MASTER
PROMISSORY NOTE
$600,000.000 Los Angeles, California March 18, 1998
SECTION ONE
TERMS OF NOTE
Spin Forge, LLC, a California limited liability company ("MAKER"),
whose address for the purposes of this Master Promissory Note (the "NOTE") is
1700 East Grand Avenue, El Segundo, California 90245, for value received,
without grace, in the manner, on the dates and in the amounts set forth herein,
promises to pay to the order of Dynamic Materials Corporation, a Delaware
corporation ("PAYEE"), whose address for the purposes of this Note is 551 Aspen
Ridge Drive, Lafayette, Colorado 80026, at 551 Aspen Ridge Drive, Lafayette,
Colorado 80026, or at such other place as Payee may hereafter designate, the
principal sum of $600,000.00, or so much thereof as may be advanced hereunder
and confirmed in a writing delivered by Holder to Maker. Reference is made to
that certain Loan Agreement (the "LOAN AGREEMENT") as of an even date herewith
entered into by Maker and Payee and pursuant to which Maker is delivering this
Note. Capitalized terms used in this Note and not otherwise defined in this Note
shall have the meanings ascribed to such terms in the Loan Agreement.
SECTION TWO
ADVANCES
Payee shall make advances under this Note as required by the Loan
Agreement. The time that advances shall be made under this Note, and the amount
of those advances, are set forth on Schedule A attached hereto, provided,
however, that such advances shall be made subject to the terms and conditions of
the Loan Agreement. The aggregate amount of all advances made under this Note
shall not exceed $600,000.00 unless Payee, in its sole and absolute discretion,
otherwise agrees in writing to advance additional funds, in which case such
additional funds shall constitute advances subject to the terms of this Note.
In the event that the unpaid principal amount under this Note at any
time, for any reason, exceeds the maximum amount hereinabove specified (except
with regard to interest that was added into this Note as principal), Maker
covenants and agrees to pay the excess principal amount forthwith upon demand
unless Payee otherwise agrees in writing. Such excess principal amount shall in
all respects be deemed to be included among the loans or advances made pursuant
to the terms of this Note.
SECTION THREE
INTEREST RATE
The unpaid principal balance from time to time outstanding hereunder
shall bear no interest; provided, however, that in the event the Maturity Date
of this Note is extended as provided in Section Four hereof, the unpaid
principal balance under this Note as of January 2, 2002 shall begin to accrue
interest on January 2, 2002 at a rate equal to the prime rate as reported in the
Wall Street Journal on January 2, 2002 (or, if January 2, 2002 is not a business
day, the next succeeding business day); and provided further, that all past due
principal on this Note, whether due as the result of acceleration or maturity or
otherwise, shall bear interest from the date payment thereof shall have become
due until the same is fully paid at the Maximum Rate.
SECTION FOUR
MATURITY
The entire unpaid principal balance of this Note shall be due and
payable on January 1, 2002 (the "MATURITY DATE"); provided, however, that in the
event the term of the Operating Lease is extended for an Extended Term as
provided thereunder, the Maturity Date of this Note may be extended, at the sole
discretion of Payee, until December 31, 2003 or such other date as Payee shall
determine in its sole discretion.
SECTION FIVE
PAYMENTS
Maker, in its sole and absolute discretion, reserves the right of
prepaying the principal of this Note, in full or in part, at any time without
the payment of any prepayment premium or fee. All payments made on this Note
shall be made in immediately available funds. All such payments shall be made to
Payee at the address set forth in Section One not later than 2:00 p.m. Mountain
Time on the date such payments become due hereunder.
SECTION SIX
RECORDS
The date and amount of (i) all advances and (ii) each payment made with
respect to principal outstanding under this Note shall be recorded by Payee on
Schedule B attached hereto. The failure to record any such amount or any error
in so recording any such amount shall not, however, limit or otherwise affect
the obligations of Maker to repay the unpaid principal amount of this Note.
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SECTION SEVEN
OVERDUE AMOUNTS
All past due principal on this Note, whether due as the result of
acceleration or maturity or otherwise, shall bear interest from the date the
payment thereof shall have become due until the same is fully paid at the
Maximum Rate. The term "MAXIMUM RATE" shall mean the maximum nonusurious rate of
interest allowed to be charged by Payee to Maker by applicable law, as such
applicable law or rate of interest is in effect from time to time.
SECTION EIGHT
ACCELERATION
If an Event of Default (as defined in the Loan Agreement) occurs under
the Loan Agreement or any instrument now or hereafter executed in connection
with or as security for this Note, then the holder hereof may, at its sole
option, declare the entirety of the outstanding principal balance of this Note
immediately due and payable. Failure to exercise said option at any time shall
not constitute a waiver on the part of the holder hereof of the right to
exercise said option at any other time.
SECTION NINE
SECURITY
This Note is secured by a security interest in Maker's stock in Dynamic
Materials Corporation as evidenced by that certain Stock Pledge Agreement, dated
of even date herewith, made between Maker and Payee. This Note is also
guaranteed by that certain Personal Guaranty, dated of even date herewith, made
between Payee and Joe Allwein and Darlene Bauer, respectively.
SECTION TEN
WAIVER OF PRESENTMENT, ETC.
Maker and each other Liable Party expressly and specifically (i)
severally waive grace, presentment for payment, demand for payment, notice of
intent to accelerate and notice of acceleration, notice of dishonor, protest and
notice of protest, notice of nonpayment, and any and all other notices, the
filing of suit and diligence in collecting this Note or enforcing any of the
security herefor, (ii) severally agree to any substitution, subordination,
exchange or release of any security held for the payment of this Note or any
other obligation to the holder hereof and release of any party primarily or
secondarily liable hereon, (iii) severally agree that the holder hereof shall
not be required first to institute suit or exhaust its remedies hereon against
Maker or other parties liable hereon or to enforce its rights against them or
any security herefor in order to enforce payment of this Note by any of them,
and (iv) severally agree to any extension or postponement of time of payment of
this Note and to any other indulgence with respect hereto without notice thereof
to any of them.
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SECTION ELEVEN
EXPENSES AND ATTORNEYS' FEES
If this Note is not paid at maturity, however such maturity may be
brought about, and this Note is placed in the hands of an attorney for
collection or if collection by suit or through the probate court, bankruptcy
court, or by any other legal or judicial proceeding is sought, Maker agrees to
pay expenses incurred by Payee, including reasonable attorneys' fees and
expenses.
SECTION TWELVE
SEVERABILITY
If any provision of this Note is held to be illegal, invalid or
unenforceable, such provision shall be fully severable herefrom. This Note shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.
SECTION THIRTEEN
COMPLIANCE WITH USURY LAWS
It is the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, notwithstanding any provision to the
contrary in this Note, the aggregate of all interest and any other charges or
consideration constituting interest under applicable usury law that is taken,
reserved, contracted for, charged or received under this Note, or otherwise in
connection with this loan transaction shall under no circumstances exceed the
maximum amount of interest allowed by the usury law applicable to this loan
transaction. If any excess interest charge or consideration in such respect is
taken, reserved, contracted for, charged, received or provided for in this Note,
whether by the terms of this Note or because the maturity of the indebtedness
evidenced by this Note is accelerated for any reason, or in the event of any
required or permitted prepayment, then in any such event (i) the provisions of
this paragraph shall govern and control; (ii) neither Maker nor Maker's heirs,
executors, administrators, legal representatives, assigns or any other Liable
Party shall be obligated to pay the amount of such interest to the extent that
it is in excess of the Maximum Rate; (iii) any excess shall be deemed a mistake
and canceled automatically and, if theretofore paid, shall be credited on this
Note by the holder hereof (or, if this Note shall have been paid in full,
refunded to Maker); and (iv) the effective rate of interest shall be
automatically subject to reduction to the Maximum Rate allowed as the usury law
may now or hereafter be construed by courts of appropriate jurisdiction. Without
limiting the foregoing, all calculations of the rate of interest taken,
reserved, contracted for, charged, received or provided for under this Note or
which are made for the purpose of determining whether the interest rate exceeds
the Maximum Rate shall be made, to the extent allowed by law, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the loan evidenced hereby, including any extension thereof, all
interest at any time taken, reserved, contracted for, charged, received or
provided for under this Note.
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SECTION FOURTEEN
GOVERNING LAW AND VENUE
This Note shall be governed by and construed in accordance with the
laws of the State of California in all respects, including matters of
construction, validity and performance. Venue for any action to enforce or to
interpret this Note shall be in a court of competent jurisdiction located in the
State of Colorado and each of the parties consents to the jurisdiction of such
court in any such action or proceeding and waives any objection to venue laid
therein.
SECTION FIFTEEN
HEADINGS
The Section headings used herein are intended for reference and shall
not by themselves determine the construction or interpretation of this Note.
MAKER:
SPIN FORGE, LLC
By: /s/Joe Allwein
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Its: President
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Date: 3/18/98
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