Document:

Exhibit 10.2

 

SUBLEASE

 

THIS SUBLEASE (the
“Sublease”), entered into as of this 16th day of December, 2000, is by and
between Mypodiamond, Inc., a Delaware corporation, having its principal office
and place of business at 200 North Repauno Ave., Gibbstown, New Jersey 08027
(“SUBLANDLORD”), and Dynamic Materials Corporation, a Delaware corporation,
having its principal office and place of business at 551 Aspen Ridge Drive,
Lafayette, Colorado 80026 (“SUBTENANT”).

 

BACKGROUND

 

(a)           On
March 31, 1999, SUBLANDLORD purchased the assets of the polycrystaline
industrial diamond business (the “Business”) from E.I. Dupont de Nemours &
Company (“Dupont”);

 

(b)           Dupont
is a tenant with respect to a lease dated October 19, 1985 (the “Owner Lease”)
with the Daniel Harper Estate as fee simple owners (“Owners”) of an
approximately 378 acre tract of land situate in Fayette County, Pennsylvania
(the “Dunbar Facility”), of which approximately 27 acres (which includes the
right to use the Blue Stone Mine (“Blue Stone Mine”) located thereon
(collectively with the Blue Stone Mine the “Leased Premises”) is used in the
Business;

 

(b)           On
July 22, 1996, Dupont sold its explosion bonding clad metal business
(“Explosion Business”) to SUBTENANT and entered into a sublease with SUBTENANT
for the Leased Premises (the “Dupont Sublease”);

 

(c)           Dupont
and Owners have terminated the Owner Lease as of December 16, 2000;

 

 

(d)           SUBLANDLORD
entered into a new lease with Owners effective December 16, 2000 (“Master
Lease”) for the Dunbar Facility.

 

(e)           SUBLANDLORD
wishes to enter into a new sublease with the SUBTENANT.

 

Therefore, it is
the intent of the parties hereto that SUBLANDLORD shall sublease the Leased
Premises to SUBTENANT upon and subject to the conditions and limitations
herein.

 

NOW, THEREFORE,
incorporating the foregoing Background herein by this reference, the parties
hereto, intending to be legally bound, agree as follows:

 

1.             MASTER
LEASE. By the MASTER LEASE dated as of September 21, 2000 and effective on
December 16, 2000 (the “Effective Date”) by and between the Owners and
SUBLANDLORD, as tenant, Owners have leased to SUBLANDLORD the Dunbar Facility. This
Sublease is made subject to the MASTER LEASE except where the provisions of the
MASTER LEASE are inconsistent with the provisions of this Sublease, in which
case the provisions of this Sublease will control. Where in the MASTER LEASE
there are duties owed by Owners to SUBLANDLORD which are necessary for the
proper enjoyment of this Sublease, SUBLANDLORD will make all commercially reasonable
efforts to obtain the performance of such duties by Owners in favor of
SUBTENANT, but SUBLANDLORD shall not be liable for the failure of Owners under
the terms of MASTER LEASE to perform said duties nor for the result of such
failure. If Owners are in default of its obligations and SUBLANDLORD is
unsuccessful in obtaining Owners’ performance, then upon SUBTENANT’s written
request, SUBLANDLORD shall assign to SUBTENANT its rights to enforce such
defaulted obligations of the MASTER LEASE against Owners. SUBTENANT hereby
agrees to faithfully and 

 

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promptly perform all of
the obligations and duties of SUBLANDLORD to Owners under the MASTER LEASE with
respect only to the Leased Premises except the obligation of SUBLANDLORD to pay
rent, which obligation SUBLANDLORD agrees to continue to perform during the
term hereof.

 

2.             LEASED
PREMISES. SUBLANDLORD, for and in consideration of the rents, covenants and
agreements hereinafter reserved, mentioned and contained on the part of
SUBTENANT, its successors and permitted assigns, does hereby lease, rent and
demise unto SUBTENANT, and SUBTENANT does hereby take and hire, upon and
subject to the conditions and limitations hereinafter expressed, a portion of
the Dunbar Facility .

 

The Dunbar
Facility comprises the tract of land described as follows:

 

ALL THAT CERTAIN TRACT OR
PARCEL OF LAND situate in the Township of Dunbar, County of Fayette and
Commonwealth of Pennsylvania, containing approximately 378 acres, more or less;
said tract is as shown on the Mine Survey of the former New Castle Lime &
Stone Company Mine, prepared by Sucevic Engineering, Hopwood, PA, in September
1979 (the “Plan”) attached hereto, made a part hereof and marked Exhibit “A-1.”

 

The Leased Premises
is the portion of the Dunbar Facility containing approximately 27 acres shown
on the Plan attached hereto as Exhibit “A-2” and described as follows:  the surface land bounded by (a) a 2,700 foot
length of the Dunbar-Ohiopyle Road (L.R. 26047) (at its centerline) to the
Southwest; (b) a line extending from the intersection of the mine access road
and Dunbar-Ohiopyle Road approximately 800 feet to the edge of the mine face;
(c) the mine face starting from the edge of the mine face and extending along the
mine face to a point beyond the explosives magazine that is approximately 600
feet from the centerline of the easternmost mine portal; and (d) a line from
the mine face (as extended) traveling approximately 700 feet to the
Dunbar-Ohiopyle Road (L.R. 26047).

 

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In addition,
SUBLANDLORD hereby leases, rents and demises unto SUBTENANT as part of the
Leased Premises the right to enter and use certain of the underground passages
of the Blue Stone Mine, such passages being shown on the Plan attached as
Exhibit “A-2,” upon and subject to the limitations hereinafter expressed. The
Plan is marked to show the primary access and operating areas, the emergency
access areas, and the areas for explosions (the “Explosion Areas”). Except as expressly provided herein,
SUBTENANT shall have no right to the surface portion of the Blue Stone Mine or
to the underground passages which are not a part of the Leased Premises.

 

The Leased
Premises are subleased subject to the following, in addition to the MASTER
LEASE:

 

(1)           all
matters of record concerning use of the Leased Premises and any state of facts
that an inspection or survey of the Leased Premises would disclose;

 

(2)           present
and future zoning laws, ordinances, resolutions, and regulations of all boards,
bureaus, or commissions and bodies of any municipal, county, state, or federal
sovereign now or hereafter having or acquiring jurisdiction of the Leased
Premises and the use and improvements thereof;

 

(3)           the
effect of all present and future laws and ordinances relating to SUBTENANT’s
use of the Leased Premises;

 

(4)           violations
of laws and ordinances that might be disclosed by an examination and inspection
or search of the Leased Premises as of the date first above written;

 

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(5)           except
as set forth in Section 12, the condition and state of repair of the Leased
Premises as the same may be on the Effective Date;

 

(6)           all
taxes, assessments, water meter, and water charges, sewer rents commencing as
of the Effective Date.

 

(7)           existing
oil and gas leases on the Leased Premises, under which SUBTENANT is not
permitted to drill within the area actually occupied by the hereinbefore
referred to Blue Stone Mine; and

 

(8)           the
right of the Owners to enter on the surfaceland of Leased Premises to cut and
remove timber (provided however that SUBLANDLORD AND SUBTENANT agree that each
will use reasonable efforts to prevent such activities within the Leased
Premises).

 

3.             TOLL
MANUFACTURING AGREEMENT. Pursuant to an assignment from Dupont dated as of
March 31, 2000, SUBLANDLORD was assigned the Tolling/Services Agreement for
Industrial Diamonds dated as of July 22, 1996 between Dupont and the SUBTENANT
(the “Tolling Agreement”), pursuant to which SUBTENANT has agreed to perform
certain services for the Business supplied originally by Dupont and now by
SUBTENANT, involving detonating materials on the Leased Premises to make
industrial diamonds with each party acknowledges is in full force and effect as
of the date of this Sublease..

 

4.             REQUIREMENTS
OF PUBLIC AUTHORITY. During the term of this Sublease, SUBTENANT, at its
own cost and expense, shall promptly observe and comply with all present and
future laws, ordinances, requirements, orders, directives, rules, and
regulations of the Federal, State, County, Town, Village, and City Governments,
and of all other governmental authorities affecting the Leased Premises or any
part thereof whether the same are in force at the 

 

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commencement of the term
of this Sublease or may in the future be passed, enacted or directed, and,
except as set forth in Section 12 herein, SUBTENANT shall pay all costs,
expenses, liabilities, losses, damages, fines, penalties, claims, and demands,
including reasonable counsel fees, that may in any manner arise out of or be
imposed upon SUBLANDLORD because of the failure of SUBTENANT to comply with the
covenants of this Paragraph. Without limiting the foregoing, SUBTENANT, at
SUBTENANT’s cost and expense, shall obtain and maintain all licenses, permits
and approvals necessary to perform explosion bonding operations and services
under the Tolling Agreement and SUBLANDLORD shall take all reasonable actions
(so long as no out-of-pocket costs are incurred on its part) to assist
SUBTENANT in obtaining the same.

 

5.             TERM.
Unless sooner terminated as provided herein, the term of this Sublease shall
commence on December 16, 2000, said date being hereinafter referred to as the
“Commencement Date,” and shall expire at 11:59 p.m., eastern standard time, on
December 15, 2005, provided, however, that assuming there is no Event of
Default existing, or with the passage of time would exist, the term of this
Sublease may be extended at SUBTENANT’S option 
as follows:  for a first
additional term of five (5) years from December 16, 2005 to expire at 11:59
p.m., eastern standard time, on December 15, 2010; for a second additional term
of five (5) years from December 16, 2010 to expire at 11:59 p.m., eastern
standard time on December 15, 2015; for a third additional five (5) year term
from December 16, 2015 to expire at 11:59 eastern standard time on December 15,
2020;,for a forth additional term from December 16, 2020 to expire at 11:59
eastern standard time on December 15, 2025; and for a fifth four(4) year term
to commence on December 16, 2025 to expire at 11:59 p.m. eastern standard time
on December 15, 2029 in each case by SUBTENANT giving SUBLANDLORD written
notice of the exercise of such extension option prior to August 1st
of the year prior to the year of expiration.

 

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6.             RENT.
The rent for the Leased Premises shall be as follows: From and after the
Commencement Date and to the expiration or earlier termination of this
Sublease, SUBTENANT shall pay monthly, in advance, the following sums:  From the date hereof to December 15, 2001,
the yearly rental shall be SEVENTY-EIGHT THOUSAND SEVEN HUNDRED AND FIFTY and
00/100 ($78,750.00) DOLLARS to be paid in twelve equal monthly installments
commencing on December 16, 2000 and continuing thereafter as provided herein. This
rental rate is referred to as the “Annual Rent” and is subject to increase as
provided herein. As used in this Section:

 

(a)           “Index”
shall mean the “Consumer Price Index for Urban Wage Earners and Clerical
Workers” “(1967=100)” specified for “All Items”, relating to PA-NJ-DE-MD and
issued by the Bureau of Labor Statistics of the United States Department of
Labor. In the event the Index shall hereafter be converted to a different
standard reference base or otherwise revised, the determination of the
Percentage Increase (defined below) shall be made with the use of such
conversion factor, formula or table for converting the Index as may be published
by the Bureau of Labor Statistics or, if said Bureau shall not publish the
same, then with the use of such conversion factor, formula or table as may be
published by Prentice Hall, Inc., or, failing such publication, by any other
nationally recognized publisher of similar statistical information. In the
event the Index shall cease to be published, then there shall be substituted
for the Index such other index as SUBLANDLORD and SUBTENANT shall agree upon,
and, if they are unable to agree within ninety (90) days after the Index ceases
to be published, such matter shall be determined in Philadelphia, Pennsylvania
by arbitration in accordance with the Rules of the American Arbitration
Association.

 

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(b)           “New
Index” shall mean the Index reported for the November immediately preceding
each Anniversary Date.

 

(c)           “Current
Index” shall mean the index derived for the November of the year immediately
preceding the year in which a New Index is derived.

 

(d)           “Anniversary
Date” shall mean December 16, 2001 and each successive December 16th
during the term of this Sublease.

 

(e)           “Percentage
Increase” shall mean the percentage equal to the fraction, the numerator of
which shall be the New Index less the Current Index, and the denominator of
which shall be the Current Index.

 

The Annual Rent
shall be increased on each Anniversary Date by the Percentage Increase, if any,
as provided above. It is the intention of the parties that increases in the
Annual Rent shall be determined based upon applying the Percentage Increase to
the Annual Rent as adjusted in this Section 6. All other sums, charges or
amounts which SUBTENANT has agreed to pay to SUBLANDLORD pursuant to this
Sublease shall be hereinafter referred to as “Additional Rent,” and shall be
collectible as rent. The Annual Rent and Additional Rent shall be payable at
the office of SUBLANDLORD at the address herein contained or at such other
place or places as SUBLANDLORD shall from time to time give SUBTENANT written
notice. In the event that the New Index is not available by the Anniversary
Date, SUBTENANT shall pay the Annual Rent at the then current rate until such
New Index is available, and shall, with the next scheduled payment thereafter,
pay all amounts that would have otherwise been due had the New Index been
available.

 

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7.             USE.

 

(a)           The
Leased Premises shall be used only for (i) the operation of the Explosion
Business, including the explosion bonding of clad metals, and (ii) performance
of services pursuant to the Tolling Agreement (together, the “Permitted Use”). SUBTENANT
shall not use or occupy the Leased Premises, or permit the same to be used or
occupied, for any purpose other than the Permitted Use. In particular, SUBTENANT
shall have no rights to mine or extract minerals from any portion of the Leased
Premises. Only the Explosion Areas may be used for explosions.

 

(b)           In
the event SUBTENANT’s operations within the limestone mine situated on the
Leased Premises result in necessary removal of rocks from the Blue Stone Mine,
SUBTENANT shall pile said rocks so removed in a nearby place to be designated
by SUBLANDLORD for disposal by Owners. SUBTENANT shall have no right to the
rock thus removed nor to the proceeds therefrom. Owners and SUBLANDLORD shall
have the right of egress and ingress in order to remove such rocks at their own
risk.

 

(c)           SUBTENANT
acknowledges that the Blue Stone Mine can become damaged by overuse or improper
use, in which case the Blue Stone Mine may be required to be closed or the
frequency of explosions performed in the Blue Stone Mine may be required to be
limited. In order to prolong the life of the Blue Stone Mine, SUBTENANT agrees
to use no more than 17,500 lbs. of Explosive (as hereinafter defined) per
detonation. As used in this Sublease, “Explosive” means the ammonium nitrate
explosive material produced by SUBTENANT or such other materials that are
approved by SUBLANDLORD from time to time in accordance with the operating
procedures used by SUBTENANT, as amended from time to time by SUBTENANT in
consultation with and approval from SUBLANDLORD which 

 

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approval shall not be
unreasonably withheld (the “Procedures”). SUBTENANT shall not manufacture,
test, use, or destroy any chemical or explosive materials on the Leased
Premises, other than the Explosive identified in the Procedures, without the
express written consent of SUBLANDLORD, which consent shall not be unreasonably
withheld. SUBTENANT agrees to use and maintain the Blue Stone Mine in such a
condition that maintains and maximally prolongs its integrity and useful life,
provided, however, that SUBTENANT shall have no responsibility to SUBLANDLORD
for adverse effects to the integrity or useful life of the Blue Stone Mine
caused by (i) SUBTENANT’s use of Explosives as specified in this paragraph, or
(ii) SUBTENANT’s operations according to the Procedures. SUBTENANT agrees to
promptly notify SUBLANDLORD of any actions which it knows or reasonably
believes may result in, or is likely to have resulted in, soil or groundwater
contamination. In addition, SUBTENANT agrees to periodically inspect and repair
the Blue Stone Mine, including without limitation the underhangs in the Blue
Stone Mine, so that the Blue Stone Mine is (i) maintained in a safe, lawful
condition during the term of this Sublease, and (ii) in substantially the same
condition at the end of the term of this Sublease as it was at the commencement
date of the DuPont Sublease, subject to normal wear and tear.

 

(d)           SUBTENANT
acknowledges that hazards may be involved in conducting explosions in the Blue
Stone Mine, including providing the services under the Tolling Agreement. Accordingly,
SUBTENANT agrees to perform all work at the Leased Premises in a careful and
workmanlike manner and to take all reasonably necessary precautions in the
processing, handling, transportation, and disposal of Explosives, to avoid
damage to property or pollution and in compliance with all applicable laws,
rules and regulations. In that 

 

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regard, SUBTENANT shall
provide security precautions reasonably required by SUBLANDLORD or Owners to
safely process, handle, transport, and dispose of the Explosives.

 

(e)           SUBLANDLORD
shall have the right to immediately require the suspension of the explosions on
the Leased Premises upon written notice to SUBTENANT, without liability on the
part of SUBLANDLORD to SUBTENANT, if at any time SUBLANDLORD in its reasonable
judgment determines that SUBTENANT has materially violated any material
provision of this Section 7. The right to conduct explosions should remain
suspended until SUBTENANT corrects such violation; provided that SUBTENANT
shall have a right of access to the Leased Premises to correct such violations.
If SUBTENANT fails to correct any such violation within the time periods set
forth in Section 13(a)(iii), an Event of Default shall exist.

 

8.             TAXES
AND ASSESSMENTS.

 

(a)           For
the purpose of this Sublease, the term “Taxes” shall mean all real estate taxes
and assessments, including substitutes therefor or supplements thereto,
assessed upon, levied against or imposed on the Leased Premises and any
improvements, fixtures, and equipment located thereon.

 

(b)           During
the term of this Sublease, SUBTENANT shall pay to SUBLANDLORD, as Additional
Rent, for each year during the term of this Sublease, any increase in the real
estate taxes levied against the Dunbar Facility over and above the amount of
said real estate taxes for the year 1995. Such payment shall be made to
SUBLANDLORD, who shall pay such increase in real estate taxes to Owners. It is
understood that, because this Sublease is not on a calendar year basis,
SUBTENANT’s payment of any increase in real estate 

 

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taxes levied against the
Dunbar Facility over and above the 1995 taxes will be made on a prorata basis.

 

(c)           SUBTENANT
shall pay any and all taxes on its personal property located on Leased Premises
directly to the taxing authority.

 

9.             REPAIR
AND MAINTENANCE. SUBTENANT shall have the right to construct, operate, and
maintain on the Leased Premises any and all improvements deemed necessary or
convenient in connection with the Permitted Use, and shall have the further right
at any time to remove any improvements, buildings or other structures of like
nature. Facilities, such as protective fencing and gates permanently installed,
electrical wiring and air-flow baffle walls are to be left in place at the
termination of this Sublease or removed by SUBTENANT at its expense, at
SUBLANDLORD’s option.

 

SUBTENANT agrees
that, at its sole cost and expense, it shall keep and maintain the surface area
of the Leased Premises (located adjacent to the entrance of the Blue Stone
Mine), including all improvements constructed thereon by SUBTENANT, in good
repair, replacement, and appearance during the term of this Sublease and will
with reasonable promptness make all structural and nonstructural, foreseen and
unforeseen, and ordinary and extraordinary changes and repairs of every kind
and nature which may be required to be made upon or in connection with Leased
Premises or any part thereof in order to keep and maintain Leased Premises in
such good repair, replacement and appearance, so that the Leased Premises are
in substantially the same condition at the end of the term of this Sublease as
they were at the commencement of this Sublease, subject to normal wear and tear.
Except as may be required pursuant to Section 12 herein, SUBLANDLORD shall not
be required to maintain, repair, or rebuild, or to make any alterations,
replacements, or renewals of any nature or description to 

 

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Leased Premises or any part thereof, whether ordinary
or extraordinary, structural or nonstructural, foreseen or unforeseen or to
maintain Leased Premises or any part thereof in any way, and except as may be
required pursuant to Section 12 herein, SUBTENANT hereby expressly waives any
right to make repairs or replacements at the expense of SUBLANDLORD which may
be provided for in any statute or law in effect at the time of the execution of
this Sublease or any statute or law which may thereafter be enacted.

 

10.           ACCESS-LEASED
PREMISES, RECORDS AND INSPECTIONS. SUBLANDLORD or SUBLANDLORD’s agents and
designees, upon notice to SUBTENANT, shall have the right to enter upon the
Leased Premises, including without limitation, the underground passages of the
Blue Stone Mine, at all reasonable times with reasonable advance notice to
SUBTENANT, to examine same or to perform any obligation it may have hereunder
or with SUBLANDLORD, including without limitation, cleanup of residue from the
underground passages of the Blue Stone Mine as provided in Section 12.5; or for
any reasons pursuant to any rights under the Tolling Agreement; provided such
access rights shall not interfere unreasonably with SUBTENANT’s operation of
the Leased Premises or performance of its obligations under the Tolling
Agreement.

 

SUBTENANT agrees
to maintain a record of all explosions performed at the Leased Premises in such
form and content as SUBLANDLORD reasonably determines from time to time by
notice to SUBTENANT. Such records shall include, without limitation, (a) the
type and quantity of explosives, and (b) the results of inspections of the
Leased Premises and scaling operations inside the Blue Stone Mine. SUBLANDLORD
or its designee shall have the right from time to time, at SUBLANDLORD’s cost,
to inspect and verify the records kept by SUBTENANT in connection with this
Sublease.

 

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11.           REPRESENTATIONS
AND WARRANTIES. Except as expressly provided in this Sublease, SUBLANDLORD
makes no representations, warranties, or guarantees to SUBTENANT, either
expressed or implied, with respect to the subject matter of this Sublease. SUBLANDLORD
makes no representations or warranties as to the condition of the underground
passages that are not part of the Leased Premises. SUBLANDLORD warrants and
represents (a) that the MASTER LEASE is subsisting and is in full force and
effect, (b) SUBLANDLORD is not in default under the MASTER LEASE, (c) all rents
and charges due thereunder are and shall be paid in accordance with the terms
thereof, and (d) that SUBLANDLORD has full right, power and authority to enter
into this Sublease. SUBLANDLORD is aware of no reason why the Leased Premises
cannot be used by SUBTENANT for the Permitted Use. SUBLANDLORD covenants that,
so long as SUBTENANT is not in breach of the terms and conditions of this
Sublease, SUBTENANT shall peaceably and quietly have, hold, and enjoy the
Leased Premises for the term hereof and any extensions to the term. Except as
expressly provided herein, SUBLANDLORD covenants and agrees faithfully to
observe and perform all of the terms, covenants, and conditions of the MASTER
LEASE on the part of SUBLANDLORD to be performed with respect to the Leased
Premises (except as required to be performed by SUBTENANT hereunder), and
neither to do nor cause to be done, nor suffer, nor permit any act or thing to
be done which would or might cause the MASTER LEASE TO BE canceled, terminated,
forfeited, or surrendered or which shall make SUBLANDLORD liable for any
damages, claims, or penalties under the provisions of the MASTER LEASE. SUBLANDLORD
covenants and agrees to keep the MASTER LEASE in good standing for the term
hereof and any extension hereof.

 

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EACH
PARTY DISCLAIMS AND WAIVES ALL OTHER WARRANTIES NOT EXPRESSLY SET FORTH HEREIN
INCLUDING ANY IMPLIED WARRANTIES AND WARRANTIES IMPOSED BY LAW, INCLUDING
WARRANTIES OF MERCHANTABILITY, AND WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE.

 

The parties
acknowledge that the MASTER LEASE has not been signed by all Owners of the
Dunbar Facility. SUBLANDLORD has no reason to believe that any of such Owners
will disturb SUBTENANT’s use or adversely affect SUBTENANT’s peaceful, quiet
enjoyment and possession of the Leased Premises. In the event that any of such
Owners’ attempt to disturb SUBTENANT’s use of the Leased Premises or adversely
impact SUBTENANT’s peaceful, quiet enjoyment and possession of the Leased
Premises, SUBLANDLORD and SUBTENANT shall cooperate to promptly seek to
discontinue the acts of such Owners.

 

12.           INDEMNIFICATION
AND LIMITATION OF LIABILY. The following indemnification and limitations of
liability shall apply:

 

12.1         (a)           SUBTENANT
agrees to defend, indemnify and hold harmless SUBLANDLORD (including, its
officers, directors, employees, subcontractors and agents) from and against any
and all liability, claims, injuries (including death resulting therefrom),
property damage, fine, penalty or assessment by any public agency, cost or
expense (including costs of defense, settlement and reasonable attorneys’
fees), which (1) except as provided in Section 12.2 below, are solely and
directly caused by the SUBTENANT’s acts including without limitation, acts of
negligence, gross negligence or willful misconduct of SUBTENANT, its agents,
employees or subcontractors associated with, or arising out of the use of the
Leased Premises under this Sublease or the Dupont Sublease, or the performance
of this 

 

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Sublease or the Dupont
Sublease, including any failure to comply with any pertinent Federal, State or
local law, statute, regulation, rule, or (2) are caused jointly by acts of
SUBTENANT including without limitation, negligence, gross negligence or willful
misconduct by SUBTENANT, its agents, employees or subcontractors and any acts
by any third party or parties. The term “liability” employed in the preceding
sentence, and SUBTENANT’s indemnification obligation, includes any strict
liability imposed at law, asserted against SUBLANDLORD. SUBTENANT’s obligations
under this Section 12.1(a) shall survive the expiration or termination of the
Dupont Sublease or this Sublease.

 

(b)           SUBLANDLORD
agrees to defend, indemnify and hold harmless SUBTENANT (including its
officers, directors, employees and agents) from and against any and all
liability, claim, injury (including death resulting therefrom), property
damage, fine, penalty or assessment by any public agency, cost or expense
(including costs of defense, settlement and reasonable attorneys’ fees), which
(1) are solely and directly caused by the negligence, gross negligence of
willful misconduct of SUBLANDLORD, its agents, employees or subcontractors
associated with, or arising from SUBLANDLORD’s obligations under this
Agreement, or (2) are caused jointly by acts of SUBLANDLORD including without
limitation negligence, gross negligence or willful misconduct by SUBLANDLORD,
its agents, employees or subcontractors and any acts by any third party or
parties. The term “liabilities” employed in the preceding sentence, and
SUBLANDLORD’s indemnification obligation, includes any strict liability imposed
at law asserted against SUBTENANT.

 

(c)           Where acts
or omissions of the nature referred to in paragraphs 12.1(a) and (b) by both
SUBTENANT and SUBLANDLORD (including their respective officers, directors,
employees, subcontractors or agents) have caused any liabilities, 

 

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damages, fines, penalties, costs, claims, demands and
expenses, whether or not a third party’s acts or omissions also were causal
(other than those arising out of or relating to any date prior to the date of
this Sublease), SUBTENANT and SUBLANDLORD shall contribute to their common
liability a pro rata share based upon the relative degree of fault of each. In
such a case the parties shall share all costs equally until (i) there is a
final court judgment allocating fault between the parties, or (ii) the parties
agree to such an allocation.

 

SUBLANDLORD’s indemnity shall not extend to acts or
omissions of SUBLANDLORD or any third party with respect to the underground
passages of the Blue Stone Mine that are not part of the Leased Premises.

 

(d)           The
provisions of this paragraph 12 shall survive the termination of this Sublease.

 

12.2         Notwithstanding
paragraph 12.1, with respect to any environmental issue (e.g., any
environmental contamination, hazardous wastes or substances, or compliance with
any environmental law, regulation, and/or ordinance), the following
indemnifications shall apply:

 

(a)  Except as
expressly provided in this Agreement, SUBTENANT agrees to defend, indemnify and
hold harmless SUBLANDLORD (including, its officers, directors, employees and
agents) from and against all liabilities (including third party liabilities)
losses, claims, damages, property damage, demands, judgments, fines or
penalties insofar as not prohibited by law, costs and expenses (including,
without limitation, clean-up costs and reasonable attorneys’ fees and
disbursements) which arise, or are alleged to arise from and after July 22,
1996, from or in connection with (1) SUBTENANT’s violation of, or SUBTENANT’s
non-compliance with, any federal, state or local environmental law relating to 

 

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or arising out of
SUBTENANT’s operation of the Explosion Business or operations under the Tolling
Agreement at the Leased Premises. The foregoing shall survive the expiration or
termination of this Sublease.

 

(b)  Except as
provided for in Section 12.5, SUBLANDLORD agrees to defend, indemnify and hold
harmless SUBTENANT (including its officers, directors, employees, agents and
partners, and the respective officers, directors, employees and agents of said
partners) from and against all liabilities (including third party liabilities),
losses, claims, damages, property damage, demands, judgments, fines or
penalties insofar as not prohibited by law, costs and expenses (including,
without limitation, clean-up costs and reasonable attorneys’ fees and
disbursements) which arise, or are alleged to arise after the date hereof and
from or in connection with (1) SUBLANDLORD’s violation of any federal, state or
local environmental law, or (2) SUBLANDLORD’s non-compliance with any federal,
state or local environmental law relating to the Leased Premises.

 

12.3         Notwithstanding
any other provisions in this Sublease to the contrary, neither party nor its
shareholders, partners, agents, contractors, vendors or their employees, shall
be liable to the other for consequential or indirect loss or damage, including
loss of profit, loss of use, loss of operating time, loss of revenue, increased
costs of producing revenues, cost of capital, or loss of goodwill, even if such
party has been advised of the possibility of such damages. The parties further
agree that the waivers and disclaimers of liability, indemnities, releases from
liability, sole remedy provisions and limitations on liability expressed in
this Sublease shall survive termination or expiration of this Sublease, and
shall apply (unless otherwise expressly indicated), whether in contract,
equity, tort or otherwise, even in the event of the fault, negligence,
including sole negligence, strict liability, or breach of 

 

18

 

warranty of the party
indemnified, released or whose liabilities are limited, and shall extend to the
partners, contractors, subcontractors, suppliers, directors, officers and
employees, agents and related or affiliated entities of such party, and their
partners, directors, officers and employees.

 

12.4         If
the expiration or earlier termination of this Sublease activates any
environmental law requiring audits and/or filings, (except as provided in
Paragraph 12.5 and 12.6 below) SUBTENANT shall bear the cost of any such audits
and filings required by such laws insofar as they effect the Leased Premises
unless such termination is due to the fault of the SUBLANDLORD.

 

12.5         SUBLANDLORD
and SUBTENANT acknowledge and agree that Dupont has been conducting explosive
operations in the underground passages of the Leased Premises for thirty (30)
years prior to the date of the Dupont Sublease, and that such underground
passages contain residue resulting from the detonation of Explosives or other
explosive materials (the “Explosive Residue”). Dupont has agreed to remove and
dispose of the Explosive Residue at a reasonable time prior to expiration or
termination of the MASTER LEASE, or as required by law, whichever is earlier. Dupont
shall in consultation with SUBTENANT prepare a plan for removal and disposal of
the Explosive Residue. Dupont and SUBTENANT agree to share the costs and
expenses of removal and disposal of the Explosive Residue pro rata based on the
number of years that the parties have been operating at the Leased Premises. The
parties acknowledge that SUBTENANT may, at SUBTENANT’s option and at
SUBTENANT’s cost and expense, partially remove and dispose of the Explosive
Residue in order to facilitate operations of the Permitted Use at the Leased
Premises. SUBLANDLORD shall have no responsibility for (a) the presence of the
Explosive Residue in the underground passages of the Leased Premises, or (b)
any removal and disposal of Explosive Residue. 

 

19

 

SUBTENANT shall indemnify
SUBLANDLORD for SUBTENANT’s obligation with respect to the foregoing to the
full extent set forth in Section 12.1.

 

13.           DEFAULT.

 

(a)           Any
of the following occurrences, conditions or acts shall constitute an “Event of
Default” under this Sublease:

 

(i)            If
SUBTENANT defaults in making payment when due of any installment of Annual Rent,
Additional Rent or other amount payable hereunder by SUBTENANT to SUBLANDLORD,
and such default continues for a period of fifteen (15) days after SUBLANDLORD
shall have given notice to SUBTENANT specifying such default;

 

(ii)           If
SUBTENANT makes an assignment of this Sublease or sublets all or a portion of
the Leased Premises, except as is provided in Paragraph 17 herein; or

 

(iii)          If
SUBTENANT defaults in the observance or performance of any provision of this
Sublease (other than those provisions referenced hereinabove under subparagraph
(a)(i) and (ii)), or fails to take the action required by Section 7, and such
default continues for a period of thirty (30) days after SUBLANDLORD shall have
given notice to SUBTENANT specifying such default; provided, however, if such
default cannot be wholly cured within such thirty (30) day period, then
SUBTENANT shall not be deemed to be in default so long as SUBTENANT has
commenced the cure of such default within said thirty (30) day period and
continues, with due diligence, to prosecute said cure;

 

(b)           If
an Event of Default shall occur, the following provisions shall apply and
SUBLANDLORD shall have, in addition to all other rights and remedies available
at law or in equity, the rights and remedies set forth therein, which rights
and remedies may be exercised upon or at any time following the occurrence of
an Event of Default unless, prior to 

 

20

 

such exercise,
SUBLANDLORD shall agree in writing with SUBTENANT that the Event(s) of Default
has been cured by SUBTENANT in all respects.

 

(i)            Acceleration of Rent.
By notice to SUBTENANT, SUBLANDLORD shall have the right to accelerate all
Annual Rent and any other amount due hereunder and otherwise payable in
installments over the remainder of the Term, and, at SUBLANDLORD’s option, any
other Additional Rent to the extent that such Additional Rent can be determined
and calculated to a fixed sum; and the amount of accelerated rent to the
termination date, without further notice or demand for payment, shall be due
and payable by SUBTENANT within five (5) days after SUBLANDLORD has so notified
SUBTENANT, such amount collected from SUBTENANT shall be discounted to present
value using an interest rate of six percent (6%) per annum. Additional Rent
which has not been included, in whole or in part, in accelerated rent, shall be
due and payable by SUBTENANT during the remainder of the Term, in the amounts
and at the times otherwise provided for in this Sublease.

 

Notwithstanding
the foregoing or the application of any rule of law based on election of
remedies or otherwise, if SUBTENANT fails to pay the accelerated rent in full
when due, SUBLANDLORD thereafter shall have the right by notice to SUBTENANT,
(i) to terminate SUBTENANT’s further right to possession of the Leased Premises
and (ii) to terminate this Sublease under subparagraph (b) below; and if
SUBTENANT shall have paid part but not all of the accelerated rent, the portion
thereof attributable to the period equivalent to the part of the Term remaining
after SUBLANDLORD’s termination of possession or termination of this Sublease
shall be applied by SUBLANDLORD against SUBTENANT’s obligations owing to
SUBLANDLORD, as determined by the applicable provisions of subparagraphs (c) and
(d) below.

 

21

 

(ii)           Termination of Sublease.
By notice to SUBTENANT, SUBLANDLORD shall have the right to terminate this
Sublease as of a date specified in the notice of termination and in such case,
SUBTENANT’s rights, including any based on any option to renew, to the possession
and use of the Leased Premises shall end absolutely as of the termination date;
and this Sublease shall also terminate in all respects except for the
provisions hereof regarding SUBLANDLORD’s damages and SUBTENANT’s liabilities
arising prior to, out of and following the Event of Default and the ensuing
termination.

 

Following
such termination and the notice of same provided above (as well as upon any
other termination of this Sublease by expiration of the Term or otherwise)
SUBLANDLORD immediately shall have the right to recover possession of the
Leased Premises; and to that end, SUBLANDLORD may enter the Leased Premises and
take possession, without the necessity of giving SUBTENANT any notice to quit
or any other further notice, with or without legal process or proceedings, and
in so doing SUBLANDLORD may remove SUBTENANT’s property (including any
improvements or additions to the Leased Premises which SUBTENANT made, unless
made with SUBLANDLORD’s consent which expressly permitted SUBTENANT to not
remove the same upon expiration of the Term), as well as the property of others
as may be in the Leased Premises, and make disposition thereof in such manner
as SUBLANDLORD may deem to be commercially reasonable and necessary under the
circumstances.

 

(c)           Subtenant’s Continuing Obligations/Sublandlord’s Reletting
Rights.

 

(i)            Unless
and until SUBLANDLORD shall have terminated this Sublease under subparagraph
(b) above, SUBTENANT shall remain fully liable and responsible to perform all
of the covenants and to observe all the conditions of this Sublease 

 

22

 

throughout the
remainder of the Term to the early termination date; and, in addition,
SUBTENANT shall pay to SUBLANDLORD, upon demand and as Additional Rent, the
total sum of all damages in (d) below, as SUBLANDLORD incurs, because of any
Event of Default having occurred.

 

(ii)           If
SUBLANDLORD either terminates SUBTENANT’s right to possession without
terminating this Sublease or terminates this Sublease and SUBTENANT’s leasehold
estate as above provided, then, subject to the provisions below, SUBLANDLORD
shall have the unrestricted right to relet the Leased Premises or any part(s)
thereof to such tenant(s) on such provisions and for such period(s) as SUBLANDLORD
may deem appropriate. If SUBLANDLORD relets the Leased Premises after such a
default, the costs recovered from SUBTENANT shall be reallocated to take into
consideration any additional rent which SUBLANDLORD receives from the new
tenant which is in excess to that which was owed by SUBTENANT.

 

(d)           Sublandlord’s Damages.

 

(i)            Upon
the occurrence of an Event of Default, the damages which SUBLANDLORD shall be
entitled to recover from SUBTENANT shall be the sum of:

 

(A)          all
Annual Rent and Additional Rent accrued and unpaid as of the termination date;
and

 

(B)           (1)  all costs and
expenses incurred by SUBLANDLORD in recovering possession of the Leased
Premises, including removal and storage of SUBTENANT’s property, (2) the costs
and expenses of restoring the Leased Premises to the condition in which the
same were to have been surrendered by SUBTENANT as of the expiration of the
Term, and (3) the costs of reletting commissions; and

 

23

 

(C)           all
Annual Rent and Additional Rent (to the extent that the amount(s) of Additional
Rent has been then determined) otherwise payable by SUBTENANT over the
remainder of the Term as reduced to present value.

 

Less deducting
from the total determined under subparagraphs (A), (B) and (C) all Annual Rent
and all other Additional Rent to the extent determinable as aforesaid, (to the
extent that like charges would have been payable by SUBTENANT) which
SUBLANDLORD receives from other tenant(s) by reason of the leasing of the
Leased Premises or part during or attributable to any period falling within the
otherwise remainder of the Term.

 

(ii)           The
damage sums payable by SUBTENANT under the preceding provisions of this
paragraph (d) shall be payable on demand from time to time as the amounts are
determined; and if from SUBLANDLORD’s subsequent receipt of rent as aforesaid
from reletting, there be any excess payment(s) by SUBTENANT by reason of the
crediting of such rent thereafter received, the excess payment(s) shall be
refunded by SUBLANDLORD to SUBTENANT, without interest.

 

(iii)          SUBLANDLORD
may enforce and protect the rights of SUBLANDLORD hereunder by a suit or suits
in equity or at law for the specific performance of any covenant or agreement
contained herein, and for the enforcement of any other appropriate legal or
equitable remedy, including, without limitation, injunctive relief, and for
recovery of all moneys due or to become due from SUBTENANT under any of the
provisions of this Sublease.

 

(e)           Sublandlord’s
Right to Cure. Without limiting the generality of the foregoing, if
SUBTENANT shall be in default in the performance of any of its obligations
hereunder, SUBLANDLORD, without being required to give SUBTENANT any notice or
opportunity to cure, may (but shall not be obligated to do so), in addition to
any other rights it 

 

24

 

may have in law or in
equity, cure such default on behalf of SUBTENANT, and SUBTENANT shall reimburse
SUBLANDLORD upon demand for any sums paid or costs incurred by SUBLANDLORD in
curing such default, including reasonable attorneys’ fees and other legal
expenses, together with interest at 10% per annum Rate from the dates of
SUBLANDLORD’s incurring of costs or expenses.

 

SUBTENANT
further waives the right to any notices to quit as may be specified in the
SUBLANDLORD and SUBTENANT Act of Pennsylvania, Act of April 6, 1951, as
amended, or any similar or successor provision of law, and agrees that five (5)
days notice shall be sufficient in any case where a longer period may be
statutorily specified.

 

(i)            Additional
Remedies. In addition to, and not in lieu of any of the foregoing rights
granted to SUBLANDLORD:WHEN THIS SUBLEASE OR
TENANT’S RIGHT OF POSSESSION SHALL BE TERMINATED BY COVENANT OR CONDITION
BROKEN, OR FOR ANY OTHER REASON, EITHER DURING THE TERM OF THIS SUBLEASE OR ANY
RENEWAL OR EXTENSION THEREOF, AND ALSO WHEN AND AS SOON AS THE TERM HEREBY
CREATED OR ANY EXTENSION THEREOF SHALL HAVE EXPIRED, IT SHALL BE LAWFUL FOR ANY
ATTORNEY AS ATTORNEY FOR TENANT TO FILE AN AGREEMENT FOR ENTERING IN ANY
COMPETENT COURT AN ACTION TO CONFESS JUDGMENT IN EJECTMENT AGAINST TENANT AND
ALL PERSONS CLAIMING UNDER SUBTENANT, WHEREUPON, IF SUBLANDLORD SO DESIRES, A
WRIT OF EXECUTION OR OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT
OF PROCEEDINGS, WHATSOEVER, AND PROVIDED THAT IF FOR ANY REASON AFTER SUCH
ACTION SHALL HAVE BEEN COMMENCED THE 

 

25

 

SAME
SHALL BE DETERMINED AND THE POSSESSION OF THE PREMISES HEREBY DEMISED REMAIN IN
OR BE RESTORED TO SUBTENANT, SUBLANDLORD SHALL HAVE THE RIGHT UPON ANY
SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OF THIS SUBLEASE AS
HEREINBEFORE SET FORTH, TO BRING ONE OR MORE ACTION OR ACTIONS AS HEREINBEFORE
SET FORTH TO RECOVER POSSESSION OF THE SAID PREMISES.

 

In any
action to confess judgment in ejectment, SUBLANDLORD shall first cause to be
filed in such action an affidavit made by it or someone acting for it setting
forth the facts necessary to authorize the entry of judgment, of which facts
such affidavit shall be conclusive evidence, and if a true copy of this
Sublease (and of the truth of the copy such affidavit shall be sufficient
evidence) be filed in such action, it shall not be necessary to file the
original as a warrant of attorney, any rule of Court, custom or practice to the
contrary notwithstanding.

 

                    (INITIAL).
SUBTENANT WAIVER. SUBTENANT SPECIFICALLY ACKNOWLEDGES THAT SUBTENANT HAS
VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVED CERTAIN DUE PROCESS RIGHTS TO A
PREJUDGMENT HEARING BY AGREEING TO THE TERMS OF THE FOREGOING PARAGRAPHS
REGARDING CONFESSION OF JUDGMENT IN EJECTION. SUBTENANT FURTHER SPECIFICALLY
AGREES THAT IN THE EVENT OF DEFAULT, SUBLANDLORD MAY PURSUE MULTIPLE REMEDIES
INCLUDING OBTAINING POSSESSION PURSUANT TO A JUDGMENT BY CONFESSION OF EJECTION
AND ALSO OBTAINING A MONEY JUDGMENT FOR PAST DUE AND 

 

26

 

ACCELERATED
AMOUNTS AND EXECUTING UPON SUCH JUDGMENT. SUBTENANT SPECIFICALLY WAIVES ANY
CLAIM AGAINST SUBLANDLORD AND SUBLANDLORD’S COUNSEL FOR VIOLATION OF
SUBTENANT’S CONSTITUTIONAL RIGHTS IN THE EVENT THAT EJECTION IS CONFESSED
PURSUANT TO THIS SUBLEASE.

 

(f)            Interest on Damage Amounts.
Any sums payable by SUBTENANT hereunder, which are not paid after the same
shall be due, shall bear interest from that day until paid at the rate of four
(4%) percent over the then Prime Rate as published daily under the heading
“Money Rates” in The Wall Street Journal, unless such rate be usurious as
applied to SUBTENANT, in which case the highest permitted legal rate shall
apply (the “Default Rate”).

 

(g)           SUBLANDLORD’s Statutory Rights.
SUBLANDLORD shall have all rights and remedies now or hereafter existing at law
or in equity with respect to the enforcement of SUBTENANT’s obligations
hereunder and the recovery of the Leased Premises. No right or remedy herein
conferred upon or reserved to SUBLANDLORD shall be exclusive of any other right
or remedy, but shall be cumulative and in addition to all other rights and
remedies given hereunder or now or hereafter existing at law. SUBLANDLORD shall
be entitled to injunctive relief in case of the violation, or attempted or
threatened violation, of any covenant, agreement, condition or provision of
this Sublease, or to a decree compelling performance of any covenant,
agreement, condition or provision of this Sublease.

 

(h)           Remedies Not Limited.
Nothing herein contained shall limit or prejudice the right of SUBLANDLORD to
exercise any or all rights and remedies available to SUBLANDLORD by reason of
default or to prove for and obtain in proceedings under any 

 

27

 

bankruptcy or insolvency
laws, an amount equal to the maximum allowed by any law in effect at the time when,
and governing the proceedings in which, the damages are to be proved, whether
or not the amount be greater, equal to, or less than the amount of the loss or
damage referred to above.

 

(i)            No Waiver by SUBLANDLORD.
No delay or forbearance by SUBLANDLORD in exercising any right or remedy
hereunder, or SUBLANDLORD’s undertaking or performing any act or matter which
is not expressly required to be undertaken by SUBLANDLORD shall be construed,
respectively, to be a waiver of SUBLANDLORD’s rights or to represent any
agreement by SUBLANDLORD to undertake or perform such act or matter thereafter.
Waiver by SUBLANDLORD of any breach by SUBTENANT of any covenant or condition
herein contained (which waiver shall be effective only if so expressed in
writing by SUBLANDLORD) or failure by SUBLANDLORD to exercise any right or
remedy in respect of any such breach shall not constitute a waiver or
relinquishment for the future of SUBLANDLORD’s right to have any such covenant
or condition duly performed or observed by SUBTENANT, or of SUBLANDLORD’s
rights arising because of any subsequent breach of any such covenant or
condition nor bar any right or remedy of SUBLANDLORD in respect of such breach
or any subsequent breach. SUBLANDLORD’s receipt and acceptance of any payment from
SUBTENANT which is tendered not in conformity with the provisions of this
Sublease or following an Event of Default (regardless of any endorsement or
notation on any check or any statement in any letter accompanying any payment)
shall not operate as an accord and satisfaction or a waiver of the right of
SUBLANDLORD to recover any payments then owing by SUBTENANT which are not paid
in full, or act as a bar to the termination of this Sublease and the recovery
of the Leased Premises because of SUBTENANT’s previous default.

 

28

 

14.           INSURANCE.

 

(a)           SUBTENANT
shall at its expense obtain and maintain, or cause to be obtained and
maintained, insurance during the term of this Sublease. Comprehensive or
Commercial General Liability Insurance with bodily injury and property damage
combined single limits of at least Ten Million Dollars ($10,000,000) per
occurrence, with a deductible of not more than One Hundred Thousand Dollars
($100,000). Such insurance shall include, but not necessarily be limited to,
specific coverage for contractual liability encompassing the indemnification
provisions in Paragraph 12, broad form property damage liability, personal
injury liability, explosion and collapse hazard coverage, and products/completed
operations liability.

 

(b)           The
amounts of insurance required in this Paragraph 14 may be satisfied by
SUBTENANT purchasing primary coverage in the amounts specified or by buying a
separate excess Umbrella Liability policy together with lower limit primary
underlying coverage. The structure of the coverage is SUBTENANT’s option, so
long as the total amount of insurance meets the requirements of this Paragraph
14. The coverages described above and any Umbrella or Excess coverage should be
“occurrence” form policies. The insurance requirements listed above are minimum
requirements. SUBLANDLORD and SUBTENANT shall annually renegotiate these
minimum insurance requirements to reflect increases in insured values where
applicable. Further, neither failure to comply nor full compliance by either
party with the insurance provisions of this Agreement shall limit or relieve
SUBTENANT OR SUBLANDLORD from indemnifying and holding harmless SUBLANDLORD OR
SUBTENANT, as the case may be, in compliance with the provisions of this
Agreement.

 

29

 

(c)           SUBLANDLORD
shall at its expense obtain and maintain, or cause to be obtained and
maintained, insurance covering its interests during the term of this Sublease.

 

(d)           Upon
SUBLANDLORD’s request, certificates of insurance evidencing the coverages
required above of SUBTENANT shall be filed with SUBLANDLORD. Such certificates
shall provide that the insurer will give SUBLANDLORD thirty (30) days advance
notice of any changes in or cancellation of coverage. SUBTENANT shall name
SUBLANDLORD as an additional insured under all policies of insurance relating
to the Leased Premises

 

Neither failure of
SUBTENANT or SUBLANDLORD to comply with any or all of the insurance provisions
of the Agreement, nor the failure to secure endorsements on the policies as may
be necessary to carry out the terms and provisions of the Agreement, shall be
construed to limit or relieve SUBTENANT or SUBLANDLORD from any of its
obligations under the Agreement, including the Insurance Article.

 

15.           WAIVER
OF SUBROGATION. Each party hereto, and anyone claiming through or under
them by way of subrogation, waives and releases any cause of action it might
have against the other party and their respective employees, officers, members,
shareholders, partners, trustees and agents, on account of any loss or damage
that is insured against under any insurance policy required to be obtained
hereunder (to the extent that such loss or damage is recoverable under such
insurance policy) that covers the Leased Premises, SUBLANDLORD’s or SUBTENANT’s
fixtures, personal property, leasehold improvements or business and which names
SUBLANDLORD or SUBTENANT, as the case may be, as a party insured. Each party
hereto agrees that it will cause its insurance carrier to endorse all
applicable policies waiving the 

 

30

 

carrier’s right of
recovery under subrogation or otherwise against the other party. During any
period while such waiver of right of recovery is in effect, each party shall
look solely to the proceeds of such policies for compensation for loss, to the
extent such proceeds are paid under such policies.

 

16.           CASUALTY.
If, during the term of this Sublease, the Leased Premises, including the Blue
Stone Mine, shall be destroyed, or so injured or damaged by fire, the elements,
acts of God, or other insurable casualty, structural defects or from any other
cause so as to be unfit for occupancy and not be economically feasible for the
operation of the Explosion Business, this Sublease shall, at SUBTENANT’s
option, terminate and SUBTENANT shall not be liable to pay rent after such
occurrence. If the injury or damage is such that SUBTENANT notifies SUBLANDLORD
as soon as reasonably possible (but in no event more than ninety (90) days
after such injury) that the SUBTENANT is diligently pursuing plans for
restoration of the Leased Premises and within ninety (90) working days from the
delivery of such notice, either restores the Leased Premises, or, if such
restoration cannot be completed in ninety (90) working days, commences and
diligently pursues such restoration, this Sublease shall not be terminated but
the rent shall be suspended as to that portion of the Leased Premises rendered
untenantable or unsuitable for the operation of SUBTENANT’s business and in
such case any rent paid in advance but unearned shall be refunded to SUBTENANT.
If SUBTENANT does not notify SUBLANDLORD within the time hereinabove specified
or if as soon as possible (but in no event longer than ninety (90) working days
after the date of the injury), SUBTENANT (a) is not diligently pursuing the
necessary repairs, or (b) the Parties agree that the repairs cannot be
completed within one hundred eighty (180) days following the date of such
notice, then this 

 

31

 

Sublease may immediately
be terminated by SUBLANDLORD and neither party shall have any further
obligations hereunder, except those specifically intended to survive termination.

 

17.           QUIET
ENJOYMENT. SUBLANDLORD covenants and warrants that, as long as no Event of
Default shall have occurred and be continuing under this Sublease, SUBLANDLORD
or persons claiming by, through or under SUBLANDLORD will take no action or
neglect to take any action which interferes with the peaceful and quiet
enjoyment and possession of the Leased Premises by SUBTENANT for the term
hereof and any extensions to the term.

 

18.           ASSIGNMENT
AND SUBLETTING.

 

(a)           SUBTENANT
shall have the right to assign its rights and duties under this Sublease,
either as collateral security or to an affiliate of SUBTENANT created in
connection with the financing arrangements entered into by SUBTENANT or
otherwise, by notifying SUBLANDLORD of such assignment. In the event of any
such assignment, SUBTENANT shall continue to remain primarily liable for
performance hereunder for the term of this Sublease, including any renewals.
“Affiliate” means an entity controlled by or under the control of SUBTENANT or
SUBTENANT’s parent, SNPE, Inc. “Control” or “Controlled” means ownership of
more than 50% of the ownership interests of such entity or the ability to elect
a majority of the board or other governing body of such entity.

 

(b)           Except
as provided in this Sublease, neither party may assign this Sublease in whole
or in part, or any rights granted hereunder, without the prior written consent
of the other party, which consent shall not be unreasonably withheld so long as
no Event of Default shall have occurred and then be continuing. Except as
provided in this Sublease, any transfer, assignment, delegation or attempted
transfer, assignment or delegation under this Sublease or of 

 

32

 

any of such rights or
duties herein granted or imposed whether voluntary, by operation of law or
otherwise, without consent in writing, shall cause this Sublease to be
terminated at the election of the party whose written consent has not been
obtained. SUBTENANT shall not, without the prior written consent of SUBLANDLORD,
sublet any portion of the Leased Premises. Subject to the foregoing, this
Sublease shall be binding upon and shall inure to the benefit of the parties
and their successors and assigns.

 

Notwithstanding
anything to the contrary contained herein, SUBLANDLORD may assign this Sublease
to the purchaser of all or substantially all of SUBLANDLORD’s Business.

 

19.           GOVERNING
LAW. This Sublease and the performance thereof shall be governed,
interpreted, construed and regulated by the laws of the Commonwealth of
Pennsylvania.

 

20.           CONSENT
TO JURISDICTION. SUBTENANT hereby consents to the exclusive jurisdiction of
the state and federal courts located in any county in the Commonwealth of
Pennsylvania to resolve any dispute arising under this Sublease or in connection
with SUBTENANT’s use, occupancy or enjoyment of the Leased Premises.

 

21.           SURRENDER.
SUBTENANT hereby agrees to surrender the Leased Premises in good condition and
repair, normal wear and tear excepted. Notwithstanding anything herein to the
contrary (except if required by law), SUBTENANT shall be required to have
performed a Phase 1 environmental audit upon the termination or expiration of
this Sublease at its sole expense. SUBTENANT shall have no right to hold over
beyond the expiration of the Term and in the event SUBTENANT shall fail to
deliver possession of the Leased Premises as herein provided, such occupancy
shall not be construed to effect or constitute 

 

33

 

other than a tenancy at
sufferance. During any period of occupancy beyond the expiration of the Term
the amount of rent owed to SUBLANDLORD by SUBTENANT shall automatically become
one hundred fifty percent (150%) the Annual Rent as those sums are at that time
calculated under the provisions of the Sublease. If SUBTENANT fails to
surrender the space within thirty (30) days of the termination date,
SUBLANDLORD may elect to automatically extend the Term for an additional month
or additional year, at SUBLANDLORD’s option, with an Annual Rent of one hundred
and fifty percent (150%) the sum of the Annual Rent as those sums are at that
time calculated under the provisions of the Sublease. The acceptance of rent by
SUBLANDLORD or the failure or delay of SUBLANDLORD in notifying or evicting
SUBTENANT following the expiration or sooner termination of the Term shall not
create any tenancy rights in SUBTENANT and any such payments by SUBTENANT may
be applied by SUBLANDLORD against its costs and expenses, including attorney’s
fees incurred by SUBLANDLORD as a result of such holdover. The provisions of
this Paragraph shall survive the expiration or sooner termination of this
Sublease.

 

22.           AMENDMENT
AND RECORDATION. This Sublease may not be amended, supplemented, or
modified, except by an instrument in writing, signed by SUBLANDLORD and
SUBTENANT. This Sublease may not be recorded by either party provided that
either party may record a memorandum of lease of this Sublease.

 

23.           WAIVER.
Failure of SUBLANDLORD or SUBTENANT to complain of any act or omission on the
part of the other party, no matter how long the same may continue, shall not be
deemed to be a waiver by said party of any of its rights hereunder. No waiver
by SUBLANDLORD or SUBTENANT at any time, express or implied, of any breach of
any 

 

34

 

provision of this
Sublease shall be deemed a waiver of a breach of any other provision of this
Sublease or a consent to any subsequent breach of the same or any other
provision.

 

24.           BROKER.
Each party hereby represents and warrants to the other party that it has not
dealt with any real estate broker or finder in connection with the transaction
evidenced by this Sublease, and said party agrees to indemnify, defend and hold
harmless the other party from and against any threatened or asserted claims,
liabilities, losses or judgments (including reasonable attorneys’ fees and
disbursements) by any such broker or finder claiming to have dealt with the
indemnifying party. This provision shall survive the termination or expiration
of this Sublease.

 

25.           NOTICES.
Every notice, approval, consent or other communication required or permitted
under this Sublease shall be in writing, shall be deemed to have been duly
given three days after mailing by US Mail and or next day if by nationally
known overnight carrier for priority next day delivery, and shall be valid only
if either served personally on the party to whom notice is to be given, or
mailed to the party to whom notice is to be given, by first class registered or
certified mail, return receipt requested, or by nationally recognized overnight
carrier for next day priority delivery, in each case postage prepaid, and
addressed to the addressee at the address stated opposite its name below, or at
the most recent address specified by written notice given to the other party in
the manner provided in this Paragraph.

 

To SUBLANDLORD

Mypodiamond, Inc.

200 North Repauno Ave.

Gibbstown, NJ  08027

 

35

 

with a copy to:

 

Richard P. Eckman

Pepper Hamilton LLP

1201 Market Street

Suite 1600

Wilmington, DE 19801

 

To SUBTENANT

 

Dynamic Materials
Corporation

551 Aspen Ridge Drive

Lafayette, CO  80026

Attn:  Chief Executive Officer

 

26.           PARTIAL
INVALIDITY. If any term, covenant, condition or provision of this Sublease
or the application thereof to any person or circumstance shall, at any time or
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 held invalid or unenforceable, shall not be affected
thereby, and each term, covenant, condition and provision of this Sublease
shall be valid and be enforced to the fullest extent permitted by law. Any
provision of this Sublease which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent to
which it is held invalid or unenforceable, but any such invalidity or
unenforceability shall not invalidate or render unenforceable such provision in
any other jurisdiction.

 

27.           NO
PARTNERSHIP. Nothing in this Sublease or the transaction for which it is
written shall constitute or create a joint venture, partnership, agency or any
other similar arrangement between SUBLANDLORD and SUBTENANT, and neither party
is authorized to act as agent for the other party.

 

28.           CAPTIONS.
Titles or captions of Paragraphs contained in this Sublease are inserted only
as a matter of convenience and for reference, and in no way define, limit, 

 

36

 

extend, describe or
otherwise affect the scope or meaning of this Sublease or the intent of any
provision hereof. All Exhibits attached hereto shall be considered a part
hereof as though fully set forth herein.

 

29.           COUNTERPARTS.
The parties may execute this Sublease in two (2) or more counterparts, which
shall, in the aggregate, be signed by both the parties; and each counterpart
shall be deemed an original instrument as against any party who has signed it.

 

30.           SUCCESSION.
All of the covenants, agreements, conditions and undertakings of this Sublease
shall extend and inure to and be binding upon the successors and permitted
assigns of the respective parties hereto.

 

31.           WAIVER
OF JURY TRIAL. EACH PARTY KNOWINGLY WAIVES THEIR RIGHT TO A JURY TRIAL.

 

32.           THIRD
PARTY BENEFICIARIES. There are no third party beneficiaries to this
Sublease.

 

33.           TIME
OF THE ESSENCE. Time is of the essence under this Sublease.

 

37

 

IN WITNESS WHEREOF,
the parties hereunto have caused this Agreement to be executed on the day and
year first above written.

 

	
   

  	
  MYPODIAMOND,
  INC. 

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:
  

  	
   

  	
   

  
						

 

 

	
   

  	
  DYNAMIC
  MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

38Exhibit 10.3

 

 

July 29,
2004

 

Mypodiamond,
Inc.

Fayette
Business Park

1101 Mt.
View Drive

Smithfield,
PA 15478

 

To
SUBLANDLORD:

 

Pursuant
to Section 5 of the Sublease dated December 16, 2000 between Mypodiamond, Inc. and Dynamic Materials
Corporation (“DMC”), DMC hereby provides written notice of its intent to
exercise the extension option for a first additional term of five (5) years
that will extend the term of the Sublease from December 16, 2005 until 11:59 p.m., eastern standard time, on December
15, 2010.

 

 

	
  Sincerely,

  
	
   

  
	
  

  
	
   

  
	
  Richard A. Santa

  
	
  Vice President and CFO

  
	
   

  
	
   

  
	
  cc: Richard P. Eckman, Pepper Hamilton LLP

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