OPERATING LEASE
This OPERATING LEASE (this "Lease") is made and entered into as of
the 18th day of March 1998, by and among Spin Forge, LLC, a California limited
liability company ("Lessor"), Dynamic Materials Corporation, a Delaware
corporation ("Lessee"), only with respect to Article 3, Xxx Xxxxxxx ("Xxxxxxx").
RECITALS
A. Lessor owns the real property located in Los Angeles County,
California, with a street address of 0000 Xxxx Xxxxx Xxxxxx, Xx Xxxxxxx,
Xxxxxxxxxx 00000, as more particularly described in EXHIBIT A attached hereto
and by this reference made a part hereof (the "LAND"), including the
manufacturing, storage and administrative buildings and any and all other
improvements located thereon (including surface parking facilities containing
approximately ______ spaces and any other incidental improvements)
(collectively, the "BUILDINGS").
B. As used herein, the term "Premises" shall mean and refer
collectively to the Land and the Building[s].
X. Xxxxxx wishes to lease to Lessee, and Lessee wishes to lease from
Lessor, the Premises on and subject to the terms and conditions set forth
herein.
D. The parties hereto have executed as of an even date herewith an
Asset Purchase Agreement (the "PURCHASE AGREEMENT"). Capitalized terms used in
this Lease and not otherwise defined shall have the meaning ascribed to such
terms in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the sufficiency
of which is hereby acknowledged by the parties hereto, Lessor and Lessee each
hereby promise and agree as follows:
ARTICLE 1
DEMISED PREMISES AND TERM OF LEASEHOLD
A. Lessor, for and in consideration of the rent and other amounts
herein reserved to be paid by Lessee and in consideration of the covenants
herein to be kept and performed by Lessee does hereby lease to Lessee the
Premises.
B. The term of this Lease (the "TERM") shall commence on March 18,
1998 (the "Commencement Date") and end on the first day of January, 2002.
X. Xxxxxx hereby grants to Lessee an option (the "OPTION") to extend
the Term of this Lease for one additional period of ten (10) years commencing
immediately after the end of the initial Term (the "EXTENDED TERM"). If no Event
of Default (as defined below) has occurred and is continuing, the Option may be
exercised by Lessee by written notice given to Lessor at least 60 days prior to
the expiration of the initial Term. During the Extended Term, all references
herein to the "TERM" shall be deemed to refer to such Extended Term, as
appropriate. During the Extended Term, Lessee shall take the Premises in their
as is condition, and Lessee shall lease the same hereunder on the same terms and
conditions as set forth herein, except that the Base Rent payable by Lessee
hereunder during the Extended Term (the "EXTENDED TERM BASE RENT") shall be the
fair market rental value of the Premises as determined by the parties at the
time that Lessee exercises the Option. In the event the parties are unable to
agree on the Extended Term Base Rent, Lessor shall determine the Extended Term
Base Rent within ten (10) business days after Lessee exercises the Option as
permitted by this Paragraph C, and shall deliver a statement of that amount to
Lessee within that time. If Lessee objects to the Extended Term Base Rent as
determined by Lessor, Lessee shall, within ten (10) business days after
receiving notice thereof from Lessor, notify Lessor of Lessee's objection. The
parties shall thereafter attempt to agree on the Extended Term Base Rent. If,
however, within ten (10) business days, they are unable to agree on the amount
of the Extended Term Base Rent, then the matter shall be submitted to the
Appraiser. The Appraiser shall review Lessor's calculation of the Extended Term
Base Rent and shall determine the final Extended Term Base Rent within fifteen
(15) business days after the Appraiser has received from the parties all
information that the Appraiser may reasonably request. The Appraiser's
determination of the Extended Term Base Rent shall be deemed final and
conclusive for purposes of this Lease. Lessor and Lessee shall each pay one-half
of the Appraiser's fees and expenses in determining the Extended Term Base Rent.
The Appraiser shall be a real estate appraiser mutually agreed upon by Lessor
and Lessee. If Lessee and Lessor are unable to agree upon such appraiser within
five (5) business days after Lessee notifies Lessor of Lessee's objection to the
Extended Term Base Rent, each party shall select its own appraiser and the two
appraisers shall select a third appraiser. Such third appraiser shall be the
Appraiser.
D. Notwithstanding anything to the contrary in this Lease, if Lessee
exercises its option to purchase the Premises pursuant to the Option Agreement,
and the Term expires prior to the closing of Lessee's purchase of the Premises,
then the Term shall automatically extend until (i) the closing of that purchase,
or (ii) the time that the option terminates because Lessee does not proceed with
that purchase, whichever occurs first. During that extended term, Lessee shall
lease the Premises from Lessor on the terms and subject to the conditions that
were in effect at the time that the extended term went into effect. In the event
that the Term expires pursuant to clause (ii) of this Paragraph D,
notwithstanding anything to the contrary in this Lease, the period during which
Lessee may exercise the Option shall be extended until ten (10) business days
after the expiration of the Term.
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ARTICLE 2
RENT
A. During the initial Term of this Lease, Lessee shall pay to Lessor
base rent in amounts equal to the amounts of interest due and payable under the
Dover Note. The amounts of interest due and payable ("Base Rent") and the
corresponding due dates for each of such payments under the Dover Note are set
forth in Schedule A attached to this Lease (the "PAYMENT SCHEDULE"). Base Rent
shall be paid by Lessee to Lessor in immediately available funds on a date (the
"RENT DUE DATE") at least three (3) business days prior to the date on which the
corresponding monthly interest payment becomes due under the Dover Note as set
forth on the Payment Schedule; provided, however, that Base Rent for any
fraction of a month at the commencement or expiration of this Lease shall be
prorated. The Payment Schedule shall be updated by Lessor in writing should the
interest payment amounts or due dates under the Dover Note change for any
reason; provided, however, that Lessee shall not be bound by any change to the
Payment Schedule with respect to a payment unless Lessee has been notified in
writing with respect to a change to such payment at least ten (10) business days
prior to the Rent Due Date for such payment and Lessee shall in no event be
required to pay any amounts due under the Dover Note due to a default under the
Dover Note caused solely by Lessor, including without limitation, penalties,
increases in interest rate or other payments. All payments of rent shall be made
payable to Lessor and shall be sent to Lessor at the address set forth herein or
such other address as Lessor shall from time to time designate by written notice
to Lessee.
B. In addition to the rent contemplated by the immediately preceding
paragraph, Lessee shall be responsible for the payment of all amounts required
to maintain and operate the Premises (collectively, "Operating Costs") incurred
by Lessor in connection with this Lease or the Premises, including, without
limitation, Taxes (as defined below) pursuant to the terms of ARTICLE 5 of this
Lease, utility costs pursuant to the terms of ARTICLE 6 of this Lease,
maintenance and repair costs pursuant to the terms of ARTICLE 7 of this Lease
and insurance costs pursuant to the terms of ARTICLE 12 of this Lease. Operating
Costs shall not include the cost of any financing or ground lease on the
Premises (other than Base Rent), capital improvements to the Premises (unless
approved by Lessee in its sole discretion), management costs or overhead. Lessor
shall present request for payment of additional rent to Lessee, together with
evidence of payment of such costs as Lessee may reasonably require. Lessee shall
make payment to Lessor within thirty (30) days of receipt of such request.
C. In the event that Lessee assumes the Dover Note or otherwise
relieves or releases Lessor from Lessor's obligations under the Dover Note in
accordance with the provisions of the Loan Agreement, Lessee's obligation to
make payments of Base Rent under ARTICLE 2 shall be canceled and extinguished.
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ARTICLE 3
XXXXXXX'X OBLIGATION
Xxxxxxx acknowledges that he owns a fifty percent (50%) interest in
Lessor and is also a key officer of Lessee with the responsibility of
supervising and managing the operations of Lessee located at the Premises.
Xxxxxxx hereby agrees that for so long as he is employed by Lessee, he is
responsible for monitoring the compliance by Lessee of all obligations of Lessee
under the Lease. Xxxxxxx also hereby agrees that for so long as he is employed
by Lessee that he will at all times act in the best interest of Lessee and in a
way not adverse to Lessee notwithstanding his position as an owner of a
controlling interest in Lessor. In the event that any Event of Default occurs
during the Term of this Lease due to Xxxxxxx'x negligence, willful misconduct or
breach of his obligations under this Article 3, such Event of Default shall be
deemed cured and Lessee shall suffer no adverse consequences and shall be in the
same position as if such Event of Default had not occurred.
ARTICLE 4
USE OF THE PREMISES
A. During the Term of this Lease, the Premises will be used and
occupied for any and all purposes directly or indirectly related to the conduct
of a manufacturing business and all related administrative and general business
purposes and for any other legal purpose.
B. No nuisance will be permitted on or about the Premises; and
nothing shall be done upon or about the Premises which shall be unlawful or
offensive or contrary to any law, ordinance, regulation, or requirement of any
public authority or insurance inspection or rating bureau or similar
organization having jurisdiction, or which may be injurious to or materially
adversely affect the quality of the Premises. Lessee will not take any action
which will cause the Building to become overloaded, damaged, or defaced. Lessee
will procure all licenses and permits which may be required for any use made of
the Premises; provided, however, that Lessor shall provide reasonable assistance
in obtaining such licenses or permits. Waste and refuse shall be removed from
the Premises on a regular basis at Lessee's expense. Lessee will not do, or
suffer to be done, or keep or suffer to be kept, or omit to do anything, upon or
about the Premises which may prevent the obtaining of any insurance on the
Premises for hazards, including, without limitation, fire, extended coverage,
and public liability insurance, or which may make void or voidable any such
insurance or which may create any extra premiums for, or increase the rate of,
any such insurance.
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ARTICLE 5
PROPERTY TAXES
A. Lessee shall reimburse Lessor for all ad valorem and other real
property taxes and any and all other taxes, assessments, levies and other
charges of any kind, general and special, foreseen and unforeseen, including,
without limitation, all installments of principal and interest required to pay
any existing or future general or special assessments payable during the Term,
and any increases resulting from reassessments made in connection with a change
of ownership, new construction or any other cause (now or later imposed by any
governmental or quasi-governmental authority or special district having the
power to tax or levy assessments, which are levied or assessed against or with
respect to the value, occupancy or use of all or any portion of the Property as
now constructed or as may at any later time be constructed, altered or otherwise
changed) relating to the time period of the Term only, or Lessor's interest in
the Premises, the fixtures, equipment and other property of Lessor, real or
personal, that are an integral part of and located on the Premises, the gross
receipts, income or rentals from the Premises, or the use of parking areas,
public utilities or energy within the Premises or Lessor's leasing of the
Premises (the foregoing are collectively referred to as "Property Taxes")
attributable to any period during the Term. If at any time during the Term the
method of taxation or assessment of the Premises prevailing as of the
Commencement Date is altered so that, in lieu of or in addition to any Property
Tax, there shall be levied, assessed or imposed (whether because of a change in
the method of taxation or assessment, creation of a new tax or charge, or any
other cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Premises or Lessor's interest in the Premises or (ii) on or
measured by the gross receipts, income or rentals from the Premises, or on
Lessor's leasing of the Premises, or computed in any manner with respect to the
operation of the Premises, then any tax or charge, however designated, shall be
included within the meaning of the term Property Taxes for purposes of this
Lease. Notwithstanding anything to the contrary in this Lease, the inclusion of
any services, facilities or improvements in Property Taxes shall not be deemed
to impose an obligation on Lessor to provide those services, facilities or
improvements. Lessee shall pay such amounts to Lessor within 30 days after
Lessee's receipt of a written statement therefor from Lessor together with
evidence of the amount of such taxes and the payment thereof by Lessor.
X. Xxxxxx shall supply to Lessee copies of all statements, invoices,
or bills for such taxes, and all notices of assessment, valuation, or other
similar notices or documents, promptly upon receipt thereof by Lessor. At any
time and from time to time, Lessee shall have the right, and Lessor shall use
reasonable efforts to cooperate with Lessee, to initiate any action to contest
the amount, applicability, or any other aspect of such taxes in good faith
pursuant to any procedures available to parties responsible for the payment of
such taxes; provided that Lessee shall take any steps reasonably necessary in
connection with any such contest to ensure that the Premises shall not be
subject to the risk of foreclosure, loss, or forfeiture in connection with such
contest.
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C. Lessee shall pay before delinquency any and all personal property
taxes accruing during the Term of this Lease attributable to Lessee's trade
fixtures, inventory, equipment, and other personal property located on the
Premises.
ARTICLE 6
UTILITIES
Lessee shall pay all charges for gas, water, sewage, electricity,
and any other utilities ("Utilities") accruing during the Term of this Lease and
used by Lessee at the Premises. If any such charges are not paid when due,
Lessor may pay the same, and any amount so paid by Lessor shall thereupon become
due Lessor from Lessee as additional rent. Lessee shall pay such amounts within
thirty (30) days of Lessor's receipt of a written statement therefor from Lessor
together with evidence of the amount of such payment as Lessee may reasonably
require. Lessor shall have no obligation to provide Utilities to the Premises;
provided, however, that Lessor shall provide such assistance and cooperation as
may be required by Lessee to arrange for such Utilities to be supplied to the
Premises.
ARTICLE 7
REPAIRS AND MAINTENANCE; HAZARDOUS MATERIALS
A. Throughout the Term of this Lease, Lessee, at its sole cost and
expense, shall operate, maintain, and keep the Premises in good order and
repair, including, without limitation, all landscaping, parking surfaces,
walk-ways, curbs, gutters, and sidewalks, and all mechanical, HVAC, electrical,
and plumbing systems, equipment, and facilities, excluding any damage caused by
ordinary wear and tear, by acts of God or the elements, or by fire or other
casualty, provided that nothing in this Article 7 shall limit or modify Lessee's
obligations under this Lease to pay Operating Expenses or maintain insurance. If
any such repairs are not made by Lessee promptly after written request from
Lessor, Lessor may make such repairs and all out-of-pocket costs incurred by
Lessor in connection therewith shall constitute additional rent hereunder.
Lessee shall pay such amounts within thirty (30) days of Lessor's receipt of a
written statement therefor from Lessor together with evidence of the amount of
such payment as Lessee may reasonably require.
B. Lessee agrees that Lessee's handling, transportation, storage,
treatment, disposal or use of Materials of Environmental Concern in or about the
Premises shall comply with all applicable Environmental Laws.
C. To the extent that and so long as Xxxxxxx is in compliance with
Article 3 hereof, Lessee agrees to indemnify, defend and hold harmless Lessor
from and against any liabilities, costs, fees, losses, claims, damages,
penalties, fines, attorneys' fees, expert fees, court costs, remediation costs,
investigation costs and other expenses resulting from or arising out of the use,
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storage, treatment, transportation, release, or disposal of Materials of
Environmental Concern that occur during the Term in any manner which violates
Article 7B hereof.
D. If Lessee receives notice that the presence of Materials of
Environmental Concern results in the contamination or deterioration of the
Premises or any water or soil beneath the Premises, Lessee shall notify Lessor.
E. Lessee shall promptly notify Lessor of any communication received
from any governmental entity concerning Materials of Environmental Concern or
the violation of Environmental Laws that relate to the Premises.
ARTICLE 8
MECHANICS' LIENS
Any mechanic's lien filed against the Premises for work or materials
ordered or contracted for by Lessee shall be discharged by Lessee at Lessee's
expense within sixty (60) days after Lessee's receipt of written notice thereof.
In the event of Lessee's contesting or disputing the validity of the lien or the
reasonableness of the amount claimed or in the event Lessee disputes or contests
any part of the claim made against it by a mechanic's lien claimant, the
foregoing obligation on the part of the Lessee to discharge the lien within
sixty (60) days shall be waived by Lessor provided that Lessee bonds the lien or
provides other security against the payment thereof in a form reasonably
satisfactory to Lessor.
ARTICLE 9
ALTERATIONS
Lessee shall not make any structural modifications to the Building
without Lessor's prior written consent. Lessee shall not make any major
alterations (all alterations costing in excess of $100,000 to be considered
major alterations), additions or improvements to the Premises or any part
thereof without the prior written consent of Lessor, which consent shall not be
unreasonably withheld, and then only at Lessee's sole expense. Should Lessor
fail to act upon Lessee's written request for such approval for a period of
fifteen (15) days from receipt thereof, such failure shall be deemed an approval
by Lessor. Lessee shall carry such worker's compensation insurance, general
liability insurance, and such other insurance as Lessor may reasonably require
in connection with Lessee's performance of any alterations to the Premises. All
alterations, decorations, additions, and improvements of every kind, nature, and
description made by Lessee (not including Lessee's trade fixtures, equipment,
inventory, and personal property), shall become the property of Lessor upon the
expiration of the Term of this Lease.
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ARTICLE 10
SUBORDINATION
This Lease is subject and subordinate to all mortgages which may now
or hereafter be placed on the real property of which the Premises form a part,
and to all renewals, modifications, consolidations, replacements, and extensions
thereof; provided that, before any subordination of this Lease to any such
mortgage shall be effective, the holder thereof shall have delivered to Lessee a
written agreement, in form and substance reasonably satisfactory to Lessee, that
Lessee's rights under this Lease will not be disturbed by such holder
notwithstanding any foreclosure or exercise of any other right or remedy by such
holder under such mortgage.
ARTICLE 11
INDEMNITY
A. Lessee shall indemnify, defend and save Lessor and Lessor's
agents, employees, managers and members ("Lessor's Related Parties") harmless
from and against any and all claims, suits, actions, liabilities, costs, fees,
damages, and/or causes of action, including, without limitation, reasonable
attorney's fees (collectively, "Claims and Liabilities") arising during the term
of this Lease; for any personal injury, loss of life, and/or damage to property
sustained in or about the Premises and from and against any orders or judgments
which may be entered in connection therewith, and from and against all costs,
counsel fees, expenses, and liabilities incurred in the defense of any such
claim and the investigation thereof whether or not a lawsuit is instituted;
provided that Lessee does not hereby indemnify or agree to save Lessor harmless
from or against any Claims and Liabilities arising from or related to any
negligence or act or omission by Lessor, or any of Lessor's agents, employees,
managers, members or contractors, or any breach or failure by Lessor to perform
any obligation of Lessor under this Lease.
ARTICLE 12
INSURANCE - WAIVER OF CLAIMS - WAIVER OF SUBROGATION
A. Lessee shall carry public liability insurance in a primary
coverage amount of not less than $1,000,000.00 per occurrence single limit and
excess coverage in an amount not less than $2,000,000.00 per occurrence and
$3,000,000.00 in the aggregate. Such insurance coverages shall name Lessee as
the insured party and shall name Lessor and any additional parties having an
insurable interest designated by Lessor in a written notice given to Lessee as
additional insured parties. Such public liability insurance coverages shall
cover or protect against any and all Claims and Liabilities arising from acts,
activities or omissions that take place during the Term of this Lease for any
personal injury, loss of life, or damage to property sustained in or about the
Premises by reason or as a result of the Lessee's occupancy thereof and from and
against any orders, judgments, and decrees which may be entered thereon, and
from and against all costs, counsel's fees, expenses,
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and liabilities incurred in and about the defense of any such Claims and
Liabilities and the investigation thereof, whether or not a lawsuit is
instituted. Additionally, Lessee shall obtain fire and extended "all-risks"
coverage insurance for any and all property, furniture, furnishings, equipment,
trade fixtures, and contents placed upon the Premises by Lessee. Certificates of
such insurance coverage shall be delivered to Lessor as soon as practicable
after Lessee's receipt of any written request therefor from Lessor. All such
insurance coverage required to be obtained by Lessee shall be at Lessee's sole
cost and expense. All insurance required to be carried by Lessee hereunder shall
be with companies, on forms and with loss payable clauses reasonably
satisfactory to Lessor. No such policy shall be cancelable except after thirty
(30) days written notice to Lessor.
B. At all times during the Term of this Lease, Lessee shall, at
Lessee's sole cost and expense, obtain and keep in full force and effect fire
and extended "all-risks" coverage insurance for the Building and all fixtures,
equipment, systems, and facilities attached thereto or incorporated therein in
an amount not less than 100% of the full replacement cost thereof with carriers
and on such other terms and conditions as shall from time to time be
commercially reasonable for similar properties. Such fire and extended
"all-risks" coverage shall have Lessee as the insured party and shall name
Lessor as an additional insured party.
X. Xxxxxx and Lessee each hereby waive, for themselves and on behalf
of their respective insurance carriers, any and all claims, causes of action,
and rights of subrogation which may arise against the other for any damages,
losses, costs, or liabilities (including, without limitation, property damage,
bodily injury, and loss of life) arising from or related to any fire or other
casualty affecting the Building or any other part of the Premises, or from any
other cause (including, without limitation, the negligence of either of the
parties hereto or their respective agents, employees, or contractors), to the
extent that such party has obtained, or is required by the terms of this Lease
to have obtained, insurance coverage against such damages. Lessor and Lessee
shall each cause all of the insurance policies maintained by such party under
this Lease to contain waiver of subrogation provisions.
ARTICLE 13
DESTRUCTION - FIRE OR OTHER CAUSE
A. If the Premises are destroyed or damaged to the extent of 10% or
more of the then full replacement cost from a cause not insured against under
either Lessor's or Lessee's casualty insurance policy, Lessee shall have the
right to terminate this Lease by giving written notice of termination to Lessor
within thirty (30) days after the date of the damage or destruction. If the
Lease is not so terminated, then Lessee shall diligently proceed to repair and
restore the Premises.
B. If the Premises or the Building are destroyed or damaged to the
extent of 10% or more of the then full replacement cost from a cause covered by
either Lessee's or Lessor's casualty insurance, and that damage or destruction
may be repaired or restored within ninety (90) days after
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commencement of repair or restoration, then Lessee shall diligently proceed to
repair and restore the Premises and Lessor shall pay over any proceeds of such
insurance to Lessee. If Lessee determines that the Premises cannot be repaired
or restored within that period, the Lessee shall have the right to terminate
this Lease by written notice to Lessor given within sixty (60) days after the
date of damage or destruction.
C. Upon a termination under this Article 13, Lessee's obligation to
pay rent and other charges under this Lease shall terminate as of the date of
the damage or destruction or as of the date Lessee ceases to do business at the
Premises, whichever occurs later; provided, however, that in the event of a
termination under this Article 13 Lessee shall pay to Lessor an amount equal to
(a) the balance outstanding on the Dover Note as of the termination date, proof
of which shall be demonstrated in a manner acceptable to Lessee; less (b) the
sum of (i) the fair market value of the Premises as determined pursuant to the
procedure set forth in Article 1, Section C hereof and (ii) any proceeds
received by Lessor in respect of the damage or destruction pursuant to which the
Lease was terminated.
D. Except as expressly provided in this Lease, damage to or
destruction of the Premises or the Building shall not terminate this Lease or
result in any abatement of rent. Lessee waives any right of offset against
Lessee's rental obligations that may be provided by any statute or rule of law.
E. Without limiting the generality of the foregoing provisions of
this Article 13, Lessor shall not in any event be responsible for insuring
against any loss, damage, or destruction to Lessee's leasehold improvements or
to fixtures, inventory or other Lessee-owned improvements or property.
F. Lessee shall give prompt written notice to Lessor in the event of
any casualty damage to the Premises.
ARTICLE 14
EMINENT DOMAIN
A. If the whole of the Premises shall be acquired or condemned by
eminent domain for any public or quasi-public use or purpose, or be conveyed in
lieu of any such taking, or if a part of the Premises shall be so acquired or
condemned, and if such partial taking or acquisition renders the Premises
unsuitable for the business of Lessee in Lessee's reasonable discretion, then
the Term of this Lease shall cease and terminate as of the earlier of the date
of the transfer of title or the date of taking possession of the Premises and
all rent shall be paid up to that date.
B. In the event of a partial taking, or conveyance of the Premises
in lieu thereof, which is not extensive enough to render the Premises unsuitable
for the business of Lessee, Lessor,
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to the extent possible and to the extent of proceeds of any award for such
taking made available to Lessor, shall promptly restore the Premises to a
condition comparable to its condition immediately prior to such taking (less the
portion lost in the taking), and this Lease shall continue in full force and
effect. In such case rent shall be abated on a fair and equitable basis to the
extent of any reduction, if any, in the area of the Premises resulting from such
taking and not restored.
C. In the event of any condemnation, taking or conveyance in lieu
thereof, as hereinbefore provided, whether whole or partial, Lessee shall not be
entitled to any part of the award or price, as damages or otherwise, for such
condemnation, taking or conveyance, and Lessor shall receive and be entitled to
the full amount of such award except for any portion designated as relocation
costs, or award for taking Lessee's equipment or improvements.
ARTICLE 15
ASSIGNMENT AND SUBLEASE
A. Neither party shall assign its interest in this Lease or sublet
the Premises or any part or parts thereof, nor transfer or encumber this Lease
in whole or in part without first obtaining the written consent of the other
party, which consent shall not be unreasonably withheld; provided that Lessee
shall have the right, without obtaining Lessor's consent, to assign this Lease
to any entity which controls, is controlled by, or is under common control with
Lessee, or any entity which is the surviving entity in any merger or
consolidation of or with Lessee, or to any entity which acquires all or
substantially all of the assets of Lessee. Upon any such assignment, Lessee
shall no longer be liable on this Lease and shall be released from performing
any of the terms, covenants, and conditions hereof.
ARTICLE 16
ACCESS TO PREMISES
Lessor, or Lessor's agents, shall have the right to enter the
Premises at any time or times upon reasonable prior notice to Lessee to examine
the same. If Lessee shall not be personally present to open and permit the entry
to the Premises at any reasonable time when for any reason entry therein shall
be necessary or permissible, Lessor or Lessor's agent may enter the same by a
master key or, in the event of an emergency, make forcible entry upon the same
without rendering Lessor or Lessor's agents liable therefor.
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ARTICLE 17
DEFAULT
It shall constitute an "Event of Default" under this Lease if
Lessee:
(A) Fails to pay when due hereunder any rental or other
charge or amount required to be paid by Lessee hereunder if
(i) the failure to pay Base Rent continues for five (5)
business days after written notice thereof is given by Lessor
to Lessee, or (ii) the failure to pay Operating Costs
continues for ten (10) business days after written notice
thereof is given by Lessor to Lessee.
(B) Fails to perform any other of the terms, conditions,
or covenants of this Lease to be observed or performed by
Tenant if the failure continues for more than thirty (30)
business days after written notice thereof is given by Lessor
to Lessee.
(C) Shall become bankrupt or insolvent, or file or have
filed against it any bankruptcy proceedings, or take or have
taken against it in any court pursuant to any statute,
either of the United States or of any state, a petition of
bankruptcy or insolvency, or for reorganization or for the
appointment of a receiver or trustee of all or substantially
all of Lessee's property, or if Lessee makes a general
assignment for the benefit of creditors.
ARTICLE 18
REMEDIES OF LESSOR
A. In the event of the occurrence of any Event of Default, Lessor
may elect, upon thirty (30) days written notice to Lessee:
(1) To terminate this Lease, in which case all
outstanding items of rent shall be paid by Lessee
up to the time of such Event of Default, together
with such costs as Lessor may incur for legal
expenses, attorneys' fees, and/or putting the
Premises in good order for preparing the same for
rental. Lessor shall use reasonable efforts to
relet the Premises or any part thereof, either in
the name of Lessor or otherwise, but in any event
for the account of Lessee for all or a portion of
the balance of the Term hereunder.
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(2) To continue this Lease, and from time to time,
without terminating this Lease, either (i) recover
all rent and other amounts owing hereunder as they
become due, or (ii) relet the Premises or any part
of the Premises on behalf of Lessee for any term,
at any rent, and pursuant to any other provisions
as Lessor deems advisable.
B. The following additional provisions shall apply should an Event
of Default occur:
(1) None of the following remedial actions, singly or
in combination, shall be construed as Lessor's
election to terminate this Lease, unless Lessor
has given Lessee written notice that this Lease is
terminated: (i) any act by Lessor to maintain or
preserve the Premises; (ii) any efforts by Lessor
to relet the Premises; (iii) any re-entry,
repossession, or reletting of the Premises; or
(iv) any re-entry, repossession, or reletting of
the Premises by Lessor pursuant to this Article
18. If Lessor takes any of the previous remedial
actions without terminating this Lease, Lessor may
nevertheless at any time after taking any remedial
action terminate this Lease by written notice to
Lessee.
(2) If Lessor relets the Premises, Lessor shall apply
the revenue as follows: first, to the payment of
any cost of reletting, including, without
limitation, finder's fees and leasing commissions;
and second, to the payment of rent and other
amounts due and unpaid. Lessor shall hold and
apply the residue, if any, to payment of future
amounts payable as they become due. Should revenue
from reletting during any month, after application
pursuant to the foregoing provisions, be less than
the sum of (i) Lessor's expenditures for the
Premises during that month and (ii) the amounts
due from Lessee during that month, Lessee shall
pay the deficiency to Lessor immediately upon
demand.
(3) After the occurrence of an Event of Default,
Lessor, in addition to or in lieu of exercising
other remedies, may, but without any obligation to
do so, cure the breach underlying the Event of
Default for and at Lessee's account and expense.
Lessee shall, upon demand, immediately reimburse
Lessor for all costs, including, without
limitation, costs of settlements,
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defense, court costs, and attorneys' fees, that
Lessor may incur in the course of any cure.
(4) No security or guaranty for the performance of
Lessee's obligations, which Lessor may now or
hereafter hold, shall in any way constitute a bar
or defense to any action initiated by Lessor for
unlawful detainer or for the recovery of the
Premises, for enforcement of any obligation of
Lessee, or for the recovery of damages caused by
an Event of Default.
(5) No right or remedy conferred upon or reserved to
Lessor is intended to be exclusive of any other
right or remedy given now or later existing at law
or in equity or by statute. Lessor's waiver of any
violation or nonperformance shall not be deemed a
waiver of any subsequent violation or
nonperformance, nor shall Lessor's forbearance to
exercise a remedy for any violation or
nonperformance by Lessee be deemed a waiver by
Lessor of rights or remedies with respect to that
violation or nonperformance.
C. In addition to the foregoing remedies, in the event of the
occurrence of any Event of Default by Lessee, Lessor shall have the right to
invoke any remedy otherwise available at law or in equity.
ARTICLE 19
SURRENDER OF THE PREMISES
At the expiration of the Term of this Lease, Lessee shall peaceably
surrender the Premises, including all alterations, additions, improvements, and
repairs made thereto (but excluding all trade fixtures, equipment, inventory,
signs, and other personal property), broom clean and in good condition and
repair, ordinary wear and tear and damage caused by acts of God, the elements,
fire, or other casualty excepted. Lessee shall remove all its property not
required to be surrendered to Lessor (pursuant to Article 9 or otherwise) before
surrendering the Premises as aforesaid, and shall repair any damage to the
Premises caused thereby. Any personal property remaining in the Premises at the
expiration of the Term shall be deemed abandoned by Lessee and Lessor may claim
the same and shall in no circumstances have any liability to Lessee therefor.
ARTICLE 20
FEES AND EXPENSES
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In the event of the occurrence of any Event of Default by Lessee,
Lessor may immediately, or at any time thereafter and without further notice,
perform the same for Lessee's account and expense. Lessee shall, upon demand,
immediately reimburse Lessor for all costs, including without limitation, costs
of settlement, defense, court costs, and attorneys' fees, that Lessor may incur
in the course of any cure.
ARTICLE 21
NO REPRESENTATION BY LESSOR
Lessor or Lessor's agents have made no representations or warranties
as to the Premises of any kind, nature, or description and none is asserted by
Lessee to have been made to it as an inducement to enter into this Lease. As
further provided in this Lease, Lessee accepts the Premises in their "AS-IS,"
"WHERE-IS" condition.
ARTICLE 22
NOTICES
All notices, demands, requests, elections, and other communication
provided for herein shall be in writing and shall be deemed given to a party
when a copy thereof, addressed to such party as provided herein, is actually
delivered to such address (or delivery is refused) by commercial courier, by
successful facsimile transmission, or by certified or registered mail, return
receipt requested.
All notices to Lessor shall be addressed to Lessor at the following address and
facsimile number or such other addresses and facsimile numbers of which Lessor
gives Lessee notice hereunder:
If to Lessor: Spin Forge, LLC
0000 Xxxx Xxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Wolf, Xxxxxx & Xxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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All notices to Lessee shall be addressed to Lessee at the following address and
facsimile number or such other addresses and facsimile numbers of which Lessee
gives Lessor notice hereunder:
If to Lessee: Dynamic Materials Corporation
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention:
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Xxxxx, Xxxxxx & Xxxxxx LLP
Suite 4700
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
ARTICLE 23
BROKERAGE COMMISSION AND INDEMNIFICATION
Lessee hereby represents and warrants to Lessor that Lessee has not
dealt with any broker, agent, salesperson, or other similar representative in
connection with this Lease. Lessor hereby represents and warrants to Lessee that
Lessor has not dealt with any broker, agent, salesperson, or other similar
representative in connection with this Lease. Lessee shall indemnify Lessor and
hold Lessor harmless against any and all claims for commissions, fees, or other
compensation made by any real estate broker, agent, salesperson, or other
similar representative on account of any implied or express commitment or
undertaking by Lessee in connection with the transaction contemplated herein.
Lessor shall indemnify Lessee and hold Lessee harmless against any and all
claims for commissions, fees, or other compensation made by any real estate
broker, agent, salesperson, or other similar representative on account of any
implied or express commitment or undertaking by Lessor in connection with this
Lease.
ARTICLE 24
NULLITY OF PROVISIONS
The finding of one provision, clause, or paragraph of this Lease to
be null and void shall not have an effect upon the remaining provisions of this
Lease and all other provisions shall remain in full force and effect, and the
provision, clause, or paragraph found to be null and void shall be enforced to
the fullest extent permissible.
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ARTICLE 25
INUREMENT
This Agreement, and all rights, duties, and obligations set forth
herein, shall inure to and be binding upon the parties hereto and their
respective successors and assigns.
ARTICLE 26
TRANSFER OF LESSOR'S INTEREST
In the event of any transfer of Lessor's interest in this Lease in
accordance with Article 15, Lessor shall continue to be liable and shall not be
released from the performance or observance of any agreements or conditions on
the part of Lessor to be performed or observed subsequent to the time of said
transfer, provided that, from and after the date of said transfer, the
transferee shall be primarily liable for the performance and observance of such
agreements and conditions and such transferee shall execute and deliver to
Lessee a written confirmation of such assumption.
ARTICLE 27
ATTORNEYS' FEES
In the event that a law suit or other proceeding is brought to
enforce or interpret all or any portion of this Lease, the prevailing party in
such suit shall be entitled to recover, in addition to any other relief
available to such party, reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred in connection with such suit or
proceeding, including, without limitation, any attorneys' fees incurred after a
judgment has been rendered by a court of competent jurisdiction.
ARTICLE 28
ENTIRE AGREEMENT
This instrument represents the entire and only agreement between the
parties with respect to the leasing of the Premises and no oral statements or
representations or prior written matter not contained herein shall have any
force or effect and this Lease shall not be modified in any way except by a
writing subscribed by both parties with the same formalities as this instrument.
ARTICLE 29
LAW AND VENUE
The validity and effect of this Agreement shall be determined,
interpreted, and enforced is accordance with the laws of the State of California
(without regard to its conflict of law doctrines) and the venue for any action
to enforce or to interpret this Agreement shall be in a court
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of competent jurisdiction located in the State of Colorado and each of the
parties consents to the jurisdiction of such court in any such action or
proceeding and waives any objection to venue laid therein.
ARTICLE 30
QUIET ENJOYMENT
Lessor hereby covenants that it has good and lawful authority to
make this Lease and fully warrants the right, title, and interest conveyed
hereby, and will defend the same against the claims of all persons whomsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on
the dates set forth below intending that it be valid and effective from and
after the day and year first written above.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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LESSOR:
Spin Forge, LLC,
a California limited liability company
By: /s/Xxx Xxxxxxx
-----------------------------------
Its: President
----------------------------------
Date: 3/18/98
---------------------------------
LESSEE:
Dynamic Materials Corporation,
a Delaware corporation
By: /s/Xxxxxxx Santa
-----------------------------------
Its: Vice-President, Finance & CFO
----------------------------------
Date: 3/18/98
---------------------------------
XXXXXXX:
/s/Xxx Xxxxxxx
--------------------------------------
Xxx Xxxxxxx
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