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