Exhibit 10.4

 

Execution Copy

 

SUBLEASE

 

This SUBLEASE (“Sublease”) is dated for reference purposes, as of September 17,
2004, and is executed on the dates set forth opposite the signatures below, by
and between Dynamic Materials Corporation, a Delaware corporation (“Sublessor”),
and Aerojet-General Corporation, an Ohio corporation (“Sublessee”).

 

RECITALS

 

A.                                   Spin Forge, LLC, a California limited
liability company, owns the land and the manufacturing, storage, and
administrative buildings, and other improvements, located at 1700 East Grand
Avenue, El Segundo CA, 90245 (the “Premises”).  The land containing such
buildings and improvements is legally described in Exhibit A to the Master Lease
(as defined below).

 

B.                                     Sublessor currently leases the Premises
from Spin Forge, LLC, (“Master Lessor”) pursuant to a certain Operating Lease
dated as of March 18, 1998, (“Original Lease”) as amended by an Agreement and
Amendment to Operating Lease dated as of February 1, 2000, (“Amendment”)
(collectively, the “Master Lease”), which Master Lease is attached hereto as
Exhibit “A” and made a part hereof for all purposes.

 

C.                                     Sublessee wishes to sublet the entire
Premises, as described above, from Sublessor; and Sublessor wishes to sublet the
entire Premises (the “Sublet Premises”) to Sublessee upon certain terms and
conditions.

 

NOW, THEREFORE, in reference to the foregoing recitals (collectively, the
“Recitals”), Sublessor and Sublessee, in consideration for the various
obligations set forth in this Sublease and the Master Lease, hereby agree as
follows:

 

--------------------------------------------------------------------------------

 

ARTICLE 1

 

BASIC TERMS

 

1.1                                 Demise.  For the Term set forth below, and
in accordance with the terms and conditions of this Sublease, Sublessor hereby
subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the
Sublet Premises and every part thereof, subject to all the terms and conditions
of the Master Lease.

 

1.2                                 Term.

 

(a)                                  The term of this Sublease (the “Term”)
shall commence on September 17, 2004 (the “Commencement Date”) and terminate on
January 1, 2007 (the “Expiration Date”), unless sooner terminated under the
terms of the Lease or this Sublease.  Sublessor and Sublessee agree to confirm
the actual Commencement Date in writing; however, the failure to confirm such
shall have no effect on the Commencement Date or Expiration Date.

 

(b)                                 This Sublease shall terminate upon the
termination for any reason or cause of the Master Lease, except that default of
the Sublessor as lessee under the Master Lease, or surrender of the Premises by
the Sublessor as lessee under the Master Lease to the Master Lessor shall
constitute a default or breach by Sublessor under this Sublease.   Sublessor, as
lessee under the Master Lease, may terminate the Master Lease in the event of
the partial or total damage, destruction, or condemnation of the Premises,
including buildings on the Premises, and the exercise of such right by Sublessor
pursuant to Articles 13 and 14 of the Master Lease, shall not constitute a
default or breach by the Sublessor under this Sublease.

 

(c)                                  Possession of the Sublet Premises
(“Possession”) shall be delivered to Sublessee on the Commencement Date.  If for
any reason Sublessor does not deliver Possession to Sublessee on the
Commencement Date, Sublessor shall not be subject to any liability for such
failure, the Termination Date shall not be extended by the delay, and the
validity of this Sublease shall not be impaired, except that Rent (described
below) shall abate until delivery of Possession.

 

(d)                                 If Sublessor permits Sublessee to take
Possession prior to the Commencement Date, such early Possession shall not
advance the Termination Date and shall be subject to the provisions of this
Sublease, including without limitation, the payment of Rent according to the
terms and conditions set forth below.

 

2

--------------------------------------------------------------------------------

 

(e)                                  This Sublease shall terminate upon the
exercise by Sublessee, pursuant to that certain Option Agreement, dated as of an
even date herewith, between Sublessor and Sublessee (the “Option Agreement”), of
its option to assume the option to purchase the Premises and Sublessor shall
assign its rights and liabilities under the Master Lease to Sublessee, subject
to the written consent of Master Lessor as required under Article 15 of the
Master Lease.

 

1.3                                 Rent.

 

(a)                                  Sublessee shall pay Sublessor during the
Term of this Sublease, without offset, deduction, prior notice or demand, the
Base Rent in the amount of Thirty Thousand Two Hundred and Forty-Four dollars
($30,244.00) per month (“Base Rent”), or a pro rated amount thereof for any
fraction of a month; provided however, that Sublessee may defer the first two
months’ Base Rent for up to 45 days each without penalty or interest, and such
deferred rent shall not constitute a default under Article 4 hereof.

 

(b)                                 In addition to the Base Rent provided by
subparagraph (a) of this Section 2, Sublessee shall pay all additional rent and
other charges imposed under the Master Lease with respect to the Sublet Premises
and Sublessee’s use thereof and operations therein, including but not limited to
all Operating Costs imposed under the Master Lease, (collectively, “Operating
Costs”) which shall include  (i) Taxes as defined in the Master Lease and
pursuant to the terms and conditions of Article 5 of the Master Lease, (ii)
Utilities as defined in the Master Lease and  pursuant to the terms and
conditions of Article 6 of the Master Lease, (iii) maintenance and repair costs
as described in  subparagraph A of Article 7 of the Master Lease; and (iv)
insurance costs pursuant to the terms and conditions of Article 12 of the Master
Lease.  Operating Costs shall not include the cost of any financing or ground
lease on the Premises (other than Base Rent), capital improvements to the
Premises (unless approved by Sublessee in its sole discretion), management
costs, or overhead.  Sublessor shall request an additional payment for increased
Operating Costs from Sublessee, together with evidence of the increased costs
and payment of such increased costs, as Sublessee may reasonably require. 
Sublessee shall make payment to Sublessor within thirty (30) days of receipt of
such request.

 

(c)                                  The Base Rent shall be paid to Sublessor at
the address set forth in Section 5.2 of this Sublease, or at such other place as
Sublessor may designate, in advance, three (3)

 

3

--------------------------------------------------------------------------------

 

Business Days prior to the first day of each and every month throughout the Term
of this Sublease.

 

(d)                                 In addition to the Base Rent provided by
subparagraph (a) of this Section 2, Sublessee shall pay for the right to use all
Sublessor’s office and non-factory furniture and equipment that is currently
available for use on the Sublet Premises, as set forth on Schedule 1.3(d)
hereto.  Sublessee acknowledges and agrees that it has inspected such
non-factory furniture and equipment and Sublessee agrees to accept same in its
present condition, “as is, where is” and “with all faults.”  Upon the expiration
or earlier termination of this Sublease, Sublessee shall deliver such
non-factory furniture and equipment to Sublessor in good condition and repair,
normal wear and tear excepted; provided, however, that if Sublessee exercises
its option to assume the option to purchase the Premises pursuant to the Option
Agreement, Sublessee shall pay Sublessor the net book value of the furniture and
equipment listed on Schedule 1.3(d) hereto, determined as of the date of the
exercise of such option.  Factory equipment shall be subject to the terms and
conditions of a lease agreement (the “Master Equipment Lease”) that is separate
and apart from this Sublease.

 

1.4                                 Taxes.  Sublessee shall pay any and all
taxes (occupancy or otherwise) relating to Sublessee’s occupancy, property taxes
and assessments on the furniture, fixtures, equipment, and other property
situated on, or installed in the Sublet Premises in accordance with Article 5 of
the Master Lease.  Sublessor shall supply to Sublessee copies of all statements,
invoices, or bills for such taxes, and all notices of assessment, valuation, or
other similar notices or documents, promptly upon receipt thereof by Sublessor,
and Sublessee shall have the right, and Sublessor shall use reasonable efforts
to cooperate with Sublessee, to initiate any action to contest the amount,
applicability, or any other aspect of such taxes in accordance with the
provisions in Article 5 (b) of the Master Lease.

 

1.5                                 Use.  Sublessee shall use the Sublet
Premises for any and all purposes directly or indirectly related to the conduct
of a manufacturing business and all related administrative and general business
purposes and for any other legal purpose, in accordance with Article 4 of the
Master Lease.

 

4

--------------------------------------------------------------------------------

 

1.6                                 Condition of Sublet Premises.

 

(a)                                  Except with respect to the Environmental
Warranties set forth in Article 3 of this Sublease, Sublessee represents that it
has inspected and examined the Sublet Premises and agrees to accept them in
their present, “as is” condition and acknowledges that Sublessor has no
obligation to make any improvements in connection therewith.  Any work required
by Sublessee to prepare the Sublet Premises for its occupancy, other than costs
incurred pursuant to Article 3 of this Sublease, shall be paid for by Sublessee
and shall be subject to all of the conditions set forth in this Sublease and/or
the Master Lease.

 

(b)                                 Sublessee shall not make any alterations,
additions or improvements to the Sublet Premises without first obtaining the
written consent of Sublessor and, if required by the Master Lease, of Master
Lessor.  Any approved alterations, additions or improvements to the Sublet
Premises shall be made by Sublessee at Sublessee’s sole cost and expense, and at
no cost or expense to Sublessor, and otherwise upon all applicable terms and
conditions of the Master Lease and this Sublease; provided, however, that
without the written consent of Sublessor or Master Lessor, Sublessee may make
improvements, alterations, or additions that cost below $10,000 as long as such
improvements, alterations, or additions do not diminish or interfere with the
value of the Premises.

 

1.7                                 Surrender of Sublet Premises.  On the date
upon which the term hereof shall expire or come to an end, whether on the
Expiration Date, by lapse of time, or otherwise, Sublessee, at Sublessee’s sole
cost and expense, shall quit and surrender the Sublet Premises to Sublessor in
the same good order and condition, ordinary wear and tear excepted, as Sublessor
is required to deliver them to Master Lessor pursuant to the Master Lease.

 

1.8                                 Holdover.  If, after the Expiration Date or
earlier termination or expiration of this Sublease, Sublessee shall remain in
possession of the Sublet Premises, then Sublessee shall indemnify and hold
Sublessor harmless from and against any and all actions, claims, demands,
liabilities, loss, expenses, and damages incurred by Sublessor under the Master
Lease or otherwise arising from or related to Sublessee’s failure to surrender
possession of the Sublet Premises and Sublessee shall also pay to Sublessor each
month a sum equal to one hundred twenty five percent (125%) of the Base Rent
payable hereunder.  Nothing herein contained shall

 

5

--------------------------------------------------------------------------------

 

be deemed to permit Sublessee to retain possession of the Sublet Premises after
the Expiration Date or sooner termination of this Sublease and no acceptance by
Sublessor of payments from Sublessee after the Expiration Date or sooner
termination of the Term shall be deemed to be other than on account of the
amount to be paid by Sublessee in accordance with the provisions of this
Section, which provisions shall survive the Expiration Date or sooner
termination of this Sublease.

 

1.9                                 Assignment. Notwithstanding anything to the
contrary in the Master Lease, Sublessee shall not directly or indirectly (by
sale or transfer of a controlling interest in Sublessee’s capital stock or
otherwise), voluntarily or by operation of law, sell, assign, encumber, pledge
or otherwise transfer or hypothecate all or any portion of Sublessee’s interest
in or rights with respect to the Sublet Premises or Sublessee’s subleasehold
estate hereunder, or permit all or any portion of the Sublet Premises to be
occupied by anyone other than Sublessee, sublet all or any portion of the Sublet
Premises or in any manner transfer all or any portion of Sublessee’s interest in
or rights with respect to Sublessee’s subleasehold estate hereunder, without
first complying with the provisions of Article 15 of the Master Lease and
without the prior, written consent of Sublessor and Master Lessor, which consent
shall not be withheld unreasonably.  Notwithstanding the foregoing, Sublessor
agrees that Sublessee may assign its rights to, and delegate its duties and
obligations under, this Sublease to an affiliate of Sublessee, without the prior
written consent of Sublessor.  For purposes of this Sublease, the term
“affiliate” shall mean any partnership, corporation, trust or other entity or
association, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with Sublessee.  The term
“control,” as used in the immediately preceding sentence, means, with respect to
a corporation or limited liability company the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to
the controlled corporation or limited liability company, and, with respect to
any individual, partnership, trust, other entity or association, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled entity.

 

1.10                           Defined Terms.  All initially capitalized words
contained herein for which definitions are not specified shall have the meaning
ascribed to such defined term within the Master Lease.

 

6

--------------------------------------------------------------------------------

 

ARTICLE 2

 

THE MASTER LEASE

 

2.1                                 Incorporation by Reference.  This Sublease
is subject and subordinate to the Master Lease.  Subject to the modifications
set forth in this Sublease, the terms and conditions of the Master Lease are
incorporated herein by reference as if fully set forth herein, and shall, as
between Sublessor and Sublessee (as if they were “Lessor and “Lessee,”
respectively, under the Master Lease) constitute the terms of this Sublease
except to the extent that they are inapplicable to, inconsistent with, or
modified by the terms of this Sublease.  The following provision of the Master
Lease is expressly excluded from this Sublease:  Article 1(C).   In the event of
any inconsistencies between the terms and provisions of the Master Lease and the
terms and provisions of this Sublease, the terms and provisions of this Sublease
shall govern.  Sublessee acknowledges that it has reviewed the Master Lease and
is familiar with the terms and conditions thereof.

 

(a)                                  For purposes of interpreting provisions of
the Master Lease as incorporated into this Sublease, as used therein the term
“Lessee” shall be deemed to refer to Sublessee, the term “Lessor” shall be
deemed to refer to Sublessor, the term Premises shall be deemed to refer to the
Sublet Premises.

 

(b)                                 Sublessee shall have and perform for the
benefit of Sublessor all such obligations as are set forth in the Master Lease. 
Unless otherwise set forth herein, Sublessee agrees to pay and perform, and hold
Sublessor free and harmless from and against, all of Sublessor’s obligations and
liabilities under the Master Lease.

 

(c)                                  Upon any breach by Sublessee of any of said
terms and conditions of the Master Lease as incorporated herein or upon any
failure of Sublessee to pay Base Rent or Operating Costs or to comply with any
of the provisions of this Sublease, Sublessor and/or Master Lessor may exercise
any and all rights and powers and shall have whatever remedies as are available
to the Master Lessor under the Master Lease in addition to those available under
this Sublease or by law.

 

7

--------------------------------------------------------------------------------

 

(d)                                 Sublessor shall have no liability to
Sublessee for failure of the Master Lessor to perform any of its obligations
under the Master Lease and Sublessor shall not be obligated to perform for the
benefit of Sublessee any of the obligations of Master Lessor under the Master
Lease.

 

(e)                                  Whenever a provision of the Master Lease
requires the consent or approval of the Master Lessor, it shall be construed to
require the consent or approval of both said Master Lessor and Sublessor.

 

(f)                                    In all provisions of the Master Lease
requiring Lessee to submit, exhibit to, supply or provide Lessor with evidence,
certificates, or any other matter or thing, Sublessee shall be required to
submit, exhibit to, supply or provide, as the case may be, the same to both
Lessor and Sublessor.  In any such instance, Sublessor shall determine if such
evidence, certificate or other matter or thing shall be satisfactory.

 

(g)                                 Sublessor may not waive or amend any
provision of the Master Lease that will prevent or adversely affect the use by
Sublessee of the Sublet Premises in accordance with the terms of this Sublease
without consent of Sublessee.

 

(h)                                 Sublessee hereby agrees that it will not, by
its act or omission to act, cause a default under the Master Lease.  Further,
notwithstanding any provision in this Sublease or the Master Lease to the
contrary, Sublessee shall have no right, power or authority, without the prior
written approval of Sublessor, to amend, revise, terminate or waive any
provision of the Master Lease, exercise any renewal, extension, expansion,
termination or similar rights or options under the Master Lease, or otherwise
materially adversely affect Sublessor’s interests, rights or remedies under the
Master Lease.

 

(i)                                     Whenever any period for notice from
“Lessee” to “Lessor” is specified under the Master Lease, or any period within
which “Lessee” is required to do anything under the Master Lease, the period
applicable to Sublessee’s obligation to give such notice to Sublessor or to
perform under this Sublease shall be three days shorter than the corresponding
period applicable to “Lessee” under the Master Lease (so that Sublessor shall
always have at least three days within which to give its own notice or
performance to Master Lessor), and wherever any

 

8

--------------------------------------------------------------------------------

 

period for notice from “Lessor” to “Lessee” is specified under the Master Lease,
Sublessor shall similarly have a period of at least three days within which to
give notice to Sublessee under this Sublease.

 

(j)                                     Sublessor and Sublessee have agreed to
allocate responsibility for performance of certain of Sublessor’s obligations
under the Master Lease, as follows:

 

(1)                                  Article 11, Indemnity. Unless such
liabilities are the result of the gross negligence or willful misconduct of
Sublessee, or Sublessee’s agents, employees, customers, contractors, licensees
or invitees, Sublessor shall continue to perform and retain liability for the
obligations of Sublessor under Article 11 of the Master Lease.  In addition to,
and not in limitation of, the indemnification obligations set forth in the
Master Lease, Sublessee shall indemnify, defend and hold Sublessor harmless, and
upon request defend Sublessor, from and against all losses, liabilities,
damages, claims, costs and expenses, including reasonable attorneys’ fees
incurred in defending against the same, arising out of Sublessee’s breach or
default under this Sublease.

 

 (2)                               Article 16, Access to Premises.  Sublessee
acknowledges that Master Lessor has the right to enter Premises at any time or
times, upon reasonable prior notice to Sublessor, and that “reasonable” is not
defined in the Master Lease.  Sublessee also acknowledges that Master Lessor may
enter the Premises with a master key if Sublessor is not present to let Master
Lessor enter the Premises.   Notwithstanding the foregoing, Sublessee
acknowledges that Sublessor, its agents, and its employees may from time to time
enter the Sublet Premises during regular business hours during the Term of this
Sublease.

 

 (3)                               Article 12, Insurance –Waiver of Claims
–Waiver of Subrogation.

 

(i)  Insurance. Sublessee shall maintain throughout the Term of this Sublease,
at Sublessee’s expense, all of the insurance required in Article 12 of the
Master Lease for covered claims, provided, however, that all rights and benefits
specified for Landlord pursuant to said Article 12 shall apply to any inure to
the benefit of Landlord and Sublessor.  Sublessee shall cause Sublessor and
Landlord to be named as additional insureds in said policy or policies.  Upon
the execution of this Sublease, Sublessee shall deliver to Sublessor a
certificate of insurance evidencing said insurance coverage.  Sublessee shall
procure renewals or replacements

 

9

--------------------------------------------------------------------------------

 

of such insurance from time to time before the expiration thereof and shall
deliver to Sublessor certificates of insurance indicating such coverage before
the expiration of any existing policy

 

(ii) Waiver of Subrogation.  Any insurance carried by Sublessee with respect to
the Sublet Premises or property therein or thereon shall include a clause or
endorsement denying to the insurer rights of subrogation against Sublessor to
the extent rights have been waived by Sublessee prior to occurrence of injury or
loss.  Sublessee, notwithstanding any provisions of this Sublease to the
contrary, hereby waives any rights of recovery against Sublessor for injury or
loss due to assets covered by such insurance.

 

2.2                                 Performance by Master Lessor.  In the event
Master Lessor shall fail to perform any of the terms, covenants, and conditions
contained in the Master Lease on its part to be performed, Sublessor shall
reasonably cooperate with Sublessee, at no cost to Sublessee, in seeking to
obtain the performance of Master Lessor under the Master Lease.  Notwithstanding
the foregoing, however, Sublessor shall not be obligated to perform for the
benefit of Sublessee any of the obligations of Master Lessor under the Master
Lease.  In the event Sublessee makes a request that it is entitled to make under
this Sublease, which request requires the approval of Master Lessor, Sublessor
shall make all reasonable efforts to obtain such approval. In addition,
Sublessee shall have the right in its own name to require and obtain performance
by Master Lessor pursuant to the terms of the Master Lease and take any action
against the Master Lessor.  For that purpose and only to such extent, all rights
of Sublessor as lessee under the Master Lease are hereby conferred upon and
assigned to Sublessee, and Sublessee shall be subrogated to such rights to the
extent the same shall apply only to the Sublet Premises.  In any event,
Sublessee shall not be allowed any abatement or diminution of Rent under this
Sublease because of Landlord’s failure to perform any of its obligations under
the Master Lease.  Notwithstanding the foregoing, if Sublessor, as Tenant,
receives an abatement or diminution of Rent from Master Lessor that relates to
the Sublet Premises, Sublessee shall be entitled to the same abatement or
diminution of Rent as applied to the Sublet Premises.

 

10

--------------------------------------------------------------------------------

 

ARTICLE 3

 

ENVIRONMENTAL WARRANTIES

 

3.1                                 Environmental Warranties.

 

(a)                                  For purposes of this Article 3.1,
“Hazardous Substance” means any chemical, waste, pollutant, contaminant or
toxic, reactive or corrosive material or substance, or any other chemical,
material, or substance included in the definition of “pollutant,” “hazardous
substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous
substances,” “restricted hazardous materials,” “toxic substances” or “toxic
pollutants” or words of similar import, the release of which is prohibited,
limited or regulated by any governmental authority under any Environmental Law. 
Further, “Environmental Laws” means any U.S. federal, state, county or local
law, statute, or ordinance that regulates or relates to the existence of, or
provides a remedy for, release of Hazardous Substances, the protection of the
environment, natural resources or the environment, the management of Hazardous
Substances, or other activities involving Hazardous Substances.  Environmental
Laws include all of the following federal laws and amendments thereto, their
implementing regulations and all state and local laws, regulations and
ordinances that regulate the same subject matter: (a) the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), 42 USC 9601 et
seq.; (b) the Solid Waste Disposal Act, 42 USC 6901 et seq., including the
Resource Conservation and Recovery Act (RCRA), and Laws governing underground
storage tanks; (c) the Toxic Substances Control Act (TSCA), 15 USC 2601 et seq.,
including those provisions governing use and disposal of Polychlorinated
Biphenyls (PCBs); (d) the Hazardous Materials Transportation Act (HMTA), 49 USC
5101 et seq.; (e) the Federal Insecticide, Fungicide and Rodenticide Act
(FIFRA), 7 USC 136 et seq.; (f) the Clean Air Act, 42 USC 7401 et seq.; (g) the
Federal Water Pollution Control Act, 33 USC 1251 et seq.; (h) the Emergency
Planning and Community Right-to-Know Act (EPCRA), 42 USC 11001 et seq.; and (i) 
the Safe Drinking Water Act, 42 USC 300f et seq.

 

(b)                                 If prior to or during the Term, Sublessor or
Sublessee discover any Hazardous Materials in or on the Premises, the presence
of which were not caused by Sublessee, Sublessor shall, at its expense, promptly
take all action required by all applicable laws, ordinances, codes, and/or other
regulations, to remove and/or encapsulate such Hazardous Materials and, if

 

11

--------------------------------------------------------------------------------

 

necessary, replace the same with substances and materials that are not Hazardous
Materials and repair any damage caused by such removal, encapsulation, or
replacement.  If the presence of Hazardous Materials renders the whole or any
portion of the Premises untenable for the conduct of Sublessee’s business, then
the Rent due hereunder shall abate in whole during the period commencing on the
first day such untenability and ending on the earlier of:

 

(1)                                  the date on which all Hazardous Materials
have been removed, encapsulated, and/or replaced and all resulting damage to the
Sublet Premises have been repaired; or

 

(2)                                  the date upon which Sublessee again begins
using the Sublet Premises.  In the event any such untenability lasts for longer
than ninety (90) days, Sublessee shall have the right, but not the obligation,
to terminate this Sublease without any further liability or obligation
hereunder.

 

(c)                                  Without limiting the generality of the
foregoing, Sublessor shall indemnify and hold Sublessee and Sublessee’s agents,
employees, managers, and members (“Sublessee’s Related Parties”) harmless from
and against any and all claims, suits, actions, liabilities, costs, fees,
damages, and/or causes of action, including, without limitation, reasonable
attorneys fees (collectively, “Claims and Losses”) arising out of Sublessor’s
failure to comply with any state, local, or federal law relating to Hazardous
Materials.

 

ARTICLE 4

 

DEFAULT

 

4.1.                              Default.  Sublessee shall be in default under
this Sublease if any one or more of the following occur:

 

(a)                                  Sublessee fails to fulfill any of the
terms, obligations, covenants, and conditions of this Sublease;

 

(b)                                 Sublessee fails to perform any of the terms,
obligations, covenants, and conditions of the Master Lease with respect to the
Sublet Premises;

 

(c)                                  Sublessee is adjudged bankrupt or insolvent
or makes an assignment for the benefit of creditors; or

 

12

--------------------------------------------------------------------------------

 

(d)                                 A receiver or trustee of the Sublessee’s
property is appointed and not discharged within sixty (60) days.

 

In the event that Sublessee defaults, Sublessor shall have any and all rights
and remedies available to it at law and equity, including all of the rights and
remedies of Master Lessor described in the Master Lease, which are hereby
incorporated herein and made a part hereof with the same force and effect as if
herein specifically set forth in full, and that wherever in the Master Lease
rights and remedies are given to Master Lessor, the same shall be deemed to
refer to Sublessor.

 

ARTICLE 5

 

MISCELLANEOUS PROVISIONS

 

5.1                                 Sublease Consent.  This Sublease shall
become effective only if the written consent hereto of Master Lessor is
obtained.  If such written consent is not obtained, then this Sublease shall be
void and of no force or effect, and thereupon neither party shall have any
further obligation to the other.  Both parties shall promptly furnish to the
Master Lessor any information reasonably required to be furnished by the Master
Lessor and to execute any consent form reasonably required by the Master Lessor.

 

5.2                                 Notice and Demands.  Anything contained in
any provision of this Sublease to the contrary notwithstanding, Sublessee
agrees, with respect to the Sublet Premises, to comply with and remedy any
default in this Sublease or the Master Lease that is Sublessee’s obligation to
cure, within the period allowed to Sublessor under the Master Lease, even if
such time period is shorter than the period otherwise allowed therein due to the
fact that notice of default from Sublessor to Sublessee is given after the
corresponding notice of default from Master Lessor to Sublessor.  Sublessor
agrees to forward to Sublessee, promptly upon receipt thereof by Sublessor (and
in any event within two (2) business days of receipt), a copy of each notice of
default received by Sublessor in its capacity as Master Lessee under the Master
Lease.  Sublessee agrees to forward to Sublessor, promptly upon receipt thereof,
copies of any notices received by Sublessee from Master Lessor or from any
governmental authorities.  All notices, demands and requests shall be in writing
and shall be sent either by hand delivery or by a nationally

 

13

--------------------------------------------------------------------------------

 

recognized overnight courier service (e.g., Federal Express), in either case
return receipt requested, to the address of the appropriate party.  Notices,
demands and requests so sent shall be deemed given when the same are received.

 

Any notice, approval, request, consent, bill, statement, or other communication
required or permitted to be given, rendered, or made by either party hereto,
shall  be sent to the attention of:

 

If to Sublessor:

President

 

Dynamic Materials Corporation

 

5405 Spine Road

 

Boulder, CO 80301

 

Attention:  Yvon Cariou

 

Fax Number:  (303) 604-1897

 

 

With a copy to:

Chief Financial Officer

 

Dynamic Materials Corporation

 

5405 Spine Road

 

Boulder, CO 80301

 

Attention:  Richard Santa

 

Fax Number: (303) 604-1897

 

 

If to Sublessee

Aerojet General Corporation

 

P. O. Box 1036

 

Camden, AR 71711-1036

 

Attention: Robert Shenton

 

Vice-President, Operations

 

Fax Number: (870) 574-3528

 

 

With a copy to:

Aerojet General Corporation

 

P. O. Box 13222

 

Sacramento, CA 95813-6000

 

Attention: Brian E. Sweeney

 

Vice-President, Legal and Contracts

 

Fax Number: (916) 351-8610

If by express delivery:

Highway 50 and Aerojet Road

 

Rancho Cordova, CA 95742

 

Sublessee shall remit all payments required under this Sublease to Sublessor’s
lockbox account at:

 

Dynamic Materials Corporation

 

Dept. 1323

 

Denver , CO 80291-1323

 

 

14

--------------------------------------------------------------------------------

 

Each party shall have the right to designate by notice in writing any other
address to which such party’s notice is to be sent.

 

5.3                                 Subordination.  This Sublease is subject and
subordinate to all of the provisions of the Master Lease and to all encumbrances
and other matters to which the Master Lease is subject (including the lien of
any mortgage covering the Premises).  Sublessee shall execute promptly any
instrument that Master Lessor may request to confirm that this Sublease is
subordinate in lien to any mortgage pursuant to the foregoing provisions of this
paragraph.  In the event of a foreclosure of a mortgage covering the Building,
then notwithstanding such foreclosure, Sublessee shall not disaffirm this
Sublease or any of its obligations hereunder and at the request of the mortgagee
or the purchaser at the foreclosure sale, Sublessee shall attorn to such
mortgagee or purchaser and if required, execute a new Sublease for the Sublet
Premises on all the same terms and conditions of this Sublease, except that the
term of such new sublease shall be for the balance of the term of this Sublease.

 

5.4                                 Severability.  If any term or provision of
this Sublease or the application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of this Sublease or the
application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby;
and each term and provision of this Sublease shall be valid and be enforceable
to the fullest extent permitted by law.

 

5.5                                 Broker Indemnity.  Each party represents to
the other that no broker participated in the negotiations leading to the
Sublessee’s rental of the Sublet Premises from the Sublessor. Each party
hereunder agrees to indemnify and hold the other party harmless from and against
any claim or demand of any broker or agent who claims that he or she
participated with that party in this transaction, and such indemnity shall
survive the Expiration Date or earlier termination of this Sublease.

 

15

--------------------------------------------------------------------------------

 

5.6                                 Quiet Enjoyment.  Sublessor hereby covenants
that it has good and lawful authority to make this Sublease and fully warrants
the right, title, and interest conveyed hereby, and will defend the same against
the claims of all persons whomsoever.

 

5.7                                 Successors and Assigns.  Without limiting
any restriction on assignment contained elsewhere in this Sublease, this
Sublease and all of its provisions shall be binding upon, and inure to the
benefit of, the successors and assigns of Sublessor and Sublessee.

 

5.8                                 Governing Law.  The validity, construction,
interpretation, and performance of the covenants and conditions contained herein
shall be governed by and construed in accordance with the domestic laws of
California, excluding, however, such laws as pertain to conflicts of law.

 

5.9                                 Section Headings.  The section headings used
in this Sublease are inserted for convenience of reference only; they shall not
be construed to limit or extend or otherwise affect in any way the meaning of
any part of this Sublease.

 

5.10                           Authority.  Sublessee represents and agrees that
it has good right and lawful authority to execute this Sublease and that the
same does not require joinder or approval of any other person, firm, or
corporation.

 

5.11                           Sublease Not Binding Unless Executed.  The
submission of this document for examination and negotiation does not constitute
an offer to sublease, reservation of, or option for the Sublet Premises.  This
document shall become effective and binding only upon the execution and delivery
hereof by both Sublessor and Sublessee and the approval of Master Lessor.

 

5.12                           Time of the Essence.  Time is of the essence of
each and every provision of this Sublease.

 

5.13                           Attorneys’ Fees.  If any legal action or
arbitration or other proceeding be commenced, whether by Sublessor, Sublessee,
or a third party, concerning this Sublease, the

 

16

--------------------------------------------------------------------------------

 

Premises or Sublet Premises, the Master Lease, or any alleged default or breach
of duty related thereto, as between Sublessor and Sublessee, the prevailing
party shall recover from the losing party, reasonable attorneys’ fees and cost
and expenses, not limited to taxable costs, incurred by the prevailing party, in
addition to all other remedies to which the prevailing party may be entitled,
including costs and attorneys’ fees incurred in any appeal.

 

5.14                           Mechanics’ and Materialmens’ Liens.  Sublessee
shall not permit any mechanics’ or materialmens’ liens to be filed against the
Sublet Premises.  In the event any such lien is filed, Sublessee shall cause it
to be discharged within fifteen (15) days and, upon Sublessee’s failure to do
so, Sublessor shall have the right to discharge such lien and to be reimbursed
by Sublessee for the cost thereof, which reimbursement shall be required by
Sublessee upon Sublessor’s demand.  Further, Sublessee shall hold and save
Sublessor harmless and indemnify Sublessor of and from any and all loss, cost,
damage, injury, or expense, including attorneys’ fees, arising out of or in any
way related to such liens.

 

5.15                           Entire Agreement.  This Sublease contains the
entire agreement between the parties, and no rights are created in favor of
either party other than as specified or expressly contemplated in this Sublease,
and the Master Lease, to the extent such is incorporated herein.  In addition,
no agreement shall be effective to change or modify this Sublease in whole or in
part unless such is in writing and duly signed by the party against whom
enforcement of such change or modification is sought.

 

5.16                           Waiver.  Waiver by either party of any breach of
any provision of this Sublease shall not constitute a waiver of such provision
or of any subsequent breach of the same or of any other provision contained in
this Sublease.

 

5.17                           Recitals.  The Recitals set forth at the
beginning of this Sublease are incorporated into and made a part of this
Sublease.  Sublessor and Sublessee each represent and warrant to the other that
it knows of no fact or circumstance indicating that any of said Recitals is
false, incomplete, or misleading as written.

 

17

--------------------------------------------------------------------------------

 

5.18                           Duplicate Counterparts.  This Sublease may be
executed in any number of duplicate counterparts, all of which shall be deemed
on instrument (including copies sent to a party by facsimile transmission), and
each of which shall be deemed an original of this Sublease for all purposes,
notwithstanding that less than all signatures may appear on any single
counterpart.

 

IN WITNESS WHEREOF, the parties have hereto executed this Sublease on the date
above written.

 

 

SUBLESSOR:

DYNAMIC MATERIALS CORPORATION,

 

 

 

 

 

a Delaware corporation

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Printed Name

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

SUBLESSEE:

AEROJET GENERAL CORPORATION,

 

 

 

 

 

an Ohio corporation

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Printed Name:

 

 

 

 

 

 

 

Title:

 

 

 

18

--------------------------------------------------------------------------------

 

EXHIBIT A

MASTER LEASE

 

 

(Operating Lease and Agreement and Amendment to Operating Lease)

 

(See attached)

 

19

--------------------------------------------------------------------------------

 

EXHIBIT B

 

CONSENT TO SUBLEASE

 

SPIN FORGE, LLC, a California limited liability company (“Master Lessor”) is the
Lessor under that certain Operating Lease of real property and improvements,
dated as of March 18, 1998, as amended by that certain Agreement and Amendment
to Operating Lease (“Amendment”), dated as of February 1, 2000, (collectively,
the “Master Lease”), with DYNAMIC MATERIALS CORPORATION, a Delaware corporation
(“Master Lessee”), covering those certain premises commonly known as 1700 East
Grand Avenue, El Segundo, California, 90245 (the “Premises”).

 

Master Lessor hereby consents to the sublease of the Premises by Master Lessee
to AEROJET-GENERAL CORPORATION, an Ohio corporation (“Sublessee”), pursuant to
that certain Sublease, dated as of September 17, 2004, for reference purposes
only, a copy of which is attached hereto and incorporated herein by this
reference (the “Sublease”).  All capitalized terms used in the Lease and the
Sublease, but not expressly defined herein, shall have the meanings ascribed to
them in the Lease and Sublease.

 

In granting this Consent to Sublease, Master Lessor acknowledges and agrees as
follows:

 

1.                                       Sublessee shall be entitled to quiet
use, possession and enjoyment of the Premises in accordance with terms of the
Master Lease.  In addition, so long as Sublessee is not in default in the
performance of any of the terms, covenants or conditions of the Sublease, Master
Lessor will not join Sublessee as a party defendant in any action or proceeding
for the purpose of terminating Sublessee’s interest and estate under the
Sublease because of any default by Master Lessee under the Master Lease.

 

2.                                       Master Lessor hereby certifies to
Sublessee that as of the date of Master Lessor’s signature below, to the best of
Master Lessor’s knowledge, Sublessor is not in default or breach of any of the
provisions of the Master Lease, and the Master Lease has not been amended or
modified, except by the Amendment described above.

 

IN WITNESS WHEREOF, Master Lessor has executed this Consent to Sublease as set
forth below.

 

 

MASTER LESSOR:

 

 

 

 

SPIN FORGE, LLC,

 

 

 

 

a California limited liability company

 

 

 

 

 

 

Dated:    September 17, 2004

By:

 

 

 

 

 

 

 

 

 

Its:

 

 

 

20

--------------------------------------------------------------------------------

 

Execution Copy

 

Assets Included in Facility Lease

Schedule 1.3 (d)

 

Class

 

Acquisition
Date

 

Asset #

 

Description

 

Starting
Net Book Value

 

Monthly
Lease Payment

 

B

 

12/1/1998

 

602,602A

 

Re-coat Two Containment Tanks

 

$

22,542.92

 

$

234.82

 

B

 

7/1/1999

 

149

 

Janitrol Air Conditioner

 

6,901.75

 

71.89

 

B

 

12/1/1998

 

136

 

Main Building Air Conditioning

 

6,871.01

 

71.57

 

B

 

8/1/1999

 

151

 

Tool Crib

 

1,998.68

 

20.82

 

B

 

12/1/1999

 

105

 

Improvements For Leased Machinery

 

1,526.71

 

15.90

 

B

 

4/24/1999

 

154

 

Tool Crib

 

1,147.21

 

11.95

 

B

 

12/14/1998

 

153

 

200,000 BTU Heater

 

381.40

 

3.97

 

BI

 

7/17/2000

 

159

 

STEDI WAIT POWER PANEL DE’FENDER MODEL S1480-3/4D

 

704.74

 

7.34

 

F

 

3/18/1998

 

2

 

Furniture & Fixtures

 

21,094.63

 

219.74

 

LI

 

7/31/2001

 

1321

 

PARITION WALL

 

3,222.22

 

33.56

 

LI

 

6/21/2001

 

1319

 

GATE OPERATOR AND HARDWARE

 

2,880.00

 

30.00

 

LI

 

1/31/2001

 

1287

 

REMODEL LOBBY

 

2,676.78

 

27.88

 

LI

 

2/28/2001

 

1293

 

AWNING E. SIDE WALL

 

2,255.57

 

23.50

 

LI

 

10/23/2001

 

1356

 

ROLLING STEEL DOOR

 

1,043.23

 

10.87

 

M

 

3/19/2004

 

1573

 

Overhaul 10 Ton North Crane

 

18,493.99

 

192.65

 

M

 

3/18/1998

 

69

 

20 T Overhead Crane

 

7,165.93

 

74.65

 

M

 

12/1/2002

 

1386

 

Crane 1/2 Ton

 

5,711.09

 

59.49

 

M

 

3/18/1998

 

116

 

500# Bridge Crane & Hoist South End of Track

 

3,735.16

 

38.91

 

M

 

3/18/1998

 

71

 

1/2 T Overhead Crane

 

119.43

 

1.24

 

M

 

3/18/1998

 

72

 

1/2 T Overhead Crane

 

119.43

 

1.24

 

M

 

3/18/1998

 

74

 

1/4 T Overhead Crane

 

118.87

 

1.24

 

M

 

3/18/1998

 

59

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

60

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

61

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

62

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

63

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

64

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

65

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

66

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

67

 

1 T Overhead Crane

 

59.69

 

0.62

 

M

 

3/18/1998

 

68

 

1/2 T Overhead Crane

 

59.69

 

0.62

 

 

 

 

 

 

 

 

 

$

111,307.65

 

$

1,159.45

 

 

--------------------------------------------------------------------------------