability, cost, damage and expense,
including, without limitation, reasonable counsel fees, which the Escrow Agent
may suffer or incur by reason of any action, claim or proceeding brought against
the Escrow Agent arising out of or relating in any way to this Escrow Agreement
or any transaction to which this Escrow Agreement relates unless such action,
claim or proceeding is the result of the willful misconduct of the Escrow Agent.
The Escrow Agent may consult counsel in respect of any question arising under
the Indentures and the Escrow Agent shall not be liable for any action taken or
omitted in good faith upon advice of such counsel; provided that in no event
shall any Holder be liable to the Escrow Agent for any amount in excess of
their applicable portion of cash proceeds deposited by said Holder with the
Escrow Agent.
15. Refrain from Action. In the event that the Escrow Agent shall be
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uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party hereto which, in its opinion, conflict with any
of the provisions of this Escrow Agreement, it shall be entitled to refrain from
taking any action and its sole obligation shall be to keep safely all property
held in escrow until it shall be directed otherwise in writing by all of the
other parties hereto or by a final order or judgment of a court of competent
jurisdiction.
16. Acceptance of Appointment. Norwest Bank Minnesota, National
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Association hereby agrees to act as Escrow Agent under this Escrow Agreement.
The Escrow Agent shall have no duty to enforce any provision hereof requiring
performance by any other party hereunder.
17. Successor Escrow Agent. Any company into which the Escrow Agent may
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be merged or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it shall be a
party or any company to which the Escrow Agent may sell or transfer all or
substantially all of its escrow/custody business, provided such company shall be
eligible to serve as the Escrow Agent hereunder, shall be the successor
hereunder to the Escrow Agent without the execution or filing of any paper or
any further act.
18. Counterparts. This Escrow Agreement may be executed in two or more
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counterparts, all of which taken together shall constitute one instrument.
19. Resignation. The Escrow Agent may resign upon 30-days advance written
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notice to the parties hereto. If a successor escrow agent is not appointed
within the 30-day period following such notice, the Escrow Agent may petition
any court of competent jurisdiction to name a successor escrow agent.
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20. Governing Law.
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THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS
OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY,
ESCROW AGENT AND THE HOLDERS IN CONNECTION WITH THIS AGREEMENT, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
21. Amendments. This Escrow Agreement may be amended or modified, and any
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of the terms, covenants, representations, warranties, or conditions hereof may
be waived, only by a written instrument executed by the Company, the Escrow
Agent and a majority of the Holders hereto, or in the case of a waiver, by the
party waiving compliance. Any waiver by any party of any condition, or of the
breach of any provision, term, covenant, representation, or warranty contained
in the Escrow Agreement, in any one or more instances, shall not be deemed to
be nor construed as further or continuing waiver of any such conditions, or of
the breach of any other provision, term, covenant, representation, or warranty
of this Escrow Agreement.
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22. Assignability. This Escrow Agreement shall not be assigned by
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operation of law or otherwise, except as otherwise specifically provided in
writing by the parties hereto; provided that the Company may assign its rights
and obligations hereunder to any of its subsidiaries, or affiliates or any
successor in interest to the business of the Company.
23. Section Headings. The section headings in this Escrow Agreement are
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for reference purposes only and shall not affect the meaning or interpretation
of this Escrow Agreement.
24. Severability. In the event that any part of this Escrow Agreement is
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declared by any court or other judicial or administrative body to be null, void,
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Escrow Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date and year first above written.
READ-RITE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Escrow Agent
By:________________________________
Name:______________________________
Title:_____________________________
FLEETBOSTON XXXXXXXXX XXXXXXXX
INC., as Agent for the Holders
By:________________________________
Name:______________________________
Title:_____________________________
HOLDERS
By:________________________________
Name:______________________________
Title:_____________________________
By:________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT A
Date: ________________
Norwest Bank Minnesota, National Association, as Escrow Agent
Corporate Trust Department
X0000-000
Xxxxx Xxxxxx & Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Re: Written Instructions
Dear Xx. Xxxxxxxxx:
Reference is made to (i) the Escrow Agreement (the "Escrow
Agreement"), dated as of March __, 2000, by and among Read-Rite Corporation (the
"Company"), and Norwest Bank Minnesota, National Association, as Escrow Agent
and the Subscribers listed on the signature pages thereto. Capitalized terms
used by not defined herein shall have the meaning given them in the Escrow
Agreement.
In accordance with Section 6 of the Escrow Agreement, the undersigned
hereby jointly instruct the Escrow Agent to release the Escrow Property to the
Company and release the Additional Exchange Notes to Norwest Bank Minnesota,
National Association, the trustee under the Indenture and the Additional
Exchange Notes, as custodian for the Depository Trust Company.
READ-RITE CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
EXHIBIT B
FEES
ACCEPTANCE FEE: $1,500.00
For initial services including examination of the Escrow Agreement
and all supporting documents this is a one-time fee payable upon the
opening of the account.
ADMINISTRATION FEE: $1,500.00*
An annual charge or any portion of a 12-month period thereof. This
fee is payable upon the opening of the account and annually thereafter.
This charge is not prorated for the first year.
*Assumes use of Norwest Funds for funds on deposit.
TRANSACTION FEE:
Wire transfer of funds $ 25.00
Other transfer of funds (i.e. Checks, internal account transfers) $ 15.00
Asset transactions (purchases/sales/calls/deposit/withdrawals, etc.) $ 20.00
No charge for Norwest Funds transactions other than those disclosed in the Fund
Prospectus.
TAX REPORTING FEES:
$5.00 per individual 1099 reported to the Internal Revenue Service (optional -as
required)
EXTRAORDINARY SERVICES:
For any services other than those covered by the aforementioned, a special per
hour charge will be made to commensurate with the character of the service, time
required and responsibility involved. Such services include but are not limited
to excessive administrative time, attendance at closings, specialized reports
and record-keeping, unusual certifications, etc.
FEE SCHEDULE IS SUBJECT TO ANNUAL REVIEW AND ADJUSTMENT.
EXHIBIT C
Holder (with address): Principal Amount of Exchange Notes Purchase Price
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