DEFERRAL AND WAIVER AGREEMENT
THIS DEFERRAL AND WAIVER AGREEMENT is made and entered into this 15th day
of October, 1999, by and between KEYBANK NATIONAL ASSOCIATION, a national
banking association ("LENDER") and DYNAMIC MATERIALS CORPORATION, a Delaware
corporation (the "COMPANY").
RECITALS
A. On December 31, 1998, the Company and Lender entered into a First
Amendment to Amended and Restated Credit Facility and Security Agreement ("FIRST
AMENDMENT"), which amended the terms of a November 30, 1998 Amended and Restated
Credit Facility and Security Agreement (the First Amendment and the Amended and
Restated Credit Facility and Security Agreement shall be hereinafter
collectively referred to as the "CREDIT AGREEMENT"). Pursuant to the terms of
the First Amendment, Lender agreed to provide credit facilities to the Company
in an aggregate principal amount of up to $14,000,000, consisting of an
Acquisition Line with a maximum credit limit of $5,700,000, an Accommodation
Line with a maximum credit limit of $2,300,000, and a Working Capital Credit
Line with a maximum credit limit of $6,000,000.
B. By letter dated July 21, 1999, Lender has waived for the period ended
September 30, 1999 certain of the Company's covenant defaults under the Credit
Agreement and under that certain Reimbursement Agreement between the parties
dated as of September 1, 1998, executed in connection with Lender's issuance of
a letter of credit to support principal and interest payments under certain
industrial development revenue bonds (the Credit Agreement and the Reimbursement
Agreement are sometimes hereinafter collectively referred to as the "LOAN
DOCUMENTS"). In addition, by letter dated September 30, 1999, Lender deferred
until October 15, 1999 certain principal payments that were required to be made
by the Company on September 30, 1999.
C. Company hereby acknowledges that as of the date hereof, it continues to
be in default under the Loan Documents and is unable to cure such defaults.
D. Company has requested that Lender enter into this Deferral and Waiver
Agreement in order to give the Company time to undertake diligent efforts to
develop and implement a business plan that will bring it into compliance with
its obligations under the Loan Documents or to otherwise provide for a
refinancing or infusion of equity that will permit the obligations under the
Loan Documents to be satisfied.
E. Lender is willing to enter into this Deferral and Waiver Agreement, but
only upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
mutually acknowledged, the parties do hereby agree as follows:
1. AFFIRMATION OF RECITALS. The Recitals set forth above are true and
correct and are incorporated herein by this reference.
2. ACKNOWLEDGMENT OF INDEBTEDNESS AND DEFAULT. Company acknowledges that as
of the date hereof, a material default under the Loan Documents has occurred in
the principal amounts due to Lender pursuant to the terms and conditions of the
Loan Documents and that, with respect thereto, as of the date hereof, the
following sums are owed by the Company to Lender:
Principal amount due under Acquisition Line $259,090.91
Principal amount due under Accommodation Line $230,000.00
In addition to the foregoing payment defaults, Company acknowledges that it is
in default of certain loan covenant requirements under the Loan Documents (the
"Covenant Defaults"), including, but not limited to the following: Minimum Debt
Service Coverage Ratio of 1.25:1.00 (Section 8.16 of Credit Agreement); Funded
Debt to EBITDA Ratio of not more than 3.50:1.00 (Section 8.18 of Credit
Agreement); Minimum Current Ratio of not less than 2.00:1.00 (Section 8.15 of
Credit Agreement and Section 6.15 of Reimbursement Agreement); Ratio of Total
Indebtedness to Tangible Net Worth of not more than 1.99 to 1.00 (Section 6.18
of the Reimbursement Agreement).
3. LENDER'S FORBEARANCE. Provided that Company is not in default under the
terms of this Deferral and Waiver Agreement, Lender agrees not to declare any
further defaults under the Loan Documents, to accelerate the amounts due under
the Loan Documents, or to otherwise exercise its other rights and remedies under
the Loan Documents for the period from October 16, 1999 through December 30,
1999 (the "DEFERRAL PERIOD"). The principal payments referred to in paragraph 2
above, together with accrued interest (as calculated pursuant to paragraphs 4
and 5 below), shall be due and payable on December 30, 1999.
4. INTEREST RATE ON ACCOMMODATION LINE. From and after the date hereof,
interest on the unpaid principal due with respect to the Accommodation Line
shall accrue and be payable at the rate of the Prime Rate (as defined in the
First Amendment) PLUS two hundred twenty five (225) basis points.
5. INTEREST RATE ON ACQUISITION LINE AND WORKING CAPITAL CREDIT LINE. From
and after the date hereof, interest on the unpaid principal due with respect to
the Acquisition Line and the Working Capital Credit Line shall accrue and be
payable as set forth in the First Amendment, PLUS one hundred (100) basis
points.
6. RETENTION OF CONSULTANT BY LENDER. During the Deferral Period, Lender
shall be entitled to retain a consultant for the purpose of reviewing the
Company's business plan and financial records. If so requested by Company, the
consultant shall execute a non-disclosure agreement pursuant to which
information provided to the consultant by the Company shall not be disclosed to
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third parties without the consent of Company. Notwithstanding the foregoing
sentence, the consultant shall be entitled to provide such information to Lender
and Lender's other professionals, including its counsel. The Company shall
cooperate with the consultant in responding to requests for information, and
shall provide the consultant with reasonable access to the Company's books and
records and the Company's personnel. All fees and expenses incurred by Lender
for the services of consultant shall be reimbursed to Lender by the Company
within ten (10) days of written request therefor.
7. WAIVER OF COVENANT VIOLATIONS. Provided that the Company is not in
default hereunder, Lender agrees, during the Deferral Period, to waive the
Company's Covenant Defaults under the Loan Documents.
8. NO DEFENSES, WAIVERS. As of the date of this Deferral and Waiver
Agreement, the amounts set forth in paragraph 2 above are due and payable by the
Company to Lender, and the Company acknowledges that it has no defense, offset,
or counterclaims to any of Company's obligations under the Loan Documents. To
the extent that any such defenses, claims or offsets exist as of the date
hereof, they are hereby waived and released in consideration of Lender's
execution of this Deferral and Waiver Agreement. Company has duly authorized,
executed and delivered this Deferral and Waiver Agreement to Lender, and the
Company acknowledges that the Loan Documents are valid and enforceable in
accordance with their terms against the Company.
9. DEFAULTS. The occurrence of any one or more of the following shall
constitute a default under this Deferral and Waiver Agreement:
(i) the untruth of any representation or warranty contained in
this Deferral and Waiver Agreement, or the existence of a misrepresentation of
fact or fraud contained in any document or information heretofore or hereafter
submitted or communicated to Lender in support of this Deferral and Waiver
Agreement;
(ii) breach or violation of any terms, covenant or condition
contained in this Deferral and Waiver Agreement;
(iii) any other default (other than non-payment of principal
and the Covenant Defaults acknowledged in paragraph 2 above) under any of the
Loan Documents;
(iv) any variation by Two Hundred and Fifty Thousand Dollars
($250,000) or more (on a cumulative basis) between (i) the proforma cash flow
summary (September 21, 1999 update) and monthly income statement summary
(September 21, 1999 update) which have been submitted by the Company to Lender
in accordance with the Loan Documents and (ii) the actual cash flow and
operating income of the Company calculated and submitted to Lender within twenty
(20) days following the end of each calendar month during the Deferral Period.
10.
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TERMINATION; REMEDIES. Immediately following the occurrence of any default under
this Deferral and Waiver Agreement, Lender may, at its option, (i) terminate its
obligations to waive Covenant Defaults and defer payments as contained herein
without notice or demand to the Company and (ii) pursue any other remedies
available to it under the Loan Documents or otherwise. If not sooner terminated,
Lender's obligation to waive Covenant Defaults and defer payments as set forth
herein shall terminate automatically and without notice to or action by Company
on December 30, 1999.
11. NO WAIVER OF REMEDIES. Lender expressly reserves any and all rights and
remedies available to it under this Deferral and Waiver Agreement and the Loan
Documents, at law or in equity in the event the Company defaults under this
Deferral and Waiver Agreement. No failure to exercise, or delay by Lender in
exercising, any right, power or privilege hereunder shall preclude any other or
further exercise thereof, or the exercise of any other right, power or
privilege. The rights and remedies provided in this Deferral and Waiver
Agreement and the Loan Documents are cumulative and not exclusive of each other
or of any right or remedy provided by law or in equity. Except as expressly
provided in the Loan Documents, no notice to or demand upon the Company in any
instance shall, in itself, entitle the Company to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Lender to any other or further action in any circumstances without notice or
demand.
12. EXPENSES; ATTORNEYS' FEES. In addition to all other amounts that are
now due or may hereafter become due to Lender under the Loan Documents or this
Deferral and Waiver Agreement, the Company shall reimburse Lender for all
amounts reasonably incurred by or on behalf of Lender for attorneys' fees,
recording expenses, title insurance fees, UCC searches, and all other reasonable
expenses incurred by or on behalf of Lender by reason of the matters specified
herein and for the preparation of this Deferral and Waiver Agreement and all
other documents necessary and required to effectuate the provisions hereof
including, without limitation, all reasonable costs and expenses with respect to
the Company's compliance with the terms and conditions hereof and Lender's
enforcement thereof. In the event any dispute shall arise concerning the subject
matter of this Deferral and Waiver Agreement, Lender shall be entitled to
recover from the Company its reasonable attorneys' fees and costs incurred in
the enforcement of any of the provisions set forth herein. The rights and
remedies of Lender contained in this paragraph shall be in addition to, and not
in lieu of, the rights and remedies contained in the Loan Documents and as
provided by law.
13. GOVERNING LAW. This Deferral and Waiver Agreement shall be construed in
accordance with the laws of the State of Colorado, without regard to its
conflict of laws principles.
14. CONSTRUCTION. This Deferral and Waiver Agreement shall not be construed
more strictly against Lender merely by virtue of the fact that the same has been
prepared by Lender or its counsel, it being recognized that the Company and
Lender have contributed substantially and materially to the preparation of this
Deferral and Waiver Agreement, and the Company and Lender each acknowledge and
waive any claim contesting the existence and the adequacy of the consideration
given by any of the other parties hereto in entering into this Deferral and
Waiver Agreement.
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15. ENTIRE AGREEMENT. Company and Lender each acknowledge that there are no
other agreements or representations, either oral or written, express or implied,
not embodied in this Deferral and Waiver Agreement and the Loan Documents,
which, together, represent a complete integration of all prior and
contemporaneous agreements and understandings of the Company and Lender, and the
provisions of the Loan Documents are hereby ratified and confirmed.
16. BENEFIT. Except as provided herein, this Deferral and Waiver Agreement
shall be binding upon and shall inure to the benefit of the Company and Lender,
and their respective successors and assigns.
17. RATIFICATION. The Loan Documents shall remain in full force and effect,
and all of the terms and provisions of the Loan Documents, as herein modified,
are hereby ratified and reaffirmed.
18. CONSENT TO AGREEMENT. Company acknowledges that it has thoroughly read
and reviewed the terms and provisions of this Deferral and Waiver Agreement and
is familiar with the same, that the terms and provisions contained herein are
clearly understood by it and have been fully and unconditionally consented to by
it and that the Company has had the full benefit and advice of counsel of its
own selection, or the opportunity to obtain the benefit and advice of counsel of
its own selection, in regard to understanding the terms, meaning and effect of
this Deferral and Waiver Agreement and that this Deferral and Waiver Agreement
has been entered into by the Company freely, voluntarily, with full knowledge,
and without duress, and that in executing this Deferral and Waiver Agreement,
the Company is relying on no other representations either written or oral,
express or implied, made to the Company by any other party hereto, and that the
consideration received by the Company hereunder has been actual and adequate.
19. RELEASE. As additional consideration for Lender entering into this
Deferral and Waiver Agreement, the Company hereby fully and unconditionally
releases and forever discharges Lender, its agents, servants, employees,
directors, officers, attorneys, branches, affiliates, subsidiaries, successors
and assigns and all persons, firms, corporations, and organizations acting in
its behalf of and from all damage, loss, claims, demands, liabilities,
obligations, actions and causes of action whatsoever which the Company may now
have or claim to have against Lender as of the date of this Deferral and Waiver
Agreement, whether presently known or unknown, and of every nature and extent
whatsoever on account of or in any way affecting, concerning, arising out of or
founded upon the Loan Documents including, but not limited to, all such loss or
damage of any kind heretofore sustained, or that may arise as a consequence of
the dealings between the parties up to and including the date of this Deferral
and Waiver Agreement.
20. COUNTERPARTS. It is understood and agreed that this Deferral and Waiver
Agreement may be executed in several counterparts, each of which shall, for all
purposes, be deemed an original and all of such counterparts, taken together,
shall constitute one and the same Deferral and Waiver Agreement, even though all
of the parties hereto may not have executed the same counterpart of this
Deferral and Waiver Agreement.
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21. LENDER NOT LIABLE FOR EXPENSES. Nothing in this Deferral and Waiver
Agreement shall be intended or construed to hold Lender liable or responsible
for any expenses, disbursement, liability or obligation of any kind or nature
whatsoever including, but not limited to, wages, salaries, payroll taxes,
deposits, withholding, benefits or other amounts payable to or on behalf of the
Company.
22. COMPANY REMAINS IN CONTROL. Company and Lender agree that the Company
remains in control of the Company, that it determines the business plan for, and
employment, management and operating directions and decisions for Company.
23. MISCELLANEOUS. This Deferral and Waiver Agreement is made for the sole
protection of Lender and the Company and their respective successors and
assigns. No other person shall have any right whatsoever hereunder. Notices to
parties hereunder may be given to them at the addresses and in the manner
provided in the Loan Documents. Time shall be of the strictest essence in the
performance of each and every one of the Company's obligations hereunder. If any
provision of this Deferral and Waiver Agreement is held to be invalid or
unenforceable, the remaining provisions shall remain in effect without
impairment.
IN WITNESS WHEREOF, this Deferral and Waiver Agreement has been executed by
the parties hereto in manner and form sufficient to bind them, as of the day and
year first above written.
KEYBANK NATIONAL ASSOCIATION
a national banking association
By:
Name:
-----------------------------------
Its:
DYNAMIC MATERIALS CORPORATION,
a Delaware corporation
By:
Name:
-----------------------------------
Its:
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STATE OF COLORADO )
) ss.
COUNTY OF )
-------------------
The foregoing was acknowledged before me this day of
----
, 1999, by , as of
------------- ----------------- -------------------------
KEYBANK NATIONAL ASSOCIATION, a national banking association.
WITNESS my hand and official seal.
My commission expires:
-------------------------
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF )
-----------------
The foregoing was acknowledged before me this day of
----
, 1999, by , as of
------------- ----------------- -------------------------
DYNAMIC MATERIALS CORPORATION, a Delaware corporation.
WITNESS my hand and official seal.
My commission expires:
-------------------------
Notary Public
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