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Home My WebLink About2014-09-818274 ORDINANCE NO. 2014-09-8182 AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY AUTHORIZING THE ISSUANCE OF (I) CITY OF PADUCAH, KENTUCKY GENERAL OBLIGATION BONDS, SERIES 2014C IN THE APPROXIMATE AGGREGATE PRINCIPAL AMOUNT OF $2,415,000 (SUBJECT TO A PERMITTED ADJUSTMENT INCREASING OR DECREASING THE PRINCIPAL AMOUNT OF SERIES 2014C BONDS BY UP TO $240,000) FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CONSTRUCTION OF A SHOWROOM AT THE JULIAN CARROLL CONVENTION CENTER, AND (II) CITY OF PADUCAH, KENTUCKY TAXABLE GENERAL OBLIGATION BONDS, SERIES 2014D IN THE APPROXIMATE AGGREGATE PRINCIPAL AMOUNT OF $4,325,000 (SUBJECT TO A PERMITTED ADJUSTMENT INCREASING OR DECREASING THE PRINCIPAL AMOUNT OF SERIES 2014C BONDS BY UP TO $435,000) FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF THE ACQUISITION, CONSTRUCTION, INSTALLATION AND EQUIPPING OF AN ECONOMIC DEVELOPMENT PROJECT IN THE CITY OF PADUCAH, KENTUCKY; AUTHORIZING AND APPROVING A CONTRACT, LEASE & OPTION, SUBORDINATED LEASEHOLD MORTGAGE AND SALES TAX REFUND PLEDGE AND SECURITY AGREEMENT BETWEEN THE CITY OF PADUCAH, KENTUCKY AND THE PADUCAH CONVENTION HOTEL, LLC IN CONNECTION WITH THE ISSUANCE OF THE SERIES 2014D BONDS; APPROVING THE FORMS OF BONDS; AUTHORIZING DESIGNATED OFFICERS TO EXECUTE AND DELIVER THE BONDS; AUTHORIZING AND DIRECTING THE FILING OF NOTICE WITH THE STATE LOCAL DEBT OFFICER; PROVIDING FOR THE PAYMENT AND SECURITY OF THE BONDS; CREATING BOND PAYMENT FUNDS; MAINTAINING THE HERETOFORE ESTABLISHED SINKING FUND; AUTHORIZING ACCEPTANCE OF THE BIDS OF THE BOND PURCHASERS FOR THE PURCHASE OF THE BONDS; AND REPEALING INCONSISTENT ORDINANCES. WHEREAS, the City of Paducah, Kentucky (the "City") has heretofore determined that it is a public purpose to reduce unemployment in the City, to increase the City's tax base, to foster economic development within the City and to promote the development of a skilled workforce, all to the benefit of the citizens and residents of the City; and WHEREAS, the City (the "City") has further determined the necessity of financing a portion of the costs of the construction of a showroom at the Julian Carroll Convention Center (the "2014C Project"); and WHEREAS, the City has further determined the necessity of financing a portion of the costs of the acquisition, construction, installation and equipping of improvements at a hotel to be located adjacent to the Julian Carroll Convention Center and to be leased to Paducah Convention hotel, LLC, a Kentucky limited liability corporation, for use in furtherance of economic development within the City (the "2014D Project," and together with the 2014C Project, the "Projects"); and WHEREAS, the City has determined that it is in the best interests of the City that the City proceed at this time to finance the Projects through the issuance by the City of its (i) General -' -- - 1 75 Obligation Bonds, Series 2014C in the approximate aggregate principal amount of $2,415,000 (which amount may be increased or decreased by up to $240,000) (the "Series 2014C Bonds") and (ii) Taxable General Obligation Bonds, Series 2014D in the approximate aggregate principal amount of $4,325,000 (which amount may be increased or decreased by up to $435,000) (the "Series 2014D Bonds," and together with the Series 2014C Bonds, the 'Bonds"); and WHEREAS, pursuant to the Constitution and Laws of the Commonwealth of Kentucky, and particularly Sections 66.011 et. seq. of the Kentucky Revised Statutes, as amended (the "General Obligation Act") and Sections 58.010 et. seq. of the Kentucky Revised Statutes, as amended (the "Public Project Act"), a city may issue bonds, subject to the requirements of the General Obligation Act and/or Public Project Act, to pay all or any portion of the costs of financing any public project to the extent that such city is authorized to cause the acquisition, construction, installation and equipping thereof; and WHEREAS, the City desires to cause the Projects to be financed through the issuance of the Bonds to be sold and awarded to the successful bidder or bidders (the "Purchasers") at public, competitive sale in accordance with the provisions of Chapter 424 of the Kentucky Revised Statutes, as amended; and WHEREAS, it is further necessary and desirable in connection with the plan of financing the 2014D Project for the City to enter into a Contract, Lease & Option (the "Lease") with Paducah Convention Hotel, LLC, a Kentucky limited liability company (the "Lessee"), whereby the Lessee will lease from the City the 2014D Project; and WHEREAS, it is further necessary and desirable in connection with the plan of financing the 2014D Project for the City to enter into a Subordinated Leasehold Mortgage and Security Agreement (the "Subordinated Mortgage") with the Lessee, whereby the Lessee will grant to the City, as security for the Lessee's obligations to the City under the Lease, a subordinated mortgage and security interest in the 2014D Project and the other independently financed components of the hotel project; and WHEREAS, it is further necessary and desirable in connection with the plan of financing the 2014D Project for the City to enter into a Sales Tax Refund Pledge and Security Agreement (the "Sales Tax Refund Agreement") with the Lessee, whereby the Lessee will pledge to the City, as security for the Lessee's obligations to the City under the Lease, a security interest in certain sales tax refunds the Lessee is entitled to from the Commonwealth of Kentucky. 2 /b NOW, THEREFORE, BE IT ORDAINED by the City of Paducah, Kentucky, as follows: Section 1 -- Necessity, Authorization and Purpose. The City hereby declares that it is desirable and necessary to issue, and hereby authorizes the issuance, of its General Obligation Bonds, Series 2014C, in the aggregate principal amount of $2,415,000, subject to a permitted adjustment (the "Series 2014C Permitted Adjustment") increasing or decreasing the principal amount of Series 2014C Bonds awarded to the purchasers thereof by up to $240,000, for the purpose of (i) paying the costs of the 2014C Project and (ii) paying the costs of issuance of the Series 2014C Bonds. The City hereby further declares that it is desirable and necessary to issue, and hereby authorizes the issuance, of its Taxable General Obligation Bonds, Series 2014D, in the aggregate principal amount of $4,325,000, subject to a permitted adjustment (the "Series 2014D Permitted Adjustment," and together with the Series A Permitted Adjustment, the " Permitted Adjustments") increasing or decreasing the principal amount of Series 2014D Bonds awarded to the purchasers thereof by up to $435,000, for the purpose of (i) paying the costs of the 2014D Project and (ii) paying the costs of issuance of the Series 2014D Bonds. The exact principal amount of Series 2014C Bonds and Series 2014D Bonds to be issued shall be established in the Certificate of Award (as hereinafter defined). Section 2 — Form of Bonds. The Series 2014C Bonds shall be issued as fully registered Bonds, shall be designated "General Obligation Bonds, Series 2014C", shall each express upon their face the purpose for which they are issued, that they are issued under the Act and shall be substantially in the form set forth in Annex A. The Series 2014D Bonds shall be issued as fully registered Bonds, shall be designated "Taxable General Obligation Bonds, Series 20141)", shall each express upon their face the purpose for which they are issued, that they are issued under the Act and shall be substantially in the form set forth in Annex B. The Bonds shall be in denominations as requested by the Purchasers, which shall be in integral multiples of five thousand dollars ($5,000). The Bonds shall each be dated their date of initial issuance and delivery, or such other date as is determined in a certificate of award accepting the bids of the Purchasers (the "Certificate of Award") to be executed by the City Manager or Finance Director of the City on the date of the sale of the Bonds. 3 77 Interest on the Bonds shall be payable each May 1 and November 1 (an "Interest Payment Date"), commencing May 1, 2015, at the stated interest rate or rates on the principal amounts thereof, calculated on the basis of a 360 day year with 30 day months,. The Bonds shall be serial or term Bonds maturing or subject to mandatory sinking fund redemption on November 1, 2015 and each November 1 thereafter in the years and in the amounts to be established in the Certificate of Award after advertised competitive sale of the Bonds based on the interest rates set forth in the successful bid for each of the Series 2014C Bonds and Series 2014D Bonds (collectively, the "Bids") and the provisions of this Section 2, provided that the final maturity date of the Bonds shall be as set forth in the Certificate of Award but shall be no later than May 1, 2025. The interest rate or rates on the Bonds shall be determined in the Certificate of Award based on the Bids; provided that the aggregate net interest cost of the Series 2014C Bonds shall not exceed five percent (5.0%), and the aggregate net interest cost of the Series 2014D Bonds shall not exceed six percent (6.0%). The Bonds issued as term Bonds shall be subject to mandatory sinking fund redemption on the dates, in the years and in the amounts as set forth in the Certificate of Award. The Bonds shall be subject to optional redemption prior to their maturity on any date on or after November 1, 2024, in whole or in part, in such order of maturity as shall be designated in writing by the City, and by lot within a maturity, at the election of the City upon 45 days' written notice to U.S. Bank National Association, Louisville, Kentucky, the paying agent and registrar designated for the Bonds (the "Paying Agent and Registrar") at a redemption price equal to the par amount thereof, plus accrued interest to the date of redemption: At least thirty (30) days before the optional or mandatory sinking fund redemption date of any Bonds, the Paying Agent and Registrar shall cause a notice of such redemption either in whole or in part, signed by the Paying Agent and Registrar, to be mailed, first class, postage prepaid, to all registered owners of the Bonds to be redeemed at their addresses as they appear on the registration books kept by the Paying Agent and Registrar, but failure to mail any such notice shall not affect the validity of the proceedings for such redemption of Bonds for which such notice has been sent. Each such notice shall set forth the date fixed for redemption, the redemption price to be paid and, if less than all of the Bonds being payable by their terms on a L, W single date then outstanding shall be called for redemption, the distinctive series, number or letters, if any, of such Bonds to be redeemed. On the date so designated for redemption, notice having been mailed in the manner under the conditions hereinabove provided and moneys for payment of the redemption price being held in the Bond Payment Fund by the Paying Agent and Registrar for the registered owners of the Bonds to be redeemed, the Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Bonds on such date, interest on the Bonds so called for redemption shall cease to accrue, and the registered owners of such Bonds shall have no right in respect thereof except to receive payment of the redemption price thereof. The Bonds may be issued in book -entry -only form through the services of the Depository Trust Company ("DTC"). If the City determines to issue the Bonds in book -entry -only form the Designated Officers (hereinafter defined) are authorized to execute all documents necessary to accomplish such form of issuance. Section 3 -- Execution and Delivery. The Bonds shall be executed by the manual or facsimile signature of the Mayor and duly attested by the manual or facsimile signature of the City Clerk (which, together with any other person as may be authorized by resolution or municipal order are referred to as "Designated Officers") and shall have the seal of the City or a facsimile thereof affixed thereto. Additionally, the Bonds shall bear the manual authenticating signature of the Paying Agent and Registrar. The Designated Officers are further authorized and directed to deliver the Bonds to the Purchasers, upon the terms and conditions provided herein, in the Certificate of Award and in the Bids for the Bonds, receive the proceeds therefor, execute and deliver such certificates and other closing documents and take such other action as may be necessary or appropriate in order to effectuate the proper issuance, sale and delivery of the Bonds. The City authorizes and directs the Paying Agent and Registrar to authenticate the Bonds and to deliver the Bonds to the Purchasers upon payment of the purchase price thereof. Section 4 -- Payment. Payment of or on account of the interest on and principal of the Bonds shall be made directly to the Paying Agent and Registrar for the account of the registered owner. Interest on the Bonds shall be payable by check, mailed to the person whose name appears on the fifteenth day preceding an Interest Payment Date on the bond registration records as the registered owner, on each Interest Payment Date or by other transfer of funds acceptable to G coin or currency of the United States of America as shall be legal tender for the payment of public and private debts at the time and place of payment upon delivery of the Bonds to the Paying Agent and Registrar or by other transfer of funds acceptable to the Paying Agent and Registrar and such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bonds to the extent of the sum or sums so paid. Section 5 -- Filina. The Designated Officers are hereby authorized to undertake and cause all filings which may be required by law to be filed by the City with respect to the Bonds, including, but not limited to, the filing with the State Local Debt Officer required by law. Section 6 -- Bond Payment Fund; Payment of Bonds. There is hereby established with the Paying Agent and Registrar a bond payment fund in the name of the City to be known as General Obligation Bonds, Series 2014C Bond Payment Fund (the 112014C Bond Payment Fund"), into which the City covenants to deposit, and into which the Designated Officers are hereby authorized and directed to deposit from the sinking fund (the "Sinking Fund") established pursuant to Ordinance No. 2001-5-6353 adopted by the City (the "2001 General Obligation Ordinance"), on or before the twenty-fifth day of each month which precedes an Interest Payment Date, the amount required to pay principal of and interest due on the Series 2014C Bonds on such Interest Payment Date. The Paying Agent and Registrar shall, without further authorization from the City, withdraw from the 2014C Bond Payment Fund, on such Interest Payment Date, the amounts necessary to pay principal of, and interest on, the Series 2014C Bonds to the registered owner of the same. There is hereby further established with the Paying Agent and Registrar a bond payment fund in the name of the City to be known as Taxable General Obligation Bonds, Series 2014D Bond Payment Fund (the "2014D Bond Payment Fund," and together with the 2014C Bond Payment Fund, the 'Bond Payment Funds"), into which the City covenants to deposit, and into which the Designated Officers are hereby authorized and directed to deposit from the Sinking Fund on or before the twenty-fifth day of each month which precedes an Interest Payment Date, the amount required to pay principal of and interest due on the Series 2014D Bonds on such Interest'Payment Date. The Paying Agent and Registrar shall, without further authorization from the City, withdraw from the 2014D Bond Payment Fund, on such Interest Payment Date, the R M amounts necessary to pay principal of, and interest on, the Series 2014D Bonds to the registered owner of the same. The Paying Agent and Registrar is hereby appointed depository of the Bond Payment Funds with respect to the Bonds. If the City shall fail or. refuse to make any required deposit in the Bond Payment Funds from the Sinking Fund, the Paying Agent and Registrar shall (i) notify any agency of the Commonwealth of Kentucky or any political subdivision thereof which may collect and distribute taxes or revenues for the City to seek any available necessary or proper remedial action; and (ii) upon being indemnified against cost and expense, exercise any remedy provided in the Act or at law or in equity for the benefit of the owner of the Bonds or its assignee, and shall disburse all funds so collected to the owners of the Bonds as payment of the Bonds. Section 7 -- General Obligation. The Bonds shall be full general obligations of the City and, for the payment of said Bonds, and the interest thereon, the full faith, credit and revenue of the City are hereby pledged for the prompt payment thereof. During the period the Bonds are outstanding, there shall be and there hereby is levied on all the taxable property in the City, in addition to all other taxes, without limitation as to rate, a direct tax annually in an amount sufficient to pay the principal of and interest on the Bonds when and as due, it being hereby found and determined that current tax rates are within all applicable limitations. Said tax shall be and is hereby ordered computed, certified, levied and extended upon the tax duplicate and collected by the same officers in the same manner and at the same time that taxes for general purposes for each of said years are certified, extended and collected. Said tax shall be placed before and in preference to all other items and for the full amount thereof provided, however, that in each year to the extent that the other lawfully available funds of the City are available for the payment of the Bonds, including amounts available under the Lease, and are appropriated for such purpose, the amount of such direct tax upon all of the taxable property in the City shall be reduced by the amount of such other funds so available and appropriated. Section 8 -- Maintenance of Sinking_Fund. The Sinking Fund heretofore established by the City is hereby ordered to be continued and maintained as long as any of the Bonds shall remain outstanding. The funds derived from the tax levy required by Section 7 hereof or other lawfully available funds shall be placed in the Sinking Fund and, together with interest collected on the same, are irrevocably pledged for the payment of the interest on and principal of all bonds 7 81 issued under the Act and Tax -Supported Leases, as defined in the Act, when and as the same fall due. Amounts shall be transferred from the Sinking Fund to the Bond Payment Funds at the times and in the amounts required by Section 6 hereof. Section 9 -- Sale of Bonds; Certificate of Award. The Designated Officers are hereby directed to sell the Bonds to the Purchasers at advertised competitive sale, the final principal amount of, the principal amortization of and the interest rate or rates on the Bonds to be established in accordance with the requirements of Sections 1 and 2 hereof by adoption of the Certificate of Award. Each of the City Manager and Finance Director of the City is hereby authorized to execute the Certificate of Award establishing the terms of the Bonds described herein without any further action by the City Commission. Section 10 — Bonds Registered Owners; Transfer; Exchange. As long as the Bonds executed and delivered hereunder shall remain outstanding, the Paying Agent and Registrar shall maintain an office for the Registration of such Bonds and shall also keep at such office books for such registration and transfers. The registered owner of the Bonds, as set forth in the registration books maintained by the Paying Agent and Registrar on the fifteenth day preceding an Interest Payment Date, or its assignees, for purposes of this Bond Ordinance, to the extent of its interest, shall be treated as the owner of the applicable Bonds and shall be entitled to all rights and security of the owner of the Bonds hereunder. Upon surrender for registration of transfer of Bonds at the office of the Paying Agent and Registrar with a written instrument of transfer satisfactory to the Paying Agent and Registrar, duly executed by the registered owner or the registered owner's duly authorized attorney, the Paying Agent and Registrar shall execute and deliver, in the name of the designated transferee or transferees, one or more Bonds of the same series of any authorized denomination and of a like tenor and effect. All Bonds, upon surrender thereof at the office of the Paying Agent and Registrar, may, at the option of the registered owner thereof be exchanged for an equal aggregate principal amount of Bonds of the same series of any authorized denomination. In all cases in which the privilege of exchanging or transferring Bonds is exercised, the Paying Agent and Registrar shall execute and deliver Bonds in accordance with the provisions of this Section. Every such exchange or transfer of Bonds, whether temporary or definitive, shall be without charge; provided that the Paying Agent and Registrar may impose a charge sufficient 8 M. to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. Section 11 -- Disposition of Proceeds of Bonds. The proceeds of the sale of the Series 2014C Bonds shall be deposited, together with other available funds of the City, as follows: (a) accrued interest and rounding amount, if any, shall be deposited to the 2014C Bond Payment Fund created in Section 6 hereof; (b) an amount sufficient to pay the costs of issuing the Series 2014C Bonds shall be deposited to a special cost of issuance fund hereby directed to be established and designated as the "City of Paducah, Kentucky General Obligation Bonds, Series 2014C Cost of Issuance Fund" (the "Series C Cost of Issuance Fund"); and (c) the remainder of the proceeds shall be deposited to a special construction fund (the "City of Paducah 2014C Construction Fund") to be held by the construction fund depository designated in the Certificate of Award (the "2014C Construction Fund Depository") and used for the acquisition, construction, installation and equipping of the 2014C Project. The proceeds of the sale of the Series 2014D Bonds shall be deposited, together with other available funds of the City, as follows: (a) accrued interest and rounding amount, if any, shall be deposited to the 2014D Bond Payment Fund created in Section 6 hereof, (b) an amount sufficient to pay the costs of issuing the Series 2014D Bonds shall be deposited to a special cost of issuance fund hereby directed to be established and designated as the "City of Paducah, Kentucky General Obligation Bonds, Series 2014D Cost of Issuance Fund" (the "Series D Cost of Issuance Fund"); and (c) the remainder of the proceeds shall be deposited to a special construction fund (the "City of Paducah Construction Fund") to be held by the construction fund depository designated in the Certificate of Award (the "2014D Construction Fund Depository") and used for the acquisition; construction, installation and equipping of the 2014D Project. Section 12 — Approval and Authorization of Lease. The City hereby approves the Lease in substantially the form attached hereto as Annex C and made a part hereof. It is hereby found and determined that the Lease is to be entered into in furtherance of proper public purposes of the City. It is further determined that it is necessary and desirable and in the best interests of the City to enter into the Lease for the purposes therein specified, and the execution and delivery of the Lease is hereby authorized and approved. The Mayor and Clerk of the City are hereby E M authorized to execute the Lease, together with such other agreements, instruments or certifications which may be necessary to accomplish the transactions contemplated by the Lease with such changes in the Lease not inconsistent with this Ordinance and not substantially adverse to the City as may be approved by the officials executing the same on behalf of the City. The approval of such changes by said officials, and that such are not substantially adverse to the City, shall be conclusively evidenced by the execution of such Lease by such officials. Section 13 — Approval and Authorization of Subordinated Mortgaize. The City hereby approves the Subordinated Mortgage in substantially the form attached hereto as Annex D and made a part hereof. It is hereby found and determined that the Subordinated Mortgage is to be entered into in furtherance of proper public purposes of the City. It is further determined that it is necessary and desirable and in the best interests of the City to enter into the Subordinated Mortgage for the purposes therein specified, and the execution and delivery of the Subordinated Mortgage is hereby authorized and approved. The Mayor and Clerk of the City are hereby authorized to execute the Subordinated Mortgage, together with such other agreements, instruments or certifications which may be necessary to accomplish the transactions contemplated by the Subordinated Mortgage with such changes in the Subordinated Mortgage not - inconsistent with this Ordinance and not substantially adverse to the City as may be approved by the officials executing the same on behalf of the City. The approval of such changes by said officials, and that such are not substantially adverse to the City, shall be conclusively evidenced by the execution of such Subordinated Mortgage by such officials. Section 14 — Approval and Authorization of Sales Tax Refund Agreement. The City hereby approves the Sales Tax Refund Agreement in substantially the form attached hereto as Annex E and made a part hereof. It is hereby found and determined that the Sales Tax Refund Agreement is to be entered into in furtherance of proper public purposes of the City. It is further determined that it is necessary and desirable and in the best interests of the City to enter into the Sales Tax Refund Agreement for the purposes therein specified, and the execution and delivery of the Sales Tax Refund Agreement is hereby authorized and approved. The Mayor and Clerk of the City are hereby authorized to execute the Sales Tax Refund Agreement, together with such other agreements, instruments or certifications which may be necessary to accomplish the transactions contemplated by the Sales Tax Refund Agreement with such changes in the Sales Tax Refund Agreement not inconsistent with this Ordinance and not substantially adverse to the 10 84 City as may be approved by the officials executing the same on behalf of the City. The approval of such changes by said officials, and that such are not substantially adverse to the City, shall be conclusively evidenced by the execution of such Sales Tax Refund Agreement by such officials. Section 15 -- Further Actions. In connection with the undertaking and implementation by the City of the plan of financing herein described, which is hereby expressly directed, the Designated Officers are hereby authorized and directed to take and carry out such further necessary, desirable or appropriate actions to effect such plan of financing. Section 16 -- Designation of Series 2014C Bonds. The City designates the Series 2014C Bonds as "qualified tax-exempt obligations" for the purposes set forth in § 265(b)(3) of the Internal Revenue Code of 1986, as amended. The City does not anticipate issuing more than $10,000,000 of "qualified tax-exempt obligations" during calendar year 2014. Section 17 -- Discharge of Bond Ordinance. If the City shall pay or cause to be paid, or there shall otherwise be paid, to the owners of the Bonds the total principal and interest due or to become due thereon through maturity, in the manner stipulated therein and in this Bond Ordinance, then the pledges made under this Bond Ordinance, and all covenants, agreements and other obligations of the City hereunder, shall thereupon cease, terminate and become void and be discharged and satisfied. Section 18 -- Severability. If any one or more of the provisions of this Bond Ordinance should be determined by a court of competent jurisdiction to be contrary to law, then such provisions shall be deemed to be severable from all remaining provisions and shall not affect the validity of such other provisions. Section 19 -- Inconsistent Actions. All prior ordinances, resolutions, orders or parts thereof inconsistent herewith are hereby repealed. Section 20 -- Open Meetings Compliance. All meetings of the City Commission and of its committees and any other public bodies, at which the formal actions in connection with the issuance of the Bonds were taken, or at which deliberations that resulted in such formal actions were held, were open meetings, and such formal actions were taken and any such deliberations took place while such meetings, after proper notice, were open to the public, in compliance with all legal requirements including KRS Sections 61.805 through 61.850. 85 Section 21 -- Effective Date. This Bond Ordinance shall become effective immediately upon adoption and publication of a summary thereof, as provided by law. INTRODUCED AND PUBLICLY READ ON FIRST READING on the 26d' day of August, 2014. PUBLICLY READ, ADOPTED AND APPROVED ON SECOND READING, this the 2°a day of September, 2014. CITY OF PADUCAH, KENTUCKY 0 City Clerk Introduced by the Board of Commissioners, August 26, 2014 Adopted by the Board of Commissioners, September 2, 2014 Recorded by Tammara S. Sanderson, City Clerk, September 2, 2014 Published by The Paducah Sun, September 10, 2014 \ord\bond-2014C& D -showroom & hotel CERTIFICATION I, the undersigned, do hereby certify that I am the duly qualified and acting City Clerk of the City of Paducah, Kentucky, and as such City Clerk, I further certify that the foregoing is a true, correct and complete copy of a Bond Ordinance duly enacted by the City Commission of the City at a duly convened meeting held on the 9th day of September, 2014, on the same occasion signed by the Mayor as evidence of his approval, and now in full force and effect, all as appears from the official records of the City in my possession and under my control. Witness my hand and the seal of said City as of the day of , 2014. [SEAL] 13 City Clerk W. ANNEX A Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC") to issuer or its agent for registration of transfer, exchange, or payment and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. COMMONWEALTH OF KENTUCKY CITY OF PADUCAH, KENTUCKY GENERAL OBLIGATION BOND, SERIES 2014C No. RA -1 $ BOND DATE: September _, 2014 MATURITY DATE: November 1, INTEREST RATE: % REGISTERED HOLDER: PRINCIPAL AMOUNT: KNOW ALL PERSONS BY THESE PRESENTS: That the City of Paducah, Kentucky (the "City"), for value received, hereby acknowledges itself obligated to, and promises to pay to the registered holder identified above, or registered assigns, the principal sum identified above (or, if any part thereof has been paid, the balance thereof remaining unpaid), on the maturity date specified above, and to pay interest on said principal sum (or, if any part thereof has been paid, the balance thereof remaining unpaid) from the date hereof, payable each May 1 and November 1, commencing May 1, 2015, at the Interest Rate per annum identified above, calculated on the basis of a 360 day year with 30 day months, except as the provisions hereinafter set forth with respect to prior redemption may be and become applicable hereto. The principal of and interest on this bond are payable, without deduction for exchange, collection, or service charges, in lawful money of the United States of America. Principal is payable at the designated corporate trust office of U.S. Bank National Association, Louisville, Kentucky, or any successor (the "Paying Agent and Registrar") or by other transfer of funds acceptable to the Paying Agent and Registrar and such owner. All interest on this bond and principal payable prior to the final maturity date shall be payable by check or draft mailed to the record date registered holder hereof at the address shown on the registration records kept by the Paying Agent and Registrar or by other transfer of funds acceptable to the Paying Agent and Registrar and such owner. The record date shall be the fifteenth day of the month preceding each interest payment date. This Bond is one of an issue of Bonds of like tenor and effect, except as to denomination and maturity, numbered from RC -1 upward, inclusive, of the denomination of $5,000 or any integral multiple thereof originally aggregating dollars ($ ) in principal amount, issued for the purpose of (i) financing the costs of the construction of a new showroom at the Julian Carroll Convention Center (the "Project") and (ii) paying the costs of issuance of the Bonds, all pursuant to and in full compliance with the general laws of the Commonwealth of Kentucky and particularly Chapter 66 of the Kentucky Revised Statutes, and pursuant to an ordinance duly adopted by the City Commission of the City on the 9th day of September, 2014 (the 'Bond Ordinance") upon the affirmative vote of at least a majority of the members of its City Commission at a public meeting duly and regularly held, and after filing proper notice with the State Local Debt Officer of the Commonwealth of Kentucky. This Bond and the issue of which it forms a part is a general obligation of the City and the full faith, credit and revenue of the City are pledged to the payments due hereunder. THIS BOND IS CONTINUALLY SECURED BY THE FAITH, CREDIT AND REVENUE OF THE CITY. The Bonds mature on the 1st day of November of the following years, in the respective principal amounts and bear interest at the following rates of interest: 14 MggWty Date November 1, 2015 November 1, 2016 November 1, 2017 November 1, 2018 November 1, 2019 November 1, 2020 November 1, 2021 November 1, 2022 November 1, 2023 November 1, 2024 November 1, 2025 :: Amount Interest Rate Per Annum The Bonds maturing on or after November 1, 2025 shall be subject to optional redemption prior to their maturity on any date on or after November 1, 2024, in whole or in part, in such order of maturity as shall be designated in writing by the City, and by lot within a maturity, at the election of the City upon 35 days' written notice to the Paying Agent and Registrar at a redemption price equal to the par amount thereof, plus accrued interest to the date of redemption. [INSERT ANY MANDATORY SINKING FUND REDEMPTION REQUIREMENTS] At least thirty (30) days before the redemption date of any Bonds the Paying Agent and Registrar shall cause a notice of such redemption signed by the Paying Agent and Registrar, to be mailed, first class, postage prepaid, to all registered owners of the Bonds to be redeemed at their addresses as they appear on the registration books kept by the Paying Agent and Registrar, but failure to mail any such notice shall not affect the validity of the proceedings for such redemption of Bonds for which such notice has been sent. Each such notice shall set forth the date fixed for redemption, the redemption price to be paid and, if less than all of the Bonds being payable by their terms on a single date then outstanding shall be called for redemption, the distinctive number or letters, if any, of such Bonds to be redeemed. On the date so designated for redemption, notice having been published in the manner under the conditions hereinabove provided and moneys for payment of the redemption price being held in the Payment Fund by the Paying Agent and Registrar for the registered owners of the Bonds to be redeemed, the Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Bonds on such date, interest on the Bonds so called for redemption shall cease to accrue, and the registered owners of such Bonds shall have no right in respect thereof except to receive payment of the redemption price thereof. No recourse shall be had for the payment of the principal of or the interest on this Bond, or for any claim based hereon, against any officer, agent or employee, past, present or future, of the City, as such, either directly or through the City, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise; all such liability of such officers, agents or employees is hereby renounced, waived and released as a condition of and as consideration for the issuance, execution and acceptance of this Bond. It is hereby certified that all acts, conditions and things required to be done, to occur or be performed precedent to and in the issuance of this Bond, or in the creation of the obligations of which this Bond is evidence, have been done, have occurred and have been performed in regular and due form and manner as required by law; that the faith, credit and revenue of the City are hereby irrevocably pledged for the prompt payment of the principal hereof and interest hereon; that the repayment obligation represented by this Bond is not in excess of any constitutional or statutory limitation; and that due provision has been made for the levy and collection of a tax sufficient in amount to pay the interest on this Bond as it falls due and to provide for the redemption of this Bond at maturity or upon earlier redemption. 15 89 IN WITNESS WHEREOF, the City has caused this Bond to be signed either manually or by facsimile in its name by its Mayor and duly attested either manually or by facsimile by its City Clerk and an impression or facsimile of the City's seal to be imprinted hereon, as of the date set forth above. (SEAL) Attest: 1.2 CITY OF PADUCAH, KENTUCKY Mayor City Clerk CERTIFICATE OF AUTHENTICATION This is to certify that this Bond is one of the Bonds described hereinabove. Date of Authentication: 16 Authorized Signature U.S. Bank National Association Paying Agent and Registrar CERTIFICATE It is hereby certified that the following is a correct and complete copy of the text of the legal opinion of Dinsmore & Shohl, Covington, Kentucky, regarding the issue of which the within bond is one, the original of which opinion was manually executed, dated and issued as of the date of delivery of and payment for said issue and a copy of which is on file with the undersigned. City Clerk [FORM OF APPROVING OPINION] 17 SI 91 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto: (please print or typewrite social security number or other identifying number and name and address of transferee) the within Bond and does hereby irrevocably constitute and appoint the or its successor as Bond Paying Agent and Registrar to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: 18 Note: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. 92 I.1\Z1►IW Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC") to issuer or its agent for registration of transfer, exchange, or payment and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. COMMONWEALTH OF KENTUCKY CITY OF PADUCAH, KENTUCKY TAXABLE GENERAL OBLIGATION BOND, SERIES 2014D No. RA -1 $ BOND DATE: September _, 2014 MATURITY DATE: November 1, INTEREST RATE: % REGISTERED HOLDER: PRINCIPAL AMOUNT: KNOW ALL PERSONS BY THESE PRESENTS: That the City of Paducah, Kentucky (the "City"), for value received, hereby acknowledges itself obligated to, and promises to pay to the registered holder identified above, or registered assigns, the principal sum identified above (or, if any part thereof has been paid, the balance thereof remaining unpaid), on the maturity date specified above, and to pay interest on said principal sum (or, if any part thereof has been paid, the balance thereof remaining unpaid) from the date hereof, payable each May 1 and November 1, commencing May 1, 2015, at the Interest Rate per annum identified above, calculated on the basis of a 360 day year with 30 day months, except as the provisions hereinafter set forth with respect to prior redemption may be and become applicable hereto. The principal of and interest on this bond are payable, without deduction for exchange, collection, or service charges, in lawful money of the United States of America. Principal is payable at the designated corporate trust office of U.S. Bank National Association, Louisville, Kentucky, or any successor (the "Paying Agent and Registrar") or by other transfer of funds acceptable to the Paying Agent and Registrar and such owner. All interest on this bond and principal payable prior to the final maturity date shall be payable by check or draft mailed to the record date registered holder hereof at the address shown on the registration records kept by the Paying Agent and Registrar or by other transfer of funds acceptable to the Paying Agent and Registrar and such owner. The record date shall be the fifteenth day of the month preceding each interest payment date. This Bond is one of an issue of Bonds of like tenor and effect, except as to denomination and maturity, numbered from RD -1 upward, inclusive, of the denomination of $5,000 or any integral multiple thereof originally aggregating dollars ($ ) in principal amount, issued for the purpose of financing (i) the acquisition, construction, installation and equipping of improvements to a hotel to be located adjacent to the Julian Carroll Convention Center and to be leased to Paducah Convention hotel, LLC, a Kentucky limited liability corporation, for use in furtherance of economic development within the City (the "Project") and (ii) paying the costs of issuance of the Bonds, all pursuant to and in full compliance with the general laws of the Commonwealth of Kentucky and particularly Chapter 66 of the Kentucky Revised Statutes, and pursuant to an ordinance duly adopted by the City Commission of the City on the 9th day of September, 2014 (the 'Bond Ordinance") upon the affirmative vote of at least a majority of the members of its City Commission at a public meeting duly and regularly held, and after filing proper notice with the State Local Debt Officer of the Commonwealth of Kentucky. This Bond and the issue of which it forms a part is a general obligation of the City and the full faith, credit and revenue of the City are pledged to the payments due hereunder. THIS BOND IS CONTINUALLY SECURED BY THE FAITH, CREDIT AND REVENUE OF THE CITY. 19 93 The Bonds mature on the 1st day of November of the following years, in the respective principal amounts and bear interest at the following rates of interest: Interest Rate Maturily Date Amount Per Annum November 1, 2015 November 1, 2016 November 1, 2017 November 1, 2018 November 1, 2019 November 1, 2020 November 1, 2021 November 1, 2022 November 1, 2023 November 1, 2024 November 1, 2025 The Bonds maturing on or after November 1, 2025 shall be subject to optional redemption prior to their maturity on any date on or after November 1, 2024, in whole or in part, in such order of maturity as shall be designated in writing by the City, and by lot within a maturity, at the election of the City upon 35 days' written notice to the Paying Agent and Registrar at a redemption price equal to the par amount thereof, plus accrued interest to the date of redemption. [INSERT ANY MANDATORY SINKING FUND REDEMPTION REQUIREMENTS] At least thirty (30) days before the redemption date of any Bonds the Paying Agent and Registrar shall cause a notice of such redemption signed by the Paying Agent and Registrar, to be mailed, first class, postage prepaid, to all registered owners of the Bonds to be redeemed at their addresses as they appear on the registration books kept by the Paying Agent and Registrar, but failure to mail any such notice shall not affect the validity of the proceedings for such redemption of Bonds for which such notice has been sent. Each such notice shall set forth the date fixed for redemption, the redemption price to be paid and, if less than all of the Bonds being payable by their terms on a single date then outstanding shall be called for redemption, the distinctive number or letters, if any, of such Bonds to be redeemed. On the date so designated for redemption, notice having been published in the manner under the conditions hereinabove provided and moneys for payment of the redemption price being held in the Payment Fund by the Paying Agent and Registrar for the registered owners of the Bonds to be redeemed, the Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Bonds on such date, interest on the Bonds so called for redemption shall cease to accrue, and the registered owners of such Bonds shall have no right in respect thereof except to receive payment of the redemption price thereof. No recourse shall be had for the payment of the principal of or the interest on this Bond, or for any claim based hereon, against any officer, agent or employee, past, present or future, of the City, as such, either directly or through the City, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise; all such liability of such officers, agents or employees is hereby renounced, waived and released as a condition of and as consideration for the issuance, execution and acceptance of this Bond. It is hereby certified that all acts, conditions and things required to be done, to occur or be performed precedent to and in the issuance of this Bond, or in the creation of the obligations of which this Bond is evidence, have been done, have occurred and have been performed in regular and due form and manner as required by law; that the faith, credit and revenue of the City are hereby irrevocably pledged for the prompt payment of the principal hereof and interest hereon; that the repayment obligation represented by this Bond is not in excess of any constitutional or statutory limitation; and that due provision has been made for the levy and collection of a tax sufficient in amount to pay the interest on this Bond as it falls due and to provide for the redemption of this Bond at maturity or upon earlier redemption. 20 IN WITNESS WHEREOF, the City has caused this Bond to be signed either manually or by facsimile in its name by its Mayor and duly attested either manually or by facsimile by its City Clerk and an impression or facsimile of the City's seal to be imprinted hereon, as of the date set forth above. (SEAL) Attest: CITY OF PADUCAH, KENTUCKY Un Mayor City Clerk CERTIFICATE OF AUTHENTICATION This is to certify that this Bond is one of the Bonds described hereinabove. Date of Authentication: 21 Authorized Signature U.S. Bank National Association Paying Agent and Registrar 0 95 CERTIFICATE It is hereby certified that the following is a correct and complete copy of the text of the legal opinion of Dinsmore & Shohl LLP, Attorneys, Covington, Kentucky, regarding the issue of which the within bond is one, the original of which opinion was manually executed, dated and issued as of the date of delivery of and payment for said issue and a copy of which is on file with the undersigned. [FORM OF APPROVING OPINION] 22 City Clerk ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto: (please print or typewrite social security number or other identifying number and name and address of transferee) the within Bond and does hereby irrevocably constitute and appoint the or its successor as Bond Paying Agent and Registrar to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: 23 Note: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. 97 F.110M.Wo FORM OF LEASE 24 97 ANNEX C FORM OF LEASE a) CONTRACT, LEASE AND OPTION I. By and Between II. CITY OF PADUCAH, KENTUCKY, Lessor, III. and IV. PADUCAH CONVENTION HOTEL, LLC, Lessee V. Dated as of. September 15, 2014 b) TABLE OF CONTENTS Page SECTION1. Definitions.................................................................................................................. 1 SECTION 2. Financing of Supplemental Improvements; City to Issue City Bonds ...................... 5 SECTION 3. Lessee to Act as Agent for Acquisition, Construction and Installation of Supplemental Improvements..................................................................................... 5 SECTION 4. City Bond Sale........................................................................................................... 5 SECTION 5. Application of City Bond Proceeds for Acquisition, Construction and Installation of Supplemental Improvements..................................................................................... 5 SECTION 6. Lease of Supplemental Project by Lessee; Term; Lease Payments .......................... 7 SECTION 7. Insurance of Supplemental Project............................................................................ 7 SECTION 8. Operation, Maintenance and Repair of Supplemental Project .................................. 7 SECTION 9. Alteration of Supplemental Project; Additional Improvements ............................... 8 SECTION 10. No Hazardous Wastes................................................................................................ 9 SECTION 11. Damage or Destruction of Supplemental Project ...................................................... 9 SECTION 12. Relinquishment of Supplemental Project at End of Lease Term .............................. 9 SECTION 13. Lessee to Have Exclusive Possession of Supplemental Project ............................... 9 SECTION 14. Option to Acquire Supplemental Improvements....................................................... 9 SECTION 15. Default Provisions..................................................................................................... 9 SECTION 16. Performance of Lessee's Obligations by Lessor ..................................................... 11 SECTION 17. Attorneys' Fees and Expenses.................................................................................12 SECTION 18. Conveyance of Supplemental Isnrpovments to Lessee When Bonds Discharged.. 12 SECTION 19. Release and Indemnification Covenants.................................................................12 SECTION 20. Subleasingrof Soplemental Project; Assignment..................................................12 SECTION 21. No Encumbrance, Mortgage or Pledge of Supplemental Project ...........................13 SECTION 22. Extent of Covenants; No Personal Liability............................................................13 SECTION 23. Binding Effect..........................................................................................................13 SECTION 24. Amendments, Changes and Modifications.............................................................13 SECTION 25. Invalidity of Provisions of Lease.............................................................................13 SECTION26. Captions...................................................................................................................13 SECTION 27. Execution of Counterparts.......................................................................................13 SECTION 28. References to Attorneys' Fees.................................................................................13 SECTION29. Governing Law.........................................................................................................14 EXHIBIT A Project Site...........................................................................................................A-1 EXHIBIT B Supplemental Improvements............................................................................... B-1 EXHIBIT C Parking Site.......................................................................................................... C-1 C) CONTRACT, LEASE AND OPTION This Contract, Lease and Option (the "Lease"), made and entered into as of this 15th day of September, 2014, by and between the City of Paducah, Kentucky, a municipal corporation and political subdivision of the Commonwealth of Kentucky (the "Lessor") and Paducah Convention Hotel, LLC, a Kentucky limited liability company (the "Lessee"). d) WITNESSETH WHEREAS, the Lessor is the owner of certain real property located in downtown Paducah, Kentucky, which property is more particularly described in Exhibit A attached hereto and made a part hereof (the "Project Site"); and WHEREAS, the Lessor has a compelling public interest in promoting the welfare of the inhabitants located within the jurisdictional boundaries of the Lessor by relieving conditions of unemployment, encouraging the increase of industry, replacing lost jobs, expanding local tax bases and increasing general commerce; and WHEREAS, pursuant to §§ 103.200 to 103.285, the Lessor has authorized the issuance of its Industrial Building Revenue Bonds, Series 2014 (Paducah Convention Hotel, LLC Project) (the "Industrial Revenue Bonds"), with a maximum indebtedness, exclusive of interest of $10,500,000 and with a final maturity of April 1, 2036, in order to finance a portion of the costs of the acquisition, construction installation and equipping of a 121 room hotel in downtown Paducah, Kentucky (the "Project"), which Project is to be leased to the Lessee pursuant to an Agreement of Lease dated as of September 15, 2014 between the Lessor and the Lessee (the "Bond Lease"); and WHEREAS, Lessor has determined that in order to further accomplish the public purposes of the Lessor, it is desirable and necessary that the Lessor supplement the proceeds of the Bonds in order to finance additional components of the Project, as further described in Exhibit B attached hereto and made a part hereof (the "Supplemental Improvements") and to lease the Supplemental Improvements, together with the parking site identified on attached Exhibit C and made a part hereof (the "Parking Site," and together with the Supplemental Improvements, the "Supplemental Project"), to the Lessee upon the terms hereinafter set forth; and WHEREAS, the Lessor is financing the acquisition, construction and installation of the Supplemental Improvements pursuant to Section 66.011 et. SeMc . of the Kentucky Revised Statutes, as the same may be amended from time to time (the "Financing Act"), through the issuance of its Taxable General Obligation Bonds, Series 2014D in the aggregate principal amount of million dollars ($ ) (the "City Bonds") to be payable in part from rentals under this Lease; and WHEREAS, it is appropriate at this time that this Lease be consummated by and between the parties so that the Supplemental Improvements may be financed forthwith: NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND IN FURTHER CONSIDERATION OF THE ISSUANCE BY THE LESSOR OF THE CITY BONDS, THE LESSOR AND THE LESSEE MUTUALLY COVENANT AND AGREE AS FOLLOWS: SECTION 1. Definitions. Unless the context clearly indicates some other meaning, the following words and terms shall, for all purposes of this Lease, have the following meanings: "Additional Rentals" shall mean, collectively, (i) the cost of operation and maintenance of the Supplemental Project; and (ii) the cost of insuring the Supplemental Project and (iii) any amounts payable pursuant to Sections 17 or 18 of this Lease. "Acquisition Agreements " shall mean, collectively, architectural contracts, engineering contracts, construction contracts, subcontracts and contracts with material suppliers relating to the acquisition, construction or installation of the Supplemental Improvements. "Acquisition Fund" shall mean the fund established and designated as such in the City Bond Ordinance. "Authorized Officer" shall mean, with respect to (i) the Lessor, the Mayor and any officer, agent or employees duly authorized by ordinance or resolution of the Lessor to perform the act or sign the document in question, and (ii) the Lessee, the person at the time designated to act on behalf of the Lessee by written instrument furnished to the Lessor, containing the specimen signature of such person and signed on behalf of the Lessee by an officer of the Lessee; and. "Base Rent" shall mean the monthly payments of principal and interest from Lessee to Lessor, as set forth in Section 6 of this Lease. "Bond Payment Fund" shall mean the fund established and designated as such in the City Bond Ordinance. "City Bond Ordinance" shall mean Ordinance No. 2014- - adopted by the City Commission of the Lessor on September 9, 2014, authorizing the City Bonds, as the same may be amended or supplemented in accordance with its terms. "City Bonds" shall mean any of the $ principal amount of City of Paducah, Kentucky Taxable General Obligation Bonds, Series 2014D. "Certificate" shall mean a document signed by an Authorized Officer attesting to or acknowledging the circumstances or other matters therein stated. "Depository" shall mean the bank or trust company designated in the City Bond Ordinance as depository of the Acquisition Fund, being Independence Bank, Paducah, Kentucky. "Development Agreement" means the Development Agreement dated as of December 17, 2013 by and among the Lessor, the Lessee and the Guarantors, as the same may be amended or supplemented from time to time. "Financing Act" shall mean Section 66.011 et. seMc . of the Kentucky Revised Statutes, as the same may from time to time be amended. "First Mortgage" means the Open -End Leasehold Mortgage and Security Agreement dated as of September 15, 2014, relating to the Project, the Industrial revenue Bonds and the Revenue Bond Lease, among the Lessor, the Lessee and Independence Bank, as amended or supplemented from time to time. "Guarantors" means, collectively, Todd M. Clark, John M. Clark, David M. Puckett, David B. Jones, Glenn R. Malone, Eddie Corley and Garrett Forbes Mathieu. "IDB Act" shall mean Chapter 103 of the Kentucky Revised Statutes, as the same may be amended from time to time. "Industrial Revenue Bonds" shall mean the City of Paducah, Kentucky Industrial Building Revenue Bonds, Series 2014 (Paducah Convention Hotel, LLC Project) in the maximum aggregate principal amount of $10,500,000. "Interest Rate for Advances" means ten percent (10%) per annum. "Investment Obligations" means any of the following investments permitted under KRS 66.480: Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, if delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian. These investments may be accomplished through repurchase agreements reached with sources including, but not limited to, national or state banks chartered in Kentucky; Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States governmental agency, including but not limited to: 1. United States Treasury; 2. Export -Import Bank of the United States; 3. Farmers Home Administration; 4. Governmental National Mortgage corporation; and 5. Merchant Marine bonds; Obligations of any corporation of the United States government, including but not limited to: 1. Federal Home Loan Mortgage Corporation; 2. Federal Farm Credit Banks; 3. Bank for Cooperatives; 4. Federal Intermediate Credit Banks; 5. Federal Land Banks; 6. Federal Home Loan Banks; 7. Federal National Mortgage Association; and 8. Tennessee Valley Authority; Certificates of deposit issued by or other interest-bearing accounts of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity or which are collateralized, to the extent uninsured, by any obligations permitted by KRS 41.240(d); Uncollateralized certificates of deposit issued by any bank or savings and loan institutions rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; Bankers' acceptances for banks rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; Commercial paper rated in the highest category by a nationally recognized rating agency; Bonds or certificates of indebtedness of this state and of its agencies and instrumentalities; Securities issued by a state or local government, or any instrumentality of agency thereof, in the United States, and rated in one (1) of the three highest categories by a nationally recognized rating agency; and Shares of mutual funds, each of which shall have the following characteristics; 1. The mutual fund shall be an open-end diversified investment company registered under the Federal Investment Company Act of 1940, as amended; 2. The management company of the investment company shall have been in operation for at least five (5) years; and 3. All of the securities in the mutual fund shall be eligible investments pursuant to this section. "Lease " shall mean this Contract, Lease & Option dated as of September 15, 2014, by and between the Lessor and the Lessee, as amended or supplemented from time to time in accordance with the terms hereof. "Lease Rental Payments" means Base Rent and Additional Rentals, which constitute the payments payable by the Lessee for and in consideration of the right to use the Supplemental Project and the option to purchase the Supplemental Improvements. "Lessee " shall mean the Paducah Convention Hotel, LLC, a Kentucky limited liability company, its successors and assigns. "Lessor" shall mean the City of Paducah, Kentucky, a municipal corporation and political subdivision of the Commonwealth of Kentucky. "Outstanding" when used with reference to the Bonds, shall mean, as of any date, all City Bonds theretofore or then being authenticated and delivered under the Financing Act, except: (i) Any City Bonds cancelled by the Paying Agent at or prior to the maturity date of the City Bonds; (ii) City Bonds (or portions of City Bonds) for the payment or redemption of which there shall be held in trust by the Paying Agent (whether at or prior to maturity or redemption date) (a) cash, equal to the principal amount or redemption price thereof, as the case may be, with interest to the date of maturity or redemption date, or (b) Investment Obligations as defined in clause (i) of the definition of Investment Obligations, in such principal amounts, having such maturities and bearing such interest, which, together with cash, if any, shall be sufficient to pay when due, the principal amount or redemption price, as the case may be, with interest to the date of maturity or redemption date; provided that if such City Bonds are to be redeemed, notice of such redemption shall have been given as in the City Bond Ordinance authorizing the City Bonds provided, or provision satisfactory to the Paying Agent for the City Bonds shall have been made for the giving of such notice; (iii) City Bonds in lieu of or in substitution for which other City Bonds shall have been authenticated and delivered pursuant to the ordinance authorizing the City Bonds; and (iv) City Bonds deemed to have been paid as provided in the City Bond Ordinance authorizing the City Bonds. "Paying Agent" shall mean U.S. Bank National Association, or any bank or trust company so designated, and its successor or successors hereafter appointed as paying agent for the City Bonds. "Pledged Receipts": (i) shall mean all Lease Payments paid to or upon the order of the Lessor pursuant to the Lease, including both timely and delinquent payments with late charges, if any. (ii) shall include all interest earned and gains realized on Investment Obligations unless this Lease specifically requires such interest earned and gains realized to remain in a particular fund or to be transferred to a particular fund. (iii) shall mean and include all rights arising under this Lease, including, but not by way of limitation, the duty of the Lessee to continuously operate, maintain, insure, replace and renew the Supplemental Project during the term of the Lease. (iv) shall mean and include all amounts in all funds and accounts created hereunder. (v) shall mean and include any amounts realized from the foreclosure and decretal sale of the Supplemental Project. (vi) shall mean and include any amounts realized by the Lessee from the subleasing of the Supplemental Project. (vii) shall mean and include any amounts realized by the Lessor under the Sales Tax Refund Pledge and Security Agreement. "Parking Site " shall mean the real property more particularly described in Exhibit C attached hereto and made a part hereof. "Project" shall mean the acquisition, construction, installation and equipping of a 121 room hotel on the Project Site. "Revenue Bond Lease " shall mean that certain Agreement of Lease dated as of September 15, 2014, by and between the Lessor and the Lessee, relating to the Project and the Industrial Revenue Bonds, as amended or supplemented from time to time in accordance with the terms thereof. "Sales Tax Refund Pledge and Security Agreement" shall mean the Sales Tax Refund Pledge and Security Agreement dated as of September 15, 2014 between the Lessor and the Lessee. "Subordinated Mortgage " shall mean the Subordinated Leasehold Mortgage and Security Agreement dated as of September 15, 2014, relating to the Project and Supplemental Improvements, between the Lessor and the Lessee, as amended or supplemented from time to time. "Supplemental Improvements" shall mean those additional components of the Project, as further described in Exhibit B attached hereto and made a part hereof. "Supplemental Project" shall mean, collectively, the Supplemental Improvements and the Parking Site. "Project Site" shall mean the site on which the Project is to be located, as more particularly described in Exhibit A attached hereto and made a part hereof. "Sublease " shall mean any agreement between the Lessee and a person, association, partnership, corporation, governmental unit or other legal entity (other than the Lessor) providing for the use of the Project, or any part thereof, by such other person, association, partnership, corporation, governmental unit or other legal entity. "Sublessee" shall mean any person, association, partnership, corporation, governmental unit or other legal entity (other than the Lessor Lessor) that has entered into a Sublease with the Lessee. SECTION 2. Financing of Supplemental Improvements; Lessor to Issue City Bonds. In order to provide funds for the financing of the Supplemental Improvements, the City has authorized its City Bonds in the principal amount of $ in registered form of the denomination of $5,000 each or multiples thereof numbered consecutively from RD -1 upward, inclusive; to be dated their date of initial issuance and delivery, with final maturity on SECTION 3. Lessee to Act as Agent for Acquisition, Construction and Installation of Supplemental Improvements. In connection with the acquisition, construction and installation fo the Supplemental Improvements, the Lessor designates the Lessee as its agent for all purposes of the Supplemental Improvements, including inter alia, (i) causing the planning and design of the Supplemental Improvements and approval thereof by all applicable regulatory agencies; (ii) causing construction bids to be secured in respect of the Supplemental Improvements, if applicable, with due regard to the provisions of Kentucky law; (iii) entering into the Acquisition Agreements for the Project Building; and (iv) for the performance of all other duties customarily incident to the foregoing provisions of subparagraph (i), (ii) and (iii). Actions heretofore taken by the Lessee in such respects are expressly affirmed and ratified by the Lessor. SECTION 4. City Bond Sale. The Lessor shall offer the City Bonds at an advertised, public, competitive sale or by solicitation of proposals as required by Kentucky law in accordance with the City Bond Ordinance. The Lessor hereby reserves the right to reject bids, and waive minor bidding informalities, but the Lessee hereby agrees that the Lessor may, in its discretion, accept the best bid or the only bid if but one shall be received. SECTION 5. Application of City Bond Proceeds for Acquisition, Construction and Installation of Supplemental Improvements. Upon the Lessor's delivery of the City Bonds to the purchaser or purchasers thereof and receipt of the purchase price, the same shall, after payment of the costs of issuing the City Bonds, be deposited in the Acquisition Fund to be held by the Depository. Amounts in the Acquisition Fund shall be held and disbursed by the Lessor, as follows: (a) Moneys credited to the Acquisition Fund shall be expended upon written request of the Lessee, addressed to the Lessor, only for payment of the costs of the Supplemental Improvements, including real property or interests therein, physical facilities, equipment, engineering costs, easements and rights-of-way, land and any other related costs, and interest on the City Bonds, subject to the provisions and restrictions of this Section. (b) Amounts in the Acquisition Fund shall be disbursed and applied only upon written direction of the Lessor, addressed to the Depository and signed by an Authorized Officer, only for the making of disbursements for acquisition, construction and installation of the Supplemental Improvements and related costs, pursuant to the terms of the Acquisition Agreements, and any other agreements pursuant to which the Supplemental Improvements, or any part thereof, are to be acquired, constructed or installed. The Depository shall keep and maintain complete and detailed records with respect to the Acquisition Fund. The Lessor shall be furnished with an executed copy of the Acquisition Agreements. Receipt by the Depository of such written request from an Authorized Officer of the Lessor shall, with respect to actions that are consistent with such direction, constitute full acquaintance to the Depository for disbursing in accordance with such written request. (c) Upon the deposit of the proceeds of the City Bonds in the Acquisition Fund in the manner provided in the City Bond Ordinance, the Lessee shall furnish the Lessor with a schedule of dates on which it is estimated by the Lessee that such moneys in such Acquisition Fund will be required to be expended in respect of the supplemental Improvements. The Lessee, acting on behalf of the Lessor, shall from time to time amend the schedule so furnished as further data and information become available. After such schedule or amended schedule has been furnished to the Lessor, the Lessor may direct the Depository to, or in the absence of such direction the Depository shall, invest and reinvest the moneys in the Acquisition Fund in Investment Obligations so that the maturity date or date of redemption at the option of the holder of such Investment Obligations shall coincide as nearly as practicable with the times at which moneys are required by the Lessor to be so expended on the Supplemental Improvements. All Investment Obligations purchased shall be held by the Depository and shall be deemed at all times to be part of the Acquisition Fund. The Depository shall sell or present for redemption, any Investment Obligations purchased by it as an investment whenever it shall be necessary in order to provide moneys to meet any authorized payment from the Acquisition Fund. (d) Each withdrawal of moneys from the Acquisition Fund shall be undertaken by a requisition executed by an Authorized Officer of the Lessor containing the following with respect to each payment or disbursement to be made: (i) the name of the person or persons to whom the payment or disbursement is to be made; (ii) the amount to be paid to such person or party; (iii) the applicable contract or agreement in respect of which the payment or disbursement is to be made; (iv) that with respect to such requested payment or disbursement there has not been filed with or served upon the Lessee or the Lessor notice of any lien or attachment upon, or claim affecting the right to receive payment of any of the amounts requisitioned and payable to any of the persons, firms or corporations named in such requisition which has not been released or will not be released simultaneously with such payment; (v) that such requisition contains no item representing payment on account of any retained percentages of the cost of construction of the Supplemental Improvements which the Lessee, acting on behalf of the Lessor, is at the date of such requisition entitled to retain; (vi) that in connection with such requisition, the Lessor has received such proofs, executed by parties to the Acquisition Agreements or other appropriate agreement, as are properly required by the Lessor to the effect that each obligation set forth in said requisition has been (a) properly incurred, and (b) is then due and unpaid; and (c) that insofar as such obligation was incurred for work, services, materials, equipment or supplies, such work or services were actually performed, or such materials, equipment or supplies, were actually installed in furtherance of the acquisition, construction or installation of the Supplemental Improvements or were delivered at the Project Site for such purposes, all in accordance with the Acquisition Agreements. (e) At such time as all moneys due to be disbursed from the Acquisition Fund have been so disbursed and paid, and the Lessor has received a certificate executed by an Authorized Officer of the Lessee stating that completion of the Supplemental Improvements authorized by the City Bonds has occurred, which Certificate shall be accompanied by' an opinion of legal counsel stating that there are no uncancelled mechanics', laborers', contractors' or materialmen's liens on file in any public office where the same should be filed in order to be valid liens against any part of the Supplemental Improvements, and that in the opinion of said legal counsel the time within which such liens can be filed has expired, the balance in such Acquisition Fund, if any, shall be transferred by the Depository to the Bond Payment Fund. SECTION 6. Lease of Project by Lessee; Term; Lease Payments. The Lessee hereby leases from the Lessor and the Lessor hereby lets to the Lessee the Supplemental Project, together with all of the improvements thereto, for period from the date of issuance of the City Bonds and ending on November 1, 2025, at agreed and stipulated Lease Payments equal to (i) the aggregate of the interest on and principal of the City Bonds which will become due and payable during the period May 1, 2015 through and including November 1, 2025 (the "Base Rent"), together with (ii) the cost of operation and maintenance of the Supplemental Project; and (iii) the cost of insuring the Supplemental Project, as hereinafter provided. The Base Rent identified in clause (i) above shall be payable on the first day of each month in installments equal to the sum of (a) one-sixth of the amount of interest next coming due on the City Bonds on the immediately succeeding May 1 or November 1, plus (b) one -twelfth of the amount of principal next coming due on the City Bonds, whether at maturity or as a result of mandatory sinking fund redemption, on the immediately succeeding November 1. The remaining payments due under (ii) and (iii) above ("Additional Rentals") shall be made as the same become due and payable. All Lease Payments hereunder shall be made without notice, demand, setoff, defense, deferment or deduction at the times and in the manner set forth above. Notwithstanding any provision of this Lease to the contrary, this Lease and the obligations of Lessee hereunder shall be a general obligation of the Lessee and all Lease Payments hereunder shall be payable from all lawfully available revenues of Lessee. SECTION 7. Insurance of SLipplemental Project. The Lessee agrees that it will, during the term of this Lease provide that all insurable Supplemental Improvements to be acquired or constructed and located upon the Project Site and Parking Site, are insured to the full insurable value thereof against fire, flood and windstorm to the extent such insurance is obtainable (with standard comprehensive coverage endorsement) in good and solvent insurance companies; and the Lessee will make said policies payable to the Lessor and the Lessee as their respective interests may appear, or cause said policies to be endorsed in an appropriate manner so that in the event of loss the proceeds thereof will, subject with respect to the Supplemental Improvements to the priority granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease, be payable to the Lessor. Additionally, the Lessee will cause public liability insurance to be carried and maintained with a company or self-insurance fund acceptable to the Lessor with respect to the Supplemental Improvements Project in such amount as is approved by the Lessor. Any public liability insurance policy required by this Section 7 will name the Lessor as additional named insured, subject to the priorities granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease with respect to the Supplemental Improvements. SECTION 8. Operation Maintenance and Repair of Supplemental Project. The Lessee agrees to take good care of the Supplemental Project, to maintain and repair the same at the expense of the Lessee, to keep all of said premises and improvements thereon in good repair, working order and first class condition, and to return the same in as good condition as when received by the Lessee, ordinary wear and tear, accident, damage by fire and the elements, and other unavoidable casualties excepted. The Lessee further agrees to pay any and all (i) improvement assessments of any kind whatsoever against said properties hereby leased, (ii) costs of collection of waste generated at the Supplemental Project, (iii) landscaping maintenance and snow removal costs, (iv) general real estate taxes, including those on leasehold values, (v) costs of janitorial services, (vi) utility costs and charges, whether public or private, and (vii) personal property taxes. The Lessee has and does hereby covenant for the benefit of the Lessor that it will (i) cause the Supplemental Improvements to be designed in such manner and to such standards as to comply with state, local and federal regulations applicable thereto; (ii) supervise and oversee through its duly authorized agents, the acquisition, construction and installation of the Supplemental Improvements to proper standards; (iii) accept custody, control, domination and possession of the Supplemental Improvements as same is acquired, constructed and completed, (iv) accept the Parking Site in its present condition, (v) at all times during the terms of this Lease either operate, maintain and repair the Supplemental Project or cause a Sublessee to operate, maintain and repair the Supplemental Project in accordance with the terms of this Lease; (vi) replace and restore the Supplemental Project using funds available for such purposes; but only to the same extent as other like facilities owned and operated by the Lessee, and (vii) maintain insurance with respect to the Supplemental Project as provided in Section 7 hereof, with such insurance policies to name the Lessor as beneficiaries, as their interest may appear, subject only to the priority interests in such insurance granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease with respect to the Supplemental Improvements. Actions taken by the Lessee pursuant to this Lease in respect of operating, maintaining and insuring the Supplemental Project shall be carried out in a manner consistent with actions taken in respect of similar facilities of the Lessee, and evidence thereof shall be furnished annually to the Lessor by the Lessee. SECTION 9. Alteration of Project, Additional Improvements. Lessee shall have and is hereby given the right, at its sole cost and expense, to make such additions, changes and alterations in and to any part of the Supplemental Improvements as Lessee from time to time may deem necessary or advisable; provided, however, Lessee shall not make any addition, change or alteration which will adversely affect the structural strength of any part of the Supplemental Improvements, or make any changes materially altering the nature or use of the Parking Site as parking facilities. All additions, changes and alterations made by Lessee pursuant to the authority of this Section 9 shall (a) be made in a workmanlike manner and in compliance with all laws and ordinances applicable thereto, (b) when commenced, be prosecuted to completion with due diligence without delay or abatement in Lessee's payment of Lease Payments due hereunder, and (c) when completed, be deemed a part of the Supplemental Project; provided, however, that additions by Lessee to the Supplemental Project of furnishings, machinery and equipment purchased and installed by Lessee with its own funds (i.e., funds other than the Acquisition Fund) and not constituting repairs, renewals, or replacements of items constituting a part of the Supplemental Project shall remain the property of Lessee and may be removed by Lessee at any time during the term of this Lease; provided further, however, that all such additional furnishings, machinery and equipment which remain on the Project Site or Parking Site on the date of termination of this Lease and the date of termination of the Revenue Bond Lease for any cause other than the purchase of the Project pursuant to Section 14 hereof and the provisions of the Revenue Bond Lease shall, upon and in the event of such termination, become the separate and absolute property of Lessor. Lessee shall have and is hereby given the further right at its sole cost and expense to construct on that portion of the Project Site not then occupied by buildings or improvements such additional buildings and improvements as Lessee from time to time may deem necessary or advisable, provided, however such additions shall not be made unless the Lessor shall have received a certificate of an independent engineer acceptable to the Lessor stating that such addition or additions will not impair the usefulness of the Project or interfere with ingress thereto or egress therefrom. All additional buildings and improvements constructed on the Project Site by Lessee pursuant to the authority of this Section shall, during the term of this Lease, remain the property of Lessee and may be added to, altered or razed and removed by Lessee at any time during the term of this Lease. Lessee covenants and agrees (a) to make all repairs and restorations, if any, required to be made to the Project because of the construction of, addition to, alteration or removal of such additional buildings or improvements, (b) to keep and maintain such additional buildings and improvements in good condition and repair, ordinary wear and tear and damage by fire or other casualty excepted, (c) to promptly and with due diligence either raze and remove from the Project Site in a good and workmanlike manner, or repair, replace or restore such additional buildings or improvements as may from time to time be damaged by fire or other casualty, and (d) that all additional buildings and improvements constructed by Lessee on the Project Site pursuant to this Section which remain in place on the Project Site on the date of termination of this Lease and the Revenue Bond Lease for any cause other than the purchase of the Project pursuant to Section 14 hereof and the provisions of the Revenue Bond Lease shall, upon and in the event of such termination, become the separate and absolute property of Lessor. SECTION 10. No Hazardous Wastes. Lessee shall not cause or permit the release or disposal of any hazardous substances, wastes or materials on or about the supplemental Project. Hazardous substances, wastes or materials shall include those which are defined in the Comprehensive Environmentannvironmental Response Compensation and Liability Act of 1980, as amended, 42 USC Section 6901 et seq., the Toxic Substance Control Act, as amended, 15 USE Section 2601 et seq. To the extent permitted by law, Lessee shall indemnify, defend and hold Lessor harmless from and against any claims or liability, including attorneys' fees and costs, arising out of or connected with Lessee's failure to comply with the terms of this Section 10, which terms shall survive the expiration or earlier termination of this Lease. SECTION 11. Damage or Destruction of Supplemental Improvements. In the event destruction, total or partial, shall ensue so as to make the Supplemental Improvements unusable for the purposes for which the same is to be constructed or acquired, such damage or destruction shall not relieve the Lessee of any obligations hereunder, but the Lessee agrees that it will be bound by the terms of this Lease and will continue to pay the rentals herein stipulated to the Lessor from the sources herein provided. Provided, that the proceeds of insurance coverage will be applied, if adequate, to the discharge of the City Bonds, or to the rebuilding or repair of the Supplemental Project, subject only to the priority interests in such insurance proceeds granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease with respect to the Supplemental Improvements. SECTION 12. Relinquishment of Project at End of Lease Term. Subject to the provisions of Section 14 hereof, the First Mortgage and the Revenue Bond Lease with respect to the Supplemental Improvements, the Lessee agrees to relinquish the Supplemental Project without any demand and without any notice at the expiration of the term ending _, 20___, and to keep the Supplemental Project in good repair and avoid any damage to the same (other than ordinary wear and tear) during the occupancy thereof by the Lessee. SECTION 13. Lessee to Have Exclusive Possession of Supplemental Project. During the term of this Lease, the Lessee shall have full possession, control and operation of the Supplemental Project, and the Lessee agrees that it will, at its own expense, operate the same or cause the same to be operated according to acceptable public standards and in such manner as to promote and preserve the public safety, health, convenience, fire protection and general welfare of the inhabitants of the Lessor. SECTION 14. Option to Acquire Supplemental Improvements. It is further specifically agreed that the Lessee may, at any time on or after 1,20 — ,20_ acquire title to the Supplemental Improvements, by giving to the Lessor at least sixty (60) days' notice in advance, in writing, of its intention to purchase the Supplemental Improvements and by depositing into the Bond Payment Fund, moneys sufficient to pay all principal, premium, if any, and interest on the Outstanding City Bonds to a permitted date of redemption or the maturity date of the City Bonds, or in lieu thereof, to deposit into the Bond Payment Fund, such principal amount of Investment Obligations (as defined in clause (i) of the definition of Investment Obligations) as shall, with earnings thereon, produce such identical result. Lessee shall have no option rights to acquire the Parking Site. SECTION 15. Default Provisions; Remedies. This Lease is made on condition that if (each of the following events being deemed an "Event of Default" under the provisions of this Lease): (a) Lessee fails to punctually pay any installment of Base Rent or Additional Rent as the same becomes due from the specific sources provided therefor in Section 6 of this Lease, and such failure continues for ten (10) days thereafter; or (b) The Lessee shall fail to observe and perform any other agreement, term or condition contained in this Lease, and such failure or neglect either cannot be remedied or, if it can be remedied, it continues unremedied for a period of thirty (30) days after notice thereof to Lessee, provided that such period can be extended for up to sixty additional days if Lessee has commenced a cure within said thirty -day period, is pursuing it diligently, and the interests of Lessor are not materially adversely affected; or (c) The Lessee shall: (i) admit in writing its inability to pay its debts generally as they become due; (ii) have an order for relief entered in any case commenced by or against it under the Federal bankruptcy laws, as now or hereafter in effect; (iii) commence a proceeding under any other Federal or state bankruptcy, insolvency, reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for ninety days; (iv) make an assignment for the benefit of creditors; or (v) have a receiver or trustee appointed for it or for the whole or any substantial part of its property; then Lessor may take any one or more of the following remedial steps, in addition to all other remedies available at law or equity: (i) Declare all installments of Base Rent as well as any Additional Rent for the remainder of the term of the Lease to be immediately due and payable, whereupon the same shall become immediately due and payable. If Base Rent is thus accelerated, the amount thus due and payable by Lessee as accelerated rents shall be the sum of (1) the aggregate principal amount of the Bonds then outstanding, (2) all unpaid interest on the City Bonds accruing to the date of such acceleration, (3) all fees and expenses of the Paying Agent accrued and to accrue through such acceleration date, including reasonable attorneys' fees, and (4) any amount then due the Lessor hereunder. (ii) Subject to the rights granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease with respect to the Supplemental Improvements, Lessor may then or at any time thereafter, and while such default shall continue, give Lessee written notice of intention to terminate this Lease on a date specified therein, which date shall not be earlier than ten (10) days after such notice is given, and, if all defaults have not then been cured, on the date so specified, Lessee's rights to possession of the Supplemental Project shall cease and this Lease shall thereupon be terminated, and Lessor may re-enter and take possession of the Supplemental Project; and as an alternative remedy Lessor may at Lessor's election, without terminating this Lease or the term thereof, re-enter the Supplemental Project and take possession thereof, as agent for Lessee, and having elected to re-enter and take possession of the Supplemental Project without terminating this Lease or the term thereof, Lessor shall use reasonable diligence to relet the Supplemental Project, or parts thereof for Lessee's account, for such term or terms and at such rental and upon such other terms and conditions as Lessor may deem advisable, with the right to make alterations and repairs to the Supplemental Project, and no such re-entry or taking of possession of the Supplemental Project by Lessor shall be construed as an election on Lessor's part to terminate this Lease, and no such re-entry or taking of possession by Lessor shall relieve Lessee of its obligation to pay Base Rent or Additional Rent (at the time or times provided herein), or of any of its other obligations under this Lease, all of which shall survive such re-entry or taking of possession, and Lessee shall continue to pay the Base Rent and Additional Rent provided for in this Lease until the end of the term thereof and whether or not the Supplemental Project shall have been relet, less the net proceeds, if any, of any reletting of the Supplemental Project after deducting all of Lessor's reasonable expenses in connection with such reletting, including without limitation all reasonable repossession costs, brokerage commissions, legal expenses, expenses of employees, and reasonable costs and expenses of preparation for reletting including the reasonable cost of any alterations that may be necessary in connection therewith. Any such reletting may be effected by private negotiation and without public advertisement. Having elected to re-enter or take possession of the Supplemental Project without terminating the term of this Lease, Lessor may, by notice to Lessee given at any time thereafter while Lessee is in default in the payment of Base Rent or Additional Rent or in the performance of any other obligation under this Lease, elect to terminate this Lease on a date to be specified in such notice, which date shall be not earlier than ten (10) days after the giving of such notice, and if all defaults shall not have then been cured, on the date so specified, this Lease shall thereupon be terminated. If in accordance with any of the foregoing provisions of this Section 15, Lessor shall have the right to elect to re-enter and take possession of the Supplemental Project, Lessor may enter and expel Lessee and those claiming through or under Lessee and remove the property and effects of both or either, subject, however, to the prior rights granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease with respect to the Supplemental Improvements. (iii) Subject, to the prior rights granted to the registered holders of the Industrial Revenue Bonds under the First Mortgage and Revenue Bond Lease with respect to the Supplemental Improvements, Lessor may at Lessor's election appoint a receiver or receivers of the Supplemental Project and of all rents, revenues, issues, earnings, income, products and proceeds thereof, with such powers as the court making such appointment shall confer. At the request of Lessor, Lessee shall consent to the appointment of any such receiver. Notwithstanding the foregoing, if, by reason of Force Majeure, the Lessee is unable to perform or observe any agreement, term or condition hereof which would give rise to an Event of Default under this Section 15, the Lessee shall not be deemed in default during the continuance of such inability. However, the Lessee shall promptly give notice to the Lessor of the existence of an event of Force Majeure and shall use its best efforts to remove the effects thereof; provided that the settlement of strikes or other industrial disturbances involving employees of the Lessee shall be entirely within its discretion. The term Force Majeure shall mean, without limitation, the following: (i) acts of God; strikes, lockouts or other industrial disturbances of non employees of the Lessee; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or any of their departments, agencies, political subdivisions or officials, or any civil or military authority; insurrections; civil disturbances; riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes; tornados; storms; droughts; floods; arrests; restraint of government and people; explosions; breakage, malfunction or accident to facilities, machinery, transmission pipes or canals; partial or entire failure of utilities; shortages of labor, materials, supplies or transportation; or (ii) any cause, circumstance or event not reasonably within the control of the Lessee. The declaration of an Event of Default and the exercise of remedies upon any such declaration, shall be subject to any applicable limitations of Federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings. The provisions of this Section 15 are subject to the further limitation that declaration of an Event of Default under this Section 15 by the Lessor may be waived or rescinded in writing by the Lessor, provided that no such waiver or rescission shall extend to or affect any subsequent or other default or impair any right consequent thereon. SECTION 16. Performance of Lessee's Obligations by Lessor. If Lessee shall fail to keep or perform any of its obligations as provided in this Lease in respect of (a) maintenance of insurance, (b) repairs and maintenance of the Supplemental Project, (c) compliance with legal or insurance requirements hereunder, (d) keeping the Parking Site free of any lien and the Supplemental Project free of any lien except those created under the Revenue Bond Lease, First Mortgage and Subordinated Mortgage, or (e) the making of any other payment or performance of any other obligation, then Lessor may (but shall not be obligated so to do) upon the continuance of such failure on Lessee's part for thirty (30) days after written notice of such failure is given Lessee by Lessor and without waiving or releasing Lessee from any obligation hereunder, as an additional but not exclusive remedy, make any such payment or perform any such obligation, and all sums so paid by Lessor and all necessary incidental costs and expenses incurred by Lessor in performing such obligation shall be deemed Additional Rent and shall be paid to Lessor on demand with interest thereon from the date of such payment at the Interest Rate for Advances, and if not so paid by Lessee, Lessor shall have the same rights and remedies as provided for in Section 15 in the case of default by Lessee in the payment of Base Rent. SECTION 17. Attorneys' Fees and Expenses. Should a default under the provisions of this Lease occur and the Lessor employ attorneys or incur other expenses for the collection of Lease Payments or the enforcement of performance of any other obligation of Lessee under this Lease or Lessee shall on demand pay to the Lessor the reasonable fees of such attorneys and such other reasonable expenses so incurred; provided that such attorney's fees shall be allowed only to the extent actually paid and shall not be allowed to a salaried employee of the Lessor. If any such expenses are not so reimbursed, the amount thereof, together with interest thereon from the date of demand for payment at the Interest Rate for Advances, to the extent permitted by law, shall constitute Additional Rent, and in any action brought to collect Lease Payments, the Lessor shall be entitled to seek the recovery of those expenses in such action except as limited by law or by judicial order or decision entered in such proceedings. SECTION 18. Conveyance of Supplemental Improvements to Lessee When City Bonds Discharged. If the Lessee shall pay the rentals for each year as herein provided and when from such rentals the Lessor shall have fully paid and retired all of the Outstanding City Bonds, then the Lessor covenants and agrees that it will convey the Supplemental Improvements, but not the Parking Site, to the Lessee free and clear of all liens and encumbrances created by and under this Lease, such steps to be taken at the expense of the Lessee. SECTION 19. Release and Indemnification Covenants. The Lessee will and hereby agrees to indemnify and save the Lessor (an "Indemnitee") harmless against and from any or all claims, by or on behalf of any person, firm, corporation or other legal entity, and all liabilities, obligations, losses and damages whatsoever, regardless of the cause thereof and the expenses, penalties and fees in connection therewith (including counsel fees and expenses), arising from or as a result of the operation, ordering, ownership, acquisition, construction, use, condition, delivery, rejection, storage, return or management of the Supplemental Project during the term of this Lease, or the entering into of the Lease or any other document or instrument relating thereto (collectively, "Indemnified Claims"), including, but not limited to: (i) any condition of the Supplemental Project; (ii) any act of negligence of the Lessee or of any of the agents, contractors or employees or any violation of law by the Lessee or breach of any covenant or warranty by the Lessee hereunder; (iii) any accident in connection therewith resulting in damage to property or injury or death to any person; and (iv) the incurring of any cost or expense in connection with the acquisition of the Supplemental Project in excess of the moneys available therefor in the Acquisition Fund. To the extent permitted by law, the Lessee will indemnify and save each Indemnitee harmless from any such Indemnified Claim, or in connection with any action or proceeding brought thereon and, upon notice from such Indemnitee, will defend or pay the cost of defending such Indemnitee, in any such action or proceeding. The indemnification arising under this Section 19 will continue in full force and effect notwithstanding the full payment of all obligations under this Lease or the termination of this Lease for any reason. SECTION 20. Subleasing of Supplemental Project, Assignment. The Lessee will not assign its rights under this Lease or sublease the Supplemental Project in whole or in part unless Lessee shall have received the prior written consent of the Lessor, which consent may be withheld in the Lessor's sole discretion, and subject to each of the following conditions: (a) no such assignment or sublease shall relieve the Lessee from primary liability for any of its obligations hereunder and under the Development Agreement, the Subordinated Mortgage or the Sales Tax Refund Pledge and Security Agreement except for any assignment with respect to a consolidation, merger, dissolution, disposal of assets or transfer of assets, approved by the Lessor in which case the Lessee shall be relieved from liability for any of its obligations hereunder and under the Subordinated Mortgage or the Sales Tax Refund Pledge and Security Agreement; (b) the assignee or sublessee shall assume the obligations of the Lessee hereunder and under the Development Agreement, the Subordinated Mortgage and the Sales Tax Refund Pledge and Security Agreement to the extent of the interest assigned; (c) the Lessee shall, within 10 days after execution thereof, furnish or cause to be furnished to the Lessor and the Paying Agent a true and complete copy of each instrument evidencing such assignment or sublease; and (d) the Lessee shall retain such rights and interests as will permit it to comply with its obligations under this Lease, the Development Agreement, the Subordinated Mortgage and the Sales Tax Refund Pledge and Security Agreement. The Lessor may, upon thirty days written notice to the Lessee, assign its rights, but not its obligations, under this Lease at any time, without consent of the Lessee. SECTION 21. No Encumbrance, Mortgage or Pledge of Supplemental Project. Except for the First Mortgage, Subordinated Mortgage and Revenue Bond Lease, the Lessee will not directly or indirectly create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Supplemental Project, unless specifically consented to in writing by the Lessor. SECTION 22. Extent of Covenants; No Personal Liability. All covenants, stipulations, obligations and agreements of the Lessee contained in this Lease are and shall be deemed to be covenants, stipulations, obligations and agreements of the Lessee to the full extent permitted by law. No covenant, stipulation, obligation or agreement of the Lessee contained in this Lease shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, officer, agent or employee of the Lessee in other than that person's official capacity. Neither the members or managers of the Lessee nor any officer or official executing this Lease or any amendment or supplement hereto shall be liable personally on this Lease or be subject to any personal liability or accountability by reason of the execution thereof. SECTION 23. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Lessor and the Lessee and their respective successors and assigns, subject, however, to the limitations contained herein. SECTION 24. Amendments, Changes and Modifications. This Lease may not be amended, changed, modified or altered, or any provision hereof waived, without the written consent of the Lessor and the Lessee. SECTION 25. Invalidity of Provisions of Lease. If for any reason any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby. SECTION 26. Captions. The captions or headings herein shall not be treated as a part of this Lease or as affecting the true meaning of the provisions hereof. SECTION 27. Execution of Counterparts. This Lease may be executed simultaneously in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. SECTION 28. References to Attorneys' Fees. Any covenant contained in this Lease to pay or to reimburse the payment of attorneys' fees shall be construed to include attorneys' fees through all proceedings, including, but not limited to, negotiations, administrative hearings, trials and appeals. SECTION 29. Notices. Except as otherwise specifically provided herein, all notices, approvals, consents, requests and other communications hereunder shall be in writing and shall be deemed to have been given when delivered, if hand delivered or sent by a nationally recognized courier service, or three business day after postmarked if mailed by first class registered or certified mail, postage prepaid, addressed, if to the Lessor, City of Paducah, Kentucky, P.O. Box 2267, Paducah, Kentucky 42002-2267, Attention: City Manager; and if to the Lessee, at Paducah Convention Hotel, LLC, 1115 South 4t' Street, Louisville, Kentucky 40203, Attention: Mr. Todd M. Clark. The Lessor and the Lessee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, approvals, consents, requests or other communications shall be sent or persons to whose attention the same shall be directed, but no such communication shall thereby be required to be sent to more than two addresses. SECTION 30. Governing Law. This Lease shall be deemed to be contracts made under the laws of the Commonwealth of Kentucky and for all purposes shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky. Time is of the essence hereof. The parties hereby consent to the exclusive jurisdiction of the state courts sitting in McCracken County, Kentucky and/or the federal court for the Western District of Kentucky, Paducah Division with respect to all matters arising out of or related to this Lease. IN TESTIMONY WHEREOF, the City of Paducah, Kentucky, acting by and through its City Commission, has caused this instrument to be executed in its name and on its behalf by its Mayor, attested by its City Clerk; and the Paducah Convention Hotel, LLC has caused this instrument to be executed in its name and on its behalf by its duly authorized Manager, effective as of the day and year first above written. ATTEST: Lo VII. City Clerk CITY OF PADUCAH, KENTUCKY VI. Mayor PADUCAH CONVENTION HOTEL, LLC Title: VIII. IX. e) ACKNOWLEDGEMENTS COMMONWEALTH OF KENTUCKY ) ) ss: COUNTY OF MCCRACKEN The foregoing Agreement of Lease was acknowledged before me this day of , 2014, by Gayle Kaler and Tammara Sanderson, Mayor and City Clerk, respectively, of the City of Paducah, Kentucky, a Kentucky municipal corporation, on behalf of the City. Notary Public My Commission Expires: STATE OF KENTUCKY ) ss: COUNTY OF MCCRACKEN ) The foregoing Agreement of Lease was acknowledged before me this day of , 2014, by , Manager of Paducah Convention Hotel, LLC, a Kentucky limited liability company, on behalf of the company. Notary Public My Commission Expires: X. This instrument prepared by the undersigned Attorney at Law of DINSMORE & SHOHL LLP 50 East RiverCenter Boulevard, Suite 1150 Covington, Kentucky En Dirk M. Bedarff f) EXHIBIT A XII. Project Site =i . _... ... ..r_.. f . . .� ,'1.. _.. a.. �' .. a,..:;- i—.. e..a —I^— s,» w. uw ..... y w w .. a.— w� .... g) EXHIBIT B XIII. Supplemental Improvements h) EXHIBIT C XIV. Parking Site 4010922_1.doc � - --� ,_ _ �_- � . -- ,._ . _ _ I 98 I_12111110:4�7 FORM OF SUBORDINATED MORTGAGE SUBORDINATED LEASEHOLD MORTGAGE AND SECURITY AGREEMENT BETWEEN PADUCAH CONVENTION HOTEL, LLC, Grantor and CITY OF PADUCAH, KENTUCKY, Grantee SECURING: $ PRINCIPAL AMOUNT OF CONTRACT, LEASE & OPTION DATED AS OF SEPTEMBER 15, 2014 BY AND BETWEEN CITY OF PADUCAH, KENTUCKY AND PADUCAH CONVENTION HOTEL, LLC DATED AS OF: SEPTEMBER 15, 2014 TABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION1.1. General........................................................................................................ 3 SECTION 1.2. Definitions................................................................................................... 3 ARTICLE II PAYMENTS, TAXES, INSURANCE, MAINTENANCE, SUBSTITUTIONS, REMOVALS, LIENS, DAMAGE AND DESTRUCTION, CONDEMNATION, PROTECTION OF GRANTEE SECTION 2.1. SECTION 2.2. SECTION 2.3. SECTION 2.4. SECTION 2.5. SECTION 2.6. SECTION 2.7. SECTION 2.8. SECTION 2.9. SECTION 2.10. SECTION 3.1. SECTION 3.2. SECTION 3.3. SECTION 3.4. SECTION 3.5. SECTION 3.6. SECTION 3.7. SECTION 3.8. SECTION 3.9. SECTION 3.10. SECTION 3.11. SECTION 3.12. SECTION 4.1. SECTION 4.2. SECTION 4.3. SECTION 4.4. SECTION 4.5. SECTION 4.6. SECTION 4.7. SECTION 4.8. SECTION 4.9. SECTION 4.10. SECTION 4.11. SECTION 4.12. SECTION 5.1. SECTION 5.2. SECTION 5.3. SECTION 5.4. SECTION 5.5. SECTION 5.6. SECTION 5.7. Lease Agreement........................................................................................ 5 Taxes and Other Charges ............................................................................ 5 Insurance..................................................................................................... 5 Tax and Insurance Deposits........................................................................ 6 Maintenance and Modification of Mortgaged Property .............................. 7 Substitutions for Portions of the Mortgaged Property ................................ 7 Mechanics' and Other Liens........................................................................ 8 Damage and Destruction............................................................................. 8 Condemnation............................................................................................. 9 Protection of Grantee................................................................................ 10 ARTICLE III EVENTS OF DEFAULT AND REMEDIES Eventsof Default...................................................................................... 11 OtherRemedies......................................................................................... 11 Acceleration.............................................................................................. 11 Surrender of Possession; Rights and Duties of Grantee in Possession..... 11 Actions to Recover Amounts Due............................................................ 12 Foreclosure................................................................................................ 12 Appointmentof Receiver.......................................................................... 12 Application of Moneys............................................................................. 12 Rights and Remedies Cumulative; No Waiver or Release of Obli ag tom. 12 Termination of Proceedings...................................................................... 13 Right to Remedy Default.......................................................................... 13 Subordination of Grantee's Rights to Rijzhts of Priority Mortgagee......... 13 ARTICLE IV COVENANTS, REPRESENTATIONS AND WARRANTIES Representations and Warranties................................................................ 15 Notices to Grantee..................................................................................... 15 Leases and Restrictions............................................................................. 15 No Other Financing or Liens.................................................................... 16 No Further Encumbrance, No Disposition ............................................... 16 Compliance with Laws and Regulations................................................... 16 Covenant Running with the Land............................................................. 16 Recordation............................................................................................... 16 After -Acquired Property........................................................................... 16 Financial Statements................................................................................. 17 ManagingAgent ........................................................................................ 17 Hazardous Substances............................................................................... 17 ARTICLE V MISCELLANEOUS Notices...................................................................................................... 20 Amendments, Changes and Modifications ............................................... 20 Execution Counterparts............................................................................. 20 Severability............................................................................................... 20 General Waivers By Grantor.................................................................... 20 Effect of Subordinated Mortme.............................................................. 20 Maximum Indebtedness............................................................................ 21 SECTION5.8. No Merger................................................................................................. 21 SECTION 5.09. Captions.................................................................................................... 21 SECTION 5.10. Governing Law......................................................................................... 21 SIGNATURES ACKNOWLEDGEMENTS EXHIBIT A Project EXHIBIT B Project Site EXHIBIT C Supplemental Improvements SUBORDINATED LEASEHOLD MORTGAGE AND SECURITY AGREEMENT THIS SUBORDINATED LEASEHOLD MORTGAGE AND SECURITY AGREEMENT (the "Subordinated Mortgage") is made as of September 15, 2014, between PADUCAH CONVENTION HOTEL, LLC, a Kentucky limited liability company (the "Grantor"), 1115 South 4th Street, Louisville, Jefferson County, Kentucky 40203, and CITY OF PADUCAH, KENTUCKY, a municipal corporation and political subdivision of the Commonwealth of Kentucky (the "Grantee"), 300 South 5th Street, Paducah, McCracken County, Kentucky 42002-2267, under the following circumstances: A. The Grantor has entered into a Lease Agreement of even date herewith (the "Lease Agreement") with the Grantee, pursuant to the terms of which the Grantee has agreed to issue its $ Taxable General Obligation Bonds, Series 2014D (the "Series 2014D Bonds") to finance the costs of the acquisition, construction, installation and equipping of Supplemental Improvements (as hereinafter defined), which Supplemental Improvements are to be leased to the Grantor under the Lease, and the Grantor, inconsideration of the issuance of the Series 2014D Bonds and the financing of the Supplemental Improvements has agreed to deliver to Grantee this Subordinated Mortgage granting to the Grantee a security interest in the Mortgaged Property (as hereinafter defined); this Subordinated Mortgage having a final maturity date of 2024. B. The amounts payable by Grantor pursuant to the Lease Agreement are equal to the amounts payable by the Grantee as principal, premium (if any) and interest on the Series 2014D Bonds, being a maximum indebtedness (exclusive of interest) of $ C. The interests in the Mortgaged Property granted under this Subordinated Mortgage are expressly and specifically determined by the Grantor and Grantee to be subordinate to the interests in the Mortgaged Property granted by the Grantor in the Open -End Leasehold Mortgage and Security Agreement dated as of September 15, 2014 (the "First Mortgage") among the Grantor, the Grantee and Independence Bank (the "Revenue Bond Purchaser" or "Priority Mortgagee") ,in connection with the issuance by the Grantee of its Industrial Building Revenue Bonds, Series 2014 (Paducah Convention Hotel, LLC Project) in the maximum aggregate principal amount of $10,500,000 (the "Industrial Revenue Bonds"). NOW, THEREFORE, for good and valuable considerations, the receipt of which are hereby acknowledged by Grantor, and in consideration of the foregoing recitals, which shall be construed as parts hereof for all purposes, and as security for the payment of the principal of, premiums (if any) and interest on, and all other sums provided for in the Series 2014D Bonds, and any extensions or renewals thereof, and any extensions or renewals thereof, and for payment and performance of the agreements, conditions, covenants, provisions and stipulations contained herein and in the Lease Agreement and in any other agreements and instruments made and given by Grantor to the Grantee in connection therewith, Grantor does hereby grant, bargain, sell, convey, mortgage and warrant, assign, transfer and grant a security interest in and pledge unto Grantee, and unto its respective successors and assigns forever, all of Grantor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests, whether now owned or hereafter acquired (herein called the "Mortgaged Property"); provided however, that the grant of such interests in the Mortgaged Property are subordinate to the interests in the Mortgaged Property granted by the Grantor in the First Mortgage in connection with the issuance by the Grantee of the Industrial Revenue Bonds: GRANTING CLAUSE FIRST All right, title and interest of Grantor in and to Grantor's leasehold interest created under that certain Agreement of Lease dated as of September 15, 2014 between the Grantor and Grantee (the "Industrial Revenue Bond Lease"), executed and delivered in connection with the issuance of the Grantee's Industrial Revenue Bonds, in the Project and the Project Site (each as defined herein), together with the entire interest of Grantor in and to all buildings, structures, improvements and appurtenances and any property located on the Project Site, including these items in Granting Clause Second of any nature whatsoever now standing, or at any time hereafter constructed or placed, upon the Project Site, including all right, title and interest of Grantor, if any, in and to all building material (whether on or off the Project Site), building equipment and fixtures of every kind and nature whatsoever at the Project or in any building, structure or improvement now or hereafter standing on the Project Site, and the proceeds of any insurance on such property, and together with the entire interest of Grantor in and to all and singular the tenements, hereditaments, easements, rights-of-way, rights, privileges and appurtenances to the Project Site, belonging or in any ways appertaining thereto (including without limitation the entire right, title and interest of Grantor in, to and under any streets, ways, alleys, gores or strips of land adjoining the Project Site, and all claims or demands whatsoever of Grantor either at law or in equity, in possession or expectancy of, or in and to the Project Site), it being the intention of the parties hereto that, so far as may be permitted by law, all property of the character hereinabove described, which is now owned or is hereafter acquired by Grantor and is affixed or attached or annexed to the Project Site, shall be and remain or become and constitute a portion of the Project Site, and the security covered by and subject to the lien of this Subordinated Mortgage, together with all rents, income, revenues, issues and profits thereof, and the right to make claim for, collect, receive and receipt for any and all of such rents, income, revenues, issues and profits arising therefrom or in connection therewith; subject, however, to Permitted Encumbrances (as hereinafter defined). GRANTING CLAUSE SECOND All fixtures, machinery, equipment and other articles of personal property now or at any time hereafter owned or leased by Grantor and placed upon or installed on the Project Site and any property acquired in substitution, replacement, renewal or repair thereof pursuant to this Subordinated Mortgage, and all accessions to and proceeds of any of the foregoing, less any of the foregoing removed by Grantor in accordance with this Subordinated Mortgage, and the proceeds of any insurance on or condemnation award for any of the foregoing; subject, however, to Permitted Encumbrances. GRANTING CLAUSE THIRD All rentals and other payments due or to become due under any lease or leases or rights or licenses to use or occupation of any part of the Mortgaged Property now or hereafter created, as well as all rights or licenses and remedies provided in such leases, rights or licenses, on a subordinated basis to the interests granted in the Mortgaged Property under the First Mortgage. GRANTING CLAUSE FOURTH Any and all other rights and interests in property, whether tangible or intangible, required to be subject to the lien hereof, or from time to time by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or transferred as and for additional security hereunder by Grantor or by anyone in its behalf or with its written consent to Grantee, which are hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms hereof. TO HAVE AND TO HOLD all and singular the Mortgaged Property hereby conveyed, granted and assigned, as agreed or intended so to be, unto Grantee, its respective successors and assigns forever. PROVIDED, HOWEVER, and this instrument is upon the express condition that, if Grantor pays, or causes to be paid (i) the entire principal sum of the Series 2014D Bonds and the premium (if any) and interest thereon to the Grantee, and (ii) all other sums payable by Grantor to Grantee as are secured hereby in accordance with the provisions of the Lease Agreement and this Subordinated Mortgage, at the times and in the manner specified, without deduction, fraud or delay, and Grantor performs and complies with, or causes to be performed and complied with, all the agreements, conditions, covenants, provisions and stipulations contained herein and in the Lease Agreement, then this Subordinated Mortgage and the estate and security interest hereby granted shall terminate, cease, determine and be void; otherwise this Subordinated Mortgage and the estate and security interest hereby granted shall be and remain in full force and effect. Grantor does hereby further agree and covenant with Grantee as follows: ARTICLE I DEFINITIONS SECTION I. I. General. In addition to the words and terms defined in the recitals and elsewhere in this Subordinated Mortgage, certain words and terms as used in this Subordinated Mortgage shall have the meaning given to them by the definitions and descriptions in this Article I unless the context or use indicates another or different meaning or intent and such definitions shall be equally applicable to both the singular and plural forms of any of the words and terms herein defined. Those words and terms not specifically defined herein and used in this Subordinated Mortgage with initial capitalization where rules of grammar do not otherwise require capitalization shall have the meanings set forth in the Lease Agreement referenced in the recitals to this Subordinated Mortgage. SECTION 1.2. Definitions. The following words and terms are defined terms under this Subordinated Mortgage: "Assignment of Rents" means the Assignment of Rents and Leases relating to the Industrial Revenue Bonds dated as of September 15, 2014 from the Grantor to Priority Mortgagee. "Default Rate" means the Interest Rate for Advances, as defined in the Lease Agreement. "First Mortgage" means the Open -End Leasehold Mortgage and Security Agreement dated as of September 15, 2014 by and among the Grantor, the Grantee and the Priority Mortgagee. "Industrial Revenue Bonds" means the City of Paducah, Kentucky Industrial Building Revenue Bonds, Series 2014 (Paducah Convention Hotel, LLC Project) in the maximum aggregate principal amount of $10,500,000. "Industrial Revenue Lease" means the Agreement of Lease dated as of September 15, 2014 between the Grantor and the Grantee relating to the Industrial Revenue Bonds. "Net Proceeds" means, as to any insurance proceeds or any condemnation award, the amount remaining after deducting therefrom all expenses (including attorneys' fees and expenses of Grantee) incurred in the collection of such proceeds or award, plus any interest earned on the investment thereof. "Notice Address" means for the Grantor and Grantee, the respective notice addresses provided for in the Lease Agreement. "Permitted Encumbrances" means as of any particular time, (i) the right reserved to or vested in any municipality or public authority by the terms of any provision of law to terminate any right, power, franchise, grant, license or permit, provided that the exercise of such right would not materially impair the use of the Project for the purposes for which it is held by Grantor or materially adversely affect its value; (ii) the right reserved to or vested in any municipality or public authority to purchase, condemn or appropriate all or any part of the Mortgage Property; (iii) liens for taxes, payments in lieu of taxes, assessments, levies, fees, charges, duties, imposts, claims and demands referred to in the Revenue Bond Lease which are not at the time due and payable, or the validity or amount of which is being contested in compliance with the provisions of the Revenue Bond Lease; (iv) easements, rights of way, licenses, restrictions and other defects, encumbrances and irregularities in the title to the Mortgage Property which in the opinion of the Project's architect do not materially impair the use thereof for the purposes for which it is held by Grantor or materially adversely affect its value; (v) rights reserved to or vested in any municipality or public authority to control or regulate the Mortgage Property or to use the Mortgage Property in any manner which does not materially impair the use thereof for the purposes for which it is held by Grantor or materially adversely affect its value; (vi) the leasehold estate created by and under the Revenue Bond Lease and the statutory mortgage lien created upon issuance of the Industrial Revenue Bonds and the recording of the Revenue Bond Lease; (vii) the lien of the First Mortgage; (viii) the lien of the Assignment of Rents; (ix) the Subordinated Mortgage; and (x) those exceptions contained in the commitment for title insurance, as amended on the date of delivery of the Industrial Revenue Bonds, relating to the Project and the Project Site. "Priority Mortgagee" means Independence Bank, Paducah, Kentucky, its successors and assigns, as grantee and mortgagee under the First Mortgage. "Project" means the Project Site and the real, personal, or real and personal property, including undivided interests or other interests therein, identified in Exhibit A attached hereto as a part hereof, or acquired, constructed or installed as a replacement or substitution therefor or an accession thereto, or as may result from any revision of the plans and specifications in accordance with the provisions of the Revenue Bond Lease or this Subordinated Mortgage. "Project Site" means the real estate and interests in real estate constituting the site of the Mortgaged Property, as described in Exhibit B attached hereto as a part hereof. "Series 2014D Bonds" means the $ City of Paducah, Kentucky Taxable General Obligation Bonds, Series 2014D. "Supplemental Improvements" shall mean those additional components of the Project, as further described in Exhibit C attached hereto and made a part hereof. [End of Article I] ARTICLE II PAYMENTS, TAXES, INSURANCE, MAINTENANCE, SUBSTITUTIONS, REMOVALS, LIENS, DAMAGE AND DESTRUCTION, CONDEMNATION, PROTECTION OF GRANTEE SECTION 2.1. Lease Agreement. Grantor shall make all payments when due under the Lease Agreement, and shall perform and comply with all covenants, agreements, conditions, provisions, stipulations and obligations set forth therein on its part to be performed, at the times and in the manner required thereby. SECTION 2.2. Taxes and Other Charges. Grantor shall pay or cause to be paid when due and payable and before interest or penalties are due thereon, without any deduction, defalcation or abatement, all taxes, assessments, water and sewer rents, charges and claims which may be assessed, levied, or filed at any time against Grantor, the Mortgaged Property or any part thereof (including without limitation any taxes levied upon or with respect to the revenues, income or profit of Grantor from the Mortgaged Property) or against the interest of Grantee therein, or which by any present or future law may become or be made a lien on the Mortgaged Property, or any part thereof, or a charge on such revenues, income or profits; and Grantor shall produce to Grantee, upon request, receipts for the payment thereof; provided, however, that if, pursuant to this Subordinated Mortgage or otherwise, Grantor shall have deposited with Grantee before the due date thereof sums sufficient to pay any such taxes, assessments, water and sewer rents, charges and claims, and Grantor is not otherwise in default, they shall be paid by the Grantee; and provided further, that if Grantor in good faith and by appropriate legal action shall contest the validity of any such item, or the amount thereof, and shall have established on its books or by deposit of a letter of credit or bond with Grantee, as Grantee may elect, the amount required for the payment thereof, then Grantor shall not be required to pay the item or to produce the required receipts while the amount is maintained and so long as the contest operates to prevent collection, is maintained and prosecuted with diligence, and shall not have been terminated or discontinued adversely to Grantor. Notwithstanding the foregoing, if Grantee notifies Grantor that, in the opinion of counsel selected by Grantee, by nonpayment of any such item the lien of this Subordinated Mortgage as to any part of the Mortgaged Property will be materially affected or the Mortgaged Property or any part thereof will be subject to imminent loss or forfeiture, Grantor shall promptly pay such item. It is expressly agreed that no credit shall be claimed or allowed on the interest payable on the amounts payable under the Lease Agreement as "Base Rent" because of any taxes or other charges paid. SECTION 2.3. Insurance. Grantor shall keep the Project insured for the benefit of the Grantor, Grantee and Priority Mortgagee (with Grantee and Priority Mortgagee named as mortgagee) by (i) an "all risk" property insurance policy with an agreed amount endorsement for full replacement cost (defined below) without any coinsurance provisions or penalties, or the broadest form of coverage available, in an amount sufficient to prevent the Grantee from ever becoming a coinsurer under the policy or laws, and with a deductible not to exceed Twenty -Five Thousand Dollars ($25,000.00); (ii) a policy or endorsement insuring against acts of terrorism; (iii) a policy or endorsement insuring against claims applicable to the presence of Microbial Matter; (iv) a policy or endorsement providing business income insurance (including business interruption insurance and extra expense insurance and/or rent insurance) on an actual loss sustained basis in an amount equal to at least one (1) year's total income from the Project including all rents plus all other pro forma annual income such as percentage rent and tenant reimbursements of fixed and operating expenses, which business interruption insurance shall also provide coverage as aforesaid for any additional hazards as may be required pursuant to the terms of the First Mortgage; (v) a policy or endorsement insuring against damage by flood if the Project is located in a Special Flood Hazard Area identified by the Federal Emergency Management Agency or any successor or related government agency as a 100 year flood plain currently classified as Flood Insurance Rate Map Zones "A", "AO", "AH", "A1 -A3011, "AE", 11A9911, "V", "VI -V30% and "VE" in an amount equal to the original amount of the Bonds; (vi) a policy or endorsement covering against damage or loss from (A) sprinkler system leakage and (B) boilers, boiler tanks, HVAC systems, heating and air-conditioning equipment, pressure vessels, auxiliary piping, and similar apparatus, in the amount reasonably required by the Grantee and Priority Mortgagee, as mortgagee under the First Mortgage; (vii) during the period of any construction, repair, restoration, or replacement of the Project, a standard builder's risk policy with extended coverage in an amount at least equal to the full replacement cost of such Project, and worker's compensation, in statutory amounts; and (viii) a policy or endorsement covering against damage or loss by earthquake and other natural phenomenon in the amounts reasonably required by the Grantee and Priority Mortgagee, as mortgagee under the First Mortgage. "Full replacement cost" shall mean the one hundred percent (100%) replacement cost of the Project, without allowance for depreciation and exclusive of the cost of excavations, foundations, footings, and value of land, and shall be subject to verification by the Grantee. Full replacement cost will be determined, at the Grantor's expense, periodically upon policy expiration or renewal by the insurance company or an appraiser, engineer, architect, or contractor approved by said company, the Grantee and Priority Mortgagee, as mortgagee under the First Mortgage. The Grantor shall also maintain commercial general liability insurance with per occurrence limits of $1,000,000, a products/completed operations limit of $2,000,000, and a general aggregate limit of $2,000,000, with an excess/umbrella liability policy of not less than $10,000,000 per occurrence and annual aggregate covering the Grantor, with the Grantee and Priority Mortgagee, as mortgagee under the First Mortgage, named as additional insureds, against claims for bodily injury or death or property damage occurring in, upon, or about the Project or any street, drive, sidewalk, curb, or passageway adjacent thereto. In addition to any other requirements, such commercial general liability and excess/umbrella liability insurance shall provide insurance against acts of terrorism and against claims applicable to the presence of Microbial Matter, or such coverages shall be provided by separate policies or endorsements. The insurance policies shall also include operations and blanket contractual liability coverage which insures contractual liability under the indemnifications set forth in Section 2.10 hereof (but such coverage or the amount thereof shall in no way limit such indemnificationg). Upon request of the Grantee, the Grantor shall also carry additional insurance or additional amounts of insurance covering the Grantor or the Supplemental Improvements as the Grantee shall reasonably require. All insurance required under this Section shall be fully paid for, non -assessable, and the policies shall contain such provisions, endorsements, and expiration dates as the Grantee shall reasonably require. The policies shall be issued by insurance companies authorized to do business in the Project Site, approved by the Grantee and Priority Mortgagee, as mortgagee under the First Mortgage, and must have and maintain a current financial strength rating of "A-, V (or higher) from A.M. Best or equivalent (or if a rating by A.M. Best is no longer available, a similar rating from a similar or successor service). In addition, all policies shall (i) include a standard mortgagee clause, without contribution, in the name of the Grantee and Priority Mortgagee, as mortgagee under the First Mortgage, (ii) provide that they shall not be canceled, amended, or materially altered (including reduction in the scope or limits of coverage) without at least thirty (30) days' prior written notice to the Grantee except in the event of cancellation for non-payment of premium, in which case only ten (10) days' prior written notice will be given to the Grantee, and (iii) include a waiver of subrogation clause substantially equivalent to the following: "The Company may require from the Insured an assignment of all rights of recovery against any party for loss to the extent that payment therefor is made by the Company, but the Company shall not acquire any rights of recovery which the Insured has expressly waived prior to loss, nor shall such waiver affect the Insured's rights under this policy." Subject to the provisions of Section 2.8 hereof, each insurer is hereby authorized and directed to make payment of any amount under the insurance described in this Section (except liability insurance), including return of unearned premiums, directly to the Grantee instead of to the Grantor and the Grantee jointly, and the Grantor hereby appoints the Grantee, irrevocably, as Grantor's attorney-in-fact to endorse any draft therefor for application as herein provided; provided that the foregoing provisions of this paragraph shall not limit Grantor's right to negotiate or agree to settlement of any claim under the insurance described in this Section, and provided further that the foregoing provisions are subject to the priority provisions set forth with respect thereto in the first Mortgage, so long as any Industrial revenue Bonds remaining outstanding and unpaid. Grantor shall comply with all applicable workers' compensation laws. SECTION 2.4. Tax and Insurance Deposits. Without limiting the effect of Sections 2.2 and 2.3 hereof, Grantor shall pay to the Trustee monthly on or before the first day of each month, commencing with the month following the recording of this Subordinated Mortgage, an amount equal to one -twelfth (1/12) of the annual premiums for the insurance policies referred to hereinabove and the annual real estate taxes, water and sewer rents, rates and charges, any special assessments, charges or claims and any other items which at any time may be or become a lien upon the Mortgaged Property prior to the lien of this Subordinated Mortgage; and on demand from time to time Grantor shall pay to the Grantee any additional sums necessary to pay, at least thirty (30) days prior to the due date thereof, the premiums and other items, all as estimated by the Trustee. The amounts so paid shall be security for the premiums and other items and shall be used in payment thereof if Grantor is not otherwise in default hereunder. If, pursuant to any provision of this Subordinated Mortgage, the whole amount of the unpaid principal debt becomes due and payable, Grantee shall have the right, at its election, to apply any amount so held against the entire indebtedness secured hereby. So long as Grantor is not in default under Sections 2.2 or 2.3 hereof and has provided to Grantee evidence of timely payment of its obligations thereunder, the provisions of this Section 2.4 shall be waived by Grantee. SECTION 2.5. Maintenance and Modification of Mortgaged Property. Grantor shall keep and maintain or cause to be kept and maintained the Mortgaged Property and the sidewalks and curbs abutting same, in good order and condition (including operating condition) and in rentable and tenantable state of repair, and will make or cause to be made, as and when necessary, all repairs, renewals and replacements, structural and nonstructural, exterior and interior, ordinary and extraordinary, foreseen and unforeseen. Grantor shall abstain from and shall not permit the commission of waste in, of or about the Mortgaged Property; shall not remove or demolish any building erected at any time on the Project Site without the prior written consent of Grantee; and shall not permit the Mortgaged Property to become vacant, deserted or unguarded. The Grantee shall have the right to enter upon the Mortgaged Property at any reasonable business hour for the purpose of inspecting the order, condition and repair of the Mortgaged Property. So long as there is continued compliance with applicable laws and regulations of governmental jurisdictions and the requirements of insurance underwriters providing insurance pursuant to Section 2.3 hereof, Grantor shall have the right to remodel the Mortgaged Property or make additions, modifications and improvements thereto, from time to time as it, in its discretion, may deem to be desirable for its uses and purposes, the cost of which remodeling, additions, modifications and improvements shall be paid by Grantor, and the same shall, when made, become a part of the Mortgaged Property. No such remodeling, addition, modification or improvement of the Mortgaged Property shall adversely affect the value of the Mortgaged Property and Grantor shall comply promptly and conform to all requirements of insurance underwriters providing coverage for the Mortgaged Property regarding use, occupancy, operation, maintenance, alteration or repair of any of the Mortgaged Property. SECTION 2.6. Substitutions for Portions of the Mortgaged Property. Grantor shall have the right from time to time to substitute personal property or fixtures for any portions of the Mortgaged Property, provided that the personal property or fixtures so substituted shall not impair the value of the Mortgaged Property. Any such substituted property or fixtures shall become part of the Mortgaged Property. Grantor shall also have the right to remove any personal property portions of the Mortgaged Property, without substitution therefor, from the Mortgaged Property and from service in Grantor's business, in any instance where Grantor determines, in its reasonable discretion, that such property has become inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, whereupon, subject to the provisions hereinafter set forth, such removed property shall no longer be subject to this Subordinated Mortgage. Prior to any removal Grantor shall deliver to Grantee certificates executed by Grantor so certifying and particularly describing the property to be removed. Grantor shall promptly pay to the Grantee, (a) if the removed property is comprised of Supplemental Improvements and is sold or scrapped, an amount equal to the proceeds of such sale or the scrap value thereof, (b) if the removed property is comprised of Supplemental Improvements and is used as a trade-in for property not to become part of the Mortgaged Property, an amount equal to the trade-in credit received by Grantor, or (c) if the removed property is comprised of Supplemental Improvements and is retained by Grantor, an amount equal to the fair market value of such property, as determined by Grantor with the consent of the Grantee; provided, however, that with respect to each calendar year of Grantor, no such deposits need be made except to the extent that the aggregate of the amounts determined pursuant to clauses (a), (b) and (c) of this sentence exceed $50,000 in such calendar year. Within 30 days after the end of each calendar year of Grantor, Grantor shall deliver to Grantee certificates signed by a duly authorized representative of the Grantor particularly describing property removed by Grantor during such calendar year pursuant to this paragraph, stating the respective sale or scrap values thereof, trade-in credits received therefor, and the fair market values thereof, and certifying that such removals have been made in accordance with the provisions of this paragraph. SECTION 2.7. Mechanics' and Other Liens. Grantor shall not suffer or permit any mechanics' liens to be filed or exist against the Mortgaged Property, or against any payment to be made under the Lease Agreement, by reason of work, labor, services or materials supplied or claimed to have been supplied to Grantor or anyone holding the Mortgaged Property or the Project Site or any part thereof through or under Grantor. If any such mechanics' liens shall at any time be filed, Grantor shall, within thirty days after notice of the filing thereof, cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise; provided that if Grantor in good faith and by appropriate legal action shall contest the validity of any such mechanic's lien, or the amount thereof, then Grantor shall not be required to discharge such mechanic's lien so long as the contest is maintained and prosecuted with diligence, and shall not have been terminated or discontinued adversely to Grantor. Notwithstanding the foregoing, if Grantee notifies Grantor that, in the opinion of counsel selected by Grantee, by nonpayment of any such mechanic's lien the lien of this Subordinated Mortgage as to any part of the Mortgaged Property will be materially affected or the Mortgaged Property or any part thereof will be subject to imminent loss or forfeiture, Grantor shall promptly discharge such mechanic's lien. SECTION 2.8. Damage and Destruction. Unless Grantor shall have elected to exercise its option to purchase the Supplemental Improvements under the provisions of the Lease Agreement, if the Project is damaged by fire or other casualty and Grantor has not been declared in default of the Lease Agreement, unless Grantor elects within 90 days to prepay the Series 2014D Bonds in full in accordance with the provisions of the Lease Agreement, (i) Grantor will promptly repair, replace, rebuild or restore the property damaged or destroyed to substantially the same condition as existed prior to the event causing such damage or destruction, with such changes or alterations (including substitution and addition of other property), as Grantor may deem necessary for proper operation of the Mortgaged Property, and (ii) Grantor and Grantee will apply for such purpose so much as may be necessary of any Net Proceeds of insurance resulting from claims for losses, under the insurance policies required to be carried herein, resulting from such damage. In the event that Grantor is in default of the Lease Agreement, all proceeds of insurance shall, at the election of the Grantee, be applied to prepay Base Rent, as defined in the Lease Agreement, as the Grantee, in its sole discretion, and in accordance with the related documents, may determine, subject, however, to the priority of such payments in favor of Priority Mortgagee under the provisions of the First Mortgage. Subject to the provisions of the First Mortgage, all Net Proceeds of insurance resulting from claims for losses not in excess of $5,000 shall be paid to Grantor by Grantee, assuming Grantor acts to promptly repair, replace, rebuild or restore the damaged property. All Net Proceeds of insurance resulting from claims for losses in excess of $5,000 shall be paid to and held by the Grantee in a separate disbursement account, and the Grantee will apply so much as may be necessary of the Net Proceeds of such insurance to payment of the costs incurred by Grantor for the repair, replacement, rebuilding or restoration of the Project, either on completion thereof or as the work progresses as directed by Grantor. In the event any Net Proceeds of insurance will be insufficient to pay in full the costs of repair, replacement, rebuilding or restoration under this Section, as determined by an independent architect or engineer, then Grantor, prior to commencing such repair, replacement, rebuilding or restoration, shall pay to the Grantee for deposit in the separate disbursement account an amount equal to the deficiency, which deposit shall first be exhausted before any disbursement of Net Proceeds of insurance. Grantor shall not, by reason of the payment of any such deficiency be entitled to any reimbursement from Grantee or the Issuer or any abatement or diminution of payments under the Lease Agreement. Any balance of such Net Proceeds remaining after payment of all the costs of repair, replacement, rebuilding or restoration under this Section shall be paid to the Grantor, provided no default has been declared under the Lease Agreement. If upon any damage to or destruction of the Project Grantor elects to prepay the Base Rent in full pursuant to the provisions of the Lease Agreement rather than repair, replace, rebuild or restore the property damaged or destroyed, all Net Proceeds of insurance shall be applied to such prepayment of Base Rent, and any balance remaining after such prepayment shall be paid to Grantor. SECTION 2.9. Condemnation. If title to, or the temporary use of, the Project or the Project Site or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, Grantor shall be obligated to continue to make the payments required by the Lease Agreement. Subject to the provisions of the First Mortgage, Grantor and Grantee will cause the Net Proceeds received by them or either of them from any award made in such eminent domain proceedings, to be paid to and held by the Grantee in a separate disbursement account, to be applied in one or more of the following ways as shall be directed in writing by Grantor: (a) The modification or restoration of the improvements located on the Project Site, or the acquisition, construction, installation or otherwise, by Grantor of buildings, machinery, equipment, fixtures or other improvements on the Project Site, all to the extent deemed appropriate by Grantor for its uses and purposes; provided that, at a minimum, the Project as so modified, restored or acquired shall have a value, as reasonably determined by the Grantor, sufficient to fully secure the then outstanding principal amount of the Series 2014D Bonds; and provided further that the Project as so modified, .restored or acquired shall be subject to no liens or encumbrances except Permitted Encumbrances. (b) Redemption of the Series 2014D Bonds, together with accrued interest thereon, to the date of redemption; provided, that no part of any such condemnation award may be applied for such redemption unless (i) all of the Series 2014D Bonds are to be redeemed in accordance with the Bond Purchase Agreement upon exercise of the option to purchase the Project pursuant to the provisions of the Lease Agreement, or (ii) if less than all of the Series 2014D Bonds are to be redeemed, Grantor shall fixrnish to Grantee a certificate of a duly authorized representative of the Grantor stating (1) that the property forming a part of the Mortgaged Property that was taken in such eminent domain proceeding is not essential to Grantor's use or occupancy of the Mortgaged Property, (2) that the Project has been restored to a condition substantially equivalent to its condition prior to the taking in such eminent domain proceeding, or (3) that improvements have been acquired which are suitable for Grantor's operations at the Project as contemplated by the foregoing subsection (a) of this Section. (c) Payment into the Bond Fund of an amount sufficient to permit payment in full of the Series 2014D Bonds. If Grantor elects to apply any Net Proceeds of any such award in the manner set forth in paragraph (a) above, and the amount of such Net Proceeds will be insufficient to pay in full the costs of such modification, restoration or acquisition, as determined by an independent architect or engineer, then Grantor, prior to commencing such modification, restoration or acquisition, shall pay to the Grantee for deposit in the separate disbursement account provided for in the Revenue Bond Lease an amount equal to the deficiency. Such deposit shall first be applied to the costs of such modification, restoration or acquisition before any Net Proceeds of any such award are so applied. Grantor will not, by reason of the payment of any excess costs of modification, restoration or acquisition, be entitled to any reimbursement by the Grantee or any abatement or diminution of payments under the Lease Agreement. Within 30 days from the date of entry of a final order in any eminent domain proceedings granting condemnation, Grantor shall direct Grantee in writing as to which of the ways specified in this Section Grantor elects to have the condemnation award applied. Any balance of the Net Proceeds of the award in such eminent domain proceedings shall be paid and applied in the same manner as specified in Section 2.8 hereof for excess Net Proceeds of insurance. Any moneys held by the Grantee under the provisions of the preceding paragraph shall be invested or reinvested by the Grantee in the manner provided for investment of funds under the Lease Agreement and the Revenue Bond Lease. SECTION 2.10. Protection of Grantee. Grantor will protect, defend, indemnify and hold harmless Grantee from and against all liabilities, obligations, claims, damages, penalties, causes of action, cost and expenses (including, without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against the Grantee by reason of (a) ownership of any interest in the Mortgaged Property or any part thereof, (b) any accident, injury to or death of any person or persons, or loss of or damage to property, occurring on or about the Mortgaged Property or any part thereof or any adjoining sidewalks, curbs, vaults and vault spaces, streets or highways, (c) any use, nonuse or condition of the Mortgaged Property or any part thereof, or any adjoining sidewalks, curbs, vaults and vault spaces, street or highways, (d) any failure on the part of Grantor to perform or comply with any of the terms, covenants or conditions of this Mortgage, (e) any necessity to defend any of the rights, title or interest conveyed by this Mortgage, or (f) the performance of any labor or services or the furnishing of any materials or other property in respect of the. Mortgaged Property or any part thereof. Notwithstanding the foregoing, Grantor shall have no obligation to protect, defend, indemnify or hold Grantee harmless with respect to any liability, obligation, claim, damage, penalty, cause of action, cost or expenses arising from or due to the negligent or willful misconduct of Grantee. In the event that any action, suit or proceeding is brought against Grantee by reason of any of the matters described in the immediately preceding sentence, Grantor, upon the request of Grantee, will, at Grantor's expense, cause such action, suit or proceeding to be resisted and defended by counsel designated by Grantor and approved by Grantee. Any amounts payable to Grantee pursuant to the provisions of this paragraph shall be secured by this Mortgage. The obligations of Grantor under this paragraph shall survive any defeasance of this Mortgage. For purposes of clause (d) in the first sentence of the preceding paragraph (and without limiting the generality thereof), it is expressly understood and agreed that Grantee shall have no duty to examine or make any investigation with respect to any work done, action taken or payment made by Grantor under Sections 2.5, 2.6, 2.8 or 2.9 of this Mortgage, and any determination of value under any such Section (except as therein provided) shall be the sole responsibility of Grantor. Nothing contained in this Section, however, shall require the Grantor to indemnify the Grantee or any of its officials, officers, employees or agents from any cost, liability, expense, loss or claim arising out of or resulting from the willful misconduct or negligence of the Grantee or any of its officials, officers, employees, or agents. The indemnification provided by this Section to the Grantee shall include its officials, officers, employees and agents. [End of Article II] SECTION 3. 1. Events of Default. The following shall be "events of default" under this Subordinated Mortgage: (a) The occurrence of an Event of Default as defined in the Lease Agreement. (b) Failure by Grantor to pay to Grantee any advances made pursuant to Section 3.11 hereof within 10 days after written notice to Grantor from Grantee. (c) Failure by Grantor to observe and perform any other covenant, warranty, condition or agreement on its part to be observed or performed hereunder, for a period of 30 days (unless the Grantee shall agree in writing to an extension of such time prior to its expiration) after notice of such failure requesting such failure to be remedied, given to Grantor by Grantee. The provisions of paragraph (c) of this Section are subject to the following limitations: If by reason of acts of God; winds; fires; epidemics; landslides; floods; droughts; famines; strikes; lockouts or other industrial disturbances; acts of public enemies; acts or orders of any kind of any governmental authority; insurrection; military action; war, whether or not declared; sabotage; riots; civil disturbances; explosions; breakage or accident to transmission pipes or canals; partial or entire failure of utilities; or any cause or event not reasonably within the control of Grantor, Grantor is unable in whole or in part to carry out the agreements on its part herein contained, other than obligations on the part of Grantor to make the payments required under the Lease Agreement, to carry insurance, to pay any ad valorem property taxes, and to make other payments or deposits pursuant to the terms hereof, Grantor shall not be deemed in default during the continuance of such inability. Grantor shall, however, use its best efforts to remedy with all reasonable dispatch the cause or causes preventing Grantor from carrying out its agreements; provided, that Grantor shall not in any event be required to settle strikes, lockouts or other industrial disturbances by acceding to the demands of the opposing party or parties when such course is, in the judgment of Grantor, not in the interest of Grantor. SECTION 3.2. Other Remedies. In addition to any other remedy available to Grantee, as provided herein or otherwise, Grantee may exercise any remedy available to it under the Lease Agreement, Indenture or any applicable law, including the rights and remedies of a secured party under the Uniform Commercial Code as adopted in the Commonwealth of Kentucky. SECTION 3.3. Acceleration. Subject to the provisions of Section 3.12 hereof, upon the occurrence of an event of default, the Grantee may declare the principal, interest and all other sums secured by this Subordinated Mortgage to be due and payable immediately and, upon said declaration, such principal, interest and other sums shall become and be immediately due and payable. SECTION 3.4. Surrender of Possession; Rights and Duties of Grantee in Possession. Upon the occurrence of an event of default, and subject to the provisions of Section 3.12 hereof, Grantor, upon demand of Grantee, shall forthwith, to the extent possible, assemble the Mortgaged Property and proceeds and make them available to the Grantee at the Project Site or some other place to be designated by the Grantee which is convenient to all parties, and Grantor shall forthwith surrender the possession of, and it shall be lawful for the Grantee to take possession of, all or any part of the Mortgaged Property together with the books, papers and accounts of Grantor pertaining thereto, and to hold, operate and manage the same, and from time to time to make all needful repairs, replacements and improvements; and Grantee may lease or license the use of the Mortgaged Property or any part thereof in the name and for the account of Grantor and collect, receive and sequester the rents, license fees, revenues and other income, charges and moneys therefrom, and out of the same and any moneys received from any receiver of any part thereof, after deducting all proper costs and expenses of so taking, holding and managing the same, including reasonable compensation to Grantee, its respective agents and counsel, pay and/or set up proper reserves for the payment of any or all of the following in such order and amounts as Grantee, in Grantee's sole discretion, may elect: the payment of any sums due under any prior or subordinate lien, taxes, water and sewer rents, charges and claims, insurance premiums and all other carrying charges, costs of maintenance, repair, replacement or restoration of the Mortgaged Property, and on account and in reduction of the principal or interest, or both, on the indebtedness hereby secured. For the aforesaid purpose, Grantor hereby assigns to Grantee all rentals and license fees due and to become due under any leases or rights or licenses to use and occupation of all or any part of the Mortgaged Property now or hereafter created, as well as all rights and remedies provided in such leases, rights or licenses. In the event that all events of default have been made good and Grantee shall have surrendered possession to Grantor, the right of entry provided in this Section shall again exist upon any subsequent event of default. SECTION 3.5. Actions to Recover Amounts Due. Subject to the provisions of Section 3.12 hereof, Grantee shall have the right, from time to time, to bring an appropriate action to recover any sums required to be paid by Grantor under the terms of this Subordinated Mortgage or the Lease Agreement as they become due, without regard to whether or not the principal indebtedness or any other sums secured by the Lease Agreement or this Subordinated Mortgage shall be due, and without prejudice to the right of Grantee thereafter to institute foreclosure or otherwise dispose of the Mortgaged Property or any part thereof, or any other action, for any default by Grantor existing at the time the earlier action was commenced. SECTION 3.6. Foreclosure. Subject to the provisions of Section 3.12 hereof, upon the occurrence of an event of default, the lien on the Mortgaged Property created and vested by this Subordinated Mortgage may be foreclosed and the Grantee may sell or otherwise dispose of the Mortgaged Property in the manner provided by law, and Grantee, if the highest bidder, may become the purchaser of the Mortgaged Property at any such sale. Grantee will give Grantor reasonable notice of the time and place of any public sale thereof. SECTION 3.7. Appointment of Receiver. Subject to the provisions of Section 3.12 hereof, Upon the occurrence of an event of default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of Grantee under this Subordinated Mortgage, Grantee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Mortgaged Property and all receipts therefrom, pending such proceedings, with such power as the court making such appointment shall confer; provided, however, that each Grantee may, with or without action under this Section, pursue any available remedy to enforce the payment of principal and interest and premium, if any, or to remedy any event of default. SECTION 3.8. Application of Moneys. All moneys received by either Grantee or a receiver pursuant to any right given or action taken under the provisions of this Article shall, after the payment of the costs, expenses, liabilities and advances incurred by such Grantee or receiver, together with interest thereon at the Default Rate, be applied in the manner provided in Section 3.4 hereof if such moneys are received other than as a result of foreclosure or any other disposition of the Mortgaged Property, and if received as a result of foreclosure or any other disposition of the Mortgaged Property shall be applied first to the payment of the costs, expenses, liabilities and advances incurred by Grantee or receiver, together with interest thereon at the Default Rate, and then on account and in reduction of the principal, premium (if any) and interest on the indebtedness hereby secured. SECTION 3.9. Rights and Remedies Cumulative; No Waiver or Release of Obligation. The rights and remedies of Grantee as provided in this Subordinated Mortgage or the Lease Agreement, and in the warranties contained herein and therein shall be cumulative and concurrent, may be pursued separately, successively or together against Grantor or against the Mortgaged Property, or any combination thereof, at the sole discretion of Grantee, and may be exercised as often as occasion therefor shall arise. The failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. Any failure by Grantee to insist upon strict performance by Grantor of any of the terms and provisions of this Subordinated Mortgage or the Lease Agreement shall not be deemed to be a waiver of any of the terms or provisions thereof, and Grantee shall have the right thereafter to insist upon strict performance by Grantor of any and all of them. No delay or omission to exercise any right or power accruing upon any failure or event of default shall impair any right or power or shall be construed to be a waiver of any such failure or event of default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any failure or event of default hereunder by Grantee shall extend to or shall affect any subsequent failure or event of default or shall impair any rights or remedies consequent thereon. Neither Grantor nor any other person now or hereafter obligated for payment of all or any part of the sums now or hereafter secured by this Subordinated Mortgage shall be relieved of such obligation by reason of the failure of Grantee to comply with any request of Grantor or of any other person so obligated to take action to foreclose on this Subordinated Mortgage or otherwise enforce any provisions of this Subordinated Mortgage or the Lease Agreement, or by reason of the release, regardless of consideration, of all or any part of the security held for the indebtedness secured by this Subordinated Mortgage, or by reason of any agreement or stipulation between any subsequent owner of the Mortgaged Property and Grantee extending the time of payment or modifying the terms of the Subordinated Mortgage, without first having obtained the consent of Grantor or such other person; and in the latter event Grantor and all such other persons shall continue to be liable to make payments according to the terms of any such extension or modification agreement, unless expressly released and discharged in writing by Grantee. The Grantee may release, regardless of consideration, any part of the security held for the indebtedness secured by this Subordinated Mortgage without, as to the remainder of the security, in any way impairing or affecting the lien of this Subordinated Mortgage or its priority over any subordinate lien. SECTION 3.10. Termination of Proceedings. If Grantee shall have proceeded to enforce any right under this Subordinated Mortgage by the appointment of a receiver, by entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case Grantor and Grantee shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of Grantee shall continue unimpaired as before. SECTION 3.11. Right to Remedy Default. In the event that Grantor should fail to carry the insurance required herein or pursuant hereto, or to pay or cause to be paid real estate or other taxes, assessments, water and sewer rents, charges and claims (unless and only for so long as, in strict compliance with the provisions of Section 2.2 hereof, Grantor is contesting the validity of any such item or the amount thereof), corporate taxes, sums due under any prior lien or approved prior lien, or insurance premiums, or fail to make necessary repairs or replacements, or permit waste, or fail to cure any default under any prior lien or approved prior lien, or fail to comply with any other obligation on the part of Grantor contained herein or in the Lease Agreement, Grantee, at its election and without notice to Grantor, shall have the right to make any payment or expenditure and to take any action which Grantor should have made or taken, or which Grantee deems advisable to protect the security of this Subordinated Mortgage or the Mortgaged Property, without prejudice to any of Grantee's rights or remedies available hereunder or otherwise, at law or in equity. All such sums, as well as costs, advanced by Grantee or due Grantee pursuant to this Subordinated Mortgage, the Lease Agreement, or the Indenture shall be due immediately from Grantor to Grantee and, together with interest thereon at the Default Rate, shall be secured hereby. SECTION 3.12. Subordination of Grantee's Rights to Rights of Priority Mortgagee. So long as any sum shall remain outstanding under the Revenue Bond Lease and related Industrial Revenue Bonds: (a) Grantee shall give the Priority Mortgagee a copy of each notice of default given to Grantor with respect to the Lease Agreement and this Subordinated Mortgage at the same time that Grantee gives such notice to Grantor. (b) If (i) the Revenue Bond Lease and related Industrial Revenue Bonds becomes due or is declared due and payable prior to its stated maturity, (ii) Grantor is in default under the Revenue Bond Lease or First Mortgage, or (iii) any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the property, assets or business of Grantor or the proceeds thereof, in whatever form, to any creditor or creditors of Grantor or to any holder of indebtedness of Grantor by reason of any liquidation, dissolution or other winding up of Grantor or its business, or of any receivership or custodianship for Grantor of all or substantially all of its property, or of any insolvency or bankruptcy proceedings or assignment for the benefit of creditors or any proceeding by or against Grantor for any relief under any bankruptcy, reorganization or insolvency law or laws, federal or state, or any law, federal or state, relating to the relief of debtors, readjustment of indebtedness, reorganization, composition or extension, then, and in any such event, any payment or distribution of any kind or character, whether in cash, property or securities which shall be payable or deliverable (excluding however payments under the Sales Tax Refund Pledge and Security Agreement (as defined in the Lease Agreement) or Pilot Payments (as defined in the Revenue Bond Lease)) with respect to the Lease Agreement from and after the occurrence of any of the events set forth in this Section 3.12(C)(i), (ii) or (iii) shall be held in trust by Grantee for the benefit of Priority Mortgagee and shall forthwith be paid or delivered directly to Priority Mortgagee for application to the payment of the Revenue Bond Lease and related Industrial Revenue Bonds to the extent necessary to make payment in full of all sums due under the Revenue Bond Lease and related Industrial Revenue Bonds after giving effect to any concurrent payment or distribution to Priority Mortgagee. In any such event, Priority Mortgagee may, but shall not be obligated to, demand, claim and collect any such payment or distribution that would, but for these subordination provisions, be payable or deliverable with respect to the Lease Agreement. In the event of the occurrence of any of the events set forth in this Section 3.12(c)(i), (ii) or (iii) above and until either Priority Mortgagee gives its written consent to Grantee or the Revenue Bond Lease and related Industrial Revenue Bonds shall have been fully paid and satisfied, no payment shall be made to or accepted by Grantee in respect of the Lease Agreement, except for payments under the Sales Tax Refund Pledge and Security Agreement (or Pilot Payments. [End of Article III] ARTICLE IV COVENANTS, REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties. Grantor warrants that, subject to Permitted Encumbrances, (a) it is lawfully seized with a good and marketable title to a leasehold estate in the Project Site, subject to no lien, charge or encumbrance; (b) it will own a leasehold estate in the Mortgaged Property free and clear of liens and claims; (c) this Subordinated Mortgage is and will remain a valid and enforceable lien on the Mortgaged Property; (d) it has full power and lawful authority to mortgage the Mortgaged Property in the manner and form herein done or intended hereafter to be done; and (e) it will preserve such title, and will forever warrant and defend the validity and priority of the lien hereof against the claims of all persons and parties whomsoever. SECTION 4.2. Notices to Grantee. Grantor shall notify Grantee promptly of the occurrence of any of the following: (a) a fire or other casualty causing any damage to the Mortgaged Property; (b) receipt of notice of condemnation of the Mortgaged Property or any part thereof, (c) receipt of notice from any governmental authority concerning any action or condition that may adversely affect the structure, use or occupancy of the Mortgaged Property; (d) receipt of any notice of alleged default from the holder of any lien or security interest, or any other interest, in the Mortgaged Property; (e) commencement of any litigation which may adversely affect the Mortgaged Property or Grantor's ability to repay the obligations secured hereby; (f) receipt of any notice of alleged default from any tenant of any portion of the Mortgaged Property; or (g) any change in the occupancy of the Mortgaged Property. SECTION 4.3. Leases and Restrictions. Grantor hereby represents that except for the Revenue Bond Lease and the Lease Agreement, there are no leases, subleases, or agreements to lease or sublease all or any part of the Mortgaged Property now in effect. Except with respect to subleases entered into at market rates, Grantor hereby agrees not to lease or allow or suffer to be leased or subleased any part of or space in the Mortgaged Property from and after the date hereof without the prior written consent of Grantee, which consent shall not be unreasonably withheld. Any grant or lease of use of the Mortgaged Property shall be subject and subordinate to this Subordinated Mortgage. Grantor shall, with respect to any such permitted lease or grant, execute and deliver to Grantee a collateral assignment of its interest as lessor, in form and substance satisfactory to Grantee, as additional collateral for the indebtedness hereby secured. Grantor will perform, fulfill, comply with and observe each and every covenant, agreement and condition to be performed, fulfilled, complied with and observed by Grantor as lessor under any such lease, and will not suffer or permit any default of Grantor as lessor thereunder to occur (except defaults which are duly cured within the time provided therein for the curing thereof). Except as may be permitted by the Lease Agreement, Grantor will not convey all or any part of the Mortgaged Property to any lessee thereof without the prior written consent of Grantee and except upon express stipulation duly set forth in the deed that any such conveyance shall not effect a merger of the leasehold estate in the fee except with the written consent of Grantee. Grantor shall not, and shall not have the right or power as against Grantee without its consent, to cancel, terminate, abridge or materially modify any such lease or to accept prepayments of installments of rent or other sums due or to become due thereunder. Grantor covenants and agrees that it will comply with the terms of, and will promptly perform all of its obligations under, deed or use restrictions affecting the Mortgaged Property; and in default thereof (a) Grantee may, at its option, perform the same and the cost thereof, together with interest at the Interest Rate for Advances, shall immediately be due from Grantor to Grantee and be secured by this Subordinated Mortgage, and (b) subject to the provisions of Section 3.1(c) hereof, Grantee may, at its option, treat any such default as an event of default hereunder. SECTION 4.4. No Other Financing or Liens. Without the prior written consent of the Priority Mortgagee and Grantee, and except for Permitted Encumbrances, Grantor shall not create or cause or permit to exist any lien or security interest in the Mortgaged Property, including any fixtures, machinery, equipment or other items of personal property which are intended to be or become part of the Mortgaged Property, and shall not incur any indebtedness for money borrowed to purchase the Mortgaged Property or any part thereof, other than the indebtedness secured hereby or by any Permitted Encumbrance. SECTION 4.5. No Further Encumbrance, No Disposition. Without the prior written consent of the Priority Mortgagee and the Grantee, or except as may otherwise be permitted herein and in the Revenue Bond Lease and the Lease Agreement, Grantor shall not grant a security interest in, mortgage, encumber, hypothecate, sell, transfer, assign or otherwise dispose of all or any part of the Mortgaged Property, or any legal or equitable interest therein, or the revenues and receipts thereof (other than to Grantee hereunder) or assign, transfer or hypothecate (other than to Grantee hereunder) any rentals or license fees (or analogous payment) then due or to accrue in the future under any lease of or license to use the Mortgaged Property or Project Site or any part thereof, or permit assumption by any third party of Grantor's obligations under the Lease Agreement. SECTION 4.6. Compliance with Laws and Regulations. Grantor covenants and agrees that in the maintenance, repair, renewal, replacement, remodeling, modification, operation and management of the Mortgaged Property it will observe and comply with all insurance underwriters' requirements and with all applicable, Federal, state and local statutes, ordinances, regulations, orders and restrictions, reserving hereby its right to contest the same, or the application of the same, so long as such contest shall not prejudice the lien of this Subordinated Mortgage nor affect the amounts secured hereby. SECTION 4.7. . Covenant Running with the Land. Any act or agreement to be done or performed by Grantor shall be construed as a covenant running with the land and shall be binding upon Grantor and its successors and assigns as if they had personally made such agreement. SECTION 4.8. Recordation. Grantor, at its expense, shall cause this Subordinated Mortgage, any instruments supplemental hereto, financing statements, including all necessary amendments, supplements and appropriate continuation statements to be recorded, registered and filed, and to be kept recorded, registered and filed, in such manner and in such places as may be required in order to establish, preserve and protect the lien of this Subordinated Mortgage as a valid, first mortgage lien on all real property, fixtures and interests therein included in the Mortgaged Property and a valid, perfected security interest in all personal property, fixtures, and interests therein included in the Mortgaged Property (including in each such case, without limitation, any such properties acquired after the execution hereof). If requested by either Grantee, but in each case not more than once in each calendar year, Grantor, at its expense, will furnish to Grantee an opinion of counsel acceptable to Grantee, specifying the action required and to be taken by Grantor to comply with this Section 4.8 since the date of this Subordinated Mortgage or the date of the most recent such opinion or stating that no such action is necessary. SECTION 4.9. After -Acquired Property. All property of every kind acquired by Grantor after the date hereof, which by the terms hereof is intended to be subject to the lien of this Subordinated Mortgage, shall immediately upon the acquisition thereof by Grantor, and without further mortgage, conveyance or assignment, become subject to the lien of this Subordinated Mortgage as fully as though now owned by Grantor and specifically described herein. Nevertheless, Grantor shall take such actions and execute and deliver such additional instruments as Grantee shall reasonably require to further evidence or confirm the subjection to the lien of this Subordinated Mortgage of any such property. SECTION 4.10. Financial Statements. Grantor will keep proper records and books of account pertaining to the Mortgaged Property in accordance with generally accepted accounting principles, consistently applied. All such records and books shall be open at all reasonable times to inspection by Grantee. Grantor shall furnish to Grantee such information respecting the business affairs, operations and financial condition of Grantor as may be reasonably requested. In case of default hereunder, Grantor will thereafter furnish to Grantee, on demand, complete monthly statements of income and expenses showing the operations of the Mortgaged Property. Grantee shall have the right to audit such statements, as well as Grantor's books of account and all papers in connection therewith. SECTION 4.11. Managing Agent. In the event that the Mortgaged Property is not maintained in good repair or if it appears that the income form the operation of the Mortgaged Property will not be sufficient to pay all Lease Payments (as defined in the Lease Agreement) when due and all expenses of proper maintenance and operation of the Mortgaged Property, the Grantor shall employ a managing agent for the Mortgaged Property. SECTION 4.12. Hazardous Substances. (A) Grantor hereby covenants and agrees with Grantee that the following terms shall have the following meanings for purpose of this Section 4.12: (i) "Environmental Laws" mean all federal, state and local laws, statutes, ordinances and codes relating to the use, storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives with respect thereto. (ii) "Hazardous Substance" means, without limitation, any flammable explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum based products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials, as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601, et seq.), or any other applicable Environmental Law. (iii) "Indemnitee means the Grantee and all subsequent holders of this Subordinated Mortgage, their respective successors and assigns, their respective officers, directors, employees, agents, representative, contractors and subcontractors and any subsequent owner of the Mortgaged Property who acquires title thereto from or through Grantee. (iv) "Release" has the same meaning as given to that term in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.) and the regulations promulgated thereunder. (B) Grantor represents and warrants to Grantee that, to its knowledge after due investigation: (i) the Mortgaged Property is not being or has not been used for the storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance in violation of any Environmental Laws; (ii) the Mortgaged Property does not contain any Hazardous Substances in violation of any Environmental Laws; (iii) there has been no Release of any Hazardous Substance on, at or from the Mortgaged Property or any property adjacent to or within the immediate vicinity of the Mortgaged Property and Grantor has not received any form of notice or inquiry with regard to such a Release or the threat of such a Release; (iv) no event has occurred with respect to the Mortgaged Property which, with the passage of time or the giving of notice, or both, would constitute a violation of any applicable Environmental Law; (v) there are no agreements or orders or directives of any federal, state or local governmental agency or authority relating to the Mortgaged Property which require any work, repair, construction, containment, clean up, investigations, studies, removal or other remedial action with respect to the Mortgaged Property; and (vi) there are no actions, suits, claims or proceedings, pending or threatened, which seek any remedy that arise out of the condition, ownership, use, operation, sale, transfer or conveyance of the Mortgaged Property and (a) a violation or alleged violation of any applicable Environmental Law, (b) the presence of any Hazardous Substance or a Release of any Hazardous Substance or the threat of such a Release, or (c) human exposure to any Hazardous Substance. (C) Grantor covenants and agrees with Grantee as follows: (i) Grantor shall keep, and shall cause all operators, tenants, subtenants, licensee and occupants of the Mortgaged Property to keep the Mortgaged Property free of all Hazardous Substances, except for Hazardous Substances stored, treated, generated, transported, processed, handled, produced or disposed of in the normal operation of the Mortgaged Property in accordance with all Environmental Laws. (ii) Grantor shall comply with, and shall cause all operations, tenants, subtenants, licensees and occupants of the Mortgaged Property to comply with, all Environmental Laws. (iii) Grantor shall promptly provide Grantee with a copy of all notifications which it gives or receives with respect to any past or present Release of any Hazardous Substance or the threat of such a Release on, at or from the Mortgaged Property or any property adjacent to or within the immediate vicinity of the Mortgaged Property. (iv) Grantor shall undertake and complete all investigations, studies, sampling and testing for Hazardous Substances required by Grantee and, in accordance with all Environmental Laws, all removal and other remedial actions necessary to contain, remove and clean up all Hazardous Substances that are determined to be present on the Mortgaged Property in violation of any Environmental Laws. (v) Grantee shall have the right, but not the obligation, to cure any violation by the Grantor of the Environmental Laws and Grantee's cost and expense to so cure shall be secured by this Subordinated Mortgage. (D) Grantor covenants and agrees, at its sole cost and expense, to indemnify, defend and save harmless Indemnitee from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, actions, proceedings, costs, disbursements and/or expenses (including, without limitation, reasonable attorneys' and experts' fees and expenses) of any kind or nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against Indemnitee arising out of the condition, ownership, use, operation, sale, transfer or conveyance of the Mortgaged Property and (i) the storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance, (ii) the presence of any Hazardous Substance or a Release of any Hazardous Substance or the threat of such a Release, (iii) human exposure to any Hazardous Substance, (iv) a violation of any Environmental Law, or (v) a material misrepresentation or inaccuracy in any representation or warranty or material breach of or failure to perform any covenant made by the Grantee herein (collectively, the "Indemnified Matters"). The liability of the Grantee to Indemnitee hereunder shall in no way be limited, abridged, impaired or otherwise affected by (a) the repayment of all sums and the satisfaction of all obligations of the Grantee under this Subordinated Mortgage, (b) the foreclosure of this Subordinated Mortgage or the acceptance of a deed in lieu thereof, (c) any amendment or modification of the Lease Agreement by or for the benefit of Grantor or any subsequent owner of the Mortgaged Property, (d) any extensions of time for payment or performance required by the Lease Agreement, (e) the release or discharge of this Subordinated Mortgage or of the Grantee, any guarantor of the amounts secured by the Subordinated Mortgage or any other person from the performance of observance of any of the agreements, covenants, terms or conditions contained in the Lease Agreement, whether by Grantee, by operation of law or otherwise, (f) the invalidity or unenforceability of any of the terms or provisions of the Lease Agreement, (g) any exculpatory provision contained in Lease Agreement limiting Grantee's recourse to property encumbered by this Subordinated Mortgage or to any other security or limiting Grantee's rights to a deficiency judgment against the Grantor, (h) any applicable statute of limitations, (i) the sale or assignment of the Lease Agreement or this Subordinated Mortgage, (j) the sale, transfer or conveyance of all or part of the Mortgaged Property, (k) the dissolution or liquidation of Grantor, (1) the release or discharge, in whole or in part, of Grantor in any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceeding, or (m) any other circumstances which might otherwise constitute a legal or equitable release or discharge, in whole or in part, of Grantor under this Subordinated Mortgage. The foregoing indemnity shall be in addition to any and all other obligations and liabilities Grantor may have to Grantee at common law. [End of Article IV] ARTICLE V MISCELLANEOUS SECTION 5.1 . Notices. All notices, certificates, requests or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, postage prepaid, addressed to the appropriate Notice Addresses. SECTION 5.2. Amendments, Changes and Modifications. Except as may otherwise be provided in the Lease Agreement, this. Subordinated Mortgage may not be effectively amended, changed, modified or altered without the prior written consent of the party against whom enforcement of such amendment, change, modification or alteration is sought. SECTION 5.3. Execution Counterparts. This Subordinated Mortgage may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument. SECTION 5.4. Severability. In case any clause, provision or section of this Subordinated Mortgage, or any covenant, stipulation, obligation, agreement, act, or action, or part thereof, made, assumed, entered into, or taken under this Subordinated Mortgage, or any application thereof, is for any reason held to be illegal, invalid or inoperable, such illegality, invalidity, or inoperability shall not affect the remainder thereof or any other clause, provision or section or any other covenant, stipulation, obligation, agreement, act or action or part thereof, made, assumed, entered into, or taken thereunder, which shall at the time be construed and enforced as if such illegal or invalid or inoperable portion were not contained therein, nor shall such illegality or invalidity or inoperability of any application thereof affect any legal and valid and operable application thereof, from time to time, and each such clause, provision or section, covenant, stipulation, obligation, agreement, act, or action, or part thereof shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent from time to time permitted by law. SECTION 5.5. General Waivers By Grantor. Grantor hereby waives and releases, to the extent permitted by law: (a) all errors, defects and imperfections in any proceeding instituted by Grantee hereunder or under the Lease Agreement; (b) all benefit that might accrue to Grantor by virtue of any present or future law exempting the Mortgaged Property, or any part of the proceeds arising from any sale thereof, from attachment, levy or sale on execution, or providing for any stay of execution, exemption from civil process or extension of time for payment; (c) any appraisement, valuation, stay, extension or redemption or usury law now or hereafter in force and all rights of marshalling of assets in the event of any sale of the Mortgaged Property or any part thereof or interest therein, it being understood and agreed that any court having jurisdiction to foreclose the lien hereof may sell the Mortgaged Property in part or as an entirety; and (d) unless specifically required herein, all notices of or Grantor's default or of Grantee's election to exercise, or Grantee's actual exercise, of any option or remedy hereunder or under the Lease Agreement. SECTION 5.6. Effect of Subordinated Mortgage. This Subordinated Mortgage constitutes a security agreement under the Uniform Commercial Code as adopted in the Commonwealth of Kentucky and creates a security interest in favor of Grantee in and to all that property (and the proceeds, accessions and replacements thereof, and the proceeds of any insurance on such property) included in the Mortgaged Property which constitutes fixtures or personal property. Grantor shall execute, deliver, file and refile any financing statements, continuation statements, or other security agreements Grantee may require from time to time to confirm the lien of this Subordinated Mortgage with respect to such property. If certificates of title are issued with respect to any such property, Grantor will cause the interest of the Grantee to be properly noted thereon. Without limiting the foregoing, Grantor hereby irrevocably appoints ---- i I _ _i_ __ Grantee attorney-in-fact for Grantor to execute, deliver and file such instruments for and on behalf of Grantor. Notwithstanding any release of any or all of that property included in the Mortgaged Property which is deemed "real property", any proceedings to foreclose this Subordinated Mortgage, or its satisfaction of record, the terms hereof shall survive as a security agreement with respect to the security interest created hereby and referred to above until the repayment or satisfaction in full of the obligations of Grantor as are now or hereafter secured hereby. Nothing herein shall preclude Grantee from proceeding as to both real and personal property in accordance with Grantee's rights and remedies in respect of real property, as provided in the Uniform Commercial Code as adopted in Kentucky. SECTION 5.7. Maximum Indebtedness. Grantor and Grantee intend and agree that this Subordinated Mortgage shall secure unpaid balances of all rent indebtedness under the Lease Agreement, whether obligatory or not, made by the Grantee after this Subordinated Mortgage is delivered to the McCracken County Clerk for record to the extent that the total unpaid rent indebtedness under the Lease Agreement, exclusive of interest thereon, does not exceed the maximum amount of unpaid rent indebtedness under the Lease Agreement which may be outstanding at any time, which is $ SECTION 5.8. No Merger. It being the desire and intention of the parties hereto that this Subordinated Mortgage and the lien thereof do not merge in fee simple title to the Mortgaged Property, it is hereby understood and agreed that should the Grantee acquire any additional or other interest in or to the Mortgaged Property or the ownership thereof, then, unless a contrary intent is manifested by the Grantee as evidenced by an appropriate document duly recorded, this Subordinated Mortgage and the lien thereof shall not merge in the leasehold title, that this Subordinated Mortgage may be foreclosed as if owned by a stranger to the leasehold title. It is further the intention and desire of the parties that the leasehold title to the Mortgaged Property cannot merge with the fee simple title interest to the Mortgaged Property without the prior written consent of Grantee. SECTION 5.9. Captions. The captions or headings in this Subordinated Mortgage are for convenience only and in no way define, limit or describe the scope or intent of any provisions of this Subordinated Mortgage. SECTION 5.10. Governing Law. This Subordinated Mortgage shall be deemed to be a contract made under the laws of the Commonwealth of Kentucky and for all purposes shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky. The parties hereby consent to the exclusive jurisdiction of the state courts sitting in McCracken County, Kentucky and/or the federal court for the Western District of Kentucky, Paducah Division with respect to all matters arising out of or related to this Subordinated Mortgage. [End of Article V] IN WITNESS WHEREOF, the parties have executed this Subordinated Mortgage as of the day and year first above written. GRANTOR: PADUCAH CONVENTION HOTEL, LLC 0.0 Title: GRANTEE: CITY OF PADUCAH, KENTUCKY, Title: Mayor F r ACKNOWLEDGMENTS COMMONWEALTH OF KENTUCKY ) SS COUNTY OF MCCRACKEN ) On this day of September, 2014, before me, a Notary Public duly commissioned, qualified and acting within and for the County and State aforesaid, appeared in person the within named , Manager of Paducah Convention Hotel, LLC, a Kentucky limited liability company, to me personally known, who stated that he was duly authorized to execute the foregoing instrument and further stated and acknowledged that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand seal this day of September, 2014. Notary My commission expires: COMMONWEALTH OF KENTUCKY ) SS COUNTY OF MCCRACKEN ) On this _ day of September, 2014, before me, a Notary Public duly commissioned, qualified and acting within and for the County and State aforesaid, appeared in person the within named Gayle Kaler, Mayor of the city of Paducah, Kentucky, a Kentucky municipal corporation, to me personally known, who stated that he was duly authorized to execute the foregoing instrument and further stated and acknowledged that she had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand seal this day of September, 2014. Notary My commission expires: This instrument prepared by the undersigned: Dirk M. Bedarff, Esq. Dinsmore & Shohl LLP 50 East RiverCenter Boulevard, Suite 1150 Covington, Kentucky 41011 W:4rie3#10 PROJECT EXHIBIT B PROJECT SITE EXHIBIT C SUPPLEMENTAL IMPROVEMENTS 4012536.1 M ANNEX E FORM OF SALES TAX REFUND AGREEMENT SALES TAX REFUND PLEDGE AND SECURITY AGREEMENT This Sales Tax Refund Pledge and Security Agreement is made as of September 15, 2014 (the "Agreement") between PADUCAH CONVENTION HOTEL, LLC, a Kentucky limited liability company whose address is 1115 South 4t' Street, Louisville, Kentucky 40203 (the "Assignor") and the CITY OF PADUCAH, KENTUCKY, a municipal corporation and political subdivision in and of the Commonwealth of Kentucky, whose address is 300 South Fifth Street, Paducah, Kentucky 42002 (the "City" or "Assignee"). 1. PLEDGE In order to induce the City (i) to issue its $ Taxable General Obligation Bonds, Series 2014D (the "Bonds"), the proceeds of which are to be used to finance (the "Supplemental Improvements"), and (ii) to enter into that certain Contract, Lease & Option dated as of September 15, 2014 with the Assignor (the "Lease"), whereby the Assignor will lease to the Assignor the Supplemental Improvements, together with a surface parking lot (the "Parking Lot") located on the real property described in Exhibit A attached to the Lease and made a part thereof (the "Parking Lot Site"), a pedestrian bridge linking the Paducah McCracken County Convention Center to that certain hotel being constructed by the Assignor (the "Connecting Bridge") and an entrance connecting the Parking Lot to such Hotel (the "Entrance Facilities," and together with the Parking Lot and the Connecting Bridge, collectively called the Non -Hotel Improvements"), and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Assignor hereby assigns to the Assignee as collateral, as that term is defined in Section 9-105 of the Uniform Commercial Code as adopted by the Commonwealth of Kentucky (herein the "Uniform Commercial Code") and pledges, transfers and grants to the Assignee a continuing first priority pledge and security interest in the following property (the "Collateral")to secure the payment of principal of, premium, if any, and interest on the Bonds: 1.1 all amounts payable to the Assignor in accordance with Section 148.853 of the Kentucky Revised Statutes, as amended, being also amounts payable under that certain Tourism Development Agreement dated as of June 26, 2014 between the Kentucky Tourism Development Finance Authority "KTDFA") and the Assignor, as the same may be amended from time to time (the "Sales Tax Refund Agreement"); and 1.2 the proceeds as that term is defined in Section 9-306 of the Uniform Commercial Code) of all of the foregoing. The Assignor authorizes the Assignee to insert herein, or on a Schedule attached hereto, any detail necessary from time to time to perfect the security interests created hereunder. 2. REPRESENTATIONS The Assignor represents and warrants to the Assignee that: 2.1 No prior lien or encumbrance exists on the Collateral. 2.2 The Assignor is the sole owner of the Collateral and has the right to pledge and grant a security interest in the Collateral to the Assignee without the consent of any other party. 2.3 Assignor shall defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein. 2.4 Assignor shall deliver to Assignee all Collateral and proceeds thereof. 3. EVENTS OF DEFAULT The occurrence of any of the following will be a default hereunder ("Event of Default"): (a) the failure by the Assignor to perform any of the provisions of this Agreement for a period of fifteen (15) days after notice of such failure has been given to the Assignor by the Assignee; (b) a general assignment by the Assignor for the benefit of creditors; or (c) the filing by or against Assignor of a petition in bankruptcy, for a reorganization or an arrangement or for a receiver, trustee or similar creditors' representative for the property or assets of Assignor or any part thereof or any other proceeding under any federal or state insolvency law. Upon the happening of any such Event of Default, the Assignee may exercise any remedies as provided in the Lease and in the Subordinated Leasehold Mortgage and Security Agreement dated as of September 15, 2014 between the Assignee and Assignor (the "Subordinated Mortgage"). The Assignee is authorized to draw such funds represented by the Collateral, in whole or in part, and to all acts necessary to draw such funds, to apply to all Bonds secured hereby, whether declared immediately due and payable or otherwise, and the officers of the Assignor are directed to pay the same to the Assignee on demand. The Assignee, in its sole discretion, may apply such funds in any manner or order to the payment of the Bonds. Notwithstanding any provisions hereof, the Assignee may exercise any one or more of the rights and remedies with respect to the Collateral granted pursuant to this Agreement or given to a secured party under the Kentucky version of the Uniform Commercial Code, as it may be amended from time to time, including, without limitation, the right upon default to sell or otherwise dispose of the Collateral. Whenever notice is required by law to be sent by the Assignee to the Assignor of any disposition of the Collateral, at least five days written notice sent by certified mail, return receipt requested, to the Assignor at the Assignor's address hereinabove set forth will be reasonable. No action and/or inaction of the Assignee shall be construed as an election of remedies; the Assignee, under all circumstances, being deemed to have reserved all of its rights and/or remedies under law and/or equity. 4. MISCELLANEOUS 4.1 General. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Kentucky. This Agreement may not be amended, altered or modified or any of its provisions waived except by a writing signed by all of the parties hereto. 4.2 Financing Statements; Documents. At the request of the Assignee, Assignor will join with the Assignee in executing one or more financing statements pursuant to the Uniform Commercial Code in form satisfactory to the Assignee and will pay the cost of filing financing, continuation and termination statements in all public offices where filing is deemed necessary or desirable by the Assignee. The Assignor will execute and deliver to the Assignee from time to time such supplemental assignments or other instruments as the Assignee may reasonably require for the purpose of confirming Assignee's interest in the Collateral. The Assignor hereby authorizes the Assignee to execute and file on behalf of the Assignor all financing statements and documents deemed necessary or appropriate by the Assignee to perfect the Assignee's interest in the Collateral. 4.3 Sales Tax Fund. The Assignor shall deposit within one (1) business day of the receipt thereof all amounts of Collateral it receives to the Sales Tax Fund (as defined and described in the Lease) held by the Assignee, which fund shall be within the exclusive control of the Assignee. Amounts on deposit in the Sales Tax Fund shall be applied and disbursed by the Assignee in accordance with the terms of the Lease. 4.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Assignor and the Assignee and their respective successors and assigns, provided, however, that the Assignor may not assign this Agreement in whole or in part without the prior written consent of the Assignee, and the Assignee may at any time assign this Agreement in whole or in part. All references to "Assignor" and "Assignee" shall be deemed to apply to the Assignor and the Assignee and their respective successors and assigns. 4.5 Termination. This Agreement shall terminate and all liens or encumbrances created hereby and hereunder shall be of no further force and effect when payment of all principal of, premium, if any, and interest on the Bonds has been made or provided for under the Lease. 4.6 Use of Defined Terms. Unless the context clearly indicates some other meanings, all capitalized terms not defined in this Agreement shall have the meanings given to them in the Lease. 4.7 Assignee, Appointed Attorney -in -Fact. Assignor constitutes and appoints Assignee the attorney-in-fact for Assignor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which Assignee may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, Assignee shall have the right, after the occurrence of an Event of Default, with full power of substitution, either in Assignee's name or in the name of Assignor, to ask for, demand, sue for, collect, receive, receipt and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral, to endorse checks, drafts, orders and other instruments for the payment of money payable to Assignor, representing any interest or dividend or other distribution payable in respect of the Collateral or any part thereof or on account thereof, and to give full discharge for the same, to settle, compromise, prosecute, or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating Assignee to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby, and no reasonable action taken by Assignee or omitted to be taken with respect to the Collateral or any part thereof shall give rise to any defense, counterclaim or offset in favor of Assignor or to any claim or action against Assignee. 4.8 Specific Performance; Injunctive Relief. Assignor acknowledges that a breach of any of the provisions contained in this Agreement may cause irreparable injury to Assignee; that Assignee will have no adequate remedy at law with respect to such breach; and that, as a consequence, Assignor's obligations hereunder shall be specifically enforceable against Assignor and that Assignee shall be entitled to injunctive relief as a remedy for such breach. 4.9 Additional Rights and Remedies. The rights and remedies provided in this Agreement and in all other agreements, instructions or documents delivered pursuant hereto are cumulative and are in addition to any rights or remedies provided by law, including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code. 4.10 Further Assurances. Assignor covenants and agrees that, at Assignor's cost and expense, upon request of Assignee, Assignor shall duly execute and deliver, or cause to be duly executed and delivered, to Assignee such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of Assignee or its counsel to carry out more effectively the provisions and purposes of this Agreement. 4.11 Indemnity. Assignor hereby agrees to indemnify Assignee and its officers, directors, agents, and attorneys against, and to hold Assignee and all such other persons harmless from all losses resulting from any representation or warranty made by Assignor or on Assignor's behalf pursuant to this Agreement having been false when made, or resulting from Assignor's breach of any of the covenants set forth in this Agreement or the Lease. This agreement of indemnity shall be a continuing agreement and shall survive payment of the Lease and termination of this Agreement. 4.12 Enforcement and Waiver by Assignee. Assignee shall have the right at all times to enforce the provisions of this Agreement in strict accordance with the terms hereof, notwithstanding any conduct or custom on the part of Assignee in refraining from so doing at any time or times. The failure of Assignee at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of Assignee are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy. 4.13 Expenses of Assignee. Assignor will, on demand, reimburse Assignee for all expenses incurred by Assignee in connection with the preparation, administration, amendment, modification or enforcement of this Agreement and/or in the collection of any amounts owing from Assignor or any other Person to Assignee under this Agreement and, until so paid, the amount of such expenses shall be added to and become part of the Additional rent due and payable under the Lease. 4.14 Attorneys' Fees. If at any time or times hereafter Assignee employs counsel to advise or provide other representation with respect to this Agreement or any other agreement, document or instrument heretofore, now or hereafter executed by Assignor and delivered to Assignee with respect to the obligations of the Assignor under this Agreement, or to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings or to take any other action in or with respect to any suit or proceeding relating to this Agreement or any other agreement, instrument or document heretofore, now or hereafter executed by Assignor and delivered to Assignee with respect to the obligations of the Assignor under this Agreement, or to represent Assignee in any litigation with respect to the affairs of Assignor, or to enforce any rights of Assignee or obligations of Assignor or any other Person which may be obligated to Assignee by virtue of this Agreement or any other agreement, document or instrument heretofore, now or hereafter delivered to Assignee by or for the benefit of Assignor with respect to the obligations of the Assignor under this Agreement, or to collect from Assignor any amounts owing hereunder, then in any such event, all of the Attorneys' Fees incurred by Assignee arising from such services and any expenses, costs and charges relating thereto shall constitute additional obligations of Assignor payable on demand and, until so paid, shall be added to and become part of the obligations of the Assignor under this Agreement. 4.15 Notices. All notices and other communications from any party to any other party hereunder shall be given and deemed received when given. 4.16 Governing Law. This Agreement is entered into and performable in McCracken County, Kentucky, and the substantive laws, without giving effect to principles of conflict of laws, of the United States and the State of Kentucky shall govern the construction of this Agreement and the documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto and thereto, except to the extent that the location of any Collateral in a state or Jurisdiction other than Kentucky requires that the perfection of Assignee's Lien hereunder, and the enforcement of certain of Assignee's remedies with respect to the Collateral, be governed by the laws of such other state or Jurisdiction. 4.17 SUBMISSION TO JURISDICTION; WAIVERS. ASSIGNOR HEREBY IRREVOCABLY AND UNCONDITIONALLY: SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE LIVINGSTON CIRCUIT COURT; CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ASSIGNOR AT ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH ASSIGNEE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; AND AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION. ASSIGNOR AND ASSIGNEE HEREBY: IRREVOCABLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY. Dated as of the day of September, 2014. ASSIGNOR: PADUCAH CONVENTION HOTEL, LLC, a Kentucky limited liability company (Title) ASSIGNEE: CITY OF PADUCAH, KENTUCKY By: Mayor ATTEST: am 5303262v3 City Clerk