Loading...
HomeMy WebLinkAbout45. 12-290 MAY 22, 2012 12-290 RESOLUTION (CARRIED___7-0____ LOST _______ LAID OVER _______ WITHDRAWN _______) PURPOSE: APPROVE DEVELOPER AGREEMENT WITH OSHKOSH INVESTORS LLC FOR REHABILITATION OF CITY CENTER HOTEL INITIATED BY: CITY ADMINISTRATION BE IT RESOLVED by the Common Council of the City of Oshkosh that the attached Agreement between the City of Oshkosh and Oshkosh Investors, LLC for rehabilitation of City Center Hotel is hereby approved. BE IT FURTHER RESOLVED that the proper City officials are hereby authorized to execute and deliver the agreement in substantially the same form as attached hereto any changes in the execution copy being deemed approved by their respective signatures and said City officials are authorized and directed to take those steps necessary to implement the terms and conditions of the Agreement. DEVELOPMENT AGREEMENT This Development Agreement (the "Agreement") is made as of the day of , 2012 by and between the CITY OF OSHKOSH, WISCONSIN, a Wisconsin municipal corporation (the "City") and OSHKOSH INVESTORS, LLC, a Wisconsin limited liability company (the "Developer"). RECITALS A. The Developer has acquired a 176 room hotel property located at One North Main Street in the City of Oshkosh, Wisconsin, which property is more particularly described on Exhibit A attached hereto (the "Property"). B. The Developer plans to remodel, repair, rehabilitate and reconstruct the hotel located on the Property into a mid- to upper price full service hotel with banquet facilities and convention service. C. Pursuant to Wis. Stats. §66.1105 (the "Tax Increment Law"), the City may exercise all powers necessary and convenient to (i) carry out the purposes of the Tax Increment Law, (ii) cause certain project plans to be prepared, (iii) implement the provisions and effectuate the purposes of said project plans, and (iv) finance development through the use of tax incremental financing. D. The City has (i) created Tax Increment District No. 25 (City Center Hotel Rehabilitation) (as amended from time to time, the "TIF District"), and (ii) approved a project plan for the redevelopment of the TIF District (as amended from time to time the "TIF District Project Plan"). E. The Property is located within the TIF District. F. The Developer desires to redevelop the Property in accordance with the provisions of this Agreement. G. The City desires to encourage economic development, expand the City's tax base, and create new jobs within the City and within the TIF District. H. As an inducement to the Developer to undertake the Project and in order to achieve the objectives of the TIF District, (i) the City may undertake certain public improvements, and (ii) the City shall provide financial assistance to the Developer, all in accordance with the provisions of this Agreement. I. The City (i) believes the Project will further the goals of the TIF District by increasing the value of the Property for property tax purposes, providing a valuable service to the community and creating local employment opportunities, and (ii) expects that the anticipated tax increment to be produced by the Project will be adequate to recover the Project Costs (as defined below) within the life of the TIF District. 6980074_9 J. The City finds it to be in the public interest to utilize tax incremental financing to assist the Developer to undertake the Project, consistent with the terms and conditions of this Agreement. K. Funds used to provide the Developer with the tax incremental financing for the Project Costs as described in this Agreement (the "TIF Funds") shall be raised (i) by City borrowing, and/or (ii) from tax income generated in the TIF District. L. The City and Developer agree that but for the City's willingness to provide development assistance for the Project, the Project would not take place in the City. M. The City finds that construction of the Project, and fulfillment of the terms and conditions of this Development Agreement are in the vital and best interest of the City and its residents and fulfill a public purpose in accordance with state law. NOW THEREFORE, in consideration of the foregoing recitals that are incorporated hereto and made a part of this Agreement, the promises, covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Developer and the City promise, covenant and agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: (a) "Annual Tax Increment Deficit" means the shortfall between (i) Tax Increments received by the City during any calendar year, and (ii) the amount necessary to service the City's debt on all amounts disbursed for or on behalf of Developer under this Agreement during such calendar year, plus those costs payable to the City pursuant to Section 10 for such calendar year. (b) "Annual Tax Increment Surplus" means the extent to which (i) Tax Increments received by the City in any calendar year exceed (ii) the amount necessary to service the City's debt on all amounts disbursed for or on behalf of Developer under this Agreement during such calendar year, plus those costs payable to the City pursuant to Section 10 for such calendar year. (c) "City" means the City of Oshkosh, Wisconsin, a Wisconsin municipal corporation, its successors and assigns. (d) "City Contribution" means payments provided by the City to the Developer from future Tax Increments in an amount not to exceed One Million and No/100 Dollars ($1,000.000.00). (e) "Closing Date" means the date on which all conditions precedent to the funding of the Grant have been satisfied or waived by the City, after which the City shall deposit the Grant funds into escrow for subsequent disbursement as described under Section 4, below. 2 6980074_9 (f) "Completion Date" means June 30, 2013. (g) "Developer" means Oshkosh Investors, LLC, a Wisconsin limited liability company, its successors and assigns. (h) "Default" means the occurrence of any one or more of the events described in Section 18, below. (i) "Disbursing Agreement" means the Disbursing Agreement described in Section 4, below, in the form attached hereto as Exhibit B. (j) "Equity Contribution" means a contribution to the Project by the Developer in an amount of not less than Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00). (k) "Expiration Date" means the earliest to occur of(i) the termination of the TIF District under Wis. Stat. §66.1105(7), or (ii) the repayment by the Developer of the Grant, following a demand to make such repayment made by the City pursuant to Section 19, below. (1) "Grant" means a development assistance grant in an amount of Two Million and No/100 Dollars ($2,000,000.00) to be provided by the City to the Developer under the terms and conditions of this Agreement. (m) "Guaranty" means the Developer's guaranty of increment revenue to be received by the City, as more specifically described in Section 13, below. (n) "Lender" means the financial institution(s) providing the Loan to Developer, which institution(s) shall be approved by the City. (o) "Loan" means one or more loans to fund Project Costs in the maximum amount of Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) from Lender to Developer. (p) "Minimum Project Cost" means Fourteen Million and No/100 Dollars ($14,000,000.00). (q) "Payment Date"means each November 1. (r) "Project" means the acquisition, renovation, furnishing and equipping of the 176 room hotel located on the Property into a mid- to upper price full service hotel with banquet facilities and convention service. (s) "Project Costs" means the total costs of acquiring, renovating, furnishing and equipping the Project, including all capital expenditures (or expenditures that could be treated as capital expenditures) and preliminary expenditures (such as architectural, engineering, surveying, soil testing, and similar costs that are incurred in connection with 3 6980074_9 the construction of the Project) and all other direct or indirect costs of development of the Project in accordance with the Project Plans. (t) "Project Costs Itemization" means a cost itemization of construction and nonconstruction cost items identifying each element of the Project and any contingency and all other direct or indirect costs of development of the Project in accordance with the Project Plans. (u) "Project Plans" means final detailed plans and specifications for the Project including, without limitation, the plans and specifications for the renovation of the hotel lobby, public meeting spaces, guest rooms, the repair and replacement, as necessary, of building systems, and all other improvements located or to be located on the Property. (v) "Property" means the parcel of land upon which the Project is located, as legally described on Exhibit A. (w) "Tax Increment" shall have the meaning set forth in Wis. Stat. §66.1105(2)(i). (x) "Term" means the period of time commencing on the Closing Date and terminating on the Expiration Date. (y) "TIF District" means Oshkosh Tax Incremental District No. 25 (City Center Hotel Rehabilitation). (z) "TIF District Project Plan" means the Project Plan for Tax Increment District No. 25 as approved by the City's Common Council on , 2012 and by the Joint Review Board on , 2012, as the same may be amended from time to time. (aa) "Title Company" means Assurance Title Services, Inc., or such other title company as the Developer and City may designate by mutual agreement as disbursing agent under the Disbursing Agreement. 2. Project Overview. The Developer will construct the Project on the Property in accordance with the Project Plans. To assist the Developer with the Project, the City will provide the Grant, which will be disbursed pursuant to the Disbursing Agreement, and the City Contribution. The Developer will make the Equity Contribution and will provide or obtain any additional money required to complete the Project. 3. City Grant. To assist the Developer with the Project, the City shall make a development assistance grant in an amount of up to Two Million Dollars ($2,000,000), so long as the terms and conditions set forth in this Agreement are met. The City will provide or obtain any money required to make the Grant through (i) City borrowing, and/or (ii) from tax increment generated in the TIF District. 4 6980074_9 4. Disbursement of Grant Funds. On the Closing Date, the City will deposit the Grant funds into an escrow account designated for the Project, to be held by the Title Company and disbursed in accordance with the Disbursing Agreement. All interest earned on the Grant funds in the escrow account shall accrue to the benefit of the City and shall be paid to the City. The Disbursing Agreement shall require that the Equity Contribution and the Loan proceeds be disbursed prior to the disbursement of the Grant. The Grant funds shall be disbursed to pay for Project Costs pursuant to the terms and conditions of the Disbursing Agreement, which shall be the Title Company's standard form for disbursement of construction loans, with such changes as the Developer and City may agree upon. The Disbursing Agreement also will state that in the event of a casualty, the City will continue to disburse the Grant funds only if the Developer decides to reconstruct the Project in accordance with the Project Plans and the insurance proceeds are disbursed prior to the disbursement of the balance, if any, of the Grant funds. 5. City Contribution. (a) Subject to all the terms and conditions of this Agreement and applicable law, the City will provide payments to the Developer solely from future Tax Increments to assist with the Developer's Project Costs; provided, that the total aggregate amount of the City's payments to the Developer shall not exceed One Million and No/100 Dollars ($1,000,000.00). (b) As the sole source of payment for the City Contribution, the City agrees to pay to the Developer seventy five percent (75%) of each Annual Tax Increment Surplus attributable to the Property based on taxes accrued through the Expiration Date. Payments under this Agreement shall be made on Payment Dates solely from Tax Increments attributable to the Property actually received by the City by each Payment Date. In no event shall the City's payment to the Developer exceed the total Tax Increment generated by the Property. The City Contribution, as evidenced by this Agreement, shall be a special and limited obligation of the City and not a general obligation. Payments under this Agreement shall be due in annual installments beginning on the first Payment Date of the calendar year following the first tax year in which an Annual Tax Increment Surplus exists and continuing each Payment Date thereafter in a tax year in which an Annual Tax Increment Surplus exists, until the earlier of (i) the receipt by Developer of the maximum City Contribution of One Million and No/100 Dollars ($1,000,000.00), or(ii) the Expiration Date. (c) The Developer acknowledges that as a result of the special and limited nature of the City's obligation to pay the City Contribution, the Developer's recovery of the City Contribution depends upon various factors including, but not limited to, future mill rates, changes in assessed value of the Property, the failure of the Property to generate Tax Increments at the rate expected by the Developer, changes in the Tax Increment Law, and other factors beyond the City's and/or the Developer's control. (d) The City covenants to the Developer that unless the City Contribution has been paid in full, the City shall not close the TIF District prior to the Expiration Date. 5 6980074_9 (e) The City shall, at the Developer's request, provide to the Developer an accounting of the TIF District, including, but not limited to, the outstanding balance of the City Contribution and the annual Tax Increments received from the TIF District. 6. Conditions Precedent to City's Obligations. In addition to all other conditions and requirements set forth in this Agreement, the obligations of the City hereunder (including, without limitation, the obligation of the City to disburse the Grant and pay the City Contribution) are conditioned upon the satisfaction of each and every of the following conditions: (a) On or before the date of this Agreement, the Developer shall provide the City an opinion of its counsel reasonably acceptable to the City stating, among other things, that the persons executing this Agreement on behalf of the Developer are authorized to do so, that the Developer has duly authorized entry into this Agreement, and other matters as are reasonably requested by the City. (b) On or before the Closing Date, the Developer shall have provided the City with (i) certified copies of its Articles of Organization and Operating Agreement, and (ii) a current Certificate of Status issued by the Wisconsin Department of Financial Institutions. (c) On or before the Closing Date, the Developer, at its sole cost, will provide the Title Company with the Project Costs Itemization. The Project Costs Itemization shall demonstrate Project Costs not less than the Minimum Project Cost, shall be certified by the Developer and , the Developer's architect as accurate and complete, and shall be otherwise reasonably acceptable to the City. (d) On or before the Closing Date, the Developer, at its sole cost, shall provide the City with the Project Plans, which Project Plans must be reasonably acceptable in all respects to the City. (e) On or before the Closing Date, the Developer shall certify that it has entered into a construction contract with Hoffman, LLC for the Project. (f) On or before the Closing Date, the Developer shall have provided the Title Company with evidence reasonably satisfactory to the City showing the amounts expended by the Developer for Project Costs (which amounts shall be credited toward the Equity Contribution), and the Developer shall deposit the balance of the Equity Contribution (if any) with the Title Company. (g) On or before the Closing Date, the Developer, the City, and the Title Company shall have agreed on the changes to be made to the Title Company's standard form for disbursement of construction loans in preparing the Disbursing Agreement referred to in Section 4, above. (h) On the Closing Date, no uncured default, or event which with the giving of notice or lapse of time or both would be a default, shall exist under this Agreement. 6 6980074_9 (i) On or before the Closing Date, the City and the Developer shall have entered into an agreement pursuant to which the Developer will make payments to the City for the Developer's use of the parking structure located adjacent to the Property, substantially in the form attached hereto as Exhibit C. (j) On or before the Closing Date, the Developer shall have agreed to (i) convey the real property described on Exhibit D to the City (the "Riverwalk Parcel"), and (ii) grant such permanent and temporary easements as are necessary to allow the City to construct those portions of the City Center Area and Hotel Zone segment of its continuous riverwalk system (as envisioned by the City's 2005 "Fox River Corridor Riverwalk Plan and Design Guidelines," as the same may be amended from time to time) which are located on the Riverwalk Parcel, the Property or within the adjoining channel of the Fox River. (k) On or before the Closing Date, the City and the Developer shall have entered into an Operations Agreement pursuant to which the Developer will assume the management, marketing, promotion and operation of the Oshkosh Convention Center. Unless all conditions contained in this Section 6 are satisfied within the time periods for satisfaction of such conditions as set forth above or such conditions are waived in writing by the City within the time periods for satisfaction of such conditions as set forth above, the City, at its option, exercised in its sole discretion, may terminate this Agreement, in which event none of parties to this Agreement shall have any further liability or other obligation to the other parties. 7. Representations, Warranties of Developer. The Developer represents and warrants to the City as follows: (a) The Developer is a limited liability company duly organized and validly existing and has the power and all necessary licenses, permits, and franchises to own its assets and properties and to carry on its business. (b) The Developer is duly licensed or qualified to do business in the State of Wisconsin and all other jurisdictions in which failure to do so would have a material adverse effect on its business or financial condition. (c) The execution, delivery and performance of this Agreement have been duly authorized by all necessary limited liability company action of the Developer and constitute the valid and binding obligations of the Developer enforceable in accordance with their terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium, general principles of equity, and other similar laws of general application affecting the enforceability of creditors' rights generally. (d) The execution, delivery, and performance of the Developer's obligations pursuant to this Agreement will not violate or conflict with the Developer's Articles of Organization or Operating Agreement or any indenture, instrument or agreement by which the Developer is bound, nor will the execution, delivery or performance of the 7 6980074_9 Developer's obligations pursuant to this Agreement violate or conflict with any law applicable to the Developer or to the Project. (e) There is no litigation or proceeding pending or affecting the Developer or the Project, or, to the best of the Developer's knowledge, threatening the Developer or the Project, that would adversely affect the Project or the Developer or the enforceability of this Agreement, the ability of the Developer to complete the Project or the ability of the Developer to perform its obligations under this Agreement. (f) The Project Costs Itemization accurately reflects all Project Costs that will be incurred in the acquisition, renovation, furnishing and equipping of the Project, and the Title Company shall be entitled to rely on the Project Costs Itemization. The Developer knows of no circumstances presently existing or likely to occur which would or could be expected to result in material variation or deviation from the Project Costs Itemization. (g) To the best of the Developer's knowledge, no default, or event which with the giving of notice or lapse of time or both would be a default, exists under this Agreement, and the Developer is not in default (beyond any applicable notice and cure period) of any of its obligations under any other agreement or instrument to which the Developer is party or obligor. (h) The Property is in compliance with all applicable material federal, state, and local statutes, regulations, rules, and/or ordinances, and with all orders, decrees, or judgments of governmental authorities or courts having jurisdiction, relating to the use, generation, manufacture, collection, treatment, disposal, storage, control, removal, or cleanup of hazardous substances (as that term is defined in Section 14, below). In the event any hazardous substances are present in, at, on or about the Property, the Developer shall be responsible for removing or otherwise monitoring or remediating such hazardous substances as required by, and in full compliance with applicable law. The representations and warranties contained herein shall be true and correct as of the date hereof and as of the Closing Date. 8. Covenants of Developer. During the Term of this Agreement, the Developer covenants to the City as follows: (a) The Developer shall pay for all work performed and materials furnished for the Project as and when due. (b) On or before the Completion Date, the Project shall be completed (subject to matters of force majeure), and in all other respects be ready for occupancy and use by the Developer. (c) The Developer shall conform and comply with, and will cause the Project to be in conformance and compliance with, all applicable federal, state, local and other laws, rules, regulations and ordinances, including without limitation, all zoning and land 8 6980074_9 division laws, rules, regulations, and ordinances, all building codes and ordinances of the City, and all environmental laws, rules, regulations, and ordinances. (d) The Developer shall cause the Project to be constructed in a good and workmanlike manner and substantially in accordance with the Project Plans and will promptly correct any defects, structural or otherwise, in any construction or deviations from the Project Plans. Construction of the Project shall be completed free of all liens and encumbrances except for those liens and encumbrances permitted by this Agreement. (e) The Developer shall not, without the prior written consent of the City (i) approve any change or modification in the Project by change order or otherwise that would cause the Project Costs to be less than the Minimum Project Cost, or (ii) modify or amend any agreement affecting the Project in a manner which would cause the agreement to be materially inconsistent with this Agreement. (f) The Developer shall permit the City and the City's construction consultant or inspector, at all reasonable times, to inspect the Project and all matters relating to the development thereof The City assumes no obligation to the Developer for the sufficiency or adequacy of such inspections, it being acknowledged that such inspections are made for the sole and separate benefit of the City. The fact that the City may make inspections shall in no way relieve the Developer from its duty to independently ascertain that the construction of the Project is being completed substantially in accordance with the Project Plans. (g) The Developer shall pay or cause to be paid prior to delinquency all federal, state and local taxes in connection with the Project. The Developer shall pay when due all operating expenses in connection with the Project. (h) The Developer shall comply with the requirement to provide notification of position openings under Wis. Stat. § 66.1105(6c), and, to the extent notified by the City prior to the date of this Agreement, with any other applicable material restriction affecting the TIF District and with all laws, rules, regulations and ordinances generally applicable to tax increment districts that are applicable to the Project. (i) The Developer shall have in effect at all times, all permits, approvals and licenses that may be required by any governmental authority or nongovernmental entity in connection with the development, construction, management and operation of the Project. (j) Except for a mortgage in favor of Lender securing the Loan, the Developer will not mortgage or otherwise place a lien or encumbrance on the Property without first obtaining the City's consent, which consent the City shall not unreasonably withhold; provided, that in no event shall the City be required to consent to a mortgage, lien or encumbrance which would be entitled to priority over the lien of the Mortgage (as defined in Section 13, below). (k) The Developer, at its cost and expense, shall operate, maintain, repair and replace (including without limitation, repairs and replacements of a capital nature) all 9 6980074_9 elements of the Project. The Developer's maintenance and repair obligations shall include both day to day maintenance and repair and extraordinary maintenance and repair and shall include maintenance, repair and replacement of all elements or systems of the Project as are necessary in order to maintain the Project. The Developer will not defer any required maintenance, repair or replacement (including, without limitation, repairs and replacements of a capital nature) of any element of the Project and shall establish adequate reserves therefor. (1) The Developer will not, without the City's consent, initiate any change in the zoning classification of all or any portion of the Property. (m) The Developer will operate the Project substantially in accordance with the final operating pro forma submitted to the City in conjunction with the Project Plans, and shall not increase the amount of any management fees paid to Developer or any third party beyond what is set forth in the operating pro forma without the City's consent. 9. Damage; Destruction. In the event of fire, damage, or any other casualty to any part of the Project, the Developer agrees, at its cost and expense, to rebuild, repair and replace the Project in the condition it was in immediately prior to the casualty. The fair market value of the Project following reconstruction and/or repair by the Developer must be greater than or equal to the fair market value of the Project immediately prior to the casualty. The Developer shall not be relieved of its obligations to make Guaranty Payments as such payments become due and payable under Section 13, below, as a result of fire, condemnation or other casualty or during the period of repair or rebuilding and replacement of the Project. If the Project is required to be rebuilt or repaired or replaced, then the Project shall be rebuilt, repaired or replaced in accordance with plans and specifications prepared by the Developer and approved by the City. The Developer agrees to apply any necessary portion of the insurance proceeds to rebuild, repair and replace the Project. The proceeds of insurance shall be disbursed for the replacement, rebuilding or repair of the Project pursuant to the terms and conditions of a disbursing agreement among the City, the Developer and the Title Company, similar in form and content to the Disbursing Agreement entered into pursuant to Section 4, above. Any amount required in excess of insurance proceeds for rebuilding, repair and/or replacement of the Project shall be paid by the Developer. If the Project is not rebuilt, repaired and/or replaced following fire, damage or other casualty, that shall not operate to release the Developer from its liabilities and obligations under this Agreement, including, but not limited to, its obligations to make Guaranty Payments pursuant to Section 13, below. 10. Costs. The Developer shall each year during the Term of this Agreement pay all reasonable and itemized fees, costs and expenses actually incurred by the City, including administrative costs and attorneys' and consultants' fees, in connection with the creation and maintenance of, and annual reporting for, the TIF District, the development of the TIF District Project Plan, the negotiation and preparation of this Agreement and all documents and agreements executed in connection therewith; provided, however, that the annual amount of such payment shall not exceed Fifty Thousand and No/100 Dollars ($50,000.00) for the first year, and 10 6980074_9 after the first year, the annual amount of such payment shall not exceed Five Thousand and No/100 Dollars ($5,000.00), which amount will increase by one and one-half percent (1.5%) each year during the Term. Developer shall also pay all reasonable and itemized fees, costs and expenses actually incurred by the City, including attorneys' and consultants' fees, in connection with the enforcement of its rights against the Developer under the TIF District Project Plan or this Agreement, including without limitation, the enforcement of such rights in any bankruptcy, reorganization or insolvency proceeding involving the Developer. 11. City's Right to Cure Default. In case of a failure by the Developer to procure or maintain insurance, or to pay any fees, assessments, charges or taxes arising with respect to the Project or to comply with the terms and conditions of this Agreement or any other document, contract or agreement effecting the Project, the City shall have the right, but shall not be obligated, to effect such insurance or pay such fees, assessments, charges or taxes or take such action as is necessary to remedy the failure of the Corporation to comply with the documents, contracts or agreements effecting the Project, and, in that event, the cost thereof shall be payable by the Developer to the City. 12. Real Estate Taxes and Assessments. The Developer shall pay timely to the City generally applicable property taxes assessed and levied by the City on the Property under applicable property tax laws, rules, rates, regulations and ordinances in effect from time to time. Nothing in this Agreement shall impair any statutory rights of the City with respect to the assessment, levy, priority, collection, and/or enforcement of real estate property taxes. In addition, the Developer agrees to pay timely to the City all special assessments that may be assessed or levied in connection with the Property under the applicable special assessment laws, rules, regulations, ordinances and rates in effect at the time said special assessments are assessed or levied. 13. Increment Guaranty. (a) The Developer hereby guarantees that commencing in 2016, Tax Increments received during each calendar year will be at least equal to the amount necessary to service the City's debt on all amounts disbursed for or on behalf of Developer during such calendar year. In the event that there is an Annual Tax Increment Deficit in any given year, the City shall notify the Developer, in writing, that there is an Annual Tax Increment Deficit, and the amount of the Annual Tax Increment Deficit ("Deficit Notice"). Within thirty (30) days after the Deficit Notice, Developer shall pay the City an amount equal to the Annual Tax Increment Deficit (a"Guaranty Payment"). (b) Revenue Generation. The Developer acknowledges that the Grant and City Contribution are being provided by the City in reliance upon the future generation of general property taxes which will generate revenues for the City, including the revenues necessary to repay the City's debt on all amounts disbursed for or on behalf of the Developer under this Agreement. During the term of the TIF District, the Developer shall use, and shall assure the use by any subsequent purchaser of, the Property for commercial purposes sufficient at all times to avoid an Annual Tax Increment Deficit and shall take no action which would negatively affect the value of the Property. 11 6980074_9 (c) Conveyance to Third Parties. The Developer shall not sell, transfer or convey the Property, any portion thereof or any improvements thereon, to any person or entity unless such person or entity, for itself and its successors and assigns, agrees to be bound by the terms of this Section 13 to the same extent as the Developer. (d) The Developer's obligations under this Section 13 shall be secured by a Mortgage granted in favor of the City (the "Mortgage"), in the form attached hereto as Exhibit E. The Mortgage shall be subordinate only to the mortgage of Lender securing the Loan. (e) The Developer's obligations under this Section 13 shall also be secured by the City's right of special assessment or by another remedy available to the City by statute. If the Developer fails to pay timely any Guaranty Payment due under this Section 13, the City may, in addition to all other remedies available to it in law or equity, levy the amount of the overdue obligation against the Property as a special assessment pursuant to Wis. Stat. §66.0701. In connection therewith, the Developer: (i) acknowledges that the City has incurred costs for the payment or reimbursement of the Project Costs; (ii) agrees that the amount of the special assessment, if levied consistent with this Agreement, constitutes a proper exercise of the City's authority to levy special assessments in accordance with Wis. Stat. §66.0701; (iii) agrees that the allocation of the City's costs to the Property is reasonable and commensurate with the special benefits provided to the Property; (iv) agrees that the amount being assessed in accordance with this Agreement does not exceed the value of the benefits accruing to the Property from the City's expenditures identified herein; (v) consents to the imposition and levy of such special assessments; (vi) agrees that the approval of this Agreement by the Oshkosh Common Council shall be sufficient to authorize the levy of special assessments in accordance herewith, and that no further procedural steps need be taken by the City; (vii) waives all special assessment notices, hearings and appeals provided by Wis. Stats. §66.0701 or §66.0703; and (viii) acknowledges that the City is relying on the terms of this Agreement, and specifically the terms of this subsection, that such reliance is reasonable, and that the City's payment of its obligations to the Developer under this Agreement will be detrimental to the City if the provisions relating to special assessments are not enforced and that a failure to enforce such agreements would be inequitable. 14. Indemnifications. The Developer hereby indemnifies, defends and holds the City harmless from and against all loss, liability, damage and expense, including reasonable attorneys' fees, suffered or incurred by the City to the extent caused by the following: (a) the failure of the Developer or its contractors, subcontractors, agents, employees, or invitees to comply with any environmental law, rule, regulation or ordinance, or any order of any regulatory or administrative authority with respect thereto; (b) any release by the Developer or its contractors, subcontractors, agents, employees or invitees of petroleum products or hazardous materials or hazardous substances on, upon or into the Project; (c) any and all damages to natural resources or real property or harm or injury to persons resulting or alleged to have resulted from any failure by the Developer and/or its contractors, subcontractors and/or agents to comply with any law, rule, regulation or ordinance or any release of petroleum products or hazardous materials or hazardous substances as described in clauses (a) and (b) above; (d) claims arising on the Property under the Americans with Disabilities Act, and any other laws, rules, regulations or 12 6980074_9 ordinances; (e) claims for third parties for injury to or death of any person on the Property; and (f) the failure of the Developer to maintain, repair or replace as needed any portion of the Project. The term "hazardous substances" means any flammable explosives, radioactive materials, hazardous wastes, toxic substances, or related materials, including, without limitation, any substances defined as or included in the definition of "hazardous substances," "hazardous waste," "hazardous materials," or "toxic substances" under any applicable federal or state or local laws or regulations. 15. Insurance. The Developer shall maintain the following insurance policies issued by insurers with a rating of at least "A-" and in a financial size category of at least "X" as established by A.M. Best Company and licensed to do business in the State of Wisconsin: (i) property insurance on the Property with coverage limits equal to the full replacement cost of the building and contents; (ii) commercial general liability insurance with limits of $1,000,000 per occurrence and $5,000,000 in the aggregate; (iii) statutory worker's compensation insurance; and (iv) automobile liability insurance with a combined single limit of$1,000,000. Each insurance policy shall require the insurer to provide at least thirty (30) days prior written notice to the City of any material change or cancellation of such policy. 16. Nondiscrimination. The Developer shall not use the Project in any manner to permit discrimination or restriction on the basis of race, creed, ethnic origin or identity, color, gender, religion, marital status, age, handicap or national origin, and the Developer shall construct and operate the Project in compliance with all laws, rules, regulations and ordinances relating to discrimination or any of the foregoing. 17. Property Tax Challenges and Exemptions. The Developer shall not seek to reduce the assessed value of the Property below an amount necessary to create the Tax Increments set forth on Exhibit F. In addition, the Developer shall not cause or permit the Property or any portion thereof to become tax exempt unless condemned by a governmental entity. The Developer will place a restriction in any deed conveying all or any portion of the Property prohibiting any use or ownership of the Property which would cause the Property or any portion thereof to become tax exempt. 18. Default. The occurrence of any one or more of the following events shall constitute a default hereunder: (a) The Developer or any successor shall fail to pay when due any Guaranty Payment or other amount due from it under this Agreement, and such failure continues for fifteen (15) days after the Developer has received a written notice of default; or (b) Any representation or warranty made by the Developer or any successor in this Agreement or any document delivered by the Developer or its successor pursuant to this Agreement shall prove to have been false in a material way as of the time made or given; or 13 6980074_9 (c) The Developer or any successor shall breach or fail to substantially perform timely or observe timely any of its covenants or obligations under this Agreement, and such failure shall continue for thirty (30) days following notice thereof from the City to the Developer (or such longer period of time as is necessary to cure the default as long as the Developer has commenced the cure of the default within the thirty (30) day period and is diligently pursuing to cure the default and as long as the default is cured not later than one hundred eighty (180) days following notice thereof from the City); or (d) The Project is not substantially completed on or before the Completion Date (subject to matters of force majeure); or (e) The Developer shall: (i) become insolvent or generally not pay, or be unable to pay, or admit in writing its inability to pay, its debts as they mature; or (ii) make a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its assets; or (iii) become the subject of an order for relief within the meaning of the United States Bankruptcy Code, or file a petition in bankruptcy, for reorganization or to effect a plan or other arrangement with creditors; or (iv) have a petition or application filed against it in bankruptcy or any similar proceeding, and such petition, application or proceeding shall remain undismissed for a period of ninety (90) days or more, or the Developer shall file an answer to such a petition or application, admitting material allegations thereof; or (v) apply to a court for the appointment of a receiver or custodian for any of its assets or properties or have a receiver or custodian appointed for any of its assets or properties, with or without consent, and such receiver shall not be discharged within ninety (90) days after its appointment; or(vi) adopt a plan of complete liquidation of its assets. 19. Remedies. Upon the occurrence of any default, without further notice, demand or action by any kind by the City, the City may, at its option, pursue any one or more of the following remedies concurrently or successively: (a) Demand the immediate repayment of the entire amount of the Grant; (b) Cease all future payments of the City Contribution; or (c) Pursue any or all of the rights and remedies available to the City at law and/or in equity against the Developer and/or the Project. Except as may be otherwise specifically set forth herein, no remedy herein conferred upon the City is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, and/or available to the City under the TIF District Project Plan and any other covenants, restrictions, documents or instruments governing the TIF District, and/or now or hereafter existing at law or in equity. No failure or delay on the part of the City in exercising any right or remedy shall operate as a waiver thereof nor shall any single or partial exercise of any right preclude other or further exercise thereof or the exercise of any other right or remedy. 14 69800749 Notwithstanding any of the foregoing authorizations, the City shall have no duty or obligation whatsoever with respect to any of the matters so authorized. 20. No Personal Liability. Under no circumstances shall any council member, official, director, attorney, employee, or agent of a party have any personal liability arising out of this Agreement, and no party shall seek or claim any such personal liability. 21. City Authorization. The execution of this Agreement by the City is authorized by Resolution No. of the City's Common Council dated 22. Miscellaneous. (a) Except as otherwise specifically set forth herein, the respective rights and liabilities of the City and the Developer in this Agreement are not assignable or delegable, in whole or in part, without the prior written consent of the other party. Provisions of this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. (b) No waiver, amendment, or variation of the terms of this Agreement shall be valid unless in writing and signed by the City and the Developer, and then only to the extent specifically set forth in writing. (c) All material applicable agreements, representations, warranties, covenants, liabilities and obligations made in this Agreement and in any document delivered pursuant to this Agreement shall remain effective during the Term of this Agreement. (d) All communications or notices required or permitted by this Agreement shall be in writing and shall be deemed to have been given: (i) upon delivery to an officer or the person entitled to such notice, if hand delivered, or (ii) two business days following deposit in the United States Mail, postage prepaid, or with a nationally recognized overnight commercial carrier that will certify as to the date and time of delivery, air bill prepaid, or (iii) upon transmission if by facsimile, any such communication or notice shall be addressed as follows, unless and until any such party notifies the other in accordance with this section of any change of address: If to the City: City of Oshkosh City Attorney's Office 215 Church Avenue Post Office Box 1130 Oshkosh, WI, 54903-1130 Attn: City Attorney Facsimile No. [ With a copy to: Godfrey & Kahn, S.C. 100 West Lawrence Street Appleton, WI 54911 Attn: Michael J. Lokensgard 15 69800749 Facsimile: 920-830-3530 If to the Developer: Oshkosh Investors, LLC [842 Algoma Blvd. Oshkosh,WI 54901 Attn: Arthur H. Rathjen Facsimile: 920-424-7116] With a copy to: (e) This Agreement and the documents executed pursuant to this Agreement contain the entire understanding of the parties with respect to the subject matter hereof. There are no restrictions, promises, warranties, covenants or understandings other than those expressly set forth in this Agreement and documents executed in connection with this Agreement. This Agreement and the documents executed in connection herewith supersede all prior negotiations, agreements and undertakings between the parties with respect to the subject matter hereof. (f) This Agreement is intended solely for the benefit of the Developer and the City, and no third party (other than successors and permitted assigns) shall have any rights or interest in any provision of this Agreement, or as a result of any action or inaction of the City in connection therewith. Without limiting the foregoing, no approvals given pursuant to this Agreement by the Developer or the City, or any person acting on behalf of either of them, shall be available for use by any contractor or other person in any dispute with the construction of the Project. (g) This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Wisconsin applicable to contracts made and wholly performed within the State. (h) This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one in the same Agreement. Facsimile signatures shall be deemed original signatures for all purposes of this Agreement. (i) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be in effect to the extent of such prohibition or enforceability without invalidating the remaining provisions of this Agreement in such jurisdiction or affecting the validity or enforcement of any provision in any other jurisdiction. (j) Nothing contained in this Agreement or any other documents executed pursuant to this Agreement shall be deemed or construed as creating a partnership or joint 16 6980074_9 venture between the City and the Developer or between the City and any other person, or cause the City to be responsible in any way for the debts or obligations of the Developer or any other person or cause the Developer to be responsible in any way for the debts or obligations of the City or any other person. Each party represents, warrants and agrees, for itself and its successors and assigns, not to make any assertion inconsistent with its acknowledgement or with the acknowledgement and agreement contained in the preceding sentence in the event of any action, suit or proceeding, at law or in equity, with respect to the transactions which are the subject of this Agreement and this paragraph may be pleaded and construed as a complete bar and estoppel against any assertion by or for a party and its successors and permitted assigns, that is inconsistent with its acknowledgement and agreement contained in the preceding sentence. (k) Time is of the essence as to each and every obligation or agreement contained in this Agreement. (1) If any party is delayed or prevented from timely performing any act required under this Agreement other than the payment of money, by reason of fire, earthquake, war, terrorist act, flood, riot, strikes, labor disputes or shortages, government restrictions, judicial order, public emergency, or other causes beyond the reasonable control of the party obligated to perform, the performance of such act shall be excused for the period of such delay and the time for the performance of any such act shall be extended for a period equivalent to such delay. (m) No disbursement of any portion of the Grant or payment of any portion of the City Contribution shall preclude the City from declaring a default hereunder and pursuing its remedies hereunder in the event the Developer fails to fulfill its obligations hereunder or cure any such default. (n) A memorandum of this Agreement may be recorded in the office of the Register of Deeds of Winnebago County, Wisconsin, it being understood by the parties that until Expiration Date, this Agreement will run with the land and will be binding upon the Property. This Agreement inures to the benefit of the City and its successors and assigns. (o) The headings to this Agreement are for reference only and are not intended to modify any of the terms and conditions of this Agreement. (p) Nothing contained in this Agreement is intended to or has the effect of releasing the Developer from compliance with all applicable laws, rules, regulations and ordinances in addition to compliance with all the terms, conditions and covenants contained in this Agreement. (q) This Agreement is the product of negotiation between the parties hereto and no term, covenant or provision herein or the failure to include a term, covenant or provision shall be construed against any party hereto solely on the basis that one party or the other drafted this Agreement or any term, covenant or condition contained herein. 17 6980074_9 (r) Upon mutual consent of the parties to this Agreement, which consent any party can withhold in its sole discretion, the parties can agree to submit disputes arising under this Agreement to alternative dispute resolution. (s) EACH PARTY TO THIS AGREEMENT HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER CONTRACT OR TORT, AT LAW OR EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT. (t) All amounts not paid when due hereunder shall bear interest at the rate of twelve percent(12%). 23. Other Approvals. In addition to any approvals required under this Agreement, the Developer shall be required to obtain all approvals, consents, and licenses as may be required by any governmental or non-governmental authority in connection with the Project, including, without limitation, all building permits, Project Plan approvals and zoning approvals. The Developer's compliance with the terms of this Agreement shall not relieve the Developer from complying with all applicable federal, state and local laws, rules, regulations and ordinances in connection with the Project and to the extent any governmental or non-governmental entity imposes different or more restrictive conditions on the Developer or the Project, compliance by the Developer with the terms of this Agreement shall not relieve the Developer from complying with such different or more restrictive conditions. Likewise, any less restrictive conditions imposed on the Developer or the Project by any governmental or non-governmental authority shall not relieve the Developer or the Project from complying with all of the terms and conditions of this Agreement. [SIGNATURE PAGE FOLLOWS] 18 6980074_9 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CITY OF OSHKOSH, WISCONSIN By: Mark A. Rohloff Its: City Manager By: Pamela R. Ubrig Its: City Clerk Approved as to form: By: Lynn A. Lorenson Its: City Attorney STATE OF WISCONSIN ) ) SS COUNTY OF WINNEBAGO ) Personally came before me this day of , 2012, the above-named Mark A. Rohloff and Pamela R. Ubrig, to me known to be the City Manager and City Clerk of the City of Oshkosh, Wisconsin and the person who executed the foregoing document and acknowledged the same. * Notary Public, State of My commission: [SIGNATURES AND ACKNOWLEDGEMENTS CONTINUED NEXT PAGE] 19 6980074_9 OSHKOSH INVESTORS, LLC By: Its: STATE OF WISCONSIN ) ) SS COUNTY OF ) Personally came before me this day of , 2012, the above-named , to me known to be the of Oshkosh Investors, LLC and the person who executed the foregoing document and acknowledged the same. * Notary Public, State of My commission: 20 69800749 Exhibit A Property Legal Description Lot Three (3) according to CERTIFIED SURVEY MAP No. 1197 filed in Volume 1 of Certified Survey Maps on Page 1197 as Document No. 602518; being part of Lots 1 through 11 in Moore's Subdivision, in the First Ward, City of Oshkosh, Winnebago County, Wisconsin. Tax ID Number 6980074_9 Exhibit B Form of Disbursing Agreement 69800749 Exhibit C Form of Parking Agreement 6980074_9 Exhibit D Legal Description of Riverwalk Parcel 6980074_9 Exhibit E Form of Mortgage 6980074_9 li MORTGAGE DOCUMENT NO. 1 j THIS SPACE RESERVED FOR RECORDING DATA NAME AND RETURN ADDRESS Lynn A.Lorenson,Esq. City of Oshkosh 215 Church Avenue Oshkosh, WI 54903-1130 Parcel Identification Number This instrument was drafted by: Michael J. Lokensgard Godfrey & Kahn, S.C. 100 W. Lawrence Street Appleton, WI 54911 69800749 MORTGAGE THIS MORTGAGE is made and entered into as of this day of , 2012, by and between OSHKOSH INVESTORS, LLC, a Wisconsin limited liability company (the "Mortgagor") and the CITY OF OSHKOSH, WISCONSIN, a Wisconsin municipal corporation ("Mortgagee"). WITNESSETH: This Mortgage is given to secure the prompt and full payment and performance as and when due of the obligations of Mortgagor pursuant to that certain Development Agreement (the "Development Agreement") by and between Mortgagor and Mortgagee dated as of , 2012. The term "Indebtedness" as used in this Mortgage shall mean all sums payable to or for the benefit of Mortgagee by Mortgagor under the Development Agreement or this Mortgage, including any and all expenses reasonably incurred by Mortgagee to enforce obligations of Mortgagor, as permitted under this Mortgage or the Development Agreement. FOR VALUE RECEIVED, Mortgagor hereby mortgages to Mortgagee Mortgagor's interest in the real property described in Exhibit A attached hereto, with all appurtenances and existing or future improvements (the "Property"). The Mortgage is given to secure payment of the Indebtedness and is given and accepted on the following terms and condition, which Mortgagor will promptly and faithfully observe and perform. The lien of this Mortgage is and shall at all times be secondary, subordinate and inferior to the lien of each mortgage, deed of trust, security agreement, assignment of rents and leases and any other instrument securing payment of the loans to Mortgagor for the construction or development of the Property described on attached Exhibit B (the "Prior Encumbrance(s)"). This subordination shall be self-executing as to the Prior Encumbrances and each of them and effective without any further action or consent of Mortgagee. However, without limiting the foregoing, upon written request from any lender holding the Prior Encumbrance(s) listed on Exhibit B, or their respective successors or assigns with respect to such Prior Encumbrance(s), Mortgagee shall execute and deliver to such person such subordination and other instruments that such person may reasonably require and that pass in the trade among prudent financial institutions seeking to confirm or obtain priority over a prior filed or subordinate lien to confirm or establish the subordination of the lien of this Mortgage to such interest. Mortgagor hereby expressly covenants and agrees to pay or see to the payment of the indebtedness and performance of the obligations secured or required by Mortgagor by any Prior Encumbrance(s) and to pay, perform and observe all things necessary to prevent any default thereunder. Mortgagor will immediately forward to Mortgagee a copy of any notice of default under any then Prior Encumbrance(s) which Mortgagor may receive at any time. During the period in which any Prior Encumbrance is in effect, Mortgagor shall also comply with the insurance and other provisions contained therein. If any proceeds from the insurance or of any condemnation of all or any portion of the Property become payable on loss or taking, or any other income or 69800749 proceeds of the Property would otherwise become payable to Mortgagee, the provisions in this Mortgage for division of such proceeds shall apply only to that portion of the proceeds not payable to the holder of any Prior Encumbrance. Each provision of this Mortgage shall be subject to and subordinate to the terms and conditions of(and rights of the lender(s) as to) the Prior Encumbrance(s). 1. PAYMENT AND PERFORMANCE. Mortgagor shall pay to Mortgagee all amounts, payment of which is secured by this Mortgage, and shall perform all obligations imposed upon Mortgagor by this Mortgage or the Prior Encumbrance(s). 2. POSSESSION AND MAINTENANCE OF THE PROPERTY. 2.1 Possession. Until in default, Mortgagor may remain in possession and control of and operate and manage the Property and collect income from the Property. 2.2 Duty to Maintain. Mortgagor shall maintain the Property in as good condition and repair as required under the Prior Encumbrance(s), as defined below, which standard shall survive the release of the Prior Encumbrances and each of them. 2.3 Nuisance, Waste. Mortgagor shall not conduct or permit any nuisance and shall not commit or suffer any waste on the Property. 2.4 Mortgagee's Right to Enter. Mortgagee and its agents and representatives may enter upon the Property at all reasonable times upon reasonable prior written notice (which shall in no event be less than twenty-four (24) hours' advance notice, except in the event of an emergency) to attend to Mortgagee's interest and to inspect the Property, subject to the right of tenants then in possession. 2.5 Alteration or Removal. Mortgagor shall not remove, demolish or materially alter any part of the Property without Mortgagee's prior written consent; except Mortgagor may remove a fixture, provided the fixture is promptly replaced with another fixture of at least equal quality. 2.6 Ordinances. Mortgagor shall comply with all laws, ordinances and regulations affecting the Property. 3. TAXES AND LIENS. 3.1 Payment. Mortgagor shall pay or cause to be paid before delinquency all taxes and assessments levied against or on account of the Property from and after the date of this Mortgage, and shall pay or cause to be paid all claims for work done on or for services rendered or material furnished to the Property. Mortgagor shall maintain the Property free of any liens created or suffered by Mortgagor having priority over or equal to the interest of Mortgagee under this Mortgage, except for the Prior Encumbrance(s), and the lien of taxes and assessments not due, and except as otherwise provided in Section 3.2. 69800749 3.2 Right to Contest. Mortgagor may withhold payment of any tax, assessment or claim in connection with a good faith dispute over the obligation to pay, so long as Mortgagee's interest in the Property is not jeopardized. If the Property is subjected to a lien for which Mortgagor is responsible under this Mortgage which is not discharged within thirty (30) days, Mortgagor shall deposit with Mortgagee cash, a sufficient corporate surety bond or other security satisfactory to Mortgagee in an amount sufficient to discharge the lien plus any interest, costs, attorneys' fees or other charges that could accrue as a result of a foreclosure or sale under the lien. In any contest proceedings, Mortgagor will defend itself and Mortgagee and will name Mortgagee as an additional oblige under any surety bond, and Mortgagor shall satisfy any final adverse judgment before enforcement against the Property. 3.3 Evidence of Payment. Mortgagor shall promptly furnish evidence of payment of taxes and assessments to Mortgagee on its demand and shall authorize the appropriate county official to deliver to Mortgagee at any time a written statement of the taxes and assessments against the Property. 4. PROPERTY DAMAGE INSURANCE. 4.1 Maintenance of Insurance. Mortgagor shall procure and maintain policies of fire insurance with standard extended coverage endorsements covering all improvements on the Property, for replacement value, and in an amount sufficient to avoid application of any co-insurance clause and with loss payable to Mortgagee and Mortgagor, as their respective interests may appear. Policies shall be written in amounts, in form, on terms and with companies reasonably acceptable to Mortgagee. Mortgagor shall deliver to Mortgagee certificates of coverage from each insurer containing a stipulation that coverage will not be canceled or diminished without a minimum of thirty (30) days' written notice to Mortgagee. 4.2 Application of Proceeds. Mortgagor shall promptly notify Mortgagee of any loss or damage of the Property the restoration or repair of which is estimated to cost in excess of$50,000. Mortgagee may make proof of loss if Mortgagor fails to do so within fifteen (15) days of the casualty. So long as there is no material default under this Mortgage or the Development Agreement and subject to the Prior Encumbrance(s), Mortgagee shall make the net insurance proceeds actually received by Mortgagee available to Mortgagor for the restoration and repair of the Property in a manner consistent with commercially prudent practice of secured parties in the holding and disbursement of such funds. If the proceeds are disbursed to Mortgagor for restoration and repair, Mortgagor shall repair or replace the damaged or destroyed improvements in a good and workmanlike, lien-free manner, in compliance with applicable law and reasonably satisfactory to Mortgagee. 4.3 Unexpired Insurance at Sale. Any unexpired insurance shall inure to the benefit of, and pass to, the purchaser of the Property covered by this Mortgage at any foreclosure sale of the Property. 5. WARRANTIES OF MORTGAGOR. 5.1 Title. Mortgagor warrants that it holds the leasehold interest in the Property free of all encumbrances other than this Mortgage, any Prior Encumbrance(s), as 6980074_9 defined below, and those restrictive covenants, easements and conditions currently of record on the Property. 5.2 Defense of Title. Subject to the matters described in paragraph 5.1, above, Mortgagor warrants and will forever defend the title to the Property against the lawful claims of all persons. 6. CONDEMNATION. 6.1 Application of Net Proceeds. Subject to the provisions of the Prior Encumbrance(s), if all or any part of the Property is condemned, at Mortgagor's election, so long as there is no material default under this Mortgage or the Development Agreement, Mortgagee shall apply all or any portion of the net proceeds of the condemnation actually received by Mortgagee on the Indebtedness or disburse them to Mortgagor for the restoration of the Property to as near as practicable to its condition prior to such taking. The "net proceeds" shall mean the total amount available after payment of all reasonable costs, expenses and attorneys' fees necessarily paid or incurred by Mortgagor and Mortgagee in connection with the taking by condemnation. Sale of all or any part of the Property to a purchaser with the power of eminent domain in the face of a threat or the probability of the exercise of the power shall be treated as a taking by condemnation to which this Section shall apply. 6.2 Proceedings. If any proceedings in condemnation are filed, Mortgagor shall promptly take such steps as may be necessary to defend the action and obtain the award. 7. TRANSFER BY MORTGAGOR. 7.1 Prohibition of Transfer Without Consent. Mortgagor shall not sell or convey the Property without the prior written consent of Mortgagee. 7.2 Effect of Consent. Consent by Mortgagee to one transfer shall not constitute a consent to other transfers or a waiver of this Section. No transfer by Mortgagor shall relieve Mortgagor or any other person of liability for payment of the Indebtedness. Following a transfer, Mortgagee may agree to any extension of time for payment or performance or modification of the terms of this Mortgage or the Development Agreement or waive any right or remedy under this Mortgage or the Development Agreement without relieving Mortgagor or any other person from liability. 8. RELEASE ON FULL PERFORMANCE. If all of the Indebtedness is fully paid, performed and satisfied as and when due, Mortgagee shall execute and deliver to Mortgagor a full release of this Mortgage. 9. DEFAULT. The following shall constitute "Events of Default": (a) Failure of Mortgagor or other person to pay any portion of the Indebtedness when due, subject to any cure period expressly provided under this Mortgage or the Development Agreement, as applicable. 6980074_9 (b) Failure of Mortgagor to perform any other obligation within the period, if any, allowed under this Mortgage or the Development Agreement, as applicable, for such cure. (c) Any other event of default under the Development Agreement. (d) The commencement of any action to foreclose any one or more of the Prior Encumbrances or the attachment to the Property of any other lien or encumbrance not a Prior Encumbrance under this Mortgage. 10. RIGHTS AND REMEDIES ON DEFAULT. 10.1 Remedies. Upon the occurrence and during the continuance of any Event of Default, Mortgagee may exercise anyone or more of the following rights and remedies: (a) Mortgagee may declare the entire Indebtedness immediately due and payable. (b) Mortgagee shall have the right to foreclose this Mortgage in accordance with applicable law. (c) If permitted by applicable law, Mortgagee may obtain a judgment for any deficiency remaining in the Indebtedness due to Mortgagee after application of all amounts received from the exercise of the rights provided in this Section. (d) With respect to all or any part of the Property that constitutes personalty, may exercise the rights and remedies of a secured party under the Uniform Commercial Code, as adopted in the State of Wisconsin. (e) Mortgagee shall have the right, with notice to Mortgagor, to take possession of the Property and collect income, including amounts past due and unpaid, and apply the net proceeds, over and above Mortgagee's costs, against the Indebtedness. Mortgagee may exercise its rights under this paragraph either in person, by agent or through a receiver. (f) Mortgagee may pursue any and all other rights and remedies available under the Development Agreement or applicable law or equity. 10.2 Attorneys' Fees; Expenses. In the event suit or action is instituted to enforce any of the terms of this Mortgage, the Mortgagee shall be entitled to recover its costs and attorneys' fees at trial, on any appeal and on any petition for review, or other proceedings, including without limitation, any arbitration or bankruptcy case or proceedings, in addition to all other sums provided by law. 11. SECURITY INTEREST. 11.1 Fixture Filing. This instrument constitutes a financing statement filed as a fixture filing in the Official Records of the County Recorder of the county in which the 69800749 Property is located with respect to any and all fixtures included within the term Property as used herein and with respect to any goods or other personal property that may now be or hereafter become such fixtures. 11.2 Form of Mortgage/Tax Key Number. The Property is not homestead property. The tax key number(s) of the Property are as set forth on attached Exhibit A. 12. ENVIRONMENTAL LAWS. Mortgagor represents, warrants and covenants to Mortgagee (a) that, except in compliance with Environmental Laws or as would have no material adverse effect on the condition or value of the Property, during the period of Mortgagor's ownership or use of the Property no substance has been, is or will be present, used, stored, deposited, treated, recycled or disposed of on, under, in or about the Property in a form, quantity or manner that, if known to be present on, under, in or about the Property, would require cleanup, removal or some other remedial action ("Hazardous Substance") under any federal, state or local laws, regulations, ordinances, codes or rules ("Environmental Laws"); (b) that Mortgagor has no knowledge of any prior use or existence of any Hazardous Substance on the Property by any prior owner of or person using the Property; (c) that, without limiting the generality of the foregoing, Mortgagor has no knowledge that the Property contains asbestos, polychlorinated biphenyl components (PCBs) or underground storage tanks; (d) that to Mortgagor's knowledge there are no conditions existing that would subject Mortgagor to any damages, penalties, injunctive relief or cleanup costs in any governmental or regulatory action or third-party claims relating to any Hazardous Substance; (e) that Mortgagor is not subject to any court or administrative proceeding, judgment, decree, order or citation relating to any Hazardous Substance; and (f) that Mortgagor in the past has been, and at the present is, in compliance with all Environmental Laws. Mortgagor shall indemnify and hold harmless Mortgagee, its directors, officers, employees and agents from all loss, cost (including reasonable attorneys' fees and legal expenses), liability and damage whatsoever directly or indirectly resulting from, arising out of, or based upon (i) the presence, use, storage, deposit, treatment, recycling or disposal, at any time, of any Hazardous Substance to or from the Property; (ii) the violation or alleged violation of any Environmental Law, permit, judgment or license relating to the presence, use, storage, deposit, treatment, recycling or disposal of any Hazardous Substance to or from the Property, or (iii) the imposition of any governmental lien for the recovery of environmental cleanup costs expended under any Environmental Law. Mortgagor shall immediately notify Mortgagee in writing of any governmental or regulatory action or third-party claim instituted or threatened in connection with any Hazardous Substance on, in, under or about the Property. 13. ASSIGNMENT OF RENTS AND LEASES. Mortgagor assigns and transfers to Mortgagee, as additional security for the Indebtedness, all rents that become or remain due or are paid under any agreement or lease for the use or occupancy of any part or all of the Property. Until the occurrence of an event of default under this Mortgage or the Development Agreement, Mortgagor has the right to collect the rents, issues and profits from the Property, but upon the occurrence of such an event of default, and the giving of notice by Mortgagee to Mortgagor declaring that constructive possession of the Property is in Mortgagee, Mortgagor's license to collect is terminated and Mortgagee shall be entitled to such rents, issues and profits and may, after giving Mortgagor any notice and opportunity to perform required by law, notify any or all tenants to pay all such rents directly to Mortgagee. All such payments shall be applied in such manner as Mortgagee determines to payments required under this Mortgage and the Secured 69800749 Obligations. This assignment shall be enforceable and Mortgagee shall be entitled to take any action to enforce the assignment (including notice to the tenants to pay directly to Mortgagee or the commencement of a foreclosure action) without seeking or obtaining the appointment of a receiver or possession of the Property. 14. MISCELLANEOUS. 14.1 Time of Essence. Time is of the essence of this Mortgage. 14.2 Binding Upon Successors and Assigns. Subject to the limitations stated in this Mortgage on transfer of Mortgagor's interest, this Mortgage shall be binding upon and inure to the benefit of the parties, their successors and assigns. 14.3 Expenditure by Mortgagee. If Mortgagor fails to comply with any provision of this Mortgage within the time allowed (including any cure period allowed by this Mortgage after notice from Mortgagee), Mortgagee may elect to take the required action on Mortgagor's behalf, and any amount that Mortgagee expends in so doing shall be added to the Indebtedness. Amounts so added shall be payable on demand with interest from the date of expenditure at the rate past due amounts under the Development Agreement bear, but not, in any event, at a rate higher than the maximum rate permitted by law. Such action by Mortgagee shall not constitute a cure or waiver of the default or any other right or remedy which Mortgagee may have on account of Mortgagor's default. 14.4 Notices. Any notice under this Mortgage shall be in writing and shall be effective when either delivered in person or, if mailed, shall be deemed effective on the second day after deposited as registered or certified mail, postage prepaid, addressed to the party at the address stated in this Mortgage. Any party may change its address for notices by written notice to the other. 14.5 Invalid Provisions to Affect No Others. If any of the provisions contained in the Development Agreement or this Mortgage shall be invalid, illegal or unenforceable in any respect, the validity of the remaining provisions in this Mortgage and the Note shall not be affected. 14.6 Changes in Writing. This Mortgage and any of its terms may only be changed, waived, discharged or terminated by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement subsequently made by Mortgagor or Mortgagee relating to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance. 14.7 Applicable Law. The law of the state in which the Property is located shall be applicable for the purpose of construing and determining the validity of this Mortgage and determining the rights and remedies of Mortgagee on default. [SIGNATURE PAGE FOLLOWS] 69800749 IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the date first written above. MORTGAGOR: OSHKOSH INVESTORS,LLC By: Name: Its: STATE OF WISCONSIN ) ) SS COUNTY OF OUTAGAMIE ) On this day of , 2012 personally came before me , to me known to be the of Oshkosh Investors, LLC, a Wisconsin limited liability company, and the person who executed the foregoing instrument on behalf of said limited liability company, and acknowledged the same. Notary Public, State of Wisconsin My commission . This instrument was drafted: Michael J. Lokensgard, Esq. Godfrey & Kahn, S.C. 100 West Lawrence Street P.O. Box 2728 Appleton, WI 54912-2728 6980074_9 EXHIBIT A TO MORTGAGE Real Property Lot Three (3) according to CERTIFIED SURVEY MAP No. 1197 filed in Volume 1 of Certified Survey Maps on Page 1197 as Document No. 602518; being part of Lots 1 through 11 in Moore's Subdivision, in the First Ward, City of Oshkosh, Winnebago County, Wisconsin. Tax Key No. 69800749 EXHIBIT B TO MORTGAGE Prior Encumbrances [Mortgage of Lender in amount not to exceed $ .1 6980074_9 Exhibit F Projected Increment Schedule 69800749