HomeMy WebLinkAboutOshkosh Best Western - Assignment, Assumption, and First Amendment to Development Agreement (FE)27876718.2 158275412.12
ASSIGNMENT, ASSUMPTION AND FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND FIRST AMENDMENT TO
DEVELOPMENT AGREEMENT (“Amendment”) is made as of the 22nd day of February, 2023 by and among the CITY OF OSHKOSH, WISCONSIN, a Wisconsin municipal corporation (the “City”), OSHKOSH INVESTORS, LLC, a Wisconsin limited liability company (the “Oshkosh Investors”), and 1 N. MAIN, LLC, a Delaware limited liability company (“Assignee”).
The City and Oshkosh Investors, as original “Developer” entered into a Development
Agreement dated as of October 22, 2012 (the “Development Agreement”) with respect to the remodeling, repairing, rehabilitation and reconstruction of a 176 room hotel located at One North Main Street in the City of Oshkosh, Wisconsin (the “Property”). Pursuant to the Development Agreement, the City is paying Oshkosh Investors a City Contribution (as that term is defined in
the Development Agreement), which is structured as a “pay as you go” incentive from Annual Tax
Increment Surpluses (as that term is defined in the Development Agreement) in an amount not to exceed One Million Dollars ($1,000,000). As of the date of this Amendment, the incentive payments made to Developer total $31,575.41.
The City and an affiliate of Oshkosh Investors, OI Management Corporation (“OI Corp”)
entered into a separate Development Agreement dated October 22, 2012 (the “OI Development
Agreement”) pursuant to which the City made a grant to OI Corp in the amount of Two Million Dollars ($2,000,000), which amount has been disbursed in full to OI Corp. The City and OI Corp have both fully performed their respective obligations under the OI Development Agreement, and as of the date hereof, the OI Development Agreement is being terminated. In connection with such
termination, that certain Memorandum of Development Agreement recorded January 16, 2013 as
Document No. 1626603 in the Winnebago County, WI Register of Deed’s Office, is hereby terminated, and in furtherance of the foregoing, the City shall cause a termination thereof in recordable form to be executed and delivered to Developer in connection with the sale of the Property.
Oshkosh Investors is contemplating the sale of the Property to Assignee, and in connection
with such sale, Oshkosh Investors wishes to assign the Development Agreement and its role as “Developer” to Assignee, and Assignee wishes to accept the assignment of the Development Agreement and the role of “Developer.”
NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
A. ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT
1. Assignment and Assumption. Oshkosh Investors hereby sells, assigns, grants, conveys and transfers to Assignee all of Oshkosh Investors’ right, title and interest in, to and under
the Development Agreement. Assignee hereby accepts such assignment and assumes all of Oshkosh
Investors’ duties and obligations under the Development Agreement and agrees to pay, perform and discharge, as and when due, all of the obligations of Oshkosh Investors under the Development
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Agreement but only to the extent that such obligations thereunder are required to be performed arising after the date Assignee acquires the Property from Oshkosh Investors (the “Effective Date”), and such
obligations were incurred in the ordinary course of business and do not relate to any failure to perform,
improper performance, warranty or other breach, default or violation by Oshkosh Investors on or prior to the Effective Date. All references in the Development Agreement to “Developer” shall, after the Effective Date, refer to Assignee.
2. Indemnity of Oshkosh Investors. To the extent allowed by law, Oshkosh Investors
shall indemnify, hold harmless and defend the Assignee and its respective members, partners, affiliates, parent business organizations, subsidiary business organizations, shareholders, officers, directors, beneficiaries, agents, employees, attorneys and representatives and their respective successors and assigns from and against any and all claims, demands, liabilities, injuries, losses, costs,
damages, actions and expenses, known or unknown, directly or indirectly, including without
limitation, injury or death of persons or damage to or loss of property, arising out of, alleged to have arisen out of, related to, or in connection with, any act or omission of Oshkosh Investors in connection with the Development Agreement, which arise or relate to the period prior to the Effective Date.
3. Indemnity of Assignee. Assignee shall indemnify, hold harmless and defend the
Oshkosh Investors and its respective members, partners, affiliates, parent business organizations, subsidiary business organizations, shareholders, officers, directors, beneficiaries, agents, employees, attorneys and representatives and their respective successors and assigns from and against any and all claims, demands, liabilities, injuries, losses, costs, damages, actions and expenses, known or
unknown, directly or indirectly, including without limitation, injury or death of persons or damage to
or loss of property, arising out of, alleged to have arisen out of, related to, or in connection with, any act or omission of Assignee in connection with the Development Agreement, which arise or relate to the period following the Effective Date.
B. AMENDMENTS TO DEVELOPMENT AGREEMENT
4. Capitalized terms used herein without definition have the meanings ascribed to them in the Development Agreement. The foregoing recitals are hereby incorporated into this Amendment as if fully set forth herein.
5. The definition of “Annual Tax Increment Deficit” in Section 1(a) is amended in its
entirety to read as follows:
(a) “Annual Tax Increment Deficit” means the shortfall between (i) Tax Increments received by the City during any calendar year and (ii) the debt service payable by the City during such calendar year on
the borrowing necessary to fund the City Contribution and repay an
inter-fund loan from TIF #17 plus those costs payable to the City pursuant to Section 8 of this Agreement for such calendar year.
6. The definition of “Annual Tax Increment Surplus” in Section 1(b) is hereby deleted.
7. The definition of “Expiration Date” in Section 1(h) is amended to read as follows:
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(h) “Expiration Date” means the date upon which the TIF District terminates under Wis. Stat. Sec. 66.1105(7). As of the date hereof, the Expiration
Date is currently anticipated to be May 22, 2039.
8. Sections 3(a) and 3(b) are hereby deleted and replaced with the following:
“The City agrees to pay Developer the balance of the City Contribution in a lump sum payment of $968,424.59 no later than [April 1, 2023]. The City Contribution, as evidenced by this Agreement, shall be a special and limited obligation of the City and not a general
obligation. Notwithstanding anything in this Agreement to the contrary, upon Developer’s
receipt of the City Contribution in accordance with the foregoing, the City’s obligation to pay the City Contribution shall be satisfied.”
9. Subsections 3(c), (d) and (e) of Section 3 are hereby deleted.
10. The City acknowledges that all conditions precedent to the payment of the City
Contribution were satisfied prior to the date of this Amendment.
11. Subsection (a) of Section 6 is amended by deleting “and/or OI Corp.”
12. Subsections (b), (d), (e), (f), (h), (j), (m), and (n) of Section 6 are hereby deleted.
13. The first sentence of Subsection (k) of Section 6 is deleted and replaced with the following: “The Developer, at its cost and expense, shall at all times operate the Hotel as a full
service hotel, in compliance with its franchise or license agreement, and shall maintain, repair and
replace (including, without limitation, repairs and replacements of a capital nature) all elements of the Project.
14. Section 7 is hereby amended to delete the third sentence of the second paragraph of Section 7.
15. Section 8 of the Development Agreement is hereby amended to state that the City
may deduct Five Thousand and 00/100 Dollars ($5,000.00)(“City Expense Fee”) from the City Contribution to reimburse the City for the City’s reasonable fees, costs, and expenses incurred by the City in connection with the creation, maintenance of, and annual reporting for the TIF District, the development of the TIF District Project plan, the negotiation and preparation of the Agreement
(including this Amendment). The City waives payment of the one and one-half percent (1.5%)
City Expense Fee, and the City Expense Fee shall not increase.
16. Section 11(a) of the Development Agreement is hereby amended to delete “2016” and replace it with “2023”.
17. Section 11(b) of the Development Agreement is hereby amended to delete “under
the OI Development Agreement”.
18. Subsections (d) and (f) of Section 11 are hereby deleted.
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19. Subsection (e) of Section 11 is amended by deleting the word “also” from the first sentence thereof.
20. The City will release the Mortgage referenced in Section 11 of the Development
Agreement, and in furtherance of the foregoing, the City shall cause a termination thereof in recordable form to be executed and delivered to Developer in connection with the sale of the Property.
21. Subsection (a) of Section 16 is amended by deleting “by OI Corp.”
22. Subsections (d) and (f) of Section 16 are hereby deleted.
23. Section 17 is amended by redesignating Subsection (b) as Subsection (c), and adding a new Subsection (b) as follows:
“(b) Levy a special assessment pursuant to Section 11(e), above; or”
24. The addresses for Developer and its counsel set forth in Section 20(d) are hereby
deleted and replaced with the following:
“If to the Developer: 1 N. Main, LLC c/o Scarlett Hotel Group One Northbrook Place, Suite 200 Northbrook, IL 60062
Attn: Zio Pekovic and Rob Sadoff
Email: zio.pekovic@scarletthotelgroup.com and rob.sadoff@scarletthotelgroup.com With a copy to: Perkins Coie LLP
110 North Wacker, Suite 3400
Chicago, IL 60606 Attn: Adam Docks Email: adocks@perkinscoie.com
25. Section 20(m) is hereby deleted.
26. All other terms of the Development Agreement remain in full force and effect.
[SIGNATURE PAGES FOLLOW]
[Signature page to Assignment, Assumption and First Amendment to Development Agreement]
OSHKOSH INVESTORS:
OSHKOSH INVESTORS, LLC
By: OI Management Corporation, its Manager
By:
Its:
ASSIGNEE:
1 N. MAIN, LLC, a Delaware limited liability
company
By: _____________________________________
Name: Zijad Pekovic
Title: Authorized Signatory