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EXHIBIT 10.38

 

EXECUTION COPY

 

SUB-LEASE

 

            THIS SUBLEASE is made and entered into by and between Cohen Brothers of Lexington, Inc., a Kentucky corporation, located at 740 Rockcastle Avenue, Lexington, Kentucky 40505 (the "Sublessee") and Industrial Services of America, Inc., a Florida corporation, located at 7100 Grade Lane, Building 1, Louisville, KY 40213 (the "Sublessor").

 

            WITNESSETH :

 

1.         TERM - The Term of the Sublease shall commence on March 1, 2007 and continue

through January 31, 2012 (the "Term").

 

2.         DESCRIPTION OF PREMISES - The premises subject to this Sublease consists of the premises generally described as "1 1/2 acres of 1-2 zoned land" located at 1400 Cahill Drive, located in Lexington Kentucky as outlined on Exhibit "A" attached hereto and by reference made a part hereof (hereinafter referred to as the "Premises")

 

3.         [Intentionally Deleted] .

 

4.         USE OF PREMISES - The Premises shall be used and occupied by Sublessee as a scrap metal processing facility, as well as any and all lawful uses related thereto.  Sublessee agrees to abide by all applicable zoning regulations and not to commit or suffer waste; to operate in a safe/sound manner and abide by all EPA and OSHA laws, not to assign this lease, sublet or underlet the Premises or any part thereof, or permit the sale of the interest therein by legal process, without the written consent of the Sublessor.  Any licenses or permits necessary for Sublessee to operate its business on the Premises will be procured at the Sublessee's expense.  The Sublessee may not occupy or use the Premises for any other purpose without the written consent of the Sublessor.  Sublessee shall obey, observe and promptly comply with all valid present and future laws, ordinances, rules, regulations, orders and requirements of the United States of America, the Commonwealth of Kentucky, the City of Lexington, Kentucky, and of any or all governmental authorities or agencies having authority over said Premises and the occupancy thereof.  Sublessee shall not use the Premises or permit same to be used for any unlawful or illegal purpose.  Sublessee will not do, nor permit anything to be done, in, upon, or about the subleased Premises that increases the fire hazard beyond that which will exist by reason of the ordinary use or occupancy of the Premises set forth above.  Sublessee will not do or permit to be done anything in, about or upon the subleased Premises that interferes with the rights of, or tends to annoy, other Sublessees of Sublessor; that conflict with the regulations of the Fire Department or Board of Health; that creates a nuisance; or that is dangerous to persons or property.  Sublessee shall not use nor permit to be used on the Premises anything that will invalidate any policies of insurance which may now or hereafter be carried on said Premises or increase the rate of insurance thereon; and any increase in insurance premiums on said Premises which may be caused by the use made thereof by Sublessee shall be paid by Sublessee.

 

5.         ACCESS TO PREMISES - During the Term, access to the property by the Sublessee shall be limited to the regular hours of operation of the Sublessor unless Sublessor otherwise expressly grants approval.  Sublessor and its duly authorized agents, employees, officers and independent contractors shall have access to the Premises during normal business hours for the purposes of ascertaining that Sublessee is carrying out the terms, conditions and provisions hereof, and to properly make any necessary repairs, improvements and alterations by reason of Sublessee's default under the terms of this Lease or otherwise.

 

6.         RENT -

 

            The rent for use of the Premises during the Term shall be four thousand five hundred ($4,500) dollars per month.

 

            Notwithstanding anything to the contrary contained elsewhere in this Agreement, the Sublessor hereby waives the payment of rent for the first month of this sub-lease (i.e. March 1st, 2007 through March 31st, 2007).

 

            Monthly rental payments shall be due and payable on the first day of each and every month.  In the event a monthly rent payment is paid after the fifth day of a month, such payment shall be deemed late and shall be subject to a 5% late fee (i.e., 5% of the monthly rent payment) payable along with such payment.

 

7.         SECURITY DEPOSIT - Intentionally Deleted.

 

8.         SUBJECT TO OVERLEASE - This Sublease is subject to an Overlease (the "Overlease") entered into on February 15, 2005 between the Sublessor and the Landlord, C & R Asphalt ("Landlord").  The Sublessee hereby acknowledges that it has read and agrees to be bound by the terms of the Overlease.  Sublessee acknowledges that this Sublease is contingent on the continuation of the Overlease.

 

9.         OVERTENANT'S DUTIES - The Overlease describes the Landlord's duties.  The Sublessee, as a third party beneficiary of the Overlease, shall have right to enforce the terms of the Overlease in the event the Sublessor fails to enforce its rights under the Overlease.  Such right shall be subject to Sublessee providing notice to the Sublessor of the default specifying the particulars of such default; and further subject to a thirty (30) day period for the Sublessor to cure such default.

 

10.       QUIET ENJOYMENT AND TITLE - The Sublessor covenants, warrants and represents that it has full right and power to execute and perform the Sublease and this agreement and to grant the estate demised herein, and covenants that the Sublessee, on paying the rent herein and performing the covenants and agreements hereof, shall peaceably and quietly have, hold and enjoy the Premises and all rights, easements, appurtenances and privileges belonging or in anyway appertaining thereto, during the term of the Sublease and any extension or renewal thereof.

 

11.       IMPROVEMENTS - Sublessee acknowledges that it is renting the Premises in an "as is" condition and shall provide all improvements that it deems necessary or desirable, provided, however, that no material improvements shall be made to the Premises without Sublessor's prior written consent.  In the event Sublessee desires to make a material improvement, Sublessee shall submit a plan to Sublessor outlining such proposed change at least thirty (30) days prior to any proposed construction.  If said plans are acceptable to the Sublessor, written consent will be given to the Sublessee.  Any permission given by the Sublessor to make structural changes or alterations shall be on the condition that the work shall be at Sublessee's expense, unless otherwise agreed in writing, and shall be in accordance with the building code and zoning laws of the Lexington Metro.  All necessary approvals, consents, and licenses necessary to perform the proposed improvements shall be the responsibility of the Sublessee, performed at the co


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