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Tugboat Willy's Lease Approval NORMAN, GILLOON, WRIGHT & HAMEL, p.e. Attorneys Wayne A. Norman, Jr.* Arthur F. Gilloon* E. David Wright* Dirk J. Hamel** Kathryn Conway Kordell Christopher R. Paar*** Please Reply To: P.O. Box 857 Dubuque, IA 52004-0857 E-Mail: ngwhlaw@mwcLnet February 23, 1999 RE: Tugboat Willy's Lease Approval o ;:::;: CJ'-<. '-.- 9- ~~~~ .0 j~~ C C(j ....1.; - -0 P'~ o' <D ,-0 \..D -r'\ r11 co N W Mayor Terry Duggan and the Dubuque City Council City Hall 50 West 13th Street Dubuque, IA 52001-4864 -0 :x. tf! N &"* :D rn o rTl <: t3 Dear Honorable Mayor and City Council Members: Attached to this letter please find a copy of the proposed Lease between the Dubuque Yacht Basin and Tugboat Willy's, Inc. Mike is the President of Tugboat Willy's, Inc., and has entered into a Lease with the Dubuque Yacht Basin for the operation of the restaurant formerly known as the Wheelhouse. Pursuant to the Lease between the Dubuque Yacht Basin, Inc. and the City of Dubuque, we seek your consent and approval for this Lease. Thank you very much. Sincerely, Arthur F. Gilloon AFG/jdh Enclosure cc: Don Shanley Michael E. Welsh Security Building / 800 Town Clock Plaza / Dubuque, IA 52001 / (319) 556-6433 / Fax: (319) 556-7706 * Also Licensed in Wisconsin / ** Also Licensed in Illinois / *** Also Licensed in Minnesota LEASE This Lease is effective J-- ( ;. 5 , 1999, between DUBUQUE YACHT BASIN, INC., an Iowa Corporation ("Lessor"), and TUGBOAT WILLY'S, INC., an Iowa corporation ("Lessee"). 1. PREMISES. Lessor hereby leases to Lessee and Lessee hereby leases from Lessor the premises located in Dubuque, Dubuque County, Iowa (the "Leased Premises"), as follows: The restaurant and tavern building, all kitchen and bar equipment (see attached Exhibit "A"), and all land inside of the black driveway which encircles the building known as the "Wheel House", and, in addition, the portion of the black driveway which is adjacent to the Wheel House as shown on attached Exhibit "B", all upon premises owned by the City of Dubuque, Iowa, and locally known as 1630 East 16th Street, which property and equipment is hereinafter referred to as the "leased premises." (It is acknowledged by Lessor and Lessee that Lessor is actually subleasing to Lessee in this Lease, except for the building and equipment, real estate owned by the City of Dubuque, Iowa, and leased to Lessor. In addition, Lessee acknowledges that Lessor has a 44 foot wide easement along the top of the slope adjacent to the Wheel House for the purpose of maintenance, inspection and repair of rip-rap and land fronting on the water. See also paragraph 25 below.) 2. TERM. The term of this Lease shall commence April 1 , 1999, and end at midnight on March 31,2004. In addition, Lessee shall have the option, exercisable only in writing and during the first six (6) months of the last twelve (12) months of the current term of this Lease to extend the term of this Lease for a five year period commencing on the expiration of the current term of this Lease and ending on March 31,2009. Thereafter, Lessee shall have an additional option to renew this Lease, exercisable only in writing and during the first six (6) months of the last twelve (12) months of the extension ending in the year 2009, to extend the term of this Lease for an additional five years to March 31, 2014. However, if the Lessee fails to exercise this first option to extend the Lease to 2009, the additional option to extend the Lease to 2014 shall become null and void. Thereafter, Lessee shall have a final additional option to renew this Lease, exercisable only in writing and during the first six (6) months of the last twelve (12) months of the extension ending in the year 2014, to extend the term of this Lease for an additional five years to March 31,2019. However, if Lessee fails to exercise the second option to extend the Lease to 2014, this final option to extend the Lease to 2019 shall become null and void. 3. RENT. Lessee shall pay fixed rent to the Lessor in the sum of Nineteen Thousand Eight Hundred and Sixty Dollars ($19,860.00) for the first year of this Lease, payable in equal monthly installments of One Thousand Six Hundred Fifty-Five Dollars ($1,655.00), which rent shall commence on the 1 st day of April, 1999 and which rent shall be payable on or before the 1 st day of each and every calendar month thereafter during the term of this Lease. The rental during each of the four remaining years of the original term, and for each year during any renewal term shall also be paid on the 1 st day of each calendar month but shall be subject to adjustments as hereinafter provided during said years. During the second rental year and each rental year thereafter during the initial five year term of this Lease, Lessee agrees to pay to Lessor as the basic rental during each rental year an amount equal to the product obtained by multiplying $19,860.00 by a fraction, the numerator of which is the "Consumer Price Index-seasonally adjusted U.S. city Page 1 of 11 average for all items for all urban consumers (1967 = 100)" published monthly by the Bureau of Labor Statistics of the U.S. Department of Labor ("CPI-UII"), for the first calendar month of each rental year, and the denominator of which is the CPI-U for the first calendar month of the first rental year. In no instance during this Lease or any renewal shall the annual rental be less than $19,860.00. 4. ESCROW. The effectiveness of this Lease is subject to a condition precedent in the form of a payment of $5,000.00 (the "Escrow") to Mercantile Bank of Dubuque, Iowa, as Escrow Agent. The Escrow may be used by Lessor from time to time to cure any default by Lessee under this Lease and shall be disbursed by said bank upon written instructions from the Lessor that a default has occurred. Any depletion of the escrow account necessary to cure Lessee's default shall be reimbursed by Lessee so that the escrow account does not fall below $5,000.00 for more than 20 days. Interest on said escrowed funds shall be accrued and become a part of the default deposit. At the termination of this Lease any such funds not necessary to cure Lessee's default (see paragraphs 14-17) shall be delivered to the Lessee. 5. CARE AND MAINTENANCE. Lessee shall, at its own expense, care for and maintain the Leased Premises above in a reasonably safe and serviceable condition. Lessee shall be responsible routine maintenance and snow removal on the sidewalks and for the maintenance of the grass on the Leased Premises. Lessee is responsible for removal of trash deposited by their customers on any of the Lessor's property within eight hours of closing. Lessor will maintain the driveway and the parking area, including snow and ice removal. 6. TAXES AND UTILITIES. Lessor shall pay all real estate taxes and special assessments levied against the Leased Premises during the term of this Lease. Any increase in such taxes due to an increase in the assessed value of the property (as opposed to an increase in the mill levee rate) shall be paid by Lessee as additional rent to Lessor. All other utilities and related expenses including, but not limited to, refuse pick up, water, and the electric bill for the Wheel House sign shall be paid by Lessee. 7. IMPROVEMENTS. It is understood and agreed that Lessee is taking the premises and equipment in an "as is" condition, and has had reasonable opportunity to inspect same. Lessee shall make all repairs necessary to keep the premises and the building, the machinery and equipment contained therein and appurtenances situated thereon in good and working order and condition. Lessee shall make all repairs so as to keep all utility lines including, but not limited to, sewage and water in open and operating condition at all times at its expense. Any damage to the leased premises, including, but not limited to, the building, the equipment contained therein and the appurtenances situated thereon, which shall be caused by the acts and conduct of Lessee, its employees, agents, customers and invitees, shall be repaired by and at the expense of Lessee and any insurance proceeds payable as a result of any such damage shall be available to Lessee and Lessor for the purpose of making such repairs. Failure to comply with the provisions of this paragraph within thirty (30) days after the occurrence of any referenced damage shall, at the discretion of the Lessor, subject to the Lessee to immediate eviction. 8. ALTERATIONS. No alterations, changes in or improvements to the leased premises shall be made by the Lessee without the prior written consent of Lessor. In the event that any such alterations, changes in, or improvements to the leased premises are consented to by the Lessor Page 2 of 11 they shall be made in a good and workmanlike manner and all such improvements shall remain upon the leased premises at the expiration of this Lease, and shall be the property of Lessor. Unless otherwise mutually agreed to prior to the commencement of such improvements, the cost thereof shall be paid by Lessee. 9. ASSIGNMENTS AND SUBLETTING. Lessee will not assign this Lease or sublet all or any portion of the leased premises without the prior written consent of Lessor, and if necessary, the consent of the City of Dubuque. Any assignment or subletting shall not, however, relieve Lessee from its performance obligations of each and every term, covenant and condition of this Lease. 10. USE OF PREMISES. Lessee shall use the Leased Premises only in the conduct of the business of retail sales of food, beverages, T-shirts and other small gift items that do not conflict with DYB's sales and business. Lessee shall not use the Leased Premises in the conduct of any unlawful business nor conduct or permit to be conducted any activity upon the leased premises which is in violation of any applicable statute or regulation. Lessee shall conduct its business in such a manner so as to not adversely affect the business of Lessor conducted on the premises adjacent to the Leased Premises, or to adversely affect the business of Lessor or the quiet enjoyment of the Yacht Basin by Lessor's customers. 11. LIENS. Lessee will not permit any mechanics' or other liens against the leased premises for any labor or material furnished the Lessee in connection with any work performed on the Leased Premises, subject, however, to the right of the Lessee to contest the validity of any such liens. Upon final determination of any such liens the same shall be fully paid, discharged and released of record by Lessee. In addition to the liens given by law, that the Lessor shall have a lien for rent upon all property brought or used upon the leased premises whether exempt or not. 12. INSURANCE. During the term of this Lease, Lessee shall maintain commercial general liability insurance in companies satisfactory to Lessor in amounts not less than $300,000.00 bodily injury to anyone person, $500,000.00 bodily injury as a result of anyone occurrence and $100,000.00 property damage. Lessee shall also provide dram shop insurance with no less than $1,000,000.00 limits. 12.1. All policies of insurance required under this paragraph shall: (1) Name both Lessor and the City of Dubuque, Iowa, as additional insureds and a memorandum copy of such insurance shall be furnished by Lessee to Lessor; (2) Provide that should Lessee default on its insurance premium payments or let coverage lapse, the insurance company will immediately notify Lessor of said default or lapse in insurance coverage. 12.1. The parties hereby release each other and their respective officers, employees, agents, contractors and invitees from all claims for damage to the Leased Premises and to the fixtures, personal property, equipment and improvements of either the Lessor or the Lessee in or on the Leased Premises that are caused by or result from risks insured against under any insurance policies carried by the parties and in force at the time of any such loss or damage, notwithstanding that any such loss or damage may be due to or result from the negligence of either of the parties or their respective officers, employees, agents, contractors, invitees, or other authorized representative. Page 3 of 11 13. DEFAULT. Each of the following shall be deemed a default by the Lessee and a breach of this Lease: (A) The filing of a Petition by or against the Lessee for adjudication as a bankrupt; (8) The making by the Lessee of an assignment for the benefit of creditors; (C) A default in the payment of the rent herein reserved, or any part thereof, for a period of ten (10) days; (D) A default in the performance or observance of any other covenant or condition of this Lease on the part of the Lessee to be performed or observed for a period of thirty (30) days. 14. RIGHTS UPON DEFAULT. In the event of default by the Lessee, the Lessor may (at Lessor's option) serve a written notice upon the Lessee that the Lessor elects to terminate this Lease upon a specified date not less than thirty (30) days after the date of the serving of said notice, and this Lease shall then expire on the date so specified as if the date had been originally fixed as the expiration date of the term herein, granted unless the Lessee shall have cured such default no later than the specified date set forth in said written notice. No default shall be deemed waived unless in writing and signed by the Lessor. However, termination of this Lease under the provisions of this paragraph shall not relieve Lessee from liability for its obligations of rent for the remainder of the term in which the Lease is terminated. 15. RE-ENTRY. If this Lease is terminated as provided above or otherwise, or if the Leased Premises is abandoned by the Lessee, or Lessee removes without Lessor's consent any of the equipment on Exhibit "A" or other property owned by Lessor, the Lessor may at any time thereafter, re-enter and resume possession of the Leased Premises and remove all persons and property therefrom, either by summary dispossession proceedings, by a suitable action or proceeding at law or equity, or by force, self-help or otherwise, without being liable for any damages therefor. No re- entry by the Lessor shall be deemed an acceptance of a surrender of this Lease. 16. RELETTING. If this Lease is terminated as provided above, or if the Leased Premises is abandoned by the Lessee, the Lessor may, in its own name and on its own behalf, relet the whole or any portion of the Leased Premises, for any period equal to, greater or less than the then current term of this Lease, for any sum which it may deems reasonable, to any tenant and for any use and purpose which it may deems appropriate. In no event, however, shall the Lessor be under any obligation to relet the premises for any purpose, other than that specified in this Lease, which the Lessor may regard as injurious to the Leased Premises, or to any tenant which the Lessor, in the exercise of reasonable discretion, shall deem to be objectionable. The Lessor shall not be required to pay to the Lessee any surplus of any sums received by the Lessor on a reletting of the Leased Premises in excess of the rent provided by this Lease. 17. MEASURE OF DAMAGES IN EVENT OF DEFAULT. In the event of termination of this Lease as provided above, the Lessor shall immediately be entitled to recover from the Lessee, and the Lessee shall pay to the Lessor, as liquidated damages for such breach, an amount equal to the difference between the rent reserved in this Lease from the date of such breach to the date of the expiration of the then current term, and the then fair and reasonable rental value of the premises for the said period. Said damages shall become due and payable to the Lessor immediately upon such breach of this Lease and without regard to whether this Lease be terminated or not, and if this Lease is terminated, without regard to the manner in which it is terminated. 17.1. If the Leased Premises or any part thereof be relet by the Lessor for the unexpired term of this Lease, or any part thereof, before presentation of proof of such liquidated Page 4 of 11 damages, the amount of rent reserved upon such reletting shall be deemed to be the fair and reasonable value for the part or the whole of the premises so relet during the term of such reletting, provided, however, that such reletting is at "arms length." 17.2. In the event that this Lease is terminated by summary proceeding, or otherwise, or if the premises is abandoned, and whether or not the Leased Premises be relet, the Lessor shall be entitled to recover from the Lessee and the Lessee shall pay to the Lessor, in addition to the rent provided above, an amount equal to all expenses, if any, including reasonable attorneys' fees, incurred by the Lessor in recovering possession of the Leased Premises and all reasonable costs and charges for the care of said premises while vacant, which damages shall be due and payable by the Lessee to the Lessor at such time or times as such expenses are incurred by the Lessor. 18. HOLDOVER. Notwithstanding any provision of law or any judicial decision to the contrary, no notice shall be required from either party to terminate this Lease on the expiration date specified above and, anything herein contained or implied to the contrary notwithstanding, a holding over by the Lessee, its permitted assignees or sub-lessee beyond the expiration of said term shall give rise to a tenancy from month-to-month only. 19. QUIET POSSESSION. The Lessor covenants that the Lessee, if in compliance with the terms of this Lease, shall peacefully hold the Leased Premises for the term provided above. 20. PAYMENT BY LESSOR. If Lessee fails to pay any amount required to be paid under this Lease, the Lessor shall have the right, but not the duty, to pay the same (and at Lessor's option, to pay it from the "escrowed amount" referred to above in paragraph 3), and the amount so paid shall be due from the Lessee to the Lessor on the next succeeding rent payment due after such payment by the Lessor. 21. INDEMNITY. The Lessee shall indemnify the Lessor against any expense, loss or liability paid, suffered or incurred, including attorney's fees and costs of litigation, as a result of any breach by the Lessee, its employees, agents, invitees, customers, licensees or sub-tenants of any provision of this Lease, or the result of the Lessee' use or occupancy of the Leased Premises or the negligence of the Lessee, its employees, agents, invitees, customers, licensees or sub-tenants. 22. TIME IS OF THE ESSENCE. Time is of the essence as to all terms, provisions, conditions and restrictions of this Lease and all covenants, agreements and undertakings of the parties. 23. NO REPRESENTATIONS BY LESSOR. Except as otherwise provided herein, Lessor, or Lessor's agents, have made no representations or promises with respect to the Leased Premises. The taking of possession of the Leased Premises by Lessee shall be conclusive evidence that Lessee accept same "as is" and that the Leased Premises were in good and satisfactory condition at the time such possession was so taken. 24. FEES AND EXPENSES. If Lessee defaults in the performance of any obligation required of it under this Lease, Lessor may at any time thereafter, without notice, perform the obligation for Lessee, and if Lessor incurs any expenses in connection therewith including, attorneys' fees, such Page 5 of 11 expenses incurred, with interest and costs, shall be paid by Lessee to Lessor within five (5) days of submission to Lessee of a statement therefor. 25. APPROVAL BY CITY OF DUBUQUE. It is understood and agreed that the leased premises, except the improvements thereon, are owned by the City of Dubuque, Iowa, and this Lease (and any renewals) are subject to the approval of the City of Dubuque, Iowa, which approval Lessor will endeavor to obtain. In the event such approval is not obtained, however, this Lease shall be null and void and the failure to obtain such approval shall not constitute a breach of this Lease by either party, nor subject the Lessor to any claims for damages at any time by Lessee. Lessor and Lessee agree to abide by all of the conditions of Lessor's Lease with the City of Dubuque as may be applicable to Lessor and Lessee. Further, if, for any reason, the City of Dubuque cancels its Lease with Lessor, or otherwise acts in such a manner as to render Lessor's ability to perform under this Lease impossible, such event, at Lessor's option, shall render this Lease null and void and any failure on the part of Lessor to perform under this Lease shall not constitute a breach of said Lease, nor subject Lessor to any claims for damages by Lessee. 26. MISCELLANEOUS PROVISIONS. 26.1. Lessor reserves the right to establish minimum hours of operation for Lessee. 26.2. Lessee will be permitted to use the parking facilities at the premises known as the Dubuque Yacht Basin jointly with Lessor and both Lessor and Lessee shall cooperate fully with each other to insure that such parking facilities will be used for the benefit of each party hereto. 26.3. Upon the termination of this Lease, Lessee shall deliver to Lessor all of the leased property in good and working order and condition, reasonable wear and tear excepted, including, but not limited to, the fixed assets which are attached to this Lease as Exhibit "A". 26.4. Upon termination of this Lease, Lessor shall have a lien on any of Lessee's equipment, supplies, fixtures and upon any non-exempt personal property which has been used or kept on the Leased Premises during the Lease, for any unpaid rent or unpaid expenses of Lessor due to Lessee' default. 27. NOTICES. All notices under this Agreement shall be in writing and shall be deemed delivered if delivered in person, if sent by certified mail (postage prepaid, return receipt requested), telegraph or facsimile, as follows: If to Lessor: Dubuque Yacht Basin, Inc. 1630 E. 16th Street Dubuque, IA 52001 Attn: Donald P. Shanley, President If to Lessee: Tugboat Willy's Inc. 1630 E. 16th Street Dubuque, IA 52001 Attn: Michael E. Welsh, President Page 6 of 11 28. APPLICABLE LAW; SEVERABILITY. This Agreement shall be subject to, construed and enforced in accordance with the laws of the State of Iowa. If any provision of this Agreement is held invalid under applicable Law, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provision, and to this end, the provisions hereof are severable. 29. BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties. 30. INTERPRETATION; HEADINGS. Words and phrases herein shall be interpreted and understood according to the context in which they are used. The headings in this Agreement are intended solely for convenience of reference, and shall be given no effect in the construction or interpretation of this Agreement. 31. ENTIRE AGREEMENT; COUNTERPARTS. This Agreement, including any Exhibits, all of which are incorporated by this reference, and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a writing signed by each party. All agreements, instruments and documents referred to in this Agreement are by this reference made a part of this Agreement for all purposes. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. 32. NON-WAIVER; REMEDIES CUMULATIVE. The parties shall have, in addition to the rights and remedies provided by this Agreement, all those allowed by all applicable laws, all of which shall be in extension of and not in limitation of those provided hereunder. No delay or failure by a party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein. 33. WAIVERS. Except as herein expressly provided, no waiver by either party of any breach of this Agreement, or of any warranty or representation hereunder, shall be deemed to be a waiver by the same party of any other breach of any kind or nature (whether preceding or succeeding the breach in question, and whether or not of the same or similar nature). 33.1. No acceptance by a party of payment or performance after any such breach shall be deemed to be a waiver of any breach of this Agreement or of any representation or warranty hereunder, whether or not the party knows of the breach when it accepts such payment or performance. 33.2. No failure by a party to exercise any right it may have under this Agreement or under law upon another party's default, and no delay in the exercise of that right, shall prevent it from exercising the right whenever the other party continues to be in default. No such failure or delay shall operate as a waiver of any default or as a modification of the provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Lease in duplicate on the day and year first above written. Page 7 of 11 BY: TUGBOAT WILLY'S, INC. BY: ~.dJ 'i'-j!~ , ichael E. Welsh, President Page 8 of 11 EXHIBIT "A" TO LEASE OF , 1999, BETWEEN DUBUQUE YACHT BASIN, INC. AND THE WHEEL HOUSE, INC. 2 Ceiling Fans Syracuse China Stainless Shelves (Cooler) Undercounter Refrigerator Beverage Air Beer Cooler - Model DD-50C, Serial 2517126 Frymaster Fryer - Model GF14FD, Serial 9303FM0544 Bar Maid Glass Washer - Serial 33288 RCA TV 27" Table Model F27120WN, Serial 246526303 Satellite Dish 2 Hatco Food Warmers GRAH-48, Serial 2122769305 York 5-ton Air Conditioner 20 Stack Chairs Anchor 41 x 18' Wheel House Sign on highway frontage Walk-in Cooler Freezer 1 Icemaker 1 Charcoal Grill 1 Meat Slicer 1 Beer Coolers 1 Hobart Dishwasher 1 Stainless Steel Cart 1 Refrigerator 1 Stove 1 Deep Fryer 1 Portable Deep Fryer 1 Electric Grill A new front for the Wheel House sign 1 York Furnace - Model PHDD20N11501A, Serial BMYP025098 and Serial BMYP025095 Grill Hood State Water Heater - Model PRV50NOVT6F, Serial E93202198 Henny Penny Broaster - Model 500, Serial HPE3360 Sandwich Table - Model 9304, Serial P5915121293 Proofer - Model DP1Z Savery Bun Toaster - Model R022, Serial 6200505 Shelving, Pans Sinks Ansul R02 Safety System - Serial 348438 Stainless Steel Table 60" - Model STUS30604NSF, Serial 76436BS Page 9 of 11 Stainless Steel Table Aero Hot Steamer - Model 62, Serial FP303 Glassware, Flatware and Small Kitchen Equipment 40 Bar Stools 14 Dining Tables Page 10 of 11 (I~ us ~~9 .\1(1.\ 113: UJ J-:U Jl";);)D I'" ib,''. ~