HomeMy WebLinkAboutOshkosh Best Western - Interim Beverage Agreement (FE)1
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this “Agreement”) is entered into as of this 23rd
day of February, 2023 (the “Effective Date”), by and between 1 N. Main, LLC, a Delaware limited liability company (“Main”), and Oshkosh Investors, LLC, a Wisconsin limited liability company (“Manager”).
W I T N E S S E T H
A. Manager is the license holder/operator of that certain hotel and conference center businesses, which is commonly known as “Best Western Premier Waterfront Hotel & Conference Center” and located at 1 North Main Street, Oshkosh, Wisconsin (the “Premises”).
B. Main has or will apply for all requisite state and local licenses for the service of alcoholic beverages at the Premises (the “Requisite Licenses”), however, as of the Effective Date, all of the Requisite Licenses have not been issued.
C. Manager possesses all of the Requisite Licenses pursuant to which it has operated
the Premises in the fashion in which Main intends to operate same.
D. Manager has agreed to manage the liquor service aspects of the Premises for the benefit of Main and, in accordance therewith, Main has appointed Manager to so manage the
Premise.
E. Because of Manager’s experience in managing and operating the Premises, and because of Manager’s knowledge of the unique laws, rules and regulations of the State of Wisconsin and municipality where the Premises are located pertaining to the purchase, sale, and
service of alcoholic beverages; so as to facilitate the smooth and orderly transition of ownership
of the Premises; and, so as to ensure that during said transition, there is continuity in the operation of the Premises, Main intends to retain Manager for the sole and limited purpose of managing and operating those portions of the Premises which serve and sell alcoholic beverages for the benefit of Main.
F. Manager hereby accepts said appointment on the terms set forth below.
NOW THEREFORE, in consideration of the mutual agreements, promises and covenants contained herein; in furtherance of the duties and obligations set forth in the that certain Purchase
Agreement by and between Manager and Scarlett Real Estate Holdings, LLC (“Scarlett”), dated
October 12, 2022, for the purchase and sale of the Premises, as assigned by Scarlett to Main pursuant to separate assignment and assumption agreement dated January 25, 2023; and for other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged by all parties hereto, it is hereby agreed to as follows:
1.Managed Premises and Manager’s Duties. Main hereby appoints Manager, on an
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exclusive and interim basis, to act as its agent as to those portions of the Premises which are utilized for the purpose of purchasing, serving, and selling alcoholic beverages (collectively, “Beverage
Operations”) and for no other purpose whatsoever. Manager shall, in good faith, fulfill its
management duties as set forth herein and hereinbelow upon the exclusive and strict direction, instruction, and control of Main; provided, however, Manager shall have the sole and unqualified control with respect to the actual purchase and sale of alcoholic beverages at the Premises. Manager shall arrange for the employment, direction, control, and discharge, as the case may be,
of all personnel employed in Beverage Operations. Manager will not knowingly employ any
person who is disqualified from being employed on an alcoholic beverage licensed premises. All such employees shall be employees of Manager. Manager shall arrange for the keeping of full and adequate books of account and other records reflecting the operation of Beverage Operations, which it shall make available to Main for inspection at all times during the Term and which shall
be provided to Main following expiration or termination of the Term. Manager shall exercise all
commercially reasonable efforts to keep the Requisite Licenses in full force and effect throughout the Term, and shall not surrender the Requisite Licenses, or take or fail to take any commercially reasonable action which would cause a suspension, revocation, or termination of the Requisite Licenses; provided, however, that Main shall promptly reimburse Manager for any out-of-pocket
expenses incurred in connection with such efforts and actions. Manager shall also exercise all
commercially reasonable efforts, but without being required to spend money or incur liability, to cooperate with Main in their efforts to obtain approval for the Requisite Licenses to be issued in Main’s name.
2. Term. This Agreement shall commence on the Effective Date and terminate
immediately upon the first to occur of (a) the date on which the applicable licensing authorities approve the issuance of the Requisite Licenses to Main (or its designee(s)), and (b) 90 days from the Effective Date (the “Initial Term”). Notwithstanding the foregoing, Manager acknowledges that the issuance to Main of the Requisite Licenses is within the discretion and control of
governmental agencies and that, therefore, it is difficult to determine with precision when each of
the Requisite Licenses will issue. Therefore, in the event for any reason not caused by Main, each of the Requisite Licenses shall not have issued to Main or its designee(s) as of the expiration of the Initial Term, the term of this Agreement shall extend automatically, and without further act of the parties hereto, for an additional 90 days (the “Second Term,” together with the Initial Term,
the “Term”), provided, however, that Manager and Main acknowledge that the Second Term, if
applicable, will automatically terminate upon issuance to Main or its designee(s) of the Requisite Licenses. Main shall use commercially reasonable efforts to obtain the Requisite Licenses as soon as possible following the Effective Date.
3. Inventory and Supplies. Main, at its sole expense, shall provide during the Term
all operating equipment and supplies (including glassware and other supplies, collectively, the “Operating Supplies”) necessary to manage Beverage Operations in a manner consistent with past operating practices and in a professional manner consistent with the management of hotels and conference centers of a quality and type similar to the Premises. Manager shall have the right
to use the Operating Supplies in the conduct of providing its services under this Agreement, in its
reasonable discretion. All alcoholic beverage inventory needed to be purchased for the operation of Beverage Operations shall be purchased by [Manager] on behalf of [Main] from licensed
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Wisconsin distributors in the name of Manager, with prior approval as to amount and type of such purchases by Main. To the extent necessary, Manager shall be promptly reimbursed out of
proceeds from the operation of Beverage Operations for all purchases of alcoholic beverages made
under this Paragraph. Main and Manager acknowledge and agree that title to the inventory of alcoholic beverages (including wine and beer, the “Alcoholic Beverage Inventory”) on hand at the Premises as of the date of Main’s purchase of the Premises is the property of Main, and such transfer has been or shall be promptly documented on inventory Form AT-900, if necessary.
4. Profits and Revenues. Main shall retain all net profits from the operations of Beverage Operations during the Term. Manager shall not be responsible for any expenses arising from or relating to Beverage Operations from and after the Effective Date. Main and Manager agree to cooperate in good faith to allocate amounts to Manager to ensure that Manager shall, in a
timely manner, pay all expenses incurred in operating Beverage Operations, including, but not
limited to, any and all taxes associated with Beverage Operations, from the revenues and receipts collected by Main. Manager agrees to pay all such expenses incurred in operating Beverage Operations prior to delinquency. Manager agrees to file with the appropriate agency of the State of Wisconsin any and all sales tax reports and pay all sales tax due in connection with the operation
of Beverage Operations for each month or partial month during the Term. Manager agrees to
provide copies of any and all such sales tax returns to Main within five (5) days of filing such returns. 5. Assignment. Manager shall not assign this Agreement or any interest therein,
except upon the prior written consent of Main, which may be withheld for any reason.
6. Alterations and Improvements. No improvements shall be made to any portion of the Premises without the prior written consent of Main, which consent may be withheld in Main’s sole discretion; provided, however, that Main shall not unreasonably withhold consent if a request
relates to an alteration or improvement required to maintain the Requisite Licenses by Manager
during the Term. 7. Compliance with Law. Manager shall comply with all governmental laws, ordinances, rules, and regulations applicable to the sale and service of alcoholic beverages and
shall, at all times during the Term, keep in full force and effect the Requisite Licenses currently
issued to Manager. Main and Manager shall, at all times during the Term, cooperate with one another and with any and all departments or agencies which issue, or otherwise have jurisdiction over, the Requisite Licenses, in connection with said compliance. Said cooperation shall include, by way of illustration only and not limitation, the full and faithful performance of each of the
provisions of this Agreement and the preparation and/or execution of any and all documents
necessary to so fully and faithfully perform hereunder. 8. Insurance. Main, shall, at its sole expense, arrange to keep in force and effect at all times during the Term, adequate public liability and “dram shop” insurance policies of
insurance, in amounts and with companies acceptable to Manager, and in no event less than
amounts maintained by Manager during its ownership and operation of the Premises immediately prior to the date hereof. Such policies of insurance shall name Manager as an additional insured
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thereunder and Main shall provide evidence in such form and at such intervals as Manager may request. All such insurance policies shall be on an “occurrence” basis and maintained with
insurance companies reasonably acceptable to Manager. Main shall deliver to Manager a
certificate of insurance which shall provide that such insurance may not be canceled or modified without thirty (30) days prior notice to Manager. This Paragraph 8 shall survive the expiration or termination of this Agreement.
9. Notices. Any notice, statement or demand required to be given under this
Agreement shall be in writing and shall be deemed to have been given upon personal delivery to the addresses set forth below, or by certified mail (return receipt requested), or by delivery from a nationally-recognized overnight delivery service, or by facsimile transmission or by electronic mail. Notices shall be delivered to the following addresses:
Main: c/o Scarlett Hotel Group One Northbrook Place, Suite 200 Northbrook, IL 60062 Attn: Zio Pekovic
E-mail: zio.pekovic@scarletthotelgroup.com
With copy to: Perkins Coie LLP 110 North Wacker, Suite 3400 Chicago, IL 60606
Attn: Adam Docks and Valerie Johnston
Fax: (312) 324-9543 E-mail: adocks@perkinscoie.com and vjohnston@perkinscoie.com Manager: 200 E. Washington St., Suite 2A
Appleton, WI 54911
Attn: John Pfefferle E-mail: johnp@naipfefferle.com With copy to: Reff Baivier Lim Muza Sundet & Dunham, S.C.
217 Ceape Avenue
P.O. Box 1190 Oshkosh, WI 54903 Attn: Russell J. Reff Fax: (920) 231-0035
E-mail: rjr@reff-law.com
10. No Default. No waiver by the parties hereto or any default or breach of any term, condition, or covenant of this Agreement shall be deemed to be a waiver of any subsequent default or breach of the same or any other term, condition or covenant contained herein. In the event of
Manager’s default of any
11. Captions. The captions or headings of paragraphs in this Agreement are inserted
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for convenience only, and they shall not be considered in construing the provision hereof if any question of intent should arise.
12. Successors. The terms, conditions and covenants contained in this Agreement shall apply to, and inure to the benefit of, and be binding upon, the parties hereto and their respective successors-in-interest and legal representatives except as otherwise expressly provided herein.
13. Indemnification and Hold Harmless. a. The parties agree that Manager is agreeing to perform its obligations hereunder solely as a courtesy to Main, and Manager is not to be in any manner liable or
responsible for any costs, expenses, obligations, or other claims of any nature whatsoever unless
Manager has acted recklessly or in an intentionally wrongful manner. With the exception of Manager’s recklessness or intentional willful misconduct or any breach of this Agreement by Manager, Main hereby agrees to indemnify, defend and hold Manager, its affiliates, directors, officers, employees, and agents harmless from and against any and all claims, losses, causes of
action, costs and expenses (including but not limited to attorneys’ fees incurred in enforcing the
terms of this Paragraph), damages, penalties, fines, or liability incurred or arising out of, or connected to, the execution, enforcement, or performance of this Agreement. Manager shall not be liable or responsible in any manner or to any extent for any failure to perform its duties hereunder, absent Manager’s recklessness or intentional misconduct or Manager’s breach of this
Agreement.
b. Manager shall defend, indemnify and hold each of Main and its agents, officers, directors, shareholders, employees, subsidiaries, parents, and affiliates (collectively, the “Main Parties”) harmless from any and all liabilities, damages, or claims, costs, unpaid operating
expenses, penalties, citations, enforcement actions, losses, or expenses (including reasonable
attorneys’ fees) incurred by the Main Parties in connection with Manager’s breach of this Agreement and/or Manager’s recklessness or intentional misconduct; except to the extent such liabilities, damages or claims, costs, penalties, citations, enforcement actions, losses, or expenses arise from the recklessness or willful misconduct of Main.
c. Main and Manager each agree to provide written notice to the other party within two (2) business days following such party’s receipt of any notice, action, citation, or correspondence received from the City of Oshkosh, Wisconsin, the State of Wisconsin, the Wisconsin Department of Revenue, or any other state, local, or federal governmental unit relating
to the service of alcoholic beverages at the Premises.
14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be exchanged by facsimile or e-mail, which shall be considered
binding.
15. Entire Agreement. This Agreement constitutes the entire Agreement between the
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parties hereto and supersedes and terminates all prior oral and written agreements and understandings among the parties. No amendment, alteration, modification of, or addition to
this Agreement will be valid and binding unless expressed in writing and signed by the parties
hereto. 16. Partial Invalidity. If any of the phrases, sentences, clauses or paragraphs contained in this Agreement shall be declared invalid by a final and unappealable order, decree, or judgment
of any court, this Agreement shall be construed as if such phrases, sentences, clauses or paragraphs
had not been inserted, provided that the economic basis of this Agreement is not thereby altered. 17. Governing Law. This Agreement shall be governed by, interpreted under, construed and enforced in accordance with the laws of the State of Wisconsin and the courts of the
State of Wisconsin shall have jurisdiction over any matters arising hereunder.
18. No Joint Venture. Nothing in this Agreement creates a joint venture or partnership and, except as may be expressly set forth herein, no party is given the authority to bind or obligate any other party.
19. Waiver of Trial by Jury. Main and Manager each hereby waives its right to a trial
by jury in any action or proceeding by any party against any other party with respect to any matter arising from or in connection with this Agreement.
20. Prevailing Party. If any litigation or other court action, arbitration or similar adjudicatory proceeding is undertaken by any party to enforce its rights under this Agreement, all
fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and court costs,
of the prevailing party in such action, suit or proceeding shall be reimbursed or paid by the party against whose interest the judgment or decision is rendered. This Paragraph 20 shall survive the termination of this Agreement.
[signature page follows]
[Signature page to Management Agreement - Interim Beverage]
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the Effective
Date.
Main:
1 N. Main, LLC, a Delaware limited liability company
By: _______________________
Name: Zijad Pekovic
Its: Authorized Signatory
Manager:
Oshkosh Investors, LLC, a Wisconsin limited liability company
By: OI Management Corporation, its Manager
By: _______________________
Name: John Pfefferle
Its: President