EXHIBIT 99.3
November 11, 2002
Xx. Xxxx X. Xxxxx
Keystone Financing LLC
MS VR900
P.O. Box 4030
Golden, CO 80401-0030
Dear Xxxx:
This letter is to confirm that XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank"), subject to all terms and conditions contained herein, has agreed to
make the credit described below available to Keystone Financing LLC
("Borrower"):
An advancing term loan under which Bank will make advances to Borrower
from time to time up to and including the end of six months after loan
closing, not to exceed the aggregate principal amount of Two Hundred Million
Dollars ($200,000,000.00) ("Loan"), the proceeds of which shall be used to
provide short and long term financing to conduct a tender offer for
outstanding shares of CoorsTek, Inc., and which shall be converted on such
date to a term loan, as described more fully below.
LOAN:
LIMITATION ON BORROWINGS. Notwithstanding any other provision of this
letter, the aggregate amount of all outstanding borrowings under the Loan
shall not at any time exceed a maximum of Two Hundred Million Dollars.
BORROWING AND REPAYMENT. Borrower may from time to time during the
first six months after the closing of the Loan borrow and partially or wholly
repay its outstanding borrowings, provided that amounts repaid may not be
reborrowed; provided, further however, that the total outstanding borrowings
under the Term Commitment shall not at any time exceed the maximum principal
amount available thereunder, as set forth above.
At the end of six months from the closing of the Loan, Borrower shall
no longer have the right to borrow and the outstanding principal balance of
the Loan shall be due and payable in full; provided, however, that so long
as Borrower is in compliance on said date with all terms and conditions of
all documents relating to the Loan, including no adverse change relating to
Borrower or Collateral and no default, the Loan will convert to a term note
in the amount of the lesser of (a) the amount of advances made as of such
date, or (b) $140,000,000. The principal amount outstanding under the Loan
in excess of $140,000,000 shall be due and payable on such date. Upon such
conversion, the principal amount converted shall be due and payable sixty
months from the conversion date.
During the term of the Loan, interest shall be payable on a quarterly
basis.
PREPAYMENT. All prepayments of principal on any advance under the Loan
Limit prior to the end of the applicable LIBOR tranche shall be subject to
Bank's standard fixed rate prepayment fee in effect at the time the
promissory note evidencing such advance is signed. All prepayments shall be
applied on the most remote principal installment or installments then unpaid.
Xx. Xxxx X. Xxxxx
November 11, 2002
Page 2
COLLATERAL:
As security for all indebtedness of Borrower to Bank Borrower shall
grant to Bank on or prior to closing perfected security interests of first
priority in Xxxxxx Xxxxx Company (NYSE: RKY) Class B shares with a market
value of at least $500,000,000 (the "Collateral") to be held in a custody
account with Xxxxx Fargo Bank during the term of the Loan. The initial
number of shares comprising the Collateral shall be maintained with Bank as
collateral throughout the term of the Loan. The Collateral shall be free of
any restrictive legend and Bank shall be provided with all necessary
documents and consents to allow Bank to exercise all available remedies
against the Collateral if necessary.
In addition, the outstanding principal amount of the Loan shall not at
any time exceed fifty percent (50%) of the value of the Collateral. In the
event the value of the Collateral, for any reason and at any time, is less
than the required amount, Borrower shall, within ten (10) business days,
make a principal reduction on the loan or provide additional collateral of a
nature satisfactory to Bank, in either case in amounts or with values
sufficient to achieve the required value.
All dividends from the Collateral shall be deposited into a restricted
account with Bank, pursuant to which Bank will be authorized to withdraw
funds sufficient to make all payments of debt service on the loan. Dividends
not needed for the payment of debt service of the Loan shall be returned to
the Borrower.
Borrower shall reimburse Bank immediately upon demand for all costs and
expenses incurred by Bank in connection with any of the foregoing security,
including without limitation, filing and recording fees and costs of
appraisals, audits and title insurance.
INTEREST/FEES:
INTEREST. The outstanding principal balance of the Loan shall bear
interest as follows:
Prior to conversion: At a fixed rate per annum determined by Bank to
be eight-tenths of one percent (0.80%) above LIBOR calculated for a one
month term.
After conversion: At a fixed rate per annum determined by Bank to be
eight-tenths of one percent (0.80%) above LIBOR calculated for a one,
three or six month term as chosen by the Borrower.
The calculation of the LIBOR interest rate shall be in accordance with
Bank's standard terms and conditions.
COMPUTATION AND PAYMENT. Interest shall be computed on the basis of a
360-day year, actual days elapsed, and shall be payable at the times and
place set forth in any promissory note or other instrument or document
executed by Borrower to evidence any extension of credit by Bank.
COMMITMENT FEE. Borrower shall pay to Bank a non-refundable commitment
fee for the Loan equal to one half of one percent (0.50%) of the amount
converted, which fee shall be due and payable in full on the date of
conversion.
Xx. Xxxx X. Xxxxx
November 11, 2002
Page 3
CUSTODIAL FEE. Borrower shall pay a fee of 0.03% per annum based on
the market value of securities held in custody, such fee to be due and
payable each quarter.
COMPENSATING BALANCES. Borrower shall maintain with Bank average free
collected deposit balances ("Compensating Balances"), calculated on a
quarterly basis, equal to Twenty Five Million Dollars ($25,000,000.00). To
the extent such Compensating Balances are not maintained, Borrower shall pay
to Bank a fee or adjust the interest rate on the Loan in an amount to be
determined by Bank based on the prevailing market conditions at the time of
such deficiency and in proportion to the amount of the balance deficiency.
CONDITIONS PRECEDENT:
Prior to Bank's extension to Borrower of any credit contemplated by
this letter, all of the following shall have occurred:
LOAN DOCUMENTS. Borrower shall have executed, or caused to be executed
by any other party required hereby, and delivered to Bank, any and all
promissory notes, contracts, instruments and other documents, including
without limitation a comprehensive loan agreement, required by Bank to
evidence Bank's extension of extension of credit pursuant to the terms and
conditions of this letter, all of which shall be in form and substance
satisfactory to Bank and shall include, in addition to the terms and
conditions of this letter, such representations, warranties, conditions,
covenants, events of default and other provisions as Bank deems appropriate.
FINANCIAL CONDITION. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower,
nor any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the
assets of Borrower.
EXERCISE OF REMEDIES. Borrower shall furnish to Bank all documents
necessary to enable bank to comply with all applicable securities laws in
connection with any sale by Bank of the Collateral. Such documents shall
include, but not be limited to, all documents necessary to enable Bank to
sell the Collateral in compliance with SEC Rule 144.
At closing, Borrower shall furnish to Bank an initial calculation of
the volume, timing and other limitations imposed by applicable securities
laws, including Rule 144, on the Bank's ability to liquidate the Collateral.
COMPLIANCE WITH LAWS. Borrower shall provide evidence satisfactory to
Bank in its sole discretion, concerning compliance with all applicable laws,
including but not limited to, securities and fraudulent transfer and
conveyance laws.
Such evidence shall include, but not be limited to the following:
o Legal opinion in a form acceptable to Xxxxx Fargo provided by legal
counsel for the Coors Family Trusts (the "Trusts") addressing, among
other things:
o the authority of the Trusts to consummate the proposed transaction
and to form Borrower
o the Trusts' authority to transfer unencumbered assets into Borrower
Xx. Xxxx X. Xxxxx
November 11, 2002
Page 4
o the existence and nature, if any, of potential claims against the
Trusts' assets transferred to Borrower
o Legal opinion in a form acceptable to Xxxxx Fargo provided by legal
counsel for Borrower addressing, among other things, enforceability
of loan documents and Xxxxxxxx's ability to pledge the Collateral.
o Legal opinion in a form acceptable to Xxxxx Fargo provided by chief
counsel of the Xxxxxx Xxxxx Company regarding any restrictions on Xxxxx
Fargo's ability to liquidate the Collateral, including, but not limited
to confirmation of Bank's ability to sell Collateral pursuant to an
exemption from Registration granted by SEC Rule 144.
COVENANTS:
The loan agreement required by Bank shall include such covenants as
Bank may require, which may include, without limitation, (a) covenants
obligating Borrower, and any other party as required by Bank, to: provide
financial statements; preserve and maintain its facilities; maintain
insurance; pay taxes and other indebtedness when due; notify Bank of
litigation; and maintain Borrower's financial condition at levels and in
accordance with standards acceptable to Bank; and (b) covenants restricting
the ability of Borrower, or any other party, to: invest in fixed assets;
incur lease obligations; borrow from others; create or permit liens on
assets; merge; change the nature of Borrower's business; sell a substantial
part of Borrower's assets; make loans or investments; pay dividends or redeem
stock; or guaranty debts of others.
Without limiting the covenants which Bank may require in the loan
agreement with Borrower, Bank has determined that such document will include
Borrower's agreement:
FINANCIAL STATEMENTS. To provide to Bank all of the following, in form
and detail satisfactory to Bank:
(a) not later than ninety (90) days after and as of the end of each
fiscal year, a financial statement of Xxxxxxxx, prepared by a firm of
certified public accountants acceptable to Bank, to include balance sheet,
income statement, statement of cash flow and application of funds statement,
and within ten (10) days after filing, but in no event later than each April
15, unless Xxxxxxxx has provided bank with evidence of the granting of an
extension for such filing, copies of Xxxxxxxx's filed federal income tax
returns for such year;
(b) contemporaneously with each annual financial statement of
Xxxxxxxx, a certificate of a manager of Xxxxxxxx that said financial
statements are accurate and that there exists no default nor any condition,
act or event which with the giving of notice or the passage of time or both
would constitute a default;
(c) from time to time such other information as Bank shall reasonably
request.
LITIGATION. To promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower with a claim in excess of
$1,000,000.00.
OTHER INDEBTEDNESS. Not to create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to
Bank, (b) indebtedness of Borrower to any member or members of Borrower in an
aggregate amount not to exceed $50,000,000 incurred in connection with the
conversion of the Loan,
Xx. Xxxx X. Xxxxx
November 11, 2002
Page 5
which indebtedness shall be completely subordinated in right of repayment to the
Loan, and (c) any other existing liabilities disclosed by Xxxxxxxx to, and
deemed acceptable by, Bank prior to Bank's extension of any credit to Borrower.
MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Not to merge into or
consolidate with any other entity; nor to make any substantial change in the
nature of Xxxxxxxx's business as presently conducted; nor to acquire all or
substantially all of the assets of any other entity; nor to sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
Borrower's assets except in the ordinary course of its business.
GUARANTIES. Not to guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor to pledge or hypothecate any assets of Borrower as
security for, any liabilities or obligations of any other person or entity,
except any of the foregoing in favor of Bank.
LOANS, ADVANCES, INVESTMENTS. Not to make any loans or advances to or
investments in any person or entity, except any of the foregoing disclosed by
Xxxxxxxx to, and deemed acceptable by, Bank prior to Bank's extension of any
credit to Borrower, and additional loans or advances to Keystone Acquisition
Corp. in amounts not to exceed an aggregate of $200,000,000.00 outstanding at
any one time.
PLEDGE OF ASSETS. Not to mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Xxxxxxxx's assets
now owned or hereafter acquired, except any of the foregoing in favor of Bank
or which is disclosed by Borrower to, and deemed acceptable by, Bank prior to
Bank's extension of any credit to Borrower.
ADDITIONAL TERMS AND PROVISIONS:
Whether or not any credit is extended to Borrower or a loan agreement
or any other documents are agreed to and executed, Borrower shall be liable
for and shall pay to Bank, immediately upon demand, the full amount of all
payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of
Bank's in-house counsel), expended or incurred by Bank in connection with the
negotiation and/or preparation of this letter, any such loan agreement, and
any other contracts, instruments and documents required hereunder or
thereunder.
This letter shall be governed by and construed in accordance with the
laws of the State of Colorado. Upon the demand of any party, any action,
dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, arising under or in any way
pertaining to this letter or any extensions of credit or other activities,
transactions or obligations of any kind related hereto, shall be resolved by
binding arbitration administered by the American Arbitration Association
("AAA") in accordance with the AAA Commercial Arbitration Rules and the
Federal Arbitration Act (Title 9 of the United States Code), notwithstanding
any conflicting choice of law provision herein. Bank's current standard
provision governing arbitration of disputes is deemed incorporated herein as
though set forth in full and shall be included in full in the loan agreement
and/or other contracts, instruments and documents required hereby. Any party
who fails or refuses to submit to arbitration following a lawful demand by
any other party shall bear all costs and expenses incurred by such other
party in compelling arbitration.
Xx. Xxxx X. Xxxxx
November 11, 2002
Page 6
The commitment set forth herein is personal to Borrower and may not be
transferred or assigned without the prior written consent of Bank. Neither
this letter, nor any portions hereof, may be disclosed or exhibited to any
person or entity without the prior written consent of Bank.
Bank reserves the right to terminate this commitment at any time prior
to receipt by Bank of a copy of this letter executed below by Xxxxxxxx.
Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions. Unless accepted or terminated, this
commitment shall expire on December 8, 2002. If the loan documentation
required by Bank hereunder is not completed and the credit contemplated
hereunder has not been extended by Bank to Borrower for any reason by January
7, 2003, then this commitment shall expire on said date.
Sincerely,
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
/s/ XXX X'XXXXXX
By: Xxx X'Xxxxxx
Title: Vice President
Acknowledged and accepted as of November 11, 2002:
-----------------
KEYSTONE FINANCING LLC
By: /s/ XXXXXXX X. XXXXX
----------------------------
Title: Manager
By: /s/ XXXXXXX X. XXXXX
----------------------------
Title: Manager
