CERTAIN CONFIDENTIAL MATERIAL CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.
SUBLEASE
BETWEEN
E. I. du Pont de Nemours and Company
and
Dynamic Materials Corporation
SUBLEASE - TABLE OF CONTENTS
----------------------------
Paragraph Page
- --------- ----
1. MASTER LEASE . . . . . . . . . . . . . . . . . . . . . 2
2. LEASED PREMISES. . . . . . . . . . . . . . . . . . . . 3
3. TOLL MANUFACTURING AGREEMENT . . . . . . . . . . . . . 6
4. REQUIREMENTS OF PUBLIC AUTHORITY . . . . . . . . . . . 7
5. TERM . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. RENT . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. USE. . . . . . . . . . . . . . . . . . . . . . . . . . 11
8. TAXES AND ASSESSMENTS. . . . . . . . . . . . . . . . . 12
9. REPAIR AND MAINTENANCE . . . . . . . . . . . . . . . . 13
10. ACCESS-LEASED PREMISES, RECORDS AND INSPECTION . . . . 14
11. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 14
12. INDEMNIFICATION AND LIMITATION OF LIABILITY. . . . . . 16
13. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 26
14. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . 30
15. CASUALTY . . . . . . . . . . . . . . . . . . . . . . . 31
16. QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . 33
17. ASSIGNMENT AND SUBLETTING. . . . . . . . . . . . . . . 33
18. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . 34
19. SURRENDER. . . . . . . . . . . . . . . . . . . . . . . 34
20. AMENDMENT AND RECORDATION. . . . . . . . . . . . . . . 35
21. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . 35
22. BROKER . . . . . . . . . . . . . . . . . . . . . . . . 35
23. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . 36
24. PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . 37
25. NO PARTNERSHIP . . . . . . . . . . . . . . . . . . . . 38
26. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . 38
27. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . 38
28. SUCCESSION . . . . . . . . . . . . . . . . . . . . . . 38
EXHIBIT "A"--DUNBAR FACILITY AND LEASED PREMISES
SUBLEASE
--------
THIS SUBLEASE AGREEMENT (the "Lease"), entered into as of
this 22nd day of July, 1996, is by and between E. I. du Pont
de Nemours and Company, a Delaware corporation, having its principal
office and place of business at 1007 Market Street, Wilmington,
Delaware 19898 ("LANDLORD"), and Dynamic Materials Corporation a
Colorado corporation, having its principal office and place of
business at 551 Aspen Ridge Drive, Lafayette, Colorado 80026
("TENANT").
BACKGROUND
----------
(a) LANDLORD is the lessee of a tract of land situate in Fayette
County, Pennsylvania, known as the "Dunbar Facility" and;
(b) On the date hereof LANDLORD is selling to TENANT LANDLORD's
DETACLAD(R) explosion bonding clad metal business (the "Business"),
which business operates, in part, at the Leased Premises;
(c) The portion of the Dunbar Facility that includes the
approximate 27 acre operating area and the right to use the Blue Stone
Mine is referred to herein as the "Leased Premises".
(d) It is the intent of the parties hereto that LANDLORD shall
sublease the Leased Premises to TENANT upon and subject to the
conditions and limitations herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. MASTER LEASE. By lease dated October 19, 1985, by and
------------
between the Daniel Harper Estate, as owner (hereinafter referred to as
"Owner") and E. I. du Pont de Nemours and Company, as tenant ("MASTER
LEASE"), Owner leases the Dunbar Facility, comprising approximately
378 acres, to LANDLORD. This Lease is made subject to MASTER LEASE
except where the provisions of MASTER LEASE are inconsistent with the
provisions of this Lease in which case the provisions of this Lease
will control. Where in MASTER LEASE there are duties owed by Owner to
LANDLORD which are necessary for the proper enjoyment of this Lease,
LANDLORD will make all reasonable efforts to obtain the performance of
such duties by Owner in favor of TENANT, but LANDLORD shall not be
liable for the failure of Owner under the terms of MASTER LEASE to
perform said duties nor for the result of such failure. If Owner is
in default of its obligations and LANDLORD is unsuccessful in
obtaining Owner's performance, then upon TENANT's written request
LANDLORD shall assign to TENANT its rights to enforce the Master Lease
against Owner. TENANT hereby agrees to faithfully and promptly
perform all of the obligations and duties of LANDLORD to Owner under
MASTER LEASE with respect only to the Leased Premises except the
obligation of LANDLORD to pay rent, which obligation
2
LANDLORD agrees to continue to perform during the term hereof.
2. LEASED PREMISES. LANDLORD, for and in consideration of
---------------
the rents, covenants and agreements hereinafter reserved, mentioned
and contained on the part of TENANT, its successors and permitted
assigns, does hereby lease, rent and demise unto TENANT, and TENANT
does hereby take and hire, upon and subject to the conditions and
limitations hereinafter expressed, a portion of the Dunbar Facility
(the "Leased Premises").
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".
The Leased Premises is the portion of the Dunbar Facility
containing approximately 27 acres shown on the Plan attached hereto as
Exhibit "A" 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
3
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).
In addition, LANDLORD hereby leases, rents and demises unto
TENANT 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", 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. Except as expressly provided herein, TENANT 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 afore-described Leased Premises are leased subject to
the following:
(1) all matters of record concerning use of the Leased Premises
and any state of facts that an inspection of the Leased
Premises would disclose;
4
(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 TENANT'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;
(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
date first above written;
(6) all taxes, assessments, water meter and water charges, sewer
rents commencing as of the date first above written;
(7) existing oil and gas leases on the Leased Premises, under
which TENANT is not permitted to drill within the area
actually occupied by
5
the hereinbefore referred to Blue Stone Mine; and
(8) the right of the fee Owners to enter on said Leased Premises
to cut and remove timber.
3. TOLL MANUFACTURING AGREEMENT. TENANT and LANDLORD
----------------------------
have, on the date hereof, entered into a Tolling/Services Agreement
for Industrial Diamonds (the "Tolling Agreement").
4. REQUIREMENTS OF PUBLIC AUTHORITY. During the term of
--------------------------------
this Lease, TENANT, 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 Leased Premises or any part
thereof whether the same are in force at the commencement of the term
of this Lease or may in the future be passed, enacted or directed,
and, except as set forth in Section 12 herein, TENANT 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 because of the failure of TENANT to
comply with the covenants of this Paragraph. Without limiting the
foregoing, TENANT, at TENANT's cost and expense, shall obtain and
maintain all licenses, permits and approvals necessary to perform
6
explosion bonding operations and services under the Tolling Agreement
and Landlord shall take all reasonable actions to assist Tenant in
obtaining the same.
5. TERM. Unless terminated as provided herein, the term of
----
this Lease shall commence on the date hereof, said date being
hereinafter referred to as the "Commencement Date", and shall expire
on December 15, 2000, provided however, that this Lease may be
extended until December 15, 2005, by TENANT giving LANDLORD written
notice of such extension prior to August 1, 1999.
6. RENT. The rent for the Leased Premises shall be as
----
follows:
(a) From and after the Commencement Date and to the expiration
or earlier termination of the this Lease, TENANT shall pay monthly, in
advance, the following sums: From the date hereof to December 15,
2000 the yearly rental shall be [
]*; and (provided this Lease is extended) from December 15,
2000 to December 15, 2005, the yearly rental shall be [
]*, said rental to be payable in
advance in equal monthly installments before the first of each month,
prorated for partial months.
(b) All other sums, charges or amounts which TENANT has agreed
to pay to LANDLORD pursuant to this Lease shall be hereinafter
referred to as "Additional Rent". All rent and
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
7
Additional Rent shall be payable at the office of LANDLORD at the
address herein contained or at such other place or places as LANDLORD
shall from time to time give TENANT written notice.
7. USE.
---
(a) The Leased Premises shall be used only for (i) the operation
of the Business, including the explosion bonding of clad metals, and
(ii) performance of services pursuant to the Tolling Agreement.
TENANT shall not use or occupy the Leased Premises, or permit the same
to be used or occupied, for any other purpose. In particular, TENANT
shall have no rights to mine or extract minerals from any portion of
the Leased Premises. Only those portions of the mine designated on
the Plan may be used for explosions.
(b) In the event TENANT's operations within the limestone mine
situated on the Leased Premises result in necessary removal of rocks
from the mine, TENANT shall pile said rocks so removed in a nearby
place to be designated by LANDLORD for disposal by Owner. TENANT
shall have no right to the rocks thus removed nor to the proceeds
therefrom. Owner shall have the right of egress and ingress in order
to remove such rocks.
(c) TENANT acknowledges that the mine can become damaged by
overuse or improper use, in which case the mine may be required to be
closed or the frequency of explosions
8
performed in the mine may be required to be limited. In order to
prolong the life of the mine, TENANT agrees to use no more than
[ ]* of Explosive per detonation. "Explosive" means [
]*
on the date hereof. TENANT shall not manufacture, test, use or
destroy any chemical or explosive materials on the Leased Premises,
other than [
]* without the express written consent of LANDLORD,
which consent shall not be unreasonably withheld. TENANT agrees to
use and maintain the mine in such a condition that maintains and
prolongs its integrity and useful life, provided, however, that TENANT
shall have no responsibility to LANDLORD for adverse effects to the
integrity or useful life of the mine caused by (i) TENANT's use of
Explosives as specified in this paragraph, or (ii) TENANT's operations
according to [
]* as may be amended from time to time in
accordance with this Lease or the Tolling Agreement. TENANT agrees to
promptly notify LANDLORD of any actions which it knows or reasonably
believes could have resulted in soil or groundwater contamination. In
addition, TENANT agrees to periodically inspect and repair
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
9
the mine, including without limitation the underhangs in the mine, so
that the mine is (i) maintained in a safe condition during the term of
this Lease, and (ii) in substantially the same condition at the end of
the term of this Lease as it is on the date first above written,
subject to normal wear and tear.
(d) TENANT acknowledges that hazards may be involved in
conducting explosions in the mine, including providing the services
under the Tolling Agreement. Accordingly, TENANT 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. In that regard, TENANT shall provide
security precautions reasonably required to safely process, handle,
transport and dispose of the Explosives. In addition to the operating
procedures provided by LANDLORD to TENANT on the date hereof, LANDLORD
may provide TENANT with certain information regarding the operations
at the Leased Premises, including procedures for processing, handling,
transporting and disposal, as well as toxicological data. Such
supplemental information is provided without warranty or
representation as to its completeness or suitability.
LANDLORD shall have the right to immediately suspend this
Lease, without liability on the part of LANDLORD
10
to TENANT, if at any time LANDLORD in its reasonable judgment
determines that TENANT has materially violated any material provision
of this Article. The Lease shall remain suspended until TENANT
corrects such violation; provided that TENANT shall have a right of
access to the Leased Premises to correct such violations. Further, if
TENANT fails to correct any such violation within thirty (30) days
immediately following LANDLORD's notice to TENANT of the violation or
if TENANT is diligently attempting to cure such violation but is
unable to do so within such sixty (60) days following LANDLORD's
notice, then within sixty (60) days following LANDLORD's notice to
TENANT, LANDLORD has the right to terminate this Agreement.
8. TAXES AND ASSESSMENTS.
---------------------
(a) For the purposes of this Lease, 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 Lease, TENANT shall pay to LANDLORD,
as Additional Rent, for each year during the term of this Lease, any
increase in the real estate taxes levied against the Leased Premises
over and above the amount of said real estate taxes for the year 1995.
Such payment shall be made to LANDLORD, who shall pay such increase in
real estate
11
taxes to Owner. It is understood that, because this Lease is not on a
calendar year basis, TENANT's payment of any increase in real estate
taxes levied against the Leased Premises over and above the 1995 taxes
will be made on a pro rata basis.
(c) TENANT shall pay any and all taxes on its personal property
located on Leased Premises directly to the taxing authority.
9. REPAIR AND MAINTENANCE. TENANT shall have the right to
----------------------
construct, operate and maintain on the Leased Premises any and all
improvements deemed necessary or convenient in connection with its
operations and shall have the further right at any time to remove any
improvements, buildings or other structures of like nature within
ninety (90) days after expiration of this Lease. 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 Lease or removed by TENANT at its expense, at LANDLORD's
option.
TENANT 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 mine), including all improvements
constructed thereon by TENANT, in good repair, replacement and
appearance during the continuance of this Lease and will with
reasonable promptness
12
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 Lease as they are on the first date
written above, subject to normal wear and tear. Except as may be
required pursuant to Section 12 herein, LANDLORD shall not be required
to maintain, repair, or rebuild, or to make any alterations,
replacements or renewals of any nature or description to 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 TENANT hereby expressly waives
any right to make repairs or replacements at the expense of LANDLORD
which may be provided for in any statute or law in effect at the time
of the execution of this Lease or any statute or law which may
thereafter be enacted.
10. ACCESS - LEASED PREMISES, RECORDS AND INSPECTIONS.
-------------------------------------------------
LANDLORD or LANDLORD's agents and designees shall have the right to
enter upon the Leased Premises, including without limitation, the
underground passages of the
13
mine, at all reasonable times with reasonable advance notice to
TENANT, to examine same or to perform any obligation it may have
hereunder, including without limitation cleanup of residue from the
underground passages of the mine as provided in Section 12.5 and/or
removal of two (2) underground storage tanks as provided in Section
12.6; or for any reasons pursuant to any rights under the Tolling
Agreement; provided such access rights shall not interfere
unreasonably with TENANT's operation of the Leased Premises or
performance of its obligations under the Tolling Agreement.
TENANT agrees to maintain a record of all explosions
performed at the Leased Premises. Such records shall include, without
limitation, (a) the type and quantity of explosives, and (b) the
results of inspections the Leased Premises and scaling operations
inside the mine. LANDLORD or its designee shall have the right from
time to time, at LANDLORD's cost, to inspect and verify the records
kept by TENANT in connection with this Lease.
11. REPRESENTATIONS AND WARRANTIES. Except as expressly
------------------------------
provided in this Lease, LANDLORD makes no representations, warranties
or guarantees to TENANT, either expressed or implied, with respect to
the subject matter of this Lease. LANDLORD makes no representations
or warranties as to the condition of the underground passages that are
not part of the Leased Premises. LANDLORD warrants and
14
represents (a) that the MASTER LEASE is subsisting and is in full
force and effect, (b) LANDLORD 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 LANDLORD has full
right, power and authority to enter into this Lease. LANDLORD is
aware of no reason why the Leased Premises cannot be used by TENANT
for its intended purpose. LANDLORD covenants that, so long as TENANT
is not in material breach of the terms and conditions of this Lease,
TENANT 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, LANDLORD covenants and agrees faithfully
to observe and perform all of the material terms, covenants and
conditions of the MASTER LEASE on the part of LANDLORD to be performed
with respect to the Leased Premises, (except as required to be
performed by TENANT 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 LANDLORD liable for any damages,
claims or penalties under the provisions of the MASTER LEASE.
LANDLORD covenants and agrees to keep the MASTER LEASE in good
standing for the term hereof and any extension hereof. Both parties
disclaim and waive any implied warranties and warranties imposed by
law, including
15
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. LANDLORD has no reason
to believe that any of such Owners will disturb TENANT's use or
adversely effects TENANT's peaceful, quiet enjoyment and possession of
the Leased Premises. In the event that any of such Owner's attempt to
disturb TENANT's use of the Leased Premises or adversely impact
TENANT's peaceful, quiet enjoyment and possession of the Leased
Premises, LANDLORD and TENANT shall cooperate to promptly seek to
discontinue the acts of such Owners.
12. INDEMNIFICATION AND LIMITATION OF LIABILITY. The
-------------------------------------------
following indemnifications and limitations of liability shall apply:
12.1(a) TENANT agrees to defend, indemnify and hold
harmless LANDLORD (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 TENANT's acts including without
limitation, acts of negligence, gross negligence or
16
willful misconduct of TENANT, its agents, employees or subcontractors
associated with, or arising out of the use of the Leased Premises, or
the performance of this Lease, including any failure to comply with
any pertinent Federal, State or local law, statute, regulation, rule,
or (2) are caused jointly by acts of TENANT including without
limitation, negligence, gross negligence or willful misconduct by
TENANT, its agents, employees or subcontractors and any acts by any
third party or parties. The term "liability" employed in the
preceding sentence, and TENANT's indemnification obligation, includes
any strict liability imposed at law, asserted against LANDLORD.
(b) LANDLORD agrees to defend, indemnify and hold harmless
TENANT (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 or willful
misconduct of LANDLORD, its agents, employees or subcontractors
associated with, or arising from LANDLORD's obligations under this
Agreement, or (2) are caused jointly by acts of Landlord including
without limitation negligence, gross negligence or willful misconduct
by LANDLORD it agents,
17
employees or subcontractors and any acts by any third party or
parties. The term "liabilities" employed in the preceding sentence,
and LANDLORD's indemnification obligation, includes any strict
liability imposed at law asserted against TENANT.
(c) Where acts or omissions of the nature referred to in
paragraphs 12.1 (a) and (b) by both TENANT and LANDLORD (including
their respective officers, directors, employees, subcontractors or
agents) have caused any liabilities, damages, fines, penalties, costs,
claims, demands and expenses, whether or not a third party's acts or
omissions also were causal, TENANT and LANDLORD 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.
LANDLORD's indemnity shall not extend to acts or omissions
of LANDLORD or any third party with respect to the underground
passages of the mine that are not part of the Leased Premises.
(d) The provisions of this paragraph 12 shall survive the
termination of this Lease.
12.2 Notwithstanding paragraph 12.1, with respect to any
environmental issue (e.g., any environmental contamination, hazardous
wastes or substances, or compliance
18
with any environmental law, regulation, and/or ordinance), the
following indemnifications shall apply:
(i) Except as expressly provided in this Agreement, TENANT
agrees to defend, indemnify and hold harmless LANDLORD
(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 or in connection
with (1) TENANT's violation of, or TENANT's compliance
with, any federal, state or local environmental law
relating to or arising out of [
]* provided, however, that this
indemnity shall not extend to losses, claims, damages,
property damage, demands, judgments, fines or penalties
directly related to
[
]*
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
19
[
]*
that result in a violation of any existing
environmental law [
]*; or (2) the generation,
manufacture, refining, transportation, treatment,
storage, handling, disposal, discharge or spill by
TENANT or any third party occurring on or after the
date hereof of any hazardous or toxic substance or
wastes on the Leased Premises by TENANT. TENANT will
resist and defend any action, suit or proceeding
brought against LANDLORD in connection with the
foregoing by independent counsel selected by TENANT,
but which counsel is reasonably acceptable to LANDLORD.
In the event of [
]* causes (a) the [
] as provided in [
]*, or (b) TENANT's operations under [
]*
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
20
[ ]*, to result in a violation
of any such environmental law, then TENANT shall notify
LANDLORD in writing and the parties shall diligently
work to [
]* provided in [
]* to bring them in compliance with such
law or laws.
(ii) LANDLORD agrees to defend, indemnify and hold harmless
TENANT (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, from or in connection with (1)
LANDLORD's violation of any federal, state or local
environmental law, (2) LANDLORD's compliance with any
federal, state or local environmental law, (3) [
]*
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
21
[ ]* which are presently in
violation of a federal, state, or local environmental
law,(4) the generation, manufacture, refining,
transportation, treatment, storage, handling, disposal,
discharge or spill of any hazardous or toxic substance
or waste on the Leased Premises and the rest of the
Dunbar Facility by LANDLORD or any third parties
occurring prior to the date hereof, and (5) in the
event of [
]* causing (a) [
]* as provided in [ ]*, or
(b) [
]* to be
in violation of any federal, state, or local
environmental law, LANDLORD shall indemnify TENANT for
liabilities, claims, judgments, fines or damages
directly arising from [
]* as it relates to (a) [
]* as provided in [
]*, or (b) [
]*,
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
22
[ ]*
LANDLORD will resist and defend any action, suit or
proceeding brought against TENANT in connection with
the foregoing by independent counsel selected by
LANDLORD, but which counsel is reasonably acceptable to
TENANT.
(iii) Except as provided above, where acts or omissions of
the nature referred to in clauses (i) and (ii) above by
both TENANT and LANDLORD (including their respective
officers, directors, employees, contractors or agents)
have caused any liabilities, claims, injuries
(including death resulting therefrom), property damage,
fines, penalties or assessments by any public agency
and costs or expenses, whether or not a third party's
acts or omissions also were causal, TENANT and LANDLORD
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 (1) there is a final court judgment
allocating fault between the parties, or (2) the
parties agree to such an allocation.
12.3 Notwithstanding any other provisions in this Lease to
the contrary, neither party nor its partners,
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
23
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 Lease
shall survive termination or expiration of this Lease, 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 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 Lease
activates any environmental law requiring audits and/or filings,
(except as provided in Paragraph 12.5 and 12.6 below) TENANT shall
bear the cost of any such audits and filings required by such laws
insofar as they effect the Leased Premises.
24
12.5 LANDLORD and TENANT acknowledge and agree that
LANDLORD has been conducting explosive operations in the underground
passages of the Leased Premises for thirty (30) years, and that such
underground passages contain residue resulting from the detonation of
Explosives. LANDLORD agrees to remove and dispose of such residue at
a reasonable time prior to expiration or termination of the MASTER
LEASE, or as required by law. LANDLORD shall in consultation with
TENANT prepare a plan for removal and disposal of the residue.
LANDLORD and TENANT agree to share the costs and expenses of removal
and disposal of such residue pro rata based on the number of years
that the parties have been operating at the Leased Premises. The
parties acknowledge that TENANT may, at TENANT's option and at
TENANT's cost and expense, partially remove and dispose of the residue
in order to facilitate operations at the Leased Premises. Unless
otherwise agreed by the parties, LANDLORD shall have no responsibility
for such partial removal and disposal of residue.
Except as provided in Section 12.2 above or in this Section
12.5, in no event does either party indemnify the other from and
against liabilities (including third party liabilities), losses,
claims, damages, property damage, demands, judgments, fines or
penalties, costs and expenses (including, without limitation, clean-up
costs and reasonable attorneys' fees and disbursements) which arise,
or are
25
alleged to arise, from or in connection with the residue resulting
from detonation of explosives in the underground passages of the
Dunbar mine.
12.6 TENANT acknowledges that two (2) 1000 gallon
underground storage tanks are situate at the Leased Premises. Unless
otherwise agreed by the parties, LANDLORD agrees to remove, dispose
and , if necessary, remediate such underground storage tanks as soon
as reasonably possible. LANDLORD shall in consultation with TENANT
prepare a plan for removal and disposal of such underground storage
tanks. LANDLORD shall, at LANDLORD's cost and expense, also cleanup
any hazardous or toxic substance or waste resulting from spills,
leaks, or overflows of the contents of such tanks. TENANT shall
provide LANDLORD and LANDLORD's representatives with reasonable access
to the Leased Premises in order to remove the tanks and perform any
necessary cleanup.
13. DEFAULT.
-------
(a) Any of the following occurrences, conditions or acts shall
constitute an "Event of Default" under this Lease:
(i) If TENANT defaults in making payment when due of
any installment of rent, Additional Rent or other
amount payable hereunder by TENANT to LANDLORD,
and such default continues for a period of fifteen
(15) days after LANDLORD shall have given notice
to TENANT specifying such default;
26
(ii) If TENANT makes an assignment of this Lease or
sublets all or a portion of the Leased Premises,
except as is provided in Paragraph 17 herein, and
such default continues for a period of thirty (30)
days after LANDLORD shall have given notice to
TENANT specifying such default; or
(iii) If TENANT defaults in the observance or
performance of any material provision of this
Lease (other than those provisions referenced
hereinabove under subparagraph (a)(i) and (ii)),
and such default continues for a period of thirty
(30) days after LANDLORD shall have given notice
to TENANT specifying such default; provided,
however, if such default cannot be wholly cured
within such thirty (30) day period, then TENANT
shall not be deemed to be in default so long as
TENANT has commenced the cure of such default
within said thirty (30) day period and continues,
with due diligence, to prosecute said cure.
(b) Upon the occurrence of an Event of Default, LANDLORD shall
have the following remedies:
(i) With respect to an Event of Default described in
Paragraph 13(a)(i), if TENANT has not tendered
payment of the amount in default, together with
interest thereon at a rate per annum equal to one
27
(1) point over the Bank of America's "reference rate"
(the "Default Rate") as of the date of the Event of
Default (which interest shall be calculated from the
date of the Event of Default to the date of payment),
on or before the fifteenth (15th) day after LANDLORD
gives notice of such default under Paragraph 13(a)(i),
then LANDLORD shall have the right to terminate this
Lease by notice to TENANT. If LANDLORD exercises said
termination right, said notice shall be deemed
effective as of the fifteenth (15th) day following the
giving of such notice; provided, however, if TENANT
tenders payment of the amount in default, together with
the interest due thereon at the Default Rate, prior to
said effective date, said notice shall be deemed null
and void.
(ii) With respect to an Event of Default described in
Paragraph 13(a)(ii), LANDLORD shall have the right
to immediately terminate this Lease by notice to
TENANT.
(iii) With respect to an Event of Default described in
Paragraph 13(a)(iii), LANDLORD shall have the
right but not the obligation to take such
reasonable action as is necessary to cure the
28
default. All costs and expenses incurred by LANDLORD
shall be for the account of TENANT, and shall be paid
by TENANT, together with interest thereon at the
Default Rate from the date of the giving of such
statement to the date of payment, within thirty (30)
days after receipt of a reasonably detailed statement
itemizing the costs and expenses incurred by LANDLORD,
together with receipts for such amounts.
(iv) In the event of a default by LANDLORD under the terms
of the MASTER LEASE, TENANT shall have the right but
not the obligation to take such reasonable action as is
necessary to cure the default. All costs and expenses
incurred by TENANT shall be for the account of
LANDLORD, and shall be paid by LANDLORD, together with
interest thereon at the Default Rate from the date of
the giving of such statement to the date of payment,
within thirty (30) days after receipt of a reasonably
detailed statement itemizing the costs and expenses
incurred by TENANT, together with receipts for such
amounts.
14. INSURANCE.
---------
(a) TENANT shall at its expense obtain and maintain, or cause to
be obtained and maintained, insurance during the
29
term of this Lease: Comprehensive or Commercial General Liability
Insurance with bodily injury and property damage combined single
limits of at least [ ]* per
occurrence, with a deductible of not more than [
]*. 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 TENANT 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 TENANT'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. LANDLORD and TENANT shall from time to time
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
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
30
this Agreement shall limit or relieve TENANT from indemnifying and
holding harmless LANDLORD in compliance with the provisions of this
Agreement.
(c) In lieu of purchasing insurance coverages of the types and
in the amounts set forth in Paragraph 14 above, LANDLORD elects to
self-insure its liabilities under this Lease. Further, neither
failure to comply nor full compliance by either party with the
insurance provisions of this Lease shall limit or relieve LANDLORD
from indemnifying and holding harmless TENANT in compliance with the
provisions of this Lease.
(d) Upon LANDLORD's request, certificates of insurance
evidencing the coverages required above of TENANT shall be filed with
LANDLORD. Such certificates shall provide that the insurer will give
LANDLORD thirty (30) days advance notice of any changes in or
cancellation of coverage.
Neither failure of TENANT 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 TENANT from any of its obligations under the Agreement,
including the Insurance Article.
15. CASUALTY. If, during the term of this Lease, the
--------
Leased Premises, including the mine situate on the Leased
31
Premises, 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 or not be
economically feasible for the operation of TENANT's business, this
Lease shall, at TENANT's option, terminate and TENANT shall not be
liable to pay rent after such occurrence. If the injury or damage is
such that TENANT notifies LANDLORD as soon as reasonably possible (but
in no event more than ninety (90) days after such injury) that the
TENANT 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 Lease 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 TENANT's business and in such case any rent paid in advance but
unearned shall be refunded to TENANT. If TENANT does not notify
LANDLORD 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), TENANT (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
32
such notice, then this Lease may immediately be terminated by
LANDLORD.
16. QUIET ENJOYMENT. LANDLORD covenants and warrants that,
---------------
as long as no default on the part of TENANT shall have occurred and be
continuing under this Lease beyond any applicable grace or cure period
provided herein, LANDLORD or persons claiming by, through or under
LANDLORD 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 TENANT for the term hereof and any extensions to
the term.
17. ASSIGNMENT AND SUBLETTING.
-------------------------
(a) TENANT shall have the right to assign its rights and duties
under this Lease, either as collateral security or to another entity
created in connection with the financing arrangements entered into by
TENANT, by notifying LANDLORD of such assignment. In the event of any
such assignment, TENANT shall remain liable for performance hereunder
for the term of this Lease.
(b) Except as provided in the Lease, neither party may assign
this Lease 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. Except as provided in this Lease,
any transfer, assignment, delegation or attempted transfer, assignment
or delegation
33
under this Lease or of 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 Lease to be terminated at the
election of the party whose written consent has not been obtained.
TENANT shall not, without the prior written consent of LANDLORD,
sublet any portion of the Leased Premises. Subject to the foregoing,
this Lease 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,
LANDLORD may assign this Lease to the purchaser of all or
substantially all of LANDLORD's MYPOLEX(R) industrial diamonds
business and TENANT may assign this Lease to the purchaser of all or
substantially all of TENANT's business. The parties acknowledge that
consent of the Owners would be required for any such assignments.
18. GOVERNING LAW. This Lease and the performance thereof
-------------
shall be governed, interpreted, construed and regulated by the laws of
the Commonwealth of Pennsylvania.
19. SURRENDER. TENANT hereby agrees to surrender the
---------
Leased Premises in good condition and repair. Notwithstanding
anything herein to the contrary (except if required by law), TENANT
shall only be required to perform a Phase 1 environmental audit upon
the termination or expiration of this Lease. The provisions of this
Paragraph
34
shall survive the expiration or sooner termination of this Lease.
20. AMENDMENT AND RECORDATION. This Lease may not be
-------------------------
amended, supplemented, or modified, except by an instrument in
writing, signed by LANDLORD and TENANT. This Lease may not be
recorded by either party.
21. WAIVER. Failure of LANDLORD or TENANT 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 LANDLORD or TENANT
at any time, express or implied, of any breach of any provision of
this Lease shall be deemed a waiver of a breach of any other provision
of this Lease or a consent to any subsequent breach of the same or any
other provision.
22. 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 Lease, 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.
35
23. NOTICES. Every notice, approval, consent or other
-------
communication required or permitted under this Lease shall be in
writing, shall be deemed to have been duly given on the date of
receipt, and shall be 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, 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 LANDLORD
-----------
E. I. du Pont de Nemours and Company
Corporate Real Estate
1007 Market Street
Wilmington, DE 19898
with a copy to:
E. I. du Pont de Nemours and Company
Specialty Chemicals
Brandywine Building
1007 Market Street
Wilmington, DE 19898
Attn: Manager - Mypolex(R) industrial diamonds
and
36
E. I. du Pont de Nemours and Company
Specialty Chemicals
Repauno Plant
Repauno Drive
P. O. Box 68
Gibbstown, N.J. 08027
To TENANT
---------
Dynamic Materials Corporation
551 Aspen Ridge Drive
Lafayette, Colorado 80026
Attention: Chief Executive Officer
24. PARTIAL INVALIDITY. If any term, covenant, condition
------------------
or provision of this Lease 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 Lease, 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
Lease shall be valid and be enforced to the fullest extent permitted
by law. Any provision of this Lease 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.
37
25. NO PARTNERSHIP. Nothing in this Lease or the
--------------
transaction for which it is written shall constitute or create a joint
venture, partnership, agency or any other similar arrangement between
LANDLORD and TENANT, and neither party is authorized to act as agent
for the other party.
26. CAPTIONS. Titles or captions of Paragraphs contained
--------
in this Lease are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend, describe or otherwise
affect the scope or meaning of this Lease or the intent of any
provision hereof. All Exhibits attached hereto shall be considered a
part hereof as though fully set forth herein.
27. COUNTERPARTS. The parties may execute this Lease 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.
28. SUCCESSION. All of the covenants, agreements,
----------
conditions and undertakings of this Lease shall extend and
38
inure to and be binding upon the successors and permitted assigns of
the respective parties hereto.
IN WITNESS WHEREOF, the parties hereunto have caused this
Agreement to be executed on the day and year first above written.
E. I. DU PONT DE NEMOURS AND COMPANY
By: /s/ W. A. Sullivan
------------------------------------------
Print Name: W. A. Sullivan
----------------------------------
Title: [ILLEGIBLE]
---------------------------------------
Date: 7/19/96
----------------------------------------
DYNAMIC MATERIALS CORPORATION
By: /s/ Paul Lange
------------------------------------------
Print Name: Paul Lange
----------------------------------
Title: Pres/CEO
---------------------------------------
Date: 7/22/96
----------------------------------------
39