FIRST AMENDMENT TO AMENDED AND RESTATED
CREDIT FACILITY AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT FACILITY AND SECURITY
AGREEMENT (this "FIRST AMENDMENT"), effective as of the 31st day of December,
1998, is entered into by and between DYNAMIC MATERIALS CORPORATION, a Delaware
corporation (the "COMPANY"), and KEYBANK NATIONAL ASSOCIATION, a national
banking association (the "BANK").
R E C I T A L S:
A. On November 30, 1998, the Company and the Bank entered into an
Amended and Restated Credit Facility and Security Agreement (the "Credit
Agreement") pursuant to which the Bank agreed to provide reducing, revolving
credit facilities in an aggregate principal amount of up to $14,000,000.
B. The Company desires to restructure the credit facilities provided
under the Credit Agreement by reducing the maximum principal amount of the
Acquisition Line from $8,000,000 to $5,700,000 and by adding a new reducing,
revolving credit facility with a maximum principal amount of $2,300,000, and the
Bank is willing to do so on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
1. CREDIT AGREEMENT AMENDMENTS. The Credit Agreement is hereby
amended as follows:
(A) Section 1.2 of the Credit Agreement is hereby amended by
amending the definitions of the terms "Acquisition Line Credit Limit",
"Borrowing Base", "Interest Period", "Note", "Notes" and "Working Capital Line
Credit Limit" contained therein to read in their entirety as follows:
"ACQUISITION LINE CREDIT LIMIT" shall mean $5,700,000 less any permanent
reductions to such amount resulting from (i) principal payments required to be
made under Section 2.7(a) hereof and (ii) Free Cash Flow recapture payments made
under Section 2.8(c) hereof.
"BORROWING BASE" shall mean an amount equal to the sum of:
(a) 80% of Eligible Accounts Receivable; plus
(b) the lesser of (i) the sum of (A) 50% of Eligible Inventory
consisting of raw materials, plus (B) 50% of Eligible Inventory consisting of
work-in-process previously purchased by the
Company from Spin Forge LLC or purchased from Precision Machined Products
pursuant to the Acquisition, plus (C) 30% of Eligible Inventory consisting of
work-in-process other than work-in-process previously purchased by the Company
from Spin Forge LLC or purchased from Precision Machined Products pursuant to
the Acquisition, plus (D) 50% of Eligible Inventory consisting of finished
product, or (ii) 80% of Eligible Accounts Receivable.
"INTEREST PERIOD" means, with respect to any LIBOR Rate Loan, the period
commencing on the date such Loan is made, continued, or converted and ending on
the last day of such period as selected by the Company pursuant to the
provisions below and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the last day of
such period as selected by the Company pursuant to the provisions below. The
duration for any LIBOR Rate Loan which is a Credit Loan shall be 1 month, 2
months, or 3 months, as selected by the Company; PROVIDED, HOWEVER, that
whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall occur on
the next succeeding Business Day, and; PROVIDED, FURTHER, HOWEVER, that if such
extension of time would cause the last day of such Interest Period for a LIBOR
Rate Loan to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day
"NOTE" shall mean the Accommodation Note, the Acquisition Note or the
Working Capital Note; "NOTES" shall mean the Accommodation Note, the Acquisition
Note and the Working Capital Note.
"WORKING CAPITAL LINE CREDIT LIMIT" shall mean $6,000,000.
(B) Section 1.2 of the Credit Agreement is hereby further amended by
adding the following new definitions thereto:
"ACCOMMODATION LINE" shall mean the line of credit provided by the Bank
pursuant to Section 2.1(c) hereof.
"ACCOMMODATION LINE CREDIT LIMIT" shall mean $2,300,000 less any permanent
reductions to such amount resulting from (i) principal payments required to be
made under Section 2.7(b) hereof and (ii) Free Cash Flow recapture payments made
under Section 2.8(c) hereof.
"ACCOMMODATION LINE MATURITY DATE" shall mean December 31, 2001.
"ACCOMMODATION NOTE" shall mean the promissory note of the Company
evidencing amounts advanced by the Bank pursuant to Section 2.1(c) hereof.
"CREDIT LINE" shall mean the Accommodation Line, the Acquisition Line or
the Working Capital Line.
"PRIME RATE" shall mean the rate of interest publicly announced from time
to time by the Bank as its "prime rate" (which rate is not necessarily the
lowest rate of interest charged by the Bank
2
to its customers) or, if the Bank ceases to announce a rate so designated, any
similar successor rate designated by the Bank.
"PRIME RATE LOAN" shall mean any Loan that bears interest with reference
to the Prime Rate.
(C) Section 1.2 of the Credit Agreement is hereby further amended by
deleting in their entirety the definitions of the terms "Acceptable Real Estate"
and "Eligible Equipment" contained therein.
(D) Sections 2.1 through 2.3 of the Credit Agreement are hereby
amended and restated to read in their entirety as follows:
SECTION 2.1 AMOUNT AND TERMS OF THE CREDIT FACILITIES.
(a) ACQUISITION LINE. The Bank hereby agrees, subject to the terms and
conditions of this Agreement, to make Credit Loans consisting of LIBOR Rate
Loans or Federal Funds Effective Rate Loans available to the Company from time
to time on and after the date of this Agreement through and including the
Acquisition Line Maturity Date, in an aggregate principal amount not to exceed
the Acquisition Line Credit Limit. Until the Acquisition Line Maturity Date, the
Company may borrow, repay, and reborrow such Credit Loan up to the maximum
amount thereof, subject to the mandatory principal reductions set forth in
Sections 2.7(a) and 2.8(c) hereof.
(b) WORKING CAPITAL LINE. The Bank hereby agrees, subject to the terms and
conditions of this Agreement, to make Credit Loans consisting of LIBOR Rate
Loans or Federal Funds Effective Rate Loans available to the Company from time
to time on and after the date of this Agreement through and including the
Working Capital Line Maturity Date, in an aggregate principal amount not to
exceed the lesser of (i) the Working Capital Line Credit Limit or (ii) the
Borrowing Base. Until the Working Capital Line Maturity Date, the Company may
borrow, repay, and reborrow such Credit Loans up to the maximum amount thereof,
subject to the mandatory principal reductions set forth in Section 2.8(b) hereof
and sufficient Borrowing Base availability. Notwithstanding anything to the
contrary set forth herein, the Company may utilize proceeds of Credit Loans
obtained by the Company under the Working Capital Line to pay down outstanding
amounts owing in connection with the Accommodation Line, subject to sufficient
Borrowing Base availability.
(c) ACCOMMODATION LINE. The Bank hereby agrees, subject to the terms and
conditions of this Agreement, to make Credit Loans consisting of Prime Rate
Loans available to the Company from time to time on and after the date of this
Agreement through and including the Accommodation Line Maturity Date, in an
aggregate principal amount not to exceed the Accommodation Line Credit Limit.
Until the Accommodation Line Maturity Date, the Company may borrow, repay, and
reborrow such Credit Loans up to the maximum amount thereof, subject to the
mandatory principal reductions set forth in Sections 2.7(b) and 2.8(c) hereof.
SECTION 2.2 [INTENTIONALLY LEFT BLANK]
3
SECTION 2.3 LIBOR, FEDERAL FUNDS EFFECTIVE RATE AND PRIME RATE LOANS. Each
Credit Loan made under the Acquisition Line or the Working Capital Line shall be
either a LIBOR Rate Loan or a Federal Funds Effective Rate Loan, and each Credit
Loan made under the Accommodation Line shall be a Prime Rate Loan, subject to
the following conditions:
(a) Each Loan that is made or continued as or converted into a LIBOR Rate
Loan shall be made, continued, or converted on such Business Day, in such amount
(equal to $100,000 or an integral multiple thereto), and with such an Interest
Period as the Company shall request by written notice given to the Bank no later
than 11:00 a.m. (Denver, Colorado time) on the third Business Day prior to the
date of disbursement or continuation of or conversion into the requested LIBOR
Rate Loan. Each written notice of any LIBOR Rate Loan shall be irrevocable and
binding on the Company and the Company shall indemnify the Bank against any loss
or expense incurred by the Bank as a result of any failure by the Company to
consummate such LIBOR Rate Loan, including, without limitation, any loss
(including loss of anticipated profits) or expense incurred by reason of
liquidation or reemployment of deposits or other funds acquired by the Bank to
fund the LIBOR Rate Loan. A certificate as to the amount of such loss or expense
submitted by the Bank to the Company shall be conclusive and binding for all
purposes, absent manifest error. In the event that the Company fails to provide
the Bank with the required written notice, the Company shall be deemed to have
given a written notice that such LIBOR Rate Loan shall be converted to a Federal
Funds Effective Rate Loan on the last day of the applicable Interest Period. In
no event shall the Company be permitted to select a LIBOR Rate Loan having an
Interest Period ending after the maturity date of the Credit Line under which
such Loan is requested.
(b) Each Loan that is made as or converted into a Federal Funds Effective
Rate Loan or a Prime Rate Loan shall be made or converted on such Business Day
and in such amount (equal to $10,000 or any integral multiple thereof) as the
Company shall request by written notice given to the Bank no later than 11:00
a.m. (Denver, Colorado time) on the date of disbursement of or conversion into
the requested Federal Funds Effective Loan or Prime Rate Loan.
(E) The first sentence of Section 2.4 of the Credit Agreement is
hereby amended to read in its entirety as follows:
Loans made under the Accommodation Line, the Acquisition Line and
the Working Capital Line shall be evidenced by the Accommodation Note, the
Acquisition Note and the Working Capital Note, respectively.
(F) Sections 2.5 through 2.8 of the Credit Agreement are hereby
amended and restated to read in their entirety as follows:
SECTION 2.5 INTEREST RATES. The Company shall pay interest on the unpaid
principal amount of each Credit Loan made by the Bank from the date of such
Credit Loan until such principal amount shall be paid in full as follows:
4
(a) (i) During such periods as any LIBOR Rate Loan is outstanding, at a
rate per annum equal to the sum of the LIBOR Rate and the LIBOR Rate Margin (as
described in subpart (b) below) in effect from time to time from and after each
Margin Adjustment Date occurring on or prior to the date of the making, the
conversion or the continuation of such Loan, as the case may be, in accordance
with this Agreement, (ii) during such periods as any Federal Funds Effective
Rate Loan is outstanding, at a rate per annum equal at all times to the sum of
the Federal Funds Effective Rate plus two hundred (200) basis points, and (iii)
during such periods as any Prime Rate Loan is outstanding, at a rate per annum
equal at all times to the sum of the Prime Rate plus twenty five (25) basis
points.
(b) (i) Except as otherwise provided herein, the LIBOR Rate Margin in
effect shall be adjusted as of the first day of each calendar quarter, beginning
with January 1, 2000 (each a "Margin Adjustment Date"), in accordance with
Section 2.5(b)(ii) below. The LIBOR Rate Margin in effect shall be applicable to
new advances for Credit Loans as of the date of such advances, and to a
converted or continued Loan as of the date of conversion or continuation,
occurring within the calendar quarter in which such LIBOR Rate Margin is in
effect. With respect to any LIBOR Rate Loan for which the last day of the
Interest Period is a date subsequent to the Margin Adjustment Date, such LIBOR
Rate Margin shall not be applicable until the continuation date of such LIBOR
Rate Loan, if applicable, subsequent to the Margin Adjustment Date.
(ii) As of any Margin Adjustment Date, the LIBOR Rate Margin shall
be adjusted to be the percentage indicated in the following table corresponding
to the ratio of the Company's Indebtedness to its Tangible Net Worth, which
shall be calculated from the quarterly balance sheet most recently provided by
the Company to the Bank under Section 8.l(a) hereof:
Ratio LIBOR Rate Margin
----- -----------------
<1.00 to 1.00 100 Basis Points
>=1.00 to 1.00 but <2.00 to 1.00 125 Basis Points
>=2.00 to 1.00 but <3.00 to 1.00 150 Basis Points
>=3.00 to 1.00 200 Basis Points
(iii) Any such adjustment to the LIBOR Rate Margin shall only remain
effective until the earlier of the next Margin Adjustment Date or the date on
which an Event of Default shall occur. The LIBOR Rate Margin to be effective
from such earlier date and from time to time thereafter shall be the LIBOR Rate
Margin as adjusted pursuant to this Agreement, PROVIDED, HOWEVER, that: (i) if
the Company shall not deliver its financial statements in accordance with
Section 8.1 of this Agreement, the LIBOR Rate Margin shall be two hundred (200)
basis points per annum and (ii) if an Event of Default shall occur which has not
been waived in writing by the Bank, the interest rate shall be the interest rate
applicable pursuant to subsection (c) below.
(c) Upon the occurrence of any Event of Default and so long as such Event
of Default is continuing (excepting therefrom an Event of Default created by the
Company's failure to deliver
5
its financial statements in accordance with Section 8.1 of this Agreement) (i)
the unpaid principal amount of each Federal Funds Effective Rate Loan or Prime
Rate Loan, and accrued interest thereon, or any fees or any and other sum
payable hereunder, shall thereafter until paid in full bear interest at a rate
per annum equal to six hundred (600) basis points in excess of the Federal Funds
Effective Rate in effect from time to time, and (ii) the unpaid principal amount
of each Prime Rate Loan, and accrued interest thereon, or any fees or any and
other sum payable hereunder, shall thereafter until paid in full bear interest
at a rate per annum equal to six hundred (600) basis points in excess of the
Prime Rate in effect from time to time.
SECTION 2.6 INTEREST PAYMENTS. The Company shall pay to the Bank interest
on the unpaid principal balance of each Federal Funds Effective Rate Loan on
either (i) the date such Loan is converted to a LIBOR Rate Loan, or (ii) the
last day of each March, June, September and December. The Company shall pay to
the Bank interest on the unpaid principal balance of each LIBOR Rate Loan on (i)
the date such Loan is converted to a Federal Funds Effective Rate Loan, or (ii)
the last day of the applicable Interest Period of such Loan, whichever is
earlier. The Company shall pay to the Bank interest on the unpaid principal
balance of each Prime Rate Loan on the last day of each March, June, September
and December.
SECTION 2.7 PRINCIPAL PAYMENTS.
(a) Commencing September 30, 1999, and on the last day of each calendar
quarter thereafter, the aggregate principal amount available under the
Acquisition Line shall be permanently reduced by the amount of $259,090.91, and
the Company shall immediately pay to the Bank the amount, if any, by which the
aggregate principal amount outstanding under the Acquisition Line exceeds such
reduced commitment of the Bank at that time. If, after giving effect to any such
payment any LIBOR Rate Loan would be prepaid prior to the end of its applicable
Interest Period, the Company shall pay the Bank the breakage fee required under
Section 2.11(c) hereof.
(b) Commencing September 30, 1999, and on the 1st day of each calendar
quarter thereafter, the aggregate principal amount available under the
Accommodation Line shall be permanently reduced by the amount of $230,000 and
the Company shall immediately pay to the Bank the amount, if any, by which the
aggregate principal amount outstanding under the Accommodation Line exceeds such
reduced commitment of the Bank at that time.
(c) On the Accommodation Line Maturity Date, the Acquisition Line Maturity
Date and the Working Capital Line Maturity Date, all amounts outstanding under
the Accommodation Line, the Acquisition Line and the Working Capital Line,
respectively, shall be immediately due and payable. If payment of the
outstanding Loans at maturity causes any LIBOR Rate Loan to be prepaid prior to
the end of its applicable Interest Period, the Company shall pay the Bank the
breakage fee required under Section 2.11(c) hereof.
6
SECTION 2.8 PREPAYMENT.
(a) VOLUNTARY PREPAYMENT. The Company may prepay any Federal Funds
Effective Rate Loan or Prime Rate Loan in whole, or in part, at any time or
times. The Company may prepay any LIBOR Rate Loan, in whole or in part, only on
the last day of the Interest Period applicable to such LIBOR Rate Loan upon not
less than three (3) Business Days' prior written notice given to the Bank.
(b) MANDATORY PREPAYMENT. Without notice or demand, if the sum of the
outstanding principal balance of Loans made under Section 2.1(b) hereof shall at
any time exceed the Borrowing Base, the Company shall immediately prepay such
Loans to the extent necessary to eliminate such excess. Any payment received by
the Lender under this Section 2.8(b) or under 2.8(a) may be applied to the
Obligations, in such order and in such amounts as the Bank, in its discretion,
may from time to time determine. If, after giving effect to any such payment any
LIBOR Rate Loan would be prepaid prior to the end of its applicable Interest
Period, the Company shall pay the Bank the breakage fee required under Section
2.11(c) hereof.
(c) FREE CASH FLOW RECAPTURE. Within ninety (90) days of the end of each
fiscal year of the Company commencing with the Company's fiscal year ending on
December 31, 1999, the Company shall make a principal payment in respect of the
outstanding Loans in an amount equal to fifty percent (50%) of the Company's
Free Cash Flow for such fiscal year. Such payment shall be applied first to the
Accommodation Line and any remainder shall be applied to the Acquisition Line,
and the aggregate principal amount available under the Accommodation Line and
the Acquisition Line, as applicable, shall be permanently reduced in such
amount. If, after giving effect to any such payment any LIBOR Rate Loan would be
prepaid prior to the end of its applicable Interest Period, the Company shall
pay the Bank the breakage fee required under Section 2.11(c) hereof.
(d) PREPAYMENT UPON SIGNIFICANT SALE OF ASSETS. Without notice or demand,
if the Company sells, leases, transfers or otherwise disposes of any plant or
any manufacturing facility or other assets in any single transaction involving
amounts exceeding $250,000, the Company shall immediately prepay the Loans in
the full amount of the consideration (whether cash or otherwise) received by the
Company in respect of such sale. Such prepayment shall be applied to the Credit
Lines in such proportions as the Company shall direct, but such application
shall not effect a permanent reduction to the applicable credit facility. If,
after giving effect to any such prepayment, any LIBOR Rate Loan would be prepaid
prior to the end of its applicable Interest Period, the Company shall pay the
Bank the breakage fee required under Section 2.11(c) hereof.
2. AMENDMENT TO BORROWING BASE CERTIFICATE. Exhibit D to the Credit
Agreement (containing the form of Borrowing Base Certificate) is hereby amended
to read in its entirety as set forth in Exhibit A hereto.
3. DOCUMENT RATIFICATION. Except as explicitly set forth herein, all of
the terms and conditions contained in the Credit Agreement and the other Loan
Documents (as that term is defined in the Credit Agreement) shall remain
unmodified and in full force and effect.
7
4. RELEASE. Except as specifically set forth herein, the execution of this
First Amendment by the Bank does not and shall not constitute a waiver of any
rights or remedies to which the Bank is entitled pursuant to the Loan Documents,
nor shall the same constitute a waiver of any default now existing or which may
occur in the future with respect to the Loan Documents. The Company hereby
agrees that the Bank has fully performed its obligations pursuant to the Loan
Documents through the date hereof and hereby waives, releases and relinquishes
any and all known claims whatsoever that it may have against the Bank with
respect to the Loan Documents through the date hereof.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
represents, warrants and covenants to the Bank:
(a) No default or event of default under any of the Loan Documents
as modified herein, nor any event that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
(b) There has been no material adverse change in the financial
condition of the Company or any other person whose financial statement has been
delivered to the Bank in connection with the Loans from the most recent
financial statement received by the Bank.
(c) Each and all representations and warranties of the Company in
the Loan Documents are accurate on the date hereof.
(d) The Company has no known claims, counterclaims, defenses, or
set-offs with respect to the Loans or the Loan Documents as modified herein.
(e) The Loan Documents as modified herein are the legal, valid, and
binding obligation of the Company, enforceable against the Company in accordance
with their terms.
(f) The Company shall execute, deliver, and provide to the Bank such
additional agreements, documents, and instruments as reasonably required by the
Bank to effectuate the intent of this Agreement.
6. CONTROLLING LAW. The terms and provisions of this First Amendment shall
be construed in accordance with and governed by the laws of the State of
Colorado.
7. BINDING EFFECT. This First Amendment shall be binding upon and inure to
the benefit of the parties hereto, their successors and assigns.
8. CAPTIONS. The paragraph captions utilized herein are in no way intended
to interpret or limit the terms and conditions hereof, rather, they are intended
for purposes of convenience only.
8
9. COUNTERPARTS. This First Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this First Amendment may be detached
from any counterpart of this First Amendment without impairing the legal effect
of any signatures thereon and may be attached to another counterpart of this
First Amendment identical in form hereto but having attached to it one or more
additional signature pages.
10. DEFINED TERMS. Capitalized terms not defined herein shall have the
same meaning as set forth in the Credit Agreement.
11. EFFECTIVENESS. This First Amendment shall be effective only upon (i)
the Company's execution of an Accommodation Note in substantially the form of
Exhibit B hereto, (ii) the Company's payment of an origination fee in the amount
of $30,000, and (iii) the Company's delivery of a legal opinion of counsel to
the Company acceptable to the Bank.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the day and year first above written.
BANK:
KEY BANK NATIONAL ASSOCIATION
By:___________________________________
Title: __________________________
COMPANY:
DYNAMIC MATERIALS CORPORATION
By:___________________________________
Title:____________________________
9
EXHIBIT A
BORROWING BASE CERTIFICATE
DYNAMIC MATERIALS CORPORATION
BORROWING BASE CERTIFICATE
AS OF ____________
The undersigned officer of Dynamic Materials Corporation, hereby certifies
that the following is a true and accurate calculation of the Borrowing Base as
of the date specified above, determined in accordance with the requirements of
the Amended and Restated Credit Facility and Security Agreement dated November
30, 1998, as amended, between Dynamic Materials Corporation, a Delaware
corporation ("Borrower") and KeyBank National Association ("Lender").
Name:__________________________________
Title:_________________________________
Date:__________________________________
Accounts Receivable Aging Schedule:
1-30 Day 31-61 Day 61-90 Day 90+Day Total
------ ------ ------ ------ ------
----------------------------------------------------------------------------
BORROWING BASE CALCULATION:
ACCOUNTS RECEIVABLE PORTION:
Accounts Receivable/1/
Less:
A. Accounts Receivable to which Borrower does
not have valid title ________
-------------------
/1/ Reference is made to the definitions of "Eligible Accounts Receivable" in
Section 1.2 of the Credit Agreement. Information must be provided in accordance
with such definitions. Captions set forth below are for reference purposes only
and may not reflect the actual definition in the Credit Agreement.
A-1
B. Accounts Receivable which are not the binding
obligation of the account debtor ________
C. Accounts Receivable arising from services provided
by Borrower to an Affiliate of Borrower ________
D. Accounts Receivable which are unpaid more than the
earlier of ninety (90) days after the original
invoice date or one hundred five (105) days after
the services were provided ________
E. Accounts Receivable which, when aggregated with all
other Accounts Receivable of the same account debtor
or Affiliate, exceed 50% in face value of all Accounts
Receivable of Borrower ________
F. Accounts Receivable (i) wherein the account debtor
is also a creditor of the Borrower, (ii) which are
subject to dispute or (iii) which are or are likely
to become subject to any right of setoff or other
claim or defense ________
G. Accounts Receivable wherein the debtor has commenced
a voluntary case under applicable bankruptcy laws, or
made an assignment for the benefit of creditors, or a
decree has been entered in respect of the debtor in an
involuntary case under federal bankruptcy laws ________
H. Accounts Receivable in which the Lender does not
have a valid perfected first priority security
interest ________
I. Accounts Receivable for which the sale to the
account debtor is on a consignment, ▇▇▇▇-and hold,
sale on approval, guaranteed sale or sale-and-return
basis ________
J. Accounts Receivable from the same account debtor in
which 50% or more of the other Account Receivables
from such account debtor are unpaid within the
applicable period of time set forth above ________
K. Accounts Receivable for which 75% or more of other
Accounts Receivable from the same account debtor are
not deemed Eligible Accounts Receivable ________
A-2
L. Accounts Receivable which have not been shipped and
delivered to and accepted or the services giving
rise to such Account Receivable have not been
performed or the Account Receivable otherwise does
not represent a final sale ________
M. Accounts Receivable for which the principal place
of business of the debtor is located outside of
the United States ________
N. Accounts Receivable which do not comply in all
material respects with all applicable legal
requirements ________
O. Accounts Receivable arising out of unbilled
cooperative advertising activities ________
Eligible Accounts Receivable
========
BORROWING BASE:
80% of Eligible Accounts Receivable ________
Revolving Credit Availability
========
INVENTORY PORTION:
Eligible Inventory/2/
========
BORROWING BASE:
50% of Eligible Inventory consisting of raw
materials ________
50% of Eligible Inventory consisting of
work-in-process purchased by the Company from
Spin Forge LLC or Precision Machined Products ________
----------------
/2/ Reference is made to the definition of "Eligible Inventory" in Section
1.2 of the Credit Agreement. Information must be provided in accordance with
such definition.
A-3
30% of Eligible Inventory consisting of
work-in-process other than work-in-process
referred to in the immediately preceding
category ________
50% of Eligible Inventory consisting of finished
product ________
Revolving Credit Availability ________
Lesser of Inventory Portion of Revolving Credit
Availability or 80% of Eligible Accounts Receivable
========
AGGREGATE REVOLVING CREDIT
AVAILABILITY
========
A-4
EXHIBIT B
ACCOMMODATION NOTE
$2,300,000.00 December ____, 1998
For value received, DYNAMIC MATERIALS CORPORATION, a Delaware corporation
(the "Company") promises to pay to the order of KEYBANK NATIONAL ASSOCIATION,
(the "Bank"), its successor and assigns, at its main office, on the date or
dates and in the manner specified in Article II of the Credit Agreement (as
defined below), the aggregate principal amount of the Loans outstanding under
the Accommodation Line, as shown on any ledger or other record of the Bank,
which shall be rebuttably presumptive evidence of the principal amount owing and
unpaid on this Note.
The Company promises to pay to the order of the Bank interest on the
unpaid principal amount of each Loan evidenced by this Note from the date of
such Loan until such principal amount is paid in full at such interest rate(s)
and at such times as are specified in Article II of the Credit Agreement.
This Note is the Accommodation Note referred to in, and is entitled to the
benefits of, the Amended and Restated Credit Facility and Security Agreement
("Credit Agreement") by and between the Bank and the Company dated November 30,
1998, as the same was amended on December ____, 1998. This Note may be declared
forthwith due and payable in the manner and with the effect provided in the
Credit Agreement, which contains provisions for acceleration of the maturity
hereof upon the happening of any Event of Default and also for prepayment on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Each defined term used in this Note shall have the meaning ascribed
thereto in Section 1.2 of the Credit Agreement.
The Company expressly waives presentment, demand, protest, and notice of
dishonor.
The Company acknowledges that this Note was signed in the City of Denver,
in the State of Colorado.
COMPANY: DYNAMIC MATERIALS CORPORATION
By:_______________________________________
Title:____________________________________
B-1