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HomeMy WebLinkAboutVerve Kombucha Lease Agmnt - 5/29/2018Waterloo Public Market LEASE AGREEMENT This Lease Agreement (the "Lease") is entered into as of U� , 2018 by and between the City of Waterloo, Iowa ("Lessor") and Verve Kombucl , LLC ("Lessee"). NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. RENTAL OF PREMISES; TERM. a. Premises. Upon the condition that Lessee pays rent and otherwise abides by all of the provisions of this Lease, Lessor leases to Lessee the following -described real estate, situated in Waterloo, Black Hawk County, Iowa, to -wit: Lot Nos. 4, 5, 6 and 7, and the alley abutting each of said lots, all in Block 15 in the Original Plat, on the West Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, locally known as 327 West 3rd Street, Waterloo, Iowa, 50701 and commonly known as the Waterloo Public Market; with the improvements thereon and all rights, easements, and appurtenances thereto belonging. b. Term. The term of this Lease is seven (7) years, commencing on July 1, 2018 and continuing until and including June 30, 2025. No later than April 1, 2025, the parties shall confer in good faith to assess the profitability of Lessee's operations on the premises and shall negotiate terms and conditions for extension of the Lease term, if any. 2. RENT PAYMENTS; PROPERTY TAXES. In addition to other payments required by this Lease, Lessee shall pay rent and property taxes as set forth below. a. Base Rent. Lessee agrees to pay to Lessor as base rent for said term the monthly sums stated below, in advance, on or before the first day of each month during the Lease term: First year (ending 6/30/2019) $0 7/01/2019 — 6/30/2020 $1,000 7/01/2020 — 6/30/2021 $2,000 7/01/2021 — 6/30/2022 $3,000 7/01/2022 — 6/30/2023 $3,833 7/01/2023 — 6/30/2024 $4,000 7/01/2024 — 6/30/2025 $4,000 b. Prope , Taxes. Lessee shall pay all real estate taxes and special assessments with respect to the premises. Lessee shall timely pay all taxes, assessments, or other public charges levied or assessed by lawful authority against its personal property on the premises during the term of this Lease. Each party reserves the right to protest any assessment of taxes. 3. UTILITIES AND SERVICES. Lessee shall pay, before delinquency, all charges for use of telephone, cable or fiber optic, water, gas, heat, electricity, power, air conditioning, garbage disposal, trash disposal, and all other utilities and services of whatever kind and nature that may be used in or upon the leased premises. Lessee shall be reimbursed for power usage resulting from outdoor events held by others, with such usage to be determined on an equitable basis in good faith with reference to relevant information, including but not limited to power usage on the leased premises during periods when such events do not occur. 4. USE OF PREMISES. Lessee agrees during the term of this Lease to use and occupy the leased premises for purposes of operating a kombucha tea brewery, tasting room and bistro and distribution of kombucha tea. Lessee further agrees to work cooperatively and in good faith with Lessor and outdoor event organizers ("Expo Organizers") (currently WESCO as contracted through Main Street Waterloo) to insure optimum public use of the adjacent Riverloop Expo exhibition grounds. Lessee may work with Expo Organizers to schedule up to 12 events per year on said grounds at no additional cost, to be conducted on the same terms as apply generally to other parties making use of the grounds. a. Parkin. The parking lot will be available for use at all times by members of the general public. The parties acknowledge that, from time to time, certain extraordinary Expo activities may require use of some or all parking areas on the leased premises. In such instances Lessee shall cooperate with Lessor and Expo Organizers in a good -faith effort to reach a mutually acceptable arrangement to accommodate Lessee's parking needs with competing needs for such Expo events. b. Restrooms. Lessee shall make restrooms available for outdoor events held at the Expo Plaza. The organizer of such outdoor events shall be responsible for cleaning and servicing of restrooms as needed during and immediately after events. The organizer shall provide needed restroom supplies/materials for such events and shall replenish supplies/materials promptly after such events. C. No Unlawful Use. Lessee shall make no unlawful use of the leased premises and agrees to comply with all valid regulations, including but not limited to those of the Board of Health, City ordinances, laws of the State of Iowa, and the federal government, but this provision shall not be construed as creating any duty by Lessee to members of the general public. d. Hours of Operation. Lessee shall operate so that the premises is open for business with the general public seven days a week. 5. CARE AND MAINTENANCE OF PREMISES. Lessee takes the leased premises in their present condition, AS IS, except for such repairs and alterations as may be expressly herein provided. Except as expressly provided in this Lease, Lessee shall be responsible for all maintenance and cleanliness of the leased premises, including but not limited to the Public Market building and adjacent property. 2 a. Lessee's Duty of Care and Maintenance. Lessee shall be further responsible for the maintenance and repair of the water, sewer, and electrical systems serving the leased premises during the term of this Lease. Lessee shall replace light bulbs in lighting fixtures as necessary. Lessee agrees to keep faucets closed so as to prevent waste of water and flooding of premises. To the extent that Lessee has control of thermostats, Lessee agrees to maintain adequate heat to prevent freezing of pipes. At the termination of said Lease, it shall be Lessee's sole responsibility to return said services and related facilities to Lessor in good working order and in substantially the same condition in which they were at the beginning of the Lease term. b. Cleaning; of Premises. Lessee shall clean all interior and exterior window surfaces of the premises as needed, but no less than quarterly. Lessee shall clean all floors and floor coverings on a regular basis, keeping same in a first-rate condition of cleanliness. Lessee shall provide all necessary cleaning supplies, chemicals, tools and equipment. C. Care and Maintenance by Lessor. Lessor will be responsible for repair and replacement of the structural parts of the building, which for purposes of this Lease shall mean the foundation, roof, exterior walls, load bearing components of interior floors and walls (but not the surface of floors or other coverings for floors or walls), and all sewers, pipes, wiring, and electrical fixtures outside of the structure that are not adapted solely for Lessee's use. Lessor will also be responsible to repair, maintain and replace heating and cooling equipment and systems. Lessee will promptly notify Lessor of any issues as set forth in this paragraph that may require Lessor's attention. d. Litter Control; Garbage Disposal. Lessee shall be further responsible for litter control in and around the premises and parking areas, including but not limited to areas within 50 feet of the leased premises on any street, sidewalk, or the Riverloop Expo grounds. Litter shall be picked up no less than weekly, but shall be done as often as required to maintain the premises and surrounding areas in clean condition. All solid waste pickup and disposal for the premises, as well as all duties of care and maintenance ascribed to Lessee herein, shall be the sole responsibility and cost of Lessee. e. Natural Disasters/Acts of Terrorism. Lessee shall not be responsible for damage to the premises caused by natural disasters, acts of terrorism or civil unrest. f. Snow Removal. Lessor will remove snow from the parking lot after streets and areas designated as priority streets and areas have been completed. Lessee may provide additional snow removal for the parking lot at its own cost. Lessee shall be responsible for all other snow removal required on premises, including but not limited to sidewalks and pedestrian areas. g. Access to Premises. During the term of this Lease, Lessee shall provide Lessor with keys necessary to access all parts of the premises. 6. ALTERATIONS. Lessee shall obtain advance written approval from Lessor for any interior or exterior improvements or alterations to the leased premises, including but not limited to those for energy efficiency. Unless there is prior written agreement to the contrary, 3 any improvements or alterations made to the leased premises by Lessee or any other person shall be the sole property of Lessor. 7. EQUIPMENT. Lessee is permitted to use any equipment located on the leased premises, for payment of $1.00 per year. Lessor will remove any equipment that Lessee does not wish to use. Upon expiration of the initial term of this Lease, the parties will confer in good faith about whether Lessee will purchase the equipment and upon what terms. 8. END OF TERM; FIXTURES. a. Termination on Expiration; Holding Over. This Lease shall terminate upon expiration of the original term or any renewal term. Continued possession beyond the expiration date of the term of this Lease by the Lessee, absent a new lease or a written agreement by both parties for an extension of this Lease, shall constitute a month-to-month extension of this Lease, provided that effective upon such possession the base rent shall automatically increase by $1,000 per month. b. Surrender in Reasonable Condition. Lessee agrees that upon termination of this Lease, it shall surrender, yield up and deliver the leased premises in good and clean condition, with the exception of ordinary wear and tear and depreciation arising from lapse of time, or damage without fault or liability of Lessee. C. Improvements. Unless otherwise agreed, any improvements, including but not limited to fixtures attached to the Waterloo Public Market building, shall become the sole property of Lessor at the expiration of this Lease, without compensation for same to Lessee. d. Post -Term Possession. Continued possession beyond the expiration date of the term of this Lease by Lessee, and absent a written agreement by both parties for an extension of this Lease or for a new lease, shall constitute a month-to-month extension of this Lease, provided that any extended term may be terminated by 30 -days' advance written notice from one party to the other. 9. ASSIGNMENT AND SUBLETTING. Lessee may not assign this Lease or sublet the premises or any part thereof without Lessor's prior written permission. Any unauthorized assignment or subletting shall, at the option of Lessor expressed by delivery of written notice to Lessee, void this Lease and immediately accelerate any and all compensation due, and Lessee shall immediately surrender the premises and be bound by all other provisions of this Lease which may apply at that time. 10. INSURANCE AND INDEMNITY. a. Insurance Coverage. Lessee agrees that it will, at its own expense, procure and maintain casualty and liability insurance in the amount of not less than $2,000,000 per occurrence and $3,000,000 annual aggregate. Such insurance shall cover liability arising from premises operations, independent contractors, personal injury, products, and completed operations and liability assumed under an insured contract, including but not limited to the activities of Lessee, its officers, employees and agents. Lessee acknowledges that Lessor is 0 providing no insurance for the benefit of Lessee. Subrogation rights of Lessee are waived. Also see Section 10(b). b. Additional Insured Status. Certificates or copies of said policies, naming the Lessor as an additional insured, and providing for 30 days' advance notice to the Lessor before cancellation, shall be delivered to Lessor within no later than the beginning of the Lease term. A renewal certificate shall be provided to Lessor prior to expiration of any policy. C. Indemnity. Except as to the sole negligence of Lessor, Lessee shall protect, indemnify, and hold Lessor harmless from and against any and all claims, demands, causes of action, costs, damages or liabilities of any type or nature whatsoever, including but not limited to attorneys' fees and expenses, which may arise out of the acts or omissions of Lessee, or the use or occupancy of the leased premises by Lessee or any person claiming through or under Lessee who may suffer injury, loss, or damage directly or indirectly by the acts or omissions of Lessee or such persons. 11. ALCOHOLIC BEVERAGES. a. Permission to Sell. Lessee may offer and sell alcoholic beverages for on- site or off-site consumption purposes, consistent with the bid proposal (the "Proposal") submitted by Lessee before the date of this Lease. All said sales shall be by Lessee or its agents or employees. Lessee shall abide by all local, state, and/or federal laws which may apply to the licensing and sale of alcoholic beverages. b. Dram Shop Insurance. Lessee shall provide proof of financial responsibility by the existence of a dram shop liability insurance policy as required by law (which coverage may be included in liability coverage required by Section 10(a) above) in the minimum amount of $2,000,000 per occurrence. Certificates or copies of said policies, providing for 30 days' advance notice to the State of Iowa before cancellation, shall be delivered to Lessor upon execution of this Lease. A renewal certificate shall be provided to Lessor prior to expiration of any policy. The indemnity provisions of Section 10(c) shall also apply with respect to any and all loss, damage, fee, fine, penalty, cost and expense occasioned by, of arising out of, any claim relating to alcoholic beverages dispensed on the leased premises. Lessee shall provide to Lessor proof of all licenses required by law prior to the offer, dispensing or sale of any alcoholic beverages or wine. Lessee agrees to assume all liability for any and all claims or causes of action, at law or equity or otherwise, which may arise from the offer, dispensing or sale of alcoholic beverages on the leased premises. 12. COPYRIGHT. Lessee shall be solely responsible for any copyright, licensing or other fees required by law for the playing or performance of any music in or upon the leased premises, whether live or recorded, and shall have the right to contract with performers and with companies providing recorded music. 13. LOSS OF LICENSE. If Lessee fails to obtain, renew, or keep in force for any reason whatsoever, including but not limited to the suspension, revocation, or non -renewal by governing authority, any governmental license or authorization necessary to operate its business on the premises, then Lessee's duties under this Lease shall be unaffected thereby and Lessee shall be obligated to continue its performance hereunder. 14. FIRE AND CASUALTY. a. Partial Destruction of Premises. In the event of a partial destruction or damage of the leased premises which causes a business interference by preventing the conduct of a normal business operation, and which damage is reasonably repairable within 90 days after its occurrence, this Lease shall not terminate but the rent for the leased premises shall abate during the time of such business interference. In the event of partial destruction, Lessor shall repair such damages within 90 days of its occurrence unless prevented from so doing by acts of God, the elements, the public enemy, strikes, riots, insurrection, government regulations, municipal ordinances, labor, material or transportation shortages, or other causes beyond Lessor's reasonable control. b. Total Destruction of Business Use. In the event of a destruction or damage of the leased premises so that Lessee is not able to conduct its business on the premises, and which damages cannot be repaired within 90 days, this Lease may be terminated at the option of either party. Such termination in such event shall be effected by written notice of one party to the other, within 30 days after such destruction. Lessee shall surrender possession within 10 days after such notice issues and, each party shall be released from all future obligations hereunder, Lessee paying rental and triple net charges (if any) pro rata only to the date of such destruction. In the event of such termination of this Lease, Lessor at its option may rebuild or not, according to its own wishes and needs. 15. CONDEMNATION. Should the whole or any part of the leased premises be condemned or taken by a competent authority for any public or quasi -public use or purpose, each party shall be entitled to retain, as its own property, any award payable to it. Or in the event that a single entire award is made on account of the condemnation, each party will then be entitled to take such proportion of said award as may be fair and reasonable. If the whole of the demised premises shall be so condemned or taken, the Lessor shall not be liable to the Lessee except and as its rights are preserved as provided in this Section. 16. TERMINATION OF LEASE; DEFAULTS OF LESSEE; OTHER REMEDIES. Other than termination upon expiration as set forth in paragraph 8.a, this Lease shall be subject to early termination as provided in this Section 16. a. Termination upon Notice of Default. Lessee shall be in default of this Lease if (i) Lessee fails to make any payment of rental herein when such payment becomes due, (ii) Lessee breaches any other terms or provision of this Lease, (iii) without the advance written consent of Lessor, Lessee offers or sells alcoholic beverages beyond the scope of the Proposal, or (iv) Lessee abandons the premises by failure to engage in its usual and customary business activities on the premises for more than 15 consecutive business days. Upon occurrence of any event of default, this Lease may at the option of Lessor be canceled and forfeited, provided, however, before any such cancellation and forfeiture except as provided in paragraph (c) below, Lessor shall give Lessee a written notice specifying the default, or defaults, and stating that this Lease will be canceled and forfeited 10 days after the giving of such notice, unless such default, or defaults, are remedied within such grace period. b. Bankruptcy or Insolvency of Lessee. In the event Lessee is adjudicated a bankrupt or in the event of a judicial sale or other transfer of Lessee's leasehold interest by reason by any bankruptcy or insolvency proceedings or by other operation of law, but not by death, and such bankruptcy, judicial sale, or transfer has not been vacated or set aside within 10 days from the giving of notice thereof by Lessor to Lessee, then and in any such events Lessor may, at its option, immediately terminate this Lease and, upon giving of 10 days' written notice by Lessor to Lessee, re-enter said premises, all to the extent permitted by applicable law. C. Other Remedies. In addition to any remedies set forth in this Section 16 or otherwise available under applicable law, in the event of a default Lessor may exercise any one or more of the following remedies: (i) declare due, sue for, and receive from Lessee the sum of all payments and other amounts then due and owing under this Lease, plus the accelerated balance of future payments; (ii) terminate this Lease or any other agreement with Lessee; (iii) collect from Lessee all other amounts due and owing under this Lease; (iv) charge interest on all sums due hereunder from and after the date of default at the rate of 18% per annum, compounded monthly, until paid in full, but in no event more than the maximum rate permitted by law; (v) charge an administrative late fee of $50 for each payment not received within five days of the due date (in addition to any applicable penalty interest), plus an additional late fee of $50 for each additional month that a payment is delinquent. In addition, Lessor may use any other remedies available to it under applicable law. d. Cure of Lessee Defaults. If Lessee defaults in the performance of, or compliance with, any of the terms, covenants, or conditions of this Lease, and such default shall have continued for 30 days after written notice thereof from Lessor, then Lessor, in addition to all other remedies now or hereafter provided by law, may, but need not, perform such term, covenant, or condition, or make good such default, and any amount advanced shall be repaid forthwith on demand, together with interest at the rate of 18% per annum, compounded monthly, from the date of advance. e. In the circumstances described in paragraphs (a) -(c) above, waiver as to any default shall not constitute a waiver of any other or subsequent default, and no delay in exercising any right or remedy shall operate as a waiver of any right or remedy or modify the terms of this Lease. Remedies will be applied cumulatively, to the extent allowed by law. Lessee agrees to pay Lessor all costs and expenses, including attorneys' fees, incurred by Lessor in exercising or attempting to exercise any of its rights or remedies or in defending against the claims of Lessee. If appropriate in the circumstances, remedies will include those available under UCC Article 9. f. Acceptance of keys, advertising, and re -renting by the Lessor upon the Lessee's default shall be construed only as an effort to mitigate damages by the Lessor, and not as an agreement to terminate this Lease. 17. MECHANIC'S LIENS. Neither the Lessee nor anyone claiming by, through, or under Lessee, shall have the right to file or place any mechanic's lien or other lien of any kind or character whatsoever upon said premises or upon any building or improvement thereon, or upon the leasehold interest of the Lessee therein, and notice is hereby given that no contractor, subcontractor, or anyone else who may furnish any material, service, or labor for any building, improvements, alteration, repairs or any part thereof, shall at any time be or become entitled to 7 any lien thereon, and for the further security of the Lessor, the Lessee covenants and agrees to give actual notice thereof in advance to any and all contractors and subcontractors who may furnish or agree to furnish any such material, service, or labor. 18. SIGNS. Lessee shall have the right and privilege of attaching, affixing, painting or exhibiting signs on the leased premises, provided only that any and all signs comply with the ordinances of the City of Waterloo, and the laws of the State of Iowa; such signs shall not change the structure of the building; such signs if and when taken down shall not damage the building; and such signs shall be subject to the advance written approval of Lessor, which approval shall not be unreasonably withheld. The current "Public Market" signs cannot be removed or altered without the prior written consent of Lessor. 19. RIGHTS CUMULATIVE. The various rights, powers, options, elections, and remedies of either party provided in this Lease shall be construed as cumulative and no one of them as exclusive of the others, or exclusive of any rights, remedies or priorities allowed either party by law, and shall in no way affect or impair the right of either party to pursue any other equitable or legal remedy to which either parry may be entitled as long as any default remains in any way unremedied, unsatisfied, or undischarged. 20. NOTICES AND DEMANDS. Notices as provided for in this Lease shall be given to the respective parties hereto at the addresses set forth below (or to such alternate addresses to which a party may give notice as set forth herein): Lessor City of Waterloo Attn: Community Planning & Development Director 715 Mulberry Street Waterloo, IA 50703 With a copy to: City Attorney 715 Mulberry Street Waterloo, IA 50703 Lessee Verve Kombucha, LLC Attn: Manager 327 W. 3rd Street Waterloo, IA 50701 Unless either party notifies the other, in writing, of a different address, such message shall be considered given under the terms of this Lease when sent, addressed as designated above, by U.S. registered or certified mail, return receipt requested, postage prepaid. Such notice shall be deemed delivered three (3) days after the date it is deposited in a United States mail receptacle. 21. RELATIONSHIP OF PARTIES. Nothing in this Lease shall, or shall be deemed or construed to, create or constitute any joint venture, partnership, agency, employment, or any other relationship between the parties, nor to create any liability for one party with respect to the liabilities or obligations of the other party or any other person. Each party hereto is an independent contractor in relation to the other. 22. BINDING EFFECT. This Lease is binding upon and shall inure to the benefit of the parties and the respective successors and assigns of each. 23. AMENDMENT. None of the covenants, provisions, terms or conditions of this Lease shall be in any manner modified, waived, or abandoned, except by a written instrument signed by the parties. This Lease contains the entire agreement of the parties concerning the subject matter hereof, superseding all prior or contemporaneous discussions, negotiations, understandings or agreements, except as set forth in Section 11. 24. SEVERABILITY; REFORMATION. If any provision of this Lease is held invalid, illegal, or unenforceable, whether in whole or in part, the remaining provisions of this Lease shall not be affected thereby and shall continue in full force and effect. If, for any reason, a court finds that any provision of this Lease is invalid, illegal, or unenforceable as written, but that by limiting such provision it would become valid, legal, and enforceable, then such provision shall be deemed to be written and shall be construed and enforced as so limited. 25. GENERAL PROVISIONS. Time is of the essence in the performance of the terms of this Lease. This Lease shall be governed by the laws of the State of Iowa, and Lessee hereby consents to the exclusive jurisdiction and venue of the Iowa District Court for Black Hawk County for the resolution of any dispute arising from or related to this Lease. THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL. This Lease may be executed in one or more counterparts, each of which will be deemed an original and all of which together shall constitute one instrument. IN WITNESS WHEREOF, the parties have executed this Lease Agreement by their duly authorized representatives as of the date first set forth above. CITY OF WATERLOO, IOWA By: Quentin Hart, Mayor i Attest: Kelley FeFle, City Clerk VERVE KOMBUCHA, LLC By: yz;— Aq/ew"'Fuchtman, Manager [acknowledgments on next page] N STATE OF IOWA ) ) ss. BLACK HAWK COUNTY ) On Kou,3 , 2018, before me, the undersigned, a Notary Public in and for the State of Iowa, sonally appeared Quentin Hart and Kelley Felchle, to me personally known, and who, being by me duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Waterloo, Iowa; that the seal affixed to the foregoing instrument is the corporate seal of the corporation, and that the instrument was signed and sealed on behalf of the corporation by authority of its City Council as contained in the Resolution adopted by the City Council, under Council Action No. [LI -76 (o2 of the City Council on Me , 2018, and that Quentin Hart and Kelley Felchle acknowledged the execution of t e instrument to be their voluntary act and deed and the voluntary act and deed of the corporation, by it voluntarily executed. STATE OF IOWA ) ) ss. BLACK HAWK COUNTY ) Notary Pu is Acknowledged before me on✓ AoLA C , 2018 by Andrew Fuchtman as Manager of Verve Kombucha, LLC. Ij ADRIENNE MILLER ZCOMMISSION NO. 809109 jairy PuLblic MY COMMISSION EXPIRES w FEBRUARY 23, 2021 PERSONAL GUARANTY. Each of the undersigned, being either an officer, manager, or member of Verve Kombucha, LLC, hereby agree for themselves and their heirs, personal representatives, and assigns, to unconditionally guarantee to the City of Waterloo, Iowa, its 10 NANCY HIGBY i COMMISSION NO.788229 MY OMMISSION EXPIRES STATE OF IOWA ) ) ss. BLACK HAWK COUNTY ) Notary Pu is Acknowledged before me on✓ AoLA C , 2018 by Andrew Fuchtman as Manager of Verve Kombucha, LLC. Ij ADRIENNE MILLER ZCOMMISSION NO. 809109 jairy PuLblic MY COMMISSION EXPIRES w FEBRUARY 23, 2021 PERSONAL GUARANTY. Each of the undersigned, being either an officer, manager, or member of Verve Kombucha, LLC, hereby agree for themselves and their heirs, personal representatives, and assigns, to unconditionally guarantee to the City of Waterloo, Iowa, its 10 successors and assigns, the full and prompt performance by Verve Kombucha, LLC, its successors and assigns, of all promises and covenants on the part of said company to be performed pursuant to the foregoing Lease, including but not limited to the duties of indemnity set forth therein. Liability of multiple guarantors hereunder is joint and several. rVFuchtmarn David Morgan Brent Dahlstrom 11