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HomeMy WebLinkAbout9B - City Perks Lease CITY COUNCIL AGENDA REPORT February 4,2002 9B Frank Boyles, City Manag AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO ENTER INTO A NEW LEASE AGREEMENT FOR CITY PERKS DISCUSSION: History: Currently there is an existing lease agreement between the City and City Perks, Inc. for the operation of the coffee shop at the Prior Lake Library/Resource Center. The current lease was entered into on October 1, 1999 and is effective through September 2002. Current Circumstances: We have negotiated the attached lease agreement with Mr. Reeve and Ms. Beise. The agreement is substantially the same as proposed for a previously contemplated sale. The key terms of the lease are as follows: 1. The lease will be for a term of three years commencing February 4, 2002 and terminating on February 4, 2005. 2. The monthly rent is $1,000 a month in year 1, $1,050 a month in year 2; and $1,100 a month in year 3. 3. For the term of the lease the lessee will have in effect a minimum of $1,000,000 liability insurance. 4. The lease agreement provides for one-three year renewal option, at the sole discretion of the City with monthly rents in the amount of $1215 for year one, $1276 for year two and $1340 for year three. This is a 5% increase each year. 5. The hours of operation generally coincide with hours of operation of the Library and Resource Center. Mr. Reeve and Ms. Beise will also be required to sign the attached Lease Guaranty. This document provides a guarantee to the City that the terms of the Lease Agreement will be enforced and not affected by any adverse situation. Also attached for Council information is the purchase agreement between the Bergerons and Mr. Reeve and Ms. Beise. Conclusion: Since the Bergerons wish to sell the business and get released from the current lease, and Mr. Reeve and Ms. Beise are interested and viable buyers, it would be in the City's best interest to authorize Mr. Reeve and Ms. Beise to operate the coffee shop through a new lease agreement. 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 1:\CQUNCIL\AGNRPTS\2002\CITY PERKS LE~tQgQC(lPPORTUNITY EMPLOYER T ..."-",- j ISSUES: FISCAL IMPACT: ALTERNATIVES: RECOMMENDED MOTION: Mr. Reeve and Ms. Beise have executed both the Lease Agreement and Lease Guaranty and have indicated that upon approval by the City Council to authorize a lease agreement, a closing on the sale of the business wHI immediately follow. The City should not execute a new lease agreement with the new owners until the City receives satisfactory proof that the closing has been completed. In June 2001 there was water damage to the kitchen floor at City Perks caused by a leaky water facet that was determined to be the fault of the current lessee. The Bergerons have agreed to forfeit their security deposit in the amount of $1350 plus pay an additional $650 for repair of the flooring. The $650 needs to be collected before the Bergerons are released from the current lease agreement. The monthly lease payment under the current lease agreement with the Bergerons was $950 from October 1, 1999 to September 30, 2000; $950 from October 1, 2000 to September 30, 2001 and $1,000 from October 1, 2001 to September 30, 2002. The new lease increases payments for each of the three years of the lease and for the renewal years as well. (1) Adopt a Resolution Authorizing Termination of a Lease Agreement for the Operation of a Coffee Shop at the Library Resource Center ("Coffee Shop") subject to the conditions set forth above and Authorizing the Mayor and City Manager to Execute a New Lease Agreement. (2) Deny the Resolution (3) Take no action and provide staff with specific direction. Alternative No. 1 1:\COUNCIL\AGNRPTS\2002\CITY PERKS LEASE.DOC s Account Inquiry (97.02) Account: 101-45500-381 Ending Date: 12/31/01 Starting Date: 01/01/01 Beginning: 0.00 Debits: 18,480.75 Credits: 877.03 Net Change: 17,603.72 Ending: 17,603.72 Budget: 18,000.00 Expended: 17,603.72 Encumberd: 0.00 Remaining: 396.28 GENERAL FUND LIBRARIES Utilities - Electric Reference Posting Src PDoc SDoc Amount ------------------------- -----~-- -------------- XCEL ENERGY 12/30/01 AP 1,449.11 XCEL ENERGY 11/30/01 AP 1,264.28 XCEL ENERGY 10/31/01 AP 1,468.15 XCEL ENERGY 09/30/01 AP 2,004.23 XCEL ENERGY 08/31/01 AP 2,218.59 XCEL ENERGY 07/31/01 AP 1,846.11 XCEL ENERGY 06/30/01 AP 1,780.09 XCEL ENERGY 05/31/01 AP 1,186.59 XCEL ENERGY 04/30/01 AP 1,036.53 XCEL ENERGY 03/31/01 AP 1,201.19 NORTHERN STATES POWER CO 03/15/01 AP 877.03 MINNEGASCO 02/28/01 AP 877.03 MINNEGASCO 02/28/01 AP -877.03 NORTHERN STATES POWER CO 01/31/~ AP 1,271.82 ~ T RESOLUTION ()Z / 11 \fi ~A SOLUTION AUTHORIZING TERMINATION OF A LEASE AGREEMENT HE OPERATION OF A COFFEE SHOP AT THE LIBRARY RESOURCE CENTER ("COFFEE SHOP") AND AUTHORIZING A NEW LEASE AGREEMENT. Motion By: Second By: WHEREAS, the City and City Perks, Inc. are parties to a Lease Agreement for the operation of a Coffee Shop at the Library Resource Center; and WHEREAS, David Bergeron is the Owner and Guarantor of said Lease Agreement on behalf of City Perks, Inc.; and WHEREAS, Mr. Bergeron intends to sell City Perks, Inc. to Dean Reeve and Kelly Beise and desires to terminate its current Lease Agreement pursuant to the sale of City Perks; and WHEREAS, upon the purchase of City Perks, Inc. by Dean Reeve and Kelly Beise, the new owners desire to enter into a Lease Agreement with the City. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA that: 1. The recitals set forth above are incorporated herein. 2. Contingent upon proof satisfactory to the City that Dean Reeve and Kelly Beise have completed the purchase of City Perks, Inc. from David Bergeron, the City agrees to the termination of the Lease Agreement for the Coffee Shop at the Library Resource Center dated October 1, 1999. 3. Contingent upon proof satisfactory to the City that Dean Reeve and Kelly Beise have purchased City Perks, Inc., the City Council authorizes the Mayor and City Manager to execute a Lease Agreement with City Perks, Inc. for the period of February 4, 2002 through February 4, 2005. 4. The Lease Agreement with City Perks, Inc. shall be personally guaranteed by Dean Reeve, a single person, and Kelly Beise, a single person. 5. The Lease Agreement is contingent upon execution of a personal Lease Guaranty by Dean Reeve and Kelly Beise. 6. Mr. Bergeron shall forfeit to the City the security deposit in the amount of $1350 and shall pay an additional $650 to the City for repair of flooring within the Leased Premises. 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER PASSED AND ADOPTED THIS 4th DAY OF FEBRUARY, 2002. YES NO Haugen Haugen Ericson Ericson Gundlach Gundlach Petersen Petersen Zieska Zieska R:\RESOLUTI\ADMINRES\city perks.DOC Frank Boyles, City Manager City of Prior Lake, Minnesota LEASE AGREEMENT THIS LEASE AGREEMENT is made and entered into this day of , 2002, by and between the CITY OF PRIOR LAKE, MINNESOTA, a Minnesota municipal corporation (hereinafter referred to as "CITY", and CITY PERKS, INC., a Minnesota corporation (hereinafter referred to as the "LESSEE"). In consideration of the mutual covenants and promises hereinafter set forth, the sufficiency of which are not disputed, the CITY and LESSEE do hereby agree as follows: 1. DESCRIPTION OF THE PREMISES. CITY does hereby lease to LESSEE and LESSEE does hereby lease and take from CITY certain premises consisting of 480 square feet (the specific location of the premises is as outlined and delineated on the attached Exhibit "A") (hereinafter referred to as "Leased Premises"), and located in the Prior Lake Library/Resource Center building at 16210 Eagle Creek Avenue, Prior Lake, Minnesota 55372 (hereinafter "Building"). 2. TERM. This Lease Agreement shall be for a term of three (3) years commencing on the 4th day of February, 2002, and terminating on the 4th day of Febuary, 2005. 3. USE OF PREMISES. It is agreed that the Leased Premises may be used by the LESSEE for retail food and beverage space, with the exception of vending machines, subject to all local, state and federal laws and regulations regarding the use of the Leased Premises. However, any other use shall require the written consent of the CITY, which shall not be unreasonably withheld. 4. RESPONSIBILITY OF CITY REGARDING LEASED PREMISES. The CITY is responsible for and shall pay all utility charges, property insurance premiums on the Building (exclusive of furnishings for the Leased Premises) and all repairs, maintenance and services for the Building unless excepted therefrom in this Lease Agreement. The LESSEE shall be responsible for making nonstructural repairs to the Leased Premises (See Paragraph 8). CITY shall not be liable to LESSEE for any loss or damage of any kind whatsoever caused or sustained by reason of failure of any mechanical system within the Building including, but not limited to the heating or ventilating and air conditioning system servicing the Leased Premises or because of inability to obtain energy or utilities for any reason beyond CITY's control. 5. RENT AND SECURITY DEPOSIT. LESSEE shall pay CITY monthly rent in the amount of One Thousand and no/100 Dollars ($1000.00) for the Leased Premises for the first year; One Thousand Fifty and no/100 Dollars ($1050.00) for the Leased Premises for the second year; and One Thousand One Hundred and no/100 Dollars ($1100.00) for the Leased Premises for the third year of the term of this Lease Agreement. Rent payments shall be made on a monthly basis and paid by the 10th day of the given month in which payment is due. A late fee of $5.00 per day shall be assessed for payments received after the 10th day of the month. All rental payments required hereunder shall be paid to the CITY at 16200 Eagle Creek Ave. S.E., Prior Lake, MN 55372, or such other place as determined by the CITY. The first month's rent shall be paid at the time the Lease Agreement is signed by both parties. LESSEE shall pay to CITY at the time the Lease Agreement is signed by both parties an amount equal to one and one-half times (1YJ) the initial rent payment as security deposit for the Leased Premises. The security deposit may be used by the CITY to restore the Leased Premises to its original condition, normal wear and tear excepted, upon termination or expiration of the Lease T I , Coffee Shop Lease Library/Resource Center February 2002 Agreement. If the security deposit is insufficient to cover all costs of such repair, LESSEE (not business) shall be personally liable for the balance of the cost of repairs. 6. INSURANCE. The LESSEE shall maintain in full force and effect during the term hereof, a policy of public liability insurance in a form acceptable to the City Attorney. The minimum limits of liability of such insurance shall be $1,000,000 for injury or death to anyone person, $1,000,000 for injury or death to more than one person and $500,000.00 for property damage. LESSEE shall be responsible for the payment of any and all other insurance which it desires, and/or a public liability policy which insures LESSEE above the limits as required hereunder of the CITY. The CITY shall be named as an additional insured on the public liability policy. Said policy shall contain a provision that the insurance cannot be terminated without 30 days written notice by the insurance company to the CITY. LESSEE shall provide CITY with a Certificate of Insurance which conforms with the provisions herein, before LESSEE may operate at the Leased Premises. The CITY shall carry and cause to be in full force and effect a fire and extended coverage insurance policy on the Building containing the Leased Premises, but not the contents owned, leased to, or otherwise in possession of the LESSEE. Said fire and extended coverage insurance policy on the Building covers, without any rating surcharge, a wide range of uses. In the event, however, the LESSEE changes the use of the Leased Premises or contents kept in the Leased Premises, or refuses to follow directions from the Fire Inspection Bureau, or general housekeeping causing CITY's fire and extended coverage insurance premiums for the Building to increase, then the LESSEE agrees to pay to CITY any increase in CITY's premium. Waiver of Subrogation: To the extent such waiver does not void or diminish the coverage under any policy. LESSEE and CITY hereby waive any rights each may have against the other on account of any loss or damage occasioned to LESSEE or CITY, as the case may be, or to their respective property, to the extent such loss or damage is covered by the LESSEE's or the CITY's insurance. 7. INDEMNITY. The LESSEE agrees that it will, at all times, indemnify and save, protect and keep harmless the CITY, including but not limited to its Council, staff and employees, agents and employees, attorneys, and the Leased Premises from every and all costs, loss, damage, liability, expense, penalty and fine whatsoever, which may arise from or be claimed against the CITY or the Leased Premises by any person or persons, for any injuries to person or property, or damage of whatever kind or character consequent upon or arising from the use or occupancy of said Leased Premises by the said LESSEE, or consequent upon or arising from any neglect or fault of the LESSEE or the agents and employees of LESSEE, in the use and occupancy of the Leased Premises, or consequent upon or arising from any failure by the LESSEE so to comply and conform with all laws, statutes, ordinances and regulations of the United States, the State of Minnesota and the CITY, now or hereafter in force; and if any suits or proceedings shall be brought against the CITY or the said Leased Premises, on account of any alleged violation thereof, or failure to comply and conform therewith or on account of any damage, omission, neglect or use of said premises by the LESSEE, or the agents and employees of the LESSEE, or any other person on said premises, the LESSEE agrees that the LESSEE will defend the same, and will pay whatever judgments may be recovered against the CITY or against said Leased Premises on account thereof; provided however that the LESSEE shall not be required, and nothing in this paragraph shall be construed as requiring LESSEE to indemnify CITY against any 2 city perks lease2 Coffee Shop Lease Library/Resource C~nter February 2002 costs, losses, damages, liabilities, expenses, penalties, fines or claims of any type arising from the acts, omissions or negligence of CITY, its agents or employees. 8. MAINTENANCE. The LESSEE shall be wholly responsible for the maintenance and repair of the interior of the Leased Premises including all interior walls, all door and electrical fixtures, and will keep the Leased Premises in as good a condition as when turned over to LESSEE, reasonable wear and tear excepted. The LESSEE agrees to keep the Leased Premises in a clean, orderly and sanitary condition and will neither do nor permit to be done therein anything which is in violation of insurance policies on the Building or that is contrary to any State or local law, ordinance or regulation thereof. The LESSEE will neither commit nor suffer waste to the Building or to the Leased Premises. The CITY shall, at its own expense, keep in good order, safe condition and repair, the structural parts of the Building (including, but not limited to, roof, exterior walls, foundation and concrete floor) in which the Leased Premises are located, except where repairs to the structural parts are required due to the fault or negligence of the LESSEE, its employees or invitees, in which case the LESSEE shall be responsible for reimbursing the CITY for the costs of such repairs. 9. APPEARANCE AND ACCESS. CITY, to the extent obligated herein, and LESSEE mutually agree to keep the grounds, Building, and the Leased Premises in a condition of good repair and appearance as their respective responsibilities and rights require. LESSEE agrees to keep all of its trash containers, refuse and waste within the Leased Premises and agrees not to litter any of the grounds or entries. LESSEE acknowledges that, upon occupancy of Leased Premises, LESSEE will cause the Leased Premises to be inspected in order to ascertain the condition thereof, that any objections thereto not delivered in writing to the CITY within ten (10) days after occupancy shall be deemed waived; and that no representations, either expressed or implied, have been made regarding the quality or condition of the Leased Premises. o 10. CONDEMNATION. If substantially all of the Leased Premises shall be taken under the power of eminent domain, then the term of this Lease Agreement shall cease as of the day possession shall be taken and gross rent shall be paid up to that date with a proportionate refund by CITY of such rent as may have been paid in advance. If more than twenty percent (20%) of the floor space in the Building shall be taken under the power of eminent domain, LESSEE shall have the right to terminate this Lease Agreement as of the day possession shall be taken by notice to CITY given within ten (10) days after possession is taken. If more than one-third (1/3) of the parking area in the Building in which the Leased Premises is situated is taken under the power of eminent domain, LESSEE shall have the right to terminate this Lease Agreement as of the day possession shall be taken, unless a reasonably equivalent substitute parking area is provided. LESSEE shall be allowed a reasonable time not to exceed sixty (60) days after any such termination to vacate the remainder of the Leased Premises and rent shall be paid up to the day possession be taken or the LESSEE vacates the remainder of the Leased Premises, whichever is later. If this Lease Agreement is not canceled pursuant to this paragraph 11, the CITY shall at its expense make the necessary repairs to that part of the Leased Premises not affected by such 3 city perks lease2 ~ 1 .--...-------.---~---.-- I Coffee Shop Lease Library/Resource Center February 2002 condemnation as rapidly as reasonably possible to restore the Leased Premises to as near the condition which existed immediately prior to the taking as is reasonably possible. In the event that any portion of the Building in which the Leased Premises are located or the Leased Premises themselves are condemned, the CITY shall not be responsible to LESSEE for any costs or damages related to LESSEE's use of Leased Premises or LESSEE's business. 11. ASSIGNMENT. The LESSEE shall not have the right to assign its interest in this Lease Agreement or to sublet the Leased Premises, or any part thereof, except with CITY's written consent. Any approved assignment or sublet shall be subject at all times to the provisions of this Lease Agreement, provided, however, in such an instance, LESSEE shall at all times remain obligated hereunder, the same as though no assignment or sublease had occurred. LESSEE agrees that it will not permit any assignment hereof by operation of law without the consent in writing of the CITY, first hand and obtained. No assignment for the benefit of creditors or by operation of law shall be effective to transfer any rights to the said assignee without the written consent of the CITY, first-hand and obtained. 12. BREACH OF LESSEE. If the LESSEE shall default hereunder and such default shall continue for a period of fifteen (15) days after written notice from the CITY of such default, then it shall be lawful for the CITY to terminate this Lease Agreement and enter into and take possession of the Leased Premises and remove all persons and their property therefrom; provided that if the default be of such a nature that it may require more than fifteen (15) days to cure, the period to cure may be extended with the written permission of the CITY. Said time to cure default may be extended for such period of time as specified by CITY's written notice to LESSEE. The LESSEE shall cure any default with due diligence and within the time period provided herein. 13. ALTERATIONS. The LESSEE shall not make any alterations to the Leased Premises without the prior written consent of the CITY. If the LESSEE shall desire to make any such alterations, an accurate description shall first be submitted to and approved by the CITY and shall be done by the LESSEE at its own expense. Approval shall not be unreasonably withheld. LESSEE agrees that all such work shall be done in a good, workmanship-like manner, and in conformance with applicable building codes, that the structural integrity of the Building shall not be impaired, and that no liens shall attach to the Leased Premises by reason thereof. The LESSEE shall and will in each instance save the CITY and said Leased Premises forever harmless and free of all costs, damages, losses and liabilities of every kind and character which may be claimed, asserted or charged, including liability to adjacent owners based upon the acts or negligence of said LESSEE or their agents, contractors or employees, and will preserve and hold the CITY and said Leased Premises forever free and clear from liens for labor and material furnished. Any such alterations shall become the property of the CITY as soon as they are affixed to the Leased Premises and all right, title and interest therein of the LESSEE shall immediately cease unless otherwise stated in writing. The LESSEE however, shall remain the owner of any installed trade fixture and shall have the right to remove such trade fixture at the expiration or termination of this Lease Agreement, so long as the Leased Premises is restored to its original condition. Any alterations to Leased Premises shall be restored to their original condition at the termination or expiration of this Lease Agreement and subject to the provisions provided in Paragraph 5 herein. 14. MECHANIC'S LIEN: Should any mechanic's or other liens be filed against any portion of the Leased Premises by reason of LESSEE's acts or omissions or because of a claim against LESSEE, LESSEE shall cause the same to be canceled and discharged of record by bond or 4 city p9l'ks IEiase2 Coffee Shop Lease Library/Resource Center February 2002 otherwise within ten (10) days after receipt of notice from the CITY. Failure to comply with the provisions of this paragraph shall be grounds for the CITY to immediately terminate this Lease Agreement. 15. SIGNS. The LESSEE shall have the right, at its own risk and expense, to place signs identifying LESSEE's business within the Building in which the Leased Premises is located. CITY reserves the right to determine size and location of all signs. Said signs shall not be erected without the written prior approval of the CITY, which approval the CITY will not unreasonably withhold. LESSEE agrees to maintain the sign(s) in good repair, to remove such sign(s) at the end of the term or any extended term of this Lease. The CITY reserves the right to remove all unapproved signs at the expense of LESSEE. 16. TERMINATION. Upon termination of this Lease Agreement, LESSEE shall deliver up the Leased Premises to the CITY in as good a condition as said Leased Premises shall be in as of the date of tender of possession subject to ordinary wear, tear and decay, the LESSEE agreeing not to leave the Leased Premises in an irregular or unkempt manner. 17. RULES AND REGULATIONS. The LESSEE shall perform, observe and comply with all Building rules and regulations of the CITY with respect to the safety, care and cleanliness of the Leased Premises, and the preservation of good order thereon, and, upon written notice thereof to LESSEE, LESSEE shall perform, observe and comply with any changes, amendments or additions thereof as from time to time shall be established and deemed advisable by the CITY. Said rules and regulations shall be in writing. 18. ENTRY. During the ninety (90) days prior to the expiration of the term, the CITY or its agents may exhibit the Leased Premises to prospective Lessees. 19. NOTICES. All notices, consents, demands and requests which may be or are required to be given by either party of the other, shall be in writing and sent by United States registered or certified mail, with return receipt requested, addressed to the LESSEE at the Leased Premises and to the CITY at 16200 Eagle Creek Avenue S.E., Prior Lake, MN 55372, or to such other address as CITY may direct, in writing, in the future, with a copy to Suesan Lea Pace, City Attorney, 600 Pillsbury Center South, 220 South Sixth Street, Minneapolis, MN 55402-4501. The date which said registered or certified mail is mailed by the CITY shall be conclusively deemed to be the date on which a notice, consent, demand or request is given or made. The above address of a party may be changed at any time, or from time to time, by written notice given by said party to the other party in the manner herein above provided. 20. CLAIMS. The LESSEE will make no claim against the CITY for any loss of or damage to property and/or the Leased Premises caused by theft, burglary, water, gas, electricity or other means. LESSEE further agrees it will not make any claim against the CITY regardless of cause for loss of profits. 21. FIRE REPAIR. In the event of damage to the Leased Premises by fire, the elements or other casualty of whatever kind or nature, the CITY shall repair the damage with reasonable dispatch. If the damage renders the Leased Premises untenantable in whole or in such part that it is impractical to conduct business therein, the rent shall wholly abate until the damage has been 5 city perks lease2 .,. .........---------r----.--.-------.---- Coffee Shop Lease Library/Resource Center February 2002 repaired. If the damage renders the Leased Premises untenantable in part but LESSEE continues to occupy them in part, the rent shall be reduced in the proportion that the unoccupied portion of the Leased Premises bears to the occupied portion of the Leased Premises, until the damage has been repaired. The CITY shall not be responsible for any loss of LESSEE's fixtures, property or for any lost profit. If the damage is not repaired by CITY within a reasonable time, or in any event, within one hundred twenty (120) days, LESSEE shall thereupon have the right to terminate the Lease Agreement by giving the CITY written notice of such termination. 22. QUIET ENJOYMENT. LESSEE, upon payment of the rent herein reserved and upon performance of all of the terms, covenants and conditions of this Lease Agreement by it to be kept and performed, shall at all times during the term hereof or during any extension or renewal hereof, peaceably and quietly enjoy the Leased Premises without any disturbance from CITY except that LESSEE understands and agrees the use of the Building for the public purpose for which it was constructed shall ~ot constitute a breach of quiet peace and enjoyment of Leased Premises. Upon expiration of the Lease term or earlier termination of the Lease, LESSEE shall surrender the Leased Premises in good condition and repair, except for reasonable wear and tear. 23. RENEWAL TERM. Provided that LESSEE is not in default under the terms and conditions of this Lease Agreement, the Lease term may be renewed, at the sole discretion of the CITY, for an additional three-year term. The rent during the renewal period shall be as follows: Year 1 of renewal term: $1215.00 Year 2 of renewal term: $1276.00 Year 3 of renewal term: $1340.00 24. HOLDING OVER. If LESSEE shall hold over the Leased Premises or any part thereof after the expiration of the term hereof, such holding over shall be construed only to be a tenancy from month to month subject to all of the covenants, conditions and obligations hereof except that the rent shall be two hundred (200%) percent of the amount identified in Paragraph 5 herein plus the increase in operating expenses. Nothing herein shall be construed to give LESSEE any rights to hold over or to continue in possession of the Leased Premises. 25. HOURS OF OPERATION OF LEASED PREMISES. LESSEE may only operate or have open for business the Leased Premises from 6am. to 8pm, Monday-Thursday; 6am to 7pm on Fridays; 7:30am to 4pm on Saturdays; 9am-5pm on Sundays; or such times and dates that the Library and Resource Center is open to the public, including times during which the City is sponsoring or has approved the use of the Building for a private event. LESSEE may not conduct private events in Leased Premises that are not connected with an approved event in the Building, unless agreed to by the CITY in writing. 26. NO VENDING MACHINES. LESSEE shall not install vending machines without the prior written consent of the CITY. The CITY will not place, nor approve any party other than the LESSEE from installing food or beverage vending machines in the Building. 27. INDEPENDENT CONTRACTOR. It is agreed that nothing herein contained is intended or should be construed in any manner as creating or establishing the relationship of co-partners between 6 city perks lease2 Coffee Shop Lease Library/Resource Center February 2002 the parties hereto or as constituting the LESSEE as an agent, representative or employee of the CITY for any purpose or in any manner whatsoever. LESSEE is to be and shall remain an independent contractor with respect to all services performed under this Lease Agreement. LESSEE represents that it has, or will secure at its own expense, all personnel required in performing services under this Lease Agreement. Any and all personnel of LESSEE or other persons while engaged in the performance of any work or services required by LESSEE under this Lease Agreement shall have no contractual relationship with the CITY and shall not be considered employees of the CITY and any and all claims that mayor might arise under the Workers' Compensation Act of the State of Minnesota on behalf of said personnel or other persons while so engaged, and any and all claims whatsoever on behalf of any such person or personnel arising out of employment or alleged employment including without limitation claims of discrimination against the LESSEE, its officers, agents or employees shall in no way be the responsibility of the CITY; and LESSEE shall defend, indemnify and hold the CITY, its officers, agents and employees harmless from any and all such claims regardless of any determination of any pertinent tribunal, agency, board, commission or court. Such personnel or other persons shall not acquire nor be entitled to any compensation, rights or benefits of any kind whatsoever from the CITY, including without limitation, tenure rights, medical and hospital care, sick and vacation leave, Workers' Compensation, Unemployment Compensation, disability, severance pay and PERA. The CITY shall not be bound by and the LESSEE's performance hereunder shall not be conditioned upon any contract between the LESSEE and any other entity or party. 28. NONDISCRIMINATION. In connection with the execution of this Lease Agreement, the LESSEE agrees that it and any of its subcontractors, material suppliers and vendors shall not discriminate against any employee or applicant for employment because of race, creed, age, sex, religion, national origin, affectional preference or any other characteristic protected by local, state or federal statutes, regulation or ordinance. The LESSEE will take affirmative actions to insure that applicants are employed, and that employees are treated during employment without regard to race, color, sex, national origin, affectional preference or any other characteristic protected by local, state or federal statutes, regulation or ordinance. Such actions shall include, but not be limited to, the following: employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of payor other forms of compensation, and selections for training, including apprenticeship. 29. CERTIFICATE OF COMPLIANCE FOR PUBLIC CONTRACT: If LESSEE has employed more than twenty (20) full-time employees in Minnesota at any time during the previous twelve (12) months, it shall have an affirmative action plan for the employment of minority persons, women, and the disabled that has been approved by the Commissioner of Human Rights. The LESSEE shall submit receipt of a Certificate of Compliance issued by the Commissioner signifying that the LESSEE has an approved Affirmation Action Plan by the State Human Rights Department. 30. COMPLIANCE WITH STATE AND FEDERAL LAWS. LESSEE, in connection with the execution of this Lease Agreement, assumes compliance with the statements and conditions in the Equal Employment Opportunity Assurance included in Exhibit "B". 31. ENTIRE AGREEMENT. This Lease Agreement represents the entire and integrated agreement between the parties hereto and supersedes all prior negotiations, representations or agreements, either written or oral. 7 city perks lease2 T t -. Coffee Shop Lease Library/Resource Center February 2002 32. COUNTERPARTS AND SIGNATORIES. This document may be signed in one or more counterparts which, when taken together, shall be one and the same agreement. The persons signing this Lease Agreement have been duly authorized by their respective entities to enter into this Lease Agreement._ 33. HEADINGS. The headings herein are inserted only for convenience and reference and shall in no way define, limit or describe the intent of this Lease Agreement. 34. GOVERNING LAW / JURISDICTION. State of Minnesota (State) laws govern all questions and interpretations concerning the validity and construction of this Lease Agreement. 35. SEVERABILITY. If any provision of this Lease Agreement is held invalid, illegal or unenforceable by a Court of competent jurisdiction, the remaining provisions will not be affected. 36. EXHIBITS. This instrument contains all of the agreements made between the parties and may not be modified orally or in any manner other than by agreement, in writing, signed by all parties to this Lease Agreement. The following Exhibits listed below are made part of this Lease Agreement as if fully set forth herein: Exhibit A - Location map of Leased Premises Exhibit B - Equal Employment Opportunity Assurance 37. WAIVER. One or more waivers of any covenant, term or condition of this Lease Agreement by the CITY shall not be construed by the LESSEE as a waiver of a subsequent breach of same covenant, term or condition. The failure or delay on the part of the CITY to enforce or exercise at any time any of the provisions, rights or remedies of this Lease Agreement shall in no way be construed to be a waiver thereof nor in any way effect the validity of this Lease Agreement or any part thereof or the right of the CITY to thereafter enforce each and every such provision, right or remedy. 38. BINDING EFFECT. This Lease Agreement and the covenants and conditions herein contained, shall inure to the benefit of and be binding upon the CITY, its successors and assigns, shall be binding upon LESSEE, their heirs, successors and assigns, and shall inure to the benefit of LESSEE and only such assigns of LESSEE to whom the assignment by LESSEE has been consented to by CITY. IN WITNESS WHEREOF, the parties hereto have caused this Lease Agreement to be executed the day and year first above written. LESSOR: City of Prior Lake LESSEE: CITY PERKS, INC. BY: By: Frank Boyles, City Manager Dean Reeve, By: BY: Jack G. Haugen, Mayor Kelly Beise, 8 city perks lease2 Coffee Shop Lease Library/Resource Center February 2002 EXHIBIT "A" (Location Map of Leased Premises) 9 city perks lease2 r ~ !-- R- ~ '" z ~ !: II> ~ I ><., 8 8 e "... ::1''' . .~ ~ m~ I I E 0 I I . ro ill e f @~ em ffi ffi em oWo' -'11 · ~ lJ~ffll~. C 8 ~ ,QQ ~-~ .Dprl,~~ W ffi 1:rd DO 00 . -...~ ~"Il ClDD! . _1"-' ~ ~ ,"l.L~.l ~ ~ ~ ~ ~ ~ - ~ J, 'I~. ~ ;: L ~ l )'I l. ~ l" . ~ . .( "" .., ,;;,~p .. ~i :iO ~ 6 O~ -n ~ ~;h 1"1 - rtJ. d;c f1)~ t7~ .~ 35 ~.. ~ fII~ J5'L ~.. 8~ .,._r ~-i- ~@ ~ Cl Coffee Shop Lease Library/Resource Center February 2002 EXHIBIT "B" (Equal Employment Opportunity Assurance) CITY PERKS, INC. hereby agrees that it shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, marital status, status with regard to public assistance, disability, political affiliation, affectional preference or any other characteristic protected by local, state or federal statutes, regulation or ordinance. LESSEE: CITY PERKS, INC. By: Dean Reeve, By: Kelly Beise, Dated: 10 city perks lease2 LEASE GUARANTY FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and to induce THE CITY OF PRIOR LAKE, a Minnesota municipal corporation (hereinafter referred to as "CITY") to enter into at any time that certain Lease Agreement dated February 4, 2002 (hereinafter "Lease Agreement") with CITY PERKS, INC., a Minnesota corporation (hereinafter "LESSEE") granting to LESSEE the right of possession of certain premises commonly known as the City of Prior Lake Library and Resource Center coffee shop, and as specifically described in the Lease Agreement, a copy of which is attached hereto as Exhibit "A", ("Leased Premises"). RECITALS A. In order to induce the CITY to enter into the Lease Agreement for the Leased Premises, and in consideration of the leasing of the Leased. Premises by the CITY to LESSEE, LESSEE has agreed to procure and deliver, and the undersigned has agreed to provide, this Guaranty; and CITY has refused to enter into the Lease Agreement unless this Guaranty be executed and delivered by the undersigned to the CITY. B. The CITY is fully relying upon this Guaranty and the enforceability of this Guaranty in entering into the Lease Agreement with LESSEE and the undersigned recognizes and acknowledges that the undersigned intend that the CITY shall be entitled to rely upon this Guaranty and to enforce this Guaranty against the undersigned as though the undersigned were principal parties to the Lease Agreement. NOW THEREFORE, in consideration of the foregoing, which are made a part of this Guaranty, the undersigned hereby covenant and agree with the CITY as follows: 1. Guaranty. The undersigned guarantee to the CITY the payment and performance of all the LESSEE's covenants and obligations under the Lease Agreement and the full payment by LESSEE of all rents, additional rents, and other charges and amounts required to be paid pursuant to the Lease Agreement and the undersigned will pay all the CITY's expenses, including attorneys' fees, incurred in enforcing the obligations of the LESSEE under the Lease Agreement or in enforcing this Guaranty. 2. No Contingencies. No act or thing need occur to establish the liability of the undersigned hereunder, and no act or thing, except full payment in discharge of all obligations of every type and description under the Lease Agreement, shall in any way exonerate the undersigned or modify, reduce, limit or release the liability of the undersigned hereunder. 3. Continuing Guaranty. This is an absolute, unconditional and continuing guaranty of the payment of and performance of all of the payment and other obligations under the Lease Agreement and shall continue to be in force and be binding upon the undersigned, whether or not the Lease Agreement is terminated or all obligations have been fully performed by the LESSEE. The death or incompetence of the undersigned shall not act to revoke this Guaranty as to the Lease Agreement or any of the obligations of the undersigned to guarantee the payment or performance thereof. 4. Collateral. The undersigned hereby agree that the CITY may take other guaranties, collateral or security to further secure the payment and performance of all obligations under the Lease Agreement, and any terms, covenants and conditions contained in the Lease Agreement may Coffee Shop Lease Guaranty Library and Resource Center February 4,2002 be altered, extended, changed, modified, or released without in any manner affecting this Guaranty or releasing the undersigned. The undersigned shall remain liable to pay and perform pursuant to the Lease Agreement as so altered, extended, changed or modified, notwithstanding the taking of such other guaranties, collateral or security. 5. Subordination. The undersigned will not exercise or enforce any right of contribution, reimbursement, recourse or subrogation available to the undersigned against the LESSEE or any other person liable for payment or performance of any obligations under the Lease Agreement, or as to any collateral security therefore, unless and until the Lease Agreement shall have been fully performed and all obligations due or which may become due thereunder have been fully paid and discharged. Any such right of contribution, reimbursement, recourse, or subrogation available to the undersigned is expressly made subordinate to the lien, time of payment, and in all other respects, to the amounts owing to the CITY under this Guaranty arising out of the Lease Agreement or the performance or failure to perform under the Lease Agreement. 6. Costs. Expenses and Attorneys' Fees. The undersigned will payor reimburse the CITY for all costs and expenses (including reasonable attorneys' fees and legal expenses) incurred by the CITY in connection with the protection, defense or enforcement of this Guaranty. 7. Waiver of Defenses and Acceptance. The undersigned does hereby waive all requirements of notice of the acceptance of this Guaranty and all requirements of notice of breach or non- performance by LESSEE. The undersigned's obligations hereunder shall remain fully binding although CITY may have waived one or more defaults by LESSEE, extended the time of performance by LESSEE, modified or amended the Lease Agreement, or released, returned or misapplied other collateral given later as additional security (including other guaranties) and released LESSEE from the performance of its obligations under the Lease Agreement. The undersigned will not assert, plead or enforce against the CITY any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to the LESSEE or any other person liable in any respect to payor perform any obligations under the Lease Agreement. 8. Cumulative Remedies. All remedies afforded to the CITY by reason of this Guaranty are separate and cumulative, and no one of such remedies, whether exercised by CITY or not, shall be deemed an exclusion of any other remedy available to the CITY, and shall in no way limit or prejudice any other legal or equitable remedies CITY may have in the Leased Premises. All payments made by LESSEE and the undersigned, or by any other person, and the proceeds of any security, may be applied by CITY to obligations owing under the Lease Agreement as CITY may determine, whether the same be due or not. Any remedy or right hereby granted which shall be found to be unenforceable as to any person or circumstance, for any reason, shall in no way limit or prevent the enforcement of such right or remedy as to any other person or circumstance, nor shall such unenforceability limit or prevent enforcement of any other remedy or right hereby granted. 2 k:\pau I\contracts\csg uarnt.doc T Coffee Shop Lease Guaranty Library and Resource Center February 4, 2002 9. Rescinded Payments. If any payment applied by the CITY to any obligations owing under the Lease Agreement is thereafter set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of LESSEE or any other obligor), the obligation for payments under the Lease Agreement to which such payment was applied shall, for the purposes of this Guaranty, be deemed to have continued in existence, notwithstanding such application, and this Guaranty, shall be enforceable as to such sums as fully as if such application had never been made. 10. Liability. Enforceability. Waiver. Governing Law. This Guaranty shall be enforceable against each person signing this Guaranty. All persons signing this Guaranty shall be jointly and severally liable for all its provisions. The invalidity or unenforceability of any provision or application of this Guaranty shall not affect other lawful provisions and applications hereof, and to this end the provisions of this Guaranty are declared to be severable. This Guaranty may not be waived, modified, amended, terminated, released or otherwise changed, except by a writing signed by the undersigned and the CITY. The undersigned waived notice of CITY's acceptance hereof and waives the right to a trial by jury in any action based on or pertaining to this Guaranty. This Guaranty shall be interpreted and construed in accordance with the laws of the State of Minnesota. 11. Notices. Any notice, demand or request by the CITY to the undersigned shall be in writing. It shall be deemed to have been duly given or made if either delivered personally or if mailed by United States registered or certified mail, return receipt requested, to the undersigned at the following addresses: GUARANTORS: Dean Reeve 3790 Vermillion Court South Eagan, MN 55122 Kelly Beise Notice so mailed shall be deemed and made upon deposit in the United States Mail at a United States Post Office or a branch thereof. 12. Benefit Subrogation. The undersigned represents, warrants, acknowledges and agrees that: (a) the undersigned will receive direct economic benefit from the leasing of the Leased Premises to the LESSEE under and pursuant to the Lease Agreement, (b) CITY is making and entering into the Lease Agreement in reliance upon this Guaranty; (c) the undersigned has received a reasonably equivalent value in return for the execution and delivery of this Guaranty. The undersigned waives and relinquishes any right of subrogation or other rights of reimbursement from the LESSEE or the LESSEE's estate and any other right to payment from the LESSEE or the LESSEE's estate, arising out of or on account of any sums paid or agreed to be paid by the undersigned under this Guaranty, whether such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured 3 k:\pa ul\contracts\csg uarnt. doc Coffee Shop Lease Guaranty Library and Resource Center February 4,2002 or unsecured. The provisions of this paragraph are made for the express benefit of the LESSEE as well as the CITY and may be enforced independently by LESSEE. The undersigned's obligations under this Guaranty include all amounts paid to CITY by LESSEE that are later recovered by CITY in a legal proceeding. The undersigned's obligations under this Guaranty survive the payment in full and the performance of all the terms and provisions of the Lease Agreement until such performance and payments have become final and are no longer subject to being reclaimed or recovered in any legal proceeding. IN WITNESS WHEREOF, this Guaranty has been duly executed by the undersigned Guarantors as of the date indicated. Dated: Dean Reeve Dated: Kelly Beise 4 k:\paul\contracts\csg uarnt.doc I I Coffee Shop Lease Guaranty Library and Resource Center February 4, 2002 STATE OF MINNESOTA ) )ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2002, by DEAN REEVE, a single person to me known to be the person who executed the foregoing document, and who acknowledged that he executed the same as his free act and deed. Notary Public STATE OF MINNESOTA ) )ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2001, by KELLY BEISE, a single person, to me known to be the person who executed the foregoing document, and who acknowledged that she executed the same as her free act and deed. Notary Public 5 k:\pa ul\contracts\csg ua rnt. doc 01/15/2002 09:47 FAX 6513655154 Dean Reeve Contract for Purchase of Business Assets From a Corporation 1. Names. City Perks inc. a Minnesota corporation, Seller Wendy and David Bergeron, Buyer Dean Reeve and Kelly Beise, agree to the following sale. 2. Sale of Business Assets. Seller is selling to Buyer and Buyer is buying from Seller the assets of the business known as City Perks inc. located at 16210 Eagle Creek Ave SE. Prior Lake MN 55372. 3. Assets Being Sold. The assets being sold consist of: A. The goodwill of the business, including the current business name, trademark, copyrights, and phone number. B. The lease dated October 1, 1999, between, Seller, and City of Prior Lake, Landlord, covering the premises at 16210 Eagle Creek Ave SE Prior lake MN. 55372. C. The fumiture, fixtures and equipment listed in attached Schedule A. D. The equipment leases, warranties, and service agreements listed in attached Schedule B. u\ A E. Other. . 4. Purchase Price The purchase price is $ 99,000.00, allocated as follows: A. Goodwill $45,500.00 B. Assignment of lease $12,500.00 C. Furniture, fixtures and equipment $40,000.00 D. Other. $1,000.00 Total $99,000.00 The total purchase price will be adjusted by prorating rent, taxes, insurance premiums, utility costs and security deposits as of the date of closing. 5. Price of Inventory (Optional) At closing, in addition to the total purchase price listed in paragraph 4, Buyer will buy the inventory by paying Seller the amount Seller paid for those goods. A physical count of the goods will be made by: Seller and Buyer. 6. Accounts Receivable Seller's accounts receivable will remain Seller's property. Buyer will send Seller the proceeds of any of Seller's accounts receivable that Buyer may collect up to but not after closing. . 7. Deposit Buyer will pay Seller a deposit of $5,000.00 when Buyer and Seller sign this contract. This amount will be applied toward the amount listed in paragraph 4. Seller will return this deposit to Buyer if the purchase is not completed because Seller cannot or does not meet its commitments. 8. Payments Due at Closing. At closing, Buyer will pay Seller the following amounts, using a cashier's check: $94,000.00 to be applied toward the amount listed in paragraph 4. _ The value of the inventory as determined under paragraph 5. _ The value of the accounts receivable as determined under paragraph 6. 9. Promissory Note. At closing, Buyer will give Seller a promissory note for the balance of the purchase price. Buyer and seller will sign the promissory note. 1 l4l 002/005 01/15/2002 09:47 FAX 6513655154 Dean Reeve Buyer is a Corporation or Limited Liability Company. The following people will personally guarantee the promissory note and will be jointly and individually liable for payment: Dean Reeve and Kelly Beise. The promissory note will contain the following terms: A. The unpaid balance of $15,000.00 will be subject to interest at the rate of 8% a year totaling $16,281.80. B. Buyer will pay $ 678.41 on the 15th day of each month beginning one month after the closing until the principal and interest have been paid in full. C. The entire amount of principal and interest will be paid in 24 months. D. Payments will be applied first to interest and then to principal. E. Buyer may prepay all or any part of the principal without penalty. F. If Buyer is more than 30 days late in making a payment, Seller may declare that the entire balance of the unpaid principal is due immediately, together with the interest that has accrued. 10. Security for Payment. At closing, to secure the payment of the promissory note, Buyer will sign a security agreement and UCC financing statement giving Seller a security interest in: _ The assets that Buyer is purchasing. _ The lease that is being assigned to Buyer. 11. Seller's Debts. Buyer is not assuming any of Seller's debts or liabilities. At or before closing, Seller will pay all debts and liabilities that are or may become a lien on the assets being bought by Buyer. At closing, Seller will confirm in an affidavit {Attachment --> that Seller has paid all debts and liabilities of the business, including those that are known and those that are in dispute. 12. Closing. The closing will take place no later than 60 days from this agreement. Date: \\\\.~\o~ , At closing, Buyer and Seller will sign the documents specified in this contract and all other documents reasonably needed to transfer the business assets to Buyer. Buyer will pay Seller the amounts required by this contract and Seller will transfer the business assets to Buyer. 13. Documents for Transferring Assets. At closing, Seller will deliver to Buyer these signed documents: A. A bill of sale for the tangible assets being bought, with a warranty of good title. B. An assignment of the lease, with the landlord's written consent. C. Assignment of any other contracts that are being transferred to Buyer, with the written consent of the other contracting person, if such is required. D. Assignments of all trademarks, patents and copyrights that are part of this purchase. Seller will also deliver to Buyer at closing all other documents reasonably needed to transfer the business assets to Buyer. 14. Seller's Representations. Seller warrants and represents that: I4l 003/005 01/15/2002 09:48 FAX 6513655154 Dean Reeve [4J 0041005 A. Seller has good and marketable title to the assets being sold. The assets win be free from encumbrances at closing. B. At closing, Seller will have paid all taxes affecting the business and its assets. C. There are no judgments, claims, liens or proceedings pending against Seller, the business or the assets being sold, and none will be pending at closing. D. Seller has given Buyer accurate information, in writing, about the earnings of the business and its financial condition. E. Until closing, Seller will operate the business in the normal manner. These warranties and representations will survive the closing. 15. Buyer's Representations. Buyer warrants and represents that: A. Buyer has inspected the tangible assets that Buyer is purchasing and the premises covered by the lease, and is satisfied with their condition except for: B. Buyer has given Seller accurate information about Buye"'s financial condition. These warranties and representations will survive the closing. 16. Covenant Not to Compete. The shareholders named at the end of this contract are all of Seller's shareholders. For 5 years following closing, none of Seller's shareholders will directly or indirectly engage in the Coffee business within a radius of 20 miles from the present location of the business being sold. Each shareholder, by signing this agreement, accepts this covenant not to compete. At closing, Buyer will expect each of Seller's shareholders for covenant not to compete. . 17. Risk of Loss. If business assets are damaged or destroyed before closing, Buyer may cancel this contract, in which case Seller will promptly return the deposit. 18. Applicable Law. All state and federal laws will apply to this contract. 19. Disputes. Litigation. If a dispute arises, any party may take the matter to court. 20. Additional Agreements and Amendments Seller and Buyer additionally agree that all agreements between Seller and Buyer concerning the purchase of business assets are incorporated in this contract. Any modifications must be in writing. Required Sig\at~res Dated: \ \'- C\ v . . " SELLER Name of Business: City Perks Inc. A Minnesota company,. 7 ~'-' . By: Wendy Berg n /A.4 , / . 1 By: Dave Bergeron Title: C.6.u Title: L, \="". (') oJ BUYER C-.~ _.c. By: Dean Reeve BY~...Y ~..e~_ _"" ~ . - '- ~~/ T . --.----.-...------------r------- U1Il~/lUU2 09;48 FAX 6513655154 Dean Reeve @005/005 Address:, I~~I ~~~\r. "\==V-, 11..(" ~ 1'1::5 1_ Address: 3790 Vermilion ct south Eagan MN. 55122 Consent of Shareholders To induce Buyer to buy the assets of City Perks inc. we each agree that: 1. We are allot Seller's shareholders. 2. We consent to this contract. 3. We will each be personally bound by Seller's representations and warranties contained in this contract. 4. We will each be personally bound by the covenant not to compete. 5. We each personally guarantee the obligations of Seller contained in this contract. , J ~ -Z- Shareholder: /t.difl~ / ._ _ : ! - / '/ - c) Shareholder: _ ___ Dated: Consent of Others to Covenant Not to Compete _ [1/ We] consent to the terms of the Covenant Not to Compete described in the above contract and will sign Covenant upon those terms. D~\~ ~~d~:~~~ "- ~r(}V\ Dated: ~ / - I C/- i) ;;1.. By: M ~~~ Printed Name: b . ~o~ I.