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HomeMy WebLinkAbout2004-4-678461 ORDINANCE NO. 2004-4-6784 AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY APPROVING A CAPITAL SUBLEASE AGREEMENT AMONG THE PADUCAH MCCRACKEN COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, AS LESSOR, AND INFINITI PLASTIC TECHNOLOGIES, INC., AS LESSEE, WITH RESPECT TO A PUBLIC PROJECT, AND AUTHORIZING THE EXECUTION OF VARIOUS DOCUMENTS RELATED TO SUCH CAPITAL SUBLEASE AGREEMENT i I WHEREAS, the City of Paducah, Kentucky (the "City") has previously determined, and hereby further determines, that 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 skilledworkforce, all to the benefit of the citizens and residents of the City, and WHEREAS, the City has further determined that it is necessary and desirable to accomplish such public purposes that the City proceed at this time with the acquisition, construction and installation of an approximately 100,000 square foot facility (the "Project"), which Project is to be jointly owned by the City and the County of McCracken, Kentucky (the "County") and is to be financed in part on an interim basis through the issuance of the City's General Obligation Bond Anticipation Notes, Series 2004 (the "Notes"); and WHEREAS, the Notes are to be retired with the proceeds of the City's General Obligation Bonds, Series 2004 (the "Bonds") to be subsequently issued, which Bonds are to be secured in part through a general obligation note or other obligation of the County of McCracken, Kentucky (the "County") in a principal amount equal to fifty percent (50%) of the principal amount of Bonds to be issued by the City, and WHEREAS, the Notes and Bonds are to be further secured by all amounts received from leasing the Project to the Paducah McCracken County Industrial Development Authority (the "Authority") for a term equal to the term of the Bonds; and WHEREAS, the Authority, as lessor, has subleased the Project to Infiniti Plastic �.0 Technologies, Inc., as lessee (the "Lessee"), under the terms and conditions of the Capital Sublease Agreement dated March 24, 2004, (the "Sublease") for a term equal to the term of the Bonds, and all rentals received by the Authority from the Sublease shall also secure the Notes and Bonds; and WHEREAS, in order to provide for the issuance of the Notes and Bonds and to secure same as aforesaid, it is necessary and desirable that the City, as a joint owner of the Project approve and consent to the Sublease among the Authority and the Lessee with respect to the Project. NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF PADUCAH, KENTUCKY, AS FOLLOWS: Section 1. Recitals and Authorization. The City hereby approves and consents to the Sublease among the Authority and Lessee in substantially the form attached hereto as Exhibit A and made part hereof. It is hereby found and determined that the Project identified in the Sublease is public property to be used for public purposes. It is further determined that it is necessary and desirable and in the best interests of the City to execute the Sublease for the purposes therein specified, and the execution of the Sublease is hereby authorized and approved. The Mayor of the City is hereby authorized to execute the Sublease, together with such other agreements, instruments or certifications which may be necessary to accomplish the transaction contemplated by the Sublease with such changes in the Sublease not inconsistent with this Ordinance and not substantially adverse to the City as may be approved by the official executing the same on behalf of the City. The approval of such changes by said official, and that such are not substantially adverse to the City, shall be ( conclusively evidenced by the execution of the Sublease by such official. tel , Section 2. Severability. If any section, paragraph or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. Section 3. Compliance With Open Meetings Laws. This City Commission hereby finds and determines that all formal actions relative to the adoption of this Ordinance were taken in an open meeting of this City Commission, and that all deliberations of this City Commission and of its committees, if any, which resulted in formal action, were in meetings open to the public, in full compliance with applicable legal requirements. Section 4. Conflicts. All ordinances, resolutions, orders or parts thereof in conflict with the provisions of this Ordinance are, to the extent of such conflict, hereby repealed and the provisions of this Ordinance shall prevail and be given effect. Section 5. Emergency. Pursuant to KRS 83A.060, the City Commission suspends the requirement of a second reading and publication of this Ordinance. As grounds therefore, the City Commission does hereby declare an emergency to exist as to the execution of the Sublease. Specifically, any delay in the execution of the Sublease could adversely impact the Project. Section 6. Effective Date. This Ordinance shall become effective upon the first reading of this Ordinance. , ATTEST: Jjww� 11f, Tammara S. Brock, City Clerk Introduced and adopted by the Board of Commissioners, April 5, 2004 Recorded by Tammara S. Brock, City Clerk, April 5, 2004 Published by The Paducah Sun, April 12, 2004 63 EXHIBIT A CAPITAL SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT, effective the day of , 2004, by and between: PADUCAH MCCRACKEN COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (hereinafter referred to as "LESSOR") INFINITI PLASTIC TECHNOLOGIES, INC., (hereinafter referred to as "LESSEE"), having its principal offices and place of business at 19481 Harborgate Way, Torrance, CA 90501: WITNESSETH: WHEREAS, the City of Paducah, Kentucky, and the County of McCracken, Kentucky, (hereinafter collectively referred to as "LANDLORD") is the owner of certain real property located within Industrial Park West of the City of Paducah, County of McCracken, Kentucky; and WHEREAS, Lessee desires to lease the aforesaid real property from Lessor and Lessor is agreeable to lease the same to Lessee; and WHEREAS, the aforesaid real property is referred to in a lease agreement between the City of Paducah, Kentucky, and County of McCracken, Kentucky, as the landlord, and Paducah McCracken County Industrial Development Authority, the lessor herein, as the tenant therein, which lease is effective the day of , 2004, hereinafter referred to as the "Underlying Lease"; WHEREAS, Lessor and Landlord find that this lease is in the best interest of the City of Paducah, County of McCracken, and surrounding areas in order to promote the general welfare of the City and the County, and its inhabitants, by relieving conditions of unemployment and encouraging the increase of industry and replacing jobs that have been lost, expanding the local tax base, and general commerce within the area; and WHEREAS, it is the express intent of the parties hereto to enter into a lease agreement which will set out the terms, conditions and covenants of the parties' contractual relationship; NOW, THEREFORE, for and in consideration of the terms, covenants and conditions herein set forth and contained, Lessor and Lessee contracts and agree as follows: 1. PREMISES LEASED. The Lessor has leased and by these presents does grant and lease unto Lessee a 100,000 square foot steel shell building to be built as per mutually agreed to construction plans prepared by Farris, McIntosh & Tremper, Inc., and actual construction bid of A&K Construction Co., (Alternative No. 1) per bid opening date of February 26, 2004, upon certain land identified as approximately 19.22 acres as shown by the attached site plan and located in the Industrial Park West in Paducah, Kentucky 42001, initially leasing Tract D consisting of 12 acres (the "Leased Premises") as shown on the plat attached hereto as Exhibit "I" and incorporated herein by reference, and which is more particularly described in the legal description marked Exhibit "11" attached hereto and made a part hereof. Each party has had opportunity for input, and objection, if any, to the preparation of plans and the bid process. Lessor shall construct and install the aforesaid building upon the Leased Premises. Lessor hereby grants to Lessee a construction allowance not to exceed $4,600,000.00 ("Construction Allowance") toward the cost of construction of the aforesaid building upon the Leased Premises. Any costs of constructing the aforesaid building in excess of the Construction Allowance shall be paid by Lessee. Any revisions or alternations to the plans subsequent to the bid opening date are to be mutually agreed upon between the parties. This Lease shall constitute a binding agreement between the parties effective as of the date set forth above, which will be added by either Lessor or Lessee, whichever is last to sign the Lease. 2. TERM. The Lessor does hereby agree to lease to the Lessee and the Lessee does hereby agree to rent from the Lessor, the Leased Premises for abase term of twenty (20) years. Said base term shall commence upon the effective date. The effective date as hereinafter referred to shall be defined as the date that the Lessee has been handed the keys to the Leased Premises and the Lessor and Lessee have verified by execution of the Effective Date Acknowledgment attached hereto as Exhibit "III" that the Leased Premises are ready for occupation. All rights, duties, responsibilities, obligations, covenants and conditions as set forth in the Lease Agreement shall become effective on the effective date. The Lessee will begin to pay rent on the Rent Commencement Date. The Rent Commencement Date shall be defined as the first day immediately following the effective date. If the Leased Premises are not completed and ready for occupancy by the One Hundred Thirty Second (132nd) day after Lessor's issuance to its contractor of notice to proceed (the "Completion Period"), and provided that the delay is not occasioned by any act of the Lessee, the Lessee shall be entitled to late penalty equal to two (2) days rent for each day of delay past the Completion Period. The late penalty amount shall be applied as a credit to the Construction Allowance. On the Lessee's behalf, Landlord has agreed to pay the rent for the first 36 months beginning on the Rent Commencement Date. 3. RENT. Lessee shall, during the term of this Lease, pay to Lessor an annual rental in monthly installments. The rent shall be payable in advance on the first day of each and every calendar month of the term of the lease, without notice, demand, setoff, defense, deferment, or deduction, with the first installment being due on the Rent Commencement Date. If the Leased Premises are occupied for a fraction of a month at the beginning or the end of the Term, Lessee shall pay a proportionate part of the applicable monthly installment. This Lease is entered into by Lessor for the express purpose of providing the Lessor with net rental income free and clear of any and all expenses, maintenance or repair costs, charges, liens, taxes or impositions of any kind, except as expressly provided herein. The rent for the facility shall be $ , per month. Rental payments are based upon two (2) components consisting of (a) a Construction Allowance not to exceed $4,600,000.00, and (b) certain financing charges. Each component is more particularly described as follows: (a) The Construction Allowance not to exceed $4,600,000.00 component of the rent calculation is derived as follows: (i) the actual construction base bid by A&K Construction Co., (Alternative No. 1) and plans prepared by Farris, McIntosh & Tremper, Inc., for the construction of a steel shell building; (ii) engineering fees; (iii) consideration of Lessee's requests for additional improvements; and (iv) contingency reserve funds. (b) The financing component of the rent calculation is derived as follows: A repayment of all principal and interest indebtedness pertaining to the Construction Allowance which the Lessor incurs in the construction of the facility, as described in this Lease. Further, the Lessor shall be repaid for all reasonable and necessary finance fees, charges and costs that are incurred in entering into the aforesaid indebtedness, which will include, but is not limited to: AAA bond insurance premium, fees for required credit enhancers (initial and renewals), such as a bank letter of credit, underwriting fees, trustee acceptance fees, printing costs, rating agency fees and bond counsel fees. All of the aforesaid will be amortized over a twenty (20) year period. The aforesaid is now an ESTIMATE; the final costs of the financing component of the Lease cannot be known until the borrowing has closed. (c) Lessor and Lessee shall prior to the Lessee occupying the building execute an itemized statement agreeing to the initial rental amount. Thereafter, the itemized statement will be attached hereto, and made a part hereof. 4. TRIPLE NET LEASE. This lease shall be construed, as to Lessor's obligations, as a triple net lease. In addition to the Rent reserved in 3. above herein, Lessee shall pay all sums incurred in connection with the operation and occupancy of the Leased Premises, including but not limited to (i) the cost of collection and disposal of any wastes generated at the Leased Premises; (ii) all property, casualty and liability insurance; (iii) all landscape maintenance and snow removal; (iv) all general real estate taxes, including those on leasehold value, if any, and installments of special assessments against the Leased Premises (proof of payment of which shall be provided to Lessor prior to the date upon which the general real estate taxes or installments or special assessments may be paid without penalty and delinquency) and if in the event Lessee fails to pay, then the Lessor may 4 ..- 65 pay same and recover its costs from the Lessee with 10% per annum "In the absence of a good faith objection by `Lessee"'; (v) all janitorial services; (vi) all utilities; (vii) all maintenance and repairs; and (viii) personal property taxes, including those on leasehold value, if any. 5. TITLE AND ENJOYMENT. Lessor covenants that it has the fee simple title to the Leased Premises. The Lessor covenants that Lessee, on paying the rental herein provided, and on keeping, observing and performing all the other terms, covenants and agreements herein contained on the part of Lessee to be kept, observed and performed, will, during the term hereby granted, and during any renewals hereof, peaceably and quietly have, holds and enjoy the said Leased Premises for the full term of years in this Lease, subject to the terms, covenants and agreements hereof. 6. USES OF PREMISES. The Lessee shall use the Leased Premises for manufacturing, distributions and any other lawful purpose and shall immediately discontinue any use which is declared by either any governmental authority having jurisdiction or the Lessor to be a violation of any law, code, regulation or a violation of said Certificate of Use or Occupancy. Lessee will comply with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Lessee's use or occupancy of, impose any duty upon Lessee or Lessor with respect to the Leased Premises or with respect to the use or occupation thereof. Lessee shall not use or allow the building to be used for any immoral, unlawful or objectionable purposes, nor will Lessee maintain or permit any nuisance or commit or suffer to be committed any waste in, on or about the Leased Premises. Lessee shall not cause or permit the release or disposal of any hazardous substances, wastes or materials on or about the Leased Premises. Hazardous substances, wastes or materials shall include those which are defined in the Comprehensive Environmental/Environmental 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. 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 (6.), which terms shall survive the expiration or earlier termination of this Lease. Lessor may, at its option, terminate this Lease in the event Lessee engages in a prohibited use and fails to cure such violation within sixty (60) days following Lessee' s receipt of written notice from Lessor. 7. BUILDING SERVICES -CONDITION OF BUILDING. Lessee acknowledges that it is leasing essentially a shell building and will be responsible for finishing all electrical and plumbing interior improvements. Also, Lessee will be responsible, at its sole cost, for the installation of equipment and machinery. Lessor will not be responsible to the Lessee for loss of property in or from the Leased Premises or for any damage done to furniture, furnishings or effects therein, however occurring, except where such damages occur through the gross negligence of Lessor, nor will Lessor be responsible should any equipment or machinery break down or for any cause cease to function properly on account of any such interruption of service. At all times during the Term, Lessee, at no cost or expense to Lessor, will promptly and in a workmanlike manner perform all maintenance and make all repairs and replacements reasonably required to keep and maintain (i) the Leased Premises in first class order, condition and repair, and (ii) the parking lot, walkway and other exterior areas of the Leased Premises, as well as the exterior and interior of the Leased Premises, in first class order, condition and repair, free of any hazardous substances, wastes or materials, including, but not limited to, those hazardous substances, wastes or materials identified in section six (6.) (Use of Leased Premises). 8. ALTERATIONS. Lessee may not make any changes, additions, alterations, or improvements to the Leased Premises or attached or affix any article thereon without Lessor's prior written consent "which shall not be unreasonably withheld". All alterations, additions, or improvements which may be made upon the Leased Premises by Lessor or Lessee (but not including unattached trade fixtures and office furniture and equipment owned by Lessee) shall not be removed by Lessee but shall become and remain properties of Lessor. All alterations, improvements, and additions to the Leased Premises (as permitted by Lessor) will be done only by licensed contractors or mechanics approved by Lessor, and shall be at Lessee's sole expense and at such times and in such manners as Lessor will approve. If Lessee shall make any alterations, improvements or additions to the Leased Premises, Lessor may require Lessee, at the expiration of the Lease or upon Lessee' s departure from the Leased Premises, to restore the Leased Premises too substantially the same condition as existed at the commencement of the Term. M. Any mechanic's or materialman's lien for which Lessor or Lessee has received a notice of intent to file or which has been filed against the Leased Premises or Building arising out of work or materials furnished to Lessee will be discharged, bonded over, or otherwise satisfied by Lessee, within ten (10) days following the execution date Lessor or Lessee first received (1) notice of intent to file a lien or (2) notice that the lien has been filed. If Lessee fails to discharge, bonds over or otherwise satisfy any such lien, Lessor may do so at Lessee's expense, and the amount expended by Lessor, including interest and any reasonable attorneys' fees, shall be paid by Lessee within ten (10) days following Lessee's receipt of a bill from Lessor. 9. RAIL CONNECTION AND SOIL STABILIZATION. Lessor will construct, at its expense, a rail spur acceptable to Lessee at no cost to Lessee. Lessor will be responsible for the maintenance of the rail spur for so long as the Lessee occupies the premises. Lessor has the right to convey the 105' easement established for the railroad spur to a third party for the purpose of maintaining and operating trains over a said railroad spur. Lessee shall have a non-exclusive right of use to the railroad spur. Additionally, Lessor will be solely responsible for the soil stabilization necessary for the accelerated construction of the building on the Leased Premises. 10. INSURANCE -INDEMNITY -DAMAGE TO PROPERTY -INJURY TO PERSONS. Lessee shall and hereby does indemnify and hold Lessor harmless from and against any and all claims arising from (i) Lessee's use of Leased Premises or the conduct of Lessee's business or profession; (ii) any activity, work or thing done, permitted or suffered by the Lessee in and about the Leased Premises; (iii) any breach or defaults in the performance of any obligation on Lessee' s part to be performed under the term of the Lease or any negligent acts or omissions of Lessee, or of Lessee' s agents or employees. Lessee shall and hereby does further indemnify, defend and hold Lessor harmless from and against all costs, including interest, attorneys' fees, expenses and liabilities incurred in connection with any such claim or against any proceedings brought thereon. In case any action or proceeding is brought against Lessor by reason of any such claim, Lessee upon notice from Lessor, shall defend same at Lessee's expense by counsel reasonably satisfactory to Lessor. Lessee, as a material part of the compensation to Lessor, hereby assumes all risk of damage to property or injury to persons in, upon or about the Leased Premises from any cause other than Lessor' s negligence, and Lessee hereby waives all claims in respect hereof against Lessor. During the term hereof, Lessee shall maintain insurance for the facility and property in an amount equal to the full replacement cost of the Leased Premises or the amount required by any lender of Lessor, as jointly determined by the Lessor and Lessee. Lessee also shall maintain comprehensive general liability insurance on the Leased Premises of at least $1,000,000.00 per occurrence (personal injury) and $2,000,000.00 aggregate (including property damage). Lessee will also procure a railroad liability policy, in an amount satisfactory to Lessor, providing coverage for any personal injury or property claims that may arise from Lessee use of the rail line on the Leased Premises. Lessee shall also maintain All Risk property insurance on all property owned or used by Lessee and maintain an adequate business loss insurance policy. All insurance shall be with rated companies that are mutually acceptable to both parties. Lessor shall be named as an Additional Insured on all insurance policies set forth herein. On or about the Rent Commencement Date, Lessee will provide to Lessor Certificates of Insurance evidencing all coverage required by this Lease. Lessor will, in all policies, be given thirty (30) days' written notice, by the insurance carrier, that the insurance policies are to be canceled. Lessee will provide Lessor with proof of insurance annually without being requested by Lessor. Certificates of Insurance will be annually updated and provided to Lessor. Neither Lessor nor its agents shall be liable for any damage to property entrusted to employees of the Building, nor for loss of or damage to any property by theft or otherwise nor for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas,✓ electricity, water or rain which may leak from any part of the Building or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface, or from any other place or resulting from dampness or any other cause whatsoever, unless caused by or due to the gross negligence of Lessor, its agents, servants or employees. Neither Lessor nor its agents shall be liable for any latent defect in the Leased Premises or in the Building. Lessee shall give prompt notice to Lessor in case of fire or accidents in the Leased Premises or in the Building or defects therein or in the fixtures or equipment. Lessee hereby acknowledges that Lessor shall not be liable for any interruption to Lessee's business for any cause whatsoever, and that Lessee will obtain Business interruption insurance coverage should Lessee desire to provide coverage for such risk. n$ 67 11. ASSIGNMENT AND SUBLETTING. Lessee shall not, whether voluntarily or by operation of law, sell, hypothecate, assign or transfer the Lease, or sublet the Leased Premises or any part thereof, or permit the Leased Premises or any part thereof to be occupied by anyone other than Lessee or Lessee' s employees, without the prior written consent of Lessor "which consent shall not be unreasonably withheld". It is agreed that Lessor may, at its sole discretion, withhold consent if there is any default herein by Lessee or if Lessee has not met its obligation to reach the employment levels as set forth in Section 14. Further, Lessor may, at its sole discretion, withhold consent should any prospective assignee not give written agreements that it is ready, willing and financially able to meet Lessee's obligations as set forth in Section 14. Any sale, assignment, mortgage, transfer or subletting of this Lease which is not in full compliance with the approved provisions herein shall be null and void and of no effect and shall constitute a default hereunder. The consent by Lessor to an assignment or subletting shall not be construed as relieving Lessee from obtaining the express written consent of Lessor to any further assignment or subletting. Lessors' consent to any assignment or subletting shall not release Lessee from its primary liability under the Lease. Lessor shall be entitled to assign or transfer all of its rights and obligations under this Lease. 12. DAMAGE OR DESTRUCTION. If, during the Term, there occurs any material damage to or destruction of the Leased Premises, or any part thereof, resulting from any cause whatsoever (collectively "Casualty"), the Lessee shall, at Lessee's sole cost and expense, proceed with the repair or restoration of the damaged Leased Premises within ninety (90) days following such damage or destruction or, if greater than eighty percent (80%) of the estimated cost of such restoration is covered by insurance, then such later dates as the insurance proceeds are available therefore. Once commenced such repair or restoration will be diligently prosecuted to completion by Lessee under the direction and supervision of Lessor. Promptly after the occurrence of such Casualty, Lessee will give notice thereof to Lessor, and Lessee will immediately take such action as is reasonably necessary to assure that the Leased Premises does not constitute a nuisance or otherwise presents a health or safety hazard, such work to be accomplished at Lessee's sole cost and expense. All insurance proceeds payable as a result of such Casualty shall be payable to Lessee and used by Lessee to the extent necessary for payment of the cost of repairs and restoration required hereby. Any unused proceeds may be retained by Lessee. Lessor shall have no liability to Lessee, and Lessee shall not be entitled to terminate this Lease by virtue of any delays in completion of repairs and restoration, except to the extent caused by Lessor. If such a Casualty occurs, during the last three (3) lease years and it is reasonably determined that the cost would make restoration thereof unfeasible, notwithstanding the availability of insurance proceeds therefore, Lessee may terminate this Lease within sixty (60) days after such Casualty, provided, however, that Lessee promptly pay to Lessor a cash sum equal to the monthly lease payments for the balance of the lease term. Upon Lessor's receipt of the cash payment, Lessee shall be entitled to retain all insurance proceeds collected. Lessee hereby expressly waives any rights to surrender this Lease or to quit or surrender the Leased Premises, or any part thereof, or to receive any suspension, diminution, abatement or reduction of the Rent or other sums or charges payable by Lessee hereunder on account of any such Casualty. 13. EMINENT DOMAIN. If the whole of the Leased Premises or so much thereof as to render the balance unusable by Lessee will be taken under power of an eminent domain, this Lease shall automatically terminate as of the date of such condemnation, together with any and all rights of Lessee existing or hereafter arising in or to the same or any part hereof; provided, however, that nothing contained herein shall be deemed to give Lessor any interest in or require Lessee to assign to Lessor any award made to Lessee for: (i) the taking of personal property and fixtures belonging to Lessee; (ii) the interruption of or damage to Lessee's business or profession; (iii) the cost of relocation expenses incurred by Lessee; (iv) Lessee' s unamortized cost of leasehold improvements; and (v) the Lessee' s payments allocated to principal on the amortized construction costs paid to the date of condemnation, less interest. In the event of partial taking, which does not result in a termination of the Lease, the Rent will be apportioned according to the part of the remaining usable by Lessee. Lessor may, without any obligation or liability to Lessee, stipulate with any condemning authority for a judgment or condemnation without the necessity of a formal suit for judgment of condemnation, and the date of taking under this clause will then be deemed the date agreed to under the terms of said agreement of stipulation. 7 M. 14. DEFAULTS. The occurrence of any of the following shall constitute a material default and breach of the Lease: The vacating or abandonment of the Leased Premises by Lessee. 2. A failure by Lessee to pay the Rent or to make any other payment required to be made by Lessee hereunder, when due, or within ten (10) days thereafter. 3. A failure by Lessee to observe and perform any other provision of this Lease to be observed or performed by Lessee. , �D 4. The making by Lessee of any general assignment for the benefit of creditors; the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt or the filing of a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed by Lessee, the same is dismissed within sixty (60) days); the appointment of a trustee or receiver to take possession of substantially all of Lessee' s assets located at the Leased Premises or of Lessee' s interest in the Lease where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Leased Premises or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days. 5. A failure by Lessee to fulfill and maintain its employment obligations and such failure continues for a Two Hundred and Seventy (270) day period after written notice by Lessor to Lessee. Lessee hereby covenants and agrees to achieve full-time equivalent employment at prevailing wages of 100 employees by the end of the fifth (5th) year of the lease term, and shall maintain the 100 employees through the end of the seventh (7th) year of the lease term. In the event Lessee has successfully fulfilled and maintained its employment obligations through the end of the seventh (7th) year of the lease term, Lessee's failure to maintain these employment obligations through the remainder of the lease term shall not constitute an event of default and breach of this lease. Notwithstanding same, Lessee shall use its best efforts to maintain these employment obligations. Lessee shall not be in default in the performance of any obligation provided for herein, except with reference to the payment of Rent, unless and until Lessee has failed to perform such obligation within thirty (3 0) days after written notice by Lessor to Lessee specifying wherein Lessee has failed to perform such obligation. Lessor will not be deemed to be in default in the performance of any obligation required to be performed by it hereunder unless and until it has failed to perform such obligation within thirty (30) days after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation. Provided, however, that if the nature of Lessor' s obligation is such that more than thirty (30) days are required for its performance, then Lessor will not be deemed to be in default if it shall commence such performance within such thirty (3 0) day period and thereafter diligently prosecute the same to completion. 15. REMEDIES. In the event Lessee commits an act of default as set forth in (14.), Lessor may exercise one or more of the following described remedies, in its sole discretion, in addition to all other rights and remedies available at law or in equity, whether or not stated in this Lease: 1. Lessor may continue this Lease in full force and effect and shall have the right to collect Rent when due. During the period Lessee is in default, Lessor may re-enter the Leased Premises, with or without legal process, and relet them, or any part of them, to third parties for Lessee's account and Lessee hereby expressly waives any and all claims for damages by reason for such re-entries, as well as any and all claims for damages by reason of any distress warrants or proceedings by way of sequestration which Lessor incurs in reletting the Leased Premises, including, without limitation, brokers' commissions, expenses of remodeling the Leased Premises required by the reletting, and like costs. Reletting can be for a period shorter or longer than the remaining Term of the Lease, and in no event shall Lessor be under any obligation to relet the Leased Premises. On the dates such rent is due, Lessee shall pay to Lessor a sum equal to the Rent due under this Lease, less the rent Lessor receives from any reletting. No act by Lessor allowed by this paragraph shall terminate the Lease unless Lessor notifies Lessee in writing that Lessor elects to terminate the Lease. 2. In the alternative, in the event that Lessee abandons the facility prior to the end of the sixth (6th) year of the lease term or fails to provide Lessor with the required written notice of termination that is at least eighteen (18) months prior to the date of termination, Lessee shall pay in cash, within sixty (60) days, eighteen (18) months of lease payments or the balance of the lease payments owed, whichever is less. 3. Should any of these remedies, or any portion thereof, not be permitted by the laws of the Commonwealth of Kentucky, then such remedy or portion thereof shall be considered deleted and unenforceable, and the remaining remedies or portions thereof shall be and remain in full force and effect, and Lessor may avail itself to these as well as any other remedies or damages r l allowed by law. All rights, options and remedies of Lessor stated herein or elsewhere by law or in equity will be deemed cumulative and not exclusive of one another. The Lessor agrees to use its best efforts to mitigate damages in the event Lessee defaults on any of the aforementioned lease provisions. 16. EXPANSION OF OPERATIONS AND ADDITIONAL LAND. In the event Lessee's business requires expansion onto the adjacent Tract E (herein defined) and Lessee is in compliance with its employment obligations as set forth in Section 14 of this Lease, and is not in default herein, then Lessor will lease unto Lessee Tract E, consisting of 7.22 acres as shown on the plat attached hereto as Exhibit "I", for One dollar ($1.00) per year. Tract E will be conveyed to Lessee along with Tract D upon the completion of the Lease Term. Expansion, as used in this section, is agreed to mean: a new building, or addition to the original building, whose physical dimensions, types of construction and materials used are substantially similar to, or exceed, those of the original building. This definition of "expansion" is to be strictly construed. 17. RIGHT OF ACCESS. Upon reasonable notice to Lessee, Lessor and its agents will have free access to the Leased Premises during all reasonable hours for the purpose of examining the same to ascertain if they are in good repair, to make reasonable repairs as required hereunder (provided, however, Lessor will have no obligation as the result of such examination to make any repairs other than expressly set forth herein), and to exhibit the same to prospective purchasers or Lessees. Lessor may also show signage ninety (90) days prior to termination of the Lease for advertisement purposes. 18. END OF TERM/EARLY TERMINATION. This Lease shall end twenty 20 , . tY ( )ears Y from the Rent Commencement Date. Notwithstanding the foregoing, the Lessee may at the end of the sixth (6th) year of the lease term terminate this Lease and quit the Leased Premises by providing Lessor with written notice that is at least eighteen (18) months prior to the date of termination. The aforesaid notice of termination may not be given by Lessee until the end of the fifty-fourth (54th) month of the lease term. During the (18) eighteen month notice period, Lessor shall have unrestricted access to the Leased Premises for the purposes of marketing the Leased Premises for future use and sale. Also during such period Lessee shall be required to fully and faithfully perform all obligations required to be performed by it under this Lease. 19. OPTION TO PURCHASE FACILITY. Lessee may purchase the Leased Premises based on the following terms: 1. In the event that Lessee, for a period of twenty (20) years, successfully completes all covenants, obligations and conditions set forth in this Lease, then Lessee will have the option of purchasing both the Leased Premises and Tract E, if a timely expansion has been made as defined in Section 16, for the sum of One and 00/100 Dollar ($1.00). 2. At any time during the term of this Lease, if Lessee is not in default herein, Lessee may purchase the Leased Premises for a sum equal to the payoff of the unpaid balance(s) of any and all indebtedness that Lessor has incurred in meeting its obligations under this Lease. Lessees' payoff of the aforesaid sum(s) shall also include any penalty for early payoff, reasonable ' and necessary professional fees, if any, that Lessor incurs in paying off the indebtedness. The parties agree that upon purchase by Lessee the Lessor shall be relieved of all of its obligations, of every kind, including financial, in regard to the premises and Lease. However, premature abandonment or quitting of the leased facilities constitutes a forfeiture of any claims or rights Lessee may have under this paragraph in the Leased Premises, notwithstanding the payment of future rent obligations as a remedy for default. Lessee's premature abandonment or quitting of the Leased Premises without payment of the balance of principal owed on the remaining rent due shall constitute a forfeiture of Lessee' s rights, if any, to any equity interest in the Leased Premises and a forfeiture of Lessee' s rights to purchase the Leased Premises. 0 70 20. ESTOPPEL CERTIFICATE, ATTORNMENT, AND NON -DISTURBANCE. Within ten (10) days following receipt of Lessor I s written request, Lessee will deliver executed in recordable form, a declaration to any person designated by Lessor: (a) ratifying this Lease; (b) stating the Rent Commencement and termination dates of the Lease; and (c) certifying (i) that the Lease is in full force and effect and has not been assigned, modified, supplemented or amended (except by such . writings as shall be stated); (ii) that all conditions under this Lease to be performed by Lessor have been satisfied (stating exceptions, if any); (iii) that no defenses, credits, or offsets against the enforcement of this Lease by Lessor exist (or stating those claimed); (iv) the sum of advanced Rent, if any, paid by Lessee; (v) the date to which Rent has been paid; (vi) the amount of security deposited with Lessor, and such other information as Lessor reasonably requires. Persons receiving such i statements shall be entitled to rely upon them. 21. NOTICES. Any notice required or permitted to be given hereunder will be in writing . and may be given by: (1) hand delivery and will be deemed given on the date of delivery; (2) registered or certified mail and will be deemed given the third day following the date of mailing; or (3) overnight delivery will be deemed given the following day. All notices to Lessee and Guarantor Company will be addressed to: Mr. Saeed Yousefian, President Infiniti Plastic Technologies, Inc. Infiniti Media, Incorporated 19481 Harborgate Way Torrance, CA 90501 All notices to Lessor will be addressed to: Chairman Paducah McCracken County Industrial Development Authority 401 Kentucky Avenue P.O. Box 1155 Paducah, KY 42002-1155 Notices will also be sent to the Office of the Mayor of the City of Paducah and the Office of the McCracken County Judge Executive. 22. MISCELLANEOUS PROVISIONS. 1. Attorneys' Fees. In the event that suit is brought by either party against the other for a breach or default under the terms of this Lease, the prevailing party shall be entitled to reasonable attorneys' fees, which sum shall be fixed by the court. 2. Headings. The headings contained in this Lease are for convenience only and will not be considered in the construction or interpretation of any provision hereof. 3. Amendment. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. 4. Waiver of Subro ag tion. Lessor and Lessee hereby mutually waive any and all rights of recovery against one another based upon the negligence of either Lessor or Lessee or their agents or employees for real or personal property loss or damage occurring to the Leased Premises or to the Building or any part thereof or any personal property located therein from perils which are able to be insured against in standard fire and extended coverage, vandalism and malicious mischief and sprinkler leakage insurance contracts (commonly referred to as "All Risk"), whether or not such insurance is actually carried. 5. Waiver. No waiver by Lessor of any provision of this Lease shall be deemed to be a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or � any other provision. Lessor's consent to or approval of any act by Lessee requiring Lessor's consent or approval will not be deemed to render unnecessary the obtaining of Lessor's consent to or approval of any subsequent act of Lessee, whether or not similar to the act so consented or approved. No act or thing done by Lessor or Lessor' s agents during the Term of this Lease shall be deemed an acceptance or a surrender of the Leased Premises, and no agreement to accept such a surrender shall be valid unless in writing and signed by Lessor. The subsequent acceptance of Rent shall not be deemed a waiver of any preceding breach by Lessee of any term, covenant or condition of the Lease, other than the failure of Lessee to pay the particular Rent so accepted. 10 6. Governing Law. This Lease shall be governed by the laws of the Commonwealth of Kentucky. 23. CONDITIONS PRECEDENT. Anything to the contrary in this Lease notwithstanding, the covenants contained in this Lease to be performed by Lessor will not be binding personally, but instead such covenants are made for the purpose of binding only Lessor's interest in the Property, as expressly set forth herein. IN WITNESS WHEREOF, the parties have duly executed this Lease the day and year first above written. Lessee: INFINITI PLASTIC TECHNOLOGIES, INC. By: Its: STATE OF _ COUNTY OF SCT The foregoing instrument was acknowledged before me by on behalf of INFINITI PLASTIC TECHNOLOGIES, INC., Lessee, this 2004. My commission expires: Notary Public 11 day of 71 72 Lessor: PADUCAH MCCRACKEN COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY 0 Its: HAVE SEEN AND AGREED TO. Landlord: CITY OF PADUCAH, KENTUCKY COUNTY OF MCCRACKEN, KENTUCKY By: By: Its: Its: COMMONWEALTH OF KENTUCKY ) SCT COUNTY OF MCCRACKEN ) The foregoing instrument was acknowledged before me by , on behalf of PADUCAH MCCRACKEN COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, Lessor, this day of 52004. My commission expires: Notary Public Commonwealth of Kentucky at Large 12 GUARANTY AGREEMENT In consideration of Lessor entering into this Lease with Lessee, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, Infiniti Media, Incorporated, 19481 Harborgate, Torrance, California 90501, does irrevocably and unconditionally guarantee all Lease payments of Lessee when due, whether by acceleration or otherwise, and the performance of all other terms, conditions, covenants of Lessee contained in the Lease, including all employment obligations as set forth in Section 14 of the Lease. Infiniti Media, Incorporated, waives hereby notice of any amendments, renewals, modifications, extensions, and any default by Lessee. It is agreed that this guaranty is a primary obligation of Infiniti Media, Incorporated, and may be assigned by Lessor. This guaranty shall be binding upon all successors and assigns of Infiniti Media, Incorporated. The undersigned guarantees that persons signing the Lease in behalf of Lessee and the Guaranty Agreement in behalf of Infiniti Media, Incorporated, have full corporate authority to i execute the same as binding and enforceable agreements. STATE OF SCT INFINITI MEDIA, INCORPORATED Lo Title The foregoing instrument was acknowledged before me by on behalf of INFINITI MEDIA, INCORPORATED, the guarantor, this 2004. My commission expires: This Lease was prepared by: Notary Public 13 day of 73 74 Whitlow, Roberts, Houston and Straub, Attorneys at Law, in behalf of Lessee P. O. Box 995 Paducah, KY 42002-0995 And Denton & Keuler, Attorneys at Law, in behalf of Lessor P. O. Box 929 Paducah, KY 42002-0929 14 I�D I�) EXHIBIT "I" See Attached Plat. 15 75 76 EXHIBIT "II„ See Attached Legal Description. 16 C� 77 EXHIBIT "III" EFFECTIVE DATE ACKNOWLEDGMENT THIS AGREEMENT, made this day of , 2004, by and between: PADUCAH MCCRACKEN COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (herein called "LESSOR") AND INFINITI PLASTIC TECHNOLOGIES, INC., (herein called "LESSEE") WITNESSETH: WHEREAS, Lessor and Lessee have entered into a certain Lease dated , 2004, hereinafter referred to as "Lease", for the purpose of leasing a building identified as Industrial Park West, Paducah, KY 42001; and WHEREAS, Lessor and Lessee wish to acknowledge the effective date as defined in (2.) ofthe Lease. In addition thereto, Lessor and Lessee wish further to establish the date that the base term shall commence pursuant to (2.) and to further establish the dates in which the Lessee must notify the Lessor of its intentions to exercise any renewal period terms; NOW, THEREFORE, in consideration of the Leased Premises as described in the Lease and the covenants set forth therein, Lessor and Lessee agree as follows: 1. The effective date of the Lease commenced on _ Commencement Date under the Lease Agreement shall commence on The Rent 2. The term of the Lease as defined in paragraph two of the Lease shall expire twenty years after the effective date which shall be IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. LESSEE: INFINITI PLASTIC TECHNOLOGIES, INC. Un Its: 17 LESSOR: PADUCAH MCCRACKEN COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY